Welcome to DAYBREAK, Australia.I'm Heidi Stroud. What's in Sydney?We're counting down to Asia's major market opens.I'm not about drool in Hong Kong. And the top stories this hour.A cautious start ahead for Asia. Trade with investors split on whetherstocks can sustain recent advances. The first of three Treasury auctionsthis week drawing solid demand for three year notes.But Dan's filing a US legal challenge to it's forced a tick tock sale, setting upa battle that could make its way to the Supreme Court.And Israeli forces edge into Rafah in.
Southern Gaza.Even as ceasefire negotiations continue with a deal proving elusive.What we're watching as we head into the start of trading in about an hour's timefor markets, including Sydney and in Tokyo, take a look at the set up here inAustralia, We're seeing futures upside about 2/10 of 1%.So a little bit of a muted start to opening.So a mixed session is really expected. It was a sluggish US session really themarkets remaining very much split on whether this is a rally that can sustainthe amount of exuberance that we continue to see given the economiccross-currents that we continue to see.
And the uncertainty over central bankpolicy. We're seeing a bit of downside when itcomes to trading in New Zealand. Chicago, Nikko futures are tradingpretty much flat at the moment. We're seeing modest gains in Australia,potentially that drop in Japan and a steadiness when it comes to the open inHong Kong. When it comes to ethics, we're seeingthe Aussie dollar trading at 6591. The dollar jumped by the most in about aweek. The yields a situation sort of paringmuch of the drop that we saw across the greenback as we also see that reboundacross oil prices.
Some of those comments from the FedReserve Bank of Minneapolis President Neel Kashkari weighing on trading aswell. We're also ahead of the Tokyo Open,though, really watching for what we're seeing in moves in the yen.We had the BOJ governor way too, telling really saying that he did tell the primeminister conceded that he's carefully watching the impact of these levels forthe yen. Yeah, that's right.Early intervention, a very big risk or question marks over that.We can perhaps expect a little bit more jawboning as well, following those thosemeetings there.
But this is the outlook here that we'vegot for US futures. Again, you can see very steady going inthe session. And so it sort of continues that tone wehad intraday as well. It has been really that question mark ofwhere exactly do we go from here? You've had good earnings coming through.You've got that prospect for Fed rate cuts that is back on the table for thisyear. But still on the flip side, you've gotelevated interest rates. This prospect, we are still going to behigh for longer and inflation as well stickier than banks expected.So again, traders are really split.
Investors are split on where we go fromhere. But Jp morgan is among those saying wecould be due a pullback. But on the other hand, you've got thelikes of Citi and Bank of America that are now looking at some signals that itcould actually be the time to snap up shares here.So that's the state of play, as we said for US futures.Of course, one of the big aspects of the intraday session as well on Wall Streetwas just this latest challenge from Tick Tock as well, because they're suing theUS government to block a new law that aims to force its Chinese parent companyto divest or face a ban.
The move sets out what could be aprolonged court battle pitting free speech rights against national securityinterests. Bloomberg political news director JodySchneider joins us now from Washington. And Jody, this is the first legalchallenge that we've seen since Congress passed the law back in April.But just start us off here with some of the details of it.Yeah, well, what's happening is that Bytedance, the Chinese based parentcompany of Tik Tok, says it has no intention of selling Tik.That this is they say that they've been basically given no due process, thatthis is not constitutional and that the.
U.S.needs to rethink this. What happened was there was legislationpassed as part of broad reaching legislation that funded Ukraine andIsrael and also included this. This part of the legislation that wouldrequire the sale of Tik Tok from its required Chinese based parent to sell iton national security grounds, or it will be banned in the U.S.starting next January. The Biden administration did this onnational security concerns. The president signed it after it waspassed in a bipartisan way in Congress. So it's really setting up a nationalsecurity debate against some of these.
Free speech rights.Of course, the Chinese government does not see any reason that they should getinvolved in this. And they're saying that there's noreason to go ahead and make that sale. So this will we expect over months, itwill go through various court challenges and end up at the US Supreme Court,really pitting those national security concerns against free speech.Jodie Can the app still operate in the US?In the meantime, what are the sort of political implications of of a ban?Yeah, so it can operate in the US. They're not going to have to go aheadand pass an emergency order or anything.
