Daybreak Weekend: Earnings Season Continues; European Oil; Lunar New Year

This is Bloomberg day Break Weekend, our global look at 0:00:04.840 --> 0:00:06.840 the top stories in the coming week from our day 0:00:06.840 --> 0:00:09.160 Break anchors all around the world. And straight ahead on 0:00:09.200 --> 0:00:12.880 the program, The Cavalcade of earnings continues on Wall Street 0:00:12.920 --> 0:00:16.280 and we take a deep dive into two closely watched companies. 0:00:16.400 --> 0:00:17.880 I'm Tom Busby in New York. 0:00:17.960 --> 0:00:20.440 I'm Stephen Cawen in London, where we're taking the temperature 0:00:20.440 --> 0:00:22.599 of the European oil and gas industry as we head 0:00:22.600 --> 0:00:25.360 into another week of big name earnings reports. 0:00:25.680 --> 0:00:28.080 I'm Doug Prissner looking at what the lunar New Year 0:00:28.200 --> 0:00:30.560 festivities will mean for the Chinese economy. 0:00:31.320 --> 0:00:34.479 That's all straight ahead on Bloomberg Daybreak Weekend. 0:00:34.760 --> 0:00:37.160 The business news you need to wramp up your. 0:00:37.000 --> 0:00:41.000 Week available on Apple, Spotify, the Bloomberg Business App, and 0:00:41.159 --> 0:00:42.960 everywhere you get your podcasts. 0:00:47.280 --> 0:00:49.120 Good day to you. I'm Tom Busby and we begin 0:00:49.200 --> 0:00:53.320 today's program with the world's biggest media company, Disney, reporting 0:00:53.360 --> 0:00:57.200 earnings this Wednesday, and boy, there's a lot to unpack there. 0:00:57.280 --> 0:01:00.720 Production still catching up from last year's twin with strikes, 0:01:01.000 --> 0:01:04.319 What to do about the ABC network and other non 0:01:04.400 --> 0:01:10.160 core units unprofitable streaming TV services, activists, investor Nelson Peltz's 0:01:10.200 --> 0:01:13.360 proxy battle with Disney's board, news that it's selling off 0:01:13.600 --> 0:01:17.080 most of its Indian broadcasting unit, and a real setback 0:01:17.120 --> 0:01:20.720 in Disney's feud with Florida Governor Ron DeSantis over control 0:01:20.800 --> 0:01:23.839 of the municipal district in Florida that includes the cash 0:01:23.880 --> 0:01:27.920 Cow theme park Disney World. It's a lot, and for answers, 0:01:28.000 --> 0:01:33.000 we turn to Getha raganathin US media analyst with Bloomberg Intelligence, 0:01:33.440 --> 0:01:36.480 and Getha, what is the headline? That's a lot? But 0:01:36.560 --> 0:01:38.880 what do you expect to see in disney second quarter 0:01:38.920 --> 0:01:39.639 earnings report? 0:01:40.440 --> 0:01:43.880 Yeah, Disney is a very very complex story, thom as 0:01:43.920 --> 0:01:47.320 you pointed out, and I think you know what we're 0:01:47.360 --> 0:01:51.680 really looking to see. There's no one specific catalyst, per se, 0:01:52.080 --> 0:01:54.560 but I think the sentiment for this talk has definitely 0:01:54.640 --> 0:01:57.240 turned and there's there's there's a variety of factors that 0:01:57.320 --> 0:02:00.960 play here. I think you have some real positive commentary 0:02:01.000 --> 0:02:03.600 coming out from them. In terms of cost cutting. We 0:02:03.720 --> 0:02:07.720 are seeing margin improvement and we're seeing improved profitability at 0:02:07.760 --> 0:02:10.320 the streaming business. Now, remember that there's still losses going 0:02:10.360 --> 0:02:14.680 on there, but they're better or they're less bad than feared, 0:02:15.919 --> 0:02:17.880 and I think the one thing that really kind of 0:02:17.960 --> 0:02:22.000 stood out and has investors kind of excited going into 0:02:22.080 --> 0:02:25.280 fiscal twenty twenty four was their free cash flow guidance. 