Rafah Concerns: US Pauses Israel Arms Shipment | Bloomberg's The Pulse 05/08/24

Rafah Concerns: US Pauses Israel Arms Shipment | Bloomberg’s The Pulse 05/08/24

News makers and market movers. This is the pulse with friends in line. Well, good morning, everyone, and welcome to the Pulse and Francine Lacqua here in London with the conversations that matter. And here’s what’s coming up on today’s program. The U.S. pauses a shipment of bombs to Israel over concerns about damage to urban areas as Israel enters into Rafa, Siemens Energy and Green giant AB InBev surge after strong results as global stocks continue to stage a comeback. Plus, the US revokes licenses, allowing Huawei to buy chips from Qualcomm and Intel as Washington tightens curbs against a Chinese bookmaker. So first thing is first, let’s take a look at the European markets map. It has been a pretty strong week actually, so far in terms of earnings. And it’s very clear that equities are enjoying that. So they’re all ticking higher. We had some strong company reports. Also a trader’s, of course, seeking some of the evidence of earnings recovery before taking this month’s rally further. The dollar’s gaining and of course, it’s also been supporting a lot of these equities is what we’ve seen really the prospects of Fed rate cuts. And again, the pace of advance seems to be easing and that’s in general, pretty equity supportive. Now, we’ll continue watching markets very closely, but really our main story is what’s happening on the ground in the Middle East. The US paused a shipment of bombs to Israel last week over concerns about plans for a full scale assault on Rafah. Meanwhile, Israeli forces are edging closer to the city in southern Gaza, with truce talks stalling. Now Washington says Israel and Hamas should be able to resolve their differences over a proposed ceasefire. We’re now joined by Wilson Matheson, Bloomberg’s EMEA news director. So, Ross, what’s the latest that we know of? What we know that the US has paused the shipment and these are bigger bombs, heavy bombs that could do damage potentially in highly densely populated areas in the US. Concern there very much is those bombs could be end up being used in Gaza, particularly in Rafah. So it’s a pretty symbolic move from the US. It’s not unprecedented, but they’re certainly sending a further signal of their concern about what an Rafah offensive might look like and the potential risk to civilians in the area. They are saying they’re going to proceed with the rest of their aid shipments, their military aid that recently agreed significantly large package that includes stuff that will help Israel with its own defense. So, for example, supporting the Iron Dome missile shield and so on. So they’re not pulling away from military support for Israel as a whole, but they’re sending a message to Israel with this particular pause in sending them these heavier bombs. And that really is that level of concern that we’re seeing Israel edge forward and move forward bit by bit towards that fully fledged Rafa offensive. We’ve seen them move in to take control of the Rafah crossing into Egypt. We’ve seen, you know, airstrikes going on in the eastern part of Rafah. We’re seeing further activity on that front this morning. So we are getting bit by bit towards that full offensive. Perhaps it will be a slow walk towards that, but it’s coming either way. And so the US is really concerned about that and certainly doesn’t want its big bombs being used across. How difficult is it to understand what civilians are doing right now, where they can go to? It’s very difficult to track because of the limited access to the area. It’s very difficult to tell. We do see some satellite imagery which shows that tents are being set up further north from that that area in eastern Rafah. We can see some initial signs of movement of people, but it’s really difficult to tell the size of that, the number of people who might be relocating. And obviously, either way, it’s going to be a very, very slow process. They’re not compelling people to leave. Israel is encouraging people to leave and saying they suggest they move north out of harm’s way. And that’s only from one section of Rafah at the moment. Do you get to the point where they’re going to tell everybody in Rafah City itself to leave and that that’s more like a million people and you can’t move a million people in a hurry. So the suggestion is that we’re not going to get to a fully sort of full fledged Rafah offensive in a matter of days. It could, in fact, be weeks. Roslyn, thank you so much. Ross Matheson there, Bloomberg’s EMEA news director, of course, on the latest on the ground. Now, European stocks have been staging a comeback so far this month. Traders on the lookout for firm evidence of an earnings recovery before taking the rally further. Joining us now is Natalia Lipski, now head of EMEA equity strategy at JPMorgan Private Bank. Also with us is Justine. Lisa, thank you both for joining us and welcome to The Pulse. Delighted to have you here today, especially on such an important day for earnings. It seems a lot of them are actually better than expected. It’s like an earnings recovery that’s filtering through to equities. Yeah, absolutely. Thank you. Very excited to be here coming to this this year. We were actually very positive on the on the equity markets. And the reason for that was the rolling earnings recovery. We think that earnings are bottom here in Europe and they’re recovering in the second half of this year. And same for for the US. We think that earnings are likely to to recover from here. When we look into the beats and in general, what different sectors are doing in the US, we’re actually seeing that 11 sectors. Being beat and the