To do that.But at the same time there there is real politics involved because a lot of oursmall businesses and others have come out very much against a Tik Tok bansaying this is how they do business now. And of course, many young people kind oflive on TikTok these days. And some of these are young voters thatthe Biden administration will really need for its coalition for hisreelection. They've, you know, before this they wereactually advertising and Tik Tok using Tik Tok users as, you know, part as away to get their message out. So there's some real politicalramifications if it is banned.
Of course, what the Biden administrationand Congress had been hoping was for this sale rather than a ban.But Bytedance today made that clear. They're not going to go that route.And Jody, we've also heard from the former US Treasury Secretary StevenMnuchin, saying that he's still interested in buying the US operationsof TikTok and thinks that the the technology could actually be replicatedto. Right.What are some of the conversations happening around this?But? Or is it kind of a moot point ifBytedance has been pretty clear in its.
Intentions to not sell?Yeah. I mean, there's that issue you ifthey're really not going to sell so you know the buyers become a little bit of amoot point. But there is this issue of replicatingit's ammunition. And others have kind of made the pointthat, well, maybe if they you know, you can't you can't beat them, you know, youcan't join and beat them, and beating them would be to really be able toreplicate this algorithm. Others think that's not so easy.The reason that TikTok has become so incredibly popular is this algorithm.And remaking this one won't be terribly.
Easy, which is why we saw thislegislation passed to begin with. And of course, it's not just tick tockthat's in focus in the US has just these continuing restrictions or tightening ofrestrictions on China's access to advanced chipmaking equipment as well.Yeah. So today we saw a move to really furthertighten those export restrictions and not allowing Weiwei to have access toQualcomm or Intel's chips any further. And we've seen these restrictionscontinue. But this was another round of this,according to people familiar with the matter.But then we heard from Michael McCaul,.
The chairman of the House ForeignAffairs Committee, who confirmed this, who said they're really trying totighten these restrictions and allow no chips, no American made chips to get toWeiwei, making it very difficult for them to to make this advancedtechnology. Political news director Jodi Schneiderin Washington with the latest on tick tock and some of those techcross-currents. Well, President Xi Jinping has arrivedin Serbia on the second leg of his European tour, looking to bolster tieswith a country that's embracing Chinese trade and investment.His arrival comes 25 years after the.
Deadly U.S.bombing of the Chinese embassy in Belgrade during NATO's operations aimedat pushing Yugoslav troops out of Kosovo.And a Serbian newspapers wrote that China will never forget the attack whichthe US blamed on faulty maps. Well, staying with geopolitics in theU.S. says Israel and Hamas should be able toresolve their differences over a proposed ceasefire in Gaza.That contradicts top Israeli officials who said the two sides remain far apart.Truce talks have stalled as Israeli forces edge closer to the city of Rafah.Meanwhile, President Biden has condemned.
The rise of anti-Semitism as part of aceremony to remember victims of the Holocaust.That hatred was brought to life on October 7th in 2023.On a sacred Jewish holiday, the terrorist group Hamas unleashed thedeadliest day of the Jewish people. I have not forgotten, nor have you.For more, let's bring Olympic editor Michael Heath with the latest.And it is this sort of optimism. Is it sort of based on anything?It look, it's important to sort of get the timeline here, right, Heidi.So the Israelis started to move into Rafah, sent these warnings toPalestinians who are there that they.
Need to move.And suddenly Hamas had agreed to the truce with that happening.So Israel is definitely, on one hand pushing to try to exert pressure on onthe on Hamas to to do this deal, to release the hostages.But it's also setting itself up to try to complete its operation as well.So Hamas is under a lot of pressure, but Israel is going to be under a good dealof pressure as well, because the US definitely wants this.I mean, as we've reported that Prime Minister Netanyahu is aware thatPresident Biden does not want a war going on, protests on universities,etc., while he's trying to run a.
Reelection campaign.It doesn't work for him. So the Israelis are almost running a twotrack thing here, trying to pressure the pressure Hamas to do a deal, release thehostages, but also setting themselves up to complete the operation.And a poll shows that most Israelis want those hostages released.They think it's more important than going into Rafah.So, look, the the Israelis say they are quite far away, but the Israelis arealso playing their own game there. The US seems fairly confident thatsomething could happen. So really, given the state of Hamas, Imean, if it doesn't agree to this and.
