Bloomberg Daybreak: Australia 04/23/2024

Welcome to DAYBREAK Australia.I'm Paul Allen in Sydney. We're counting down to Asia's majormarket opens. And that of old rulers in Hong Kong.The top stories this hour. A stock rebound set to extend into Asiaas investors hope strong earnings can quell worries over geopolitics and highinterest rates. Treasuries waver ahead of a flurry ofbond auctions by Time's digging in for a legal battleover us moves to force a tick tock sale. The case shaping up as a test of resolvefor officials in Washington and Beijing. Plus, how Tesla's China price cuts couldwipe out its entire operating profit in.

The world's biggest EV market.All right. Right out of the gate.We've got some breaking news for you out of Australia.It is due to Bank PMIERS. That's a partial reading for the monthof April. We're seeing a modest improvement herein the composite number of 53.6. That's from the 53.3 that we had back inMarch. A reasonable rebound in manufacturing aswell, 49.9 just a shade below that crucial 50 level.And the PMI services, the read that's backing off of that, but still inpositive territory, 54.2.

We are, of course, counting down to themajor data event of the week here in Australia.That's going to be Wednesday's first quarter CPI numbers that's seen holdingsteady at 3.4, but some encouraging partial readings there from those due tobank PMI. As let's take a look at how we'reshaping up in terms of trading for this Tuesday in the Asia Pacific.As you can see there, we've got futures pointing higher by about a quarter of 1%for Australia. And we did have a broad based rally onthe ASX on Monday, up 1%, pretty much every sector apart from energy, was inpositive territory and it was a similar.

Story for the Nikkei and the cost be aswell, the cost be its it was almost up by about one and a half per cent wemight see a bit more of the same today. A Nikkei futures looking kind of flat atthe moment. New Zealand showing a little bit ofsoftness off by a quarter of 1%, but it was a pretty good day for equities inthe US. We'll get to that in a moment, but we'regoing to have a bit of data out later as well.PMIs for Japan are watching out for those CPI, for Singapore for the monthof March. That's coming up too.And of course there's going to be a.

Flood of earnings out of the US and all.Yeah, that's right. I mean, as you said, we did see us dogsturning a little bit higher overnight. But the sustainability of the rebound,that's really the key question here. You've got U.S.futures is coming online this morning, fairly flat, in fact, a little movementacross the screen overall, but it is that countdown to key numbers that arecoming out. The Magnificent Seven very much infocus. We've got key numbers from that group ofstocks and the expectations as well. Extremely high because at BloombergIntelligence team seeing around a 40%.

Jump in earnings growth.So whether they can deliver on that, that's really the key question.And strategists are very much split on the expectations for numbers.Bonds wise, we actually saw them falling oil as well, sort of slipping a littlebit higher this morning, but slipping overnight.It does seem that the the geopolitical tensions, Middle Eastern risks, they doseem a little bit contained for now. And, Paul, that's certainly playing intothat dynamics that we've seen not just for crude, but also a gold in turn.In. Our next guest is cautious on both crudeprices and gold as well.

So let's discuss this and more withChris Wisdom, a head of research at Pepper Stone Group.Chris, I'm just wondering if your position on oil and gold is informed bythat sort of easing of the geopolitical tension we've seen in the Middle East,or is it something else? Is it maybe a supply and demand dynamicthat you're looking at? Well, think in terms of the gold one.I mean, it's obviously had a significant run, but 22% in recent months.And, you know, some of the optionality it got a little bit too stretched, whichseen, you know, in very, very short dated calls.Well, one week Coles and gold trading.

About a three volt premium to puts putsort of traditionally been a level where sentiment got a little bit stretched alot of this the correlation we've been seeing in gold had to do with what we'vebeen seeing in crude and of course so people have been using thispredominately as a portfolio hedge against geopolitical headlines.It does seem now that Israel is firmly focusing their attention on Hamas asopposed to sort of Iran and the broader region.So I think people are seeing a very high probability now that this is going to becontained and which is rolling off a few of those geopolitical hedges.I think there's probably some further.

Downside scope just from a positioningperspective to get down into, say, 20 to 60, where I think you probably offersome a chance to flip the positions and look to go long.But yeah, it's a very extended geopolitical hedge that's coming throughmarkets. We've seen them manage moneyoptionality. As I say, I think there's a little bitmore downside there. Yeah, the crude price, if we if we lookat that, I mean, we traded from 91 bucks down to 85, 70 or so just holding the 50day and Brent and yeah, if you look at two term premiums they've sort of movedin alignment and I just say there's.

