This is Bloomberg day Break Weekend, our global look at the top stories in the coming week from our day Break anchors all around the world and straight ahead on the program. Tech earnings continued this week, and we'll get a preview. I'm Tom Busby in New York.
I'm Stephen carl and London, who are looking ahead to the options facing the Bank of England as an inflation in the UK remains the highest in the G seven.
I'm Deck Prisner. How close is the aviation industry in the APAC to pre pandemic levels.
I'm Gaylei Lynes in Washington, where we're looking ahead to Florida Governor Ronda Santis getting set to make a big economic speech.
That's all straight ahead on Bloomberg day Break Weekend on Bloomberg Eleve them three oh New York Bloomberg ninety nine to one, Washington, DC, Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco, DAB Digital Radio, London, Sirius XM one nineteen and around the world on Bloomberg Radio dot com and via the Bloomberg Business app.
You.
I'm Tom Busby, and we begin today's program with two of the biggest names in tech, Apple and Amazon, posting their latest earnings this coming week and joining us to talk about what to expect. Ed Ludlow, co host of Bloomberg Technology, ed, thank you for being here.
Thank you for having me. Happy weekend.
Yes it is well. Now, before we jump into Apple and Amazon, let's talk about takeaways from the other megacap tech names that have already posted earnings for last quarter. And there's a lot to digest here. So why don't I let you talk about and we can go one by one, starting with maybe meta platforms.
Yeah, I think there is a commonality between all of them that we've all been so hyped up over artificial intelligence AI, and we go into earnings hoping that we hear some big piece of breaking news about what the
big tech names doing in AI. But interestingly, the real theme of this earning season had been that the core legacy businesses for each of these big tech names have done really well, prizingly well, and that outperformance against expectations has seen the shares rise after earnings print indicate of meta alphabet Microsoft, And even though you know there's a lot of talk on the call about AI, you know that's what investors have been looking at. So Meta's a
really interesting one. It's been an interesting quarter because Meta also launched Threads right, and they stopped telling us how that was going after it reached one hundred million users. But again the messaging from Mark Zuckerberg the CEO, and Susan Lee the CFO, is we're we're playing it slow,
we're playing it safe with Threads. But Zuckerberg did say that if cloud providers, for example, want access to their generative AI technology and they're going to make money off it, it's only fair the Meta makes money off it too, So that was a really interesting U turn.
Now, speaking of cloud, Microsoft had a bit of a surprise in its earnings last week about yeah, a bit of a slump and growth in its cloud computing unit, which is a big money maker for them.
Two ways of looking at it. It was a milestone because Azure, which is the cloud unit, hit a milestone where for the first time it represented more than fifty percent of the overall share of cloud revenue. Like they make one hundred and ten billion dollars a year in collaborated revenues. Sales growth is slipping, but you know it's still when you look at the azual unit becoming increasingly
important to them. And there's an interesting parallel which we can talk about with Amazon, which is going to report next week. Because we all know Amazon has an e commerce platform, right Amazon dot Com, Amazon Prime Video, but the cash cow for them is cloud. That's why we look so closely at how all of these guys perform, because it's a competitive market between the three of them. You know, there is some life there.
And another encouraging sign we got from Intel, and that is about PC sales. They're saying things are looking up again.
Yeah.
Intel's a really interesting story because every earning season and executive will say we think things will get better. You're going to have to take our word for it, but they'll get better at some point. And the messaging from Intel in the last couple of quarters is that the demand will recover in the second half of twenty twenty three. Well, what Intel did this week is demonstrate that that is
actually true. We got some evidence. So they had a surprise profit in the quarter just gone, and in the current quarter they forecast sales of thirteen point eight billion dollars, which was ahead of what the street thinks they were going to make thirteen point three billion dollars, and it all comes down to PC. The story is that there was just a surplus of chips that go into personal computers. That meant that people that make personal computers had an
inventory they had to work through. They had a surplus of chips. The messaging from Intel is that they've worked through that inventory and they're now ordering again for the future.
