Apple Unveils iPhone 16; Asian Stocks Fluctuate Ahead of US CPI | Bloomberg: The Asia Trade 9/10/24

SHERY: THIS IS THE ASIAN TRADE. I'M SHERY AHN IN TOKYO. HAIDI: I'M HAIDI STROUD-WATTS IN SYDNEY. CUTTING THE CHANCE OF A JUMBO FED RATE CUT NEXT WEEK TO 20%. APPLE SHARES CLOSE LOWER, FEATURING TECHNOLOGY THAT IS ALREADY A. THE FED WILL CUT INCREASED CAPITAL REQUIREMENTS FOR INCREASED DEBT FOR BANKS -- REQUIREMENTS FOR BANKS. SHERY: WE SAW CALM RETURNING TO THE MARKETS OVERNIGHT ON WALL STREET. BOND HUNTING SUPPORTING THE EQUITIES SPACE BUT BEFORE WE GET CPI NUMBERS WEDNESDAY. OPTIONS TRADERS PRICING IN ABOUT ALMOST A 1% MOVE IN EITHER DIRECTION FOR THE S&P 500 DEPENDING ON HOW THESE NUMBERS COME OUT, AND THE EXPECTATION NOW IS FOR 2.6% YEAR-OVER-YEAR FOR THE MONTH OF AUGUST, THE SMALLEST INCREASE SINCE 2021. WE SAW A NEW YORK FED SURVEY SHOWING THAT CONSUMER INFLATION EXPECTATIONS HAVE STABILIZED. HAIDI: WHAT HAS NOT STABILIZED IS THE SORT OF DEFLATIONARY SPIRAL WE ARE SEEING IN CHINA. WE HAVE TALKED ABOUT HOW LONG UNTIL POLICYMAKERS TAKE A MORE STRINGENT ACTION AGAINST THIS RISK, THE PSYCHOLOGY SETTING IN. WE ARE STARTING TO SEE FEARS OF THAT. IT HAS BEEN STALKING CHINA SINCE LAST YEAR AND IS SHOWING SIGNS OF SPIRALING. THAT COULD WORSEN THAT STRUCTURAL SLOWDOWN FOR CHINA'S ECONOMY. IT'S RAISING CALLS CERTAINLY FOR MORE IMMEDIATE AND SEVERE POLICY MEASURES. THE PRICES FALLING ALL THE WAY THROUGH 2025. SEEING STAGNATION WHEN IT COMES TO WAGES, LANGUISHING DOMESTIC DEMAND, AND WE KNOW FROM THE JAPANESE EXPERIENCE OF NOW FINALLY EMERGING AFTER THESE PAINFUL DEFLATION YEARS WHAT HAPPENS WHEN THAT MINDSET BECOMES ENTRENCHED. SHERY: YEAH. WE CONTINUE TO SEE REALLY THAT DECLINE IN THE CHINESE ECONOMY. WE COULD SEE THAT PRESSURE MOUNTING ON THE CHINESE YUAN AS WELL. WE HAVE SEEN THAT UPSIDE OF ABOUT 2% THIS QUARTER AGAINST THE U.S. DOLLAR, BUT WILL THERE BE REPATRIATION OF DOLLAR HOLDINGS IF THERE IS NOT THAT APPETITE TO INVEST WITHIN THE COUNTRY? WE WILL BE WATCHING AS WE CONTINUE TO WATCH THE JAPANESE YEN, THAT 143 LEVEL STILL BEING HELD. NIKKEI FUTURES AT THE MOMENT POINTING TO THE UPSIDE OF .2% AFTER FIVE SESSIONS OF LOSSES ALREADY. WE HAVE SYDNEY FUTURES ALSO POINTING HIGHER. THE DOLLAR GAINING GROUND IN THE OVERNIGHT SESSION. LOOK AT U.S. FUTURES ARE COMING ONLINE. WE HAD TWO YEAR TREASURY YIELDS REALLY GETTING A BOOST ALTHOUGH THE TREASURY MARKETS WERE MIXED, BUT WE ARE REALLY WATCHING, AND WHAT WE WILL BE WATCHING IN THE ASIAN SESSION IS APPLE SUPPLIERS. WE SAW APPLE GAINING 2% DURING THEIR PRODUCT LAUNCH, ALMOST ENDED UNCHANGED. THAT WAS ONE OF THE BIG MOVES WE SAW IN THE EQUITY MARKETS, BUT REALLY, IT WAS ABOUT THAT SORT OF APPETITE RETURNING FOR A RISK ASSET. WE SAW THE VIX INDEX FOR EXAMPLE FALL BELOW 20 AS WELL, ALTHOUGH PUT IT INTO CONTEXT, WE ARE STILL ABOUT 50% HIGHER THAN THE YEARLY AVERAGE, HAIDI. HAIDI: AND OF COURSE WE ARE WATCHING WHEN IT COMES TO THE ASIAN SESSION HOW SOME OF THESE APPLE SUPPLIERS MIGHT REACT WITH APPLE INTRODUCING THE LATEST VERSIONS OF ITS FLAGSHIP IPHONE, BETTING IT CAN ENTICE CONSUMERS WITH MODEST HARDWARE UPGRADES, PROMISES OF AI TECHNOLOGY THAT WILL NOT BE INCLUDED IN INITIAL MODELS. ED LUDLOW JOINS US FROM CUPERTINO. THERE WAS A MANAGING OF EXPECTATIONS GOING INTO THIS. WE KNEW THIS WOULD NOT BE THE SORT OF BIG BANG NEW PRODUCT RELEASE, SO WHAT DID WE ACTUALLY GET? >> WE GOT A NEXT GENERATION IPHONE, IPHONE 16, THAT IS STILL THE CENTERPIECE, BUT WITH MODEST HARDWARE MODIFICATIONS OR CHANGES FROM THE PRIOR GENERATION AND WHILE THE NARRATIVE WAS VERY MUCH ABOUT APPLE INTELLIGENCE, APPLE'S AI OFFERING, YOU HAVE A STATE OF PLAY NOW WHERE THE NEW IPHONES ARE AVAILABLE FOR PREORDER TODAY NOW AND SHIPPED ON, SEPTEMBER 20 BUT APPLE INTELLIGENCE WILL ONLY SHIP IN A LIMITED FORM IN IOS 18.1 IN, OCTOBER SO WE WANTED MORE. IT'S FLAT, THE STOCK, BUT IN 12 OF THE 17 IPHONE LAUNCHES PRIOR TO TODAY, THE STOCK CLOSED DOWN, AND GIVEN HOW IT HAS TRADED SO CLOSELY TO APPLE'S AI STORY, YOU WOULD SAY ALL IN ALL THERE WAS ENOUGH TO CONVINCE INVESTORS ON THE PATH FORWARD FOR APPLE AND AI HERE. SHERY: YOU MENTIONED IN OUR TLIV BLOG ABOUT THE FASTEST CPU OF ANY PHONE. DOES THAT WARRANT A BIG REFRESH CYCLE HERE? ED: IT'S A REALLY GOOD QUESTION. BECAUSE THERE ISN'T THAT MUCH DIFFERENCE, REALLY, BETWEEN WHAT WE GOT WITH THE IPHONE 15 A YEAR AGO AND NOW, BUT YOU TAKE FOR GRANTED THE THINGS THAT ARE IMPORTANT TO CONSUMERS. THAT INCLUDES CONSUMERS IN CHINA. EVEN THOUGH THEY WANT HAVE ACCESS TO APPLE INTELLIGENCE IN THE FIRST INSTANCE, THINGS LIKE PROCESSOR PERFORMANCE, BATTERY LIFE, THE QUALITY OF MATERIALS -- APPLE IS STILL AN ASPIRATIONAL PRODUCT IN MANY ASIAN MARKETS -- THOSE THINGS MATTER. SO WHILE THERE WERE NOT MANY SPECIFIC AESTHETIC, HARDWARE OR DESIGN CHANGES, THE CHANGES ARE A STEP UP AND APPLE ARE KEEN TO MAKE THAT POINT. HAIDI: YOU KNOW, WE SAW APPLE SHARES HITTING THAT RECORD WHEN IT DID THE WHOLE SORT OF AI FOR THE REST OF US RELEASE, SO HOW MUCH DOES FUTURE GROWTH AND SUCCESS REALLY HINGE ON THE ABILITY TO DELIVER ON THESE AI FEATURES AND WHEN COULD WE POSSIBLY SEE THEM IN FULL FLIGHT? ED: LOOK, I WAS ABLE TO GET HANDS-ON WITH SOME OF THE BETA VERSIONS OF APPLE INTELLIGENCE, AND THE EASIEST WAY TO SUMMARIZE IS THEY ARE TOOLS THAT MAKE THINGS YOU ALREADY DO ON YOUR PHONE SLIGHTLY EASIER AND MORE CONVENIENT, SUMMARIZING BODIES OF TEXT, AUTO RESPONSES, PHOTO EDITING, BUT THE REALLY BIG STUFF IS STILL TO COME. IT WILL BE THE STANDARD RELEASE. THE PESSIMIST WOULD SAY WE HAVE NOT LEARNED ENOUGH ABOUT HOW WE ARE REALLY GOING TO USE APPLE INTELLIGENCE. THE OPTIMIST WOULD SAY, ACTUALLY, THERE COULD BE AN UPGRADE CYCLE DRIVEN SURELY BY ANTICIPATION. BUY YOURSELF A LATEST IPHONE 16 GENERATION KNOWING APPLE IS STAGGERING THE RELEASE OF THIS FUNCTIONALITY, PARTICULARLY IN MARKETS LIKE CHINA, WHERE THE REGULAR -- REGULATOR NEEDS TO SIGN OFF AND FIND A TECHNOLOGY PARTNER. THEY KNOW IT'S COMING DOWN THE LINE. SHERY: WHAT DID YOU MAKE OF THE PRICING FRAMEWORK HERE? ED: PRICING IS REALLY IMPORTANT AND, ON THE PRO, CONSISTENT, 999 U.S. DOLLARS, THE PROMAX $1999. THE MOST SIGNIFICANT REFRESH APPROACH WAS IN THE WEARABLES CATEGORY. REFRESH ON AIRPODS, APPLE WATCH SERIES 10 WITH SLEEP APNEA DETECTION. THE REASON I BRING THAT UP IN THE CONTEXT OF PRICE POINT IS THERE ARE GOING TO BE CONSUMERS WHO WILL NOT PAY $1000 FOR A SMARTPHONE BOAT WILL PAY SEVERAL HUNDRED DOLLARS -- SMART BUT WILL PAY SEVERAL HUNDRED DOLLARS FOR AN APPLE PHONE OR WATCH. IT'S AN ENTRY POINT FOR APPLE IN SEVERAL MARKETS. HAIDI: COANCHOR OF BLOOMBERG TECHNOLOGY ED LUDLOW WITH THE LATEST APPLE RELEASE. ONE OF THE OTHER SECTORS WE HAVE BEEN WATCHING OVERNIGHT OF THE BIG BANKS. IN TERMS OF THESE CHANGES WHEN IT COMES TO THE CAPITAL REQUIREMENTS FOR BIG AMERICAN BANKS, THIS IS A SCOOP THAT REALLY IS SIGNIFICANT IN TERMS OF THE LENDERS FACING A 9% INCREASE IN CAPITAL REQUIREMENTS, A BIG RETREAT FROM THE ORIGINAL PROPOSED PLAN. REGULATORS HAVE AGREED AFTER INTENSE LOBBYING TO THESE SWEEPING CHANGES TO OUR PROPOSED PACKAGE OF RULES ACCORDING TO BLOOMBERG REPORTING AND SPEAKING TO PEOPLE FAMILIAR WITH THE MATTER. THIS PLAN BY THE FED, THE FBI SEE AN OFFICE OF THE COMPTROLLER OF THE CURRENCY IS CHANGING THIS FOR SYSTEMICALLY IMPORTANT BANKS, THIS CUSHION AGAINST UNEXPECTED LOSSES AND FINANCIAL SHOCKS. THIS IS A BIG TURNAROUND IF THIS TURNS OUT TO BE THE CHANGES THAT WE SEE. >> SO MUCH BACK AND FORTH SINCE THE CAPITAL REQUIREMENTS WENT OUT. AS MUCH AS 5% . WE STILL HAVE A 60 DAY COMMENT PERIOD AND THINGS ARE EXPECTED TO TRY FOR AN EXTENSION BUT BLOOMBERG REPORTING FROM SOURCES CLOSE TO THE MATTER SAY WE WILL SEE ONLY A 9% INCREASE IN CAPITAL REQUIREMENTS. COMING UP ON THE ASIA TRADE, UBS WEALTH MANAGEMENT AND OTHERS JOIN US AS MARKETS BRACE FOR THE NEXT FED MEETING. WE WILL DELVE PEOPLE INTO APPLE'S LATEST AI PROMISES. AN EXCLUSIVE CONVERSATION WITH A CEO AS CONSUMERS CUT SPENDING. STAY WITH US. ♪ SHERY: WE HAVE BREAKING NEWS. THE U.S. HOUSE OF REPRESENTATIVES HAS PASSED A BILL THAT WOULD BAN FIVE CHINESE BIOTECH COMPANIES FROM RECEIVING FEDERAL CONTRACTS. THAT INCLUDES BGI GROUP, IN G.I., COMPLETE GENOMICS AND OTHERS. BACKERS OF THE BILL HAVE EXPRESSED CONCERN THAT CHINESE COMPANIES COULD GROW TO DOMINATE THE BIOTECH SPACE. THEY TALKED ABOUT POTENTIAL EFFECTS ON NATIONAL SECURITY AND THE ECONOMY AND HAVE SET AMERICAN TAX DOLLARS SHOULD NOT FINANCE THE GROWTH OF CHINESE TECH. THIS COMES AFTER EARLIER THIS YEAR CONGRESS PASSED LEGISLATION SIGNING INTO LAW BANNING TIKTOK UNLESS ITS BEIJING-BASED PARENT COMPANY BY DANCE -- COMPANY BYTEDANCE DIVESTS. WITH THIS BILL PASSED BY THE U.S. HOUSE OF REPRESENTATIVES, WE MIGHT SEE SENATORS CONSIDERING ADDING THE LEGISLATION TO THE CHAMBER'S ANNUAL DEFENSE POLICY BILL. WE WILL CONTINUE TO WATCH HOW THIS UNFOLDS AND WHETHER THIS ACTUALLY BECOMES LEGISLATION, BUT THE U.S. HOUSE OF REPRESENTATIVES HAS PASSED THE BILL TARGETING FIVE BIOTECHNOLOGY COMPANIES FROM CHINA FROM RECEIVING FEDERAL CONTRACTS, HAIDI. HAIDI: TAKE A LOOK AT HOW WE ARE SITTING UP IN THE SESSION. JUST ABOUT 45 MINUTES AWAY FROM THE START OF TRADING ACROSS MAJOR MARKETS AND WE ARE SEEING BROADLY ASIAN STOCKS ARE SAID TO FOLLOW THAT REBOUND ON WALL STREET. DIP-BUYING AHEAD OF THE U.S. CPI DATA LATER THIS WEEK. THAT COULD GIVE US SOME