This is Bloomberg day Break Asia for this Friday, June second in Hong Kong, Thursday June first in New York and coming up today. Apple is working on plans to expand its retail chain with a deeper push into China and India. Broadcom suffers a slowdown in sales despite gains in Ai, and one FED official says the US Central Bank should it least skip a rate hike in June.
The Senate continues to try to move closer to a debt ceiling agreement, while in Asia, worries continue regarding the relationship between the US and China. I'm Dan Schwartzman. I'll have your news coming up.
That's all straight ahead on Bloomberg day Break Asia, the business news you need to start your day, and just one fifteen minute podcast available on Apple, Spotify, the Bloomberg Business App, and everywhere you get your podcasts.
Good morning, I'm Rishad Salama and I'm Brian Curtiz. One of the stories we're following today.
All right, well, we're having a look now at Apple. Apple planning a deeper push into retail in China and India. Let's get details now from Bloomberg Joanna One who sent us this from Hong Kong.
Apple is in toox you open fifteen new stores across the APAC region through twenty twenty seven. Sources say the idea is to build Apples brand in growth markets, especially China and India. The APAC market generated about one hundred and thirty billion dollars of Apple's revenue last year. That's roughly a third of total sales. Currently, Apple has more than five hundred and twenty stores in twenty six countries,
about half of them in the United States. Yet the company gets most of its revenue from other channels, including its e commerce site. So why the added stores while they're more about building Apple's brand than actually selling goods in Hong Kong, joined Wang Bloomberg Day Brigasia Well.
Broadcom says artificial intelligence spending is helping fuel sales, but it wasn't enough to offset a broader post pandemic slow down in the industry. Let's get the story from Bloomberg's Charlie Pellett. Broadcom is one of the world's biggest chip makers. It said revenue in the fiscal third quarter will be about eight point eight five billion dollars of four point six percent from a year earlier. Though that tops the Analys estimate of eight point seven six billion, it would
represent its slowest growth in years. On the plus side, the forecast suggests that Nvidia is not the only chip maker benefiting from the AI frenzy. Broadcoms networking components helped direct traffic between computers in giant data centers, and it's a maker of custom chips for some of the biggest cloud computing providers in New York. Charlie Pellett Bloomberg Daybreak Asia.
In late trading, the stock bounced around a little bit, down two point four percent now at one point it was higher and earlier we mentioned the Apple story during the regular session, Apple gaining one point six percent.
Rish yep Blue Lulemon Athletica reporting better than anticipated profits and sales for the first quarter, projecting four year results that outpaced analyst estimates. It has been interpreted as a sign that demand for the company's price the active way. It's persisting despite emerging weakness among consumers. We've got reaction from Bloomberg's Pudam Goyle.
What I think struck out to us to be very very good was the international revenue growth, which was sixty percent, and you can attribute a lot of that to China, but remember China wasn't weak for them last year when it was for everyone else, even before reopening. So just you know, good numbers on top of good numbers here.
Put going from Bloomberg Intelligence there. Lululemon also been working down bloated inventories since last year, reporting that levels are up twenty four percent from a year ago in the first quarter. It's an improvement from the fifty percent year of a year gain reported last quarter, though it's still higher than usual. Lululemon shares last timm I checked were up thirteen percent in late trading.
Philadelphia Fedbank President Patrick Harker says the FED is close to the point where it can stop raising interest rates, and he thinks the FED can at least skip a rate hike at the June meeting. Is Harker speaking at an event with the National Association for Business Economics.
I do believe that we are close to the point where we can hold rates in place and let monetary policy do its work to bring inflation back to the target in a timely manner. Along this path, I projected we will see modest growth this year, with real GDP coming in a bit below one percent.
Harker, who votes on monetary policy this year, said inflation is way above the fed's two percent target. He emphasized that he'll assess incoming data to determine whether additional tightening is needed. One data point FED officials will be watching tomorrow is the May jobs report in the United States. Those numbers coming at eight thirty in the morning.
Wall Street time, Well, we are also looking at what's happening with investment banking and if anything's to go by looking great because Goldman Sachs is winning of a shop slowed down in its investment bank and Kate's reports.