Very encouraging. All right, now, let's look ahead what's coming up this week, and let's start with what you see Apple reporting.
Yeah, so the quarter that we've already reported this year for Apple, the calendar second quarter, a lot of evidence that iPhone shipped me to rebounding. Everyone is so stoked about the vision pro everything. One's talking about the arvii headself. But the thing is, it's just like AI. It's such a distant technology. It's so distant from being a meaningful revenue contributor that we just look at the iPhone and the latest generations of hardware that they're actually shipping. That
is going to be the story for Apple. It always is, and it's important because the more devices that they sell around the world, and the more surprised to the upside that there is for things like Mac. In markets like China, it also usually translates to an improvement in their services revenue. What Apple wants to do is build an ecosystem. They want people to have multiple types of their devices in their hand or in their home and then be lured in to spend more on the software and services side.
And so that's why we pay such close attention to Apple and iPhone.
And let's talk about that thirty five hundred dollars price tag on that vision one.
Thirty five hundred dollars is very expensive. By comparison, the premium meta Quest headset is about one thousand dollars and its latest generation is about five hundred dollars. So thirty five hundred dollars is absolute premium. Now, Bloomberger reported that in its first year, applew had hoped to ship around nine hundred thousand units. But if you do the math, this is what I'm talking about. Nine hundred thousand units at thirty five hundred dollars still does not translate to
three point five billion dollars of sales. That's nothing in the scheme of what they do on iPhone and Mac. Then The Financial Times reported that they're actually cutting expectations and telling suppliers, you know what, we're going to build nearer to half of those units. So they've kind of scaled back what they hope to do. It's going to be a really long time until this is mainstream. But the price point also makes you realize that the vision Pro it's four developers. It is four people who are
early adopters at the cutting edge. Bigger question earnings, do we get a carrot dangle that has some information about future generations of the vision Pro at a lower price point, a more mass market product. Apple is usually self restrained. They usually don't do that at earnings, but you can always be surprised.
Yeah they are.
That just one more thing so you never know. Let's switch now to Amazon dot Com and you know, we talked very much about the cloud computing, their Amazon Web services. What that means, what are you looking for?
And that report it's really interesting. Amazon is still unraveling its COVID era investments where they just threw billions of dollars at fulfillment, getting packages to you as quickly as you could because during the pandemic we were all at home. It drove a lot of business for them, but they were left with head count and infrastructure that they just don't need. Andy Jasse replaced Jeff Bezos's CEO and discipline and kind of unraveling that investment in the panemic era
has been the story. AWS revenue rows around sixteen percent, twenty one billion dollars of sales in the court are just gone, so those stories continue. We know Amazon as consumers is Amazon dot Com where we buy things and they're delivered to our doorstep, but the cash cow is
its cloud business. Now throw artificial intelligence into the mix, we might get some early signs about their strategy, which has been less about a consumer facing generative AI tool like chat GPT and more about providing the infrastructure, cloud based infrastructure for companies to work on their own AI tools. And once we have a sense that they're going to make some money on that in the timeline for that, you add this in as another revenue stream alongside AWS.
Advertising has also been a surprise because it's a higher margin revenue that they make hand in hand with their e commerce platform. So a lot to focus on there.
Now, ed I want to talk about the impact of a couple of strikes in Hollywood on not big revenue generators for both companies Apple and Amazon, but they're streaming services. What's the thinking on how this is impacting Apple TV Plus and Amazon Prime.
There is two competing forces happening in the world of content and streaming, and it applies pretty uniformly to all of the names that are involved. The writers and actors strike gives everybody a lot of concern that the content timeline and content slate's going to be impacted. Simply put, if the actors and writers are on strike, new shows and films are not being written, and they're certainly not being produced, which means there's a delay in putting them
out and in some cases projects get canceled altogether. The competing force is that, if you're taking the case of Amazon, Andy Jasse is looking very very closely about how much money the Prime video unit is spending on producing content, because it is not a money maker for them. He wants to rein in that spending. So you can understand
right why these are competing forces. We're concerned that not enough content's being made, and yet at the same time executives are saying, we've really got to scale back what we're spending because otherwise we're not going to reach profitability, and the long term profitability of streaming platforms is certainly a big question. Let's be honest, guys, Like no one wants their favorite show to be canceled or indeed like wait a whole year and a half for the next
season to come out. But that is the prospect we face. So that's basically the equation the industry's facing.
