Bloomberg Morning time: Australia 01/09/2024

A very good morning.Welcome to DAYBREAK Australia. I'm Heidi Stroud.What's in Sydney? I'm out of drool.As in Hong Kong. We're counting down to Asia's majormarket open. Good evening from Bloomberg's worldheadquarters in New York, I'm Vonnie Quinn.The top stories this hour. The US securities regulator says itsaccount was compromised. It denied a post saying approval hadbeen granted for a spark. Bitcoin ETFUS Stocks Struggle for traction ahead of.

Thursday's US inflation data.Treasury yields remaining above 4%. Also ahead, Blackwell cutting hundredsof jobs, blaming what it calls unprecedented changes in assetmanagement. Plus, AI in focus as tech giants andstartups showcase their cutting edge innovations.We're live at CES in Las Vegas. Well, let's get a quick check on WallStreet. We finished a choppy session with theS&P 500 down fractionally, about seven points or more than a 10th of a percentthere. We did have a deal and that wasresponsible for the biggest gainer and.

The biggest loser.Juniper Networks up more than 22% after Hewlett Packard Enterprise was said tobe buying Juniper. Hewlett Packard Enterprise down 8%.They were the two main movers today. If you take a look at the Nasdaq, it wasup about 2/10 of 1%. So a lot choppier than the previoussessions action. The ten year yield at 4.013%.We had Bill GROSS saying that he's turning away from treasuries at theselevels, that the ten year at 4% is overvalued.Plenty of people weighing in on that particular position.It doesn't have that much of an impact.

On how yields move today.And then it looks like crude oil is consolidating at this level, 7224.It's been trading at around a $5 range since December spread.So signaling the rebound from its biggest drop is reflecting strongerunderlying physical fundamentals. But the big story just this hour isBitcoin. We had SEC chair Gary Gensler saying theregulator has not approved Bitcoin ETF Tuesday and that the agency's ex accounthad been compromised. This resulted in an unauthorized postappearing to confirm the news that yes, indeed the SEC had approved BitcoinETFs.

So to sort through what's going on,let's bring in Bloomberg Intelligence senior ETF analyst Eric Balchunas.Eric, we possibly could have predicted that some fireworks like this would havehappened, but not from an S.E.C. account.What does compromised mean, do you think?Yeah, it's unclear. Look, you know, the crypto world hasdone a couple of things like this since this BlackRock filing six months ago, soit's not like a total shocker. We also cointelegraph who was I saidBlackRock was approved about a month ago.There's been a series of things that.

Have been head fakes for the past coupleof months, so I'm kind of used to it at this point.The reason this one was interesting is that we expected to see approvalstomorrow between four and 5 p.m. We thought that's when the moment wasgoing to happen. And so my first take was, well, maybethey just scheduled this tweet and actually did it a day early because thistweet would make perfect sense in terms of all the intel we're hearing tomorrowat four or 5 p.m. and then they're going to trade onThursday. That said, regardless of all thisshenanigans and what happens, I it as.

Far as I know, we're still on track tohave approval tomorrow and launch on Thursday.But but this is a bit of an interesting curveball to the situation.But, you know, it looks like the price of Bitcoin at the end of the day wasflat today. So it's not like anything crazyhappened, but it's just another like turn in this rollercoaster known ascrypto. Eric Why would the SEC prepare a tweetthough? And this is all speculation, right?I understand your point that it would have been a perfect tweet if the SECwere approving ETFs to put out tomorrow.

After the market close.But the FCC is going to be more careful than that.No. I would think so.But look, someone's managing this account, you know?You know, it's the government. You know, people make mistakes.So that was my first thought. Because if you look at the language, itreally sounds as if somebody from the crypto world didwrite this. They're really good.Or maybe they use A.I. because it really reads like a tweetlike this.

And remember, the S.E.C.and Gary have been putting out tweets for the past two days, sort of saying,hey, if you're looking to invest in crypto, here's some warnings.So it's not like they haven't been active on Twitter regarding this topic.So again, it smelled and felt like we were getting an early Christmas present.They were just going to approve it. The other thing is, if you were lookingfor max impact, fun or manipulation, if this was your goal of a hacker, whywouldn't you tweet rejection? Because that the price would plummet.Big time approval is kind of baked in and expected.So there's all kinds of questions there.

