This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world, and straight ahead on the program, A huge week ahead for tech earnings.
I'm Tom Busby in New York.
I'm Kroin Heager here in London, where we're looking ahead to European bank earnings.
I'm Bryan Curtis in Hong Kong. Is the coast clear now for a big uptick in tourism into Japan?
I'm Kaylee Lyons in Washington. As the fight over the debt ceiling intensifies. How Speaker McCarthy pushes for a vote next week the White House Still Bloomberg.
That's all straight ahead on Bloomberg day Break Weekend on Bloomberg eleve on three Own, 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.
We begin today's program with a look at the tech sector ahead of a cavalcade of big name tech earnings coming our way this week, names like Alphabet, Microsoft, Meta Platforms, Intel, and Snap. And joining us now to talk about all that and more is Bloomberg Technology co host Caroline High. Caroline, welcome, thanks.
For being here.
What a joy to be with you.
Well, it looks like overall tech stocks have outperformed the rest of Wall Street, in the least in the first quarter, coming off of pretty dismal lows from before that. As a sector, how do you think tech did in the first three months of this year and is that growth extending into the current quarter.
Do you think we.
Are starting to question that growth? Certainly from a stock price perspective. From a valuation perspective, we've got to remember the Nasdaq one hundred, the key benchmark for big tech, is back in bull market territory. It managed to escalate twenty percent off of its lows that we hit last year, and this is around perhaps not that much more fundamental change in news. Yes, there's hopes that the Federal Reserve
perhaps cool its intentions on where interest rates go. But as Gina Martin Adams over at Bloomberg Intelligence will point out, the valuations are still way out of whack unless we start to see the FED actually cutting rates. At the moment, no one's anticipating that. We're just anticipating as slowing in
those rate hikes. So at the moment, it feels that the growth potential just isn't there to substantiate what has been maybe a move to safety amidst some of the concerns around the US banking system.
Now, before we dive deeper into the individual earnings and the impact on the rates and the impact of what the FED is going to do, let's talk about probably the biggest game changer in tech since I don't know the search engine. It's artificial intelligence chatbots like open AI's chat GPT. They've changed everything since debuwing just in November, and Microsoft's also ran search engine bing now gaining traction
after how many years? About fourteen years? Google racing to develop its own search engine powered by AI meta platforms, changing its name from Facebook to focus on the metaverse, now downplaying to focus on AI. How has this changed everything in tech and every company?
So funny.
I just got off a call with the CEO of AMEX and he said, look, a couple of years ago, the new technology was all about blockchain. Now the new technology is all about artificial intelligence. But as he will say, look they've been.
Doing it for years.
They've got AI, they got machine learning, and actually all these other companies are racing to say the same thing. We heard Andy Jasse from Amazon in his letter to investors saying we've been busy on machine learning and AI for a couple of decades. Now we know that Google was almost synonymous with artificial intelligence after it bought a UK pin up and the tech sector which was deep Mind.
But now it.
Seems to have changed the game from a consumer perspective because we all get to play with it. The open AI revelation, the chatchept now released into version four. It is the fact that you and I can now just
see how powerful it has become. People now worrying that AI is developing at too fast rate, But it really is the consumer interaction with it that I think has made us sit up and understand that, yes, the way in which search certainly could happen is going to be far more efficient, the way in which we could see the way you and I react and our productivity levels increase.
But I wonder if this is also slightly a tech sect to trestplately trying to look for some sort of silver lining amid macroheadwinds that are still there.
And you talked about the consumers, and here's a perfect example of how consumers are interacting. Snapchat has seen huge growth in their four dollars a month Snapchat plus and it's because they added AI from open Ai, and everybody wants to play with it. You know, they want to write poems and essays and whatever. So yeah, I see what you mean. It has really taken the consumer to a new place.
It has, But has it taken the actual revenues of the business to a new place? Many would argue say with Microsoft, no, actually, Microsoft's future quarter that we're all anticipating this fiscal third quarter is likely to be well an underperformance one. We're still thinking about where the businesses are investing, rather than in their azure, rather than actually whether practically the integration of open AI's Chat GPT into being is really changing up their own dollars in terms
of revenue. It's not in the short term. In the longer term, yes, we could start to advertise against that, and yes, our productivity levels could go through the roof and it makes their own offerings that much more in demand.
