Bloomberg Fracture of day: Australia 04/29/2024

Welcome to DAYBREAK Australia fromHaiti, Stroud Watts in Sydney. We're counting down to Asia's majormarket opens. I'm Annabel Jewellers in Hong Kong.The top stories this hour. Elon Musk making an unannounced trip toChina, meeting Premier Li Chang and seeking to reverse the eBay maker'srevenue decline. BHP is said to be looking to sweeten itsbid for Anglo American after having its $39 billion offer turned down.And Bloomberg learns that Elliott Management has built a large stake inone of Warren Buffett favourite Japan trading houses Sumitomo.Well ahead of major markets opening.

Across for a brand new week, we arelooking like a pretty positive set up so far, with Sydney futures up by about3/10 of 1%, indicating an early advance of about half a percent when we get tothe cash open in about an hour. We did see US equities gaining onFriday, strong earnings reports from the likes of Alphabet and Microsoft and arelief when it comes to monthly inflation, lifting spirits at the end ofwhat was really ultimately a pretty choppy week there.Take a look at how we're setting up when it comes to Japan.Nikkei futures are looking pretty flat at the moment.There's a real question as we continue.

To see the yen tumbling.Well, past levels that have previously been touted as red lines for Japan,where that intervention is, We did see in Friday that slide just gathering paceafter a Darvish Bridge and lots of questions as to the sort of thecredibility of policymakers there in testing those losses in the early partof the session. Across major trading pairs, they couldsee a 50 channel. Futures looking pretty muted at thispoint, though. Yeah, but as you said, that optimism andthose those that strength that we're really seeing coming down to keyearnings that we had out last week, the.

Likes of Microsoft Alphabet as well,investors going into this earnings season, they really wanted to understandwhether all of this money being poured into AI, whether that was starting topay any sort of dividends. And the the message that's comingthrough from to investors is it is starting to pay off, at least for somefirms in the market. And so that it really did build into theequities backdrop. And we actually had U.S.stocks seeing their best week for 2024. There are those concerns, of course,though, around the macroeconomic picture instead.And and this week the focus very much on.

The Fed and and perhaps okay, no no hikeexpected of course, or no cut either. But what sort of messaging are we goingto be seeing from Jay Powell at the conclusion of the meeting on Wednesdayand whether we get sort of any shift coming through in his tone.Oil markets to note, of course, you've got Brent crude and WTI both comingonline this morning. Again, we had a weekly advance signs ofa tightening physical market coming in today, seeing it very close still tothat $90 a barrel level, Heidi. But let's shift our focus a little bitto what else we're tracking this morning.That's Elon Musk making an unannounced.

Trip to China and seeking approval for adriver assistance software that could help arrest Tesla's revenue decline.For more, let's bring in our chief North Asia correspondent, Stephen Angle.And Steve, you're in Beijing. You saw perhaps the plane that wascarrying Elon Musk arriving or or our members of Bloomberg News did.But what do we know so far about this surprise visit?Yeah, we are tracking the story. And Bloomberg News was tracking theplane across the Pacific, his Gulfstream that is at least registered to Tesla.We can't confirm 1,000% that Elon Musk was actually on that particular plane.But we can see from CCTV that he was.

There in Beijing meeting with thepremier, Li Chung. Keep in mind, Li Chung was the ShanghaiParty boss at the time that Musk and Tesla negotiated the the factory forShanghai that opened in 2019. And essentially, you know, there is along five year relationship, if not more, between Musk and Li Chung, andthat is the most productive factory in the world for Tesla.But keep in mind, Tesla is having troubles right now.It just coming off its first year over year decline in quarterly revenue since2020. It's also slipping down the table in theEV leadership in China.

So there are troubles here.They're cutting headcount globally. They're also said to be axing newrecruits, college graduates here in China.They're also looking to accelerate new models around the world.However, they are not at the Beijing Auto Show, which is ongoing right now.Li Chung did go to the auto show. There's speculation, at least in Chinesemedia, that Elon Musk, before he jets off out of China, might make a visittoday at the Beijing Auto Show. We cannot confirm that.We are getting a report, though, coming out, actually a statement from the ChinaAssociation of Automobile Manufacturers.

In a statement yesterday afternooncoinciding with Musk's arrival, by the way.Coincidence? Perhaps He arrived at 2 p.m.We got the statement about the same time, the data that basically Tesla haspassed the data security test on how a vehicle collects sensitive personalinformation and whether the vehicle allows a driver to easily stop its fromcollecting data. This is for the Model three and ModelY's from Tesla. But again, the overall pressure thatTesla is facing globally on its revenue is acute and it is in China.I asked Bill Russo, who is the founder.