0:02:25.280 --> 0:02:28.480 And they're guiding to whopping eight billion dollars in free 0:02:28.480 --> 0:02:30.800 cash flow, which kind of takes them back to pre 0:02:30.919 --> 0:02:33.880 pandemic levels and really supports the stock. 0:02:35.000 --> 0:02:37.960 And that is good news streaming. I know they've been 0:02:37.960 --> 0:02:43.480 counting on several properties, including ESPN, Hulu, Disney Plus. But 0:02:43.880 --> 0:02:45.040 it's not all good news, is. 0:02:45.040 --> 0:02:47.959 It for Disney Not at all. There are a lot 0:02:48.000 --> 0:02:51.640 of challenges that remain and you alluded to this just 0:02:51.639 --> 0:02:53.280 a short while ago in terms of at least the 0:02:53.320 --> 0:02:57.040 linear TV networks. You know that there is secular pressure 0:02:57.160 --> 0:03:01.799 on that part of the business. They are to you know, 0:03:02.160 --> 0:03:04.359 dispose of some of the networks, and I think that's 0:03:04.520 --> 0:03:06.680 that's the right thing that they're doing, especially as far 0:03:06.720 --> 0:03:08.840 as their India unit is concerned. But they have to 0:03:08.960 --> 0:03:11.560 kind of articulate a much better strategy for some of 0:03:11.560 --> 0:03:16.600 the US properties, the most famous of them of course 0:03:16.639 --> 0:03:21.079 being ESPN. Now this is you know, the juggernaut when 0:03:21.120 --> 0:03:25.520 it comes to sports networks in the US, but it 0:03:25.600 --> 0:03:27.760 is a cash cow it generates about three billion dollars 0:03:27.760 --> 0:03:29.960 in EBITDA. But there has to be a clear strategy 0:03:30.000 --> 0:03:33.000 from Disney in terms of the future of ESPN and 0:03:33.440 --> 0:03:35.600 how and when it goes over the top. 0:03:35.920 --> 0:03:38.680 Now, also there was talk last time, I think we 0:03:38.720 --> 0:03:42.240 spoke about Byron Allen making a ten billion dollar bid 0:03:42.280 --> 0:03:45.720 for the ABC network. Now that was obviously turned down, 0:03:45.760 --> 0:03:48.720 but is there any movement in the selling of that 0:03:48.760 --> 0:03:50.920 what is now a non core business for Disney. 0:03:51.000 --> 0:03:52.920 It is definitely a non core business for Disney. But 0:03:52.920 --> 0:03:55.720 actually after you know, there was initially some chatter about 0:03:55.760 --> 0:03:58.120 Disney maybe wanting to sell out some of its linear networks, 0:03:58.160 --> 0:04:01.280 including of course the ABC broadcast network. But after that, 0:04:01.640 --> 0:04:05.160 Bob Iger has kind of walked back the talk on, 0:04:05.320 --> 0:04:07.240 you know, the sale of the linear networks, and he 0:04:07.280 --> 0:04:10.880 has to be I think, really careful as he orchestrates 0:04:11.280 --> 0:04:15.000 any you know, any sale of assets, especially the linear networks, 0:04:15.000 --> 0:04:18.160 because again, remember they do definitely want to hold on 0:04:18.200 --> 0:04:20.960 to ESPN. That is a core property for them, a 0:04:21.000 --> 0:04:24.720 core brand name for them, and most of ESPN's revenue 0:04:24.920 --> 0:04:26.960 is tied to the linear networks. So they need to 0:04:27.000 --> 0:04:29.120 do it in a very very careful way and it's 0:04:29.200 --> 0:04:32.760 it's a very tricky balancing act for Bob Byger, and 0:04:32.800 --> 0:04:35.080 so I think he realizes that he does need to 0:04:35.080 --> 0:04:37.320 hold on to some of the linear networks for just 0:04:37.360 --> 0:04:40.279 a little while longer before he can kind of figure 0:04:40.279 --> 0:04:43.640 out a viable strategy for that entire TV network business. 