Probably a little bit more downsidethere. But certainly gold, you know, would belooking for a better bid to come through back in sort of 20 to 60.Okay. So does this meanyou're looking at opportunities in equities?And I'm thinking, particularly as Bill was mentioning, we are counting down tosome pretty big earnings in the US side, changing some of your positions ahead ofthat, especially in some of those big tech names.Not at the moment. I don't think we're out of the woodsjust yet.

You know, if we have a look at the priceaction in S&P futures, for example, and NASDAQ futures, we were S&P futurestrading down to the 50 day 100 day. Sorry, bounced off that, but we justcouldn't quite close above the Friday high.And that would have been a sort of a signal for me that we could see furtherpositioning coming through. Obviously, Tesla is very much in thedoghouse for seven days in a row. I felt people just going to be sellinginto any kind of strength there. Nvidia is trading a little bit better.Yeah, obviously Microsoft's going to be a really important one later in theweek, but I just think the price action.

At the moment is pretty unconvincing atthis stage. Yeah, well, I think sentiment has got alittle bit beaten out. We've been oversold, but I was hopingfor a little bit more of a bounce from some of the risk assets to give me thatsort of buy signal. It hasn't happened.So yeah, just just to still a little bit cautious and I still feel people areprobably going to sell into this rally in the short term.I really like that. That turn of phrase that heads are inthe dog castle. That's absolutely true when you look atthe stock slide this year, but what will.

Come out of the earnings call tend tomake you turn a little bit more positive, do you think?Well, I'm going to be in. I'm going to be looked at.I'm going to be following the price action.If you if you start seeing some some volume coming back into the name, youknow, then we can look at, you know, looking for a counter move and perhapssome of the shorts that have been coming in there can push this higher.And that's what I'll be looking at. And obviously, look, looking at thevolume, I don't think we've ever seen a situation where the stock's down eightdays in a row.

Yeah.We've had for over occasions where it's been down seven days in a row and eachtime it's sat back. But obviously we haven't had this priorto earnings. That's the key point of differential andsentiment towards Tesla. And the whole EV space is is shot topieces at the moment. So I think there's there's opportunitiesin heavy names, but probably not so much in Tesla at the moment.You know, people are looking at those deliveries.The reasons why some people bought into Elon Musk's reasons recently.But I think when you when they cut 10%.

Of their workforce, I think most peoplenow realize that this is actually a demand story and not just a supply issuethat's coming through. And yeah, so I feel so there's there's alot to play out in the stock and there's still some downside in the in the price.I think any kind of short covering rally from thisis an opportunity to to look to get shorts into this.I think there's still a lot more negativity to play out on the stock.And Nvidia, as you mentioned, another key earnings.And really we've seen so much sort of a focus on that and and concentration riskperhaps in the market.

But what price action are you also goingto be monitoring there? Well, I think the problem is in thevideo, I mean, they don't report until until May.But yeah, we need to get that back above 800 bucks and then you start seeing theoptionality coming through. You know, the short position, somedealers that they have to hedge when the price goes up and, you know, obviouslythat means buying the underlying, which is perpetuates the price.We haven't seen that dynamic. And yeah, it's just works really well asit's just a pure momentum based and and then some as you know is a stall or twofactor is is is underperforming at the.

Moment people want quality you knowdefensive areas of the markets have been outperforming and I still feel likethat's a place that I think a lot of people are wanting to gravitate towardsand know until we see momentum showing momentum, then then I think NVIDIA isthat trading vehicle. It just needs some more buying to comethrough. It needs to sort of trend a little bithigher the rate of change to move higher.And then yeah, I think you can use it as a momentum vehicle similar to what you'dsee in something like a Bitcoin for example.Everyone starts chasing it higher, but.

You know, an actual catalyst so far forNVIDIA from the earnings call isn't going to come for a for some time.And so yeah, obviously watching the chips, watching the semi's, they've beentrading poorly but I think we need that momentum to come in then I think you canstart chasing it again. You mentioned Bitcoin and we just hadthe halving, of course, taking place. It seems to have gone off without ahitch mostly, but post halving. It does seem like the token is lacking abig narrative perhaps. What are you watching with thatcryptocurrency in particular? Well, she said, look, it's a slow movingship, obviously, and everyone's done the.