Of Automobile City, He is a long termauto veteran in this market. He knows and he essentially said thatTesla is losing ground in this market and it just doesn't have the new modelsand does not make is not, you know, present at the Beijing auto show at atime when Chinese EVs have made such grounds over the last four years or so.It does have new technologies that we hear they want to try and maybe pushinto this market full self-driving. Is this a sort of a service, I guess,that would be accepted by regulators there?Well, that's an interesting question. The data force, you know, assisteddriving is accepted in this market.

Whether Tesla's full self-drivingsoftware and system is going to be accepted is the other question.And that's probably why he is definitely here.He wants to see that revenue stream included, of course, from the world'sbiggest auto market here in China. Tesla charges about 8,000 USD to buy thesystem outright. They charge a $99 subscription as analternative option for buyers. So he wants to get that approval fromBeijing regulators. But there's all kinds of, you know,sensitivities around the cameras that are in the system data security, thesafety.

Keep in mind, this FSD system, the fullself-driving system, it doesn't make these Teslas fully autonomous.It needs driver assistance, but it's a step upwards beyond the other systemthat Tesla has, and that is autopilot. Autopilot has had some problems and USregulators have launched an investigation into the safety, citing 20crashes allegedly involving that system since December, since a software upgradein since December. So, again, these are obviously concernsthat the Chinese regulators would have about the safety of any Tesla system.But also data security is absolutely at the crux of the differences betweenChina and the United States.

Already, Chinese regulators andauthorities have essentially banned Teslas from going onto militarycompounds and other government facilities.So there's a long road to, obviously, for Tesla.He does have the good relationships. Elon Musk with Lee Chang, obviously.But again, it's a big struggle to get that kind of approval.So immediately. But again, they said all the rightthings. Lee Chang, according to KTTV, said Chinais always open to foreign companies. He added that Tesla is a successfulexample of China U.S.

Cooperation and that Musk also,according to CCTV, told Lee that Tesla was willing to deepen cooperation withChina. Keep in mind, you can kind of see ElonMusk priorities. He was supposed to be in India lastweek, supposed to be meeting with Narendra modi, the prime minister there.He wants to get into India, no doubt. There's a lot of it, tax issues ofimport taxes and the like in the Indian market.He also wants StarLink in India. But clearly, China is Elon Musk'spriority. He flew in here sort of unannounced.Well, the Chinese knew he was coming.

We didn't know he was coming.But he obviously sees China as a more pressing matter right now.Our chief North Asia correspondent, David Engle there in Beijing with thedetails on that surprise visit. Really make sure to stick around formore insight into Musk's weekend trip to Beijing.He was speaking with Wedbush Securities. They're maintaining the view that the EVmaker is still set to outperform despite these revenue declines.That's at 11:40 a.m. in Sydney, 9:40 a.m.If you're watching out of Hong Kong or US Secretary of State Antony Blinken isdue in Saudi Arabia on Monday for talks.

With regional counterparts on theIsrael-Hamas war and follows his meeting in Beijing, which is wrapping up twodays of sometimes confrontational talks. The Chinese president warned the US notto target or oppose China, saying the two powers should be partners ratherthan rivals. Blinken, though, told reporters afterthe meeting that the US will impose further sanctions if China continuessupporting Russia's war in Ukraine. If we don't see a change, we of coursethe United States. We've already imposed sanctions on morethan 100 Chinese entities, export controls, etc.and we're fully prepared to to act,.

Take additional measures.And I made that very clear. The prime minister.Russia says Ukrainian drones attacked an oil refinery in the country's south overthe weekend, causing a fire which partially suspended operations.The facility is capable of processing 4 million tonnes of oil a year is amongthe multiple refineries targeted by Kiev.The latest attacks follow a heavy Russian missile barrage on Ukraine,which Moscow says targeted energy, defense and railway infrastructure.We'll have more coming up. When it comes to Anthony Blinken'svisits to China and the Middle East with.

Geopolitical analyst Bonnie Glaser.She's joining us at 10:30 a.m. in Sydney, A30 in Hong Kong.And Heidi, still ahead this hour, we'll have Japan's oldest VC firm closing inon a target to triple the value of its investment.We'll hear exclusively from JAFCO CEO Keisuke Miyoshi.But first, hear why Goldman Sachs expects developed market inflation tocool despite the recent hot CPI ratings from the U.S..This is Bloomberg. Wednesday, the Fed decided Jay Powellpumping the brakes on rate hikes are off the table.No cuts.