Well, a lot to look forward to. Ed, thank you so much. That's Bloomberg Technology, host ed Ludlow. Watch the show weekdays at twelve pm Wall Street Time, or download the b Tech podcast wherever you get your podcasts. Coming up on Bloomberg day Break Weekend, we're looking ahead to the options facing the Bank of England. I'm Tom Busby and this is Bloomberg. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in
the coming week. I'm Tom Busby in New York. Now up later in our program we take a look at the aviation sector in Asia. But first, after the reft of Central Bank decisions last week, attention now shifts to London in the coming days, where the Bank of England will announce its latest rate move. Unlike their colleagues in Washington or Frankfurt, policymakers in the UK are some way
off from the end of their hiking cycle. For more, let's head to London and bring in Bloomberg Daybreak europe banker Stephen Carroll.
Tom The UK has been an outlier in the G seven for its inflation path, which saw the pasive price rises remaining higher and stickier in recent months, which had the Bank of England to hike by fifty basis points the last time around. The most recent inflation print did finally show a slowdown, but the headline figure was still at seven point nine percent. For more, let's bring in Bloomberg senior UK economist Dan Hansen. Dan, what is your
expectation then for this Bank of England meeting? The last time around the bank gave it's a bit of a surprise.
Yeah, they did, and I think looking at this meeting, there is I think, at least to my mind a fifty to fifty split, fifty to fifty chance if you like, between a twenty five and a fifty basis point hike. You mentioned, they're the inflation data for us that probably tips the balance towards a twenty five, but it's certainly
going to be a very close call. I think what you have to look at is, of course there's been some good news on inflation, and you've just mentioned it there, But I think the underlying picture goes to your first point about stickiness. So the composition of inflation is actually looking stickier now than the bank was expecting back in its May forecast. And it might be the case that looking at that, that's the thing that dominates and pushes
them towards a fifty basis point hike. As I say, we think probably on balance that the good news on the headline figure is enough to push them back towards twenty five. They've done a lot already and doing another fifty again would be quite a would be quite a message to send. But I think on balance they'll they'll up for a smaller move.
Where is the stickiness coming from now and the inflation data?
Yeah, so it's if you look at it, it is services that's running it probably twice a little bit above that. In fact twice it's long run average, So it's sup at seven point two percent long run average about three point three percent, so it's more than twice it's long run average, and of course that's a reflection of I think it's a reflection of two things. Actually, one is the obvious thing is the labor market, because a lot
of services firms their biggest cost is labor. But I also think there's an element of the lagged impact of
high energy prices. So if you think back to last year, you've got a lot of firms who rightly would have looked at the outlook for energy price has been extremely worried, and I think a lot of them have locked in higher energy prices into their tariffs, and it's going to take a bit of time for them to roll off onto the new lower tariffs, because obviously wholesale energy costs have fallen and households have started to feel the effect of that, and we'll see that in fact in the
July data, the July inflation data. But I think that's one reason why it serves as inflation as well as the labor market has been sticky, there's been a little bit better news on the good side. As I've said many times to before, there are reasons thinks that think that goods prices will continue to or goods inflation. I should say we'll continue to ease off, but the stickiness, to answer your question, is really in services.
Yeah, and that's interesting because of the changeus what we've been talking about over the past couple of months of inflation prints, where really the energy picture was the part
that was kind of helping to bring things down. As you say, the fact that getting getting baked into the service's side of the picture if we think about the broader economic picture and all this, because this is the dilemma the Bank of England is having, is that, you know, the more at hikes obviously, the greater the risk of recession. The latest PMI data for the UK showed, you know, the flash number of fifty point seven, down from fifty
two point eight in June. Does that kind of tell us that the Bank of England's rate hikes so far at least are working.
