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tv   Bloomberg Markets Asia  Bloomberg  July 18, 2022 10:00pm-11:00pm EDT

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kong, almost 10:00, also beijing. welcome to "bloomberg markets: asia." >> highlighting worries about economic downturn. of full point fed hike. try considering allowing homeowners to pause homeowners -- mortgage payments. shanghai wagons -- widens testing to around 20 million residents. david: a lot of lines coming through as part -- as far as different parts of the mainland are concerned. the mortgage story taking place, encouraging news there. then we are getting what you are sitting on your screens, a fullback of yesterday's pause and equity markets.
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we are still seeing the remnants of commodity rally in some parts of this. it is also rolling over somewhat. dollar psychic collar -- dollars, second column, stronger. yvonne: that lasted two days. the apple group, about slowing hiring. that is going to raise all those recession risks, slowdown concerns again. that's why you are seeing some these tech plays down 1.5%, apple supply very much and focus. it comes down from 2% this morning. let's talk about the bloomberg's with apple set to to collect -- slow tiring, as the company tries to cope with economic uncertainty out there. it also just the downturn people are foreseeing. let's bring in su keenan for more.
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there racing for challenging times. how rare is it to hear from a story like this from apple. >> what we're hearing from people close to them as this is conservative thinking. their concerns are similar to apple travel. the latest tech company to be making plans to slow hiring and also appending growth in the coming year. it is all about companies bracing for recession. according to the sources, the company will not add new staff in certain cases. it is not going to affect all teams, but some teams. the decision supposedly stems from a move to be more careful during uncertain times. the changes, i'll give you an example of what it will affect the apple still planning an aggressive product launch in 2023. this will include a mixed reality headset, a new category
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of product for apple since 2015. it is expected that launch related team will not be involved with any cutbacks or slowdown. the news that apple is considering to slow hiring, sense apple shares down some 2% and not it travels down as well, much as you are sitting in asia. david: su keenan on the latest out of apple and takes us into the supply chain story and the kinks we are sitting there. the inflation problem, the very reason why janet yellen, the u.s. treasury secretary is live right now in seoul, and south korea talking about this. >> and modernizing the multilateral trading system, our objective is to achieve free and secure trade that benefits our
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workers, businesses and consumers. we cannot allow countries like china to use their market position in key raw materials, technologies or products to disrupt our economy or exercise unwanted geopolitical leverage. the united states and korea share a common goal of a free and open indo pacific. but achieving it will take resolute action. the biden administration has not and will not shy away from that responsibility. the united states and our allies, like korea, work together to continue to demand strong adherence to norms and values that have underpinned the international economic order. we will impose harsh consequences on those countries that abuse or break the order, as we have demonstrated with our unprecedented response to russia's aggression.
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we will work with allies and partners through the indo pacific economic freemark to lower costs by making our supply chains more resilient in the long term. to conclude, i want to thank you for the opportunity to see important and innovative work you do here at lg science park. i want to thank the workers and researchers here and in the united states for deepening -- yvonne: really signaling out what seems like beijing officials on how the market positions in key raw materials, technologies, this whole concept of french shoring -- friend shoring. she made a stop in tokyo, she is now in seoul to meet with the
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president later today. let's bring in our greater china editor to bring us through the key themes in china. on the back of those yellen comments, the fact the u.s. is signaling -- singling out china, how is beijing going to respond? >> i think it is part and parcel to the last few years, since the trump administration was in power, we had tariffs on hundreds of millions of dollars of chinese goods. the biden administration talking about rolling back some of those tariffs. consumer goods, to help with inflation in the u.s.. in tensions over supply chain, has been present over the last five or six years. it does not look like it is going away anytime soon. david: it is not as if china has key problems to deal with. the economy for example,
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property has been there for years, within the property space, mortgages, artform rates rise up tells about the options authorities are mulling to alleviate part of this. >> the state market is with these mortgage boycotts. we have tens of thousands of people who punch down lots of money for an apartment that has yet to be built. because of the debt problems that developers like evergrande have had, construction has stopped. those homebuyers have stopped paying their mortgages. estimates are were talking the realm of 2 trillion yuan out of 38 trillion mortgages. authorities are considering a brace. that would allow these -- are considering a grace period that would allow these homeowners a
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reprieve. that would help buy some time for the real estate market. authorities have come out and asked banks to continue to loaning to those developers they can continue to construct those apartments. to deliver those homes by some time. yvonne: by some time, seems like my comes to the property prices, one step forward, two steps back. what is the endgame? how are they going to resolve this issue once and for all? >> the situation we are in now started with the government trying to deleverage the property market. which is probably a good thing for the economy in the country. doing that has resulted in some of the biggest names in the industry defaulting, unable to pay their debts. that rippled across the industry subleasing home prices falling 10 straight months as a result. we are seeing some of these
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restrictions being rolled back in terms of limitations on how many apartments, and nurse can buy, limitations on how developers can borrow. i think the authorities are trying to find some way they can both control the dangers of leverage while stabilizing the entire industry and causing a banking crisis. david: easier said than done. our senior executive editor out of beijing. let's stay in china. with your first word news with vonnie quinn. >> china's daily covid cases trending with 700, testing covers 20 million residents. it underscores the difficulty of changing covid zero in the face of more effective strange -- more effective strains.
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the white house says it is limiting chipmaker investment china as they build the united states. the senate begins debating a bill to deliver $52 billion to manufacturing, until -- the three european outliers, it could not fill supply obligations due to unforeseen circumstances. they've already been working on the pipeline for maintenance. the deal -- the field of candidates replace prime minister boris johnson is narrowing. afterwards just two contenders will remain.
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sri lankan legislators are said to submit nominations for president. the voting is due on wednesday, acting president is among the top contenders for the job, along with the main opposition. the presidency has been vacant since he resigned last week and fled. global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. yvonne: still ahead on "bloomberg markets: asia." we are joined by the society of publishers in asia and the economist intelligence unit. david: before that, deutsche bank will be coming on to talk us through the looming recession. why it might be mild if it does
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come in the path to recovery for china. that is all coming up this hour. stay with us. this is bloomberg. ♪
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>> u.s. consumers remain quite resilient. consumers and businesses have been resilient so far. >> consumer spending remains above pre-covid levels. >> i expect there's going to be more volatility and uncertainty. >> lots of uncertainty. >> we see inflation deeply
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entrenched in the economy. >> we might head into some form of recession. >> the u.s. is on the cost of recession. >> it is unlikely to be a deep and dramatic recession. >> we will manage it again. i'm confident we will do well. yvonne: of course of u.s. banking ceos saying, consumer spending remaining strong for now, that risk of recession is going up. david: very contradictory, isn't it. i guess that's the reit -- the reality. everyone is right. let's have a look at the market outlook in more detail. she is the asia-pacific cio at deutsche bank. she joins us out of singapore this morning. thank you for coming on the show. i guess assumption on where the u.s. economy goes will tell you generally what asset allocation
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you should enjoy -- employed this point. what is your assessment of the u.s. economy of the next six months? >> our function is we will have a lot of volatility going on. there's so many moving parts, we're just getting informed from the earnings season to help companies are getting out. we have acknowledged this risk of recession has gone up quite a lot. we are now forecasting a mild recession in the first quarter of next year. yvonne: do you think in terms of what markets are positioning around, is that recession trade, is a fully priced in? you think stocks can continue to fall even if we don't see recession across developed market? >> yes, i think of the one hand, we've come a long way to have growth risk, inflation risk, stagflation risk, and then
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pricing for recession risk. i'm still concerned as to whether the analyst estimates for this earnings seasons are quite optimistic. as we see, companies are using the earnings season to give more information as to how they see the environment coming out, and those estimates are still a little bit too optimistic. there is no room for downside volatility. david: within the equity markets, generally, what looks better? there is a looming energy risk, almost binary error. >> this week will be a telling one for europe. i think it is challenging to have two things the say they the same day as the ecb's decision
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to raise rates to give us more information on the anti-fragmentation, the same day we get more clarity as to whether the nord stream pipeline will go back to full capacity, some capacity or back at all. that is a challenging outlook for europe. i think that is also what is weighing down markets there. to clarify in terms of our expectations, we think for two reasons that russia will continue to deliver gas, one because all the leverage would be going away if you switch off the gas pipeline. there's only one way to go and that is up. at the same time, if you want to switch off, you will have a price increase the if you don't deliver any gas, he will be not benefiting of these -- these are revenues russia will forgo. that is the way we look at europe at the moment. yvonne: is that why you are reducing your exposure to
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commodities now as well? and perhaps a sign inflation is starting to peak? david: >> exactly, commodities on the one hands, these price increases are so much supported by the inflationary picture. as repressive recession, you feel at the commodities complex is coming under pressure. what i think is more interesting in terms of allocating your money now is the asian equities or the asian markets, going on about being cautiously optimistic, looking into the second half of the year in regards to china and asia on the back of the china reopening story. we maintain that view. david: nothing you've heard in recent weeks, whether that is the weak economy or what is brewing in the mortgage part of the market, nothing you've heard
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so far it derails dispute that you think china will outperform? >> we have always been inclined to be cautious on the property side, last year's experience taught us there will be much more news, there's also a confrontation that needs to bond in the market. the positive part about it is that the mortgages are prepaid because the consumer doesn't have the money. they are prepaid because their projects that are stalling, and need to get completed. that is something the government has shown resolve with the mortgage holiday, they will be going back to inject liquidity and other ways to help these developments go forward. in that respect, it is interesting to see how the
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market is refocused on these. i think it is not just the mortgage or property markets, also probate that has gotten back of a lot of attention. which tells us it will be challenging for the regional markets to overcome the bad risk sentiment we have in the global headwinds that are keeping the market in this rift of sentiment. yvonne: stephanie, thank you. we've got plenty more ahead. this is bloomberg. ♪
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david: welcome back to the show. let's talk about blowing. -- let's talk about boeing.
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the ceo told us more about the weak points as well as the demand in terms of this global travel resurgence. >> we are seeing where the weak points are in the supply chain now. six months ago, it was hard to see some of those weak points. a lot of us make assumptions about bringing back resources based on past practice. with covid, every industry has seen resources are coming back as fast. we had to bake that in. now we see the weak links in the supply chain. we are focused with those partners to try to help them bring resources back in, get learning curves flattening said the output can increase. that is the name of the game. it is not a restraint. -- not a capex restraint.
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that is issue number one. we do see effects of the chip shortage. >> what does the recession mean for boeing? >> if i could predict that, i would be a great investor. it is hard to tell yet. i think we've seen this rapid resurgence of travel when the markets are ready and when the populations are vaccinated. i think there is a fair amount of pent-up demand in the market that is going to carry us through some of this recessionary pressure that may occur. we are going to adjust rates to meet the market demand. today we are supply constrained. this rates don't quite match demand. we will look out there to see if there's a headwinds we have to adjust. >> you're hinting the aircraft
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are taking all the aircraft on the books now. >> i'm just saying if that were to be the case. today we see strong demand. particularly for the narrowbody. what we are starting to see as many more discussions about the wide-body. the u.s. to europe connecting strong into latin america, the middle east, india starting to connect internationally. first coming back will be orders on 787. i think you will see orders and few for that triple seven down the line. yvonne: that was boeing's ceo of commercial airplanes speaking with guy johnson at the farnborough air show. twitter has admits -- and its latest court filings, they are urging the judge to hold the trial as soon as possible over must scrapping of that buyout.
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sources say the walkout of leading officials in boris johnson's administration have caused the talks for now is a play a leading role in talks. david: let's look at your sector moves. going to the japanese lunch break, one in japan, energy plays on the back of this moving up in commodity prices in general. they're having a second order effect in terms of energy. yvonne: given that apple skipped they are going to be slowing hiring, if that does happen, it would send some shockwaves on apple supply, to percent losses. this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes. [ cheers ] are we actually going?
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yvonne: 11:20 9 a.m. in tokyo
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and japanese markets are going to a lunch break. we are counting down to the be ok decision. -- bok decision. we are betting that something will change and higher rates are coming. david: the preview is out. we start talking about the ecb and that takes us into the north -- the nord stream pipeline conversation which is what energy traders will be tracking closely as a key event. 103, west texas. that may signal it intends to keep supplies capped which reinforces russia's script. >> it is a nonstarter from the
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beginning. it is not that they don't want to, it is that they don't have it. yvonne: for more, let's bring in bloomberg's asia energy market reporter. a lot and focus as we get to july 21. what are the sum -- what are some of the scenarios analysts are mapping out before that? >> the moment we have tightness in the energy market will not go away. [indiscernible] amid the concern over gazprom's force majeure -- all of this shows traders are looking at whether or not the political
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tension will escalate and there is tremendous concern on where the energy tightness will go. yvonne: with this force majeure, the timing is interesting because it is retroactive. what do we know about the end date of this? >> it is interesting because what gazprom has done is send a notice to buyers of gas in germany and some of those are the largest utility companies in germany. this applied to these utilities -- the supply to these utilities, they have no responsibility to deliver. there has been a push back
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saying it is a signal that russia is putting a lid on supplies. russia in the european energy supply mix which means -- which comes back to the russian invasion of ukraine. yvonne: worst-case scenario, if in fact putin decides he will not restart the pipeline, what does that do to markets and economies? >> one of the issues is where the extra supply comes from. in the case of russia or other suppliers, you are right.
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how bad of an impact will this have on the european economy? in some cases, it is not just the utilities. it is fertilizers, petrochemical companies and the average consumer being asked to play -- to pay more for energy. european commission according to documents obtained by bloomberg, the worst case scenario is a recession of up to 1.5%. that would cause a cut to europe's gdp because of the energy tightness. david: something to watch and it is getting fairly extreme. thank you so much. our asia energy reporter. let's stay on story. the heatwave i'm sure many have heard of is in many ways boiling
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through europe threatening the supply of vital commodities. the number of mentions with the word "aircon" has spiked. that broadly speaks to the consciousness and awareness of market conversations. how the rubber meets the ground as far as commodity markets are concerned -- have a look at this next graphic. we plotted this for you guys. the rhine in germany. the gap between where the current water is and below which it becomes uneconomical for the barges to carry key commodities into different parts of europe and we are just about 14 inches. if you -- if the water level
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goes below that, that is another conversation we will have to have as it pertains to supply chain disruptions. we are now the closest to that threshold since 2017. the weather forecast, we don't do this a lot but given what is happening, there is a function for that on your bloomberg. set it to northwest europe. the green line is your 30 year average. this is where we are right now. 5.5 degrees above where we are used to seeing this in terms of historical data. this extrapolates where the weather will be. there is no guarantee. if you have any experience with weather forecast. but based on the information we have now come it will remain elevated through the end of the month and then back to mean. yvonne: 40 degrees is something that u.k. is not you still -- is not used to.
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let's talk more about the weather. it is not just the u.k. or the northwest but china as well, extreme weather whether it is heatwave's, the flooding situation. there is a lot of talks about rationing power consumption. foxconn has had to do a little bit of that. but it is not as bad as what we saw last fall where we also had widescale outages due to a shortage of coal. something to watch in china. we have vonnie quinn in york. >> bloomberg has been told china may allow homeowners to temporarily hold mortgage payments without incurring penalties. it still requires approval from senior chinese leaders. it is a broader push to stabilize the housing market.
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u.s. treasury secretary janet yellen has gone -- has called on trusted u.s. allies to help fix supply trade issues. she also singled out china morning beijing could use its market position to exercise geopolitical leverage. altria is a final stop on her asia tour. in italy, lawmakers in mario draghi's coalition are working on a last-ditch play on asking the prime minister not to resign. they are trying to determine whether that would be enough to persuade draghi to stay on. he offered to resign last week. dr. anthony of how she is planning to retire before the end of president biden's current term. bloomberg has learned he will step down before january 2025 opting up a storied career as the top infectious disease experts under -- expert under
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seven presidents. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. yvonne: coming up, a look at the future of news in asia-pacific and where opportunities are for organizations to innovate the age of social media. we discussed the results of a survey. this is bloomberg. ♪
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yvonne: news is what we do. and the journalism that goes into it. it is a business that has changed significantly in the last few decades and continues to evolve. and with this in mind, study was commissioned on the sustainability of the news media industry and i believe it is the first survey of its kind. david: joining us now to discuss the findings of the study is byron. alongside naka kondo. byron, let me start with you. we have laid out the broad russian behind the prop -- we
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have laid out the broad rationale behind the project. byron: at the society of publishers in asia, our objective is to promote free speech in the media industry so we partnered with google and the economist where our aim was to take a first survey of the media industry across the asia-pacific region to understand how things are going in terms of both journalism and the commercial aspects of the business. we surveyed 12 markets, 2000 consumers and 500 executives for the report. yvonne: can you tell us more about what the key takeaways are? what is the state of the news media industry now? naka: thank you. very excited to be launching the paper today. we found that yes, the media industry is disrupted but despite the dynamic landscape,
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media executives are very bullish on the outlook of this industry. and one other take away is that everyone sees technology as a key to propel themselves forward and to ensure media industry stays sustainable. david: byron, that takes us back to you. in terms of yes, players are bullish, yes, people know what they need to do, are they doing it in terms of the big players and coming players? help us understand -- in a lot of ways, business models --have the evolved enough given the reality? byron: that was one of the biggest dichotomies we saw in the results. there was basically a 50-50 split from respondents as to whether media companies should invest more in traditional
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subscription models and advertising or try to innovate and invent new business models. while executives were definitely bullish on their outlook, there were other responses that showed not all is perfect and there may be challenging times ahead. one thing we found heartening and the result was from the consumer standpoint, i believe something like 76% said they agree and understand that news, a free and fair news industry is essential to a functioning society. consumers understand the value of news but they are not paying for it as much as the corresponding value that they see. david: on that last point byron mentioned, what does that mean for news companies in general moving forward? do we scale down? what are the skill sets needed to meet the new demand?
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naka: i think the one thing to highlight is that as byron just mentioned, 60 percent of consumers have said i do not have a paid subscription to any media at the moment but on the flipside, 40% do. and they have one or more. given that many media companies digitally are putting up pay walls, that is not a low number so we -- it is actually not a negative outcome and there is more to come. the other thing is to when we spoke to the experts, they were unanimous in that media companies need to think creatively going forward and they need to think in terms of different business models, whether it be something that is not traditional to media. it could be about cooking. it could be about games. they need to start thinking
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create -- creatively about building a brand. yvonne: i noticed china is not included in the survey. can you tell us why and how china fits into the media and scape in the asia-pacific given the fact that this is a country where internet censorship is quite have his dictated? -- is quite sophisticated? byron: we surveyed 12 markets. it was a broad survey and not very deep. we excluded china because it is so big, it is such a large market, just as large as all the other markets we surveyed combined and it has such a different internet ecosystem and media ecosystem -- we felt we could not cover china. that is not to say we would not want to cover china in the future with a survey and china has fascinating media issues but
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it was about the scope of the survey as to why we did not include china. yvonne: that is a future one may be pure -- that is a future one maybe. how do companies navigate around it? naka: we actually do not have an answer to that at the moment. it is important to realize that both consumers and executives at we survey have highlighted -- that we surveyed have highlighted the impacts of technology. the best way is for media companies to proactively start thinking about how to address the issue and also for the consumers to arm themselves by taking more note of how to
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improve one's media literacy. david: byron, a final thought to bookend this bit. misinformation is a problem. the debate is whether the onus is on the media companies are the platforms they are on -- i won't name names. final thoughts on that note -- where does the story go from here? no pun intended. byron: a great thing we found which hopefully is obvious to everyone is that everyone agreed misinformation was a massive problem. one data point that stood out to me is something like 60% of the consumer respondents said they had a financial loss due to misinformation. the first step is recognizing there is a problem. as to fixing it, it is a responsibility of all of the parties combined. the tech platforms or where it
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proliferates. unscrupulous media companies put out misinformation. it is a very complex problem that i believe government as well will play a key role in helping to fight. david: first ever study is out and we look forward to discussing the second. thank you so much. byron. and naka kondo. yvonne: goldman sachs push revenue past expectations. this is bloomberg. ♪
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david: let's talk about the big bank earnings. we have all six megabanks out. where do we start? all did well? bonuses? >> taking a look, we had goldman sachs and bank of america rounding us out. lower earnings growth on the year but there were bright spots. think of america -- -- bank of america, the net interest income
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is the income the bank makes from lending activities minus what it lends out to creditors. on the terminal you can see the estimate was for a jump of 20% in net interest income but we saw it rise to 22%. the bank says they could see further gains in the current quarter. $1 billion in net interest income. goldman sachs -- you mentioned compensation and that was a big story. you can see across the board, j.p. morgan, morgan stanley and goldman sachs -- and goldman sachs putting aside less money to pay their bankers. we are seeing a slump in underwriting as well as m&a activity. goldman sachs taking this a step further. it is not just about less pay for the workers. they will be resigning -- redesigning the typical performance review period. yvonne: all we talked right in
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the first half was bank bonuses. of the fact they are pulling back it seems natural to me. rowing has announced a firm order for 100 -- boeing has announced a firm order for 100 -- if delta converts that, the sticker value is at about 17 point $6 billion. >> we have seen a rampant resurgence of travel when the markets are ready and when they are ready is when the population is vaccinated. i think there is a fair amount of pent-up demand and the market that will carry us through some of the recessionary pressure that will occur. we will adjust rates to meet market demand. yvonne: apple has said to be planning a slowing in hiring as
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they deal with a potential economic downturn. the decision stems from economic uncertainty although it is not a companywide policy. apple is still planning an aggressive product launch in 2023 including a mixed reality headset. netflix will add custom -- will ask customers in five latin american countries to pay a fee if they want to use an account in an additional home. the streaming giant blames password sharing as one of the primary reasons for its flagging subscriber growth. david: multi-user accounts. let's have a look at the crypto space. 23150 is a level we are flirting with right now above which we know is the breakout that people talk about here. who knows where this goes. that is bitcoin. we are seeing this play out across other crypto related
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assets including the equity markets. 22092. commodity markets also. yvonne: we are seeing a bit of a recovery given the china story and a lot of talks of more stimulus. they are going to try to stem the property crisis that is entering into a new phase with payment holidays in store according to a bloomberg scoop. steel futures, aluminum in shanghai still in the green but it is a mixed bag as you see on your gmm. we have plenty more coming in the next hour. this is bloomberg. ♪
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>> from the heart of where innovation, money, and power you collide, in silicon valley and beyond, this is bloomberg technology, with emily chang.


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