Israel proceeds, potentially that's theend of the organization, or at least it'll be it'll be decimated.So it is in their interests to try to get a deal done.What is the standing of Hamas, though, now?Because one of the big question marks is over.All of this has just been how much further radicalize people could be andit would be incredibly difficult to stamp out.That's exactly right, Annabel. I mean, Hamas has popularity wheneverthey've done polls or tried to do polls in Gaza, but certainly in the West Bankwhere there's less fighting, obviously.
It's sporadic, but it's not a fulloperation. Hamas popularity is very, very high.And the Palestinian Authority, which is sort of the inheritor of the old PLO, isin single digits. So Hamas is seen as the representativeof the Palestinian people, Not necessarily as my understanding, guys,because people support what it does, but it's the only group that's sort ofoffering resistance now. I mean, we are almost at famine or ifnot even famine now in Gaza. I mean, there's another generation ortwo now who will be radicalized. And this is what's so critical about,you know, having some sort of plan for.
What happens after this war, whichIsrael has been very definite in trying to avoid.But the potential for radicalization is very high and the ability to stamp outHamas. When you go into Rafah, presumably acertain number of factors or leadership melt away as well.You know, this is a devastated sort of area.And we've seen in other areas where Israel has bombed or has has clearedmilitants that they pop up again later. And so Hamas is still going I mean, youknow, it fired rockets and killed two Israeli soldiers on the weekend.I mean, it still is a viable group and.
It has its political leadership outside.And if not Hamas, then something else will morph as well, because until thatthe underlying issue is solved, resistance will continue.And, you know, people are living in a in a Stalingrad style environment downthere now. I mean, there's very, very little hopethere. So it's really, really worrying aboutwhat the future looks like. There are huge implications for regionalplayers to read in terms of age and the risk of both humanitarian overflow, butalso militants crossing the border as well.How important is that relationship for.
Israel?Look, it's hugely important in Egypt was obviously the first country to recognizeIsrael and to and to sign a deal with them in 1979.And Egypt does have problems with militants in the Sinai Peninsula, whichis where where the Palestinians would need to evacuate to.It's been very clear it does not want refugees.These people have a home. It is Gaza, and they shouldn't be goingthere. And Egypt at a certain point has gone sofar as to say if Israel doesn't do its best to protect civilians, to ensurethey're not pushed out, it would.
Reconsider that agreement, which isthat, you know, it's a really, really big red line.That one, I'm sorry. It would have devastating implicationsif that was to be reversed. But yeah, look, Israel is highly awareof that. They know how important Egypt is.The US. Egypt is very important to the US aswell. So what Israel has done now is it'sactually taken control of that border crossing just in its little campaignthat it's done to try and stop the movement of weapons.But it will be very mindful of of.
Egypt's position.Qatar, similarly, both Qatar, Egypt in the US say that they're the ones thatare really, really pressing this deal, will look at it to make weight though,with the lettuce and you can get that roundup of the stories you need to knowto get your day going in today's edition of DAYBREAK.Time to subscribe. This can find that at Daily Go.It's also available on the mobile in the Bloomberg Anywhere app.You can customize those settings as well so you just get the news on theindustries and assets that you care about.This is Bloomberg.
Minneapolis.Fed President Neel Kashkari thinks it's likely the US central bank will holdrates until officials are confident inflation is under control.Speaking with Bloomberg TV at the Milken Institute Global Conference, Kashkarisaid the Fed will do what's needed to hit its 2% target for the second half of2023. Surprised us at how rapidly inflationfell. That was really good news and theeconomy remains strong. We all hope that was going to continuethe first quarter of this year. It seems like it's stalled out.So it's a little too soon to declare.
That we're definitely stalled out.Or maybe it's just taking more time. I think we're in a good place right now.Labor market is still strong. We should take our time to get more datato see if this inflation is going to continue and if it does, great.If it doesn't, then we need to take that on board.What is the complexion right now of disinflation?What actually drove us at least down to the level where we're at right now?Most of the gains that we saw last year were supply side improvements.Supply chains getting better. Americans coming back to work.A lot more workers entering the labor.
Force.That's really positive. I don't think monetary policy actuallybrought demand down that much. And so most of the gains were because ofthe supply side. Now, the question is, if monetary policyhas to take us the rest of the way there.Is it tight enough to do that? I wrote an essay today on our websiteraising that question, and I'm not sure how tight monetary policy is.We need more data to assess how do we know that the inflationary process hasstill some ways to go, or how do we know that maybe this is it, This is the newnormal?.