Looking perhaps a little bit morelikely. You can't see there's a whole lot wrongwith the U.S. economy.Trust Bloomberg to bring you the fastest coverage and exclusive analysis,including Powell's press conference. Policy rate is likely at its peakthreshold to cut rates is a little higher.We're redefining patience. Bloomberg Surveillance.The Fed decides starting at 1:30 p.m. Eastern, context changes everything. Let's get you a look at the week ahead.And the Federal Reserve will hand down.

Its latest policy decision following therelease of inflation prints in the US. Bloomberg Economics expects Fed ChairJerome Powell to deliver a hawkish pivot and dampen hopes for an imminent ratecut. Aside from the Fed also track the latestU.S. jobs report, which could show payrollpayrolls growth slowing to 200,000 this month after surging by over 300,000 inMarch. Here in Asia, watching China's Aprilpayment payments, it probably edged lower after surges in March.Japan will also release a slew of data after the BOJ kept rates unchanged lastweek.

Of course, watching earnings as well andon that front will be looking at those results from all four Chinese mega-banksthis Monday. Bloomberg intelligence's earningsresults persisting there, even if those banks avoid profit declines.Other lenders, including HSBC, Standard Chartered, also releasing those resultsthis week. And aside from the banks, we're alsowaiting for lender earnings, I should say, from the other so-calledMagnificent Seven stocks. Apple, Amazon reporting after mixedresults last week from their peers. Samsung's final results are also due outafter preliminary numbers showed a sharp.

Profit rebound in the first quarter.And the embattled developer, China Banker, will also be reporting it toldbrokerages that it's making plans to resolve liquidity pressures.And that is your week ahead. Yeah, Heidi, really a lot for investorsto be digesting over the coming days. But let's kick off with really what isone of the key events on the calendar, and that's the Fed meeting wrappinglater this week. And bring in Andrew Tilton.He's chief Asia-Pacific economist at Goldman Sachs and joins us now thismorning in studio. I'm interested in your views here,Andrew.

Not really expecting, of course, anysort of move in policy, but it's really going to be that focus on the pressconference to follow and the sort of tone that Jay Powell strikes as well.Do you think he's going to have to shift it a little bit?He needs to keep the options open for the Fed.After a set of upside surprises to inflation in the first quarter.We don't know for sure whether it will see inflation down to target in time forthe Fed to begin cutting by mid-year. Our forecast, we think the Fed startscutting in July. We think we'll see a lower run rate ofinflation in Q2 and and beyond.

But that's still a forecast, not a fact.So what do you think that is going to necessitate or what are the sort ofeconomic conditions that make you or Goldman Sachs sort of confident in thatview that we're going to see a cut by mid-year?Well, some of the inflation we saw in Q1 was due to the so-called January effect.A lot of annual price adjustments, rent and so-called owners equivalent renthave been a couple of big chunks of inflation that have been running hot.But the leading indicators, the private sector leading indicators in thosecategories suggest inflation more like 2 to 3%.So as the existing set of of leases and.

Rental contracts converges down to thatlower rate of inflation, we think we'll see that sequential rate of inflationjust above 2%. Now, if the Fed's focused on sequentialinflation, they may see what they like over the next few months, but on a yearover year basis, we're still going to be above 2%, probably a little over two anda half percent even late this year. Andrea, when you listen to the likes ofthe Fed, when you listen even to other central banks like the RBA, there's arecurrent theme that the balance of risks is sort of so fine at the momentthat it could go either way. What do you think is the major driver interms of what we're looking at for the.

Data in the coming months?To be able to tip the scales potentially.Well on the central banks, it really is inflation.You mentioned the RBA, Australia. We also had an upside surprise toinflation in Q1. So in our view that probably pushes backthe onset of their rate cuts. We had originally thought they might goin August. Now we think November is more likelygiven we have some more work to do to see inflation come back down to thetarget there. So I think for many central banks,especially the developed markets,.

Central banks, it's all about theinflation outlook for the emerging markets in the region.It's to a large extent all about the Fed.Inflation's already come down to target, but they feel they want to see the Fedin easing mode before they feel comfortable cutting themselves.And a key example of that is what we saw with the surprise out of Bank Indonesialast week. Right.Are there vulnerabilities that you see within some of these emerging and morefrontier aspects of Asia and the central bank policies there?Indonesia is a great example.