0:04:44.120 --> 0:04:46.120 Well, let's talk a little bit more about Bob Biger 0:04:46.120 --> 0:04:50.640 and some of the challenges he's facing, especially from you know, 0:04:50.960 --> 0:04:54.960 try and fund managements. Nelson Peltz and his proxy fight 0:04:55.040 --> 0:04:58.320 with the board and in essence with Bob Iger is 0:04:58.440 --> 0:04:59.679 not so triumphant return. 0:05:00.000 --> 0:05:03.080 So I mean, this I think is a little bit 0:05:03.080 --> 0:05:05.600 of a distraction, I would say for the company. I mean, yes, 0:05:05.640 --> 0:05:08.600 we have Nelson Pelts, and he does make some fair 0:05:08.680 --> 0:05:12.159 points in terms of the stock price being very challenged. 0:05:12.160 --> 0:05:13.760 And of course there are a lot of things that 0:05:13.800 --> 0:05:16.720 Disney has to do and they have done that. Of course, 0:05:16.720 --> 0:05:18.400 one could argue that, you know, it maybe needs to 0:05:18.440 --> 0:05:21.400 be done even faster, and maybe even more needs to 0:05:21.440 --> 0:05:25.120 be done. But I don't necessarily see Pels having articulated 0:05:25.200 --> 0:05:28.760 anything specific that Disney hasn't already come up with. So 0:05:28.839 --> 0:05:31.640 he spoke about most recently spoke about you know, bundling 0:05:31.920 --> 0:05:35.000 ESPN Plus with Netflix. I mean, the Disney bundle is 0:05:35.040 --> 0:05:38.039 one of the most successful products out there in the 0:05:38.080 --> 0:05:41.000 streaming market right now. So it's going to be really 0:05:41.080 --> 0:05:44.599 interesting to see what exactly Pelts has to offer in 0:05:44.680 --> 0:05:46.960 terms of suggestions for Disney that you know, they haven't 0:05:47.000 --> 0:05:50.440 already that they're not already working on, or they haven't 0:05:50.440 --> 0:05:52.839 already come up with. But I think otherwise kind of 0:05:52.880 --> 0:05:56.560 having him, you know, lingering and having this this proxy 0:05:56.600 --> 0:05:59.760 battle is just an unnecessary distraction for for Disney's management team, 0:05:59.839 --> 0:06:00.800 right Yeah, and it. 0:06:00.839 --> 0:06:06.000 Keeps going on. There's always something Nelson Beltz has to say. Boy, Well, 0:06:06.000 --> 0:06:07.320 one thing I want to talk to you about, and 0:06:07.360 --> 0:06:09.360 I don't think you and I and we've talked before, 0:06:09.440 --> 0:06:12.840 have ever really talked about is the theme parks, which 0:06:13.440 --> 0:06:17.080 seems to be just a constant source of income of 0:06:17.160 --> 0:06:20.560 revenue theme parks and cruises. Does it still continue to 0:06:20.600 --> 0:06:22.800 be the cash cow for the company that it has 0:06:22.880 --> 0:06:23.520 always been? 0:06:23.839 --> 0:06:26.479 It absolutely does, And this is where you know, one 0:06:26.560 --> 0:06:28.479 really has to wonder, you know, if you just kind 0:06:28.480 --> 0:06:32.880 of look at Disney's you know, income statement, sixty five 0:06:32.960 --> 0:06:36.719 percent of this company's profits comes from the theme parks. 0:06:37.080 --> 0:06:41.400 And yet investors continue to obsess over ESPN, continue to 0:06:41.400 --> 0:06:44.719 obsess over the linear TV networks, you know, even though 0:06:44.720 --> 0:06:46.760 they don't make up such a big portion of the 0:06:46.760 --> 0:06:49.600 company's revenue or profits, and so that's kind of really baffling. 