positivity, earnings season is getting into the year and investors are not liking the reading, but liking the earnings pool. >> tesla had a horrible quarter but it will be interesting watching tesla supplies. a busy day. annabelle: texas instruments could impact chipmakers. but at the start of the day, the nikkei coming online. you mentioned eco-data more than what economists had been

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 catch-22 for the boj, yen week. boj needs to curb that. holding steady will give traders

incentive to push past 155. let's 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. pre-much 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. let's take a look at how bonds are trading in the u.s.. we saw solid $69 billion sale of two-year notes and treasuries extending gains. two-year above 4.9, backing off

high levels. 70 billion of five-year 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. it's 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 long-term 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 we've 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. i'd 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. let's 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. that's 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 today's 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. ♪

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♪ 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, it's important that this push going forward with a more affordable range of models, they're 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 man's important given more

anemic growth this year. it's 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. we've 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 they've 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 party's tesla and it is in the shadows. paul: danny lee, thank you for joining us to unpack the earnings call. let's 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. china's biggest and most criticalness it. but for wall street, i haven't seen apple doing much to counter declines. it's 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 they're 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 emerging-market, 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 low-end 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 -cross-border 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 uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. 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 “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...”

so, if you could change the price, change the name! it's 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 un-experience this whole session. okay, that's uncalled for.

>> we can say the relationship is getting worse, true, but it's 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. let's 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 blinken's visit. they are basically saying, when you arrive it's 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 china's support for russia's war in ukraine. china's 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 that's causing concern. that's going to be i would think a threat that's 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 jean-l 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. let's 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 tiktok's 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 isn't

necessarily the end. i am framing it as a new chapter in tiktok's drawn out fight to survive in the u.s. we are a ways away from a tiktok-less 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 doesn't 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 tiktok's global users, but close to 50% of tiktok's 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 wouldn't be able to operate here. tiktok also has other lines of business in the u.s., including e-commerce. 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 are some buyers that have been circulating and i'm sure more buyers would throw their hat in the ring. a lot of companies would like to get their hands on it, particularly because of the coveted algorithm. i think one of the things that's going to determine what a potential sale looks like is whether the algorithm is included. it will impact the price tag of tiktok. without it, it will probably be valued less and maybe expand the list of potential buyers. still, not going to be an easy task. it's not just about the money. tiktok is an app that's heavily scrutinized so whoever buys it would have to have a strong stomach as well. paul: tiktok has a number of u.s.-based competitors. which would stand to benefit the most if it could no longer operate? jasmine: the biggest beneficiaries would be meta and google, both in terms of users and ad dollars, because of

instagram reels and youtube shorts. they are the most natural fit for displaced tiktok users. they are not exactly replacements. you can replicate the technology but not quite the culture and the user bases are somewhat different. tiktok is a smaller add player than meta and google but by no means small. we are expecting it to bring in about $10 billion in u.s. ad revenue this year, assuming it does not get banned. that would still be incremental for both meta and google. there businesses are still much bigger. we expect meta to bring in 64 billion dollars in u.s. ad revenue this year. there is a long list of other companies that stand to benefit, from snapchat, which is another social media player. the use case is different but

the user base is similar. all the way to amazon, which i'm sure would breathe a sigh of relief if tiktok shop were to disappear from the u.s. annabelle: you mentioned a specific culture tiktok has that can't be easily replaced even if the technology can be. i'm curious for your insights. our tiktok users particularly loyal to the platform? would they look to circumvent a u.s. ban or simply shift to whatever else is available or suits their business needs or commercial interests? jasmine: it's hard to talk about tiktok users as a whole. i think there are some who are very loyal to the platform, especially young users. i have seen people are more torn about a tiktok band this time around. this isn't the first time we are talking about the potential of tiktok being banned, but it does have a huge influence on american life and digital

culture, especially among young people. it's not going to be easy to simply replace. i do think if tiktok were to be banned, it would open more opportunities for other apps. it's not easy to start a social media platform and make it successful. the past couple of years, tiktok is the only one that has really broken through. annabelle: that is jasmine enberg, principal analyst at e market. let's look at how crypto is faring in the morning session. bitcoin extending gains to near the 67,000 mark. other tokens making moves in the green. that's the outlook for crypto, post the hardening event that went off without a hitch. it is the focus on ets, the man -- the demand we are seeing not just in the u.s. but potentially hong kong because the city is looking to follow wall street by listing a batch of crypto etf

funds. it would be a big window into whether the city is making progress in its push to become a digital asset hub. let's get more with rebecca. final preparations, perhaps we will see this rating by the end of this month. rebecca: we could see the trading as early as next tuesday, but it's very exciting for hong kong. across these etf's, we may see a potential fee war like we did in the u.s. we have china amc and harvest all fighting the etf race. harvest has come out with waving their management fee for the first six months. we have never seen this in hong kong for etf's. they are replicating the success that the u.s. and bitcoin have had. we could see other etf issuers

lowering their fees, but we have china amc priced at 95 basis points, the grayscale of the three etf's because they are the largest. they have 3.6 billion dollars in assets under management while harvest only has three etf's. both sarah has the premium ticker of 3008 and 3009. in hong kong a lot of people don't remember the names of the etf, they just remember the ticker. the cra has three etf's. paul: who is going to lead this etf horserace and why? rebecca: one of the things investors need to pay attention to is the total cost of ownership. oftentimes investors look at the management fee. harvest is the cheapest at zero management fee. if we look at the total cost of

ownership, what's interesting is how much the custodians and virtual platform charge. shimao -- vocera has a partner and their cost is only around 20 to 30 basis points. the one that china and harvest are using are charging 1%. one thing to keep in mind is not just the management fee but the total cost of ownership. if we look at see sop's future, they charge almost 2% because hong kong has a charged custodian fee, around 1%. who may lead this race ultimately comes down to the marketing. between the three etf issuers, they have taken a different approach. one has gone premium ticker, the other has gone zero management fee, and the third is in between. it will be interesting to see the marketing strategy. we have already seen