Numbers.And and we all know that, you know, Bitcoin's price in the three priorhalvings didn't do a huge amount over the the month afterwards.Not a lot of supply does come out of the market.And we know that that's the issue. But of course, we've got to focus ondemand. I think in the short term, yeah, we willchase the price if it starts going higher.I think the a lot of FOMO capital comes in, but I think yeah, we watching theseETF flows really very, very, very sharply and there's been a decentcorrelation between the performance of.

Bitcoin and you know the percentage ofinflows that you're seeing into the sort of ten ETF ETF flows, ex grayscale,which is obviously seen some big outflows.But I think on Friday we did see a littlebit of buying a start coming back into the ETF.We'll be watching that one very closely. If we do start seeing some flows comingthrough, then I think this idea of demand picking up again could be quitean interesting one. So yeah, well supply does come out ofthe bitcoin scene or the ecosystem, certainly from the miners.It's the demand side of the equation,.

Which I think really we've got to befocused on what's going to be the big, big kicker from that.I think in the short term, you know, it's going to be around the ETF flowsthat I think are driving that price action.But I'm encouraged by what I've seen in the last 48 hours, and I've also beenquite encouraged by what I've seen from the Bitcoin miners who obviously areobviously a negative effect affected by the rewards that they're going to getthe Bitcoin subsidy. And if you have a look at the priceaction overnight, riot absolutely smashed it last night about 20%.Yeah, that the whole mining scene the.

Listed miners had well over six todouble digit percentage moves. So pretty encouraged by what I saw thereas well. Yeah.That question of whether we're going to see Bitcoin mining consolidation.But that was Chris Weston, head of research at Pappas Stone Group.Thanks very much for your time this morning.And as we're discussing with Chris there, the big focus on Tesla numberssaid to report first quarter earnings later Tuesday.Investors really watching margins guidance as well.J.

L Warren Capital shares their outlookamid an EV price war later in the hour. But first, tick tock.Bracing for a court battle as US lawmakers move closer to a sale or banorder for the Chinese owned app. Details next.This is Bloomberg. Spring season is here.I think we're all asking the same question just how much earnings growthyou're expecting. Bloomberg is first to break the numbers.EYLEA just coming out right now. We have take a numbers shares ofPinterest lucid group coming out with its earnings all eyes right now onnvidia.

A lot still to come with the smartestinsights. How much better could profit and revenuehave been better than what the street was expecting saying in line withestimates. We will have full and instant analysis.Continuing coverage on Bloomberg Context changes everything. Tick tock.Chinese parent company Bytedance has made it clear it has no intention ofselling the short video app that says the US Government moves ahead with itsthreat to shut down the platform if it's not divested.For more, let's bring in tech reporter.

Alex Brinker and Alex.Tik Tok has a lot of reasons to fight, but also it's made it clear that it isnot going to be backing down quietly. Absolutely.And this bill is looking like it's inevitable that it becomes law.The Senate is meant to take up this bill as soon as tomorrow.But certainly this week, President Joe Biden said he would sign it into law assoon as it passes both chambers. So the fast track to reality is kickedoff facing this divestiture ban legislation is here.Now, bytedance to talk to Chinese parent company, the company that the U.S.government has taken issue with has also.

Expected that it's going to fight thistooth and nail through the U.S. legal system.If this bill goes into law with the current language, Bytedance would havenine months with the potential three month extension to divest the app.But that seems to be an action that would be the case of last resort forBytedance who does intend to draw this out and wage a legal battle that couldlast more than a year, according to people familiar with the matter.Alex, what's the plan here? Is it to weather the storm and hope fora better administration somewhere down the track?And also, in terms of what's worse.

Is it a ban or is it divestment?Well, if you do the math here on that timeline that they would have let's sayit passes this week, then that would put us right around January, which isinauguration time here in the US as it is a presidential election year.So certainly we've seen tick tock in the past try to kind of lean into the ideaof patience and looking for a more amenable administration.Donald Trump has changed his tune on Tick Tock, the man who was the firstpresident to try to ban the app by executive order is now saying that itshould, in fact, stay here in the U.S.. So at the moment, if this bill does getsigned into law, Bloomberg intelligence.

Puts that a 90% chance of happening,then that might be their best recourse is wait for an administration if DonaldTrump gets voted in, who is either going to drag out enforcement or might be alittle bit more amenable while they do try to fight this on both FirstAmendment arguments and otherwise in the American judicial system?Ali says the risk of this has a domino effect as well.I mean, are there. Could the US also be looking to banother Chinese tech platforms? I think a team move, for instance, sortof seen as an Amazon competitor that's had a lot of success in the US comes tomind.