posting better than expected earnings growth. That is definitely posing some optimism in the markets and in Europe, even though some companies don’t really raise guidance, we’re really seeing that market is expected. The growth to accelerate from the second half of this year. And until it is this quality growth, are they is it, you know, cost cuts or is it actually that they’re growing in the right business and this is thanks to a growing economy? Yeah, exactly. If you look into the for example, last year, the story was predominantly driven by tech. Right now we’re seeing the broadening of that performance, especially from the earnings perspective, which is crucial to the market, because this is exactly what the markets wanted to see. The markets wanted to see that earnings in different sectors, not just techs, are delivering. And we believe that we’re going from the rolling earnings recession concept to the rolling earnings recovery. So if you look into Covid times, COVID created a bit of instability and a bit of deceleration in many sectors at a different time. So you really did not see it at the index level, but now you see that a lot of sectors are done with a normalization post-COVID and now re accelerating from here. And Justin, also, what’s supporting this is of course, I know expectations for the Fed are all over the place, but now we’re maybe expecting more cuts than even two weeks ago. And then we also in Europe had had already two cuts and are expecting more maybe from the ECB in June. Right, exactly. I think in Europe, people are already looking ahead that maybe the economy will get a bit of support from the rate cuts in the U.S. It’s sort of an interesting picture because if you look at the jobs data, but also some of the other prints, it would seem like there might even be some stagflation or a worry, shall we say. And I think that kind of really is confusing people at the moment. And I think that’s because a lot of the underlying drivers of inflation right now are not entirely just about, you know, demand. You know, for instance, like Neel Kashkari kind of highlighted the lack of progress on housing costs in particular, and some of that is about supply. And so that kind of raises the question of what should monetary policy do about that? And just, you know, here’s Neel Kashkari, who we spoke to yesterday. I think the most likely scenario is where we are right now, which is just we stay put for an extended period of time until we get clarity on Is disinflation in fact continuing or has it, in fact, stalled out? I don’t think we know the answer to that. I would say the most likely scenario is we sit here for an extended period of time, just, you know, what is sitting here for an extended period of time look like for the markets. Yeah, I think head of what he is highlighting here is that it could be that the neutral rate of interest, you know, where kind of the economy is neither expanding nor shrinking. I mean, it could actually be higher than what markets are expecting. But I think, you know, for a long time, markets have really enjoyed this Goldilocks scenario where actually growth is kind of pretty strong, which is keeping solid earnings. But at the same time, you know, maybe the Fed is at least not hiking yet. And I think that could still be a pretty good balance kind of for the markets as well. And Italia, it does seem that US tech companies have gotten so much attention that there’s a risk, I guess, that they’re sucking a lot of the oxygen out there. How do you play some of the opportunities in Europe? Yeah, absolutely. If you look into tech, we actually continue to like tech. There is a lot of things to like in tech, especially driven by artificial intelligence. But then when you look into more cyclical areas in the markets, we actually like companies in Europe, in Japan and US middle stocks. So in Europe, we tend to focus on the largest European companies. So think about we call them European national champions. So companies in luxury space, companies in industrials as well as tech, because they benefit from this huge CapEx that is happening in the artificial intelligence space right now. So interesting and we’ll get back actually to some of your thoughts also on Japan right now. Bloomberg’s Justin Alle, thank you so much for joining us and staying with us and Talia Lipkin, head of EMEA equity strategy at Jp morgan Private Bank. Now a couple of things we need to update you on. For example, Reddit shares jumping after improved or after improvements to the social media platforms advertising system helped push quarterly sales higher than expected in its first results as a public company. So you can see Reddit pre-market gaining some 13.7%. We’ll have plenty more up next. This is Bloomberg. Welcome back, everyone. Now we’re just getting some official data from Apple China. iPhone shipments have climbed 12% in March. Interesting that pre-market Apple is actually getting some 4/10 of a percent. There had been, of course, concern about some of that markets as also some of the customers are consumers actually in China were trading down or actually getting more local products now. Still with us to talk about the markets, Natalia, the bikini head of EMEA equity strategy at JPMorgan private bank. Natalia, thank you so much for sticking around. And we’re talking a little bit about some of the earnings season that that in many cases was better than expected. What are companies actually doing with that excess cash? Are they reinvesting or giving dividends of back to shareholders? I think what was really the most interesting part of the earnings season last week was the 200 billion CapEx spent by the U.S. tech companies. It’s unprecedented and it’s really big and all of them are