Good morning.
I'm Brian Curtis and I'm Doug Krisner. Here are the stories we're following today.
Well tomorrow, we'll see if November's employment report in the United States shows more evidence of a cooling labor market. We'll get the numbers around eight thirty in the morning. Wall Street Time, Bloomberg's Michael McKee, how's a preview.
We should be seeing signs of a slowing economy in the labor market, but economists say not just yet. The consensus forecast is November saw the pace of hiring pick up while unemployment was unchanged. About thirty thousand jobs won't be new, They will just reflect the return of auto workers to pay rolls after the UAW strike, But hiring in healthcare, leisure and hospitality, and government should keep healthy numbers.
Beyond manufacturing, markets are pricing a lower than anticipated number, however, so strength could lead to higher rates as investors worry the FED may not yet be done with rate hikes.
Michael McKee, Bloomberg Radio.
We go next to Teszla's Dojo supercomputer pro. Now the head of the project, ganesh Venta Katraman, has left the company. The Dojo system if you don't know as a supercomputer made to train machine learning models behind Tesla's self driving systems. Here's Bloomberg's Mark German.
They have put a new person in charge named Peter Bannon. He was a former mid double chip executive at Apple. He's now leading the program. And obviously when the head of the program leaves, that means there is some sort of strategy rethink going on, and it is a bit of a blow to the effort. So this is extraordinarily significant news, both within Tesla as well as in the modern processor and AI community.
That is Bloomberg's Mark German. There By the way, Tesla's CEO Elon Musk was saying the company is planning to invest more than a billion dollars on Project Dojo by the end of twenty twenty four. Shares in Tesla today brian up one point three percent in New York Training.
Well, let's take a closer look, doug at Broadcom's earnings. This stock in after hours had been down, but it's back to essentially unchanged.
Here.
Broadcomposted it's slow most sales growth since twenty twenty, as the chip maker tried to pull out of an industry wide slump.
Let's get the story from Bloomberg's Charlie Pillett.
Broadcom just completed the acquisition of VMware for more than sixty billion dollars. Revenue grew four percent to nine point three billion dollars in the fiscal fourth quarter. Broadcom also predicted that its twenty twenty four revenue would be at least fifty billion dollars including VMware, a number that appears to be below the two companies combined sales estimates. Broadcom has suffered accelerating growth brought on by sluggish demand for
computers and smartphones in New York. Charlie Pellett Bloomberg Radio.
The US in Mexico will be beating up screening of foreign investments because of concerns over China. The story from Bloomberg's and Kates.
The Biden administration of Mexico agreed to boost cooperation with a rush of Chinese investors into the southern US neighbor, stoking concerns about national security risks in the supply chain, without mentioning China by name. The Chargery Apartments, as a group formed with Mexico, will conduct investment reviews, especially in
certain technologies critical infrastructure and sensitive data. Treasury Secretary Janet Yellen says working together on financial and regulatory policy can further increase trade and investment and the benefits they bring. In Washington and Kate's Bloomberg Radio.
US Trade Representative Catherine Tie says the US and Taiwan are looking to build on a deal reached earlier this year. The deal covers issues like regulatory practices, customs, and corruption, but it excludes anything about terraff reductions traditionally called market access. These are thorny issues that are difficult to resolve given tensions between the US and China. Tai spoke about negotiations with Taiwan earlier with Bloomberg.
We are negotiating another set of disciplines right as we speak. We've been making excellent progress, and we will continue to look at building out those agreements to have an arrangement with the Taiwan economy that is fit for the times, and the times are very challenging.
Tai did not rule out a free trade agreement with Taiwan, but she said that the US is not seeking what she called very comprehensive, maximally liberalizing deals with any country at the moment.
Chinese President Chichinping told European Union leaders that he wants these two sides to be key trading partners capable of building trust or when it comes to supply chains. President She met with European Commissioned President Urzula vonder Land along with European Council President Charles Michel. Vonder Land said she had a good and candidate exchange with Chichin Ping.