That hopefully we'll get answers to.Eric, does this fundamentally change your expectations when it comes to thisapproval and the market implications? No, because I've spent the last sixmonths in particular, the last three weeks with, you know, little sleep andtracking this, and nobody of the 11 issuers and their law firms and the SCCstaff has gotten much sleep or had much time off in the past three weeks.They have really buckle down. And there's 11 issuers with twodifferent documents, 19 before and one each one is over 200 pages or at least100 pages, 150 full of technical legal language.They've been going back and forth with.

Six, seven amendments.This is a lot of man hours, a lot of legal billing time over the past coupleof weeks. And when you talk to them, they're likelike one person didn't sleep last night because of the last minute comments.So what we're hearing is that all of this is to just get it done.And to meet this January 10th final deadline, which is the ARC ETF.So they have to decide on this tomorrow one way or another.And given all of this and all of the staff's work came from Gary, it's a tenfloor issue. He directed them to do this.So at the end of the day, tomorrow's.

Deadline with ARC, they have to dosomething. It's not like they can go, oh, thistweet makes us have to rethink thing. I mean, we only have now we're in 20hours until we get to tomorrow afternoon when arcs do.So my guess is this news flow gets so moved so quickly, like an hour ago,We're talking about the futures that by tomorrow, this time we kind of chuckleat this and we're looking at the formal approval.Eric, can we tell anything about the price action when we finally do get adecision? I mean, we did see Bitcoin Spike, we sawCoinbase, Spike, we saw Beto, the.

Futures ETF that is already out there,spike and drop again after the news. Does that mean that's what's going tohappen? Look, when it gets approved, maybethere'll be a tiny little bump because it's finally that we can, you know, popthe cork on the champagne finally after ten years.But you remember this whole run up in the past six months has in some wayslargely been about the ETF optimism. Many people out there talking about buythe rumor, sell the news, and the news would be the actual approval.So some people are expecting a sell off as people take profits and, quote, sellthe news.

But there's so many people saying thatit is a sell the news event. Sometimes it isn't.And again, we're not in the business, nor are we allowed to predict the price.So I don't know. And I wouldn't honestly, even if Icould, I don't know. But I will say that what we're tellingpeople is that ETFs are like bridges to the advisor world in particular, andthese bridges are being set up, 11 of them at first, including BlackRock andFidelity, some major bridges from the crypto world to the advisor world andinstitutions. And it can't be bad for crypto ifthere's bridges between those worlds and.

They start to see traffic.So long term this is probably a good catalyst for for the price of bitcoin,but short term, who knows? I mean there's all kinds of things thatare baked into the price or not. But I would say approval would not bethe surprise. The surprise would be if they rejectedit. And that's why I think if you were goingto hack the account, that would have been the move Again, if you were in likelike a Bond villain and into like the max panic causing situation, that's whatyou would have tweeted. Bloomberg Intelligence ETF analyst EricFortune.

As with the letters, let's get you tobill for the setup as we get into trading here in asia Bill.Yeah, well, Heidi, it's not quite the same level of excitement that we have inAsian equities as to what's been happening in crypto markets just in thelast couple of hours, because you can see here very, very rangebound as welook ahead to the start of the Asian trading session, we've already got Kiwistocks online to the downside, just fractionally here.But the set up today really just tracking what came through on the WallStreet session. So again, just sort of struggling fordirections said mix moves in megacap.

So we saw oil on the move at treasuryyields as well that ten year holding above 4%.So continuing to put some pressure on the Japanese yen here.You can see close to that 145 mark. Still, let's change on because Japaneseequities are really the ones to keep a close watch on today throughout thetrading session. We've got the Nikkei here yesterdayreaching a 1990 high as the highest level we've seen since the bubbleeconomy burst. A lot of optimism, of course.We've seen that huge rally in Japan stocks over the course of last year.But investors are really liking these.

Further signals that we're finallystarting to see actual growth in Japan take hold.Also playing into that, of course, is that weekend.It helps the exporters and Vonnie as well that expectation that the BOJlikely to stay dovish for a period to come of course unlike the counterpartsover in the US. Exactly.Well, let's continue to chat about that bell because our next guest thinks thatthe Fed won't cut until the end of this year at the very least, perhaps evenafter that. Lila Pence, US President Pence WealthManagement and joins us now.