in this CapEx race because of A.I.. They all want to be ahead of the game. But the most interesting part is that it’s not just the tech companies that will benefit from it. It’s not just semiconductors that will actually fit through the whole system, especially industrial companies that are exposed to A.I., that are also talking about how this CapEx is already positively impacting their earnings. So we think this is a very, very big theme, not just for this year, for years to come. And infrastructure is nowhere near peaking at this point. And so that also translates in Europe. Absolutely. There are loads of loads of companies that are actually benefiting from that beyond just big tech companies. We’re talking about industrial companies, we’re talking about mining companies. All of them have different exposure to datacenters. And I and Intel that you also mentioned, you know, you’re actually overweight on Japanese equities. I mean, Japan, you know, gives us quite a lot of heartbeats because of values in yen and interventions. And what the BOJ does next is this a longer term play? So if you look into the overall economic stability right now in the markets, U.S. is very strong, unemployment is low, consumer confidence is high. And then if you look at outside the U.S., economic growth is actually picking up. So that itself is very positive for the cyclical parts of the market. That’s our preference for Europe, preference for Japan and to us midcaps. Japan’s story is also quite interesting from the shareholders perspective because they increase in their buybacks similar to Europe, which I think is still very under-appreciated by the markets. And also Japan is really the region that didn’t have inflation for a long time. So seen a bit of inflation in that region. It’s very positive and something that’s investors are looking for. Yeah. Which is maybe a bit of yen weakness is is not the sort of data. Thank you so much for joining us Natalia today Natalia Lipski another from J.P. Morgan private bank going through some of their top plays, including Japan, but also U.S.. Coming up, our exclusive interview with the chief executive of the Spanish car brands Santa and Cupra. That’s next. And this is Bloomberg. Now, Simmons Energy raised its outlook for the year and said it would cut jobs and output at its troubled wind turbine business. Also looking at AB InBev, the world’s largest, Brewer said revenue in North America fall 9.1% in the first quarter and that’s less than expected. And then BMW down 3%. Earnings actually fell in the first quarter after rising manufacturing costs weighed on the luxury carmaker’s profitability. So automakers are dialing back their ambitions after a few years of surging growth, with orders slowing due to disappearing subsidies, a lack of charging infrastructure and high prices. At the same time, Chinese rivals and Tesla are exposing competitive weakness at Europe’s biggest carmakers, an issue which has been front and center during President Bush’s visit to the continent this week. Spanish car brands say ads and cupra are investing heavily in EVs, but the company’s chief executive has warned the local market is too small. Well, we’re delighted to be joined by Griffiths. He is the chief executive of South and Cupra. So thank you so much for joining us here in the studio. I mean, you have a big job and you’re spending about €3 billion to electrify this factory in Montréal. Is that is that tough? You’ve never done this. Like, what’s your biggest challenge at that? Yeah, the 3 billion is in our factory, but the whole investment’s a lot bigger. Our ambition is to electrify Spain. We’re investing, as is the Volkswagen Group in Spain. €10 billion. This is an historic investment in in the in the history of Spain, if you like. And it involves not only electrifying our plant in Montréal, but also Pamplona and building a gigafactory for batteries in Valencia. So it’s it’s a real game changer. I mean, it’s quite difficult because you can’t if you had delayed it, people would probably have said, well, why did you delay it? We need electrification. But it’s also a tough environment out there because of the Chinese EVs and lack of subsidies. Do you do you worry that you were a little bit too quick to push this all integrated battery supply chain? No, I don’t think there’s any point in questioning the objective. We need to get to zero emissions as fast as we can. No. And the European Union has set an objective by 2035 of getting to zero emissions. So I think what we have to do now is try and speed up. We’re doing our homework. We’re doing our part, we’re getting the cars ready. Also cars that are accessible, accessible for the masses in terms of pricing. So cars from €25,000, small urban city cars fully electrified for the Volkswagen Group in Spain and also cars with autonomy and range. So four or 500 kilometers. So I think we need to speed up. There is more competition, particularly from from from the US and China. And I think Europe really needs to start to pull together and speed up. I mean, for the specific plant, I know there was a pushback also from locals. Right. And trying to build it. Are you confident that the plans will go ahead or will it be delayed? No, there’s no there’s no going back for us when we start to build cars from next year, 2025. But with we’re building a battery assembly plant at the moment that will be with the 300 million investment that will be ready in the end of this year. So we start ramping up next year. And like I say, there is no Plan B for us. All we need now is more support from the Spanish government in particular to accelerate the sales of electric vehicles, particularly in our home market. If you look at the cell factory, I mean, again, this is