Well, they're beginning to Yeah. I mean we've seen up until this point that actually the response of the economy to everything it's been done and the high inflation, there's not been much change in the direction of the economy. We've had sort of broadly say stagnation over the past year, but we haven't had anywhere near the level of weakness that we and almost all other forecasters had been expecting.
I mean, I think just on the PMI itself. I didn't mention it in the answer to the first question, but I think that's another reason to think that twenty five might be a better bet than a fifty, just because there is now a little bit more evidence that this very rapid tightening cycle is beginning to take hold
on the economy. And I think what we'll get as well as as a policy decision, of course, is a forecast from the banking and this time around, and we'll see what they're thinking in terms of where the economy is heading. They'll have to take in the rising yields that we've seen to the higher path of interest rates. So it'll be really interesting to see how they put that in and where it ends up. Because of course, remember back in May they took the recession out of forecast.
You know, there's a question this time exactly that is it going to go back in. And just for sort of people that don't know the ins and outs of the Bank of England's forecasting process, what the bank does is it takes the market curve as given and it puts that into its forecast. So and then the forecast gets spat out based on that market curve, so it gives it. The point of doing it is to give a sense of whether the market is right or wrong in terms of the path of interest rates, whether that's
consistent with two percent inflation in the medium term. So it's sort of the the bank is sort of hostage to that yeal curve, so it goes in and then the forecast gets spat out back to it, and you sort of see whether that path of rates is consistent with one two percent inflation in the medium term, and second, whether it's consistent with and the economy going through a downturn to get there.
So of course the forecast is going to be very closely watched in Westminster as well, because the Prime Minister has made his number one priority having inflation by the end of the year. After the most recent inflation figures, bloombergerre speaking to John glenn as a minister in the Trousury Department, and here's his take on where the inflation challenges lie.
Now, what I'm doing is controlling public spending to make sure that we don't do anything that adds fuel to inflation. But of course we welcome these figures. There's no complacency though here in the Treasury. We work very closely with the Bank. As you say, they do interest rates, we do government spending. But these are tough times for families in the UK. But we going be relentless in our commitment to have inflation and get it down to the long term trend two percent.
That Johnnie, you're going to do anything actively to reach your number one target of halving inflation by the end of the year. For example, X Banking and policymaker Kate Barker suggested you should raise taxes.
Well, look, we don't want to raise taxes. What we're trying to do is make sure that we spend money wisely. We had a spending review a few years ago. Obviously meeting those numbers is now really hard in a high inflation rey or higher inflationary environment. So my job is to make sure that we spend wisely, that we accommodated the pay Review Body announcements last week for public sector pay that increased between six six and a half seven
percent for one of the workforces. We did that by not by taxing more, not by borrowing more, by asking government departments by asking cabinet ministers to absorb that additional pay requirement. So we're being relentless in focusing on making sure that we manage public spending and don't add to the inflatory pressure which the IMF and others have warned us we would do if we borrowed more.
That was traguriy Minister John Glenn speaking to Bloomberg, Zazie Brayden and Anna Edwards Dan. There'll also be a question too about where we are in terms of the pain the Bank of England is inflicting and the likelihood of a recession. Remind us what the expectations around recession are in the UK.
So I think the consensus is that it's certainly this year it's going to be avoided, and I think if you look at consensus forecast it's that it will be avoided as well next year. We're a little bit more pessimistic about it, we do, you know me, but we're a little bit so we're a bit more pessimistic. We do think there'll be a modest downturn in the economy. But I think you know, people jump on this idea of recession when you when you sort of ride it
on a piece of paper. But I think the context here is that, as I've said before, the economy has been stagnating, so it doesn't take much for a negative quarter of growth, and we're what we've penciled in the peak trough fall in GDP of only one percent. That is not particularly significant. Compare it to the nineties. It was a three percent full of the eighties, it's four
and a half percent full. Of the financial crisis, it was over six percent fall in GDP, So you know, they're far deeper recessions in history.