Yeah, and any kind of connection toChina has been one that has gotten intense scrutiny.The way this legislation is written is about about basically social mediacompanies who are owned or majority owned by a foreign entity.So that scrutiny around that Chinese ownership has come into play becauseU.S. lawmakers are worried that because ofthe regulations in China and how they can request data from companies in thatdomicile, that there could be some kind of risk to Americans.So there are certainly a number of companies.T-Mo is a great one that comes to mind.

That might be concerned not only fromwhat the precedent could be set from this current legislation, but alsocertainly how other countries might react.You have America, who is the home to the biggest social media companies thataren't tech talk now be saying, Hey, look, this needs to be a company that'snot owned by one of our foreign adversaries and potentially a companythat owned by instead American investors.Alex Batons also are fighting a battle on two fronts across the Atlantic.There's trouble in the EU as well. What's going on there?Staring down the barrel of a fine,.

Right?They are. And it's not the first time.This is actually the second kind of major moment.Tick Tock. Lt was an app that was launched in bothFrance and Spain within the EU bloc. It rewards users.The report points system and the EU regulator opened a new probe on Mondayinto whether Bytedance violated its content law because they're worried thatthis point system might have an addictive effect on users.They have 24 hours to deliver a risk assessment.So we should see potentially some news.

On this in the coming days, but it's notthe first time the EU has gotten involved.The EU has previously announced an investigation under the Digital ServicesAct around the app's addictive design around screen time limits, privacysettings, age verification. So all that to say Tik Tok is wagingbattles not just on the American front, but certainly in other domiciles wherethere are either privacy legislation already in place or similar concernsabout its ownership and its connection to the Chinese government.All right, Tech reporter Alex Brink of there on the difficulties currentlybeing faced by Bytedance and Tik Tok.

And on the topic of difficulties, we'vebeen hearing plenty about them from Tesla.Let's take a look at how Tesla closed in the US.Not another great day for that stock as we await what is expected to be a fairlybrutal earnings report. We'll get more on that in just a moment.But it's an ebbing tide that sinks all boats in the space.We've got vinfast down by about three and a half percent as well.Worth noting, though, the performance of General Motors and Ford, the internalcombustion engine, not quite ready to join the horse and the steam engine onhistory's scrap heap still seems to be a.

Place for conventional powered vehiclesas well. Both those stocks, GM and Ford, alsogoing to be reporting earnings this week, having a pretty good day.Ford up by more than 6%. Well, for more on the Tesla story, let'sbring in our global business editor, Peter Vercoe.And, Peter, we are eagerly counting down to this Tesla earnings report.It's going to be a very, very interesting day.What are analysts looking for? Yeah, obviously there's expectationsthat earnings are going to fall. We've already seen that big 8.5% drop invehicle deliveries in the first quarter.

Year on year.So the numbers aren't expected to be good.But I think what investors and analysts are looking for is be on the numbersthis time and they're really looking for some coherent strategy from Tesla andwhether Musk is going to take the concerns seriously.We've seen in these previous earnings calls it Musk can be kind of flippant ordisinterested. He can sort of be dismissive ofquestions, sort of treat the whole thing as a chore.He'd rather be doing something else. And I think in previous times, investorshave sort of excuse that a little bit.

When Tesla's flying, you know, sales up50/% year on year, the stock surging to record highs, that sort of stuff.This time it's a bit different. I think there's going to be a real focuson on Tesla and on Musk in particular to outline that coherent strategy.As long time Tesla watcher Dan, I said who's going to be the adult in the roomthis time? We saw that chaos continue on Monday inthe US when Tesla dismissed its about 40 employees in its marketing team that wasonly formed about a year ago. And then Musk this year work on X.He's formerly Twitter saying the ads were too generic and they could havebeen any car.

So we just seem to be getting like theseshift in strategy made at the whims of Musk, who we know is a pretty mercurialcharacter at best that he had seemed to now stake the thecompany's growth outlook on a robotaxi that he says will be unveiled in August.So there really need to be clarity on that and whether that's going to come atthe expense of what was widely anticipated to be a more affordable massmarket car around the $25,000 mark. And we know that Tesla hasn't nailedfull self-driving or autonomous driving yet.What it calls full self-driving still needs constant human supervision.Peter, we've seen Tesla resorting to.