They are have a stability mandate aspart of the central bank's goals. The rupiah had moved above 16,000 to thedollar after the strong U.S. inflation report a couple of weeks ago,and because of that goal for stability, they decided they needed to raise rates.So Indonesia is probably one of the better examples or one of the morefocused, you know, central banks in the region.But that dynamic waiting longer to cut or even in the case of buy hiking issomething we'll continue to see if we don't get a more relatively dovishmessage from the Fed over the next couple of months.Does the BOJ need to be more ethics.

Focused, do you think?I mean, we're seeing obviously the weak yen andgetting closer to one six, you know, and and also starting to perhaps really dentconsumption trends. It was quite striking on Friday, youknow, governor way that didn't express a lot of concern about the yen yen's downmaybe 15% year over year, more than 10% year to date.But he implied that that hadn't had too much of an upward effect on inflationand that it would probably still take the outlook report suggested it wouldprobably still take until 2026 for inflation to sustainably get back totarget.

So I think the message from the BOJ waswe need to normalize policy very, very slowly.And that clearly led to a further yen selloff on Friday, two over 158.So the message from the BOJ is we're still focused on inflation.It's still going to take time to get there.And as long as the Fed and other central banks are relatively reluctant to ease,the yen is likely to be on the back foot.Andrew, you talked about it all being down to the Fed and watching for thatlead for emerging markets. Is that the bigger anchor now in a verydominant way than China?.

And is that sort of relationship betweenthe more complex and what happens in China becoming correlated?Well, the Fed is still, we think, in most critical in terms of how centralbanks are behaving, trying to growth has held up moderately so far this year withpolicymakers are probably feeling reasonably confident about the overallgrowth target. It's still early days, but the pressureon them to ease aggressively is is not extremely high at the moment.We will have a Politburo meeting this week focused on the economy.We expect that be more focused on the implementation of measures that havealready been announced or hinted at.

Then a big new announcement of policyeasing. Now, China's growth is more exportoriented this year, so to some extent that's coming perhaps at the expense ofexports in other parts of Asia. There's a competitive aspect to that,but a relatively stable renminbi to the dollar and moderate Chinese growthprobably gives other central banks some optionality.So we really do think the Fed is probably the most important factor formost central banks in the region. Andrew, thanks so much for your timethis morning and for coming into the studio so early for us as well.That was Andrew Tilton, the chief.

Asia-Pacific economist at Goldman Sachs.And you can always get a roundup of the stories that you need to know to getyour day going. In today's edition of DAYBREAK.Terminal subscribers go to day be go. It's also available on mobile in theBloomberg Anywhere app. You can customize your settings so youonly get news on the industries and the assets that you care about.More ahead. This is Bloomberg. We do have some breaking news justcrossing the Bloomberg on the political disarray engulfing Scotland.Scottish First Minister Humza Yousaf is.

Preparing to resign.He could stand down on Monday. According to the Times is coming to theconclusion that his position is no longer tenable.According to reports, senior SNP figures have been told that the Nationals leaderdecided over the weekend that there is no way for him to survive this week'svote of no confidence. He may stand down on Monday.And this really comes as we've seen just a period of disarray and turmoil for theSNP. Conservatives lodging that vote of noconfidence in the chief. Coming after use of ended the powersharing deal with the Greens.

It's been some dramatic times and we arewaiting for further developments but that resignation could come as early asMonday. Well, BHP is said to be consideringmaking an improved proposal for Anglo American after its $39 billion deal wasrejected. Let's bring in Paul Allen for thedetails. So what are the next steps?Yeah, well, important to say off the bat that there's no official comment fromBHP or Anglo. So all of this information as accordingto sources, people familiar with the matter.But of course, it was last week.

BHP made this all share offer $39billion for Anglo. And on Friday Anglo rejected it, sayingit's opportunistic fails to value its prospects.So where do we go from here? According to UK takeover law, May 22 isthe next dates. BHP has got until then to table a freshoffer or walk away. But it's not hard to understand theappeal here. We've been talking all week about copperprices are surging, were knocking on the door of 0,000 a tonne.Demand could soar as well. I mean, you take an electric vehicleneeds four times the amount of copper as.

