haidi: good morning, welcome to "daybreak asia".

>> we are counting down to asia's major market opens. shery: good evening, the top stories this hour. earnings and focus as teslas price cuts squeeze profits while netflix forecast disappoint overshadowing the success of its password sharing crackdown. haidi: goldman sachs says noisy -- a dealmaking slump. haidi: bloomberg reveals apple is working on its own ai tools to challenge the market leaders. and apple is one of those gainers, where u.s. stocks rose with real estate and utilities leading. u.s. futures under pressure in the after hours session. this as we had more optimism over cooling in the u.k. in the regular session, he saw u.s. treasuries joining of worldwide

rally. those rice pressures in the u.k. dropping to the lowest in 15 months, leading to the speculation that central banks can go easier on raising rates. oil was under pressure in the new york session from the stronger dollar. traders ignoring for stockpile report that signet -- that signaled tighter market. we are following tesla, profitability shrank in the quarter. we are seeing market squeeze after months of price cuts. netflix down, take a look of the plunge of more than 6%. sales and forecast fell short. the new ad strategy, including their password sharing crackdown not doing as well is expected.

haidi: let's get more details when it comes to tesla. this margin squeeze we are seeing, does it look like it will pay off, what is the narrative from the company. david: they did lose on margins, they showed a record sales in the quarter for vehicles, that is all good. but what analysts have been worried about is price cuts seeing into profitability. the fear is that as they cut their prices, tesla comes less special. what might have countered that narrative is the cybertruck that appears to be on schedule, but it seems like we will not see sales until next year. you see shrinking margins because of the pricing pressure,

and not a great both story. there is no bad news here, except they do not have any thing that tells investors there will be another spurt of growth. shery: given regulatory credits are down big time. david: that is getting tougher because other companies are coming out with ev's. it is causing them to lower prices, and when these other companies who sell gasoline powered vehicles, they do not need as many credits. that is going to be something they will have to deal with. haidi: what is the production side looking like in terms of the leadtime of tesla? david: production is pretty solid.

most of the car companies have worked through the semiconductor shortage. they have plenty of chips to meet demand. there is more demand out there, which is good for everyone to keep production lines going. the cybertruck, they started production, you will not see them ramping up until next year. you will see it ramping up in the second half, but it is not expecting to generate huge numbers until the second half. haidi: that is one to watch. the latest on tesla numbers, also watching netflix. it fell short of wall street estimates. let's break down the numbers. what do you make of these numbers, let's start with the password sharing crackdown.

gita: that is bearing fruit, we saw the subscriber numbers triple what consensus was expecting. what the story has been, was that expectations were way too high. we are seeing that in the after hours price action, because if you look at their subscriber guidance, it will be similar to the second quarter. the street was looking higher. the revenue number came in later. fundamentally, the story is getting stronger, they have everything in place for revenue we acceleration, user growth re-acceleration, it will take time to play out. there will be some bombs on the road. shery: we are getting lines from their analyst call by netflix

executives say the financial impact of password crackdown is gradual. we have seen the impact of the writer and actor strike in hollywood, saying the strike is not an outcome that netflix wanted. when it comes to the subscription number, and customers, that was still pretty high. gita: that was extremely high. triple what the street was expecting. we got updates that suggested there was a huge uptick in new sign-ups we were not seeing, not seeing a lot of cancellation. those expectations were high. it is a good thing, for future growth because it shows if netflix executes well, they can reinvigorate scriber growth. a year ago, we were talking about subscriber growth hitting a wall. this is a positive trend.

for all of the pieces of the puzzle to come together, it will take time. there is a balancing act between growth revenue and subscribers. they will have to figure out how to balance it and make the formula work for them. haidi: what is the outlook for netflix and the longer term, what happens with the demands for proper payment and residuals and renegotiation with the wga and sag? geeta: the netflix content is in a relative sweet spot. they have a huge production lead time, they have a huge backlog of shows compared to rivals. a lot of -- releasing new shows can go on on interruptive, we saw this during covid. if you look at it from a

financial perspective, it is good because it is lower, the huge bump and free cash flow guidance. it is doing them something, and terms of a financial benefit. if it is a prolonged strike, it is not good for anybody. netflix is in a better position because of their backlog and they also have a lot of content coming to them from overseas. a great example is south korea, so many shows coming from that market. content from coming -- content coming from all over the world. shery: we turn to goldman sachs, shares closed higher both -- despite profit plunging.

let's bring in vonnie quinn with the latest. it was to do with real estate heads and dealmaking slumping. vonnie: executives have been warning for quarter would be messy, or noisy. indeed it was thanks to the write-downs. the real estate right downs we were watching, goldman did see a slump in investment banking fees as well. it saw a downturn in consumer inking which houses the green sky lending is nice. goldman is not the largest property lender on the street. right downs of those drive $1.15 billion hit. they are spread on the balance sheet across debt and equity instruments. added visibility, offices do not

make up a huge portion of that exposure, which is interesting given the return to work trends we have been seeing what you do not look good for office buildings. shareholders do not like that volatility, david solomon has been saying that they are getting out of that business. they will not hold those kinds of exposures on their balance sheet for lunch -- for much longer. this is david solomon's worst quarter. shares rose because analysts halved their expectations. in equity, 4%, which was not what we expected and the worst of the bigger banks.

haidi: we are also looking at wells fargo,? >> vonnie: for wells fargo it was an excellent quarter, the best about the market pie. it hit 5.7 percent in terms of market share in the second quarter, and terms of investment banking, -- it grew in all of the cy vance. if you compared to chase, 1.9 billion dollars,, that compares with a point $6 billion for jpmorgan chase. charlie sharp intends to get some of the way there, bear in mind that wells, was told by the fed it had to keep a lid on its growth. until it is difficult for them

to try and grow in those businesses where it would have to take more exposure, the fed has not allowed it to do that. charlie is excited about the quarter, it was a surprise. investors are becoming more sanguine about the banks. we saw the kbw up 7%. these evaluations are cheap, the banks have turned a page since march. shery: vonnie quinn with the latest in bank earnings, let's see how the markets in asia >> >>. we are focusing in on the boj, had a survey coming out, telling us what investors are expecting in terms of the timeline for any sort of change in policies. that has been pushed once again.

it is more than 80% of respondents saying they are not expecting any changes in the upcoming meeting in july. compare that to the last meeting, one in three or expecting a pivot. the reaction we are seeing coming through in the japanese yen, we saw strength. partly down to a softer dollar, that trend is resuming, heading back 140 level. we are counting down to the inflation data due out tomorrow in japan. or on that survey ahead. let's take a look at the markets, futures are looking mixed. what is going to be happening in china, we have seen the slide. that could look to be reversed, we saw the golden dragon index in the u.s. session moving higher.

another vow coming through from policy in china to support sector, they will treat private companies the way they will treat us so ease. it is a lot of talk right now to prop up sentiment, the question is how much investors will be listening. haidi: we -- the women's world cup football, hosted by australia and new zealand will be live for preview. talking about market strategy with investors who warn for turmoil. this is bloomberg. ♪

>> feeling a lot of pressure with very high food trays inflation, food prices have come down, they are higher than they were a few years ago. we need to's to the plan, to bring inflation back. we can see from other countries, if we do that, we will succeed and we can put this difficult period for households behind us.

shery: jeremy hunt speaking after inflation dropped to a 15 month low. given the economic act up investor should be ready for a recession. joining us now is dana d'auria. they are having more calls of a soft landing. could be achieved, if we do go into a recession, what are the implications for investors when it comes to trading in the markets? dana: historically we know that markets do not bottom out until after the recession has started. you do not know you are in a recession until you are in it. but given the rescission -- the revision we have seen in the gdp, the associated increase in consensus estimates, it is hard to think we are in a recession.

you have had a lot of prognosticators come out and talk about a recession coming, maybe second half, and of course it has not materialized. rather you have had a huge to boom coming from the growth side, on the big tech companies, from ai. it becomes a question of, are we going to get away with this? that could happen. that soft landing could happen. i would not on it. if i am an investor, i think i am thinking, if we are looking at her recession, i have to think in terms of taking sure i am ready for that. shery: is that why you are going more overseas and said of the u.s.? within those be riskier assets

if the u.s. goes into recession? dana: there is the question around short-term, medium-term and long-term. valuations play an important role. we would say diverse -- you never know who is going to be hit better and worse. valuations favor that -- internationally there is value to be had there. there is a good argument for the types of stocks you are going to look at in places like japan or china, as opposed to a blanket approach. at the end of the day, i would not say, put it all there. staying diverse is key above any tilts. haidi: you mentioned japan and china, where are you seeing the opportunities in asia?

dana: there is obviously demographic issues, if you look at japan. we have had a great rally this year, the question becomes, how is that, where are we in that landscape. if you are an active manager, you are employing quant screens, it is an opportunity in a place like japan or china. they are facing a different situation. in china it is a matter of looking at what is the political risk. versus great companies. it is a question of what you are doing in country. there is a question around making sure you are not overly -- a lot of times, if you are in the emerging markets index, maybe there is a question around whether issue be capped if you

are a u.s. investor. haidi: when you take a look at tech and ai driven rally we have seen him a how do you approach that going into the second half? are you looking at the down cut of the value change? dana: because of interest rates, the fact that the fed is signaling that they will not -- this was not a pause. we are not done with interest rate increases. the job market remains strong enough that the fed will continue to hike. it is questionable about what happens in some number. it is possible we do see that. when you are talking about company shifting the focus from quality tech companies that are drawing cash flow real-time and

getting deeper into the sector, where a lot of the value of that company is coming from distant future cash flows that are questionable. it is not our recommended tilt to go that way. we would say tilt toward value and lower price. yes we have had a massive rally, growth has trounced value, but that does tend -- multiple expansion is a big piece. it makes the value stocks more attractive as you go or were. -- as you go forward. unless you are massively different from the market, you are getting an enormous amount of that growth exposure. i would not tilt reported haidi: dana d'auria, cio at envestment

inc.. terminal subscribers can find that at daybgo. this is bloomberg. ♪

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haidi: a quick check of the political stories, john kerry says washington and beijing need more time to break around in the fight against local warming. his three-day vision -- visit to beijing. talks will continue ahead of a critical summit this november in dubai. >> we came here to break new ground, which we take as important in this stage. and it is clear that we are

going to need a little more work to be able to complete that task, which we still believe, both of us, is doable. haidi: the u.s. says north korea has not responded about the fate of an american soldier across the border into the north. he may have been trying to escape a court-martial after being charged with assault while stationed in south korea. more to come here on daybreak australia, this is bloomberg. ♪ bridgett is here. she has no clue that i'm here. she has no clue who's in the helmet. are you ready? -i'm ready! alright.

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golo's a lifestyle change and you make the change and it stays off. (soft music) shery: taking a look at the stocks we are watching in the after hours. big earnings when it comes to tesla and netflix, tesla the price cut situation putting the

squeeze on the makers industry. we saw the downside reaction in the after hours, up by about 1%. profitability shrinking in the second quarter. the month of price cut that has been trying to push budget constant -- slightly below wall street estimates. musk has says he is comfortable sacrificing for volume. investors are not feeling as confident in the short term. watching netflix shares falling after forecast came up short. up to him is him when it came to the password sharing crack down, that is a longer-term watch in terms of the narrative of taking more time. we are hearing from netflix about the ongoing hollywood

writers and at first strike hurting cash flow into 2024. hearing from elon musk that tesla will cut prices further if economic conditions worsen. these are two major stocks watching, the stories when it comes to future earnings developing. for analysis, bob o'donnell, at techanalysis research. the sales forecast coming up short. we are seeing a decline in investor sentiment, what jumped out at you? bob: the number that jumps out at me is the new subscribers, that was three times what people were expect. obviously if you think about this from a long term, that is a huge benefit for them. if they are adding additional people, at some point that translate into revenue.

it will take a couple of quarters for revenues from larger supply of customers to show up. this has proven philosophically and practically and economically that the password crackdown works. they can now apply eight in other places. u.s. was the biggest market, there are other market they can do this. that is another long-term advantage for them. they want to eyes on sets, eyes on screens. that is a step in that direction. that will help. this residuals question, will they have to pay more given the strikes in the u.s., for the actors, they started to talk about how much people are watching these shows. which guests to the heart of the residuals question.

there could be some of those factors to consider. it is hard to say how much of a difference it will make in the long term. i can't help but think it is a number of eyes on screens. and the global production system, and global content, they have a lot of things in the can already. they can continue, or as other streaming services will take a serious it. we know that some of it will consolidate, netflix is sitting in a good spot. haidi: it is interesting we have not seen much of cancellations after the password crackdown. in terms of the content pipeline, netflix is a better place than the competitors. you are not worried at all, we will be seeing more content out of this part of the world? bob: exactly, we have already

seen success of squid game's and other asian based content. you will see a lot of other things along those lines. not only the fact things are being produced in other countries, have seen there are more than willingness of foreign language content in the u.s. on netflix. they are positioned well. if this goes on for a long time, that is the strikes in the u.s., for sag-aftra and wga, it will hit everyone. at least in the near term they seem to be well-positioned from the global perspective. shery: how do you view where the password sharing crackdown goes from here? bob: they are going to continue it, he also announced their lowest -- they got rid of their lowest ad free offer.

that will play into it. you will see a larger number of subscribers, they will all have to pay more, and you will see the advertising revenues grow. you put all that together, that is a good story. i think you will see them continue relatively aggressively. it has clearly worked. there was the question of how many people they will lose. they gained a huge amount. they feel confident they can take that amount apply it everywhere around the world, which will give them more sets of eyes. and that will for them. shery: will they survive another price hike? they have talked about it in a future. bob: think about it this way, if they get rid of their lowest ad free version, everyone in that

group will have to take a price hike, or move to an advertising thing. what they did today, they will increase the average price across the board, even if a lot of people are content with a particular price. all of the people at that lower tier, a significant percentage, they will end up paying more, or you will see the move to an advertising supported side, which brings more revenue for netflix. shery: we are in the thick of earnings season, on ibm, does that give you relief that the slowdown might not be as bad? bob: it does. you've got the fact that ibm broad higher revenues on software. and other ai initiative.

those are the growth categories. that is where they sell the biggest growth percentage. they saw a modest -- a big decline in their mainframes. that is not surprising, that is a seasonal business. they saw the growth in the software business, in consulting, what that suggests to me is we are seeing a lot of businesses saying, have to work with generative ai. ibm is a trusted partner, we can continue to build on these objects, leveraged the tools they have. it does speak well to the fact we have enterprises continue. the fact they maintain -- single-digit growth and revenue numbers is pretty good. shery: always great to get your insights. president and chief analyst at techanalysis research.

annabelle: in asia, the central bank had a new survey coming out, telling us what the boj will be doing and its upcoming meeting. the june versus july ratings, what is the key takeaway is that economists have pushed down their expectations of when we will see policy changes from the boj. back in the june survey, you had around one in three participants saying the boj would change tact in july. that has changed dramatically. 80% of people now say it is unlikely to happen. the timeline for this has been pushed to october instead. investors continuing to push out there xpeng patients. -- their expectations.

in the session today, not just the boj in focus, the rba will be watching the jobs numbers and a couple of hours. the expectation around 15,000 jobs be added over the month. that will keep the unemployment rate steady. are continuing to see the later market trading tight. we are starting to see more pessimism coming into households. perhaps telling us that enough of the job has been done for the rba and it cannot afford to keep steady as we end the term at the central bank. haidi: want to do bring you an update on and developing story, new zealand police said a gunman and to other people are dead after a shooting incident in downtown auckland. it comes hours before they are set to host the opening ceremony

of the fifa women's world cup. it appears there is no national security risk and no ongoing threat. shery: let's turn to singapore, the former cio of gic is planning to run for president. ahead of his formal nomination, he told us exclusively why he is seeking the position. >> i would like to give the people of singapore the opportunity to exercise their right to vote. we have had five presidential terms, three were walkover's. the people of singapore do not want a fourth walkover. i am throwing my hat into the ring so that there is a contest, the people of singapore can choose.

the second reason is, the president in singapore is important in terms of safeguarding our reserves. i have spent my entire life, my entire career, and helping to pull -- to build up our reserves. i am in a good position to safeguard our reserves. >> you are running against a clear frontrunner. both candidates are one in the same, very close to the establishment. what choice is there? >> there is a difference between establishment and political independence. i have 45 years public service, i am very proud of this, of having done that. but throughout my entire public service career, i did not, and i do not belong to any political party.

the presidency has got to rise above politics. i am politically neutral. >> do you think the voters will vote along racial lines? >> i do not think so, i think singapore is evolving. and hopefully, as time goes by, we should not allow race to divide the country. singapore must stand united. >> the reserves have been a hot topic, wondering why the reserves need to be kept secret in terms of the amount. is there a reason why this is not -- why they should not know how much the reserves amount to? >> the reserves of singapore is our financial defense. it forms part of the total defense of the country. because the reserves are to

safeguard our future in terms of possible war, and terms of severe crisis, in terms of periods of time where the stability of our currency can be undermined. so when it is as that, it is not in the national interest to disclose the total size of our reserves. >> singapore is transfixed by a corruption case involving a cabinet minister. unusual, especially in a country that pays its ministers among the highest in the world. how are you eating what is happening in the country? >> we have extremely high standards of governance. we have extremely high standards of integrity, for people in political leadership and in public service. this is the foundation behind

foreign confidence in singapore and the trust of the people in singapore. we hold ourselves at such high standards, incidents such as what happened recently are bound to arouse with public interest. how do we handle this situation? i am very proud, as a singaporean, that our prime minister has done the right thing. haidi: the singaporean presidential candidate. this is bloomberg. ♪

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old school hard work meets bold, new thinking, ♪ to help you see untapped possibilities and relentlessly work with you to make them real. ♪ haidi: the women's world cup football kicks off, hosted by australia and new zealand. billions are expected over the month-long event. paul allen to from outside sydney's psyllium australia with -- kicking off their campaign. paul: that is about 11 hours away from kickoff. the 70,000 people are expected to wash the home side australia,

the matilda's, taking on -- a record crowd for a women's football. that would surpass the record set a few might -- nights ago where 50,000 attended. football australia has announced this is a record-breaking event, 1.3 million ticket sold occurrence -- across the month. 55,000 visitors in the country as well for this. tors and australia will span $169 million, it is pretty cold of the moment, this area will be full of football fans in a few hours. haidi: hosting these events can be costly. the state of victoria is pulling out from the commonwealth games hosting? paul: yeah, that news broke a

couple of days ago. victoria announcing it would no longer host the commonwealth games in 2026. it was the only city, or in this case a state that pledged to do so. the victorian government figured out what the cost was going to be, about $7 billion, many more times than they had budgeted. the local media reporting commonwealth games federation will be seeking damages from the victorian government to the tune of hundreds of millions of dollars. no other host city has stepped forward for 2026. the future of the games is up in the air. haidi: we have been hearing from the new zealand prime minister, a big start of the month, with

the hosting of the opening ceremony. they are dealing with the developing story of the shooting. paul: that is right, the women's football world cup will not start here, it will start earlier in new zealand with the opening match between new zealand and norway. the incident happened not far from a -- from where the new region -- from where the norwegian team is staying. it was a 24-year-old male who fired the shot at a construction site, he is understood to be dead along with two other people, and six injured. there appears to be no political or ideological motivation for this. it appears to be a coincidence it has happened on the people of the football women's world cup. we are waiting to hear more. haidi: paul allen and friend of

stadium australia as we get closer to kickoff. plenty more ahead on daybreak. this is bloomberg. ♪

haidi: watching the asset tracking across australia and new zealand, kiwi assets, the and focus.

monitoring developments in breaking news. new zealand police say a gunman and two other people are dead after a shooting incident on downtown oakland. we have heard from the prime minister saying there is no national security risk, and the women's world cup events will continue. a flat pitch for the start of trading. we are watching moves in the aussie dollar after we saw the dollar rally, the pound dropping the most march. shery: we are watching apple with a pump after bloomberg learned the company is quietly working on ai tools that could challenge those of openai and key players. for more is our chief technology correspondent. what does this mean in terms of a rod or strategy coming from apple -- a broader strategy coming from apple?

>> that is at the heart of technology we have seen from bard, chatgpt, the company has developed a framework, code named ajax, they are using the technology to build large language models to apply to an internally deployed chatbot. that functions similarly to chatgpt. we are along these ways from a consumer launch. haidi: ajax is a cleaning brand in australia. mark: it fits into the broader empire of monetizing their products, without the ai features they will lag behind the competition. they will look at the hardware that supports these generative

ai technologies. apple can monetize versions of siri that relies on this technology. it is expensive to deploy. when you factor in server costs and data infrastructure. this will be a pricey, wrong term effort for apple, but they have to do it. you see how far along the competition is. apple was caught flat-footed. , there trying to reverse that. haidi: the latest on apple and its ai strategy. take a look at how currencies are trading, the dollar seeing its best day in the month. the best since june, the pound leading the losses. the aussie dollar holding steady against the u.s. dollar. it was drag lower in the previous session given that the q1 has been weakening.

-- the yuan has been weakening. the japanese yen holding at 139 level, he saw it he -- it weakening. you are seeing the offshore you want at 723. that is it for "daybreak asia", daybreak asia is not -- that is it for daybreak australia, daybreak asia is next. ♪

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