China is the EU's most important trading partner, but there are clear imbalances and differences that we must address. We both recognize the importance of de risking and strengthening the resilience of our economies, and that is why the European Union is working to ensure the security of supplied chains, critical infrastructure and technological and industrial basis.
That is EC President or as A Lavanderley and by the way, state media in China said that President She and those EU leaders also discussed the Belton Road initiative. During their meeting, She teleg officials his nation was willing to connect his initiative with the EU's Global Gateway. Now. The European program is an infrastructure plan. It's aimed at competing with China in the areas of strategic regionality.
Brian, it's time for global news. Let's get right over to Ed Baxter in the nine to sixty news room in San Francisco.
Ed, all right, Brian, thank you. Israeli Prime Minister Benjamin Nette, Yahoo is threatened to devastate by Root of Hezbollah opens up a second front. That Yahoo made the warning during a visit to the IDF and Northern Command. He says a second front would lead to Beyroot and also southern Lebanont. Bloomberg's Nick Wadams says, complete devastation is the threat.
There is a strategy here and that is essentially deterrence. The last thing Israel wants right now is for the shelling and back and forth that has happened on the border of Lebanon to turn into a wire conflict that would divert more of its resources away from its campaign in Gaza.
And Bloomberg's Anthony Squasine says the campaign in Gaza itself is going to take months. Five hundred more tunnels to destroy.
In total, they believe there are five hundred kilometers, which is about three hundred and eleven miles of tunnels. I don't know what that translates to but they feel there are still many tunnels that they have to find.
And says there's no timeline actually spelled out. Meanwhile, the presidents of Harvard University of Pennsylvania are walking back comments indicating hesitancy and calling for genocide of Jews, violating school policy. Penn president Liz McGill says she was focused in the moment on our school's policy to not punish speech alone.
I want to be clear, a call for genocide of Jewish people is threatening deeply. It is intentionally meant to terrify a people who have been subjected to programs and hatred for centuries and were the victims of mass genocide in the Holocaust.
Harvard's Claudine Gay meanwhile released a statement saying genocide threats have no place at Harvard. My deministration's top Envoid to Asia says North Korea has spurned all outreach. Kurt Campbell says difficult need even getting then address a letters sent to.
Them AID for Ukraine.
The debate on deadline, NSC spokesman John Kirby says time is running out.
We've got a few more weeks here and then we're out of slit when it comes to help in Ukraine with this kind of security as systems that we've been able to provide, and that's just that that should be unacceptable to everybody.
That Senator Lindsay Graham says, the southern border has to be addressed.
Secure the border before we get attacked, Secure the border before the next terrorist attack happens.
Yeah. Meanwhile, LKS Women for the White House Koreane Jean Pierre says, Congress does have the recess coming up, and this is embarrassing.
It's stunning that we have gotten to this point and that Republicans in Congress willing to give Putin a gift, the greatest gift that Putin could hope for. That's what we're seeing, and so they are playing chicken with our national security.
Yeah.
Meanwhile, President Putin has a pledge in closer ties with Iran after his golf visit. Russia and Iran have been building a very close military tie. Global News twenty four hours a day and whenever you want it with Bloomberg News now in San Francisco. I'm at Baxter and this is Bloomberg.
All right, Let's bring in Ian King.
Bloomberg News US Semiconductor Reporter for a closer look at Broadcom's earnings and how that feeds into some of the euphoria that we saw on artificial intelligence.
Ian, thanks very much so.
The broadcon earning earnings for a little bit lackluster, revenue only up four percent, and the forecast, as we heard there from Charlie, and as you pointed out in your story, the forecast for sales only fifty billion, which isn't all that impressive given the addition of VMware, But the CEO did sound optimistic about AI.
So it's kind of steady as she goes, I guess.
And there are a lot of moving parts here, as you would expect from a company that just acquired another one for the size of VMware. So there were some explanations on the core which I think help and you sort of stock come back a little bit in after I was trading. The forecast looked light, and how the company explained this was like, look, we're going to get about twelve billion dollars of revenue buy ating VMware in our next financial year. ESTIMATESIC calls for about fourteen, so
where's a two billion going? And what he said was, look, we're going to spin off a couple of units that we don't think fit with our overall portfolio. Those two units account for about two billion of sales, so we've not included them in our forecast, and I think that helped people get a little bit more comfortable with what
was going on overall. But yeah, obviously there was a lot of explaining that needed to be done about AI and some of the other areas that they were that they're working on as well.