Well, it's not the new normal becauseit's 3% and the Fed can and will achieve 2%.The question is, if this inflation is still underway, then maybe it'llcontinue on its own and we can then take that on board if we need to hold rateswhere they are for an extended period of time to tap the brakes on the economy,or if we even needed to raise, we would do what we need to do to get inflationback down. I have to do that about 2% and I knowwhy the Fed stands by that 2%. But I talk to people around the worldthis week here and their cost of capital, they're basing that more oncloser to a 3% rate.
And the idea is they're saying, look,the 2% target that needs to come up. That's not the reality long term,structurally, at least not for the folks in this room.Yeah, I disagree with that. I mean, I think that ultimately thecentral bank, whether it's the Fed or the ECB or the Bank of England, candetermine whatever the inflation rate is.And over time, if they conduct their policy appropriately, people will cometo understand that we'll adjust their behavior.We're committed to 2%. We will get to 2%, and we will get aninterest rate environment necessary in.
Order to achieve 2%.It was Minneapolis Fed President Neel Kashkari there speaking with ourcolleagues, Carol Massar and Romaine Bostick.Let's bring our next guest. Gary Schlossberg is a global strategistat Wells Fargo Investment Institute. In a lot of way, it makes complete sensethat the Fed is likely to stay higher for longer until there's absoluteconfidence that inflation is under control.What do you think that potentially looks like, given that we do see that gapstill between monetary and fiscal policy and the distortions that it continues tocreate within inflation prints?.
And are markets at this point kind of,you know, seeing the reality of that situation?Yes. Well, I think longer term, there aresome headwinds out there. We're running large budget deficits.There is a tendency for them to move a bit higher.Near term, though, we are beginning to see the economy soften.We think the recent economic data do continue to point toward a mild, maybe amoderate economic slowdown during the latter part of the year.That should take some additional pressure off inflation, at least for atime.
The big question is what happens afterthat as the economy recovers? What is that equilibrium inflation rateand how hard is the Fed have to try to bring that inflation rate down to a moreacceptable level? In the meantime, what does that mean forthe sort of the style of trading that we've seen really dominate?Right. Are we going to see more pressure whenit comes to sensitive sectors, given that earnings by and large have beenpretty favorable for tech? Well, we think the good news has beenthat tell when provided by your friends. The real concern was the upside risk tointerest rates, which we think is.
Dissipating now that there are signsthat economic growth is winding down. Referring to the employment report andthe Purchasing Managers Survey for services activity, the dominant sectorof the economy that came out last Friday, that, along with other evidence,suggests that growth is losing momentum and that should take the pressure offinterest rates. We think the market can navigate thatfine line between slowing earnings growth, no recession and interest ratescoming off a bit more, and that allowing valuation accommodating highervaluations. So if growth is slowing down, where areyou looking to put your money instead?.
And that includes, of course, marketsoutside the US, possibly. Well, we have advocated quality allalong for the last couple of years. We think in this kind of economicenvironment, quality becomes most important.That means large cap over small and mid-sized stocks.The U.S. market.Over developed markets, over emerging markets.The sectors that we favor health care beingone of the more defensive sectors of the market, benefiting from favorabledemographics.
And we also favor materials, at leastfor now, and industrials more for secular reasons.The commodity supercycle underpinning raw materials and industrials benefitingfrom fiscal stimulus and a variety of other factors benefiting that sector.We are positioned to rotate, but we think it's a little too early for that,given the uncertainties out there. So with that sort of backdrop in mind,would you be more bullish or more likely to put money to work in China or inJapan? We'd be reluctant at this point.China does have a few things going for it.We are seeing export led growth.
How durable, how strong that willcontinue to be remains to be seen, son, given some of the headwinds out there.Likewise, for Japan, the depreciation of the yen, much like the yuan, is creatingmore favorable export environment. But up against the U.S.in this kind of environment, with the focus on quality stocks, we just feelmore comfortable with a bit of a bias toward the U.S.market. All right.That U.S. exceptionalism persists.That was Gary Schlossberg, that global strategist at Wells Fargo InvestmentInstitute.