Well, you bring us to a great transition to talk about individual companies and it's not all just chat GPT, but let's go through some of them one by one, and we're going to start with the Alphabit, which is out on Tuesday. What do we and now this is an advertising driven company, Yeah, but advertising is in a slump, it is, and.
What do you see for this company?
There is also the search engine in cloud computing and YouTube, but they have a lot of revenue generators, But what do you expect?
And YouTube could be a bit of a silver lining once again here they've had some price increases that really could bolster performance for that particular segment. But we know that actually growth expectations for YouTube for advertising in general have come down of late, so cloud could at least break even. Remember in a moment, they are a little bit of an also ran against Amazon's AWS and Microsoft's as you're but they are trying to boost profitability in
their cloud segment. Overall, Alphbet it's likely to see revenue actually climb about two percent. Remember they're raking in more than fifty billion dollars on a quarterly basis. But you're right, this top nine growth is likely to remain pretty muted because search network segments that they're exposed economic challenges. We've got to worry about how much people want to pay for advertising. And also I wonder whether this Chatchypt excitement means you and I are using Google a little less.
I know, for one, my husband won't do anything unless it's on Chatchypt in some way, So I do wonder whether we might see a little tiny sliverer of evidence that people are turning away from Google Search to use chatchipt instead.
What did we expect from Microsoft, also out on Tuesday.
Probably quite sad when you think that more than thirty percent growth isn't up to enough. But as you're is likely to see thirty one percent sales growth on a constant currency basis, but that isn't the sort of growth we've got oh so used to. Microsoft likely to see maybe revenue climb about four percent. We've seen fifty one billion per quarter on its fiscal third quarter, but we like to see evidence of this pullback in PC spending.
You and I haven't been spending so much on hardware, on on going out and buying our computers because we bought them all in the pandemic, so that PC weakness is likely to take them as is also a bit of infrastructure. Software results likely to be pulled back a little bit as companies try and curtail they spending, so could see some slowing down Microsoft though instead they're all
about marketing, aren't they. They're AI. They're all about showing the enhancements over the last couple of months, but there isn't going to be any near term sales growth because of that.
Got it Meta of course, another big one. We've seen massive.
Job cuts there talks about more what does this earnings look.
Like for I mean, unsurprisingly profit under pressure in a big way. We're likely to see revenues actually only down about one percent, but it really is the profitability. This is why Mark Zuckerberg talks time and time again about
the focus on efficiency. For this year, you're going to see perhaps a bit of a drag and engagement on the old blue Facebook, but there's going to be an uptick perhaps in the way and you and I are interacting with reels, with WhatsApp, with messaging ads, but they have been hampered by the fact that Apple doesn't want to build in of course, the way in which we track our data, so that's overall been a bit of a headwind. We're likely to see challenges once again, a
second round of layoffs. At least they're going to help with their expenditures to a certain degree.
Got it.
Snap also the owner of Snapchat reporting, and we talked briefly about that before. How they've embraced AI and the chatbot and how is it looking for them. They have suffered kind of it also ran as well, Yeah.
Oh boy, their share price has suffered. It's languished at at about ten for what the last end of twenty twenty two. Really we started to see Snap I think last year become the canaryan the coal mine. They come out with their ownings first and they then set the tone for how the rest of the advertising market was going to really look. And snaps growth expectations have come down sharply in the first half of the year. Six percent likely drop in top line overall revision the company.
We're likely to see a twenty percent cut and fixed costs. Again, this is more about how they can preserve profitability rather than drive it. So this is again being cautious, as we likely to see advertisers be cautious with their budgets. Remember, if you're thinking about, oh, where shall I put my advertising dollars to work? You're probably gonna stick with Facebook's Instagram.
You might be sticking with Google's YouTube. You might cut back on a snap because it is a bit of an also around, as you say, although they are always a creative way to perhaps get some bang for your buck with the AI focus.
Intel also reporting now this is hardware, the chip maker. They are fresh concerns about chip makers. Now Washington sanctions hamstringing China's ambitions there. What do you see for Intel?
Though?