0:06:49.600 --> 0:06:52.560 But anyway, going back to your point, you know, parks 0:06:52.640 --> 0:06:56.560 absolutely are the key growth driver for Disney in the 0:06:56.560 --> 0:06:59.159 coming years. They're planning to invest about sixty billion dollars 0:06:59.160 --> 0:07:01.920 in their parks busines is over the next ten years 0:07:02.000 --> 0:07:04.119 or so. And what we've seen is, of course, after 0:07:04.160 --> 0:07:07.919 the pandemic, we saw this huge rebound in the domestic parks, 0:07:08.360 --> 0:07:11.280 you know, so much of pent up demand, continued growth, 0:07:11.360 --> 0:07:15.560 a lot of cost efficiencies, operating margins touching record high levels. 0:07:15.880 --> 0:07:17.680 And now what we're seeing is we're seeing a lot 0:07:17.720 --> 0:07:20.960 of tailwinds actually coming from international parks, so you know, 0:07:21.040 --> 0:07:22.920 all of them are open and running right now. We've 0:07:22.920 --> 0:07:27.000 seen price increases implemented across the board, and we're seeing 0:07:27.000 --> 0:07:30.200 international revenue growth that is extremely strong as well as 0:07:30.240 --> 0:07:32.040 of course you mentioned the cruise ships. So we have 0:07:32.120 --> 0:07:34.520 five cruise ships right now for Disney that are in operation, 0:07:34.840 --> 0:07:37.080 but you have three new cruise ships that are coming 0:07:37.080 --> 0:07:40.320 on board from twenty twenty four through twenty twenty six, 0:07:40.400 --> 0:07:44.240 and so that is going to contribute significantly to the 0:07:44.280 --> 0:07:45.840 profit of this segment. 0:07:46.160 --> 0:07:49.080 It just never seems to amaze me how many people 0:07:49.080 --> 0:07:51.080 who will go to those parks and take those cruis 0:07:51.120 --> 0:07:54.600 as well. Our thanks to Geetha raganathin US media analyst 0:07:54.680 --> 0:07:58.000 with Bloomberg Intelligence. Geita, thank you so much. Next up 0:07:58.040 --> 0:08:01.280 on the earnings calendar is Uber teen Technologies posting its 0:08:01.360 --> 0:08:03.840 latest results this coming Wednesday, and for more on what 0:08:03.880 --> 0:08:08.800 to expect, we welcome Bloomberg Intelligence Senior technology analyst Mandeep sing. 0:08:09.120 --> 0:08:09.320 Now. 0:08:09.400 --> 0:08:12.320 Uber has been on a roll demand for rides, up, 0:08:12.400 --> 0:08:15.440 food delivery, up its share price more than doubling in 0:08:15.480 --> 0:08:17.760 the last year. What do you expect to see in 0:08:17.800 --> 0:08:19.160 its results this Wednesday? 0:08:19.560 --> 0:08:23.760 Yeah, Look, the mobility segment, which is the driver of 0:08:24.280 --> 0:08:29.280 profitability for Uber and it's driving all the optimism, continues 0:08:29.320 --> 0:08:32.440 to do very well. We're talking about, you know, above 0:08:32.520 --> 0:08:35.960 twenty five percent growth and that has been the case 0:08:36.400 --> 0:08:39.480 for the last three quarters. It's going to be the 0:08:39.520 --> 0:08:43.080 case in the holiday quarter, the four que that we 0:08:43.120 --> 0:08:47.160 are talking about and going forward. Also, I feel Uber 0:08:47.240 --> 0:08:51.200 mobility has an advantage in the sense it's gaining market 0:08:51.200 --> 0:08:54.480 share from Lyft, which isn't executing very well and it's 0:08:54.520 --> 0:08:58.120 actually struggling in terms of the supply side. So there 0:08:58.160 --> 0:09:02.360 aren't as many drivers on list platforms as they are 0:09:02.400 --> 0:09:05.920 on Uber right now. And we know with marketplaces, supply 0:09:06.080 --> 0:09:09.360 growth really makes a difference. If your supply growth keeps 0:09:09.440 --> 0:09:12.280 up with demand, that's very healthy for the marketplace. So 0:09:12.800 --> 0:09:16.520 net net mobility should continue to do well even in 0:09:16.559 --> 0:09:18.800 twenty twenty four, even though the comps get tougher. 