MORE CLUES AS TO THE SCOPE OF FED EASING GOING FORWARD. AT THE MOMENT, YOU ARE SEEING QUITE A BIT OF UPSIDE, STRONG START OF TRADING EXPECTED FOR SYDNEY, FUTURES UP BY ABOUT .1% -- ABOUT 1%. WE ARE ALSO SEEING STRENGTH WHEN IT COMES TO THE DOLLAR BASICALLY AGAINST ALL G10 PEERS, ON PACE FOR WHAT WOULD BE THE BEST DAY IN MORE THAN A WEEK. THAT'S FRONT END TREASURY YIELDS RISING AHEAD OF INFLATION NUMBERS AND THE PRESIDENTIAL DEBATE AT PLAY HERE AS WELL. LET'S BRING IN KATIE KAMINSKI, CHIEF RESEARCH STRATEGIST AT ALPHA SIMPLEX GROUP. SEPTEMBER IS HISTORICALLY NOT A GREAT MONTH WHEN IT COMES FOR -- WHEN IT COMES TO THE RISK ASSETS AND U.S. EQUITIES BUT IS THERE A SENSE THAT AT LEAST GOING INTO NOVEMBER THE OUTLOOK OF THE U.S. ELECTION AND GOING FORWARD THAT THE VOLATILITY THAT HAS BEEN PART OF THE MARKET CYCLE WILL BE HERE TO STAY? KATIE: DEFINITELY THE CASE, BECAUSE I THINK WE HAVE SO MANY THINGS ON THE HORIZON NOW, ESPECIALLY WITH RATE CUTS ON THE TABLE, WHAT IS THE PACE AND SIZE. OUTSIDE JUST THE ELECTION ALONE, THERE ARE SO MANY THINGS THAT ARE UNCERTAIN AT THIS POINT AS WE HAVE SHIFTED FROM A WORLD WHERE WE WERE FOCUSED ON INFLATION TO WHERE WE ARE WORRIED ABOUT THE LABOR MARKET, ECONOMIC WEAKNESS AND OTHER FACTORS, SO I THINK THIS VOLATILITY IS HERE TO STAY. HAIDI: HOW DO YOU NAVIGATE THAT? SHERY: THE CHALLENGE WITH NAVIGATING -- KATHRYN: THE CHALLENGE WITH NAVIGATING THAT TYPE OF VOLATILITY AS WE ARE STILL TRYING TO DISCERN WHAT ARE THE KEY TRENDS. WE HAVE SEEN A LOT OF INVESTORS FLEEING MORE TOWARDS FIXED INCOME AND FIXED INCOME SIGNALS HAVE BEEN MUCH STRONGER SO A LOT OF PEOPLE ARE LOOKING FOR SAFETY OUTSIDE OF EQUITY MARKETS. YOU ARE ALSO SEEING SOME INTERESTING PLAYS ACROSS THE COMMODITIES SECTOR. WE HAVE SEEN A LOT OF SHORT POSITIONING AND SHORT VIEWS IN COMMODITIES AND CURRENCIES HAVE BEEN INTERESTING AS WELL AS PEOPLE ARE TRYING TO NAVIGATE WHAT IS THE IMPACT OF CUTS ON THE DOLLAR VERSUS OTHER REGIONS. SHERY: NO HAVEN FLOWS INTO THE U.S. DOLLAR GIVEN WE ARE FACTORING -- GIVEN WHAT WE ARE FACTORING IN WITH THE FED? KATHRYN: YOU HAVE SEEN THE DOLLAR HAS BEEN QUITE UNDER PRESSURE. WHAT'S CONFUSING ABOUT THE DOLLAR IS WHEN THE EQUITY MARKET GOES DOWN THE MARKET IS TYPICALLY A BENEFICIARY OF THAT, BUT IN THE WAKE OF CUTS, THE DOLLAR HAS BEEN STRONGLY LINKED TO FED POLICY, AND SO WITH HIKES THE DOLLAR HAS BEEN STRONG, ESPECIALLY LAST YEAR AND FOR QUITE SOME TIME, BUT NOW WE ARE SEEING MORE PRESSURE ON THE DOLLAR. THIS IS PARTICULARLY AS IN THE LAST MONTH OR SO, AS YOU HAVE SEEN, HIKES ARE BECOMING MORE LIKELY TO OCCUR IN THE SIZE IS BEING NEGOTIATED AND PEOPLE ARE THINKING IT MAY BE STRONGER THAN WE THOUGHT, WHICH WOULD PUT MORE PRESSURE ON THE DOLLAR NOW. SHERY: WE ARE ALSO SEEING NEWS THAT THE BIGGEST U.S. BANKS COULD BE FACING ONLY A 9% INCREASE IN CAPITAL REQUIREMENTS, DOWN A LOT FROM THE ORIGINAL 19%. HOW ARE YOU LOOKING AT THE FINANCIAL SECTOR, ESPECIALLY IN LIGHT OF THE FED RATE CUTS TO COME? KATHRYN: THE FINANCIAL SECTOR IS ALWAYS A TRICKY ONE BECAUSE, OF COURSE, WHEN YOU ARE THINKING ABOUT RATE CUTS, IT'S OBVIOUSLY GOING TO HOPEFULLY STIMULATE THE ECONOMY AND HELP US NAVIGATE SORT OF WHAT COULD BE THE RAMIFICATION OF HAVING THAT TIGHTER POLICY FOR SOME TIME PERIOD. IT IS POSSIBLE THAT PART OF THE REASON THAT THOSE REQUIREMENTS WERE NOT AS HIGH HAS TO DO WITH THE FACT THAT THERE IS SOME CONCERN THAT THERE WILL BE IMPLICATIONS FROM HAVING TIGHT POLICY FOR SUCH A TIME. SHERY: WHEN IT COMES TO THE BROADER EQUITY MARKETS, HAIDI ALLUDED TO THE VOLATILITY WE HAVE SEEN AND WHAT WE ARE HEADED TO IN SEPTEMBER. HOW DOES THAT TRANSLATE TO OTHER EQUITY MARKETS AROUND THE WORLD? COULD WE SEE FLOWS, ESPECIALLY PERHAPS TRYING TO HEDGE THE VOLATILITY THAT WE WILL SEE IN THE U.S.? KATHRYN: THIS IS A GOOD QUESTION BUT I WISH THE PICTURE WAS MORE CLEAR, AND THE REASON WHY I ANSWER IT THIS WAY IS THAT, IF YOU LOOK AT CHINA CLEARLY AND ASIA, THERE'S DEFINITELY A LOT OF DISPERSION WHICH SHOULD YOU BE INVESTING IN JAPAN GIVEN THE SITUATION NOW? ALSO CHINA HAS BEEN IN A DIFFICULT SITUATION FOCUSED ON SOME ECONOMIC SLOWDOWN AND POTENTIAL DISINFLATION, AND EUROPE HAS HAD ITS OWN ISSUES AS WELL. THAT IS WHY INVESTORS ARE A LITTLE BIT CONCERNED ABOUT WHERE YOU HEDGE, AND THAT'S WHY MY VIEW IS IT MAY NOT BE IN EQUITY MARKETS. IT MAY BE THINKING ABOUT OTHER ASSET CLASSES THAT MIGHT PROVIDE BETTER HEDGE LIKE PROPERTIES DURING THIS TYPE OF ENVIRONMENT. HAIDI: WE ARE ALSO LOOKING AT THE SORT OF INTENSIFIED FOCUS ON THE U.S. PRESIDENTIAL DEBATE. WHERE DO YOU EXPECT THE BIGGEST REACTIONS, IF ANY, TO BE IN THE MARKETS TO THIS BETWEEN THE TWO CANDIDATES? KATHRYN: THE CHALLENGE IS THAT IT IS SO TIGHT AND YOU ARE IN A SITUATION NOW WHERE, FOR EQUITY MARKETS, THERE'S REALLY NO CLEAR ANSWERS TO WHERE THIS ELECTION IS GOING TO GO YET AND SO I THINK UNTIL WE HAVE MORE CLARITY, AND SO FAR THERE HAS NOT BEEN MUCH, YOU WILL CONTINUE TO SEE A LOT OF SWINGS ABOUT WHAT ARE THE RAMIFICATIONS OF POLICY IF IT'S VERY UNCLEAR WHERE THE ELECTION GOES. THIS IS OBVIOUSLY GOING TO PERMEATE INTO OTHER MARKETS OUTSIDE THE U.S. THAT ARE CONCERNED ABOUT WHAT THE RAMIFICATIONS OF THE NEXT CANDIDATE WHO GETS ELECTED MAYBE. HAIDI: ONE OF THE OTHER UNCERTAINTIES IS JUST HOW MUCH OF A DRIVER BIG TECH AND THE MAG SEVEN HAVE BEEN FOR THESE MARKETS. IF YOU LOOK AT THE DISAPPOINTMENT OVER THE NEW APPLE IPHONE FEATURES, THE DISAPPOINTMENT OBVIOUSLY OVER NVIDIA, DO YOU THINK THE SENTIMENT IS GOING TO BE SKEWED TO MORE BEING PRONE TO SELLING OFF ON NEW DEVELOPMENTS AND RELEASES FOR NOW? KATHRYN: YES, I DO, AND THE REASON IS, WHEN YOU ARE IN A SITUATION WITH HIGH VALUATIONS, WHERE A LOT OF INVESTORS ARE SITTING IN A SCENARIO WHERE VALUATIONS HAVE ALREADY COME SO FAR, IT'S HARD TO KNOW WHERE YOU GO FROM HERE, AND I THINK WITH A SATURATED INVESTMENT UNIVERSE, WHERE CERTAIN SECTORS HAVE OUTPERFORMED SO STRONGLY, YOU HAVE A MUCH HIGHER PROBABILITY OF A REVERSAL AND THAT TAKE-PROFIT TYPE BEHAVIOR, AND THAT'S EXACTLY WHAT WE HAVE SEEN IN THE LAST FEW MONTHS, PERHAPS STARTING AS EARLY AS JUNE. SHERY: KATIE KAMINSKI, GOOD TO HAVE YOU BACK, CHIEF RESEARCH STRATEGIST AT ALPHA SIMPLEX GROUP WITH HER TAKES ON THE BROADER MARKETS. DONALD TRUMP AND KAMALA HARRIS PREPARE FOR WHAT MIGHT BE THE BIGGEST NIGHT OF THEIR CAMPAIGNS. WE LOOK AT WHAT'S EXPECTED FROM THE U.S. PRISONS WILL DEBATE NEXT. THIS IS BLOOMBERG. SHERY: THE LATEST POLLING POINTS TO A TIGHT RACE IN KEY STATES BETWEEN DEMOCRATIC NOMINEE KAMALA HARRIS AND REPUBLICAN DONALD TRUMP. THAT'S AHEAD OF THEIR FIRST TELEVISED DEBATE TOMORROW. STEPHANIE LAI JOINS US NOW FROM NEW YORK. STEPHANIE, THIS IS A VERY MUCH ANTICIPATED FACE-OFF. THE STAKES ARE PRETTY HIGH. STEPHANIE: THE BIGGEST MOMENTS FOR VICE PRESIDENT KAMALA HARRIS, WHO UP UNTIL THIS POINT HAS NOT DONE MANY INTERVIEWS WITH THE PRESS, HAS NOT QUITE ENGAGED WITH THE MEDIA AND NATIONAL PRESS AND THE WAY DONALD TRUMP HAS FOR THE LAST EIGHT MONTHS TO A YEAR, AND SO THIS IS HER MOMENT TO INTRODUCE YOURSELF TO VOTERS WHO MIGHT BE LEARNING ABOUT HER STORY FOR THE FIRST TIME. AT THE SAME TIME, DONALD TRUMP HAS HAD THE LAST YEAR AND A HALF TO REALLY BUILD OUT HIS POLICY. SO THIS IS HARRIS'S MOMENT TO REALLY TELL THE AMERICAN VOTERS WHAT HER VISION IS IF SHE'S GIVEN A TERM. HAIDI: PART OF DONALD TRUMP'S VISION IS TO FORCE DOMINANCE, TO TARIFF COMPANIES THAT TRIED TO DE-DOLLARIZE. STEPHANIE: THAT IS SOMETHING WE HEARD AT A RALLY IN WISCONSIN. HE THREATENED TO TARIFF A COUNTRY AT 100% IF THEY SHOULD MOVE AWAY FROM USING THE U.S. DOLLAR IN TRADE. THIS IS SOMETHING THE -- THAT BLOOMBERG SCOOPED EARLIER. THIS TILTON TO HIS ROBUST TARIFF POLICY. THIS SEEMS TO BE HIS SOLUTION FOR A NUMBER OF ISSUES. IF A COUNTRY SUCH A TARIFF ON U.S. GOODS, WE WILL SET ONE AT THE SAME RATE. HE CLAIMS THIS WILL ENABLE THE U.S. TO BRING IN A NEW REVENUE STREAM TO OFFSET THE DEFICIT WE ARE CURRENTLY FACING. SHERY: WHEN IT COMES TO CHINA, WHAT ARE THE STANCES WE ARE EXPECTING? WE JUST HAD THE HOUSE PASSING THE BIO SECURE ACT TO KEEP FEDERAL CONTRACTS FROM GOING TO FIVE CHINESE FIRMS. IT SEEMS ACROSS THE AISLE IT SEEMS IT WILL BE GOING HARD AGAINST BEIJING. STEPHANIE: THAT IS CERTAINLY CORRECT AND I THINK IT'S NOT JUST SOMETHING THAT DONALD TRUMP HAS BEEN FOCUSED ON BUT SOMETHING DEMOCRATIC LAWMAKERS ARE TAKING A STRONGER STANCE AGAINST AS WELL. FROM THE FORMER PRESIDENT'S STANCE, HE'S MENTIONED A NUMBER OF THINGS BUT OFTEN CLAIMS HE HAS A GOOD RELATIONSHIP WITH PRESIDENT XI, BUT AT THE SAME TIME HE'S NOT GOING TO ALLOW CHINESE FIRMS TO GAIN AN UPPER HAND WHEN IT COMES TO MANUFACTURING. ONE THING HE ALSO -- HE OFTEN TOUTS IS HE WANTS TO FOCUS ON ARTIFICIAL INTELLIGENCE AND CRYPTOCURRENCY IS A WAY OF COMPETING WITH CHINA, SO THERE ARE MANY WAYS HE'S USING ECONOMIC POLICY TO TARGET THE NATION'S COMPETITION WITH CHINA. SHERY: WHITE HOUSE AND POLITICS REPORTER STEPHANIE LAI AHEAD OF THIS HIGHLY ANTICIPATED DEBATE. LET'S TAKE A LOOK AT HOW U.S. FUTURES ARE SHAPING UP AT THE MOMENT. QUITE A BIT OF UPSIDE. MARKETS AWAITING NOT JUST THE POLITICAL DEVELOPMENTS IN THIS HARRIS-FROM DEBATE BUT ALSO U.S. CPI, WHICH COULD BROADLY SHAPE THE EXPECTATIONS WE GET FROM THE FED GOING FORWARD. A BIT OF UPSIDE WHEN IT COMES TO TRADING IN S&P FUTURES, MORE RISK WHEN IT COMES TO SOME OF THESE TECH STOCKS, PARTICULARLY