all trade, right? And the fact that some suppliers have maybe been delayed, that the supply chain is a lot more difficult, that maybe was four or five years ago. Do you have the right supply chain in place? Like are all the components, will they be on time? Yeah, all the components will be on time because we have our own battery cell factory in Valencia that will deliver cells to us. We have the ability to assemble the battery ourselves. So I’m quite confident that we will have everything in place from our side, from the manufacturer side. Now we need to have the market there, the demand there and also the charging infrastructure ready. So what will make a difference actually to that demand and that market there? I think we need to give the consumers a reason to buy electric because first of all, they need to know it’s part of the solution for the future and not have doubts around technology. Is the electric car the solution? We need to get rid of those doubts and we need the governments to back that as well, not only the Spanish government. And then we need to give the consumers a reason, a motivation, not just a threat or a penalty. You know that we say you’re not going to be allowed to drive a combustion guy, but to say why you need to drive an electric car and give them incentives, incentivize it, make a smart buy to to buy an electric car. Do you worry about Chinese manufacturers? I mean, they have the full support of the government. There are a lot of them. They can produce cheaper. I don’t worry about them, but I take them seriously. It’s increased competition. And, you know, when you see a face with increased competition, you can react in different ways. You can try and defend your position, maintain your position, go into protectionism. I’ll take the challenge and try and be more competitive yourselves. And I think in Europe, that is the challenge we have to take. And we have it in our hands to be. We have a great automotive industry in Europe. We need to protect that grow, that we could even make it bigger. We have renewable energy and if we’re clever enough to get that. Renewable energy at competitive prices. I think we could be very competitive against the Chinese, but also the US competitors as well. Am I right? The Cooper one is actually made in China and then exported back in Europe. Yeah, the Cooper valve will be built from next year in material together with a Volkswagen model as well. And then another of the models in Pamplona. So we will be building in in Spain electric vehicles for the Volkswagen Group. But it’s tough. I mean, I guess input prices are a much costlier, right, because labor is more expensive and everything is more expensive in Europe than, for example, in China. So how do you see that stabilizing? Yeah, the margins are under pressure, particularly at this early phase of electrification. But as I said, we are going to be making electrification with this new range of cars, the small electric vehicles on this new platform for the Volkswagen Group. We’re going to make it much more accessible, if you like. We’re going to democratize electric mobility. Finally, with cars for some starting from €25,000, which is the price of the most sold car at the moment in the European market. So do you think that changes? I mean, again, you know, we talk about escape velocity at some point that because enough critical, you know, people have electric cars and it’s the only thing that people want. How far away are we from that point. Yeah the tipping point we we said would be 2030 at the moment it is and slowing down. You’re right. And what we now need to do is speed up and not talk about 20, 30 and 2035, but talk about 2024, 2025 set objectives. There are binding objectives for the infrastructure for getting the infrastructure in place. That’s one of the reasons a lot of people have their doubts and and at the same time make sure that the electric car is the best value in the market for the consumer. So, so good to have you here in the studio. Thank you so much for joining us. That was, of course the chief executive sat and COO brought Wayne Griffiths joining us this morning. Now coming up, we discuss the mining sector, including BHP, $39 billion bid for Anglo American. Our interview with the chief executive of the Footsie engineering firm the Weir Group. That’s coming up next. And this is Bloomberg. Well, the US pauses a shipment of bombs to Israel over concerns about damage to urban areas as Israel inches into Rafa. Zevon’s energy and brewing giant AB InBev search after strong results as the global stocks continue to stage a comeback. Plus, the US revokes licences, allowing one way to buy chips from Qualcomm and Intel as Washington tightens curbs against the Chinese phone maker. Well, good morning, everyone, and welcome to the pulse of Francine Lacqua here in London. Now, Minneapolis Fed President Neel Kashkari thinks it’s likely that the US central bank will hold rates until officials are confident that inflation is under control. Speaking with Bloomberg TV at the Milken Institute Global Conference, Kashkari said the Fed will do what’s needed to hit the 2% target. Of the second half of 2023 surprised us at how rapidly inflation fell. That was really good news and the economy remains strong. We all hope that was going to continue the first quarter of this year. It seems like it’s stalled out, so it’s a little too soon to declare that we’re definitely stalled out. Or maybe it’s just taking more time. I think we’re in a good place right now. Labour market is still strong. We can take our time to get more data to see if this inflation is going to continue and if it does, great. If it doesn’t, then we need to take that on board. What is the complexion right now of