advertisements in hong kong for this so it will be interesting to see the retail adoption. annabelle: rebecca sin, etf analyst from bloomberg intelligence. we could be looking at a billion dollars in a um in two years. we will have more to come on daybreak asia. ♪

paul: southeast asian nations have long i'd tapping the energy riches of the south china sea to help their economies. in the manner of chinese fishing boats and a giant vessel dubbed the monster, making sure that won't happen soon. this is the subject of today's big take. it's bring in southeast asia government reporter philip hammond in singapore. there are a number of resources in the south china sea that are important to all the nations that have multiple confusing overlapping claims. can you give us a sense of what's at stake? philip: yeah, for at least the philippines and vietnam we are talking about two growing economies that desperately need energy resources. in the case of the philippines,

we are talking about potentially a full grown -- full-blown energy crisis. to fix that, they need to tap some resources that lay beneath the seabed in the south china sea. what we are seeing is tensions wrapping up between these countries. we are not seeing much of a diplomatic solution. the energy crisis looms. annabelle: what are the opportunities available to the philippines? for instance, to vietnam, to counter that perceived incursion from beijing? realistically. philip: let's make no mistake, in terms of military prowess nobody in the region can compete with china, which has the largest naval fleet in the world. the philippines have taken china to court over the matter that ruled in favor of manila to give

manila a legal basis to extract these resources within its exclusive economic zone. there is no enforcing capability on that. china has been able to build outposts around the south china sea, has been able to stock a lot of oil rigs, block access to natural gas deposits. what is the philippines doing now? they are currently forming a new arch of collegiate -- new arch of alico concept that would help tap these energy resources. it has not been made public yet. we don't know the substance of that plan. however, it is something we can see evolve in the coming months and years. paul: i know the philippines have been taking the meteor out on some of its boats. some reporters got a taste of chinese water canyons -- tenants. what are the risk of things

escalating? philip: the water cannons are certainly something we have seen a lot of in the press. a lot of eyes have been fixed on the philippines ability to protect its own sovereign claims. that's where we see a lot of this action happening, resupply missions to an old world war ii ship that is quite rusted. this is kind of part of what president marcos has in mind, showing the world what is happening in what has historically been a black box in the south china sea. in terms of what tensions may bring, it's hard to tell. you have to go back to the 1970's, when this was a deadly conflict in some ways. the conflict between china and vietnam saw dozens of troops killed over a similar standoff. thankfully that's not the case

today. china is a much bigger military power and now we have the united states well in the back of manila in a way that was confusing just a few years ago. that raises the risk of a much bigger conflict. annabelle: that is our southeast asia government reporter there. for more on today's big take, head to the terminal or go to bloomberg.com. we will have more ahead on daybreak asia. this is bloomberg. ♪

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from chase for business. make more of what's yours. annabelle: some breaking news crossing the terminal, the eu opening an investigation into china's procurement of medical devices, something that had been reported as a bloomberg scoop going back to the middle of this month. something that had been discussed for a period here but what we understood was the eu would be launching an investigation into china's procurement of devices. that is now being confirmed but it does risk more tensions with beijing, after they have a parallel investigation into the country's ev subsidies.

the eu inquiry, perhaps according to our reporting from sources, would be seeking to address concerns that beijing's policies unfairly favor domestic supplies, something that could focus on information gathering from companies and member states. the eu opening an investigation into china's procurement of medical devices. paul: let's look at how we are tracking in the commodities space. reasonable gains across the board. there seems to be a fall in iron ore prices, now picking up 1.25%. copper prices gaining a little although they have pulled back from $10,000 earlier in the london session. there has been powerful buying out of china but buyers pulling back a little at the sign of higher prices. we are also getting news out of chilly, the world's biggest copper producer commit a few factors at play in terms of the supply and demand side in terms of the copper price.

energy prices recovering and we are seeing energy gaining reasonably well. australia is up by about .75%. this is notwithstanding a little trouble at the top. the materials sector having a rough ride despite the improvement in the iron ore price. the major iron ore exporters losing a little ground in the early going. major investors are opposing woodside's climate plans and also the chairman's reelection, raising questions about the company strategy as it rushes to expand oil and natural gas output. david joins us for more. tell us more about investors' complaints about woodside. david: as you say, woodside holding its annual general meeting later this morning over

in perth. on the ballot for holders to vote on are two key things. one, a nonbinding vote on the company climate strategy, a vote that won't necessarily change anything the company is doing, but it will inform the decision-making. currently woodside looking to make a 15% reduction on direct emissions by the end of the decade. many investors say that is too slow, other investors say the detail of the plan remains unclear and separately some investors maintain the chairman simply has not engaged to the correct degree with shareholders , particularly on climate issues. he is not expected to lose his position but nevertheless having opposition to the chairman is obviously significant.

annabelle: that was our asia energy team lead david springer. you are seeing the big jump for the taiex, not much of a surprise given the amount of chipmakers listed with that texas instruments number coming out. a bump in earnings report, certainly fading into the optimism you are seeing across the screen. chinese yuan offshore fairly steady. that is at for daybreak asia. our markets coverage continues.

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her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. 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 “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...”

so, if you could change the price, change the name! it's 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 un-experience this whole session. okay, that's uncalled for.

david: half an hour away from the opening bell, hong kong, shanghai and shenzhen. you are watching the china show. yvonne: asia stocks rise after a rally of heavyweights with investors focused on earnings as a major test of sentiment on equities. david: tesla jumping in late trade with the promise to pass cheaper models taking the