Thanks so much for your insights.We'll have more to come on DAYBREAK, Australia.This is Bloomberg. All right.Taking a look at how U.S. futures are faring so far in thesession. Look, we're really not really seeing toomuch action this morning so far, but it does really tell that story to is aboutwhat happened intraday as well. Traders are just very uncertain onwhat's to come from here. You've had strong earnings.You've got that prospect for Fed rate cuts.But at the same time, interest rates are.
Still elevated, inflation is stillsticky and investors as well coming out with some quite different calls.You've got the likes of Jp morgan, for instance, saying that we're due for apullback, but Citi and Bank of America are looking at signals that now could bethe time to snap up shares. That's the outlook for U.S.futures. Let's switch now and take a look at whatwe're expecting in South Korea later this morning.We've actually got the trading debut. We've got the trading debut of a bigcompany in South Korea, HDI, Hyundai Marine Solution.That's a ship repair company raised more.
Than or nearly $550 million in its IPOprice at the top of the range. Strong demand, investors saying we couldsee a bit of a pop. Only a very small amount of the companyexpected to start trading later today. I think the most likely scenario iswhere we are right now, which is just we stay put for an extended period of timeuntil we get clarity on. Is disinflation in fact continuing orhas it, in fact, stalled out? I don't think we know the answer tothat. I would say the most likely scenario iswe sit here for an extended period of time.Minneapolis Fed President Neel Kashkari.
Speaking at the Milken Institute GlobalConference in Beverly Hills. Take a look at the setup.It's looking pretty mixed as we get into the start of trading.We're about half an hour away from the start of cash trading here in Sydney, upby about 2/10 of 1%, indicated upside there for futures after we had a prettymixed kind of set of messaging, interesting messaging from the RBA,despite, of course, staying on hold as expected at 4.35% in the meetingyesterday. Kiwi stocks are already seeing a littlebit of downside. Their Nikkei futures looking prettymuted, looking like we'll see a negative.
Start to the session there as well.We did hear from jacob. No way to say that he had communicatedhow carefully they're watching levels in the yen to prime minister Kishida aswell so that we could currency you know when it comes to the benefit that wehave for exporters, it used to reliably boost shares of car makers for examplein Japan, inflating the value of their sales and profits overseas.But it's interesting that that correlation between the yen and stockprices has actually broken down. Senior Asia stock reporter Haley Casadojoins us to explain why and had a really great to have you here in Sydney.So, you know, it's interesting because.
You've long said currency is only kindof a small factor when it comes to the rally.But we've actually seen that correlation decrease for the car makers.Yeah, I mean, it's very interesting because I mean, carmaker is probably themost, you know, got the most benefit from a cheaper yen.No other sector has been fitted from the cheaper end than carmakers but even thecar shares have started to underperform when the and it's has declined.So that is that could be a possibly a sign this things might be changing.Now since around mid-March or April, Japanese carmaker shares haveunderperformed the broader Japanese.
Stock market as well as othercompetitors in other countries. And so many investors are starting tofear that something might be changing in the dynamics of the market at themoment. What does that sort of benefit forcarmakers come soon? And we kind of entering a period ofstability for the end of to the excitement of the most likely bouts ofintervention, or do we expect that divergence to continue to play out?That's a good question. I mean, I think it's still too early tocall. I mean, I see different views frommarket players,.
Butmany long term investors do think that there is a risk that the might reboundin the future given that the yen has been so cheap.If you look at the purchasing power parity, the yen should be around 95,whereas at the moment being it's 160. So if you think that over the long termthe currency might correct to a levels where prices you know what what you knowthe price level is justified, thenI think many investors pay attention to that aspects ratherthan an incremental increase in profits in the near future when the dollarvolume moves to yen or ¥3.
Soso for long term investors, it is not time to buy or export those shares justbecause the yen is getting very cheap. But on the other hand, the short termplayers tend to look at the volatility in currency markets.So if you think that the the the yen might weaken further in the next threeweeks, then it might be a good idea to buy Japanese carmaker shares.So, I mean, it really depends on the, you know, time frame of your investmentand I think. That was our senior Asia stock reporterhitting a key center there and sticking with that weekend theme and also theimpact on earnings because Nintendo is.
Another company.It's just reporting and it says it will soon announce a successor to its sevenyear old switch gaming console after forecasting a bigger than expectedprofit decline. President It shouldn't.Shintaro Furukawa posted on X to say an announcement on the next hardwareplatform will be made in the coming year.That came after a warning that operating income will fall 24% in the currentfiscal year. Walt Disney shares tumbled the most in18 months after a tepid outlook for growth in streaming subscribers.It also says theme park visits are.