Layla, thank you.Earlier we spoke with Lael Brainard and she pointed out that companies are notpassing on decreases in prices. Right.Disinflation. Is that something that the Fed has toconsider when it considers the trajectory for inflation?I think they should certainly, you know, Clinton is being a bit more sneaky inthis going down. But I think this is why we predict thatthey're not going to do the six interest rate increases that everyone isexpecting and that could be a jump ahead for the market.But we do think they are going to lower.

Rates, but we think that it is probablynot going to happen at least until May. So you've brought forward then your ideathat it won't be until the end of this year.What caused you to do that? Well, we just we do see oil prices goingdown, which is a big driver of inflation.We do see it slowing down enough that we do see that they you know, they don'twant to they want to have a soft landing and they will need to reduce rates.It's just they're not going to reduce it as many times as the market thinks.Just a couple of months ago, though, you were very convinced that it would take awhole nother year.

What has caused you to think that it'sgoing to take only just maybe five months?Now, is the economy slowing more than you think or is inflation stickier thanyou thought? Well, I think, you know, inflation hasreally come down a lot quicker than we thought.Like you said, you know, a few months ago, we thought it would take a lotlonger for the Fed to reduce rates. But they've actually come out and saidthat they will reduce rates by three times.So we've always been a believer that despite the Fed and I think the dataconfirms, in fact, that they should.

Reduce rateslater on ratio just because operation is coming down a lot faster.And you know, the biggest problem is the commercial real estate market and ourdebt allow refinancing coming. So they don't want to have that thatlong hear a lot of foreclosure. So they have to start indicating thatrates should be coming down. So that would be a little bit out of thecommercial market area, which affects the banks and affects our economy.So I think are doing the right thing by telling us that they will reduce rateall but not as fast as the market thinks.Lila, how is that been affecting your.

Advice to clients and how they should bepositioning themselves? If we are indeed finished with the ratehike cycle and going into in very short order, a rate cutting cycle?Well, we're definitely starting to lock in some getting out of short term bondsgoing into more medium to longer term market lock in these high rates that wehave now. We're also looking into getting moreinto small and mid-cap companies, which something we've not done for a while.Those companies tend to benefit from lower rates and lower costs in terms oftheir intakes. So those are the two main things that wereally think the lower rates are are.

Going to affect.And we tend to also start looking at more value stocks like the 193 companiesin the S&P 500. They just started doing better thisyear. A lot to choose from.Leila, I'm just curious about your thoughts on the bond market because yousaid, you know, starting to lock in profits and get out of short term bondsand you're looking at medium term bonds at this point.What did you make of what Bill growth had to say?That the ten year looks rich at 4%. Well, obviously, he's the king of, youknow, the bond market.

But we think, you know, 4%is going to go down as interest rate comes down.So it is a bit high right now, which is why we're not going to lock in elsewherewhile they're high is reducing that. That's not really sustainable.And that will, as the Fed reduces rates, those long term bonds rates have comeback quite a bit and a few months ago is always at 5%.So it's seen a huge drop in the long term rate and we think that willcontinue a bit more as the Fed actually acts.All right, Layla, thank you so much for joining us today.Much appreciate your time.

That's Layla Penn's president at Penn'sWealth Management. Still ahead, Taiwan's opposition partyis rallying hard for support ahead of presidential elections.We'll have details a little later. Plus, Boeing's largest ever monthlysales haul for the 737 max. Overshadowed by the crisis meetingfocused on safety issues. Analysis with Morning Star coming rightup. This is Bloomberg. Well, the 2024 tech conference kickedoff today in Las Vegas with AI and electric vehicles unsurprisingly takingcenter stage.

Joining us now is our co-anchor, SheryAhn to take us through the latest high tech gadgets and showcases.Day one, this is, as we know, a high tech extravaganza in what is anextravaganza of a city rite of Vegas. What have been some of the highlightsfor you this year so far? I mean, it's that time of the yearagain, right? So we're at the Las Vegas ConventionCenter. And inevitably, Heidi, as you said it,it's all about a tie. We're talking about Samsung Electronicscoming out with a robot vacuum that can use A.I.to detect air stains.