Goldman president John Waldron says the Wall Street giant is preparing for a tougher economic environment and is taking additional action on headcount. The bank's trading business is down more than twenty five percent this quarter compared to a year ago, and Waldron describes capital markets activity as sluggish. Analysa forcas AT annual revenue at Goldman Sachs will be roughly in line with what it posted last year at forty eight
billion dollars. That is more than ten billion dollars less than what the firm notched in twenty twenty one during a frenzied period of deal making and heightened trading activity in Washington and Kate's Bloomberg Daybreak Asia.
I'm Brian Curtis along with Rashad Salamat a little bit more on coming up later on China's home sales growth. We had a little bit of a slow down in May after a rebound in the previous couple of months. Values up six point seven percent, and that gains that compares to gains twenty nine percent over the previous couple of months. And then Reuter is this reporting at Tesla ceo Elon Musk before he left met with China's Vice
Premier Ding shu Chiang. That was yesterday in Beijing, and it marked the first time that Ding was known to have had a one on one meeting with a foreign CEO. Those stories ahead, but let's take a closer look now. At World News, the Senate is debating further the debt ceiling agreement. Dan Schwartzman with more in the newsroom in New York.
Dan, that's right, Brian. Senators have been working all day to try to agree on a path forward to pass the debt ceiling agreement ahead of a June fifth deadline to averted default. The House was able to approve the bill Wednesday evening. While passage through the Senate is considered a virtual certainty, when that occurs is seemingly the question. Some of the hold upstar military spending as well as
aid to Ukraine. Republican Senator Lindsay Graham says it needs to be more funding for the military in Ukraine.
I'm not going to destroy our military in the name of raising the debt. I'm not going to be part of a political system in Washington that pulled the plug on the UK at the time they're making advances. I'm not going to be the savior of Putin.
Meanwhile, Independent Vermont's Senator Bernie Sanders things for spending too much.
We're talking about, over a two year period, a fifty six billion dollar increase in military spending at a time when we spend more than the next ten nations. Come on.
Senator Marco Rubio is calling on the Department of Justice to investigate whether TikTok Ceo shoe Ze Chu made false statements to Congress. The top Republican on the Senate Intelligence committees, using a report from Forbes that claimed the social media apps stored users financial information on servers in China that were accessible to employees. Shoe had testified under oath before a House panel that he has seen no evidence that
China has the ability to access TikTok user data. Cho claims that US data is stored in Virginia and in Singapore. Rubio has urged Attorney General Merrick Garland to investigate Chu and his claims. Warries asked the relationship between the US and China were on display at a defense conference in
Singapore as participants expressed nervousness regarding Taiwan. China, also rebuffing attempts by the US to set up a meeting between Defense Secretary Lloyd Austin and his Chinese counterpart, Lee Shang Fu, has also worried those in attendance. Ever since an alleged Chinese by balloon floated over the US and was later shot down by a fighter jet, relationships between the two
powers have been at a low. President Biden, speaking at the US Air Force Academy commencement, says the country is not looking at conflicts with China.
The United States does not seek conflict or confrontation with China. China and the United States should be able to work together where we can solve some global challenges like climate.
But we are.
Prepared for bigous competition. We will stand stand up for our interest, for our friends, and for our values.
That was President Biden at the US Air Force Academy commencement. Global News twenty four hours a day, powered by more than twenty seven hundred journalists and analysts in more than one hundred and twenty countries. I'm Dan Schwartzman, and this is Bloomberg.
I'm Brian Curtis with Rashad So. I'm not Aerin gibbs Is with US. She's senior partner and CIO of Main Street Asset Management. Aaron, it looks like the debt ceiling and spending negotiations we'll be passing. We'll get through, and that's at the same time that the FED will pause. Is that enough to juice up these markets further or is that more or less priced in?
I think that's very much priced in. I think right now are the real concern for the most of the markets is the FED rate hike and what's going to come in the next two weeks.
All right, Well, you know, you look at that, where would you think interest rates are going to be in about six months or thereabouts? Because if they are low, would that be an admission that actually the Fed got it wrong?