Expected to moderate from peakpost-COVID levels. Disney Plus announced more than 6million subscribers in the second quarter, but sees no core growth thisperiod, with profitability hit by expenses for cricket rights in India.Definitely back on a growth trajectory. Not just China, but all of Asiarepresent growth opportunities for us both in terms of the streaming servicein select markets as well as in terms of the Parks and Cruises business.So we do see good growth opportunities there.Europe and Latin America continue to be good growth opportunities.And make no mistake, North America,.
We're not done growing yet.We still think there are terrific opportunities here for us right at home.Reddit shares jumped in extended trading after first quarter sales toppedestimates, impressing investors with its first results as a public company.Revenue increased 48% in the period to $243 million.And the social network projects sales in the current quarter of up to 255million, which was well ahead of the average analyst forecast.UAB's first quarter profit came in above estimates as gains in wealth and cardfees cushioned a slight drop in lending income.Net income for Southeast Asia's third.
Largest lender was 1.2 billion USD, downless than 1% from a year earlier. The bank maintained its outlook forlending and fee growth. UBS shares jumped as it returned toprofit after two quarters of losses. Net income of $1.8 billion was threetimes what analysts had forecast. CEOs.Sergio Monti told us the bank is close to cementing the integration of CreditSuisse. Very good progress on our integrationplans. But also it was great to see a verystrong return to profitability, both on a reported basis, but also very strongunderlying profits.
We also see good momentum with clientswith inflows across our businesses and and our capital is strong.So allowing us to continue to pursue our capital return plans and also theinvestment bank was actually quite strong.Better than expected. Again, what does it tell you about whatyou can see in the future? Is it a one off or actually is a pathahead? Better actually is a good momentum.You may remember in the fourth quarter, we also had a very strong performance inbanking. As we integrate the new colleagues fromCrédit Suisse on our platform.
We start to see the pipeline developing.We are able to execute. And so it's very much in line with ourexpectations of of improving the mix between our markets business and ourbanking business in the investment bank. So in the investment bank, where do yousee the biggest strength? I know we also heard about possible joblosses in Asia. Is Asia at the moment weaker than, forexample, parts of the U.S. and investment bank?No, I think that we reinforced our franchises globally.I think that's of course, we are still going through across the entire bank.We are still a lot of work to be done to.
Restructurethe businesses and to bring them back intoeven stronger profitability. So I think that is a good momentum.We achieved almost a 10% return on Citi one, which is still a third or 50% awayfrom our final target. So still work to be done.We always say that 2024 is an important year and as we now approach the end ofMay, we going to execute on our legal entity mergers which allow us to unlockin the future further cost savings in important year2024, because it's also a more difficult year to 2023, not because it is a moreFirst of all, we have two huge.
Milestones the merger of our legalentities. And the second one we start to do themigration of clients from the Credit Suisse platforms into the UBS platforms.So this is a very technical still requires a lot of support and people todo to do that. And but as we start to do that, we canunlock some cost savings, but also unlock.Capital savings, funding savings and therefore,you know, achieving our final targets to achieve 13 billions of savings by by theend of 2026 for this year, we do expect half of thatbeing achieved.
So six and a half billion.BBC So Jérome also speaking to Francine Lacqua.More ahead on DAYBREAK Australia. This is Bloomberg. Apple has unveiled a new AI focused iPadPro and a larger iPad air aiming to reinvigorate a tablet lineup that'slanguished over the past two years. The pro revamp includes an all LEDscreen and faster M4 chip. Let's get analysis now with KarenJacobs. She's associate research director formobile phones research at IDC Asia-Pacific.And and Karen J.
And let's just start off with with yourreaction to this lineup that came out. Of course, we've seen weaker tabletsales. They've sort of picked up slightly inthe first bit of this year. But do you expect to see this lineuphelp to stimulate further demand? I think it should stimulate furtherdemand and more growth in 2024. Apple didn't announce any iPads lastyear, so that led to a lull for Apple in the tablet segment.But with this announcement and four new iPads and a price drop for their iPad10th generation, it should hopefully trigger some consumer interest.They should be looking to upgrade some.