I was just with Nikon's CFO, architectCanady, who was telling me about using A.I.in their health care devices. So everybody is really jumping on thebandwagon. And of course, we have the King of A.I.and Video with its own product announcements in order to lure consumersto PC a ISE. I spoke also to the Nvidia supplier SKHynix, which just became the second largest stock in South Korea, reallyriding high on this boom of artificial intelligence.CEO Hwang No Dong telling me that he expects that in three years the marketvalue of the chip maker will double.

So we have more than 4000 exhibitorshere from more than 150 countries and territories.It's going to be a busy week. Yeah, for sure.I'm sorry. You know, beyond AI, flying, cars havebeen popping up at CES for a few years at this point, but we seem to have acouple of new models making their debuts this year.Tell us about them. Yeah.I mean, it's becoming a crowded field, isn't it?I mean, we have Joe being the U. Was VOLOCOPTER in Germany, E Hong inChina.

And there are still many challenges inthis field, whether it's battery technology, safety challenges,regulatory and policy issues. But everybody's coming up with new waysto transform mobility. I spoke to the Hyundai Group presidentand CEO of Col about their flying taxis. Take a listen.We are very excited to unveil our product concept.What I mean by that is this this concept design will become more or less a finalproduct that we are trying to get into the market in 2020 and Flying Taxi.There are many names for it, but it is an airplane and it is a hybrid between ahelicopter and a fixed wing, like a 737.

So it has a wings and then it's poweredentirely by batteries. So that's what the revolution is about,is this type of a vehicle so you can take off and land, particularly in avery small confined space. So like a city populated areas.And then it's going to be very quiet compared to helicopter.And it has a good cruising efficiency because it has wings and no emissions.So those are the very attractive features to get you to commercializationby 2028. How are you in the process, especiallywhen it comes to submitting your application for certification toregulators?.

When and where can we expect those testflights? Yeah, we believe the four full mostimportant thing is to make this airplane safe.So this is for public consumption. And so we have to make it as safe aspossible. And so we are shooting for commercialaviation safety standards, which is which is amazing.So in order to go through that, we got to do a lot of flight testing and drugtesting and so on. So our target date for entry intoservice, as I mentioned, is 2028. You backed out from there?Fully 28.

And we will try to fly full scale ofwhat we call a technology demonstrator by the end of this year, 2024.And from that point on, we will have a series of flight test program goingthrough and then a finished certification.And you've applied for certification already in the middle of this year.We will apply for certification, and it's just in the US.Do you have plans for other locations as well?The US is undoubtably unarguably, I should say, the largest market for thistype of vehicle business.So we certainly are trying to open the.

Markets of various locations in the USand also we are looking at Europe of course, and Asia and so on.Given your focus on the US force at least, is that why you're investing inthe new manufacturing base? Can you tell us a little bit aboutpotential locations, how much Honda is putting in and here?We are still studying the location, the exact location, so it's too early to saywhere. But of the strengths that we havesupported and has is we will be able to leverage and capitalize the tremendousmanufacturing mass manufacturing capability that Hyundai Motor Group has.So we are developing a lot of new.

Manufacturing technologies as well, notjust vehicle technologies. So depending on the making businesssense and also where we open the market, we will decide the location of later.What announcements are we expecting when it comes to, you know, obviously the bigthe other big focus of C K, right. Battery makers, EV carmakers.Yeah. These batteries are so important, evenwhen it comes to these flying vehicles. Right.I was just speaking to the Honda Motor CEO, Paul Shaheed Ameba today, who wasalso telling me about their new EV series to be first launched here in theU.S.

Air Force models coming out in 2026.He also mentioned the latest when it comes to autonomous vehicles that thatplan to release it in Japan will be pushed back a little bit.We'll have more on that conversation coming up.But really, when it comes to the broader EV industry, we have seen really thechallenges out there when it comes to demand, right?I mean, we have seen stronger sales of EVs here in the U.S., but the demand andpicture in China has been pretty murky. We will be speaking to South Korean EVbattery maker, the only one coming to see yes.This year.

Key on.And what we also care about will be really about not only those challengesof global demand, but also geopolitics. Given that we have seen China now reallyrelease these new restrictions and export controls when it comes to thesekey ingredients in EV batteries. Finally, Heidi.Exactly. Can't wait for some of thoseconversations. That's our DAYBREAK co-anchors sorry onthere at CES in Las Vegas. And stay tuned for more coverage fromCBS This Week. Tomorrow, we'll be speaking withexploding CEO and co-president Brian.