disinflation? What actually drove us at least down to the level where we’re at right now? Most of the gains that we saw last year were supply side improvements. Supply chains getting better. Americans coming back to work. A lot more workers entering the labor force. That’s really positive. I don’t think monetary policy actually brought demand down that much. And so most of the gains were because of the supply side. Now, the question is, if monetary policy has to take us the rest of the way there. Is it tight enough to do that? I wrote an essay today on our website raising that question, and I’m not sure how tight monetary policy is. We need more data to assess how do we know that the inflationary process has still some ways to go, or how do we know that maybe this is it, This is the new normal? Well, it’s not the new normal because it’s 3% and the Fed can and will achieve 2%. The question is, if disinflation is still underway, then maybe it’ll continue on its own and we can then take that on board if we need to hold rates where they are for an extended period of time to tap the brakes on the economy, or if we even needed to raise, we would do what we need to do to get inflation back down. I have to do that about 2% and I know why the Fed stands by that 2%. I talk to people around the world this week here and their cost of capital. They’re basing that more on closer to a 3% rate. And the idea is they’re saying, look, the 2% target that needs to come up. That’s not the reality long term, structurally, at least not for the folks in this market. Yeah, I disagree with that. I mean, I think that ultimately the central bank, whether it’s the Fed or the ECB or the Bank of England, can determine whatever the inflation rate is. And over time, if they conduct their policy appropriately, people will come to understand that we’ll adjust their behavior. We’re committed to 2%. We will get to 2%, and we will get an interest rate environment necessary in order to achieve 2%. Well, the dollar gained on those hawkish comments by the Fed’s Neel Kashkari, of course, putting a pressure on risk assets, including base metals. Now, copper fell below $10,000 a ton, although the metal has rallied around 16% this year on fears of wider deficits, with supply struggling to keep up with growing demand for the energy transition. Let’s discuss all of this. The outlook for the mining sector, including BHP, $39 billion bid for Anglo America. American four with John Standard. He’s chief executive of the Weir Group, a Footsie 100 engineering company that provides technology to make mining more efficient and sustainable. So, John, thank you so much for joining us. I mean, you’re almost like a proxy of everything that we talk about day in, day out commodities, because basically you supply the, you know, the engineering that enables mining companies to extract what they need from the ground. So first of all, is there an under capacity because of lack of investment over the last ten years? Yeah. Well, good morning, Francene. Thank you for having me. Yes, we have a unique position as a company because we serve more mines around the world than anybody else. So we have literally thousands of people working on all the big mines around the world. So we have a unique view of what is going on across the complex. And it’s becoming very clear that for commodities such as copper, which are absolutely critical to underpin the energy transition, there is a looming supply gap. It’s difficult to see where that supply gap is going to be filled at this point in time. Existing miners are working very hard to upgrade their brownfield sites and produce more, but we need to do that as well as develop new mines from a greenfield point of view to add to the supply and meet the demand that’s coming. So was it a gross miscalculation? Actually, that was that we were not mining enough. I mean, I remember like two or three years ago, Jeff Currie from Goldman Sachs at the time, not Carlyle, came and gave his explosive interview saying, We’re running out of everything. Like, how long does it take us to catch up if we’re going to put copper in the things that we need to do, the transition? Yeah, well, there’s not enough metal that’s in, I call it the the elephant in the net zero is that there’s not going to be enough copper to get to where we want to get to unless we see more production come online. I think that needs our mining customers to do more to accelerate their the projects that they have in their pipeline. But I think it also needs governments, particularly in the West, to make a policy response as we’re starting to see a little bit to help them. The challenges are the you know, the cost of capital is now very high and the payback on mining investments is so long. And, you know, at the same time, it’s taking much, much longer for new mines to get the permitting and the licences they need to operate, and quite rightly so. There needs to be lots of engagement with local communities in terms of the environment, environmental impact. But that’s taking much, much longer in terms of facilitating new projects. I mean it’s interesting to look at copper, iron ore is a different story and then goes a different story because also it’s used for jewellery, but it’s also almost a hedge against inflation. So imagine people are like putting the goods if not under the mattress, storing them safely. How do you see the other two basically changing behaviour? Well, I mean, I think, you know, again, the exposure that we have as an organisation is that we’re very diversified across all of the commodities. Copper we think is in a really strong place for the reasons that we’ve just discussed. I think gold as a store of value has bounced back incredibly strongly. So we’re