Of the devices that they had purchasedearlier during the pandemic time. And where do you see most of the demandcoming from? Because as we said, there's been sort ofthat that lower price tag segment and then you've got the operation where it'sthat sort of clear competition perhaps where where Apple's looking to competefor iPhone or PCs, rather. Which one are you more excited about atthis point in time? So obviously the iPad Pro with the, youknow, the tandem display and the new M4 chip and with the more powerful neuralengine. So that obviously, you know, it is forthe premium users and has the most.
Upgrades that Apple has seen in theiPad. But again, I think because of the higherprice, it's going to be focused on the floor users, more premium users.But most of the growth should come from iPad and that it's just announced at thesame time for people coming into the iPad or iOS gap.That is the lower priced event and to that should be driving most of thevolumes. But at the same time, the iPad Pro, thatclearly puts Apple in the space where we are talking about devices, whether it'slaptops or iPads or any other, you know, portable devices that we're talkingabout today.
Initially, we didn't sort of hear awhole lot about the strategy. Do you think that's what investors arereally looking for if they're saving that for June?Is there a risk of under-delivering and disappointing their.I think it was kind of expected that this event is more for the event ratherthan being focused on the air strategy, because the air strategy is not going tobe just events, because it's going to be encompassing all the other devices andso forth. And so at the max or, you know, thewhole range of Apple devices. So we should also hear what about inWWE, DC?.
Tim Cook has been hinting at it, butfrom this event, what we see is they'll still focus on making the hardwarecapable to run some of those algorithms and you still have to have theprocessing power. What have the horsepower?Then Apple is ready to bring the software into it.Karen, how do you think this plays out in the key market of China?Well, obviously, there's been a lot of challenges for us.Do you see a steady recovery there or is it this sort of these levels are more ofa new normal for Apple? I think Apple should probably brace tothe new normal, which means that maybe.
It wouldn't get back to the same levelthat we've seen when it was on the decline.But at the same time, Apple, the interest in and the New World featureswould generate interest not just in China but other markets as well.Karen, do you think that Apple needs to make markets or tweaks, rather, that arespecific to markets and mainly China, of course, given it does appear to belosing a little bit of ground there? The challenge for Apple in China marketis the resurgence of Wall Street to a large extent.So if you look back at 2019 when some of the trade bans came into place and thenthe pandemic happened and, you know,.
People were allgrappling to get their hands on the latest independent devices, it reallyable to grow in the China market then and now.If you look at most of the Chinese vendors, they are bringing it intothere, into the language when they are selling their products.So I think 2024 is that year when we see a lot of the Chinese players talk a lotmore about A.I. in the devices, about different usecases, how they're differentiating in terms of the on device generatedapplications. So I think it's the right moment asApple analysis something in W DC next.
Month and then you know in fall thisyear when the new products new iPhones launch and if we can see some of thosefeatures differentiate iPhones from the Android upgrades in the market, thatshould definitely Apple to kind of claw back on some of its share in the market.Do you think there needs to be any sort of concern around perhaps Apple losingground to Chinese made smartphones in other markets outside of China?In the other markets. I think really Apple has had a dominantposition in the premium segment. But what's most more interesting to seeis that even in the emerging markets, Apple is having a hole in the premiumsegment, but we are seeing more and more.
Users moving towards the premiumsegment. So the overall pie is increasing forApple. We've seen tremendous growth from Applein markets like India and Indonesia, in some countries in the Middle East.So that is definitely I think even though there is competition for theChinese space at the higher end, Apple is kind of in a same situation.But again, we've seen Samsung come up with this smartphone, so that's creatinga lot of interest. Google has just announced their pixeleight. They've been talking a lot about AI intheir smartphones, and their smartphones.
Are known for A.I..So in the premium space, I think what Apple needs to look at in the non Chinamarkets is what's the overall messaging coming around?But in overall, I would think that, you know, Apple is still kind of in a safespace there. Karenga, associate research director formobile phones, Research and IDC Asia-Pacific.You can watch us live and see our past interviews in our interactive TVfunction TV. You can also dive into any of thesecurities of the Bloomberg functions we talk about.Join in on the conversation as well.
You can send us instant messages duringour shows. This is for Bloomberg subscribers onlyto check it out at trigger. This is Bloomberg. All right.Well, it's an interesting time given, of course, we know many households aroundthe world are still battling with the cost of living crises.This sort of highly uncertain time with record high interest rates across a lotof economies. So we've been taking a look in thisBloomberg story at the cities with the most millionaires.And what changes, though, that we've.