Okay, are the more interested in those forecasts will get from the wank of England with They're just sais And thanks to Bloomberg Senior UK economist Dan Hansen. I'm Stephen Carroll in London. You can catch us every weekday morning here for Bloomberg Daybreak Europe, beginning at six am in London and one am on Wall Streets.
Tom, Thanks Steven, and coming up on Bloomberg day Break weekend, Governor Ron DeSantis has a big economic speech this week. We'll get a preview. I'm Tom Busby and this is.
Bloomberg broadcasting live from the Bloomberg Get a Active Brokers Studio in New York, Bloomberg e Levon free oh to Washington, d C, Bloomberg ninety nine one to Boston, Bloomberg one, O six one to San Francisco, Bloomberg nine sixteen to the country, Sirius XM Channel one to nineteen to London DAB Digital Radio, and around the globe the Bloomberg Business app in Bloomberg Radio dot Com. This is Bloomberg day Break Weekend.
I'm Tom Busby in New York with your global look ahead at the top stories for investors in the coming week. Governor Ron DeSantis is in the middle of a campaign reset and has a big economic speech planned for later this week. For more, let's add to our Bloomberg ninety nine one newsroom in Washington and Bloomberg sound On co host Kaylee Lines.
Yeah, Tom. Florida Governor Ron DeSantis is seeking to reset his twenty twenty four presidential campaign, which admittedly isn't in the best shape right now. It's bleeding a lot of cash, he's languishing in the polls behind front runner former President Donald Trump, and he's trying to turn things around. So this coming week, as part of his revival efforts, he's preparing to give a major economic address. Bloomberg's Nancy Cook has been covering his campaign and was actually just in
Iowa and she's joining us now. So Nancy, talk to us about this address he's going to give. What are the details, what is he going to talk about, and what does he hope this achieves.
So thanks for having me. I've been in Iowa with Governor Ron Stansis where he's starting to preview some of the themes economic themes that he's going to talk about
in this major economic address in New Hampshire. And part of the reason that he wants to give this address is a lot of his donors and advisors have really wanted him in recent weeks to stop talking so much about Florida and really to start to talk about broader themes, and they feel like the economy and talking about what he would do there is a nice pivot away from some of the Florida specific things and some of the culture wars that his campaign has really been known for.
So some of the things that we're expecting him to talk about with how he's going to tackle inflation, he really also wants to make the pitch that he thinks that the US should totally open up all domestic energy production. He really wants to decouple the US economy from China's. And he interestingly sort of waded into the student debt cancelation question and talking about how is people take out tons of what he called bad debts, you know, for majors or things that don't really end up paying off
at the end. Feels like schools should be stuck with that, not the students. And so he's really sort of giving this, in some ways a classic Republican message of you know, less regulation, particularly on things like energy, but also trying to really appeal to blue collar and middle class people with some messages on sort of jobs, wages, and student debts.
So you said he's trying to focus not so much on Florida and his governing there when it relates to some of the culture wars and fights with Disney, et cetera. That doesn't seem to be resonating. But does he have an economic track record in Florida that he can tout here when he talks about his management of the state's economy, because it's a fairly big one.
It is, Florida is a major state, and he is the governor there, and he has been a popular governor so far. So on the campaign trail, heat tells things like Florida's low unemployment rate. There have also been a number of businesses and business people that have moved to Florida, particularly during COVID, because they had a less restrictive environment. So he talks about that the migration. What he doesn't necessarily talk about is that, you know, Florida also has
a lack of a floridable housing. There's been a real housing punch there. And also, and this is a thing very unique to Florida, but people there are really suffering under very skyrocketing prices for flood insurance, which again sounds like the most Florida thing, But if you live there and you own a house and your flood insurance sort of goes through the roof, it's causing a lot of
economic pain for people there. So I would say the economic picture in Florida is a bit more mixed than what he presents on the campaign trail.
Okay, so we're going to see what he presents this coming Monday. But Nancy is I mentioned at the top here, this speech is really just part of a wider effort, right, he's trying to turn things around, but he is also having to penny pinch a little bit more to do that. He's laying off staff. What else is happening inside the campaign as he tries to you know, reinvigorate this effort.
