Meta Sales Top Estimates and First Republic Tumbles

This is Bloomberg Daybreak Asia for this Thursday, April twenty seventh in Hong Kong, Wednesday April twenty sixth in New York and coming up today.

Shares in First Republic Bank plunge on word Advisors have lined up potential buyers of new stock as part of a rescue plan.

Shares in Meta Platforms jump after the company reports sales that top analyst estimates.

And Microsoft sixty nine billion dollar takeover of Activision. Blizzard is blocked by the UK government.

McCarthy's debt ceiling Bell Biden says any North Korea nuclear attack will end Kim's regime. Disney sues DeSantis. I'm at Baxter with Global News.

That's all straight ahead on Bloomberg Daybreak Asia, The business news you need to start your day in just one fifteen minute podcast available on Apple, Spotify, the Bloomberg Business App, and everywhere you get your podcasts.

I'm Brian Curtis and I'm Doug Krisner. Here are the stories we're following today. Will begin with Meta Platforms after the bell, the company reported first quarter sales jumping to twenty eight point six billion dollars. The street was looking for something about a billion dollars less than that, so this represents a return to growth after three straight quarters

The foundational layer is AI. They are harnessing a lot of that data. They are training their own equivalent of large language models. We don't know how they'll be monetizing it. It's not in the form of cloud infrastructure, which is how Google and Microsoft are doing it. So we don't know what that next application will be where they'll be able to monetize it beyond the ad pricing, and you know the ad business they already have, which is firing

Now, Bloomberg's Mandeep sing there Meta platforms up as much as twelve percent in the late US session, and if you go back from the first part of this year, meta shares are up about seventy four percent. Let's take a look at First Republic Bank. The stock was down today quite a bit. This is after CNBC reported a rescue plan is in the works for the struggling lender. We have more from Bloombergs and Cates.

Advisors will try to persuade big US banks who've already built out. First Republic wants to purchase its bonds at above market rates for a loss of a few billion dollars, and they have already aligned up possible purchasers. Analystit Tdcounts say that while regulators don't act based on stock price, a steep decline could raise questions about the ability of a bank to raise fresh capital, and they believe there will have to be a broader restructuring of First Republic.

Now separately, we are told US bank regulators are weighing the prospects of downgrading their private assessment of First Republic. The move may limit the troubled firm's access to those lending facilities at the Federal Reserve well. As I mentioned earlier, tomorrow, we'll get the latest report card for the American economy. GDP numbers for Q one out at eight thirty am Wall Street time. We have a preview from Bloomberg's Michael McKee.

The GDP data are likely to present a picture of a US economy that started the year strong before losing momentum. The strength of the report is expected to be consumer spending, particularly in January, although at least one bank suggests the government's recent statistical adjustments to spending may cut growth concent considerably. Inventory should be a drag, falling back after a big

Well, it could be game over from Microsoft and its hopes of buying Activision Blizzard. Let's get the story from Bloomberg's to Nise Pellegrini.

The UK's antitrust watch dog is blocking the planned sixty nine billion dollar takeover. The Competition and Markets Authority says its concerns can't be resolved by any proposed remedies. In the US, the Federal Trade Commission has already sued to block the deal, and the European Commission is supposed to rule by May twenty second. The Microsoft takeover of Activision was being builled as the biggest ever deal pending in the gaming industry. Microsoft and Activision both say they do

The Biden administration is urging China to improve its protections for intellectual property. The US has the pace of Beijing's reform simply slowed last year. Now, Washington has been closely monitoring China's progress in the implementation of commitments made in the recent deal. The agreement was signed after a two year tariff war launched under the Trump administration. In an annual review, the Office of the US Trade rep says China should provide a level playing field for IP protection

Well, you look at meta higher revenue at a time when you're reducing costs, So that's very good recipe for gains, and that's why we see such big gains after hours. But I think it's really not a good sign for the bulls dug to see the broader benchmarks not being able to rally today after such strong earnings from companies like Microsoft and alphabet and so it may bode for a little bit more selling in the market. We don't know.