Sort of a familiar strategy, and that'sprice cuts to try and boost sales. But how much further can it continue todo that? I mean, there's some reporting out.For instance, Evercore ISI is saying that price cuts in China, for instance,could cost that the entirety of its operating profit there.Yeah, that was a really interesting report that came out yesterday after thewe saw the latest round of price cuts on the weekend.And it does seem to have been Tesla's strategy, you know, sales down, cutprices sales down, cut prices. But what's really happening now, youknow, particularly in China, it's faced.

With this whole suite of new competitorsfrom, you know, Bhiwadi to even Zhao Mei, which has unveiled its first EVA.And these are cars that Chinese consumers want.They're across all price points. They're really sort of tech heavy.And also the cool gadgets like, you know, convert into beds, they roll outkitchens and all this kind of stuff. And Tesla really does relies on itsModel three and its model Y for the bulk of its sales, not just in China butglobally. And without, say, that mass marketso-called model two $25,000 car, how are they going to fill that growth hole?They can't just keep cutting prices.

That was our global business editor,Peter Vercoe. As we look ahead to those very crucialearnings, and I'll actually have more analysis on them coming up this hour onthe outlook for the firm in China in Focus with the CEO of JL Warren Capital.That's just ahead. You're watching DAYBREAK, Australia.Here's the latest in geopolitics. The Israeli military intelligence chiefhas quit for failing to prevent the October seven invasion by Hamas.Aharon Halevy is the first senior Israeli official to step down over theassault that killed about 1200 people. He accepted blame shortly after theHamas attacks, but stayed in his role as.

Israel launched its war in Gaza.The EU has agreed to impose new sanctions on Iran over its attack onIsrael. The deal will further expandrestrictions already imposed for supplying Russia with drones.The measures also target weapons transfers to Iranian proxies in theMiddle East, including Hezbollah. Countries including Germany and Sweden.Pushing to add Iran's Islamic Revolutionary Guard Corps to the EU'sterrorism list, President Biden has told his Ukrainian counterpart the US willmove quickly to deliver weapons if the Senate votes this week to approve an aidpackage.

In a phone call, Biden told VladimirZelensky the US aims to swiftly ship the battlefield and air defence equipment.Meanwhile, the UK is sending more missiles to Ukraine, including longrange guided weapons and a package worth $620 million.All right. We have plenty more to come on DAYBREAK,Australia. Stay with us.This is Bloomberg. This is DAYBREAK.Asia just taking a quick check on what we're seeing in the Boeing space thismorning. A little bit of a retreat for yields andthe antipodean so very much tracking.

What came through with treasuriesovernight in the session. It is that changing expectation aroundtensions in the Middle East. They do appear contained for now.And also bond traders are looking ahead to a record auction for signals perhapsthat 5% yield is the peak. But certainly that is going to be areally a key test and a very tricky, tricky week as well, because we'relooking at the market absorbing nearly eight, $185 billion a calendar of two,five and seven year note sales. So certainly selling could be trackingvery closely here for. Well, let's take a look at some of themorning calls ahead of the Asia trading.

Day.BlackRock's Rick Reid says bond investors are facing a painful run up inyields may soon find relief. The firm's CIO of Global fixed incomesees two rate cuts by the Fed this year. As inflation moderates in the monthsahead. For now, he says, BlackRock has cut itsown interest rate exposure, weighting investments more towards shortermaturities. I think the beauty of this for callingfor an investor going into it is we're trying to we're you know, we're tryingto manage our interest rate exposure and in if if we think, you know, which Ithink will be the case this year, we're.

Going to get to a place where the dataand we anticipate the data improving. And I do think over the next month orso, you're going to get better inflation data.Meanwhile, JPMorgan's Marco Colonna says the three week rout in US equities, it'snot done yet. The bank's chief market strategist saysrising bond yields, elevated oil prices and high stock market concentration areamong a lengthy list of reasons. Which adds he's concerned aboutcomplacency in equity valuations, inflation, a further repricing of rightkind of expectations and overall rosy profit outlooks.And ahead of this week's earnings, UBS.

Group's Jonathan Golub is cutting theirsector recommendation on the Big Six tech stocks from neutral to neutral fromoverweight. Golub says earnings momentum is turningnegative after a surge in profit growth. UBS calculates that growth in earningsper share of the Big Six is expected to slow down to 42% in the first quarter,and that's down from 68% growth in the previous period.Bell. Oh, Paul, of course, focus on earningskicking off with Tesla and taking a look at this chart here.The slide that we've seen in Tesla stock over the past five sessions are downnearly 10%.