And we're back to boombust. They all told us in COVID and in the post pandemic era that we were gone out of boom bus cycles for chips because we all move to automated devices, the fact that we're going to have every connected device Internet of things, the industry would be changed. And it doesn't happen that quickly, it would seem. And so for Intel, I'd like to see actually a forty percent sales drop. We're likely to see, of course again the PC slow down that's affecting Microsoft
it's going to impact Intel as well. Slumping comsumer demand means look, they're not going to have as many chips in the devices that we're buying. So we know the headwinds are there for PC. We know that actually they're losing some market share in terms of data centers as well. AMD they're buy females. Executives just been doing phenomenal work there at catching some market and this is a market
that we want to hear from. The CEO, Pat Gelsinger has been very upfront with the challenges he faces, his entire sector faces. And remember they are trying to build a new, more resilient global supply chain at the moment, so we has to invest in future fabs here in America and in Europe, and that's more expensive. We're still trying to see where they end up.
Caroline, thank you so much. Caroline Hyde is the co host of Bloomberg Technology. Great to have you with us.
Coming up on.
Bloomberg day Break weekend, earning season for European banks as well. I'm Tom Busby and this is Bloombergo. 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.
Up later in our program, the fight over the dead ceiling heating up even more. But first, European banks from Ubs and Credit Sweee to Deutsche Bank, Barclay's and Santandar reporting first quarter results next week. But it's not going to be a simple quarter. For more, Let's head to London and bring in Bloomberg Daybreak anchor Caroline Hepgar.
Tom.
After the tremor of the demise of Credit Sweee, we turn to bank earnings, and many European names face individual issues as well as the broader themes around trading revenue and net interest income that will be key to this set of earnings. For More, I'm joined by Bloomberg's final editor, Tom Metcalf. Tom, there are going to be a lot of issues I think in this set of results, aren't there. What do you think though, First of all, the US bank results show about what we can expect from Europe.
Yeah, I think you're absolutely right. There'll be a lot of different things for investors to digest, and you know that sort of exemplifiber what's happened in the US, So you know a couple of points to pull out of that. First of all, one of the big things we saw
was effectively a flight to safety by some customers. So you had JP Morgan, the biggest bank, seeing a lot of deposits come its way after the term oil of you know, Silicon Valley Bank, and on all the regional lenders out in the US there too, So I think that will be very very interesting to see. You know, how much do the big banks in Europe benefit from that kind of trend or was it sort of you know,
unique to the US. And then at the same time you've also got net interest margins, so you saw across a lot of the US lenders, you know, the big retail lenders, they're still benefiting from that. And again it's just a case of you know, how good is the outlook there going forward? And then finally for me, you know, it's the high finance side of things. It's those traders, how are they doing? And the US painted a very
mixed picture. So you had Golden Sacks typically a bellweather for this kind of thing, but actually its traders didn't do so well this quarter. That really hurt the shares.
But in contrast, Bank of America normally a bit more scayed than Golden Sacks actually did very very well like blue past estimates, so you know, not quite sure whether European lenders will land between those two, which just means to me that I think it's going to be a very interesting, kind of difficult to unpick set of earnings and it'll be intriguing to see how sort of various banks sort of come out of it.
Yeah, and on the specifics, of course, we're only just about a month or so out from the demand is of Credit Sweee, and you've got results both from UBS and Credit Sweee, so bank regulation and all the issues around this merger are going to be at the four too.
Yeah.
Absolutely, it look for me, the Credit Swiss UBS story probably the one that continues to dominate the headlines for obviously reasons. You know, I think it will be Credit Swiss's last set of results as an independent bank, so plenty of reasons to look closely at that. But I suspect most of the grillin will be on the h UBS executives, who will presumably be asked, you know, how is the sort of merger proceeding? You know, what are your long term plans? Is this really good for UBS?
Et cetera, et cetera, And it's just an absolutely enormous story. There's so many different kind of stakeholders here. We've seen a lot of sort of agro from the Swiss side, so we'll be curious see if on the political side there's kind of pressure there. And ultimately, obviously what UBS want to do is show you know, a really good set of results and kind of a path forward to make sure this sort of very difficult merger can kind
of proceed. So that for me will probably be the dominant story, certainly, at least in the use side of things.
Okay, what about the UK? How resilient are the balance sheets of the big UK banks?