A traditional car.So BHP sees a lot of growth here and it's much cheaper to just go out and buyan asset obviously, than go looking for a new mine and spend billions developingit. So, Paul, if BHP does come back to thetable with a better offer, is that going to be enough, do you think, to sort offlush out some of the rival bidders? Yeah, that's the next thing we could bewatching for, because it's not beyond the realm of imagination to imagine thatthe likes of Rio Tinto might suddenly become interested or Glencore is anotherpotential suitor for these assets. Other miners will all be thinking thesame thing when it comes to copper.

Demand.Glencore, for its part, is already doing a major deal for $9 billion of coalmines in Canada. Barrick Gold would be another potentialcandidate. It is, of course, a gold miner, butcopper and gold deposits are usually found together and Barrick's alreadyexpressed some interest in diversifying into copper as well.And Anglo, It's a logical target really. It's been having a tough run.Diamond prices are down, platinum prices are down.Last December it announced a production downgrade for its copper as well and wesaw shares falling 20% in December.

Contrast that to the past couple of lasttwo days of last week where we saw shares gaining the 20% on news of thispotential offer. Paul Allen here.Well, coming up on DAYBREAK, Australia, we're on the intervention watch the andtaking that tumble towards a dovish. The OJ decision as it was a monumentalday for the yen on Friday and we're watching to see how low can it go beforepolicymakers will step in. This is Bloomberg. Take a look at how training when itcomes to the yen and still early intervention watch after really kind ofblowing through a number of so-called.

Red lines that have been touted in thepast as levels where we would see policymakers step in.And this is the action as we saw the yen coming off its single worst day in ayear on Friday. And in fact, looking at again that forMay 1990, lows for the yen also trading at similar lows for 2008 when it comesto pairs against a year and sterling as well Aussie dollar and yen trading atlevels that we haven't seen since April 2013.Let's bring in Grabfood Reynolds who leads our markets love Asia coverage.And we've talked at length about the efficacy, the timing of intervention andthe fact that we've seen kind of.

A comfort level maybe.Has that sort of changed that? The lines in the sand that we previouslythought were those red lines? Yeah, I think so.As you said, partly it's because it's been such a slow grind down.It's also the yen is not alone in declining against the US dollar.The US economy continues to blow away all expectations that it's going to slowdown. The initial readings for what secondquarter GDP might end up being after that admittedly slightly weaker, thoughan otherwise concerning firstreading that the none of that says this.

Is an economy that needs rate cuts.And in fact we've still got traders for the US betting on one rate cut this yearfor the Fed. Nobody really expects that situation tolast. The market is going to go to bidding onless than one rate cut that is going to send us yields higher, you know, above5% for the two year. And then then all those will get draggedup to those sort of levels as well. So with all that going along, it becomesreally, really hard to push back against that, especially through theintervention channel. The real, really effective way to pushback would be if you were to shift to.

Your rapid monetary tightening from theBOJ. However, there are lots of reasons whythat's not something that Governor White was particularly eager to countenance.So, you know, the Japanese are justbeing patient, which to be honest is is something that, you know, Japanesegovernments and policy makers have usually been far more patient than, say,US governments and policy makers. And that was part of what made Kuroda soexceptional, was he came in and blew away everybody's expectations as to whata bogey policy, you know, set up might be, you know, to come in with thosemassive easings and all the rest of it.

Why this obviously cut from a far moregradualist cloth. So that means, yes, the BOJ is on atightening path, but it's a slow path that makes it hard for the Ministry ofFinance to come in strongly to drive the dollar yen down, especially wheneverything else is busy driving the dollar up against everything else.And Garfield. It's not just the Japanese currency, ofcourse. The Korean one has been extremelysensitive and and reflecting those those differentials between the Fed and the B.Okay. But is the worst over, do you think, atthis point in time for the one.

Well, in a lot of ways that depends onthe Fed. You know, perhaps you've got some levelof of a sort of a safeguard for for most currencies in that this month or thiscoming month. The May meeting for the Fed decisioncomes out of your Thursday morning Asian time.It's not a dot plot meeting. You are likely to get a signal that yes,they're going to take at least one of the supposedly promised rate cuts offthe table. But you're not going to get anythingdefinitive about what the path for U.S. rates is likely to be.Even with that, though, if the Fed comes.

Out markedly hawkish and we also havethis week, you know, the run up into nonfarm payrolls and then nonfarmpayrolls themselves so that the risks are skewed to the downside for prettymuch every currency except the dollar, maybe the franc.The Franks proven surprisingly resilient.But yeah, Korea, the Korean one looks vulnerable from the US dollar side ofthings. I think it will also be key for the onewhat is trying to do with its own currency that has a big influence onAsian currencies. And even more important, what happenswith those China PMIs that are due out.