But the losses this year, totaling morethan 40% of a drop. The maker, of course, we know, is set toreport its first quarter earnings and price cuts.Very much the focus as well, the ramifications of those.And we had more being announced over the weekend in countries including in China,where everybody is of course are also awaiting a stimulus program that couldencourage or include incentives that aim to encourage businesses and householdsto adopt cleaner technologies. So let's discuss more of this with JoanHuang Li. She's founder and CEO at J.L.Warren Capital.

And I'm interested for your views, Johnhang we can get to to Beijing's sort of trading plan in just a moment.But these price cuts in China, are they going to be something that's reallysubstantial enough to try and boost demand there?In the case of Tesla, probably not, because I think the core issue wasTesla. Not selling well in China is its aginglock design. Tesla has not had a new product for thelast three or four years. Model three came to the market in 2017,Model Y 2020. But meanwhile there's many, many made inChina home grown brands.

Ladies, that has been show me and awhile ago a few months ago while we car and before that BYOB a number of modelsand Z GV Z cars had a few successful models all targeting at a price range ofat around a 250,000 renminbi. So this price range has become extremelycompetitive and the Tesla is not able to launch any new product in the last fewyears. Definitely slowed down its momentum inChina. Yeah, I was actually in China, mainlandChina over the weekend and I was just astonished at the number of different EVmakes over there on mainland China. But the price cuts there.Do you think Tesla is sort of shooting.

Itself in the foot?Well, I mean, it doesn't really have alternativesbecause everyone else is cutting price. And in fact, Tesla has been doingpromotion consistently over the past six months, either through the insurancerebate or zero financing. And they actually raised their model Yprice by a couple of thousand dollars, a couple of thousand renminbi, effectivelyon April 1st, but then only two weeks later it slashed price again.So, I mean, you see this as a general pattern, not just in China, but also inthe US as well. Not only just hardware software as well.At best, the subscription was $199 a few.

Weeks ago and adoption was poor, so theyimmediately cut the price by half. So I think this is going to be a reallytough year for Tesla. I mean, I think the problem can be justthe total addressable market isn't as big as people had thought.It does really well in particular markets like California and like China,where there's a lot of administrative incentives.But when that slows, where the competition catches up, the momentumjust automatically very naturally comes from.John, hang on your analysis. You point to an oversupply of vehiclesthat are coming out of Tesla's.

Gigafactory in Shanghai.Even with price cuts, is China's market able to soak all that up or are thereother markets in the region that might have to do that?I think when Elon Musk decided to build and expand GFC outside of Shanghai in2018, you had this in mind that that made in China.Cars can be exported to a certain markets, particularly in Europe.But over the past five years we see escalation in geopolitics, cancer.So and obviously U.S.the access to US market is is not possible and potentially in the futurein the market is not quite possible.

And then right now, Europe is thelargest export destination for made in China cars, but that can change goingforward. The with the tariffs ormaybe some outright ban in the future if the geopolitics continue to escalate.So it is it's possible that we see this oversupply is not at its worst.The it could go from bad to worse in the next couple of years.So right now, 50% of the cars made in China are for domestic deliveries and50% were exported away in 2023. But the European market is muted aswell. Sothat's why we see 25% year over year.

Decline in the JF three production.And right now they are making about 2000 cars a day versus its capacity at 3000cars a day. So it's at about like a 65% utilizationfor capacity utilization. So that's going to be it's going to dosome damage to its gross margin. Well, I've been hearing from Elon Muskover the past few days is increasingly going all in on full self-driving, onrobo taxis as well. But in terms of China, what's theconsumer demand like for those sorts of products and what's the regulatoryenvironment like as well? I think ABC is primarily a U.S.story because that requires to access to.

A map data and map data in China.I mean, I believe they use a Baidu map, but they have access to Baidu map, butthey don't have access to it. But they left behind a map.So that's a handicap to number one. Number two, all the data cannot leave.I'm sure data cannot leave China. So they have to process and trend thatthey are unsure. But obviously, you know, the and vedereGP hardware software are have just export ban leaving USA.So that's a handicap handicap number two.So I think FSD is not a China centric story.I don't think a consumer demand bad, not.

Especially where you have to pay 8000U.S. dollars for that subscription.So and on the U.S. side that if you read the stories outthere and there are lots of them and lots of those stories are detailingtheir journey on a Tesla drive using FSD are very accurate and very good, theboth a positive and negative. So the picture is rather mixed.But I just think it's too early to ask people to pay for a product thatrequires steel, requires, you know, a pretty frequent human intervention andstill requires hands on the wheel. But most importantly, I don't believethat there's a demand for, you know,.

