Bloomberg Daybreak: January 27, 2023

China ship restrictions. A guilty verdict for the man who killed eight people along the New York Punk Path, plus cities brace for the video release of Memphis officers in a deadly beating. I'm Michael bar More Ahead, I'm John Stash Aaron sports thrilling overtime win for the Knicks in Boston, the Nets lost to Detroit, the Devil's lost in Nashville.

That's all s traded ahead on Bloomberg day Break on Bloomberg eleven three on New York, Bloomberg one, Washington d C, Bloomberg one oh six one, Boston, Bloomberg nine sixties and Francisco Sirius x M one nine team and around the world on Bloomberg Radio dot Com and via the Bloomberg Business Good morning. I'm Nathan Hagar and I'm Karin Moscow. Here are the stories we're following today. Let's begin with an earnings disappointment from Intel. The shares are down more

than nine percent after the downbeat results. Let's get the latest live from Bloomberg's Steve Rappaport. Good morning, Steve, Good morning, Nathan, and Karen. Intel's out with a forecast that's one of the worst in the chip maker's history, predicting a gross margin of thirty seven for this quarter. Despite that outlook, CEO Pat Gelsinger says the company remains focused on the big picture. I want to remind everyone that we are

on a multi year journey. We remain focused on the things that are within our control as we navigate short term headwinds while let's secut into our long term strategy. Gelsinger adding he thinks momentum will stabilize this year. Live from New York, I'm Steve Rappaport, Bloomberg Daybreak. All right, Steve, thank you all. Disappointing earnings are also taking a toll on Hasbro this morning. Shares at the Toy are down more than five percent, and Bloomberg's Charlie Pellett reports Hasbro

is cutting fiferent of its workforce. That's eleven thousand jobs, and it comes after a disappointing holiday shopping season. The company also projected it will fall short of fourth quarter adjusted profit estimates. The company said while it's digital gaming business, including Dungeons and Dragons and Magic the Gathering, perform well, it's traditional toy business faltered. Changes to its business plan are expected to result in charges of about three hundred

million dollars. As part of the changes, president Eric Niman is leaving the company in New York. Charlie Pellett Bloomberg day Break. All right, Charlie, thank you. Another corporate story this morning centers on bed Bath and Beyond. The struggling retailer is moving closer to bankruptcy. We get more from Bloomberg's Doug Prisner. In a filing on Thursday, the retailer said it received a default notice from JP Morgan Chase after breaching the terms of its credit line, but Bedad

and Beyond warned it didn't have enough funds. The company listed around two point one billion dollars of obligations it owed as of November. One analyst said the likelihood of a bankruptcy filing within the next thirty days is relatively high. Earlier, Bloomberg reported the company has begun speaking with potential lenders on funding the firm during bankruptcy proceedings in New York. I'm Doug Prisner, Bloomberg daybreak. All right, thank you, While

turning to the markets. Now, US futures are lower as we close out the trading week. At the same time, the SNP five hundred is coming off its highest close since early December. Patrick Calfrey is senior equity strategistic Credit Sweez. I think the equity picture right here actually looks pretty good.

I mean, we've seen the market rally almost eleven since the end of September, or up four and a half percent year to date, and really that's in response to the fact that we are having interest rates come in. Credit spreads are narrowing in, the vix is falling. That is a good backdrop for risk. Credit Sue Senior equity strategist Patrick Paul Frey is also watching the Fed. He sees two more rate hikes coming from the Central Bank followed by a pause. Like he inflation report for the

FED comes out this morning. Karen. December's personal consumption expenditure prices are forecast to be unchanged while the core rate rises three tenths. We get more on the upcoming inflation report from Bloomberg Economics correspondent Michael McKee The data should

continue a string of good news on inflation. Falling energy prices and holiday discounts to clear merchandise will put downward pressure on the Fed's favorite price index, and the year over year change in both headline PC and core are likely to come in softer than Fed officials had forecast. The income and spending numbers may not be as cheerful, with incomes barely rising and spending set to drop. Retail

sales were down in December. The report will tell us whether that meant more was spent on services or whether consumers simply pulled back. Michael mckeey, Bloomberg Daybreak. All right, Mike, thank you all. Turning to Washington now, there may be

some movement in the fight over the debts sailing. Bloomberg News has learned House Republicans are considering a short term increase until September thirty that would allow more time to negotiate with Democrats, though it's not clear whether they're open to it. Republican Congressman Dusty Johnson of South Dakota says, this issue will get resolved. What we're getting is a credit card bill, and it is a whop, and I get it. We have to pay the credit card bill.