WITH THE WEAKNESS IN APPLE, DISAPPOINTMENT OVER THE MODEST UPGRADES TO ITS NEW IPHONE. DOW FUTURES ARE LOOKING PRETTY FLAT AT THE MOMENT WITH ASIAN STOCKS SUCH A TRACK THAT RENEWED DIP-BUYING REBOUND WE SAW ON THE WALL STREET SESSION. MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. SHERY: TAKE A LOOK AT SOME AFTER OUR MOVES. BIG GAINS FOR ORACLE. THEY ARE JUMPING AFTER REPORTING QUARTERLY PROFIT AND BOOKINGS THAT TOPPED ESTIMATES. A SIGNAL AI DEMAND COULD CONTINUE TO BOOST ITS CLOUD COMPUTING BUSINESS. A LOT OF FOCUS ON THE AI CAPABILITIES APPLE IS BRINGING FORTH. WE HAVE THE PRODUCT LAUNCH AND WHAT WE HEARD WAS THE APPLE INTELLIGENCE FEATURES WOULD ONLY BE RELEASED ON A STAGGERED BASIS IN 2025. LET'S BRING IN ARABELLA LOPEZ, FOUNDER AND PRINCIPAL ANALYST. IS IT A BIT CONCERNING WE HAVE SEEN THESE DELAYS WHEN IT COMES TO THE LAUNCH OF APPLE INTELLIGENCE AND THE KEY FEATURES WILL NOT BE RELEASED UNTIL NEXT YEAR AS WELL? MARIBEL: THE REALITY IS WHILE APPLE IS ALL IN ON INTELLIGENCE, CONSUMERS ARE NOT SURE WHAT THEY ARE GOING TO DO WITH ARTIFICIAL INTELLIGENCE SO THEY ARE NOT MISSING IT. WE HAVE TO KEEP IN MIND THESE PHONES ARE NOT GOING TO BE IN PEOPLE'S HANDS UNTIL CLOSER TO THE END OF Q4, BEGINNING OF Q1. IT WILL START TO SEE WHAT WILL LOOK LIKE A CONTINUOUS UPGRADE CYCLE. IT WOULD HAVE BEEN NICE TO HAVE IT COME OUT ON DAY ONE THE IPHONE ABSOLUTELY BUT I THINK WE ARE OVERPLAYING THE DELAY IN THE AI SOFTWARE FEATURES AT THIS POINT. THE MAIN THING FOR CUSTOMERS TO KNOW THAT THEY ARE INVESTING IN PHONE TODAY THAT WILL ALLOW THEM TO DO WHAT IS COMING NEXT. SHERY: IT WAS INTERESTING APPLE'S STOCK FINISHED UNCHANGED WHEN IT COMES TO THE DAY OF THE LAUNCH. WE USUALLY SEE DOWNSIDE PRESSURE. COULD THAT MEAN INVESTORS ARE LITTLE MORE OPTIMISTIC ABOUT OTHER FEATURES AS WELL? MARIBEL: NOW THERE ARE A FEW THINGS GOING ON WITH APPLE STOCK. HAVE ALWAYS HAD THAT BOUNCE. WHAT WE SAW IN THIS CYCLE IS WE WERE NOT EXPECTING A BIG UPGRADE. WE WERE EXPECT THEM TO BE ALL IN AI. THE WATCH OVER PERFORMED WHERE MOST PEOPLE EXPECTED IT TO BE IN TERMS OF IT HAVING A BIGGER SCREEN, SLEEP APNEA AND THE AIRPODS WITH THE HEARING ASSISTANCE THEY HAVE PUT INTO IT COULD BE AN INTERESTING LONGER-TERM STRATEGY FOR APPLE IN THE HEALTH MARKET BUT APPLE BEING ABLE TO GET AIRPODS UPGRADES ON A MORE CONSISTENT BASIS BECAUSE THAT WILL BECOME A CRITICAL FEATURE FOR A CERTAIN CATEGORY OF USERS. YOU PUT THAT TOGETHER, WE SAID IT IS ABOUT WHAT WE EXPECTED. A FEW SURPRISES BUT NOTHING THAT BLEW THE DOORS OFF. APPLE HAS BEEN CONSISTENT WITH THE TYPES OF CADENCE, WHAT TYPES OF HARDWARE INNOVATIONS AND SOFTWARE INNOVATIONS WE WERE EXPECTING. MOST PEOPLE DO NOT EXPECT THEM TO PUSH THE ENVELOPE AND BUILD THE THING THAT WAS SO FAR OUT THAT NOBODY EXPECTED. THEY ARE GOOD AT THE INCREMENTAL INNOVATION THAT SURPRISES INTO LIGHTS THE USERS FROM A USABILITY STANDPOINT. HAIDI: YOU THINK THE NEW CHIPS SHOULD BE OUTWEIGHING THE RELATIVE DISAPPOINTMENT OVER THE TIMING OF THE AI FEATURES? MARIBEL: THE AI MARKET IS ALL ABOUT SHIPS WHETHER YOU ARE NVIDIA OR APPLE. DO YOU HAVE THE RIGHT SHIP TO DO THE JOB MOVING FORWARD. NO ONE WANTS TO INVEST IN HARDWARE THEY THINK IS GOING TO BE STRANDED A YEAR OR TWO DOWN THE ROAD TO THE 18 CHIP WAS THE STAR OF THE HARDWARE PERFORMANCE IN THE SHOW. HAIDI: WHEN YOU TAKE A LOOK AT THE COMPETITION AND YOU HAVE TALKED ABOUT THE FACT WE ARE SEEING COMPANIES LIKE HUAWEI MANAGING TO CLOSE THE GAP. THEY SCHEDULE THEIR RELEASE HOURS AFTER APPLE'S. HOW SUCCESSFUL HAS APPLE BEEN AT BEING ABLE TO FEND OFF COMPETITORS PARTICULARLY WHEN IT COMES TO MARKETS LIKE CHINA? MARIBEL: AT THIS POINT, HUAWEI HAS DONE A TREMENDOUS JOB OF DEMONSTRATING INTERESTING HARDWARE INNOVATION AND LEADERSHIP THROUGHOUT THE CATEGORY. GRABBING THE ASIAN MARKETPLACE. WE EXPECT TO SEE THEM CONTINUE. WE KNOW THERE WAS GOING TO BE A BIG SHIFT IN CHINA TOWARD CHINESE MANUFACTURERS. THERE'S BEEN A LOT OF DISCUSSIONS ABOUT SANCTIONS FROM BOTH COUNTRIES. THIS IS NOT A BIG SURPRISE TO ME. I THINK THE TIMING OF THEIR LAUNCH WAS STRATEGIC. THE PREORDERS TO UNDERMINE THE CONFIDENCE IN WHAT APPLE COULD COME OUT WITH WAS STRATEGIC TIMING. THEY ARE GOING TO CONTINUE TO PLACE WELL OVER THE NEXT YEAR. DOES THAT MEAN APPLE IS OUT? I DON'T THINK APPLE IS OUT. IT IS A MUCH MORE COMPETITIVE LANDSCAPE. WHAT WE ARE SEEING IS MOST OF THE INNOVATION YOU ARE GOING TO SEE OVER THE NEXT YEAR OR TWO IS GOING TO BE IN SOFTWARE. THAT IS DIFFICULT TO MARKET AND VERY DIFFICULT FOR CONSUMERS TO UNDERSTAND. TRYING TO DISTILL IT INTO HOW DOES IT MAKE THE CAMERA BETTER, HOW DOES IT MAKE THE AUDIOVISUAL BETTER, WHAT KIND OF VIDEOS ARE YOU GOING TO CAPTURE? HOW ARE YOU GOING TO EXPRESS YOURSELF WITH EMOJIS? THESE THINGS WE ARE GOING TO SEE A LOT MORE EMPHASIS ON. WHAT DOES AI DO TO MAKE YOUR LIFE BETTER AS OPPOSED TO SLAP THE WORD ON -- SLAP THE WORD AI ONTO IT AND THEREFORE IT IS BETTER. LOOKING FORWARD TO SEEING WHAT THESE NEW AI FEATURES ARE ACROSS-THE-BOARD THE BOARD FROM THE SMARTPHONE MANUFACTURERS. SHERY: I WAS EXCITED ABOUT THE PHYSICAL BUTTON WHEN IT COMES TO THE CAMERA ON THE IPHONE 16. GIVEN WE DID NOT SEE THE MAJOR HARDWARE SHIFT, WHAT DOES THAT SIGNAL ABOUT WHERE APPLE SEES GROWTH ESPECIALLY GIVEN SOME COMPETITORS HAVE HAD THE FOLDABLE FUNDS BEING ALL THE MADE -- ALL THE RAGE AMONG ITS CUSTOMERS. >> APPLE HAS FULLY DECIDED THAT FOR DOUBLE IS NOT A KEY REQUIREMENT FOR THE SMARTPHONE MARKET. FOR DOUBLE PRODUCTS ARE EXTREMELY EXPENSIVE. THEY ARE NOT ABLE TO GO MAINSTREAM AT THIS POINT. THEY ARE VERY SEXY BUT THE COST OF THE COST OF THAT ANALOGY IS OFTEN NOT WORTH THE FOR MOST PEOPLE. WHILE IT IS A SEXY FORMFACTOR, APPLE DOES NOT THINK IT IS GOING TO THINK IT NEEDS TO HAVE THAT PRODUCT ANYTIME SOON. IT IS NOT SEEM TO THINK IT IS MISSING A BEAT IN CONTINUED SMARTPHONE SALES. IN THE LONG TERM, DO WE EXPECT TO SEE SOMETHING IN FULL DOUBLE? THEY NEED TO SPEND MORE OF THEIR ENERGY IN GETTING ARTIFICIAL INTELLIGENCE RIGHT. IF IT IS NOT RIGHT, IT IS GAME OVER FOR ANYONE WHO MISSES THAT BOAT RIGHT NOW. HAIDI: FOUNDER AND PRINCIPAL ANALYST AT LOPEZ RESEARCH. TAKING A LOOK AT BANKS, SOME OF THE STORIES WE ARE FOLLOWING. HSBC CONSIDERING COMBINING ITS COMMERCIAL AND INVESTMENT BANKING UNITS AS PART OF THE CEO'S PUSH TO ELIMINATE OVERLAPPING GOALS AND CUT COSTS. SOURCES SAY THE COMBINED FISSIONABLE BECOME THE LARGEST REVENUE GENERATOR. IN SHOOTING $40 BILLION A YEAR. HE HAS EMPHASIZED HE INTENDS TO CONTINUE A STRATEGY OF PIVOTING THE BANK TOWARDS CORE MARKETS IN ASIA. GOLDMAN SACHS CEO DAVID SOLOMON IS WARNING BUSINESS FOR THE BANK TRADING AND IS ON TRACK TO DROP AND PERCENT FROM THE PRIOR YEAR LED BY DECLINES ON IT FIXED INCOME BUSINESS. THE COMPANY WILL TAKE A $400 MILLION PRETAX HIT IN ITS CONSUMER BUSINESS AS IT MOVES AWAY FROM THE CREDIT CARD TIE UP WITH GENERAL MOTORS SHOULD >> WITH RESPECT TO TRADING, I WOULD SAY THE EQUITIES, WE HAD AN EXTREMELY STRONG THIRD QUARTER IN 2023. GIVEN THIS QUARTER, GIVEN WHAT I WOULD SAY IS THE MORE CHALLENGING ENVIRONMENT CRITICAL OF THE MONTH OF AUGUST, THAT BUSINESS IS TRENDING DOWN CLOSE TO 10% LARGELY DUE TO CYCLICAL. SHERY: STANDARD CHARTERED CEO BILL WINTERS SAYS SOUTHEAST ASIA IS BECOMING AN EXTREMELY ATTRACTIVE PLACE TO INVEST THIS AS GEOPOLITICAL TENSIONS RISE IN OTHER REGIONS. HE SPOKE TO US ON THE BLOOMBERG SPOTLIGHT ON ASEAN BUSINESS EVENT. >> IT IS HUGE TO NOTE A HUGE CHUNK OF FBI INVESTMENT HAS COME FROM CHINA. FROM CHINESE COMPANIES WHO ARE PURSUING THE CHINA ONE STRATEGY FOR GEOPOLITICAL. A TREMENDOUS CONFLUENCE OF TRENDS WHICH ARE MAKING ASEAN AN EXTREMELY ATTRACTIVE PLACE TO INVEST. YOU HAVE ECONOMIC POLITICAL REFORM. YOU HAVE THE BIGGER MARKETS WHERE YOU HAVE EXCELLENT UNDERLYING POLICY REFORM AND POLICY PLATFORMS. YOU HAVE ALL OF THE BENEFITS OF CHINA PLUS ONE. YOU HAVE AN EXTREMELY EXPERIENCED AND RELATIVELY LOW COST WORKFORCE OR THINK THAT WILL CONVERGE OVER A SHORT TIME. YOU HAVE POLITICAL STABILITY. THE FACT THAT ASEAN AS A BLOCK IS CONTINUING TO COME TOGETHER IS ENCOURAGING. ON A SCALE OF ONE TO 10 IN TERMS OF MIGRATION TOWARDS A REAL TRADE BLOCK, WE ARE STILL AT THREE OR FOUR. THAT IS ENORMOUS UPSIDE AND I AM KEEN TO HEAR FROM THE MINISTER. THAT IS A BIG PART OF WHAT YOU ARE FOCUSED ON. OVERALL THE CONFLUENCE OF TRENDS, SOME SELF GENERATED FROM WITHIN THE COUNTRIES OR WITHIN ASEAN AT SELF OR EXTERNAL ENVIRONMENT PLAY TO THE STRENGTHS. WE ARE ABSOLUTELY DELIGHTED TO BE PRESENT IN ALL OF THE MARKETS. THE MINISTER REMINDED ME THERE IS A PROSPECT OF IT EXPANDING TO 11. I ASKED WHETHER WE WILL BE OPENING UP IN EAST TIMOR ANYTIME SOON. YOU WILL HAVE TO GET ON THAT CASE. IT IS QUITE COMPELLING TO SAY WE ARE OPERATING ACROSS ASEAN. IN TERMS OF THE MAJOR TRADE FLOWS, INVESTMENT CORE DOORS IN THE REST OF ASIA AND HEADING WEST, THIS IS WHERE THE ACTION IS. THIS IS WHERE THE ACTION IS IN THE WORLD. HAIDI: BILL WINTERS PICKING A BLOOMBERG SPOTLIGHT ON ASEAN BUSINESS EVENT IN SINGAPORE. MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. HAIDI: TAKE A LOOK AT HOW WE ARE FARING 15 MINUTES AWAY FROM THE START OF CASH TRADING IN JULIA. -- IN AUSTRALIA. THE AUSSIE DOLLAR HOLDING FIRM DESPITE THE RECOVERY RALLY WE SULPHUR THE U.S. DOLLAR ON TRACK FOR ITS BEST PERFORMANCE IN OVER A WEEK AS WE AWAIT U.S. CPI NUMBERS. WATCHING BOND YIELDS AS WE