Tomorrow to give us a view of where theChinese economy is going, because even with, you know, something of a lesseningof the influence of China's economy on some of the other Asian economies, asthe Chinese economy has struggled, that's still crucially important foreconomies around the region and for currencies.And your career is a big part of that. Yeah.And Garfield to note as well. We've got those numbers coming out,those PMI ratings from China. And the survey that we're gettingthrough is for a modest deterioration in sentiment.But that was golfer Reynolds Day who.

Leads our Markets Live Asia coverage.And quick check on how futures are looking ahead of the open.See a 30 minutes out from the start of trade for Seoul and also Sydney.Japan. Equity markets will be shut Monday for aholiday, but we are still, of course, tracking futures and and trading for theJapanese yen because we're pushing very close to that 160 market, closer to that160 mark and of course on track on watch for any sort of intervention.But Heidi, a quite a lot of positivity across the screen here today and it doesfollow the US session Friday. Best week we've seen for the US stocksover the course of this year.

Same goes for Asia.It's that focus as well on earnings and those better numbers that came throughreally sort of reassuring investors. Yeah, a lot of reassurance that we sawgoing into the end of what had been a really choppy week.Right. Obviously a lot of event risk with theFed this week and also more earnings and particularly when it comes to China'sbig banks. And Bell, we know that this is notnecessarily going to be a kind of a straightforward good news story giventhe effect of the property down cycle on asset quality, given some of theirinvolvement in the sort of white project.

Funding programs as well, which isagain, going to impact asset quality going forward and lower lending rates aswell? It's all about that crimp on margins.We're looking ahead to the likes of HSBC and the big state lenders are really theones in focus when it comes to those things.Like the likes of ICBC, for example. Those margin risks will be the key thingto watch in first quarter numbers impact on asset quality from Project theproperty project. So funding as well.We're looking at quite a bit of a gain when it comes to ICBC shares up about10% so far this year, 13% in Shanghai.

So that margin risk will be in focus andkind of setting the tone for the other big banks.Fundamentally, their prospects for 2020 for China Construction Bank is anotherone. We could see them being impacted bylower lending rates. Again, the property down cycle impactingasset quality there as well. They're also seeing a bit more of a gainof about 7%, although not as much in Hong Kong, just about 3%.Bloomberg Intelligence expects that Cpp's earnings could be capped at lowsingle digits, though. The other thing that I'm watching, we'vetalked a little bit about property, but.

Also of course China, Vancouver, thosenumbers will be in focus as well. That'll be weighing on Chinese banks,particularly after they sort of vowed to make plans to resolve liquiditypressure. The operational difficulties, as bankerhave called it. We're looking ahead to the details onthat. Around 8 billion asset package to useas collateral as it seeks new lending bill.Yeah. And Heidi and not just the focus onChinese banks, on Chinese property names, but also the car makers followingthe Beijing Auto Show and BYD very much.

Going to be the watch for is controllingaround 33% of the auto market in China. What's going to be really interesting tonote is just how much of an impact those price cuts have been having, because weknow BYD's sort of been leading a new price war of sorts on mainland in a wayto try and boost their market share. The impact, of course, is going toreally show up perhaps in the margins, but still.First quarter revenue forecast to climb about 10% from a year earlier.So that's something we're tracking there behind really interesting unveilings, aswe were noting last week at the Beijing Auto Show.But the other name to watch is Samsung.

Over in Seoul as well.So those final results for a JU from Samsung in the preliminary ones, ofcourse, they did show us that there was a sharp profit rebound.But we are seeing better semiconductor, better readings or better sales for asmartphone as well. So then really expected to be one of thekey beneficiaries of what has been a very solid demand coming through forA.I. chips.But Samsung, you can see there that jump or rise of around 16% over the course ofthe past year. What has not been a big beneficiary sofar from the chip race has been Intel.

And we had those numbers out last weekas well with a lackluster forecast for the second quarter.CEO Pat Gelsinger spoke to us about efforts to restore the company'sdominance. We delivered a solid Q1, right?We met on revenue. We beat on earnings a bit tepid in thefirst half, as we said, but we see a lot of improvement as we go through theyear. And with that, obviously the foundrybusiness, I as I would say, we're going to see progress on the foundry businessevery quarter from now to the end of the decade.It just gets better and better as we.