Autonomous driving for a short commuteof roughly an average of 20 minutes each way from home to work.I mean, I just don't think the demand is there even in the U.S..And Jin Hong. I'm interested what you're seeing morebroadly in terms of luxury demand in China.We have seen sort of a pickup perhaps, but but spending levels do seem to be alittle bit lower still. Yeah, consumption.Consumption dipped again after the Chinese New Year in the middle ofFebruary. We are pretty diligent with our storesurveys and what we see is the first two.

Months of the year,the consumption kind of came back a little bit, but then immediately afterthe Chinese New Year gift again, you know, obviously each brand has its ownstories. They are tier one luxury brands such asand the Louis, the Paul and the Chanel. They can now up or down the supply tomanipulate the demand. Then the the outcome, the financialoutcome. But when it comes to sort of a secondaryluxury brands such as Gucci, it's a little bit tough because in the case ofGucci specifically, they have this like a change of designer and and the newdesigner is supposed to launch its debut.

That's going to hit the stores globallyin Q2 and Q3. But in a down market, when the economyis weak, what we see is the receptiveness and the you know, thereception of newness is rather muted. So in a tough economy, people embrace orclinked towards the old design, the logo and the leather fashion that preservesvalue as opposed to the fresh new design.So I think that's the having the brand that needs to embrace in the next fewquarters. All right.John Hinckley, founder and CEO of Jail Worm Capital.Thank you so much for joining us with.

Your insights.Still to come, US climate adviser John Podesta weighs in on China'sovercapacity and green tech. A look at how trade tensions are playinginto the energy transition up next. This is Bloomberg. The senior White House climate advisersays the US needs to ramp up the speed and scale of its shift away from fossilfuels. Speaking at the Bloomberg NRF summit,New York, John Podesta also joined the chorus of complaint coming fromWashington about China's overcapacity. Concerned about overcapacity in China,across the.

So-called green technologies, batteries,electric vehicles, the solar supply chain there, theparticularly the shift of the economic focus of the of Beijing has been ontrying to get out of the stagnation they were in by over and investing incapacity in some of these technologies. But that is not good for the UnitedStates. It's not good for workers and it's notgood for the world because we need a level competitive playing field acrossthe globe so that everybody has a fair chance to compete, build the productsthat are necessary. I think American auto companies and andauto workers can compete with anybody.

Across the globe.So we're going to do what we need to do to protect the investments we're makingas we're decarbonizing. You know, the first goal we have is tocut our emissions in half by 2030. That's what the IRA was all about.It was to invest in these new technologies to spur innovation.And we're not going to let those be undercut by unfair trade practices.But do tariffs hurt climate change in the sense that you wake up every day andyou think about decarbonizing? What we need to do is to have a systemthat's and I think, by the way, I you know, I'm now traveling around the worldand people.

Were first critical of the IRA.And I think what's happened, particularly with our with our partnersand allies in Europe, in Japan, in Korea and in other places is they've respondedby saying, you know, this investment led strategy is a smart strategy.It helps us spread the benefits of green energy across communities.You know, we've been very mindful of trying to ensure that every community,including traditional energy communities, feel the positive effectsof the investments that we're making. We're seeing the emissions profile andemissions reductions happening, and we need to protect that overall effort andwe'll do what we need to do to do that.

That was the White House senior climateadviser John Podesta with Bloomberg's Annmarie Horden and staying on thoseefforts to reduce emissions. Bloomberg and its latest annualassessment shows that G20 countries have made limited progress ondecarbonisation, improving their average score from last year by just onepercentage point. That's finding worries among consumers,industry and investors. Let's bring in BNSF head of APIresearch, Ali Zaidi for more. And Ali,why is it that the scores aren't improving so much?So one of the main challenges is is.

Policy uncertainty.Even the Inflation Reduction Act, which is now seen as a success.If you look at the process to getting that act passed, it created a lot ofpolicy uncertainty throughout our process.So overall, over the last couple of years, we have seen our policies arounddecarbonization face a lot of uncertainties and in some cases we haveseen actually G-20 members roll back initial measures that they have put inplace in parallel. We have not seen G-20 members fulfilltheir commitments to reduce incentives for fossil fuels annually.G-20 members are still spend hundreds of.