GET TOWARDS THOSE INFLATION NUMBERS WHICH SHOULD GIVE A GOOD INDICATION IN TERMS OF THE EXPECTATIONS OF THE SCALE OF FED EASING FROM HERE. WHAT IS NOT EASING IS THE RBA. WE HAVE HEARD FROM THE AUSTRALIA TREASURER SAYING HE IS DISAPPOINTED AND NOT SURPRISE THE OPPOSITION HAS REJECTED HIS CENTRAL BANK REFORM DEAL. >> POSITION THAT HAS BEEN REPORTED FROM THE COALITION IS IRRESPONSIBLE. IT IS DISAPPOINTING. IT IS NOT ESPECIALLY SURPRISING. WE WILL CONSIDER THE NEXT STEPS. ALL OPTIONS ARE ON THE TABLE. MY PREFERENCE HAS NOT CHANGED. I PREFER A BIPARTISAN OUTCOME IN THE SENATE. SHERY: LET'S BRING OUR ECONOMIC REPORTER WHO JOINED THIS IN SYDNEY. WHY WAS THIS REJECTION THE POSITION THE OPPOSITION TOOK? DARKER THE RBA REFORM IS ABOUT CREATING A MONETARY POLICY BOARD AND THE GOVERNMENT BOARD. THE OPPOSITION WANTS THAT THE ENTIRE BOARD MOVES TO THE NEW MONETARY POLICY BOARD WHEREAS THE TREASURER IS SAYING SOME PEOPLE WILL MOVE TO THE MONETARY POLICY BOARD THAT WILL HAVE THE OPTION TO MOVE TO THE GOVERNANCE BOARD. THE OPPOSITION IS NOT AGREEING TO THAT BECAUSE THEY SAY THIS WILL GIVE THE OPPORTUNITY TO THE TREASURER TO MAKE NEW APPOINTMENTS. WHICH THEY DO NOT WANT. THEY HAVE SAID THEY HAVE DEEP CONCERNS ABOUT THE INTENTION OF THE GOVERNMENT AND THEY ARE CONCERNED ABOUT THE FACT THE TREASURER AND SOME PEOPLE FROM THE LABOUR PARTY HAVE CRITICIZED THE RBA FOR ANY ECONOMIC GROWTH. THEY GENERALLY HAVE CONCERNS ABOUT THE GOVERNMENT'S INTENTIONS HAIDI:. HAVE WE HEARD FROM MICHELLE BULLOCK ON THIS? >> MICHELLE BULLOCK HAS SAID REPEATEDLY SHE WOULD PREFER CONTINUITY ON BOTH BOARDS WHICH MEANS SHE IS SIDING WITH THE TREASURER. SHE SAID SHE WOULD BE HAPPY WITH LEGISLATION TO GO THROUGH BECAUSE THEY ARE IN A BIT OF A LIMBO AT THE MOMENT WERE SOME CHANGES THE REFORM HAD RECOMMENDED THE REVIEW RECOMMENDED WHICH THE RBA HAS ALREADY IMPLEMENTED. THERE WERE SOME WHICH MEETS -- WHICH NEEDS THE LEGISLATION TO PASS THROUGH AND THAT IS STUCK SO THE RBA DOES WANT THIS TO GO THROUGH. BUT THEIR POSITION IS MORE IN LINE WITH WHAT CHALMERS IS SUGGESTING. HAIDI: WHAT HAPPENS NOW? IS THE REFORM DEAD? SWATI: IT COULD BE DEAD BUT CHALMERS, IT IS HIS SIGNATURE REFORM AND HE WANTS TO MAKE IT SEE THE LIGHT OF DAY SO HE IS AGREEING TO DISCUSS THIS WITH THE MINORITY PARTY, GREENS PARTY WHICH WAS NOT HIS INITIAL PREFERENCE. THAT MAY MEAN SOME RADICAL CHANGES TO THIS PARTICULAR REFORM OR SOME NEGOTIATION FOR SOMETHING ELSE. HIS PREFERENCE IS STILL BIPARTISAN SUPPORT BUT IN THE WORST CASE SCENARIO HE IS HAPPY TO CUT A DEAL WITH THE MINORITY PARTIES AS WELL. HAIDI: OUR ECONOMICS REPORTER. WE ARE JUST ABOUT 15 MINUTES AWAY FROM THE START OF MAJOR ASIA MARKETS COMING ONLINE. MORGAN STANLEY SAYS IT IS MOVING TOWARD A CAUTIOUS APPROACH TOWARD SOVEREIGN CREDIT. THEY FAVOR INVESTMENT GRADE NOTES OVER RISKIER DEBT. THEY ARE SUGGESTING SELLING AN EM INDEX OF CREDIT DEFAULT SWAPS. THE BANK SAYS THE FED RATE CUT IS UNLIKELY TO SPUR MEANINGFUL INFLOWS. A FORMER SENIOR OFFICIAL AT JAPAN'S FINANCIAL WATCHDOG SAYS THE BOJ IS STILL IN POSITION TO HIKE RATES BY YEAR END. HE SAYS THE MARKET HAS OFFICIALLY STABILIZE TO KEEP A RATE MOVE ON THE TABLE. MOST IO J WANT TO SEE THE RAISING BY JANUARY PROVIDED THERE IS NO RETURN TO THE MARKET INSTABILITY OF EARLY AUGUST. SHERY: WHICH IS WHY WE SELL THE UPSIDE ON THE JAPANESE YEN AGAINST THE U.S. DOLLAR ESPECIALLY GIVEN THE TRAJECTORY THE FED IS GOING TO CUT RATES MOST LIKELY THIS MONTH. WE ARE SEEING A LITTLE BIT OF DOWNSIDE FOR THE JAPANESE YEN AT THIS SESSION TO THE U.S. JOB -- THIS SESSION. THE U.S. JOBS DATA COME INVESTORS SAYING THEY WERE NOT WEAK ENOUGH TO JUSTIFY THE OUTSIZED FIT RATE CUT SO WE SAW MORE WEAKNESS ON THE YEN AND THE DOLLAR DEMAND SORT OF SEEN IN RESPONSE TO JAPAN'S GDP FINAL NUMBERS COMING IN LOWER THAN EXPECTATIONS THIS WEEK SHOULD THE YEN'S REBOUND THIS WEEK SPURRING THE ROLLBACK OF EXCHANGE RATE HEDGES BY GLOBAL INVESTORS. NO LONGER AFRAID OF A RAPID SLIDE IN THE JAPANESE CURRENCY. ARE EQUITIES REPORTER JOINS US WITH MORE. A LITTLE PERHAPS MORE CONFIDENCE ON THE STABILITY OF THE YEN BUT HOW ARE INVESTORS REPOSITIONING THEIR INVESTMENTS? >> LIKE YOU SAID, THEIR EYES SO MUCH MOVES IN THE YEN PEOPLE ARE SCRAMBLING TO UNDERSTAND HOW THEY CAN PROTECT THEIR INVESTMENT BY HEDGING OR UN-HEDGING AND NOW WE ARE SEEING LOTS OF INVESTORS ACTUALLY TAKING OFF THE HEDGING ON JAPANESE STOCKS. THAT IS ACCORDING TO JP MORGAN THAT RECOMMEND SUCH MOVE RECENTLY AND UBS HAVING A SIMILAR RECOMMENDATION AS THEY NOW EXPECT THE JAPANESE YEN TO TRADE AT 160 AGAINST THE DOLLAR BY YEAR END OF VERSES 155 EARLIER BEFORE THE BANK OF JAPAN DECIDED TO RAISE RATES IN LATE JULY. THAT KIND OF RECOMMENDATION IS SHOWING HOW THE SENTIMENT HAS BEEN CHANGING SHOULD WHAT IS INTERESTING IS HOW FAST THAT HAS BEEN EVOLVING. EARLIER IN THE YEAR, PEOPLE WERE RECOMMENDING TO UNHEDGED BECAUSE THEY WERE EXPECTING A STRONGER YEN AND HAWKISH BANK OF JAPAN. THAT CHANGED THROUGHOUT THE YEAR AND NOW WE ARE BACK AT ON HEDGING. IT IS INTERESTING TO OBSERVE AND TO SEE HOW INVESTORS ARE CHANGING THEIR STRATEGIES AROUND THAT. SHERY: THE OUTSIZED MOVE ON THE EQUITY MARKETS WERE DOWN FOR A FIFTH CONSECUTIVE SESSION. ARE WE HEADED IN THE NEAR TERM ESPECIALLY IF WE ARE SEEING MOVES IN THE YEN? >> A LOT OF CAUTIOUS MOOD IN THE NEAR TERM I WOULD SAY. ON ONE HAND, YOU HAVE PEOPLE ARE WORRIED ABOUT THE YEN'S APPRECIATION TO HURT STOCKS, ESPECIALLY THE OUTLOOK FOR EXPORTERS. WE HAD UBS DOWNGRADE JAPANESE STOCKS TO UNDERWEIGHT WHEN IT COMES TO LOCAL CURRENCY TERMS BECAUSE THEY ARE WORRIED ABOUT THE GLOBAL ECONOMY SLOW DOWN AND JAPANESE STOCKS THAT ARE EXPOSED TO THE SLOWDOWN IN CHINESE ECONOMY AND THEY ARE SAYING THAT THE UNWINDING OF THE CARRY TRADE COME ONLY 50% OF THAT IS DONE SO FAR SINCE TWO 712. THERE IS MORE OF THAT TO THE ROOM OF YEN APPRECIATION TO THAT IS GOING TO WEIGH ON JAPANESE STOCKS IN THE NEAR TERM. YOU JUST HAD JP MORGAN HAD A NOTE TO REINFORCING THE VIEW OF OVERWEIGHT ON JAPANESE STOCKS CITING IF WE ARE UNLIKELY TO SEE A RAPID APPRECIATION OF THE YEN, THE EARNINGS ARE LIKELY TO BE MANAGEABLE IN TERMS OF HOW MUCH THE YEN CAN STRENGTHEN. SO WHAT THEY SHARE IN COMMON IS THEY ARE STILL QUITE CONSCIOUS IN TERMS OF THE VOLATILITY OF THE MARKET AND SENTIMENT REMAINS WEAK WHEN AFTER THE BIG SELLOFF IN AUGUST. SHERY: IT HAS BEEN INTERESTING TO SEE THE SMALLER MOVES WITHIN THE BROADER EQUITY MARKETS. ONE OF MY FAVORITE STOCKS, FURNITURE MAKER, DOMESTICALLY ORIENTED HAS JUMPED THIS YEAR BECAUSE OF A STRONGER YEN. ARE THERE ANY SECTORS IN PARTICULAR YOU ARE WATCHING? WINNIE: IT IS ONE OF THE DOMESTIC DEMAND DRIVEN SECTORS. LOTS OF INVESTORS ARE TUNING IN TO THAT SECTOR BECAUSE THAT IS GOING TO BE A BENEFICIARY WHEN IT COMES TO YEN APPRECIATION. WHEN WE TALK TO STRATEGISTS, THEY MENTIONED THE RETAIL SECTOR , SHOWING SOME GOOD SIGNS WHEN IT COMES TO THE MONTHLY SALES DATA IS REINFORCING THAT YOU AS WELL. -- THAT OF YOU AS WELL. OTHER INVESTORS SAY THEY ARE QUITE POSITIVE AROUND THE SECTORS THAT CAN BENEFIT FROM THE CORPORATE GOVERNANCE REFORM SHOULD EXPORTERS WILL BE HID BY THE STRONGER YEN. AND THE SECTORS THAT ARE EXPOSED TO DEMAND FROM CHINA. SHERY: OUR ASIA EQUITY REPORTER IN THE TOKYO STUDIO WITH WHAT TO EXPECT FROM THE JAPANESE MARKETS. BE SURE TO TUNE IN TO BLOOMBERG RADIO TO HEAR MORE FROM THE DAYS NEWS BREAKERS. GET IN-DEPTH ANALYSIS. LISTEN THROUGH THE APP, RADIO PLUS OR BLOOMBERGRADIO.COM. PLENTY MORE AHEAD. STAY WITH US. HAIDI: LATEST ON THE CORPORATE FRONT, HONDA WILL REDUCE STAFFING EDITS CHINESE JOINT VENTURE. JAPAN'S NIKKEI SAYS THE VOLUNTARY CUTS APPLY TO PRODUCTION WORKERS AT THREE FACTORS THAT MANY PRODUCE PETROL POWERED VEHICLES. EDIT HONDA SECOND JOINT VENTURE TO UNDERGO JOB CUTS AS THE COMPANY MOVES TOWARD ELECTRIFYING ITS PRODUCTS. ORACLE SHARES SURGED IN LATE TRADE AFTER BETTER-THAN-EXPECTED QUARTERLY PROFIT SIGNALING AI DEMAND CONTINUES TO BOOST ITS CLOUD UNIT. THE CEO SAYS CLOUD SERVICES HAVE BECOME ORACLES LARGEST BUSINESS. IT ANNOUNCED A NEW AGREEMENT TO MAKE ITS NAMESAKE DATABASE AVAILABLE ON THE AMAZON WEB SERVICES CLOUD. MIDEA HAS STARTED TAKING INVESTOR ORDERS. IT WOULD MAKE THE CITY'S BIGGEST LISTING IN MORE THAN THREE YEARS. THE CHINESE APPLIANCE MAKER SAYS IT EXPECTS TO START TRADING A WEEK FROM TODAY. CORNERSTONE INVESTORS TAKING MORE THAN A THIRD OF THE OFFERING. SHERY: SOME OF THE STOCKS WE WILL BE WATCHING AT THE OPEN OF TRADE IN KOREA, JAPAN AND AUSTRALIA. SOME OF THOSE ASIAN APPLE SUPPLIERS IN FOCUS. WE COULD SEE THE MOVE AFTER THE FIRM REVEALED ITS LATEST DEVICES INCLUDING THE IPHONE 16 AS WELL AS NEW WATCHES WHICH COUNT AI FEATURES. KEEP WATCHING THOSE STOCKS ON THE BOARD RIGHT NOW. WE HAD A LITTLE BIT OF A MIXED PICTURE WITH SOME OF THOSE SEMI CONDUCTOR NAMES TAKING A HIT LAST WEEK WITH A DECLINE IN NVIDIA. 