And I noted earlier that THESC China Index was able to snap a six day losing streak that may be significant. The MSCI China Index up about that nine tenths of one percent, and then stateside we had the Nasdaq Golden Dragon China Index up about one percent. But I was struck by this survey published on Wednesday, data shared exclusively with Bloomberg. More than half of Chinese travelers say they haven't plans to go abroad this year during the Golden Week holiday.

Yeah, that'll be a big till, won't it. The Golden Week holiday is one thing. And then also what we might get from the Pollit Bureau, they're still expected to meet this week to look at economic priority. Now, we had interpreted that in one of our main stories at Bloomberg that this could mean less stimulus coming. That's what we're hearing from different economists around the region. But you know,

All right, let's get global news next. We have House Speaker Kevin McCarthy getting his debt bill passed ed. Baxter has the latest from the Bloomberg newsroom in San Francisco.

Eddie, Yeah, boy, the major victory for him, Doug, he just snuck it through his party barely call list behind him Bloomberg's Emily Wilkins.

Here.

They spend all day to day twisting arms, getting folks on board. Certainly those handful of changes that they put into place at two in the morning were helpful. They addressed concerns that iwins had about corn and biofuels. They addressed some some concerns that those across the conference had on when work requirements would start.

Yeah. A Republican Congressman Josh Holly, though, repeated, it's all about getting Joe Biden to the table. We all know how this is going to be resolved in the end. If it is resolved, and that is, the president is going to have to He's going to have to negotiate.

Now.

President Biden has said today again he'd be glad to sit down with McCarthy to discuss raising the debt ceiling. If McCarthy took the fault off the table so it is passed, it will have a tough time in the Senate. Democrat Richard Blumenthal.

There may be a way to combine the two, but right now, let's do the debt ceiling and have an understanding that there can be discussions and conversations and even negotiation about what the any limit should be going forward in the next budget.

So let's see if it even gets brought up in the Senate. That will be the next step. The meetings between presidents of South Korea and the United States come with a promise of increased deterrence against nuclear threats. President Joe Biden today in a meeting with South Korean President Eun Suk Yule, mentioned North Korea and Kim John undirectly.

A nuclear attack by North Korea against the United States or its allies or partisans partners is unacceptable and will result in the end of whatever regime we're to take such.

An action, he says. The agreement signed today will have nuclear weapons deployed on will not have nuclear weapons deployed on the peninsula, but there will be visits to ports by nuclear submarines, Biden saying nuclear attack is not the only thing that this partnership will serve.

There's still a contest between autocracies and democracies, and we're the meeting democracy in the world. And it's something I know fair amount about, something I care about. I have found a willingness and offl out of our allies and trends to call it so.

At the briefing, President Ewn was asked whether the intelligence leaks in the US threatened the relationship.

Hamlana with regard to that we are communicating between our two countries and we are sharing necessary information. I believe that investigation isn't your way in the United States, and.

To that point, Bloomberg Sam Kim, who's traveling with President Ewan, says they kind of expected the intelligence gathering anyway.

There's American soldiers, about thirty thousand American soldiers station and some of them are stationed right at the center of the city. They still are, and there's a massive intelligence operations. I'm not saying they're spying in South Korea, but they need to do that in order to maintain the treaty around the peninsula.

Sam says trust very important part of the relationship, and both say that it is there. Well only it was para by more than twenty seven hundred journalist and listen over one hundred and twenty countries in San Francisco. I'm at Baxter and this is Bloomberg.

I'm Brian Curtis in Hong Kong along with Rishard Salamad, and our guest is Jin Bailu, who is portfolio manager at Trabeca Investment Partner, is joining us from our studio in Sydney. Jim Belu, Nice to have you on the program. As usual, we mentioned it's an interesting environment where you have such strong earnings from the tech companies and the major benchmarks don't rally. However, if you pick the right companies,

Well, absolutely, thank you so much for having me. Look, this is a crazy world, and you know, I would actually say this is really a market for active investors. You pick the right company that will deliver you earning and high expectations and growth, and that company is going to deliver a lot of return. You know, this is not the sort of market environment where you can just buy benchmark and hopefully generate return. There's a lot of

Well, you say you've got to be active and nimble. Well, I mean, surely you just put your money into a money market fund and you're getting a decent return fixed income wise, and you know that's one way of playing this, I guess, and having the safety.