So this reset has really been happening for the past two weeks, and they've laid off a total of thirty eight people, so that's you know, they had about a ninety person staff, so that's a huge chunk of people that's gone. They have raised a lot of money, but they have burned through that money at a very high rate given the size of the staff. And also DeSantis
always likes to travel on private planes. That's expensive, and so they're really trying to He's not necessarily cutting back in the private travel, but they're trying to cut back on staff. And they're also trying to curb his travels. So he's not going to states, you know, unnecessarily. Really, he's just only going to places to do fundraising and then he's going to places early primary voting in states
like Iowa, New Hampshire, South Carolina, and Nevada. And they're really trying to stick to that.
Yeah, Iowa where you just were. I'm guessing you didn't have the privilege of a flying private there, Nancy, Am I right?
Nope, just done a good old American airline site.
The Life of journal. But on the subject of Iowa and New Hampshire, which you just mentioned, if he can't pull it off or get close to pulling it off in those states, is that it for him? Is it Iowa, New Hampshire or bust?
I think that Iowa New Hampshire will be incredibly important because and his campaign is putting a ton of resources in Iowa right now, or not his campaign the superpack that's supporting them or putting in a ton of resources. But really the thing is is that he has fallen in the polls. There was so much hope around his candidacy and the Republican Party, let's say, in January and February. But as he voters have gotten to know him. I think that a lot of voters I have to stolely
like Trump. They haven't totally been won over by DeSantis. He's not known for his retail political skills. And I think that we've just seen a big drop in the polls for him, And so I think Iowa, New Hampshire are going to be really crucial because if he can't win or do well in both or either state, I think he's going to lose even more momentum. And we've already seen him really drop in the polls in the
last week. There's new polling that shows that, you know, he Tim Scott is gaining ground on him in Iowa, Chris Christy is gaining ground on him in New Hampshire. So he has managed to stay stay as like the number two front runner or the number two behind Trump in the GOP field in polling in early voting states. But if other people start to gain on him, I think that that will, you know, sort of fell some problems for the campaign.
Well, let's just focus on the front runner, Trump in particular, who you just mentioned. Obviously, the legal woes for the former president are mounting. Is DeSantis hurt by Trump's legal woes growing or does it help him? And I say this in that we've seen this pattern where President Trump runs into legal trouble and he raises a ton of money on it, and his poll numbers actually go up, and it's very hard for rondasantists to answer questions about it.
Without alienating the Trump base. Right, So how hard is this entire equation for Rond DeSantis.
This equation is so much harder than I think any of the Disantis team anticipated, because what has happened with each of these indictments is it has mobilized and energized Republican primary voters to coalesce around former President Donald Trump. And the Trump campaign also has developed almost this playbook of how they approach indictments, and what they do is they really try to use them to their political advantage.
Former President Trump gets out ahead of them, sort of announces them himself, They fundraise when the indictments come out, and a lot of Republican primary voters when I talk to them on the campaign trail, really feel like a lot of these indictments. They don't always like tell the difference between them. They kind of mash them together in their minds. But Trump has successfully convinced a swath of
the Republican Party that these indictments are politically motivated. He has turned them to his political advantage, and it just means that it's very hard for Desantas to break these people away from Trump.
And finally, Nancy, when we talk about the discussions that DeSantis is having with his team, with advisors, with the campaign, how much of that is just conversation with his wife, Casey DeSantis.
I think a lot of it is. I Mean, the interesting thing I'm reporting on DeSantis these last several months is that he keeps a very insular, tight world. And so there's a campaign manager. They just elevated someone to be deputy campaign manager, but they really, you know, he and his wife really are their own political advisors and their tight knit team. He does not have like a kitchen cabinet of policy advisors, you know, sort of none of that traditional kind of friends or allies operation that
a lot of other candidates have or presidents have. It's really him in his life, all right.
Bloomberg's Nancy Cook looking forward to your continued coverage of this campaign and the governor's economic address this coming Monday. Thank you very much. Tom. We'll send it.