Gold,and you'll get a roundup of the stories you need to know to get your day goingin today's edition of DAYBREAK. Terminal subscribers can go today be go.You can also customize your settings so you only get news on the industries andassets you care about. This is Bloomberg. So breaking news, Amazon's Twitch unitis cutting staff perhaps as soon as Wednesday, according to people familiarwith the matter. 35% of its staff or 500 employees to belaid off by Amazon's Twitch, the live streaming site.The cards could be announced as.

Wednesday, as I said, and they come overconcerns about losses after Twitch. Several top executives had left thecompany in the span of a few months, as we know.A Twitch spokesperson declined to comment.As you can see, Amazon is unchanged after hours.Twitch supported about 1.8 billion hours of live video content a month and isenormously expensive for Amazon. Once again, Amazon's twitch took outabout 500 employees or 35% of its staff. Erica.Well, Ronnie, let's get back to one of our top copper stories.And The Wall Street Journal is reporting.

That Boeing CEO Dave Calhoun toldemployees that the company needs to acknowledge its mistake.Boeing ended 2023 with its largest ever monthly sales haul for the 737 max.But that model is again under increased scrutiny after last week's fuselage blowout on that Max nine plane on Alaska Airlines.Next guest says despite the reputational hit, he expects Boeing to their actuallyquite well as accelerate their deliveries of 737787.Joining us now is Nicholas Owens Industrials, equities analyst atMorningstar. So, you know, this comes almost fiveyears since the fatal incidents.

Involving the max.Are you concerned about the fact that these mishaps seem to be a series ofshortcomings when we look at things like loose bolts orthe cabin pressure alarm issue? I think in short, yes, I would say it'sdisconcerting. And people you know, the reputation ofthis plane and Boeing, by extension, has come under a series of of of threats.I will say that I think the actual issues of those crashes in 2018 and 2019are very different. What we're looking at here is is yetanother example that's come up in the last two or three years of things thatare just not quite right in Boeing's.

Manufacturing process.And I think that has somewhat to do with COVID and the disruption to theirassembly line process that the grounding had.So they're related, but it's not the same issue.But it's very disconcerting that there always seems to be another thing.And it's good to hear the CEO saying theyhave to acknowledge mistakes, because I think that's an important first step totrying to regain their reputation when it comes to customer confidence andwhen it comes down to the fact that this is still a duopoly.Right.

We have a great Bloomberg Opinion pieceout on the terminal today saying, well, you know, Boeing may not be the poorrelation, but it is still one out of two in the duopoly.So is it really concerning for the business, given that customers, by andlarge, don't have much of a choice? Well, I think that's an interestingpoint in that from a financial or business point of view, fixing thesebolts will not cost a ton of money and it's not a huge number of planesthat seem to be affected, at least for this issue.But as I was saying, that's the reputation that they have to worryabout.

And yes, because there's a very longwait list for these planes and many airlines are either whole operation isgeared around using one or the other. There's not a lot of other places to go.But I don't think that anyone should allow Boeing to becomplacent because of that. They still have to be held to thehighest safety standards and so on. And I think it's also important toremember that everyone walked away from this incident as well as the one inTokyo over the New year. And that's a testament to how wellengineered and safe these planes generally are, even when something goeswrong.

There's a lot of safety systems thatkeep people safe, that if that's any comfortthat it does. I don't know if it's any comfort in inthe Alaskan Airlines situation, because a lot of that came down to pure dumbluck or the fact that they weren't people actually sitting in those seats.Yeah. Yeah.And also that the door blew out when they weren't at full height altitude.Right. In my view, several things have to gowrong for one of these things to happen. And and that's the real disconcertingpart, is that when when an incident like.

This happens, it means that multiplethings went wrong. Like you, I think, alluded to Alaska hadwarning buzzers about this, about cabin pressure that they were investigatingbut hadn't investigated that door yet, etc..So at the end of the day, those boltsshould not have been loose. And I think that's going to be laid atBoeing's doorstep. When you take a look at the metricsbetween Airbus and Boeing, Airbus is beating them on just aboutevery metric that deliveries or the backlog.Operating profit, you know, cash, debt,.

Market cap.Do you expect that gap to continue to widen?Does this affect, I guess, how you write a stock like Boeing?Not in a huge way. I mean, they have so of Airbus has takenmarket share and especially in this Narrowbody area, which is interesting.But it takes decades for that to move the needle, in my view, just because theproducts live a long time, the product cycles very longand in a screwy way. Airbus was also disrupted by COVID in away couldn't run even further ahead, if you will, because everyone in themanufacturing business has been.

For the last couple of years.We do think that Airbus essentially outcompeted Boeing by having a newerdesign airplane. That Airbus platform is more extensiblethan the 737 platform. And that's really the root cause of, ina way, those crashes in 2018, 2019, that they were trying to do more with anolder design, this stuff and the tail fin assembly and other things that havecome out of spirit of last year to, I think, have more to do with a disruptedmanufacturing process that they haven't yet buttoned down.Because does this make the idea of Comac becoming a real market contender more ofa compelling narrative?.

Maybe not for major airlines, butperhaps across certainly emerging markets and some of those markets thatwe know China either already has pretty solid groundings in.So, yeah, I think, again, it takes a long time to move the needle in terms ofthe number of planes out there and the kinds of scale that would take a Comacto become a real number three, if you will.But at the margin, it's easier for some airlines to replace their 737 orderswith Comac as, again, it's going to depend for them on kind of what routes,what range, what performance they need. The Comac is still not quite the sameleg of an airplane, but.

It can serve a purpose.Right. And so at the margin, that does givesome buyers an alternative to, in this case, Boeing.I think it's an easier swap. Butagain, it would take decades to move the needle.And even in the wake of these incidents in the last couple of days, our moatrating for Boeing remains wide because of they're in this duopoly with Airbus.And my fair value estimate, which is, you know, free cash flow estimate is isunchanged at $232. I already have a more conservative rampfor their deliveries than the company.

Has stated.So if they have to slow down something or rework 171 planes, I don't think it'sgoing to make a huge difference to the value of the stock, even thoughobviously the stock's been moving here on this news.All right, Nicholas, really great to have you withus. We appreciate your time.Nicholas owns industrials, equities analyst at Morningstar there.Vonnie, got some breaking news. Jane Street is reeling in the profits.It came in with $7.3 billion of net trading revenue in the first nine monthsof last year.

The pop trading giant benefiting frommarket swings primarily and an expansion of its products is one of a select groupof firms, of course, as well that can create new shares of ETFs.And so it's working with many companies that issue them.So if those Bitcoin ETFs go ahead, for example, Jane Street would be thecreator of choice for some of those shares.Once again, Jane St In the first nine months of the year, reeling in a $7.3billion of net trading revenue, the results were disclosed to investors aspart of a debt deal and it's also showing that the company is expected togenerate 3 to 3 and a half billion.

Dollars of net trading revenue in thefourth quarter. So that would make it a $10.7 billion ayear in the full year of 2022. This is all according to people familiarwith the matter. BlackRock, meanwhile, the world'sbiggest asset manager, is slashing 3% of its global workforce.The firm says 600 employees will lose their jobs.Bloomberg's Su Keenan joins us now. And so, Larry, think citing a dramaticshift in the industry as a reason. Yeah, absolutely.And BlackRock will be reporting its earnings at the end of the week.The CEO and company president saying in.

A memo to staff that they're seeingprofound changes in the industry more than they've ever seen since thefounding of the company. As a result, they're making changes andactually expect to have a larger staff by the end of the year.Even with these cuts reduction in global workforce of about 3%.You have to remember this time last year they cut about 500 workers and then hadfurther cuts in June that amounted to less than 1% of staff.And BlackRock is among several big money managers, including Wellingtonmanagement to Rowe Price, that have recently cut jobs and redirectedbudgets.

In response, executives say that 80 appshave become the preferred vehicle for both index and active investmentstrategy, and that the firm is growing across the globe, including in Europeand in Asia. So you saw CEO Larry Fink and PresidentRob Capito say in their memo that of all the changes, they're saying, quote,Perhaps most profound are these new technologies that they believe arepoised to transform the industry and every other industry.You have to believe they're talking about A.I..Among these technologies, BlackRock is aiming to expand into the growing marketfor alternative investment, with the.

Goal of doubling revenue from privatemarkets over the next five years. The firm has more than 9 trillion inassets as of September. And as I mentioned, they will bereporting their earnings on Friday. Again, in the past year it's been aninteresting time because they did have a strong 20, 23 rising about 15%.But since the beginning of the year, shares are down about 2%.Meanwhile, Morgan Stanley displacing Citigroup as the least loved of bankingstock. Yeah, this is on the basis of Bloombergdata. We take a look at all the analystratings on the six largest U.S.

Banks and Citigroup, which had been inlast place, is now getting a bit of love and has been replaced by Morgan Stanley.The change came this week when an analyst at HSBC Holdings shuffled hisrecommendations, upgrading Citi and lowering Morgan Stanley.Saul Martinez wrote in his notes that Citi is an attractive vehicle to gainbank exposure. Adding it in is HSBC preferred choiceamong large cap banks. And they read Citigroup suddenly gettinga lot of love also from widely followed Wells Fargo analyst Mike Mayo.He named Citi as his top pick and said the stock could double over the next fewyears.

Morgan Stanley.Meanwhile, most analysts have recommended that investors hold the bankand not add to shares. No analyst, however, has given it a sellrating, but it is at the bottom of the pile.Back to you. And Mike Su Keenan there with thelatest. Well, coming up next, Taiwan'sopposition KMT tries to rally support as it seeks to unseat a government that itsays is putting the island at risk. We have a report from one of theirrallies just ahead. This is Bloomberg.

Defense Secretary Lloyd Austin washospitalized for complications from surgery to treat a prostate cancer thatsheds new light on his health and mystery around his disappearance inrecent days. Joining us now from Washington isnational security reporter Daniel flatly.Dan, at the very least, this has been a little bit embarrassing for the Bidenadministration. What's the upshot?Right. So, you know, as as you know, and aswe've reported, Secretary of Defense Lloyd Austin was went in for some whathe probably thought was routine surgery.

For prostate cancer in mid to lateDecember and then had some complications and was out of commission for severaldays and didn't inform the White House until until recently.In fact, it wasn't until today that he revealed that it was prostate cancerthat that had been afflicting him. So the upshot of this basically is thatPresident Joe Biden is under a lot of pressure right now to figure out whathe's going to do with Secretary Austin. He's said so far that he's going tostand by his secretary of defense. This is, of course, an election year.So you don't want too much turmoil at the top.But this is really sort of unprecedented.

In Washington, where you have a a verykey official at a time when the U.S. is involved in military operations allover the globe, essentially missing for several days.So I think there would be a lot more to come from this as as time goes by.But for for now, we have an answer as to why he originally sought treatment.Again, as you mentioned, it's an election year.It's also a year where the US indirectly remains engaged into active wars.Secretary Blinken's trip to Israel, his fourth since the October 7th attacks,has any progress they've made. The messaging has been prettyconsistent, but also pretty pretty.

Different to how the operations havebeen conducted. Yes, that's right.So Secretary Blinken has traveled several times to the Middle Eastfor a couple of reasons. One is to sort of tamp down some of theregional tensions in the area. Of course, we've seen some attacks inthe Red Sea by the Houthi rebels out of Yemen.We've seen some strikes on U.S. forces in Syria and Iraq.And obviously there is Israel's response to the October 7th attacks in which ithas carried out full scale military operations in Gaza.So Blinken essentially was telling.

Israel to consider what comes next andto not try to keep its boot, as it were, on the neck of the Palestinians in Gazaafter whatever, you know, its operation, after its operation to eradicate Hamasis over and to sort of let the Palestinians be able to create their owngovernment and have self-governance in that territory.This is something that Israel has talked a little bit about before.They've sort of indicated that they might want to leave some sort of a forcebehind for a for an interim period of time.And until a new government is in place, they may potentially leave some troopsstationed on the border between Israel.

And Gaza.But Blinken's message was basically that something needs to happen after thisoperation is complete that will allow the Palestinians to sort of take backtheir territory and to and to have a new government there done on Ukraine, justto turn the situation a little bit towards that areaof war. It turns out that there were some talkslast week about peace and the peace process.And talk to us a little bit about what this plan is and whether it has any kindof a chance of succeeding. Well, it's very interesting.I mean, we're heading toward the second.