14% LOSS IN THE LAST WEEK. THIS IS A PICTURE RIGHT NOW AS WE SET UP TO THE MARKET OPENS. SEEING A LITTLE BIT OF UPSIDE FOR NIKKEI FUTURES AFTER FIVE SESSIONS OF LOSSES ALREADY. HAD SEEN THE JAPANESE YEN STRENGTHEN. WE HAVE SEEN BIG MOVES FOR THE YEN. LITTLE BIT OF WEAKNESS AGAINST THE U.S. DOLLAR AS U.S. FUTURES HOLDING STEADY. WE ARE HEADING TO THE CPI NUMBERS ON WEDNESDAY. OPTIONS TRADERS PRICING IN A MOVE OF ALMOST ONE PERCENT IN EITHER DIRECTION FOR THE S&P 500 ON THAT CPI DATA. SHERY: THIS IS THE ASIA TRADE. WE ARE COUNTING DOWN TO ASIA'S MAJOR MARKET OPENS. WE HAD REALLY BARGAIN-HUNTING SUPPORTING U.S. EQUITIES WE STILL HAVE U.S. CPI TO COME LATER IN THE WEEK AND OF COURSE WE WILL BE WATCHING APPLE SUPPLIERS IN THE ASIAN SESSION. HAIDI: WE HAD MANAGE EXPECTATIONS. MODEST UPGRADES SO IT WILL BE INTERESTING TO SEE WHETHER THAT DISAPPOINTMENT THAT WE SAW FOR APPLE'S STOCK PRICE TRADING THROUGH TO THE ASIAN SESSION, SHERY. SHERY: AND OF COURSE, WE ARE WATCHING ALSO WHAT IS HAPPENING IN THE CURRENCY SPACE BECAUSE WE HAVE THE DOLLAR AND SEEING ITS BEST WAY IN OVER A WEEK. WE HAD THE JAPANESE YEN BEING PRESSURED AND WE ALREADY HAD A LOT OF VOLATILITY FOR THE JAPANESE CURRENCY. GAINS OF 1% OVERNIGHT CHECK TO BE PRESSURED RIGHT NOW AT AROUND THE 143 LEVEL. WE ARE SEEING SOME UPSIDE FOR JAPANESE EQUITY MARKETS WHERE THE NIKKEI UP .4% AFTER FIVE SESSIONS OF LOSSES BEING PRESSURED ALSO BY THAT STRENGTHEN THE JAPANESE CURRENCY. WE STILL HAVE THE 10 YEAR YIELD BELOW THAT .9% LEVEL. TAKE A LOOK AT HOW THE KOSPI IS COMING ONLINE. WE WILL BE WATCHING APPLE SUPPLIERS. WE HAD ALREADY SEEN PRESSURE ON SEMICONDUCTORS ESPECIALLY SK HYNIX, GIVEN THE PLUNGE WE SAW IN NVIDIA OVER THE PAST FEW DAYS BUT THE COST BEGINNING .3% WHILE THE KOREAN WON CONTINUES TO WEAKEN. WE HAD RISK-OFF SENTIMENT, PRESSURING THE BROADER KOREAN MARKET. STOCKS STILL AT AROUND THE AUGUST LOWS. WE HAVE THE AUGUST 5 NOW DOWN AT AROUND THOSE LEVELS COME SITTING AT THE 1343 LEVEL. >> TAKE A LOOK AT HOW WE ARE SETTING UP AS WE COME ONLINE HERE IN AUSTRALIA. FUTURES WERE SHOWING IT AT THE OPEN FOR AUSSIE EQUITIES. WE ARE UP .1%, LOOKING LIKE WE SEE SOME EARLY GAINS, AS WE SEE THIS RENEWED WAVE OF DIP BUYING PLAY THROUGH TO THIS PART OF THE SESSION AS WELL. THE AUSSIE DOLLAR HAS BEEN HOLDING PRETTY STEADY GIVEN THE OUTPERFORMANCE OF THE GREENBACK. A LITTLE SURPRISING GIVEN THE DEFLATIONARY WOES WE CONTINUE TO SEE FACING CHINA GIVEN THAT WE DO SEE THE AUSSIE OFTEN ACTING AS THE OX HE TRADED THERE. LOOKING AT U.S. TREASURY ELSE, WE HAVE SEEN KIND OF TRIMMING MOST OF THOSE LOSSES IN THE OVERNIGHT SESSIONS AS TRADERS ARE CONTINUING TO DEBATE THE PACE OF FED RATE CUTS AND THE U.S. INFLATION NUMBERS WILL GIVE US A LITTLE MORE COLOR TO THAT AND THERE IS RISK AS WE GET INTO THE HARRIS AND TRUMP DEBATE AS WELL, SEEING SOME OF THE BONDS IN THIS PART OF THE WORLD RESUMING THEIR RALLY. AUSTRALIA AND NEW ZEALAND SOVEREIGNS OPENING HIGHER AND THIS IS THEIR FIFTH GAME IN SIX DAYS. NOT MUCH OF A CHANGE WHEN IT COMES TO TRADING IN THE KIWI AT THE MOMENT AS WELL AND WE ARE WATCHING OIL PRICES GIVEN JUST THE BROAD DOWNSIDE WE HAVE SEEN ACROSS COMMODITIES. ABOUT A QUARTER OF 1% HIGHER SO STEADY TRADING AS WE CONTINUE TO TRUST THAT RISK ON TONE AND POTENTIALLY THE IMPACT OF STORM FRANCINE THREATENING SOME SUPPLIERS IN THE GULF OF MEXICO. SHARING. SHERY: LET'S BRING IN OUR NEXT GUEST. THE HEAD OF AIPAC EQUITIES AND CREDIT AT UBS WEALTH MANAGEMENT. ALWAYS GREAT TO HAVE YOU WITH US. WE TALKED ABOUT PLENTY OF FACTORS THAT COULD AFFECT MARKETS THIS WEEK. WHAT WILL BE THE KEY DRIVER FOR YOU AS WE HAD TOWARDS THE U.S. PRESIDENTIAL DEBATES? NOT TO MENTION CHINESE ECO-DATA THAT LOOKS WEAKER THAN WE THOUGHT. >> I WOULD AGREE, TOMORROW CPI NUMBER IS THE KEY ONE TO WATCH. WE EXPECTED IT JUST A LITTLE BIT BUT I WOULD SAY, UNLIKE NONFARM PAYROLLS, THEY PROBABLY HAVE A LOT MORE LEEWAY TO THE DOWNSIDE SO IT IS QUITE A BIT WEAKER THAN PEOPLE EXPECT. I THINK THAT STILL WOULD NOT WORRY ANYBODY. WE ARE HEADING TOWARDS PROBABLY AN OPENING CUT BY THE FED OF 25 SO WHAT THAT MEANS FOR INVESTORS IN MY VIEW IS THE U.S. ECONOMY IS SLOWING, NO TWO WAYS AROUND IT BUT IT IS NOT FLOWING AT A VERY RAPID PACE AND WITH THE RATE CUTS COMING UP, WE THINK INVESTMENT GRADE BONDS, THAT IS PROBABLY ONE OF THE PREFERRED RATES THAT WE WOULD CURRENTLY RECOMMEND RIGHT NOW. SHERY: HOW DO YOU HEDGE CURRENCIES AS WELL? ALTHOUGH WE MIGHT NOT GET THAT RATE CUT OF 50 BASIS POINTS, WE ARE STILL SETTING UP FOR MORE RATE CUTS THIS YEAR. >> I THINK THERE'S DIFFERENT WAYS. ONE OF COURSE IS TO TAKE THE ALTERNATIVE CURRENCY. IN OUR PREFERENCE, IT DOESN'T HAPPEN VERY OFTEN. WE HAVE FOUR OF THEM. AMONG THEM, SWISS FRANC, EURO, AUSSIE DOLLAR AS WELL. CERTAINLY A LOT OF CHOICE FOR INVESTORS TO GO ALONG ONE OF THESE CURRENCIES AGAINST THE DOLLAR. THE OTHER IDEA COULD BE TO ENGAGE IN SOME UNDERLYING ASSETS OF SOME OF THE CURRENCIES WHERE IT STRENGTHENS SO AGAIN CLOSER TO HOME, SOMETHING LIKE SINGAPORE REIT'S, FOR EXAMPLE, WHERE YOU HAVE BOND LIKE TRADES IN EQUITIES AND YOU HAVE A WORSE THE POTENTIAL STRENGTHENING OF THE SING DOLLARS SO THESE ARE SOME OF THE SORT OF THINGS YOU COULD USE FOR STABILIZING THE CURRENCIES. -- THE CURRENCY SIDE. HAIDI: HOW MUCH RISK DO YOU ACTUALLY ASSIGNED TO EVENTS LIKE THE PRESIDENTIAL DEBATE, THE CANDIDATE DEBATE, I SHOULD SAY, AND WHICH ASSET CLASSES SEE THE BIGGEST REACTION? DO YOU THINK MARKETS HAVE GOTTEN QUITE GOOD AT DISCOUNTING THE SORT OF MURKY POLITICAL RISK RIGHT NOW? HARTMUT: MAYBE, ONE COMMENT BECAUSE SOMETIMES, A BIT UNDERAPPRECIATED. EVERYBODY UNDERSTANDABLY LOOKS AT WHO BECOMES THE NEXT PRESIDENT. CERTAINLY, WE ARE, TOO. IT IS INTERESTING TO SEE THE CHANCES OF A SPLIT CONGRESS, FOR EXAMPLE, WHICH USUALLY IN MARKET TERMS IS PROBABLY POSITIVE BECAUSE IT WHAT IT PREVENTS ANY SORT OF EXTREME POLICIES TO BE IMPLEMENTED IS SOMETHING TO WATCH. OTHER THAN THAT, GOLD IS ONE OF THE ASSETS BUT IN CASE YOU GET A U.S. GOVERNMENT THAT KEEPS SORT OF RUNNING VERY LARGE BUDGET DEFICITS ON THE FISCAL SIDE IF YOU WERE WORRIED ABOUT THAT, ESPECIALLY IF YOU ARE WORRIED TO SOME EXTENT PERHAPS IN SOME CAMPS OVER THE FED INDEPENDENCE BEING CALLED INTO QUESTION AT LEAST BY ALL THESE THINGS, ALL THESE ANGLES YOU CAN COVER WELL WITH GOLD. >> I FIND CURRENCY CALLS QUITE INTERESTING. THE U.S. DOLLAR IS LEAST PREFERRED. WE ARE SEEING A BIT OF A REBOUND BUT I'M CURIOUS TO KNOW WHY YOU THINK THIS WOULD'VE LONG TRACK IS A WEAKNESS FOR THE GREENBACK AND ACTUALLY, YOU ARE A LITTLE BIT MORE CONSTRUCTIVE ON THE AUSSIE DOLLAR DESPITE SOME OF THE DOMESTIC ISSUES AND EXPOSURE TO CHINA. IS THAT PURELY ON RATE DIVERGENCE? HARTMUT: PRETTY MUCH, IT IS, YES. IN THE CASE OF THE AUSSIE DOLLAR, IN CASE OF PUTTING MUCH ON THE CENTRAL BANKS, WE DON'T THINK ANYBODY CUTS AS MUCH AS THE FED OVER THE NEXT 18 MONTHS OR SO. AUSSIE DOLLAR PLAYS A ROLE. ANOTHER ONE, PERHAPS ALSO VERY PRONOUNCED, IS SWISS FRANCS. WE THINK THEY ARE ALMOST DONE. QUITE POSSIBLY ONE MORE CUT AND THE FED HAS NOT EVEN STARTED YET AND WE ARE SEEING MULTIPLE CUTS SO EVEN THOUGH YOU COULD ARGUE TO SOME EXTENT THE MARKET HAS PRICED IN SOME OF IT, WE WOULD ARGUE SOME OF IT. PLENTY OF CHOICE ON THE CURRENCY SIDE. SHERY: IS THE YUAN ONE OF YOUR CHOICES? WE HAVE SEEN THIS RALLY OF ABOUT 2% THIS QUARTER BUT I MEAN, IF THE ECONOMY CONTINUES TO WEAKEN, WHO WILL WANT TO REPATRIATE MONEY IF THERE ARE NO INVESTMENT OPPORTUNITIES WITHIN THE COUNTRY? HARTMUT: YES, IT IS NOT NECESSARILY AMONG THOSE. AS YOU RIGHTLY MENTIONED, THE FUNDAMENTAL SIDE. WE JUST DISCUSSED THE ELECTION. WE CAN PAINT SOME SCENARIOS WHERE THIS IS NOT SO FAVORABLE. SO YES, I WOULD PROBABLY GO INTO OTHER CURRENCIES RIGHT NOW. SHERY: TAKE A LOOK AT APPLE SUPPLIERS ACROSS ASIA. THE COMPANY ROLLED OUT THE IPHONE 16 AND SET THE STAGE FOR A NEW AI PLATFORM. APPLE SHARES WERE DOWN DURING THE LAUNCH EVENT IN THE OVERNIGHT SESSION. ALMOST 2% BUT THEY MANAGED TO FINISH UNCHANGED. YOU'RE SEEING DOWNSIDE PRESSURE ACROSS THE BOARD IN ASIA. FOR MORE, THAT'S BRING IN MARK GURMAN. EXPECTATIONS WERE ALREADY LOW GOING INTO THIS EVENT BUT WHAT WERE YOUR KEY TAKEAWAYS? MARK: MY KEY TAKEAWAY IS THAT APPLE IS HINGING ON APPLE INTELLIGENCE TO SELL ITS NEW IPHONES DESPITE THE FACT THAT APPLE INTELLIGENCE DOES NOT YET EXIST. THE NEW PHONES WILL GO ON SALE ON SEPTEMBER 20. APPLE INTELLIGENCE WILL NOT BEGIN ROLLING OUT UNTIL MID OCTOBER AT THE EARLIEST. AND EVEN THEN, IT IS ONLY GOING TO INCLUDE A SUBSET OF FEATURES. MANY FEATURES ARE COMING IN DECEMBER. EVERYTHING THEY DISCUSSED, THAT IS NOT COMING UNTIL AROUND MARCH AND APRIL OF NEXT YEAR. IN ADDITION TO THAT, ESSENTIALLY ALL OF THE APPLE INTELLIGENCE FEATURES THAT ARE AVAILABLE ON THE IPHONE 16 LINE ARE ALREADY GOING TO ALSO BE AVAILABLE ON THE IPHONE 15 FROM LAST YEAR MEANING ANYONE WHO HAS ONE OF THE PHONES FROM LAST YEAR, AS I DO, YOU DON'T NECESSARILY HAVE A GOOD REASON TO UPGRADE. I DON'T MIND IT IN COMPELLING -- I DON'T FIND IT COMPELLING AND I DON'T FIND THE CAMERA CONTROL UPDATE WORTH THE PRICE OF ADMISSION IF YOU HAVE LAST YEAR'S PHONES BUT APPLE IS BUILDING NEW PHONES TO GET PEOPLE FROM THE ANDROID ECOSYSTEM AND TO GET PEOPLE ON OLDER IPHONE MODELS SO IF YOU HAVE SOMETHING OLDER THAN THE 14 PRO, YOU KNOW, YOU'RE GETTING LAST YEARS PLUS THIS YEAR'S IMPROVEMENTS AND MAYBE IT IS THE RIGHT TIME FOR YOU. HAIDI: I CAME INTO THIS THINKING, SHIRLEY HE FOUND SOMETHING TO BE EXCITED ABOUT AND EVEN YOU ARE NOT FINDING THIS RELEASE THAT COMPELLING. DOES THAT PUT APPLE IN A DIFFICULT SPOT IN TERMS OF MARKET COMPETITION? WE SEE THE LIKES OF HUAWEI BEING QUITE GOOD AT CLOSING THE GAPS, PARTICULARLY IN THE CHINESE MARKET. MARK: I AM VERY OPINIONATED AND I HAVE MY OPINIONS AND I THINK I AM ABSOLUTELY RIGHT THAT THESE ARE NOT COMPELLING UPGRADES BUT I'M ALSO KNOWLEDGEABLE OUT -- KNOWLEDGEABLE ABOUT