We absolutely should not default on our death. But when a company gets that credit card bill show up in the mail, it is exactly the right time for them to sit down and have a family conversation about how do they get the spending under control. Congressman Dusty Johnson spoke with Our Washington corresponded Joe Matthew on Bloomberg sound On. Catch the show weekdays at five pm Eastern on Bloomberg

Radio or subscribe to the Bloomberg sound On podcast. Turning to geopolitics, Karen, the US is limiting China's access to advanced semiconductor equipment, and now Japan and the Netherlands are poised to do the same. Bloomberg Daybreak Asia anchor Brian Curtis has more from Hong Kong. Sources say the three countries are on the verge of forging a powerful alliance. It will undercut China's ambitions to build its own ship capabilities, Bloomberg saidwin Chan says it would be a black eye

for China. It's with the significant victory for the Biden administration, It's something that the US could not have done alone contained China's chip ambitions. If key allies, such as an evalence in Japan refused to participate, the talks could conclude as soon as today. In Hong Kong, Bran Curtis Bloomberg, Day bright, It's thirty six degrees in Central Park. It's gonna be partly sunny and cool today with highs in the low forties. Will get back down to the low

thirties tonight under Apartment Cloudy sky Time. How to look at some of the other stories making news in New York and around the world. Good morning, Michael Vare, Good morning Nathan. New York City and Long with other major cities across the nation, are bracing for tonight's video release of a confrontation with Memphis police officers accused in the beating death of a twenty nine year old black motorists

earlier this month. The five Fiard officers have been charged with murder and other crimes in the killing of Tyree Nichols. All of the officers are black. Last night, a vigil was held for Nichols. His mother, rove On Wells, told the crowd to be peaceful when the video is released. I don't want us burning up our cities, turning up the streets, because that's not what my son stood for. This officials say the video will show the entire faithful encounter,

from beginning to end. A New York lawyer has been sentenced from the George Floyd protests. In a judge ordered Collinford Maddis to spend a year and a day in prison and pay just over thirty thou dollars to the NYPD for the fire bombing of a police car. Maddis and Rouge Raman were arrested as demonstrations and protests rage over the killing of Floyd at the hands of police in Minneapolis. Rahman was sentenced in November to fifteen months

in prison. And Islamic extremists who killed eight people a speeding truck in the seen rampage on the West Side Highway bike path has been convicted of federal charges and could face the death penalty. Jurors in the Manhattan courtroom found Cipolo Psipop guilty. The jury will return to court no earlier than February six to decide whether Psipop should be executed. New York Mayor Eric Adams vowed in his State of the City addressed to increase the number of

police and hold drivers accountable. Adams also says he wants to get repeat offenders off the streets. He reflected on his first year in office, we hit the ground running and we got stuff done. One year later, our cities on the pathway to being safer. Our economy is recovering, and our stores, subways in hotels a full. Mayor Adams says the state of the city is strong. Global news twenty four hours a day on air and on Bloomberg Quicktake, powered by more than journal list and analyist more than

a hundred twenty countries. I'm Michael Barr and this is Bloomberg. Thanks Michael, timing out for the Bloomberg Sports update, brought to you by Tri State Auty. For that, we bring in John Session. Thanks Nathan. The Knicks best win of the season in Boston, Celtics at the NBA's best record and they jumped in front by fifteen. Nicks blew a fourth quarterly that's happened a lot, but they rallied in overtime,

big three point by r J. Barrett. Julius Randall's two free throws put him a head Nicks one one one seventeen. Randalls scored thirty seven. Jalen Brunson at twenty nine. Nicks continue to be better on the road than at home. It's their fifteenth road win. Only the Celtics have more. The Nets began a stretch of home games, losing to Detroit one thirty one twenty two. They clearly missed Kevin Durant.

Nets have lost six of their last eight. Devils lost at Nashville six four, in the third time this season they've allowed that many goals. Novak Djokovic playing his Australian Open semifinal match right now, and he leads American Tommy Paul seven five three love earlier a semifinal win in four sets, force stefinal sits pass. Two NFL head coaches

fired during the season, he got new jobs. Frank Reich lost his job in Indianapolis but hired by Carolina, and Nathaniel Hackett fired in Denver, and he's now the offensive coordinator of the Jets Conference Championship. Sunday begins in the NFC in Philadelphia. Eagles forty nine is the a f C game, a rematch from last year when Joe Burrow led Cincinnati to a comeback overtime win at Kansas City. Can Burrow and the Bengals do it again. We've been

in these spots, um, they have the experience. We know a team we're playing team has been in this this game the last five seasons and there they've all been in that stadium. So to me, they're still a team to beat, and then we're coming for him, but we know it's gonna be tough. Burrow in the last two years has won three playoff road games. Longtime college basketball

analyst Billy Packer has died. He was eighty two. John stash Award Bloomberg Sports Live from coast to coast from New York to Send Francisco, Boston to Washington, d C. Nationwide on Sirius Examp, the Bloomberg Business app, and Bloomberg dot Com. This is Bloomberg Daybreak. Good morning, I'm Nathan Hagar. At the end of a big week for big tech earnings. The focus this morning is on Intel and the disappointment