0:09:19.120 --> 0:09:22.559 Now, is this a return of the business consumer people 0:09:22.600 --> 0:09:26.040 going back to work, needing rides all round? 0:09:26.280 --> 0:09:29.960 I think the thing about Uber is because they are 0:09:30.040 --> 0:09:32.280 a verb, and you know they have that one hundred 0:09:32.320 --> 0:09:36.439 and fifty million monthly active users. They cater to both 0:09:36.559 --> 0:09:39.480 airport rides, which are more business rides, but also the 0:09:39.520 --> 0:09:43.560 consumer rides where people are just using that more and more. 0:09:43.600 --> 0:09:47.720 And for a while, there was this kind of expectation 0:09:47.960 --> 0:09:51.520 that with inflation, people are going to cut back on 0:09:51.600 --> 0:09:54.360 the rights because there is that elasticity when it comes 0:09:54.360 --> 0:09:57.319 to you know, prices going up, people will take fewer rides. 0:09:57.960 --> 0:10:01.920 What that has done is really helped the inflationary aspect 0:10:02.000 --> 0:10:05.360 has helped Uber on board, more drivers on the platform. 0:10:05.800 --> 0:10:08.880 So in a sense, it's brought down the prices for 0:10:09.000 --> 0:10:12.200 Uber rights because their supply growth has been so good 0:10:12.320 --> 0:10:16.200 and people need supplemental income and Uber is one of 0:10:16.240 --> 0:10:19.320 the best platforms out there. If you want to work 0:10:19.360 --> 0:10:21.360 for two hours, you can earn decent money. 0:10:21.440 --> 0:10:24.920 That gig economy really has boosted. Now let's talk about 0:10:25.440 --> 0:10:28.280 something where there is a lot of competition, not just Uber, 0:10:28.480 --> 0:10:32.760 but food delivery, and you're up against some pretty big 0:10:32.840 --> 0:10:36.200 names when you're Uber eats, and what's the prospect there? 0:10:36.440 --> 0:10:36.640 Yees? 0:10:36.760 --> 0:10:43.080 So look, I think Uber delivery definitely is not a 0:10:43.120 --> 0:10:46.240 category leader like the mobility side is I mentioned how 0:10:46.320 --> 0:10:48.520 Uber is executing so much better than Lift on the 0:10:48.520 --> 0:10:52.439 mobility side. On the delivery side, door Dash definitely has 0:10:52.480 --> 0:10:55.360 an advantage in the suburbs. It has had that for 0:10:55.840 --> 0:10:58.439 a while now a few years. And what Uber is 0:10:58.480 --> 0:11:01.679 trying to do is to expand in multiple categories. So 0:11:01.720 --> 0:11:05.520 they have added grocery convenience and all kinds of other 0:11:06.559 --> 0:11:11.120 delivery that they could tag on to that online food delivery. 0:11:11.679 --> 0:11:14.760 And to me, the value proposition is a bundle. So 0:11:14.960 --> 0:11:19.240 Uber has really emphasized their Uber One subscription, which is 0:11:19.360 --> 0:11:24.280 like mobility plus delivery plus anything convenience, and it all 0:11:24.480 --> 0:11:27.760 comes with a nine to ninety nine subscription per month, 0:11:27.840 --> 0:11:30.880 which is quite attractive. If I had to go for 0:11:31.040 --> 0:11:34.760 a door Dash subscription that just does food delivery and 0:11:34.800 --> 0:11:38.800 grocery delivery, or an Instacart subscription, Uber is more attractive 0:11:38.840 --> 0:11:41.600 because it covers right sharing as well. So from a 0:11:41.640 --> 0:11:45.400 bundling perspective, I definitely see that value proposition and it 0:11:45.480 --> 0:11:48.560 is working. You can see the delivery take rates are 0:11:48.559 --> 0:11:52.280 getting better because of this bundling aspect. And they're layering 0:11:52.440 --> 0:11:54.760 ads as well on the platform. So the ads is 0:11:54.800 --> 0:11:57.840 the other kind of profitability driver. 