seeing our gold mining customers seeking to invest and accelerate that, accelerate their production, which is positive. You know, there are more nuanced and neutral views maybe on iron ore, but here we think the theme is going to be as we sort of clean up the steel industry and drive for a green steel, then that is going to need higher and higher grades of iron ore. So we see investment and that means more processing, more engineering, more technology to be deployed to deliver on that. So the only things that have been a little bit choppy recently from our point of view have been nickel and lithium. But from our perspective, that was never going to be a straight line in terms of the growth. And I think we’re just going through a correction at the moment. But the long term secular trend is very positive. I mean, taking Russia out of the equation, who’s a huge steel producer, how has that changed actually the steel complex? Well, I think it’s you know, it’s not changed very much yet, but there is a lot of investment in hydrogen steel, other forms of green steel moving from traditional blast furnaces to electric arc and other technologies. So I think that’s starting to happen. It needs to happen. Steel is a very, very big emitter of CO2, but it’s going to require new technology and it’s going to require higher grades of iron ore, both of which are positive for us. And one of the other things that we discussed quite a lot on the program is, of course, tariffs, but also the fact that there’s been a lot of on shoring of business back to the US. And I don’t know whether we can talk about globalization. Certainly the supply chains seem to be getting much harder. Do you see that in your industry? Well, we’ve been very fortunate insofar as we’ve always had a regional vertically integrated supply chain because we need to have manufacturing that’s close to our customers. They want to know that they’ve got security of supply. And also we did that. Because we want to keep our intellectual property in-house within our manufacturing footprint. So in a way, the world has come back to our model as it’s globalized. So I think we’re in a good place and we continue to refine our manufacturing footprint. But that’s where we are today. I think the globalization trend more broadly is quite interesting because if you think about the supply of metals for the future in a globalized sort of perfect world where supply and demand were broadly met in a somewhat perfect market, that’s going to change. You know, we’re going to see more resource nationalisation, nationalism, increasingly countries wanting to know that they’ve got security of supply. A net net, I think that probably means that more capacity is built than in a globalized world rather than less. So again, we feel positive about that. If you know BHP Anglo goes through and it’s a big if and we may have other actors actually wanting to swoop in and buy this asset, how does it change the mining complex? Well, well, not for me. And I started you comment on the specifics, but I think M&A is a that is sort of being mooted at the moment is a positive single signal, if you like. It sort of validates the thesis that copper and these other battery metals are going to be important and it looks like the larger miners want to increase their exposure to that. So I think it’s a positive. On the ground, it doesn’t really change anything. You know, it’s all about the underlying assets and they need to produce more. They need to become more efficient, more sustainable. And that’s where our our technology is deployed more broadly. You know, the M&A will may change the ownership of the assets, but we need more assets. And it really doesn’t do much to solve that problem. How much do you spend on, you know, R&D to make sure that actually, you know, some of your equipment is as green as can be? Well, since we’re has been through a transformation over the last few years. So we were quite a diversified sort of cyclical conglomerate. And now we’re entirely focused on the mining industry. And we did that so we could concentrate R&D and investment on the new technologies that are going to be needed. You know, very simply put, the mining industry needs to scale up and clean up, and we’re going to help them do that through the technologies that we could bring to improve productivity, efficiency, but also meet the increasingly challenging sustainability targets and requirements that our mining customers have. John, thank you so much for joining us. That was John Stanton, the chief executive of We Are Group. Now coming up, Beijing’s relationship with Belgrade blossoms. As tensions with Brussels soar. We get the latest on Xi Jinping’s warm welcome in Eastern Europe. This is Bloomberg. What China’s president, Xi Jinping, has praised his country’s ties with Eastern Europe as a boon for the world’s second biggest economy. As he arrived in Serbia to bolster links with the Balkan nation. Now for more, we’re joined from Warsaw by Bloomberg’s Peter called enough ski. Pedro, thank you for joining us. So why did she actually choose Serbia as part of his visit to Europe? Obviously, Serbia is the place where that has been very favorable to China. China is its biggest source of FDI. And obviously we’ve just been hearing from from President Xi and the president of Serbia, Mr. Fujita, who said that the sky’s the limit for for relations between Serbian China and obviously Serbia has been trying to attract Chinese investment. But there’s there’s there’s those deep historical ties that go back to this 25th anniversary of the bombing of the Belgrade of the Belgrade embassy of Chinese embassies in Belgrade. That sort of tied both countries. And they’ve been working very closely together. And obviously, he