Yeah, I think it'd be similar questions to what I was saying about the US. So are they benefiting from the net interest margin? And if so, you know, toward extent? And what is their guidance? What are they saying is likely to happen in the coming months. So it does seem that the Bank of England's likely to raise interest
rates again, so maybe that will be a positive. But you know, what we have seen is even after you know, right in the midst of these interest rates rate rises, investors are already looking ahead and going, well, how long will these good times last for the banks? So there's that question. I think, you know, this is fair to say. I think the UK banks have largely dodged, you know, some of the term what you saw in the US.
Obviously they have been rocked by it somewhat, but you know, that does seem like a pretty specific issue to the US. So I think the focus will be on kind of how well they executed this quarter, how well these interest rates are coming through. But again, and this is what makes this particular earnescis and really interesting. I think there's just lots of idiosyncratic issues for each bank, so kind of for almost every bank, you're going to be looking at different things.
Yeah, one of which, of course, has come to the four again this week, which is HSBC and the battle with their big shareholder ping Ann about whether the business is split.
Yeah, exactly, really heating up. So it's kind of being almost like a phony war for the last year or so, where we knew ping An were pushing for this, but it was perpetually kind of they won't send anything on the record, It was all kind of done through proxies. What happened this week is you had a ping An unit come out and say, you know, we are deeply concerned about HSBC's performance. They sort of slightly tweaked what
they wanted HSBC to do. It's basically now more of listing their Asian units, which is slightly more feasible to achieve. But if you read this letter from ping A, it's two thousand words and they basically spend most of it saying HSBC aren't listening to us. You know, they don't seem to take any kind of consideration of our ideas.
And what's fascinating is, you know, this is HSBC's top shareholder, So be really curious to see both of the results, which I think are sort of May the second, but probably more interesting at the AGM which follows on May the fifth, where I'm kind of preparing myself for fireworks there.
Fireworks. Okay, what about Barclay's then and the issues around just Daley.
Yeah, so that will again probably dominate some of the
coverage there. And you know, obviously former CEO, you know, Barcleays as it is today, has you know, really very little to do with this, and you know that that's clear, you know, all when to day he was at JP Morgan actually, but that doesn't mean sort of the bard of Barkleys don't have questions to answer about you know, how come they let the bank get into this position where even you know, you know, a year or so after they knew that the FCA was investigating their CEO,
they were still standing by him. And I think now as more and more kind of these details emerge, that's looking, you know, more and more questionable. I think the bank has finally come out and said, yes, these new allegations are sort of horrific, and you know, we were not aware of them at the time, so that will be interesting. I think the bank will presumably doing everything it can to move the conversation away and you know, look at what it can control, you know, which is obviously it's
business and stuff. But you know, in terms of the story, when people think of sort of Barclays right now, that's right at the top of the list, I think.
Yeah, absolutely that they may well be pressed, Yeah, the directors about their support for Jess Daily, Yeah, even when he was leading that bank. Look, that's an interesting story also though Deutsche Bank, I wonder what your view is on this last year. Of course, they've managed the highest profit in more than a decade, so the benchmark for them is enormous.
Yeah, exactly.
It's one of those sort of almost hoisted by your own petar, right, You've got kind of.
That very nice position to be all well.
Exactly, Yeah, So that just the comparatives are really tough, and that's actually a good thing to remember at all the banks. So for example, you know, last year we saw a lot of the investment banks doing really well on the trading side, and that obviously just makes it really harder. So when you see some of these falls, it's kind of you've got to kind of put against the long term trend rather than just looking back at twenty twenty two per se. But yeah, no, I think
Deutsche Bank another fast, fascinating story. They're come to an end of this long, long restruction they've been doing that seems to be pursued, okay, but again it's you know, has been driven by that investment bank and you know that's obviously much more volatile than other revenue streams. So I'll be very curious to see how in particular their investment bankers do. And I think they report on the same day as Barkley, So it's going to be a lovely comparison on that day.
Okay, just lastly on pay or his an issue, the kind of war for talent or the war to retain talent does seem to have faded a little bit. But what about costs and compensation?