Move into our new technologies.You know, as we've said, getting back to process leadership, which have betterASPs, we can build better products with them.We win more external foundry customers as our scale grows.We also get past this period where we had to invest to catch up, right, andcreate the capacity for a decade plus of under investment.So everything there becomes a tailwind going forward.And we hit key milestones. And one of those I was very proud ofjust this week, we went to production with our first server part on Intelthree.

The U.S.is back to leadership process technology being manufactured on our shores for thefirst time in a decade. So some key milestones and I'll just sayeverything is coming together, as we would say.And we're very optimistic that, yes, in fact, we will deliver the foundrybusiness and the manufacturing capabilities as we've laid out for thecompany, the industry in the world. Stifel Interestingly, analyst overthere, 2024 should mark the bottom in many aspects, Pat, but they really wantto understand the pace of the climb that is necessary.How can you tell us about how quickly.

You'll be able to scale back that marketshare that you've so far lost? Yeah.And, you know, we look at Intel now in these two different perspectives, Intelproducts, and we exposed through our recast financials that we have a verysolid, fabulous business with healthy financials, and we expect those toimprove over time. But the big story has been aboutexposing the foundry financials and the losses associated with those.And what we see is over the decade that will cross through profitability in themiddle of the period for that business. As we get back to process leadership andstart to moderate the level of.

Investment required to go rebuild thatdecade of underinvestment. That's Intel's Pat Gelsinger speaking toBloomberg's Caroline Hyde. Well, still ahead, our exclusiveinterview with the CEO of Japan's oldest venture capital firm, Jeff Kerr.His outlook on the country's startup scene next.This is Bloomberg. Japan's oldest venture capital firm saysit's closing in on a target to triple the value of its investment.In a sign of resurgence in the country's startup ecosystem, Jak Group CEO KeisukeMiyoshi told us exclusively that they're getting a lift from a growing pipelineof potential Japanese unicorns.

On Wall Street.There is no doubt that a number of startups that are taking on globalchallenges and solving very large social issues is increasing.So there's a bit of debate about how some Japanese startups want to debut tooearly when they're too small. In your view, what is a good size to gopublic and what are some of the other important criteria for a successful IPO?When you look, obviously the Japanese stock market is unique in that it allowscompanies of all sizes to go public from small to large.The number of startups aiming to go public with market capitalizationexceeding tens or even hundreds of.

Billions of yen is increasing rapidly.It'd be great if you could share the target return for your current SB sevenfund and your thinking behind how you came to this target and whether this, inyour view, is like a really good performance in the industry or inaverage performance or how it is? If you could explain what it was.I would like to aim for a return on investments of three times or more.To be honest, our performance to date has been a bit lower than that.However, the reason why I think we can aim for triple is that the performanceof a fund for startups in particular is determined by the number of very largestartups that we can generate.

I believe this is due to the fact thatthe number of such startups is steadily increasing.The other reason is that if we meet the standard of triple, we appear to havemet certain standards for a fund on a global basis.It would it be good to understand that Jeffco is is targeting targeting to beone of the best, if not the best performing performance the Japanese VCsAll I want to achieve good results as a top executive, and I think it'simportant to keep up the good performance and also for the next stepfor Jeff, go for the next 48 fund.Could you explain to us a rough strategy.

Behind the new fund, the expected sizeor strategy timing? If there's anything you can share withus on what I said to you, our our strategy is to create a so-called motherfund every 3 to 3 and a half years on a recurring basis.From that point of view, we're thinking of launching the next SB eight fund inthe second half of 2025. We haven't decided on the size yet, butwe're thinking about at least a size that exceeds seven because it's such agrowing market in Japan. If you can share maybe like at least ifthe fund size, at least how much size that you want it to be.It's very similar to SB seven series.

With ¥97.8 billion.So I think the number will exceed ¥100 billion.Among a number of issues or challenges that Japan is currently facing.What do you think is the most urgent challenge that it needs to solve?He's joining with the government policy of asset management nation in place.Changes are happening rapidly among large companies in Japan.The same applies to the startups and a transformation of the industrialstructure. I think it's very important for us toproperly and appropriately communicate the current changes in Japan to the restof the world.

And what would that be for Attractingmore interest from foreign investors for evenbigger growth in Japanese startups? Is that correct?Well, unlike Japan's economy, it's very small compared to the U.S.and China in terms of funds to invest in startups.However, we're about to undergo a major transformation, and I believe that thespeed of growth will change very quickly.I hope that people around the world will become aware of this and invest inJapan. I would like to promote this investmentnot only in funds but also in human.