Seen across these major cities.We we know these are cities like New York, like Hong Kong, like Sydney atplay here as well. And when it comes to New York, the statsare quite interesting. One out of every 24 New York Cityresidents is now a millionaire. So the number of people with that sevenfigure net worth has jumped in Manhattan, also across the Bay Area andalso Singapore as well is the other one that saw a major boost.Interestingly, Hong Kong, London and Moscow, they're seeing declines and yousee Sydney there also in play as well. Yeah, it really is that shiftingdynamic.
I mean, of course Hong Kong stands outas one that has, as you said, seen that bit of wealth exodus coming throughTokyo is another where we've seen a bit of a decline.But cities on the rise as well in this part of the world.Shenzhen, for instance, you've got cities across India, Ho Chi Minh Cityand Vietnam. Scottsdale, Arizona, all of these areactually seeing more millionaires coming in or doubling, at least in the past tenyears, really driven by, of course, that boom in financial markets that we'veseen concurrently. And actually this is the most read storyon the terminal over the past day or so.
It's just bank bonuses.Of course, it's a close topic to many of our viewers, but some can actuallyreally perhaps look ahead to pretty good pay packet toward the end of this year,because the earliest predictions are coming through for Wall Street bonusesthis year. Rewards could be set to jump here.So if you're someone who underwrites debt, you could see your payout swell asmuch as 25% deals picking out. We've been tracking that for bondtraders, equity underwriters, incentives could rise as well by 20%, But, Heidi,always a very perilous task as well, too, to try and predict bonuses at thestart of the year.
The big question, of course, is whathappens over the coming few months. Yeah.And what's also interesting, of course, is how we've seen the you mentionedShenzhen, but imagine there's also lots of changes when it comes to majorbanking cities like Shanghai. Right.We have heard more and more reports of, you know, if not layoffs, but at leastsome sort of attempts to try and through attrition, reduce headcount with some ofthe big Chinese brokerages as the business continues to come underpressure there. So some pretty interesting stats there.And I thought pretty interesting for New.
York as well, given that we have beentalking about this big exodus for that city in favor of Florida.And, of course, geopolitics always at play.And that the big story that we're following is what happens with Bytedanceand Tik Tok. We heard from the former U.S.Treasury Secretary, Steven Mnuchin. He's still interested in buying Tiktok'sUS operations from Baghdad. He spoke with Wall Street Week anchorDavid Westin on the sidelines of the Milken Institute Global Conference inBeverly Hills. So very interested in buying it.And to the extent they want to sell it.
Or spin it off, we very much want topursue that. I support that.Congress passed the bill and it's now been signed into law.I will say this has had just incredible, overwhelming support with Republicansand Democrats. This may be the only thing thateverybody agrees on. The fact that it's on a £160 billion, Ido think it's a security issue. Does the two that does the deal stillwork? If the algorithm doesn't come withTikTok? Well, the Chinese government has beenvery clear that they won't give an.
Export license on the algorithm.And I understand that we had sensitive technology that we don't want totransfer to them and they don't want to transfer this to the US.I've actually spoken to a lot of tech companies hardworking about rebuildingthis. I do believe the algorithms could berebuilt. So my plan, if we were to purchase that,would be to rebuild the technology under US leadership, make sure that it's alldisconnected from bytedance going forward and that it is very robust andsecure. That was the former US TreasurySecretary, Steven Mnuchin, speaking to.
Wall Street Week anchor David Westin.And geopolitics is one of the key themes that we track.The market moves across this part of the world today.The four futures setting up for the opens for Japan, Australia and SouthKorea looking very, very subdued at this point in time.Not really expecting any moves, big moves in either direction, given thatlack of uncertainty and movement on the Wall Street session intraday, tradersare just really split over the outlook for here.Stronger earnings expectations for Fed rate cuts.But still at the same time, you've got.
Stickier inflation and the prospect iswhat we stay higher for longer. One of the key stocks that we will bewatching and could see a pop at the start of trade is one in Seoul.It's a trading debut for a ship repair firm today, HD Hyun Dye Marine Solution.It's raised nearly $550 million in its IPO.It's actually the biggest one we've seen going back to January 2022.And it really cements South Korea's position as the busiest or one of thebusiest venues for fund raising through equity sales this year.Stock, as I said, could see a pop at the start of trade.