Yeah, those are always top focus for investors. So yeah, I think in previous years they were looking at those increases and sort of wonderingly, how is that going to affect the bottom line, et cetera. You know, a large chunk of this is all variable, So you would expect, particularly on the investment banking side, where there's really been such you know, little deal flows, little activity, that those variable conversations should fall quite substantially. And we are seeing
job cuts again more on the investment banking side. So yeah, it's the mood changes is drastic, right. No one is now talking about, you know, fantastic pay rises across the whole bank, So very different mood and be interesting to see what gets said.
Tom, thank you so much for being with me. That is Bloomberg's finance editor, Tom Metcalf, so laying it all out for you in the coming days of what to expect in terms of European bank earnings. I'm Caroline hepget here in London. You can catch us every weekday morning for Boomberg Daybreak. You up beginning at six am in London. That's one am on Wall Street.
Tom.
Thank you Caroline, and coming up on Bloomberg day Break weekend watch for the Battle over the dead Ceiling two intensified.
I'm Tom Buzzby. This is Bloomberg.
Broadcasting live from the Bloomberg Interactive Brokers Studio in New York. Bloomberg eleven three oh to Washington, DC, Bloomberg ninety nine to one to Boston, Bloomberg one O six one to San Francisco, Bloomberg nine sixteen to the country, Serrius XM Channel one nineteen to London, DAB Digital Radio, and around the globe the Bloomberg Business app in Bloomberg Radio dot Com. This is bloom Bird Daybreak.
We can.
Hi'm Tom Busby in New York with your global look ahead at the top stories for investors in the coming week, The fight over the debt ceiling getting more intense. For more, let's add to our Bloomberg ninety nine one newsroom in Washington and sound on co host Kaylee.
Lines, thanks Tom. Yeah, this clock toward the X status
ticking and potentially ticking louder and faster. The X state, of course, is when the Treasury could hit the wall and run out of money to pay the bills of the United States, and progress on raising the debt sealing to avoid a potential default has been hard to find to this point, but this past week, House Speaker Kevin McCarthy put a proposal on the table, a three hundred and twenty page plan that would raise the debt ceiling by one and a half trillion dollars, which could be
enough to stave off a default until March of next year. He hopes the plan will get the White House to start playing ball. Here's what he said Wednesday while introducing the Limit Save Grow Act on the House floor.
President Biden has a choice come to the table and stop playing partisan political games, or cover his ears, refuse to negotiate, and risk bumbling his way into the first default in our nation's history.
The White House, though, has accused him and House Republicans of holding the American economy hostage, and the President himself pushed back on the spending cuts that come with Speaker McCarthy's plan.
You and the American people should know about the competing economic visions of the country that are really at stake right now. Massive cuts and programs you count on massive benefit protected for those at the top, a lot of you know, all the tax cuts go to the top, none to the bottom. And who do you think will hurt the most, you hard working people in the middle class.
So how are these two ever going to compromise? Joining us now to discuss are Eric Wawson, congressional reporter for Bloomberg News, and Jordan Fabian, who covers the White House for US. So Eric, let's first start with you, because McCarthy put the plan out on the table this past week. He also, though, has to get his entire caucus in line. How hard is that job getting all the different factions of House Republicans with him here?
You know, it's very tricky because he only has a margin. You only lose four of his members and still passes since all Democrats will be united against it. And we talked to a lot of the members up on the hill and there are more members they were saying they're
undersized or not committed than four. I mean, we were talking about a dozen or more who are saying on the conservative side that the work requirements in the builds, there are new work requirements requiring twenty hours a week of labor from Medicaid and food stamp recipients who do not have children. They want that to thirty hours. So they're pushing for that change, and then that kind of maneuvering as moderate saying they won't go along. So there's
still a lot of wrangling at this point. I think they're not going to change the text because this one member said, it's a game of whack a mole. Once you start changing it for one group, the other group gets angry. So it's not a done deal at all that he can get two hundred and eighteen and it
would be a major belly flop if he doesn't. If he does get it, then they're hoping at least from the McCarthy said, this is something that would put pressure on the White House and Democrats to come to the table and do a deal.
So Jordan to that exact point, what is it going to take for the White House to come to the table. Do they have to see that this gets two hundred and eighteen votes passes in the House before they will do anything.