THE INDUSTRY TO KNOW THAT MY OPINION IS NOT NECESSARILY THE OPINION THAT DICTATES APPLE SALES SO WHILE WHAT I AM SAYING IS A DOSE OF REALITY, THE OTHER COMPONENT HERE IS THAT DEMAND FOR APPLE PRODUCTS, INTEREST IN APPLE PRODUCTS AND THE LOVE OF APPLE PRODUCTS BY BILLIONS OF PEOPLE AROUND THE WORLD IS NOT FADING AS MUCH AS SOME PEOPLE MAY THINK. SO YOU ARE GOING TO STILL SEE STRONG DEMAND AND YOU ARE GOING TO SEE A LOT OF INTEREST, RIGHT? SO I DON'T THINK YOU WILL SEE AS MUCH INTEREST AS YOU WOULD SEE IN A YEAR WHERE THERE IS MORE COMPELLING HARDWARE CHANGES. I DON'T THINK APPLE INTELLIGENCE WILL SPUR MAN. WHAT IS GOING TO SPUR DEMAND IS PENT UP DEMAND. PEOPLE WHO HAVE BROKEN THEIR SCREENS, PEOPLE WHO HAVE CRACKED CAMERAS, PEOPLE WHO HAVE BATTERIES -- BATTERY HEALTH AT 72% VERSUS THE FULL 100% YOU WOULD GET FROM A NEW IPHONE OUT OF THE BOX. THAT WILL DRIVE UPDATES THIS TIME AROUND, NOT THESE NEW FEATURES. >> MY IPHONE IS PRETTY OLD BUT I AM EXCITED ABOUT PHYSICAL -- THE PHYSICAL CAMERA BUTTON. GIVEN THE LACK OF EXCITEMENT, GIVEN THE POTENTIAL LACK OF A BIG REFRESH CYCLE, WHAT DOES THAT MEAN FOR SUPPLIERS ACROSS ASIA? MARK: IN TERMS OF SUPPLIERS, WHAT WE ARE SEEING IS STAGNANT. SUPPLIERS THINK THEY HAVE HAD A GOOD YEAR OVER THE PAST 12 MONTHS, THEY WILL HAVE A GOOD YEAR FOR THE NEXT 12 MONTHS. THEY PRODUCED 80 MILLION TO 90 MILLION HANDSETS. I THINK FOR SUPPLIERS, IF THINGS HAVE BEEN OK IN THEIR VIEW, I THINK THINGS WILL CONTINUE TO BE OK. THERE IS NO SUPER CYCLE HAPPENING HERE. ON THE OTHER HAND, THERE IS NO COLLAPSE HAPPENING EITHER. SOMETIMES, IT IS OK THAT EVERYTHING IS STILL THE SAME. >> MARK GURMAN THERE. PRETTY QUICKLY FOLLOWING ON THE HEELS OF APPLE, HUAWEI WILL OFFICIALLY LAUNCH ITS LATEST SMARTPHONE. LET'S DISCUSS ALL OF THIS. ANNABELLE DROULERS VISITS US IN HONG KONG. WE SAW SOME OF THE HUAWEI RELATED SUPPLIERS GAINING ON THE TRIFOLD PHONE PREORDERS WHAT DO WE KNOW ABOUT INTEREST SO FAR AND I GUESS HOW IT IS PLAYING CATCH-UP NOW? >> IT IS PRETTY INTERESTING FIT A LOT OF OUTLETS ARE REPORTING THAT WE ARE ALREADY GETTING REALLY ROBUST PRESALES AND THAT IS, I GUESS, TRUE TO AN EXTENT BUT IT IS IMPORTANT TO GIVE THE CONTEXT AROUND THIS. PRESALES HAVE STARTED AND THEY KICKED OFF OVER THE WEEKEND AND YOU CAN SEE ON HUAWEI'S E-COMMERCE WEBSITE THAT WE HAVE GOT AROUND 3.3 MILLION RESERVATIONS BEING MADE SO FAR. WHAT IS IMPORTANT TO NOTE IS THAT THERE IS NO CHARGE TO PREORDERS SO YOU COULD ACTUALLY JUST HAVE INTEREST. THE PRICING HAS NOT BEEN REVEALED JUST YET SO PERHAPS IF YOU WERE NOT COMPELLED ENOUGH WHEN THE PHONE IS OFFICIALLY LAUNCHED, YOU COULD RETRACT THAT PREORDER BUT THAT IS THE INDICATION WE HAVE GOT SO FAR. 3.3 MILLION PEOPLE HAVE SO FAR EXPRESSED THEIR INTEREST AND THAT IS THE WAY TO THINK ABOUT IT. THE DESIGN OF IT OF COURSE IS QUITE AN INTERESTING ONE, BRINGING IT TO THE MARKET BECAUSE IT IS THAT TRIFOLD. YOU ARE ESSENTIALLY GETTING A LOT MORE SCREEN SPACE SO HUAWEI IS REALLY TRYING TO MAKE ITS MARK. AND THAT HIGHER END MARKET SPACE. -- MARK IN THAT HIGHER END MARKET SPACE. THERE'S A HANDFUL WE ARE WATCHING OFF THE BACK AND YESTERDAY AGAIN, GIVEN WE ALREADY HAD THOSE INDICATIONS AROUND PRESALES COMING THROUGH, WE STARTED THE SEASON RISING. THESE ARE ALL CHINA-BASED NAMES. YOU HAVE CPT TECHNOLOGY, FOR INSTANCE, THAT SORT OF WORKS IN THE ELECTRONIC COMPONENTS MARKET. YOU ARE SEEING SOME PRETTY STRONG MOVE SO FAR ESPECIALLY WHEN WE HAD QUITE A LACKLUSTER TRADING SESSION YESTERDAY IN LIGHT OF THOSE INFLATION NUMBERS COMING OUT BUT AGAIN, THE CONTEXT OF THIS IS QUITE AN INTERESTING ONE BECAUSE WE HAVE SEEN HUAWEI REALLY MANAGING TO GAIN MARKET SHARE IN CHINA. IT EDGED OUT APPLE IN THE LATEST QUARTER. HOW LONG THAT WILL PERSIST IS SOMETHING TO TRACK GIVEN THAT YOU HAVE A LOW BASELINE FOR APPLE YEAR ON YEAR AND SO YOU ARE SEEING ACTUALLY STRONGER NUMBERS COMING THROUGH OFF OF THAT BUT HUAWEI, DAN, NO SORT OF MISTAKE THAT THEY ARE PITTING ITS LATEST PRODUCT AGAINST THE IPHONE 16 LAUNCH. PERHAPS NOT SO MANY COMPELLING FEATURES IN THE LATEST IPHONE LINEUP. PERHAPS HUAWEI'S NEW ONE COULD ATTRACT SOME CONSUMERS. >> ANNABELLE DROULERS IN HONG KONG. THAT'S TERM TWO'S. THE LATEST STORIES WE ARE FOLLOWING AT THE MOMENT, DAVID SOLOMON WARNING THAT THE BUSINESS FOR THE BANKS TRAINING UNIT IS ON TRACK TO DROP 10% FROM THE PREVIOUS YEAR, LED BY DECLINES IN THE FIXED INCOME BUSINESS. THE COMPANY WILL ALSO TAKE A $400 MILLION PRETAX HIT IN ITS CONSUMER BUSINESS AS HE MOVES AWAY FROM ITS CREDIT CARD TIE UP WITH GENERAL MOTORS. >> WITH RESPECT TO TRADING, I WOULD SAY THAT WITH THE SECOND EQUITIES, WE HAD AN EXTREMELY STRONG THIRD-QUARTER IN 2023. GIVEN THIS QUARTER, GIVEN WHAT I SAY IS MORE CHALLENGING MACRO ENVIRONMENT, PARTICULARLY THE MONTH OF AUGUST, THAT BUSINESS IS TRENDING DOWN CLOSE TO 10% LARGELY. >> HSBC IS SET TO BE CONSIDERING COMBINING ITS COMMERCIAL AND INVESTMENT BANK UNITS THAT CUT COSTS. IT WOULD BECOME THE BANK'S LARGEST REVENUE GENERATOR, CONTRIBUTE AND $40 BILLION A YEAR TO HSBC'S COFFERS. MATT INGRAM JOINS US NOW FOR MORE. ALSO, IT FEELS LIKE, YOU KNOW, A CONSTANT RATE OF CHANGE WHEN IT COMES TO HSBC. WHAT IS THE INTENTION HERE AND HOW DOES THAT SHAPE UP IN TERMS OF BEING ABLE TO ATTAIN THOSE SAVINGS AND EFFICIENCY? >> IT ALMOST SEEMS LIKE A CASE OF DESTRUCTION WITH HSBC. WE ARE SEEING IT AGAIN. IT DOESN'T SOUND LIKE WHAT HE HAD TELEGRAPHED. HE SAID THE CHANGES WOULD BE SORT OF MINIMAL AND NOT SIGNIFICANT AND THIS IS A MASSIVE CHANGE. THE SYNERGIES BETWEEN THOSE TWO BUSINESSES ARE QUESTIONABLE. YES, HE WOULD CUT COSTS. DO YOU TAKE AWAY FLESH AS WELL? HOW IS THE SYNERGY BETWEEN BANKING AND SMALL BUSINESS AND BANKING AND GLOBAL CONGLOMERATES? IT IS NOT NEW NEWS. HSBC CUT TELEGRAPHED THAT THEY WOULD CUT A LOT OF POSITION, -- I THINK REVENUE WILL BE HURT ON THIS BASIS. >> THERE WAS INTERNAL RESISTANCE WHEN THIS HAD COME UP BEFORE SO WHY ARE THEY BRINGING IT TO THE FOR AGAIN? >> IT IS IMPORTANT THAT THIS HAS BEEN FLOATED. THIS IS NOT AN OFFICIAL PLAN AS YET. I GUESS THEY ARE LOOKING AROUND AT LOW HANGING FRUIT. THERE'S A LOT OF RELATIONSHIP ANCHORS IN COMMERCIAL AND MARKETS. MAYBE WE COULD CUT SOME OF THOSE HIGH COST RELATIONSHIP BANKERS. THEY ARE GOING TO GO FULL-CIRCLE ON THIS AGAIN. THERE IS A REVENUE IMPACT OF DOING THIS THIS IS NOT JUST ABOUT CUTTING COSTS SO THEY HAVE TO BE EXTREMELY CAREFUL. >> WHAT ARE SOME OF THE NEXT MOVES WE SHOULD BE WATCHING OUT FOR? WHAT'S HIGH. IT IS STILL -- >> HI. THEY HAVE A COMBINATION OF GEOGRAPHIC STRUCTURES. FROM WHAT THEY HAVE SAID SO FAR, THE NEXT STEP IS STILL TO HAVE A CLOSE LOOK AT SOME OF THOSE GEOGRAPHICAL NETWORKS AND MAYBE BREAK THOSE DOWN AS WELL AS PERHAPS GETTING RID OF SOME OF THOSE INTERMEDIATE STEPS IN TERMS OF THE MANAGEMENT STRUCTURE. IN TERMS OF A BIG RESTRUCTURING, THAT IS A DANGEROUS MOVE FOR A NEW CEO. I WOULD SAY I THINK WE ARE GOING TO SEE SOME OF THAT GEOGRAPHICAL STUFF FURTHER BROKEN DOWN AND PERHAPS A COMPRESSION WITHIN EXISTING BUSINESS UNIT START WITH. >> SENIOR ANALYST MATT INGRAM. STICKING TO BANKS, WE ARE HEARING RECOMMENDATIONS FROM AUSTRALIA'S BANKING REGULATOR IN TERMS OF THE FUTURE OF THESE 81 BONDS. WE ARE HEARING FROM REGULATORS THAT THEY ARE PROPOSING LENDERS PHASE OUT THE USE OF THE SO-CALLED BONDS. SO THE KIND OF SECURITIES THAT WERE WAY OUT WITH THE COLLAPSE OF CREDIT SUISSE TO STRENGTHEN THEIR CAPITAL HOLDINGS IN THE EVENT OF A CRISIS. THE AUSTRALIAN REGULATION AUTHORITY IN A STATEMENT SAYING THE PROPOSED CHANGES SEEK TO SUPPORT STABILITY AT TIMES OF CRISIS WITH SIMPLER AND MORE CERTAIN RESOLUTION OF BANKS IN THE UNLIKELY EVENT OF FAILURE AIMED AT REINFORCING CONFIDENCE IN THE SAFETY DEPOSITS AT TIMES OF STRESS SO THIS TRANSITION UNDER THE PROPOSAL WOULD START ON JANUARY 1, 2027 AND THAT MEANS ALL CURRENT 81 BONDS ON ISSUE ARE EXPECTED TO BE REPLACED BY 2032. THEY HAD STARTED LOOKING AT THIS PROCESS IN SEPTEMBER OF LAST YEAR BUT IT IS INTERESTING BECAUSE IN JAPAN OF COURSE, THE MEGABANKS WERE SOME OF THE FIRST TO VENTURE BACK INTO THAT MARKET AFTER THE CREDIT SUISSE COLLAPSE. >> WE HAD SOME OF THE BIG BANKS LIKE MIZUHO FINANCIAL ISSUING BILLIONS OF DOLLARS OF THESE 81 BONDS. AFTER THE COLLAPSE WE SAW IN EUROPE. IT WAS ALSO FOLLOWED BY OTHER COMPANIES AS WELL AS YOUR SO REALLY A LITTLE BIT PERHAPS A SENSE THAT IT IS LESS RISKY HERE IN JAPAN. >> THE LATEST HEADLINES WE ARE FOLLOWING UP YOUR HONDA WILL REPORTEDLY -- IN THE VOLUNTARY CUTS APPLY TO PRODUCTION WORKERS AT THREE FACTORIES. IT IS HONDA'S SECOND JOINT VENTURE TO UNDERGO DRUG CLASS THIS YEAR AS THE COMPANY MOVES TOWARDS ELECTRIFYING ITS PRODUCTS. SHARES SURGED AFTER BETTER-THAN-EXPECTED QUARTERLY PROFITS SIGNALING THAT AI DEMAND CONTINUES TO BOOST ITS CLOUD UNIT. CEO'S SAY CLOUD SERVICES HAVE BECOME THE LARGEST BUSINESS AS QUARTERLY REVENUE GROWTH BY 7% AND IT ANNOUNCED A NEW AGREEMENT TO MAKE ITS NAMESAKE DATABASE AVAILABLE ON THE AMAZON WEB SERVICES CLOUD. MADEA STARTED TAKING INVESTOR ORDERS FOR ITS SHARE SALE IN HONG KONG WHICH COULD BE WORTH 3.5 BILLION DOLLARS, MAKING IT THE BIGGEST LISTING IN MORE THAN THREE YEARS. THE CHINESE APPLIANCE MAKER SAYS IT EXPECTS TO PRICE ITS SHARES ON FRIDAY AND BEGIN TRADING ONE WEEK FROM TODAY. SOURCES SAY THEY WERE COVERED AS OF MONDAY. CORNERSTONE INVESTORS TAKING MORE THAN ONE THIRD OF THE OFFERING. SHERY. SHERY: TAKE A LOOK AT THE COMMODITIES SPACE. OF COURSE, WE HAVE SEEN A LOT OF PRESSURE IN COMMODITIES GIVEN THE WEAKNESS IN THE CHINESE MARKETS, ESPECIALLY WITH THE LATEST ECONOMIC DATA AND DEFLATION REALLY SPIRALING IN THE COUNTRY. WE ARE SEEING BRENT HOLDING AT THE $72 PER BARREL LEVEL AND WE HAD SEEN IT HOLD ONTO THAT ONE DAY AGAIN. RISK RETURNING TO THE WALL STREET SESSION OVERNIGHT. WE SAW EQUITIES BEING SUPPORTED WE HAVE SEEN SIGNIFICANT DOWNSIDE PRESSURE WHEN IT COMES TO OIL MARKETS, NOT TO MENTION IRON ORE. WE ARE STILL TRADING AT AROUND THOSE LOWS SEEN SINCE 2022. WHEN IT COMES TO COPPER PRICES, WE SAW A LITTLE BIT OF A REBOUND IN THE PREVIOUS SESSION, COMING BACK ABOVE THE $9,000 LEVEL. THIS OF COURSE PERHAPS ON SIGNS THAT WE MIGHT SEE THE CHINESE DEMAND RETURNING. HAIDI: TAKING A LOOK AT HOW EUROPEAN STOCKS ARE OPENING WHEN IT COMES TO THE FUTURES SESSION. STOXX 50 FUTURES LOOKING BUOYANT WHEN IT COMES TO GERMAN >> CONFIDENCE INDICATORS COMING OUT FOR AUSTRALIA. THIS ADDS TO THE CONSUMER PESSIMISM THAT WE SEE GIVEN THE COST OF LIVING CRISIS. SUSTAIN HIGHER RATES AND THE LIKELIHOOD THAT THE RBA IS WELL BEHIND WHEN IT COMES TO THE GLOBAL EASING CYCLE. WE ARE SEEING THAT CONSUMER CONFIDENCE FALLING TO 84.6. THAT IS DOWN .5% MONTH ON MONTH THERE. THE ECONOMIC OUTLOOK, EMPLOYMENT PROSPECTS, SOME OF THE ASPECTS OF RISING CONCERN. INTEREST RATES AT THE 12 YEAR HIGH AND EXPECTED TO REMAIN FOR THE REMAINDER OF THE YEAR. PESSIMISM OUTWEIGHING OPTIMISM. THE DEMARCATION LINE FOR THIS SURVEY IS ACTUALLY BELOW THE 100 LEVEL SINCE MARCH 2022. THE SENIOR ECONOMIST, MATTHEW HASSAN, SAYING THE PESSIMISM THAT DOMINATED FOR OVER TWO YEARS NOW, SHOWING NO REAL SIGNS OF LIFTING. SHERY. SHERY: TAKE A LOOK AT HOW MARKETS ARE TRADING AT THE MOMENT. WE ARE SEEING THE NIKKEI DOWN .4% WHILE THE KOSPI IS DOWN .2%. WE HAVE SOME OF THOSE APPLE SUPPLIERS UNDER PRESSURE IN TODAY'S SESSION BUT BROADLY SPEAKING, WE HAVE SEEN THE TECH SECTOR UNDER PRESSURE FOR QUITE A WHILE ESPECIALLY WITH INVIDIOUS PLUNGE. UP .6%. HAIDI, WE HAD THE AUSSIE ACTUALLY BEING SUPPORTED IN A PREVIOUS SESSION AFTER THE BIGGEST WEEKLY DROP SINCE JULY. WE ARE SEEING BUYING BY LOCAL EXPORTERS. HAIDI: CHINA HAWKS IN THE U.S. HOUSE HAVE PASSED LEGISLATION SEEKING TO BLACKLIST AMERICAN SUBSIDIARIES. THEY ARGUE IT WILL PREVENT BEIJING DOMINATING ANOTHER FIELD THE U.S. PIONEERED. LET'S BRING IN STEVEN DENNIS FOR MORE. WHAT ARE THE KEY POINTS OF THE BILL AND SORT OF WHERE DO WE EXPECT YOU TO GO FROM HERE IN TERMS OF THE ANTICIPATED LEVEL OF SUPPORT WHEN IT HAS TO THE SENATE? >> THE BILL BASICALLY BLACKLISTS, YOU KNOW, A HANDFUL OF THESE BIG CHINESE BIOTECH COMPANIES FROM ACCESSING SALES TO U.S. PHARMACEUTICAL COMPANIES AND RESEARCH COMPANIES AND INSTITUTIONS THAT USE THEIR PRODUCTS AND SERVICES LIKE THESE BIG DNA SEQUENCING MACHINES TO TRY TO DO PRECISION MEDICINE. IT IS REALLY ABOUT THE HOT NEW PART OF PHARMACEUTICALS AND HEALTH CARE. AND THERE IS A CONCERN BY THE LAWMAKERS THAT PASSED THIS BILL THAT CHINA WOULD COME TO DOMINATE THIS FIELD AND COULD USE THE DATA FOR NEFARIOUS PURPOSES. THE COMPANIES DENY THAT. THEY SAY THAT THEY ARE NOT DOING ANYTHING WRONG AND THEY COMPLAIN THAT THIS BILL WAS SORT OF -- IT'S SINGLES THEM OUT AND DOESN'T HAVE A PROCESS FOR THEM TO COME OFF OF THIS LIST. THERE WERE SOME PEOPLE WHO BOUGHT THAT LINE OF ARGUMENT AND OPPOSED THIS BILL BUT A VAST MAJORITY OF THE HOUSE SUPPORTED IT. IT LOOKS LIKE THE VAST MAJORITY OF THE SENATE SUPPORT IT BUT THERE'S GOING TO BE AN ONGOING EFFORT BY THESE COMPANIES TO WATER DOWN THE LEGISLATION, PREFERABLY IN THEIR VIEW WILL NOT NAME THE COMPANIES THAT INSTEAD HAVE A SET OF RULES FOR PROTECTING DATA THAT GOES TO THE ADMINISTRATION AND HAVE THE ADMINISTRATION DETERMINE IF COMPANIES ARE PROTECTING DATA OR NOT. THE BIGGER QUESTION HERE IS WHETHER OR NOT, YOU KNOW, THE U.S. AND CHINA ARE GOING TO HAVE A COOPERATED RELATIONSHIP ECONOMICALLY OR NOT. >> ALREADY EARLIER THIS YEAR, WE SAW THE MOVES AGAINST TIKTOK, RIGHT? THEY WOULD BE BANNED ON MUST BYTEDANCE DIVESTS. HOW WOULD THIS COMPARE TO THAT? >> THIS IS THE SAME KIND OF BILL WHERE BASICALLY, THESE COMPANIES HAVE TO GIVE UP THEIR BUSINESSES TO SOME OTHER COMPETITOR OR ELSE. THIS IS, YOU KNOW, A NEW WAY OF CONGRESS ACTING. NORMALLY, THEY DO NOT SINGLE OUT INDIVIDUAL COMPANIES LIKE THIS MIGHT THEY DID WITH TIKTOK AND THERE IS THE POTENTIAL FOR MANY OTHER KINDS OF BILLS THAT SORT OF TARGET THESE BIG CHINESE COMPANIES INCLUDING IN THE ELECTRIC VEHICLE SPACE, IN THE DRONE SPACE WHERE CHINA DOMINATES THE MARKET FOR CONSUMER DRONES, FOR EXAMPLE, IN THE UNITED STATES. THERE'S EFFORTS TO BAN THOSE COMPANIES, SO THIS IS SOMETHING WHERE CONGRESS HAS BIG SOME OF THESE COMPANIES WERE BOUGHT BY CHINESE COMPANIES AND ARE NOW SUBSIDIARIES OF CHINESE COMPANIES, LIKE COMPLETE GENOMICS. SO THIS IS SOMETHING THAT COULD POTENTIALLY AFFECT THESE STOCKS AND BUSINESSES IF THEY CANNOT SLOW OR STOP THIS IN THE SENATE. >> BLOOMBERG'S CONGRESSIONAL REPORTER, STEVEN DENNIS, THERE. POPE FRANCIS IS IN THE MIDDLE OF AN ASIA-PACIFIC TOUR TO CONNECT WITH CATHOLICS AND COUNTRIES INCLUDING INDONESIA, PAPA NEW GUINEA, AND OTHERS. A BLOOMBERG OPINION COLUMNIST SAYS THE TRIP IS A DRESS REHEARSAL FOR A MORE COVETED PRIZE, A POTENTIAL VISIT TO BEIJING. HE JOINS US FROM SINGAPORE. HOW IMPORTANT IS CHINA FOR THE POPE #>> USUALLY IMPORTANT. JUST TO SAY POPE FRANCIS WILL BE IN SINGAPORE THIS WEEK AS WELL. IT IS THE LAST LEG OF THIS HISTORIC VOYAGE. THIS DISCUSSION ABOUT CHINA SHOULD NOT TAKE AWAY FROM THE TRIP HE HAS BEEN MAKING THROUGHOUT THE REGION, WHERE THERE ARE SIZABLE POPULATIONS OF CATHOLICS IN THOSE COUNTRIES BUT SPECIFICALLY WITH REGARDS TO CHINA, IT HAS BEEN A STATED AMBITION OF THE CHURCH TO TRY TO BRIDGE THE DIVIDE THERE. FOR THE PURPOSES OF EXPANDING TO OUR AUDIENCES WHAT THAT SPECIFICALLY MEANS, THERE ARE CATHOLICS AROUND 10 TO 12 MILLION IN CHINA, MANY OF WHOM PRACTICE OR WORSHIP UNDER THE COMMUNIST PARTY AND MANY OF WHOM PRACTICE OR WORSHIP IN SECRET, IN UNDERGROUND CHURCHES, PLEDGING THEIR ALLEGIANCE TO THE CATHOLIC CHURCH. THIS IS SEEN AS WHAT IS KNOWN AS A SCHISM IN CATHOLICISM AND THAT IS SOMETHING THE POPE IS TRYING TO HEAL TO BRIDGE THAT DIVIDE AND THAT IS WHY CHINA IS SO IMPORTANT TO THE CATHOLIC CHURCH. >> CHINA HAS SUCH A DEEPLY COMPLICATED HISTORY WHEN IT COMES TO ALLOWING AND CONTROLLING RELIGIOUS FREEDOMS. IS THERE A WAY TO KIND OF SEE THESE COMPROMISES BEING MADE? WHAT THE COP FROM -- WITH THE CATHOLIC CHURCH WANT TO MAKE THESE COMPROMISES IN THESE OVERTURES TO THE COMMUNIST PARTY? >> I DON'T WANT TO SPEAK ON BEHALF OF THE CATHOLIC CHURCH BUT FROM WHAT I HAVE OBSERVED IN MY REPORTING AND RESEARCH, WHAT WE HAVE ALREADY SEEN IS IN 2018, THERE WAS A SORT OF COMPROMISE STRUCK BETWEEN THE CHURCH AND CHINA, ONE THAT WAS HEAVILY CRITICIZED BY MANY HIGH-PROFILE MEMBERS OF THE CLERGY WHO SAID THE DISCUSSIONS AROUND THE APPOINTMENT OF BISHOPS, WHICH HISTORICALLY IN CHINA, THE COMMUNIST PARTY HAS CONTROLLED AND NOW AS A RESULT OF THIS AGREEMENT BETWEEN THE CHURCH AND CHINA, THE TWO SIDES WOULD END UP APPOINTING CANDIDATES TOGETHER. MANY MEMBERS OF THE CLERGY INCLUDING THE NOW RETIRED CARDINAL OF HONG KONG, SAID THAT THIS WAS EFFECTIVELY CEDING FAR TOO MUCH CONTROL TO THE COMMUNIST PARTY. AS YOU POINT OUT, THERE IS A GREAT DEAL OF CONCERN OVER RELIGIOUS FREEDOMS IN CHINA. THERE'S A LOT OF DATA POINT TO THE FACT THAT RELIGIOUS DEPRESSION IS A REAL PROBLEM >> WE JUST TOOK A LOOK AT A FEW MINUTES AGO, AUSTRALIA'S CONSUMER CONFIDENCE NUMBERS IN SEPTEMBER, CONTINUING TO LANGUISH UNDER THAT LEVEL OF 100 AS IT HAS BEEN OVER THE PAST COUPLE OF YEARS. WEAK CONSUMPTION HAS BEEN WEIGHING ON GROWTH. LAST WEEK'S GDP NUMBERS SHOWING SPENDING SLOWING TO A CRAWL IN THE JUNE QUARTER. PAUL ALLEN TAKES A LOOK AT WHY AUSTRALIANS ARE KEEPING SUCH A TIGHT GRIP ON THEIR WALLETS. PAUL: AUSTRALIA'S CONSUMERS ARE BARELY WORTHY OF THE NAME RIGHT NOW. INTEREST RATES ON MORTGAGES HAVE BEEN RISING AS FIXED TERM RATES ROLLOFF. INFLATION IS RUNNING AT 3.8%. GO OUTSIDE THE TARGET RANGE. ANY SPENDING THAT IS GOING ON IS MOSTLY ON THE BARE ESSENTIALS. >> SALARIES ARE NOT GROWING WITH COST-OF-LIVING. >> WE ARE BASICALLY WORKING JUST TO PAY OFF OUR BILLS AS OPPOSED TO REALLY SPENDING TIME WITH OUR KIDS. >> I'M WORKING ABOUT FOUR JOBS RIGHT NOW. >> A RISE IN SPENDING STOPPED -- WITH GROWTH ACCELERATING BY .2%. >> THE MAIN STORY IN THESE FIGURES IS CONSUMPTION. CONSUMPTION WENT BACKWARDS AND DISCRETIONARY SPENDING FELL SUBSTANTIALLY. PAUL: WEAK GROWTH REDUCES THE LIKELIHOOD OF ANY FURTHER TIGHTENING FOR THE RBA BUT WITH INFLATION STILL NOT BACK TO TARGET, RELIEF IN THE FORM OF A RATE CUT FOR AUSTRALIA MAY STILL BE MONTHS AWAY. PAUL ALLEN, BLOOMBERG SYDNEY. >> OUR NEXT GUEST IS ONE OF AUSTRALIA'S LARGEST LISTED COMPANIES AND ONE OF ITS LARGEST PRIVATE EMPLOYERS ADDED LARGEST NONFOOD RETAIL GROUP. BRANDS INCLUDE THE LIKES OF -- AND KMART. JOINING US NOW IS THE MANAGING DIRECTOR AND CEO, ROB SCOTT. REALLY GREAT TO HAVE YOU WITH US. IN TERMS OF THESE COST-OF-LIVING AND INTEREST RATE WOES THAT ARE CONFOUNDING LOTS OF HOUSEHOLDS, I WANTED TO START BY ASKING YOU WHAT IS YOUR GAUGE OF THE AUSTRALIAN CONSUMER AT THE MOMENT? HOW DO YOU FEEL IN TERMS OF YOUR BUSINESS, HOW THAT SENTIMENT IS BEING EXPRESSED? >> IT IS