Yeah, look absolutely, but given them an equity market manager that I certainly think the share market represents significant amount of opportunity for the right investor being nimble and finding you know, return opportunity. You know, we just talked to some of those you know, great megacabs like Microsoft, like the Google reporting phenomenal results and you know.

So far this year they've done very very well relative to.

You know the likes of banks and you know, the cyclicals that's being sort of under pressure at the moment, so it's really yeah, put your money to work, whether it's fixed income. My view is that capital growth is going to be quite significant and in the equity market, so that's a good place for the money too.

You're pretty positive. I note that in your three conviction calls you like US stocks to finish the year higher. China reopening is gathering momentum. Perhaps you can talk about that and that Australia will avoid recession. So given that positive view, let's switch to China. Is the China reopening part and parcel of that positive view for even US stocks and Australia avoiding recession.

Look absolutely.

I think you know, for Australia, China is a very important trading partner and a big part of our market cap is very much linked to the fortune of China. And you know, the will the reopening thematic is well on the way, and I do think that the progress has been very very promising. Now clearly there's you know, star stop and then there's slowing data and consumption isn't

Of the Yeah, that's that's I think that's consensus. But why why is the stock market selling off so much? You know, has been a really rough.

Month absolutely, so stock market is really grappling with you know, I think the China reopening is definitely happening, but the stock market is grappling with what's happening with the US and Europe, some of the developed markets where things are

But yes, you know, if it gets started spreading.

Into other markets, then they could put pressure or tighten the financial condition. So don't forget we are in this, you know, in this world where China is trying to loosen the financial condition, trying to get it to going again, whereas everywhere else was trying to contain or trying to tighten the financial condition. So clearly I know where the

Well, obviously a lot of money has also gone into fixed income as well, hasn't it. But I'm just looking for a recording point of view, and what are the I suppose the geographies you like in the sectors within those geographies that you like, and the ones that you absolutely do not.

Yeah, look absolutely, So you know our view is that, you know, given this we talked to this uncertain world. You know, we do think the quality growth leaders is going to do well. Companies are actually not unprofitable. Growth leaders is the quality that the company actually make, you know, make significant returns and high roes and generate growth is going to be the key return generator in this market.

Okay, you mentioned you mentioned the geopolitics is one reason why stocks have been faltering in the China sphere. Now you're saying that Australia will avoid recession, Australia is also kind of wrapped up in a lot of the geopolitics with China as well. What's the best play then for your confidence in Australia.

Look Australia economy.

We if you look at some of the data in terms of inflation the like it wasn't it didn't rise as sharply as every other markets like the China and other countries. You know, it's partly because our you know lockdown and disruption to reopening was longer than other markets, so in the way, we sort of avoided that peak of you know, inflationary pressure.

Now, our inflation is high, our.

Interest rate is still yet to be at the you know, the reasonable level, but it certainly seems like the interest rate increases is slowing down Australia and the inflation read it seems to be sort of topping out. And that is you know, encouraging because we may not have to get to the interest rate that is achieved by other

Clip.

I just want to just get one very quick one. And if suddenly we get to this announcement, let's say the Fed went twenty five basis points and okay, we're done. They just say that, why would the market react to you?

Of you, market will be very pleased, but twenty five basis point is being priced in, so market would like that. And then in the next six month we should begin to see a very strong equity market on basis of the certainty of the interest rate directions.

This is Bloomberg Daybreak Asia, your morning brief on the story is making news from Hong Kong to Singapore and Wall Street.

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Listen coast to coast on the Bloomberg Business app, Sirius XM Channel one nineteen, the iHeartRadio app, and on Bloomberg dot Com. I'm Brian Curtis.

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