0:11:57.720 --> 0:11:59.600 That looks like a big growth market the ads. 0:12:00.840 --> 0:12:05.120 Yeah, and that's where scale matters for a marketplace like Uber. 0:12:05.640 --> 0:12:08.640 As long as they maintain the scale through the supply 0:12:08.760 --> 0:12:11.720 acquisition I mentioned, as well as you know the bundling 0:12:11.800 --> 0:12:15.520 and the frequency of rides, they have an inherent advantage 0:12:15.559 --> 0:12:17.079 over all the smaller players. 0:12:17.280 --> 0:12:20.760 Thank you very much, our thanks to Bloomberg Intelligence Senior 0:12:20.840 --> 0:12:24.240 technology analyst man Deep Sing and coming up on Bloomberg 0:12:24.320 --> 0:12:26.120 Day Break weekend, we had to Europe for a look 0:12:26.120 --> 0:12:29.640 at upcoming earnings from several energy giants and the possible 0:12:29.720 --> 0:12:33.320 impact of the Israel Hamas war is having on the industry. 0:12:33.520 --> 0:12:47.040 I'm Tom Busby and this is Bloomberg. This is Bloomberg 0:12:47.080 --> 0:12:49.240 day Break weekend, our global look ahead at the top 0:12:49.280 --> 0:12:52.120 stories for investors in the coming week. I'm Tom Busby 0:12:52.200 --> 0:12:54.760 in New York. Up later in our program, a major 0:12:54.800 --> 0:12:57.280 holiday kicks off this coming week and what that could 0:12:57.360 --> 0:13:01.040 mean for China's economy. But first, after Shell kicked off, 0:13:01.080 --> 0:13:04.400 earning season for the European oil majors will be focused 0:13:04.400 --> 0:13:08.280 on totel energies and BP in the coming days. Apart 0:13:08.320 --> 0:13:12.000 from their financial performances, questions remain about how the industry 0:13:12.040 --> 0:13:15.360 will respond to growing efforts to meet net zero targets 0:13:15.760 --> 0:13:18.040 and ongoing disruptions in the Middle East. 0:13:18.320 --> 0:13:18.640 For more. 0:13:18.679 --> 0:13:21.080 Now, let's go to London and bring in Bloomberg Daybreak 0:13:21.080 --> 0:13:23.080 Europe banker Stephen Carroll. 0:13:23.120 --> 0:13:25.840 Tom The big oil companies have spent much of the 0:13:25.880 --> 0:13:30.320 past four years grappling with existential problems from geopolitics to 0:13:30.400 --> 0:13:34.280 climate change. Record losses during the pandemic turned into record 0:13:34.320 --> 0:13:38.360 profits two years later. Activist investors have come and gone. 0:13:38.760 --> 0:13:42.400 Big oil's post pandemic playbook has been simple. Take cash 0:13:42.440 --> 0:13:45.960 from rising oil prices and hand it right back to shareholders. 0:13:46.320 --> 0:13:50.280 The challenge this earning season is to avoid missing expectations, 0:13:50.559 --> 0:13:53.520 but crude prices were down twenty percent in the final 0:13:53.559 --> 0:13:57.920 three months of last year, so that's easier said than done. 0:13:58.000 --> 0:14:00.640 In Europe, Shell kicked off the season with a big 0:14:00.679 --> 0:14:03.720 beat on adjusted net income, coming in a billion dollars 0:14:03.800 --> 0:14:06.920 higher than had been expected. Add to that another three 0:14:06.960 --> 0:14:10.000 and a half billion dollars of share buybacks. Here's what 0:14:10.120 --> 0:14:14.040 the Shell CEO, Whales Sauan, told Bloomberg's Tom mackenzie about 0:14:14.040 --> 0:14:17.360 the company's plans for further returns to shareholders. 