Billions of dollars subsidizing fossilfuels, which is, of course, not helping with emission reduction.Of the Asia-Pacific. Members of the G20 are largely clusteredaround the middle of this ranking. So what's driving the scores for Japan,Korea, Australia, India and Indonesia as well?So indeed, as you pointed out, if you look at the APEX members of G20,compared to the European members, they do relatively worse.Part of this is a reflection that European members have had longerconsistence measures towards decarbonisation, particularly when itcomes to their power sectors.

So on average they score better on thatfront. They also all have the European membershave very stringent robust carbon pricing mechanism in place across AsiaPacific, while markets such as China and South Korea do have national emissiontrading schemes, still they have a lower level of carbon pricing in thesecountries is not enough to drive decarbonisation overall.Among the pack members, we see Japan and Korea do relatively better, partlybecause they have policies across all sectors.So not just for air power and road transport, but looking at areas such asindustry as well as circular economy.

But still, overall, when we compare themto European members, they're lagging behind.And so how would a pack countries then lift their scores in turn?What are the best sort of policies to do that?So there are two fundamental areas. One, clean power is really important.And while you've seen improvements, particularly in markets such as Chinaand India, still the power market design of a poor countries compared to Europeanmembers is not in a way that provides incentives for acceleration ofrenewables deployment, where those market designs have improved, forexample, China, India, as well as.

Australia.We have seen deployment accelerate. But if you look at, for example, Japanand Korea, if you've seen annual renewable deployment actually deceleratein recent years because of the lack of the right policy market design.The other area, as I mentioned earlier, is around carbon pricing.So when we look at the level of pricing of emissions today across the regions,the pricing levels are simply too low or actually non-existent without pricingthe emissions. We will not see an accelerated trendtowards decarbonisation, particularly in hard to abate sectors.All right.

Bloomberg NF, head of APAC Research.He is not either. Still to come, fresh signs of stressemerging in Korea's shadow banking sector.Why it's being seen as a weak link in a $63 trillion chain.That story up next. This is bloombergone. South Korea is emerging as a weak linkin the world of shadow banking, with its real estate exposure quadrupling overthe past decade to more than $670 billion.For more, let's bring in our Asia credit editor, Finbarr Flynn.And, Finbarr, this is something that.

Certainly spooking a lot of globalinvestors. But what's the problem of the stress inKorea? Exactly.Good morning. Yes, indeed.And so the root problem goes back to that flush of cheap cash that was aroundthe globe after the global financial crisis.So in in Korea, as in many other parts of the world.And low interest rates near zero or less.And that cash had to go somewhere. And it went in in Korea in manyrespects, in these more riskier projects.

In and outside of Seoul.And it's come a little bit undone as rates in Korea, like much of the world,have gone up. So as serious are these issues and whatare the market participants expecting here?So to date, the government has done a pretty good job of keeping stuff intact.And but the worry is that in the second half, now that elections are out of theway, that we'll have to take a stricter sort of stance on all of these issues.So the baseline is that people are hoping expecting a soft landing, but theseriousness of the situation can't be underestimated because this could forcethe Bank of Korea to cut its rates more.

Than it would wish, and it could alsoimpinge on growth in the second half. So we have to keep an eye out.We've seen policymakers managing to sort of stem the contagion risk so far.But would this be the case this time around?And if not, what are the sort of milestones to look out for inparticular? So we have one coming up.Actually this month, a company called Taking a surprise Market at the end oflast year when it said it had to restructure its debt.So there's a vote at the end of this month for banks, including a KDB, astate lender, to sign off to actually.

Give their approval to thisrestructuring. And our reporting has shown that 50% ofthe debt on iTunes books there may be converted into equity in a huge equityfor debt swap, but we need to keep an eye on thatbecause all to the plan, to be honest. All right, Finbarr, thanks for joiningus. That's Asia credit editor Finbarr Flynnthere. Okay.Here are some of the stocks that we're going to be watching when trade opens inKorea, Japan and Australia just a few minutes away now.And keep an eye on Asian Tesla supplies.

Of course.The EV maker is set to report its first quarter results after cutting the priceof its cars in key markets, including China.Woodside Energy's going to be in focus as well and this is after one ofAustralia's largest pension funds Aware super voted against its climate plan andre-election of chairman Richard Goyder. Aussie miners might move as well.Gold taking a tumble haven, demand easing along with easing tensions in theMiddle East. Those market opens in Sydney, Seoul andTokyo next. This is Bloomberg.

Sharing is caring!