Line thus far has been that Republicans need to release a full budget blueprint before the President will agree to sit down with Speaker McCarthy. That's pretty unlikely, at least in the short term, given Republican divisions over what should be in that budget. But you pointed out that if this proposal on the limit gets two hundred and eighteen votes and passes the House, it will increase Speaking McCarthy's
leverage to ask for a vote. If it doesn't, President Biden can afford to stand pat and say, look, I can't negotiate with you because you don't have a position to negotiate on. You can't you don't have control over your conference. And so that's why the vote is going to be looked at so closely, both on the Capitol
and the White House. The other thing that could increase leverage on for Republicans is if tax receipts come in lower than expected from this tax day and the X state, the so called X day with a data which default would sort of occur, would would be sooner than expected, you know, if if that date moves up to say, you know, June, that would also increase urgency for both sides to sit down and hammer something out.
Yeah, that's a really good point. We've seen this past week some strategists from Wall Street saying they're looking at the receipt numbers which are tracking well below twenty twenty two levels and saying June might be actually more of a possibility than we previously thought, which would just mean that the clock is perhaps ticking faster and louder because the window is shorter. But eric As Jordan was just raising the line from the White House has been show
us the budget. Where are we on the budget? If McCarthy's just focusing specifically on this debt sealing race.
Bill, now we may never see a budget. I think the White House would like them to produce that because separately from all this, Republicans have pledged to renew the Trump era tax cuts. So essentially, you know, spending two trillion or more on tax cuts that it's kew toward the wealthy, And if the budget comes out and reflects that, they can say, look, these aren't deficit hawks. These aren't
people trying to reduce the deficit. They're just trying to cut Medicaid benefits in order to give a tax break to the rite Republicans are divided on that budget, we may never see it. It made this and that. Functionally, that would just mean that the appropriators, the committees that actually divide up the age and key budgets and write those bills, would just go ahead and figure out a top line number for the whole year on their own.
But I think, I mean, functionally, if the debt ceiling bill passes, I don't see how the Whites can sustainably continue to say they need a budget. I mean, there will be an effective offer on the table. They can say we're not going to negotiate.
I mean, we had Senator Joe Manchin, a Democrat from West Virginia, on Thursday, praising Speaker McCarthy and criticizing the White House for not negotiating. Are others likely to join him?
Well, he's the proverbial canary nicole mine. But yeah, others are already joining. We have this members of the Problem Solvers Caucus. It's the thirty two Democrats as part of a sixty four member bipartisan group that put forward their own plan. They would raise the debt ceiling until December and set up sort of a commission it's kind of a punch, really, a commission to come up with budget
cuts and force a vote in two years. You know, this is the kind of gimmicky solution we've seen in past debt ceiling crises where they don't really want to take responsibility for cuts of maybe they institute something that could potentially do cuts of revenue later. But yeah, that means that thirty two Democrats there are sort of on
the idea of negotiate, let's let's find a compromise. But so far that the leaders of the party, Akeeme Jeffries in the House and Chuck Schumer and the senat are holding a line saying, you know, we're going to see them buckle. We're looking also very closely at Senate Republicans
right now they're backing McCarthy. But at some point the way that the White House would win on this is would be that the Senate would center Publis would cave presumably enough of them, you know, ten of them that are needed to pass a bill, and it cleaned that something increase comes out of the Senate, and then at that point, in the face of literally minutes away from a default, McCarthy folds at the risk of his own career and puts that bill on the floor.
Okay, so that's McCarthy's career and how it could affect him. Jordan, let's talk about the president's career, which in theory, he's hoping to prolong. There were reports over this past week that he's finally going to do it. President Biden is going to announce he's running again in twenty twenty four this coming week. Could we just talk about the timing of that announcement if it is in the middle of this debt sealing conflict. It seems interesting.
You raised a great point, which is that no president wants to run for reelection amid economic uncertainty or any headwinds that it's going to hurt the economy. I mean, it's really traditionally to the number one issue the voters cast ballots on. And so the president has kind of dragged a seat on a reelection announcement. We're hearing from sources he's going to do it as soon as you know, the coming week, and so he's going to want going forward this to be taken.
Care of, all right.
Jordan Fabian and Eric Wasawson are terrific reporters covering both the White House and Congress for Bloomberg. Thank you so very much, and Tom will see a new week. We'll see if we see progress as that clock ticks ever louder.
Thank you.