cannot he doesn’t expect to get the sort of unpleasant questions about his support for Russia to war in Ukraine or the question about flooding markets with with cheap goods or so. That’s sort of as part of his trip. That part is is is definitely he’s coming to the friendly shores. So, Pyotr, what is he actually then expecting to achieve, apart from avoiding maybe some of the more thorny issues? Well, obviously, business ties have been very close between the two countries. They’re going the two leaders are going to sign about 20 crime abuse. Those include various business ties, but also cultural. Already, when we talk about about the size of of investments, it’s 50 billion for both Serbia and Hungary. Between China, the other come from China. And finally, there’s also a lot of investments that already are bearing fruit, like, for example, in the copper industry where Chinese have actually transformed copper miner in Serbia into into a major, major company. And China is also building a huge modern high speed rail between Budapest and and Belgrade, which which also kind of shows the impact and the footprint of of of Chinese part of the world. So interesting. Petra, thank you so much. I know you’ll keep us updated with everything that’s going on with the Chinese president. Of course, on the ground. Scott Demovsky Bloomberg has also learned that the US has revoked licenses, allowing Huawei to buy semiconductors from Qualcomm and Intel. Now the move affects U.S. sales of chips for use in Huawei phones and laptops, marking a further tightening of export restrictions against the Chinese telecom equipment maker. Meanwhile, Tik Tok has sued the US government over a new law that will force its Chinese parent Bytedance to divest the popular video app or face a ban across the country. Now the legal challenge sets up what could be a prolonged court battle pitting free speech rights against national security interests. Well, let’s bring in Bloomberg’s Mark Burg. And, Mark, I mean, this is fascinating. I also think Tik Tok actually I think was one of the sponsor at the Met gala. So the timing of this is quite interesting. But what does Tick Tock actually are arguing in this lawsuit? Yeah, this is the latest twist and turn. And and they’ve been sort of signaling that they’re willing to go to the mat on a legal fight. They’re arguing that the ban and divestiture is unconstitutional, that it prevents free speech, and that I think they’re making a second argument, kind of less legal one, but maybe more of a political one that, you know, they are there are 170 million users in the US. There’s also this big kind of creator economy that Tik Tok is part of. And they’re saying that this not just risks the many users that are using TikTok and a lot of the young users who are out voting, but but also the people who are making a living off of the app. So so what happens to Bytedance if actually tick tock gets shut down in the U.S.? Are there really a question when we’re kind of looking at very closely? I mean, Bytedance has this is not say that the primary property that they have. Doyin, which is their sort of tick tock version in China I think is just as big and vibrant and they obviously have this is sort of a small fraction of the U.S. on the user base, but certainly on the economic and business front, like the US, like with all social media is a dominant market. They’re shopping adventure, which they’re they’re pushing and competing against Facebook and its properties that’s been having the most traction in the US and that would be a clear hit. So I think this is something that obviously they’re they’re wanting to fight as much as possible because it’s almost existential for them. So who would gain from this? I mean, if Tick Tock had to go away in the US? What would like? Who would benefit? Yeah, the most immediate benefit here is matter. If you look at Instagram reels, it’s kind of been called the carbon copy of of Tik Tok. YouTube has its shorts, which is a Tik Tok competitor. I mean, that’s that’s a very similar product. In some ways. All these platforms are competing for the time of the day, right? There’s only a certain number of of hours of entertainment information. And so I think Meta and YouTube, Google are probably the biggest beneficiaries of this. By the same token, like this is not that these companies, especially Google, have been in a position where they’re saying we’re not in a monopoly on antitrust argument. And Tik Tok has been amazing politically for them to point to this thing that came up in the past seven, seven years that’s now directly competing with that. So it’s a very it’s a very useful political tool in many ways that Google probably doesn’t want to go away. Yeah. So interesting. I know we’ll talk about this so much more. Thank you so much for joining us. That is Mark Bergen, of course, following this very closely. Now, former U.S. Treasury Secretary Steven Mnuchin says he’s still open to buying Tiktok’s US operations from Bytedance. While Manoogian believes the app’s algorithm could be replicated in the US. Well, he spoke to Bloomberg at the Milken Institute Global Conference in Beverly Hills. So very interested in buying it. And to the extent they want to sell it or spin it off, we very much want to pursue that. I support that. Congress passed the bill and it’s now been signed into law. I will say this has had just incredible, overwhelming support with the Republicans and Democrats. This may be the only thing that everybody agrees on, the fact that it’s on £160 billion. I do think it’s a security issue. Does the deal that does the deal still work? If the algorithm doesn’t come with tick tock? Well, the Chinese government has been very clear that they won’t give an export