Resources with great interest.Jeff Garcia. As you can see, they're speakingexclusively with Bloomberg's mentioned. You can catch iPad ahead every week.That's every Monday at 8:40 a.m. if you're watching in Tokyo, 7:40 p.m.Sunday in New York, Bloomberg subscribers can watch us live on theterminal using the TV go function. This is Bloomberg. The top corporate stories are followingthis morning. And Apple is said to have reneweddiscussions with Openai about using its technology to power some new features oniPhones.

Sources tell us that the two firms arediscussing terms of a possible agreement.The latest development comes about a month and a half before Apple'sWorldwide Developers conference, where it's poised to introduce new softwareand services. Samsung and German optical componentmaker Zeiss Group have agreed to boost cooperation in chip manufacturing.That's following a meeting last week between the company's executives.Samsung and Zeiss say they will bolster cooperation in EUV technology andcutting edge machines that are used in foundries and memory chip production.While Saturn's billionaire owner Rhino.

Geiger is said to be close to making anoffer to take the skincare company, private sources say Geiger isconsidering making an offer for shares he doesn't own at 33 to 34 HKD apiece.Blackstone and Goldman Sachs are reported to help fund the buyout, andthe deal would value the firm at about $7 billion, including debt.Bloomberg has learned that the activist fund manager, Elliott, has built a largestake in Japanese trading house Sumitomo.Japan is one of the hottest markets for activist investing, and the governmentand institutions are asking companies to better manage balance sheets and retoolbusiness strategies.

Let's get more from our Asia equitiesreporter Wendy. So what's so interesting about Sumitomothat might have attracted the attention of Elliott?Yeah. So actually, when you compare Sumitomowith other major trading help, as you can see, it really lags its peers indifferent ways from also previous investments of Elie.We know that they tend to like have low valuation, their high quality businessesand Sumitomo, PDR and PE ratios are both the lowest among its peers.And stock price also underperforms when you look at a five year span.And actually the possible reason of this.

Underperformance, it partly comes downto shareholder returns, which have been, as you know, a big trend we're seeing inJapanese companies with a push up from the stock exchange and its peers.Really, the Middle East Corp announced a ¥500 billion share buyback in February,just the biggest in history. And you've also got since you earlierthis month announcing share buyback and increasing their payout ratio target.And that really gives them so much more pressure to do so.And I don't think they've got a chance to do it so far this year yet.And we have earnings as well coming up for trading houses.So what are you expecting from Sumitomo.

In particular on Thursday?Yeah, it really comes at a very interesting timing.Elliot's investment and Mr. B, since I'm not going to announce afull year earnings and a medium term plan on Thursday, so potentially expectsome announcements around shareholder returns.Now that we know that Elliott has a quote unquote share that value on waysto create shareholder value, according to people we spoke to.And again, when you look at their historical investments, they tend toengage with companies before these companies put out their medium term,three year business plan to help the.

Companies think about the shareholdervalue. And recent examples you saw, we thinkthat also really the plan this month to sell assets and increase buybacks afterthe news in February that Elliott has ceased entirely form printing, alsoannounced its biggest buyback after such pressure.So there's a lot of excitement building up to see what Mr.Moore has got to say Thursday about its earnings and aboutwhat improvement plans that they have for capital efficiency.Winnie, thanks for your time. That was our Asia equities reporterWinnie Zou there.

And these are the stocks are going to bewatching when trade opens in Korea and Australia shortly.Japan, of course, shot for a public holiday, but Tesla supplies very much inthe spotlight. Again, Elon Musk making an unannouncedvisit to China. He is on a mission to try and boost theEV maker's revenue. So they are some of the names we'retracking there, as I said, Seoul and also Sydney trading.And in Sydney the focus on BHP because we've got reports that the Aussie mineris considering making an improved proposal for Anglo American Heidi.And of course, as we head into the.

Market opening bell, we're watching theyen trading very, very keenly. Of course, not just the yen, but we'reseeing kind of that vulnerability across Asian affects as a result of thatstronger dollar. That relentless ascent of U.S.yields and how that sort of playing out across Asian currencies is not likely toabate this week ahead of the Fed seeing sort of skewing to a hawkish pivot fromJay Powell. Right.That latest PC numbers really underscoring perhaps how entrenched U.S.inflation really is. And if you take a look at the yen, weare really kind of asking the question.

As to where policymakers are as theseprevious red lines are broken time and time again.And then our market strategy with Julius Baer, the Fed's last mile in Focus, alsotalking about Anthony Blinken's China visit and what that's achieved.

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