from the chip maker. The shares are down nine percent after one of the gloomiest quarterly forecasts in Intel's history. Bloomberg Quick Take correspondent Alex Webb is back with us this morning for more on the earnings and the overall chips story. Alex, good morning. How big a surprise was it that Intel came out with this forecast? It was something like at least two and a half billion dollars lower than the average estament. It certainly was a bit

of a sideswipe. The market was not anticipating good news, but the scope of the miss was quite considerable. The consensus had been for first quarter sales of fourteen billion dollars. Intel's projecting it's going to be between ten and a half and eleven and a half. That would make it, you know, the lowest in some twenty years. Also me ten years or so, so it's um a bit a

sizeable blow. Hope, is then that some analyst commentary this morning that they're frontloading a lot of the bad news and just saying we're going to take a painful quarter and with the hope that they rebound a bit in the second half. Is this just an Intel story or does this say something more about the overall outlook for the tech sector. I mean, we've been talking for quite some time about a lot of these magacap names are in retrenchment mode after the pandemic and trying to cut cast. Uh,

there's clearly our broader issues in the tech sector. Of course, you know, there is a lot of the tech sector encompasses a lot of very different businesses. You know, of an online advertising is not the same as chipmaking, but we have seen that the personal computing business, and that's what's really hurting Intel right now that it is clearly

not going to e really well. So that obviously has implications for Dell, for parts of Apple's business in others besides, but also some of the chipmaking peers like A m D and Nvidia, who don't how quite the problems that Intel might do, but that they're likely to see some some similar effects in the most recent quarters. Well, what is the issue, Alex for Intel that's holding it back? Why is it that we're seeing this sort of slow

down in PC sales in particular that's affecting Intel. A lot of spending got front loaded during the pandemic, so it's a combination of two factors, you know, as people had to work from home or they needed a better computing setup, so people bought laptops. Companies bought laptops and clearly some desktops as well. But there was also a

little bit more disposable income floating around. Some people, you know, had more money during the pandemic, not everybody by any stretch of the imagination, and that meant that they're able to buy new gear now as personal finances become a little bit more straightened. Uh and frankly, little people already have these new laptops. There isn't as much demand, and so there's quite a lot of inventory sitting around and warehouses from from personal computing companies. So that's really pounding

what's already not a terribly happy ship at Intel. Who that has been has been hemorrhaging market share to t SMC, the big contract manufacturer of semi conductors, and is in the middle of a huge strategic pivot to try to catch up. And even before these earnings came out, Alex you know, the CEO of Intel, Pad Gelsinger, has been talking for quite some time about a multi year turnaround

plan that he's trying to implement an Intel. When you have an outlook like this, does that raise some doubts for investors about whether that multi year plan is working. You know, he was reminding people on the call uh that it is a multi year plan asking for more patients. It clearly is, particularly in a space like semi conductors, where the innovation cycles you know, over quite a long

time frame. You know, between each new generation of chips, the time it takes to get new new fabs, that's the sort of factories essentially for semi conductors, the time it takes to get them online is considerable. What Intel is doing is trying to pivot towards contract manufacturing. So the contract manufacturing is you know, Apple makes Apple designs chips for instance, that go into its iPhones. It does not make them. It contracts that out to t SMC

in Taiwan. Intel is trying to get into that business so that it can try and offset the change the declines at seeing elsewhere. That is a multi year project and a huge significant change that can't happen overnight. In our last minute here, Alex, there of course, there was a lot of investment expected from the chips and Science Act that was passed in Washington last year. Can Intel account support from that, Yes, And we're seeing of plans

to open new facilities, for example in Columbus, Ohio. UM it's fifty billion of spending that is coming from the government. There is a huge bun fight right now between the various chipmakers and not just American chipmakers to get a piece of that. It's going to go into UH subsidizing new manufacturing facilities, to training UM new engineers, to getting into some of the underlying technolog It is partly a

play to reduce dependence on Taiwan. And when we think about reduce dependance on Taiwan, a lot of that's TSMC. So it is in the long stone something that could and should benefit into. This is Bloomberg Daybreak Today, your morning brief on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed at six am Eastern each morning, on Apple, Spotify,

and anywhere else you get your podcasts. You can also listen live each morning starting at five am Wall Street time on Bloomberg eleven three oh in New York, Bloomberg in Washington, Bloomberg one oh six one in Boston and Bloomberg nine sixty in San Francisco. Our flagship New York station is also available on your Amazon Alexa devices. Just

say Alexa play Bloomberg eleven thirty plus. Listen coast to coast on the Bloomberg Business app, Serius XM Channel one nineteen, the I Heart Radio app, and on Bloomberg dot com. I'm Nathan Hager and I'm Karen Moscow. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak