Expecting. Tesla had a week quarter but still a good outlook, rising after hours more than 12 , going all in on autonomous vehicles. The bar was high for mega caps stocks. That is the state of play for japan, japanese yen Holding Close to the 155 mark. The yen is a question of how much it is helping versus hindering. Consumer stocks are weaker, a catch22 for the boj, yen week. Boj needs to curb that. Holding steady will give traders incentive to push past 155. Lets change to korea, the kospi online up more than 1. 5 . Small caps are in the green, Texas Instruments is a another name with a solid forecast. Come back in demand so chipmakers, the korean won is weaker against the dollar. Paul in australia, staggered open. Premuch flat in the aussie dollar was showing strength relatively speaking, knocking on the door of . 65 u. S. Were going to get an important cpi prints. Cpi and australia is easing, still outside the target band, but encouraging progress. The trend mean is the metric dropping to 3. 8 . Energy stocks modest positive and a recovery in crude prices, brent up at 88. 50. Lets take a look at how bonds are trading in the u. S. We saw solid 69 billion sale of twoyear notes and treasuries extending gains. Twoyear above 4. 9, backing off high levels. 70 billion of fiveyear notes and 44 billion said in your notes after. Our next guest, Global Fund Manager at blackrock. You remain confident on where equities are headed. This rally might be getting a little tired . Russ good morning. We are constructed on japanese equities. Its worth reminding ourselves that this was a market before the recent high, tends to be under owned and we are seeing a renaissance in the japanese economy. Stronger gdp, significant governance reform. Companies are levered to longterm trends like ai. This is a market we like. The other thing is despite gains, companies in the stock market look cheap relative to the rest of the world. Paul you mentioned the nikkei is under owned, but weve seen it slip from march and i want to compare that to the csi 300 in china. Last week, chinese stocks beat the nikkei. Are you tempted to put it into another market considering great deals . Russ i think that is a fair point. China is cheap but there are a number of challenges, particularly growth, property sector. Id knowledge japan has pulled back off the march high. If you look at 12 months, japan is our favorite market. Annabelle that is a point because do you see u. S. Exceptionalism persisting given the strength of the u. S. Economy . Russ there a number of factors, u. S. Economy remarkably resilient if you think back to one year ago, we had concerns about banking, First Republic bank, here we are one year later and the u. S. Economy actually is strong so economic gains are one thing, but the other is when you consider what is to be rewarded over three or four years, companies in aia, cybersecurity, internet commerce. Seeing more of those in the u. S. Another way to put that is when you look for profitability or quality, you see more of those Companies Listed in the u. S. So the type of companies that we find in the u. S. Are very appealing. Annabelle off of ai and profitability, we have yet to see bottom line returns from ai generated so what is the run or the lead time . Russ it will take years to play out. Oh we are not going to realize the full value in one quarter or two. Lets look at earnings for tech versus the s p. Tech earnings expected to be around three or 4 . If you focus on the magnificent seven look at those companies, Earnings Growth for those companies are expected to be around 38 percent. It even though we are not realizing the full potential of ai, we have seen these companies producing tremendous Earnings Growth, cash flow and this is part of the reason why it is worth considering the premium for many firms. Annabelle focus on earnings, expectations were high. Companies had to not only beat or exceed, they had to exceed enough to convince that the rally could extend. Are you getting that signal . Russ we are just starting to get earnings, so we will have to see. Investors like what they saw from the tesla conference with the earnings discussion, but from what we are seeing, there is a lot of momentum in the market. Developments on the Semi Conductor front to support ai, cybersecurity, software. Our view is there is a lot of pressure, there is a prospect for one quarter of disappointment, but looking out, we still see Earnings Growth and cash flow momentum that is likely to support continued gains. Paul you say stocks are doing well because of easy financial conditions. Can you describe how things are easier . Russ this depends on your definition. If you look at real rates, they have not gotten easier, but over the last six months, credit spreads, stockmarket market, volatility lower. These are manifestations of financial conditions and while we have seen tightening over the last month, if you take a longer horizon and think about the world versus six months ago when the market was making a bottom, it is different. Thats not mean investors should be oblivious. For stable Growth Companies they have been resilient to the scenario in 2022. Mature Companies Got hit from the rise in rates. Annabelle Global Allocation Fund portfolio manager, thank you for your insights and we are 10 minutes into the session and some movers we are tracking, with got tesla named supplies and auto giants mostly moving to the upside. Lg energysolutions as well. We will be discussing tesla, a miss. Investors liking the Earnings Call and focus on not only automation, but delivering a cheaper lineup of vehicles. Tessler continuing to search, chip stocks as well to note because the other Earnings Report was Texas Instruments. Rising sharply after hours. Bullish forecast so sales as much as 3. 9 5 billion. Estimate had been for three point 78, so quite a beach. Profit will be more than expected so it tells us customers are beginning to reorder chips. Starting to work through inventory, a positive signal and you are seeing that reflected in trade. Get a roundup of the earnings and what is going on in todays edition of daybreak. It is available on mobile in the bloomberg app. Customize settings so you only get the news that you care about. This is bloomberg. Tamra, izzy, and emma. They respond to emails with phone calls. And they dont circle back, theyre already there. They wear business sneakers and pad their keyboards with something that makes their clicketyclacking. Clicketyclackier. But no one loves logistics as much as they do. You need tamra, izzy, and emma. They need a retirement plan. Work with principal so we can help you with a retirement and benefits plan thats right for your team. Let our expertise round out yours. Annabelle taking a look at tesla, up more than 13 and what we are seeing for automakers, big supplies into tesla like lg, samsung, the battery play jumping. Tesla not a great Earnings Report, but it did accelerate a launch of affordable models. Danny lee joins us now. Elon musk talked about cheaper cars, something investors wanted to see. What else did he say . Danny a small detail, its important that this push Going Forward with a more affordable range of models, theyre going to push forward and have something ready in 2025 sooner than expected. This brings forward growth by around three quarters. When you look at the backdrop of earnings struggling with rising competition, sales growth under pressure, tesla cutting prices is important in terms of recharging the growth story. When tesla delivers on this, will this be the autonomous robotaxi or something more vanilla . This mans important given more anemic growth this year. Its important tesla gives clarity given such a thin line up of models, getting older and more stale. You see the competition in not just the u. S. , but in china, a huge amount of competition and Companies Fighting on price. Paul there was not a lot of detail around what it is on august the eighth. That is 107 days away now. So how is the market going to digest this news. We saw the stock rise. Could we see a more muted open . Tesla trades at 54 times earnings. What is the outlook . Danny this is good news when you think about how tesla is pushing forward. The lower cost ev is not dead as was previously signaled. When you look at previous parks, the fact that it had a poor quarter, margins were better than anticipated, but operating earnings and revenue is under pressure and tesla had to cut prices in key market is its. It is responding to competition. Performance will be a real tough couple of quarters. But laying the groundwork ahead of time tuesday ahead of the curve is important. Weve seen how the stock opens, but given the past month or so as the stocks slid, this is important for tesla. Annabelle you mentioned tesla had to cut lineup prices in china and you are in beijing for the auto show, where you told us tesla is not on exhibit. One investor said the core issue is theyve got an aging design. How do you see that shifting based on tesla putting out a new lineup, but based on competitors in Mainland China . Danny this is a real problem, it came out with a fresh model, but when you look at chinese rivals innovating and putting of new models, even new brands quickly, tesla is facing a wall of competition and prices which it has to either really cut beyond prices like in the u. S. And it is a struggle how to try to respond where nothing has changed. So when you see the cars, over 100 new models at the beijing auto show, the carmaker that is not coming to the partys tesla and it is in the shadows. Paul danny lee, thank you for joining us to unpack the Earnings Call. Lets take a look at how apple suppliers are doing in early trade in korea and japan. Sk hynix is at 4. 4 . Samsung having a good day as well on the heels of counterpoint saying apple sales fell 19 , making it the worst performance in the key market since 2020 and putting a local rival hot on its heels. Mark garman joins us more. Give us a sense of the context of how serious this is considering sales falls over lunar new year, one consumers like to spend . Mark they are going to come on their Earnings Call and say they have a tough compare given the lockdowns, creating pent up demand over the lunar holiday. Anyway you slice it, this is not great when you consider apple declining 13 in the first quarter, right . And then saying the client in china has nothing to do with the iphone. Last quarter had nothing to do with the iphone and this quarter is all about the iphone. So not a great look for the company. Chinas biggest and most criticalness it. But for wall street, i havent seen apple doing much to counter declines. Its the same playbook in the u. S. , not seeing enhanced promotions in the Chinese Market , no bigger partnerships like we chat, tencent. So they need to do something to push back against this sort of mountain of stuff rolling down the mountain and theyre not doing that. Annabelle why do you think it is that they are not doing it . How easy is it to make tweaks . Do they need to make modifications for another emergingmarket, india . Danny mark it would be easy to roll out new promotions, new features, new partnerships toward the Chinese Market. The head of china, she is a figurehead. Not able to implement new policies. China is different than the u. S. As many know. Apple is not operating differently there other than following the laws of the chinese government. They need to look at it as a different world and let the iphone run differently. Make a lowend phone for india and gain share. And yet people to upgrade to the high end phone, create a bigger market for yourself. Annabelle that was mark gurman. More to come on daybreak asia, this is bloomberg. X rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh annabelle latest corporate stories this morning. Ubs is delaying plans to build a Mutual Fund Business in china due to a dim profit outlook. The bank will rely on joint ventures. They had been contemplating a standalone platform after china lifted restrictions. Visa gained shares after the Company Reported a profit beat. Adjusted net income rose over 17 to 5 billion. Credit card spending grew more than 6 with worldwide payments volume rising 8 . More to come on daybreak, this is bloomberg. Her uncles unhappy. Im sensing an underlying issue. Its tmobile. It started when we tried to get him under a new plan. But they they unexpectedly unraveled their price lock guarantee. Which has made him, a bit. Unruly. You called yourself the uncarrier. You sing about price lock on those commercials. the price lock, the price lock. so, if you could change the price, change the name its not a lock, i know a lock. So how can we undo the damage . We could all unsubscribe and switch to xfinity. Their connection is unreal. And we could all unexperience this whole session. Okay, thats uncalled for. We can say the relationship is getting worse, true, but its getting worse slowly and there is more stability to the relationship. When there is conflict, the conflict does not escalate out of control. Rather the escalations are targeted and calibrated. Romaine that was the founder and president of Eurasia Group speaking to us earlier. China has launched its harshest attack of late on complaints about overcapacity, just as secretary of state Antony Blinken is due to arrive. Lets bring in the Greater China editor john. We rarely see China Holding such briefings before a top u. S. Official visits. Is there anything to draw in significance from the timing . I think there was an implicit warning setting the stage for secretary blinkens visit. They are basically saying, when you arrive its not going to be all hugs and backslapping. There are hard issues they will want to talk about. China has a different position on many things when it comes to russia, industrial overcapacity. The Chinese Ministry calling the criticism from secretary yellen economic coercion. There is going to be a lot of these to work out and going to be some tough conversations i expect. We also got this report from the wall street journal that washington is preparing reports that would sever china from the world financial system. I imagine that would make for an interesting conversation if it is correct rate john this is an ongoing issue. There is a lot of concern in washington and the west, especially europe, about chinas support for russias war in ukraine. Chinas banks, the use of the yuan and rmb within russia as a Payment System for imports. These are all things the u. S. And europe are taking objection to because they believe it has helped russia continue to make the advances we have seen on the battlefield and continue to prosecute the war in a way thats causing concern. Thats going to be i would think a threat thats on the table, something the United States is going to be considering as a way to try to get china not to do these sorts of things, to cut off its support for russia. Annabelle that was the Greater China executive editor jeanl iu. You are taking a look at live pictures here from washington. They 95 billion emergency aid package for kyiv and other u. S. Allies is moving forward in the senate. It is on track for a congressional approval and that legislation includes a measure forcing bytedance, the chinese tech giant, to divest ownership of tiktok or face a u. S. Ban. Bytedance earlier said it has no intention of selling deplatform in the u. S. And is planning to launch a legal battle against any restriction or prohibition. Lets get analysis from jasmine enberg, principal analysis and Market Research firm the market are. It seems like a foregone conclusion tiktok is going to be banned in the u. S. Tiktok is going to push back on that ban with perhaps a protracted legal fight. Where do we go next . Jazmine it does feel like the clock is ticking for tiktok. It feels inevitable this bill is going to become law. It was smart for the u. S. House to include this bill in a package for foreign aid. There are a lot of foreign concerns in play that are outside of tiktoks control but could play a determining role in its fate. Tiktok is planning to wage what i believe will be a lengthy and intense legal battle. What that means is this isnt necessarily the end. I am framing it as a new chapter in tiktoks drawn out fight to survive in the u. S. We are a ways away from a tiktokless america, but it does seem the days are numbered for tiktok at least how it currently operates in the u. S. Annabelle as we know, the u. S. Is the most important market for tiktok. It is present in a variety of other countries or regions. Do you think tiktok can survive if it doesnt have its primary user base or where it is getting most of its revenue from . Jasmine great question. Tiktok in the u. S. On the accounts for about 10 of tiktoks global users, but close to 50 of tiktoks worldwide ad revenues. Advertising is part of its business so it is a lucrative market for tiktok and it would be a huge blow if it wouldnt be able to operate here. Tiktok also has other lines of business in the u. S. , including ecommerce. It has pushed heavily into shopping through tiktok shop, so it is counting on the u. S. To bring revenue for the company. It would have major ramifications if it were to disappear from here. Paul there is so many hypotheticals involved with this case and where it goes. One possibility if tiktok was divested, who would buy it and what would happen to the data it has gathered that lawmakers are so worried about . Jasmine both excellent questions. I think it would be hard to find a credible and approvable buyer. The buyer would need to have deep pockets and many of the companies that could afford to buy tiktok would be no goes because of regulatory and antitrust hurdles. There