Kaylee reporting from our Bloomberg ninety nine one newsroom in Washington. And you can hear Sound on with Joe, Matthew and Kaylee weekdays one to three pm Wall Street Time right here on Bloomberg Radio and coming up on Bloomberg day Break Weekend. How hot could tourism get in Japan this summer and what does it mean for the country's economy. 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, thinking about getting some R and R in Japan. Turns out, tourism there is seeing a pickup for more. Let's go to Hong Kong and Bloomberg Daybreak Asia host Brian Curtis and his colleague Doug Krisner.
For the most part, the COVID story is now firmly in the rear view mirror, at least for many countries. Central banks are getting close to the end of their intense rate hiking cycle, and at least for much of the world, we may, and I have to stress the word may be getting close to the end of this recent bout of inflation.
Well, if that's the case, we might see a big pickup in tourism and tourism related spending around the world. For a case study, we selected Japan. We know the currency as we can considerably and recently Bloomberg reported that foreigners have been buying up hotel property in Japan at a rapid pace and at a scale not seen in decades.
Joining us now is Lisa dou who covers Asia finance for Bloomberg again wrote that story about the hotel investment. Lisa, thanks so much for being with us. We thought it might be a decent prism through which we can see if real foreign demand could be coming. We know that domestic demand is still a little sluggish in Japan, but is it come and how far might it go?
We actually just had the latest numbers in March from the Japan Tourism Bureau. They had one point eight million visitors for the month. Definitely improvement from the last three years where they are effectively no tourists, but still a very far away from full recovery.
So Japan recently approved plans for the country's first casino. This paves the way to open up what may be the largest untapped casino market in Asia, and recently is a part of this. Prime Minister Kishita said that he hopes the resort and casino will become a tourism base that promotes Japan's charms to the world. So where is the government when it comes to driving tourism right now?
Tourism is definitely one of the biggest strategies that Japan had before the pandemic to drive growth in the economy, and I think it continues to it will now continue to be so now that COVID is mostly behind us.
If we look at that hotel investment story, is it investors from Hong Kong or Singapore? And does it match up with where we see the biggest numbers of tourists going into Japan.
You definitely see a mix of investors. Just to give you the numbers, you know, for investors basically accounted for nearly half of the three point seven billion invested in hotel deals in Japan the past twelve month and that's probably the highest proportion we've seen since twenty fourteen according
to MSCI data. And and you know, looking at some of the big deals you are seeing, it is Hong Kong, US and Singapore and so and these are reflective also of you know, where most of the tours are coming from. So some of the big deals we've seen in the past twelve months, KKR, with a Hong Kong fund called gall Capital, spent fifty seven billion yen buying the High
Regency in Tokyo. The Canadian pe firm Bental Green Oak bought a nice hotel in Osaka also for about fifty five billion yin And you know, and then you compare that now against where most of the tours are coming from this year. The highest numbers you're seeing in Asia, South Korea, Taiwan, Hong Kong, and then in North America definitely the US and Canada. So it does you do see some matching up there as well.
And just briefly, Lisa, what does inbound tourism do for the overall Japanese economy? In other words, could you know this kind of rush of people and money coming in will that stoke growth in the local economy.
I think that's what the hope is, you know, the if these inbound tours are coming in and spending locally, you know, that puts more money into the system. The yen has weakened considerably against the dollar since you know, the beginning of twenty twenty two because the boj and the Bank of Japan has kept its negative rate policy while most of the other developed you know, economies have
raise rates. And so I think the hope now is if you know, people are coming in and spending in Japan and bringing their foreign currenzies into Japan, that will maybe kind of ease the pressure on the yen a little bit, and that and that will then feed over into the rest of the economy and helping with food prices and energy prices, which have been you know, kind of the main source of inflation, and up the slight we're seeing in Japan.
Lisa, Thank you so much. Lisa do there. She covers Asia Finance for Bloomberg. I'm Doug Krisner along with Brian Curtis in Hong Kong, and you can catch us weekdays here from Bloomberg Day Break Asia beginning at six am in Hong Kong. Six pm on Wall Street.
Tom, thank you, Brian and Doug. And that does it for this edition of Bloomberg day Break Weekend. Join us again Monday morning at five am Wall Street time for the latest on markets overseas and the news you need to start your day.
I'm Tom Buzzby. Stay with us.
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