Yeah? Absolutely. I think if we see any cuts within twenty twenty three, I think that is an indication that the Fed, you know, if they're reversing it just within six months of the last hike, I think that's definitely an indication that, you know, they're having to pull back, maybe they've overtightened. And so I think right now, I think we might still see another two hikes towards the end of the year. I'm in more of that camp that we might see a pause, but maybe not a
cut this year. It might be we might have to wait until twenty twenty four to really see that reversal of these recent hikes.
And what are your thoughts about whether or not we get a recession and whether or not that's enough to get the Fed to start cutting maybe towards the end of the year.
I think that's still very much a risk, whether we're looking through indications through the bond markets or through just what corporate profits are doing. That's still out there. You know.
Obviously the opposing side is that we just have such a strong jobs report and we're still dealing with very high inflation, and so how quickly we could transform into actually growth being into negative and having two quarters of negative negative growth just within this year seems less likely given sort of the types of strengths that we're seeing,
particular in the labor market. I think again, that might be something that we might see maybe you know, the beginning of it, maybe in the fourth quarter this year and potentially you know, into twenty twenty four.
Erin I mean, we probably had the most aggressive manager policy tighting in recent history take place globally. Why is it that in the US we're not really seeing the effects of it that much?
Yes, there is. I mean, I think we're just starting to see some of the effects, and we're you know, we're starting to see some big drops both in money
supply and inflation. You know, we've known that there's always been sort of a nine to twelve month lag and this this takes a while, and but it I think ultimately it's because the FED is fighting a lot of different you know, sort of opposing waves of posing flows and part of that is federal spending, particularly in the US, and so trying to counteract all of that money supply that is going into the economy through tightening is just you know, fighting a rather you know, difficult headwind.
I want to ask you kind of a complicated question having to do with bubbles. First, do you think there's a bubble in AI related stocks? Okay, but that's one sort of bucket. The other bucket is, well, you don't
think there's a bubble in AI. It's very real and it's going to be very important, but maybe the stocks have run up or do you think the market is actually looking at this quite rationally and that some of these numbers, like even a Broadcom trading you know, with pe of nineteen or twenty, it's not that expensive.
You know, so there are a few stocks where it doesn't really look that terribly expensive. Just like you mentioned Broadcom in video that's trading forty times earning. That's actually you know, within its realm of averages. You know, prior to now that we have this sort of almost doubling of profits expectations and the forward forward pe get you know, went from like a seventy to forty times, so that it starts looking cheap when you double your profit expectations.
So I think there are companies where certainly the outlook has so much improved that they may not be necessarily bubble worth, but certainly expensive. So you know, are they more at risk if we really hit a recession. Absolutely? Is there really that possibility of growth in the future. Absolutely, it's just you know, whether that's going to happen, if they're going to have that downturn or a pullback, or for this type of momentum is really going to be
able to continue. And so I think, you know, it's really important for investors to be you know, selective about which companies within this space, companies that don't have a history of disappointing and you know, picking your points of entry points because there obviously has been a big run up and you might want to wait for some cooling off, maybe some disappointing news with these high data types.
Of stocks erin. I mean, if you mentioned value there, well, China and Hong Kong particularly looking very cheap. Are you looking not right now?
I think given the overall expectations, you know, we've just seen some really disappointing numbers. You know, obviously within manufacturing and the economic growth. I think there's just so much risk overall across the board. You know, we're still thirty percent cash for a lot of our clients. I think not just looking at you do US risk and European risk. But though it's a good value, you know, you never wanted to sort of buy that falling knife just yet.
Well, we've had some markets really gained so far this year in Asia, markets like Japan and also in Taiwan. Those are the two main leaders. Are those interesting at all? Are you pretty much playing it from a domestic perspective at the moment.
No, certainly Japan it does look very interesting, and so I think it's more sort of the emerging markets, and you know, sort of like with less transparency. I'm a little more hesitant, but absolutely there are definitely good values out there outside of the US.
This is Bloomberg Daybreak Asia, your morning brief on the stories making news from Hong Kong to Singapore and Wall Street.
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