Year anniversary of Russia's invasion ofUkraine, and we've kind of entered a stalemate, essentially, where based onall the, you know, folks that I've talked to, we are looking for basicallya grinding stalemate for the next year or more.And so these peace talks are coming at a very interesting time because they sortof indicate that there may be some discussions happening and that the USand its allies are getting a little bit more comfortable with the idea of havingthese discussions, at least reported in public, because initially the US wasvery reluctant to say anything about peace talks.They were always putting the sort of the.

Onus on Ukraine saying we want we wantto defer to Ukraine in terms of how this will unfold.And now you see the global south, the so-called global South, being involvedin these talks. And that's really key because it'simportant to keep in mind that if you look at the map, a lot of the countriesthat have the most population in the world have stayed neutral in thisconflict. So I think the US and its allies aretrying to court them in a sense to get their perspective on how they would liketo see this unfold and wrap up and and have their participation in that.So very interesting time indeed.

When BBC's national security reporterDaniel Farley in Washington with some of those top stories.And same with geopolitics and China's top envoy to the US, as Beijing has noroom for compromise with those advocating for Taiwan's independence.Ambassador Fung also urged the US to follow the one-China principle.Taiwan votes for its next president this Saturday.China has previously called Taiwan's ruling party's candidate latching to atroublemaker whose views risked sparking a conflict.While relations with Beijing a top of mind for voters heading into Saturday'spoll in Taiwan, Bloomberg's Stephen.

Engle reports from a rally for one ofthe opposition candidates from the traditionally Beijing friendly KMTparty. It was a homecoming crush for oppositionKMT presidential hopeful Coyote as he rallied the faithful in his hometown ofJ.E. in southern Taiwan.Ho and the other opposition candidate, Khawaja of the Taiwan People's Party, orTPP, are making separate last minute pushes to defeat the more independenceminded ruling DPP and its candidate, vice president, lighting up.It's a three horse race for Saturday's election after the two opposition campsfailed to form an alliance, a fraught.

Union that could end up splitting theopposition vote. Well, the lump.I feel like the biggest room for cooperation between KMT and TPP would bethe number of seats in the legislature to achieveour goals or the same switch the party in power tell you.The DPP government has not been doing well for the past few years.People are more fearful. That fear she's referring to wasamplified Tuesday afternoon when cell phones islandwideblared emergency alerts erroneously saying that a Chinese missile had flownover Taiwan.

And for citizens to be aware, the KMTwas quick to latch on to the mistake because it has a launching policy.When I first got the alert, I thought it was an earthquake.It turned out to be just a satellite. But the English in the message said itwas a missile. So it made people panic.Even though the DPP came out and apologized.It never should have happened, especially now when the election is sointense. It made people feel threatened by Chinaas if they want to take over Taiwan. I feel like the DPP manufactured thisfear.

These two KMT supporters felt the sameway and see closer ties with China as a benefit, not a threat.Ding dong. We need to keep good communication withthe Chinese Communist Party so we won't have a war.The two main opposition candidates agree that the DPP is putting Taiwan at riskand that they must diffuse tension across the Taiwan Strait.Now, on the other hand, they cannot show to the Taiwanese people ahead of thiselection that they're cosying up to Beijing too closely and that peoplecould perceive that their efforts to get closer to China could put the long, hardfought democracy and freedom here in.

Taiwan in jeopardy.I think being closer with China for trade is not such a bad thing, butfreedom of thought is what I want more. So I don't want to be closer with China.It may be the very issue that decides the vote and sets the broadergeopolitical tone in East Asia. It's very, very important this electionbecause it's life or death for the Republic of China, because China is ourroots. China and US are inseparable.Stephen Engle Bloomberg News Daily. Taiwan.And we'll have special coverage from Taiwan all week.Stay tuned.

This is memory. We do have confirmation of the Hill atPackard Enterprises and Juniper Deal. HP Enterprise to buy Juniper for $40 pershare, to buy Juniper Networks for $40 per share in cash.When it comes to the the deal, when it comes to the estimatedvalue of about $14 billion, the deal would be accretive to adjusted EPS inthe first year. Post the close of that deal with thenetworks coming about 3% on that deal to be acquired by HP Enterprises that theJuniper See will lead a combined HP and networking unit there as well.Bloomberg Intelligence saying that that.

Potential acquisition now beingconfirmed would help fill a gap in the portfolio to expand that datacenter andcloud networking presence but potentially doesn't leverage the scaleagainst the likes of Cisco.

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