So Ian connect the dots for me. So you have Broadcom the acquisition of VMware, How does that all fit with this theme of artificial intelligence?
VMware does not. That's you know what. You know, the AI was definitely a focus on the call, and there was definitely some excitement. What they said was, look, you know our networking gear. These are the switch chips which control the flow of data between computers in the data center. They're doing great. You know, all of those powerful projections such as the one that we saw yesterday from am D,
they're true. We're seeing the same thing. You know, that particular portion has gone from like fifteen percent has gone as high as fifteen percent of our semiconductor revenue, and it's going to go considerably higher than that, So yes, you know, they take full of the boxes on that the side of the fence, But at the same time, that's only a certain percentage and has a limited impact on what's going on overall, which includes enterprise software, which
includes virtualization software from VMware, It includes networking chips that go into the iPhone and you name it, and storage and everything else that Broadcom does as well. So yes, it's great, Yes, fantastic. We should be excited about AI, but bear in mind it's only a part of the story.
In a sense.
The additional uh you know, acquisition of VMware, adding more software in the picture would sort of seem to smooth out the earnings path of the company, wouldn't it, Because semiconductors are volatile, quite cyclical in nature, and really famous for going up and down a lot, whereas software would be steadier.
Wouldn't it.
Well, this is this is back to you know, Hocktan's core thesis, and you're right to focus on that idea is that the semiconductor industry is not cyclical anymore. It's stable, and we should start acting like that. What's happened over the last couple of years has been sort of an anomaly, but yes, software also fix that. He said, a lot of these companies are out there chasing growth like idiots. Basically he didn't say it, but he kind of implies it.
And when he talks about these other companies, he uses the word sensible and you know, if you stop doing that and you just concentrate on what you're good at, which he's going to do with VMware, and he says he's done with previous acquisition. Yeah, you don't see this huge growth spurt, but at the same time, you have fabulous level of cash generation, you have a fabulous level of profitability. We're going to give you investors a lot of returns and that's a sensible way. That's the way
that these companies should be run. You know, once they wake up and smaller conflicts and stop chasing these crazy you know, these crazy things that they're never going to get to. That's his thesis, and that's what he sees is the is how the industry is. So yes, there are all these balancing factors, but you know, he's sticking to this view of the world is only growing, you know, a small increment on top of GDP minus what's going on with AI right now, because that's a new new thing.
Oh well, speaking of AI yesterday, Ian, of course, we were talking about the announcement from Advanced micro Devices the new MI I three hundred accelerator chip. Kind of a delayed reaction when you look at the stock today, AMD shares were up ten percent. Is this this new chip capable of competing with the one from Nvidio when it comes to running AI software?
AMD said it was, and you know, I mean it's got two right that. You know. They Lisa through the CEO, and we had a couple of conversations and say yesterday, She's like, look, it's important that we can compete with them on training, which is a big market right now. But when it comes to actually implementing this software and running it, we've got to be good at that, and we are going to be better at that than they
are because that's a bigger market. And it took a while for people to sort of get their head around that, but I think they did. I think the big headline from yesterday was she talked about the market as being with four hundred billion dollars of total revenue for the X alertis bear in mind the total chip industry was only worth five hundred and ninety billion last year, so that's a massive amount of growth that she's proecting. And she said, she looked to me said, Ian, you know me.
You know I don't get carried away with these things. I'm telling you this. I believe it all right.
Well, thanks very much, Ian, We love having you on the show. Ian King, Bloomberg News US Semiconductor Reporter. This is Bloomberg Daybreak Asia. Your morning brief on this story is making news from Hong Kong to Singapore and Wall Street.
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I'm Brian Curtis.
And I'm Doug Chrisner. Join us again tomorrow for all the news you need to start your day, right here on Bloomberg day Break Asia