Back to you.
Thank you, Gaylee. That was Bloomber Sound on co host Kaylee Lines reporting from our Bloomberg ninety nine one newsroom in Washington, and you can hear sound on weekdays one to three pm Wall Street Time on Bloomberg Radio and coming up, here on Bloomberg day Break Weekend. Aviation Day is fast approaching in Hong Kong and we'll look at the aviation sector in the APAC region. I'm Tom Busby
and this is Bloomberg. This is Bloomberg day Break Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. In Hong Kong. On Tuesday, It's Aviation Day. For a look at the aviation sector and the latest developments. Let's get to Doug Krisner, co host of Bloomberg day Break Asia, Doug.
Tom and the week ahead. Hong Kong will hold its Aviation Day now. This event is sponsored by the International Air Transport Association and the Airport Authority Hong Kong. IADA represents over three hundred airlines and nearly eighty five percent of global air traffic, and recently the Association upgraded its projections for passenger traffic. With that in mind, we thought it would be a good time to check in on the aviation industry across the Asia Pacific. I'm joined now
by Danny Lee, Bloomberg Asia Transport Reporter. Danny, thanks so much for making the time to chat with me. So much of what drives this industry in the APEC is of course tied to China, and we have witnessed the contraction caused by the pandemic, of course, and the policy that Beijing put in place with those severe lockdowns. So let's begin with a big picture here. How well has the aviation industry in Asia been able to recover?
The aviation industry in Asia has been able to rebound only as soon as the borders have reopened, so we've seen a bit of Asia being a bit of a lagger to the rest of the wide world. However, we are seeing travel demand pick up very very quickly, and many many markets are getting ever closer to that magical
of exceeding their pre COVID levels. We see China and particularly the Wonder the world's biggest travel markets very much see brisk business onto domestic front, but on the international side of things, flight activities less than half of pre
COVID levels, so that's still very much struggle. When you think about Chinese outbound travel being a huge driver of tourism and spend for many many markets, including Southeast Asia and wider parts of Asia in general, that's a real problem where many countries are banking on Chinese travel and spend to help their economic recovery.
Even a regional trip I'd say from Shanghai to Tokyo, how is that route performing.
In good times it would be very very brisk. But geopolitical tensions, general strife between the likes of China, Career, Japan and other certain markets means flight levels are really back nowhere near to the levels it's saw during pre COVID. And also as a result, visa access for travel is also a huge hurdle. So it's a really problematic part of the picture where you don't have as many flights and you find it very hard if you're looking to travel to outbound into the likes of North Asia that
you can't really get hold of a visa. So it's a problem holding holding things back.
What do we know about how well these airlines are equipped to handle any sort of volume. Are the staffing level sufficient right now?
Staffing levels in Asia have been okay compared to Europe the US, where they laid off so many more workers.
Asia hasn't fared as badly, and we saw quite a few airlines who needed to keep all of their staff for whatever reason, they had better support from the government or like in the case, we saw cargo really propping up the airline industry and a lot of the cargo cargo activity been driven out of Asia and that very much saved a lot of the airlines here in Asia, so they didn't have to cut as much and therefore they've got a slightly better picture in terms of staffing,
although by no means it's out of the woods per se. You you still see some markets, particularly Hong Kong, which had been closed for over three years, they still find out a struggle to hire and revive its aviation industry.
Danny, thank you so much for being with us and helping set up Hong Kong Aviation Day and really a good discussion about a lot of the trends that were seeing unfold across the aviation industry in the Asia Pacific. Danny Lee, Bloomberg Asia Transport Reporter. Joining from Hong Kong. I'm Doug Prisner. You can join Brian Curtison myself weekdays here for Bloomberg Day Break Asia, beginning at six am in Hong Kong six pm on Wall Street. Tom.
Thanks Doug, and that does it for this edition of Bloomberg Daybreak weekend. Join us again Monday morning at five am Wall Street Time for the latest on markets overseas, the news you need to start your day. I'm Tom Busby. Stay with us. Top stories and global business headlines are coming up right now.