license on the algorithm. And I understand that we have sensitive technology that we don’t want to transfer to them, and they don’t want to transfer this to the US. I’ve actually spoken to a lot of tech companies I working about rebuilding this. I do believe the algorithms could be rebuilt. So my plan, if we were to purchase it, would be to rebuild the technology under US leadership, make sure that it’s all disconnected from bytedance going forward and that it is very robust and secure. Well, that’s the former U.S. Treasury Secretary, Steven Mnuchin, speaking to Wall Street Week anchor David Westin coming up. Earnings top estimates at Disney. The shares in the world’s biggest entertainment company, though, slump on its outlook. We’ll bring you the details next. And this is Bloomberg. Now, Disney shares tumbled the most in 18 months after reported a disappointing outlook for growth in streaming subscribers in the current quarter. But the chief financial officer, Hugh Johnston, says price hikes are not impacting streaming negatively. We took prices up a little bit in the in the beginning of this year and didn’t really see much of an impact so as to what the future brings. We’re obviously very judicious with the way that we price. We want to provide access to as many guests as we possibly can, but we do believe that the great experiences we provide, people are willing to pay for. Well, let’s get more from Bloomberg’s Charlie Wells. Charlie, good morning. So Disney reported stronger than expected results or actually strong earnings, but the share price was down. So what’s the disconnect? Yes. So it wasn’t a fairy tale ending to an earnings report that’s actually better than expected. So analysts had been expecting earnings per share of a dollar and $0.12. Disney actually reported a dollar and $0.21. And I think something really notable in their earnings report, which investors didn’t really seem to care about, was the fact that Disney Plus that all important streaming platform for them was profitable for the first time. But it was really these sort of forward looking metrics that investors seem to be disappointed by. They seem to be disappointed by a potential slowdown in streaming growth overall, as well as sort of travel normalization to some of these theme parks, which are really important for Disney’s business. So, Charlie, the chief executive, Bob Iger, also just fended off, you know, this battle with the activist investor, Nelson Peltz. How should we should I be worried about him coming back or someone else coming back? I mean, he should be concerned in the fact that there was a pretty significant share price drop yesterday. Right. 9.5%. That was significant. And one of the points that activists had been making about Disney is that their share price should be performing better. Another issue here with streaming, a lot of these activist parts included wanted streaming to be doing better. And something striking that Iger said yesterday, he said in a statement that he still sees the overall streaming business reaching profitability, not just for Disney Plus, but for the combined streaming units to be profitable by the fourth quarter. But that puts a lot of pressure on this year ahead. And very quickly, Reddit, I think the share price is getting some more than 10%, actually. So, yes, they beat expectations on revenue. They have been investing and trying to make the site more user friendly. They actually brought in more users. It was a it was a growth of 37%. So that’s really positive for this business as they try to diversify away from just ad revenue and try to sell, you know, the fact that you can use them to trade, trade, large, languid language models. And Wall Street responded positively to that. Look at that pre-market. It’s actually getting 14%. There you go, ladies. Up to date. Second is, of course, live pricing. Bloomberg’s Charlie Wells. There was two stocks that we’re watching, a Bloomberg brief. It’s up next. And this is Bloomberg.

The US paused a shipment of bombs to Israel over concerns about a potential military offensive on the Gazan city of Rafah, which President Biden opposes, according to a senior official. In other geopolitical news, China-based ByteDance makes clear it won’t comply with a new US law requiring it to sell TikTok, while the US revokes licenses allowing Huawei to buy semiconductors from Qualcomm and Intel, further tightening export restrictions against the Chinese telecom company.

Today’s guests: Nataliia Lipikhina, JPMorgan Chase; Wayne Griffiths, CEO, SEAT; Jon Stanton, CEO, Weir Group

Video Chapters
00:10 Intro
01:48 Israel edges into Rafah as truce talks stall
04:40 Nataliia Lipikhina, JPMorgan Chase
07:50 ECB, Fed divergence in focus
14:45 Exclusive: Wayne Griffiths, SEAT CEO
21:45 Fed’s Kashkari on rate outlook
25:24 Jon Stanton, The Weir Group CEO
32:48 Xi arrives in Serbia to bolster relations with Europe’s East
35:50 TikTok sues US on divestment order
40:24 Disney shares slump on outlook

#Rafah #Israel #Arms #Offensive #Gaza #China #ByteDance #TikTok #Huawei #Intel #Qualcomm #Chips

—
“The Pulse With Francine Lacqua” is all about conversations with high profile guests in the beating heart of global business, economics, finance and politics. Based in London, we go wherever the story is, bringing you exclusive interviews and market-moving scoops.

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View 3 Comments

3 Comments

@darqentries on May 8, 2024 2:01 pm

Didn't the Democrats impeach Trump for pausing weapon shipments to Ukraine?
@AC-re9ee on May 8, 2024 2:09 pm

It's time for the traitor Biden to go.
@RobertLewandowski-vi6mq on May 8, 2024 2:35 pm

I need to say yes and I say no!

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