CERTAINLY A DEGREE OF CAUTION WITHIN AUSTRALIAN HOUSEHOLDS AND HOW THEY ARE SPENDING MONEY. WE ARE SEEING A FOCUS ON VALUE PARTICULARLY FROM YOUNGER FAMILIES THAT HAVE MORTGAGES AND ARE FACING A LOT OF CHALLENGES WITH HIGHER COST-OF-LIVING SO WHAT WE ARE DOING IN OUR BUSINESSES, OFFICE WORK, THAT ARE RENOWNED FOR EVERYDAY LOW PRICES. WE ARE REALLY TRYING TO DOUBLE DOWN NOW TO KEEP PRICES REALLY LOW. THAT HAS SERVED US QUITE WELL IN TERMS OF MAINTAINING SOME SALES MOMENTUM DURING DIFFICULT TRADING ENVIRONMENT. >> JUST MENTIONED THE SORT OF FIGHT TO KEEP PRICES LOW. HOW IS THAT FRONT WHEN IT COMES TO YOUR COST AND WHETHER YOU ARE ABLE TO CONTINUE TO PROVIDE THOSE LOW PRICES PARTICULARLY IN AN ENVIRONMENT WHERE WE ARE SEEING ON MY BUSINESSES TAKING SUCH A BIG CHUNK OF CONSUMER ATTENTION AND SPENDING? >> WELL, ONE OF THE CHALLENGES THAT ALL AUSTRALIAN BUSINESSES ARE FACING AT THE MOMENT IS COST OF DOING BUSINESS SO WE ARE SEEING QUITE SIGNIFICANT INCREASES IN WAGE COSTS, POWER COSTS, DOMESTIC TRANSPORT, UTILITIES, AND A COMBINATION. RENTS ARE ALSO GROWING UP SO ALL OF THESE FACTORS ARE PUSHING UP THE COST OF DOING BUSINESS WHICH IS PUTTING MORE PRESSURE ON DOMESTIC COSTS SO WHAT WE ARE DOING IN OUR BUSINESS IS WE HAVE INVESTED HEAVILY IN A LOT OF TECHNOLOGY TO TRY AND DRIVE EFFICIENCY WITHIN OUR BUSINESSES SO FOR EXAMPLE, IF YOU LOOK AT OUR -- WE ARE USING TECHNOLOGY TO BETTER MANAGE OUR STOCK, IMPROVING THE AVAILABILITY, MAKING IT EASIER FOR OUR TEAM TO MANAGE INVENTORIES. THEY ARE ONE OF MANY EXAMPLES OF WAYS IN WHICH WE ARE TRYING TO DRIVE EFFICIENCY, DRIVE PRODUCTIVITY IN ORDER TO KEEP OUR COSTS DOWN SO WE CAN KEEP OUR PRICES DOWN. SHERY: YOU TALK ABOUT KMART BUT YOU ALREADY HAD A VERY STRONG GROWTH YEAR FOR FISCAL 2024. CAN YOU CONTINUE THAT LEVEL OF GROWTH AND WHAT BRANDS WILL DRIVE THAT? >> WE ARE REALLY DETERMINED TO KEEP OUR PRICES LOW AT A TIME WHEN HOUSEHOLDS ARE REALLY LOOKING FOR VALUE. KMART IS WELL-REGARDED FOR HAVING NOT ONLY EVERYDAY LOW PRICES BUT ALSO HAVING SOME REALLY INNOVATIVE PRODUCTS THAT ARE NOW PROVIDING ACCESSIBILITY TO SOME PRODUCTS THAT SIMPLY WERE NOT AVAILABLE OUTSIDE OF SPECIALIST STORES THAT HAD MUCH HIGHER PRICE POINTS SUCH AS HEALTH, BEAUTY, COSMETICS, YOUTH FASHION, A LOT OF ACCESSORIES FOR THE HOME. ALL OF THESE THINGS ARE REALLY RESONATING WITH CUSTOMERS SO I THINK THAT COMBINATION OF KEEPING OUR PRICES LOW BUT ALSO LEVERAGING SOME OF OUR UNIQUE DESIGN CAPABILITIES TO BRING NEW PRODUCTS TO MARGATE, THAT IS WHAT WE ARE REALLY FOCUSING ON IN THE CURRENT ENVIRONMENT. SHERY: TO HEIDI'S EARLIER POINT, HOW DO YOU SEE COMPETITION WITH CHINESE SITES LIKE SHEEN, TEEMU, AMAZON? ROB: IS A GOOD POINT THAT YOU MAKE. WE HAVE A VERY COMPETITIVE RETAIL ENVIRONMENT IN AUSTRALIA AND SOMETIMES, I THINK PEOPLE JUST FOCUS ON THE AUSTRALIAN COMPETITORS BUT WE ARE UP AGAINST SOME OF THE LARGEST, MOST FORMIDABLE RETAIL COMPETITORS IN THE WORLD AND YOU MENTIONED SOME OF THE NORWICH CHINESE E-COMMERCE PROVIDERS. YOU MENTIONED AMAZON AND WE ARE HAVING TO FIGHT REALLY HARD TO ENSURE THAT OUR PRODUCTS AND OUR VALUE, VERY COMPETITIVE. WE HAVE INVESTED SIGNIFICANTLY IN OUR E-COMMERCE CAPABILITIES. WE ARE OFFERING FREE ONLINE DELIVERY ACROSS AUSTRALIA THROUGH OUR SUBSCRIPTION PROGRAM . WE HAVE SEEN REALLY STRONG GROWTH IN E-COMMERCE. 20% GROWTH. WE ARE GETTING SOME GOOD TRACTION THERE BUT WE ARE FIGHTING A FIGHT AGAINST THOSE BIG INTERNATIONAL COMPANIES THAT YOU MENTIONED. >> WE JUST SAW IN THE LATEST CONSUMER CONFIDENCE NUMBER IS AN INDICATION THAT HOUSEHOLDS PERHAPS HAVE MOVED ON A LITTLE BIT FROM COST-OF-LIVING PRESSURES WHICH MAY HAVE ALLEVIATED SLIGHTLY AND INTEREST RATES TO KIND OF MORE OF A LONGER-TERM CONCERN OVER THE DIRECTION OF THE ECONOMY. AND EMPLOYMENT AS WELL. ARE YOU SEEING THAT THROUGH, YOU KNOW, THE BUSINESS? DO YOU FEEL LIKE THERE HAS BEEN POLICY MISSTEPS? DO YOU THINK THE RBA SHOULD HAVE STARTED EASING BY NOW? WOULD THAT TAKE THE PRESSURE OFF THE CONSUMER? ROB: LOOK, I THINK FROM AN RBA POINT OF VIEW, I THINK THE RBA IS MY FULL OF THE FACT THAT INFLATION IS STILL RUNNING QUITE HIGH. I THINK THEY ARE ADOPTING A VERY RESPONSIBLE IMPROVED APPROACH TO TRYING TO GET INFLATION UNDER CONTROL BEFORE WE SEE DECREASES IN INTEREST RATES. THERE ARE MANY THINGS THAT CAN BE DONE ON THE POLICY SIDE CERTAINLY AROUND THE SUPPLY-SIDE ISSUES TO HELP IMPROVE HOUSING AFFORDABILITY. WE MADE OVER ONE MILLION NEW HOMES IN AUSTRALIA AND THERE ARE MANY SUPPLY-SIDE CHALLENGES THAT ARE PREVENTING PEOPLE FROM INVESTING IN NEW HOMES TO UNDERTAKE RENOVATIONS. THAT GOES TO AVAILABILITY OF SKILLED LABOR, SOME OF THE CHALLENGES WITH PLANNING APPROVALS. THESE ARE ALL ISSUES THAT I THINK COULD BE ENHANCED AND IMPROVED WITH GOOD POLICY. AND THAT ULTIMATELY WILL IMPROVE THE INFLATIONARY PRESSURES, IMPROVE THE HOUSING AFFORDABILITY AND IMPROVE THE ECONOMY OVER TIME. HAIDI: YOU MENTIONED THE BUILDING SECTOR WEAKNESS. HAS THAT PLAYED THROUGH TO SOME OF THE BUSINESS? HOW ARE YOU SEEING THAT SPLIT BETWEEN RETAIL AND COMMERCIAL? ARE YOU SEEING DIVERSIFICATION EFFORTS IN SOME OF THESE OTHER GROUPS PERHAPS HELPING ALLEVIATE THAT? ROB: WE BENEFITED BECAUSE WE HAVE A VERY DIVERSE SET OF PRODUCTS AND CUSTOMERS AND AT THE MOMENT, OUR DIY CONSUMER SPENDING IS HOLDING UP REASONABLY WELL BUT WE BROUGHT A LOT OF VALUE TO OUR OFFER AND WE HAVE ALSO EXPANDED OUR PRODUCT RANGE TO NEW AREAS. WE ARE SEEING SOFTNESS IN RESIDENTIAL CONSTRUCTION. THAT ONLY ACCOUNTS FOR ABOUT 10% OF OUR OVERALL BUSINESS. I MUST ADMIT, IT IS QUITE FRUSTRATING BECAUSE WE ARE SEEING VERY STRONG DEMAND ON THE RENOVATION SIDE AND THE HOUSING SIDE BUT WE ARE FACING THE SKILL SHORTAGES THAT I MENTIONED WITH TRADES AND A LOT OF BUILDERS ARE LACKING THE CONFIDENCE TO LOCK IN FIXED-PRICE CONTRACTS AND IN AN INFLATIONARY ENVIRONMENT, HOUSEHOLDS AND INVESTORS WANT TO GET THE CONFIDENCE OF LOCKING IN A PRICE IF THEY ARE GOING TO DO A RENOVATION OR BUILD A NEW HOME. THESE ARE SOME OF THE CHALLENGES WE ARE FACING WITH RESIDENTIAL CONSTRUCTION WHICH ALSO PUT UPWARD PRESSURE ON RENTS AND HOUSING PRICES. >> ONE OF AUSTRALIA'S LARGEST EMPLOYERS AND PRIVATE EMPLOYERS, WHAT IS YOUR GAUGE OF THE LABOR MARKET AT THE MOMENT BOTH FROM THE COST AND WAGES PERSPECTIVE BUT ALSO JUST THE AVAILABILITY OF STAFFING GIVEN THEIR SOME PRESSURE THAT PERHAPS, YOU KNOW, IMMIGRATION AND INTERNATIONAL STUDENTS MIGHT HAVE TO BE PULLED BACK? ROB: I WOULD SAY ON A MACRO LEVEL, UNEMPLOYMENT IS STILL FAIRLY LOW IN AUSTRALIA AND THAT IS A REAL POSITIVE FOR THE ECONOMY AND IT IS A POSITIVE IF PEOPLE WANT WORK. THEY BASICALLY HAVE WORK AT THE MOMENT. THEY ARE SEEING SKILL SHORTAGES IN SOME KEY AREAS. TO GIVE YOU AN EXAMPLE, AS WE ARE DEVELOPING OUR STATE-OF-THE-ART LITHIUM REFINERY IN WESTERN AUSTRALIA, WE HAVE HAD TO FLY LABOR IN FROM THE EAST COAST OF AUSTRALIA JUST TO MEET SOME VERY -- FAIRLY BASIC RULES AROUND ELECTRICAL CONTRACTORS SO THAT GOES TO SHOW THAT THERE'S STILL SOME PRETTY SIGNIFICANT LABOR SHORTAGES IN KEY AREAS THAT ARE CRITICAL TO AUSTRALIA'S FUTURE AND THE FUTURE OF INVESTMENT HERE. I THINK WE NEED TO BE MINDFUL THAT MANY OF OUR INDUSTRIES IN AUSTRALIA, INTERNATIONALLY COMPETITIVE. WE HAVE SEEN SOME SOFTNESS IN GLOBAL COMMODITY PRICES. WE HAVE SEEN SOME PROJECTS START TO SLOW DOWN IN THE AREAS OF LITHIUM AND OTHER VALUE-ADDED PRODUCTION CERTAINLY HERE IN WESTERN AUSTRALIA SO I THINK WE NEED TO BE MINDFUL ALL THAT WE, YOU KNOW, THAT WE ARE WELL-POSITIONED TO ATTRACT THE INVESTMENT THAT WE HAVE THE SKILLS THAT ARE NECESSARY TO DRIVE THIS VALUE ADDED INVESTMENT OR THINGS COULD TURN IF WE ARE NOT CAREFUL. >> AS A CEO MANAGING SUCH A SIGNIFICANT WORKFORCE, WHAT ARE YOUR THOUGHTS ON THE NEW RIGHT TO DISCONNECT LAWS? ROB: WELL, I THINK IT IS A FAIRLY SMALL CHANGE IN THE SCHEME OF THINGS. AS WE HAVE INSTEAD ALONG THE WAY, OUR BUSINESSES HAVE VERY RESPECTFUL RELATIONSHIPS WITH OUR TEAMS. OUR TEAMS WANT OUR BUSINESSES TO BE REALLY SUCCESSFUL SO WE ALREADY HAVE A VERY RESPECTFUL ARRANGEMENT IF WE NEED TO CONTACT A TEAM MEMBER OUTSIDE OF OFFICE HOURS. SO THE REGULATION THAT WE ARE NOW FACED WITH, I SEE IT AS LARGELY UNNECESSARY AND IT PROBABLY JUST GOES TO THE FACT THAT WE NOW HAVE HUNDREDS AND HUNDREDS OF NEW PAGES OF WORKPLACE RELATIONS AND REGULATIONS, MANY OF WHICH DO NOT REALLY DO MUCH ABOUT IMPROVING WAGES OR CONDITIONS FOR TEAM MEMBERS WHAT A ADAPTATIONAL COST OF COMPLIANCE FOR BUSINESSES THAT THEY MUST ADDRESS. IT IS A SHAME THAT I WOULD MUCH RATHER SEE SOME OF THE FOCUS AROUND INDUSTRIAL RELATIONS FOCUS ON AREAS THAT CAN DRIVE A REAL WIN-WIN ARRANGEMENT BETWEEN BUSINESSES AND TEAM MEMBERS. I WOULD LOVE TO PAY OUR TEAM MEMBERS MORE AND WE HAVE A GREAT TRACK RECORD OF THEM PAYING OUR TEAMS MORE AS OUR BUSINESSES ARE MORE SUCCESSFUL SO THAT IS WHAT WE ARE FOCUSING ON WITHIN OUR BUSINESSES. IT WOULD BE GOOD TO SEE SOME OF THE REGULATION BE MORE CONSTRUCTIVE AROUND DRIVING THAT WIN-WIN OUTCOME. >> TAKE A LOOK AT HOW WE ARE TRADING ACROSS ASIA RIGHT NOW. WE ARE SEEING THE NIKKEI GAINING .2 PERCENT, BEING LED HIGHER BY FINANCIALS AND CONSUMER STAPLES ALTHOUGH HEALTH CARE AND UTILITIES ARE PULLING THE MARKET DOWN. WE ARE OF COURSE WATCHING THE JAPANESE YEN HOLDING AT THE 143 LEVEL AND WE ARE WATCHING THE KOSPI TURN POSITIVE FROM LOSSES EARLIER IN THE SESSION. WE ARE FOLLOWING THE AUSSIE YEN