0:14:17.840 --> 0:14:20.240 What we're guided to is thirty to forty percent of 0:14:20.280 --> 0:14:24.320 our cash flow from operations coming coming back to shareholders, 0:14:24.320 --> 0:14:28.160 so shareholder distributions. What we saw in twenty twenty three 0:14:28.480 --> 0:14:30.520 is we were slightly above the higher end of that 0:14:30.640 --> 0:14:33.680 range at forty two percent. As we continue to deliver 0:14:33.760 --> 0:14:36.240 the strategy, the whole point and the whole focus of 0:14:36.280 --> 0:14:38.880 the strategy is creating more free cash flow per share, 0:14:39.240 --> 0:14:42.040 So we will continue to stay within the thirty to 0:14:42.080 --> 0:14:45.280 forty percent or thereabats through the cycle, but continue to 0:14:45.320 --> 0:14:48.240 create the capacity to be able to reward our shareholders, 0:14:48.240 --> 0:14:50.120 as we have done in twenty twenty three and as 0:14:50.120 --> 0:14:52.000 we hope to continue to do in twenty twenty four. 0:14:52.320 --> 0:14:53.600 Okay, so you have the cash flow, you have the 0:14:53.640 --> 0:14:55.880 balance sheet. Many would look at that and say you 0:14:55.920 --> 0:14:59.120 are ready, you are primed for more M and A activity. 0:14:59.160 --> 0:15:00.800 Do you expect to be more active this year when 0:15:00.840 --> 0:15:02.200 it comes to mergers and acquisitions? 0:15:02.480 --> 0:15:05.560 Our focus is very much on delivering the first sprint 0:15:05.600 --> 0:15:08.680 that we announced. We are essentially just over two quarters 0:15:08.720 --> 0:15:10.800 into what is a ten quarter sprint, and what we 0:15:10.800 --> 0:15:15.680 have identified is that actually the largest value opportunity for 0:15:15.760 --> 0:15:19.680 us is in just unlocking the full potential of this company. 0:15:20.200 --> 0:15:22.760 And so while we will continue to look at bought 0:15:22.840 --> 0:15:25.120 onsto our current port for you, we expect to stay 0:15:25.120 --> 0:15:28.400 within the twenty two to twenty five billion dollar capex 0:15:28.520 --> 0:15:31.480 range that we have guided to, and we will continue 0:15:31.480 --> 0:15:35.040 to look at preferentially going after buybacks because, if I'm 0:15:35.040 --> 0:15:38.480 honest with you, Tom, the most attractive opportunity to allocate 0:15:38.560 --> 0:15:41.040 capital too in the sector I think right now is 0:15:41.120 --> 0:15:43.520 to buy back our shares at north to fifteen percent 0:15:43.560 --> 0:15:46.760 free cash flow yield, and that is with a company 0:15:46.800 --> 0:15:49.080 that is actually building the momentum that we have. It's 0:15:49.120 --> 0:15:51.040 not about buy for us, and that's why we're focused 0:15:51.040 --> 0:15:52.360 on ourselves from now. 0:15:53.360 --> 0:15:54.840 Okay, let me get your view on the on the 0:15:54.840 --> 0:15:56.920 oil price. We've seen gains and oil of about seven 0:15:56.960 --> 0:15:59.000 percent through the month of January. There is this tension, 0:15:59.000 --> 0:16:03.240 it seems, between the question whether that's softening and the geopolitics. 0:16:03.280 --> 0:16:05.520 How do you see that evolving in the months and 0:16:05.560 --> 0:16:06.280 quarters ahead. 0:16:06.480 --> 0:16:08.440 What we see at the moment is the market is 0:16:08.640 --> 0:16:13.080 well supplied. The demand has been remarkably resilient in twenty 0:16:13.120 --> 0:16:17.160 twenty three despite multiple headwinds. The supply side is the 0:16:17.160 --> 0:16:21.680 bigger question at the moment. Questions around ope cohesion, questions 0:16:21.680 --> 0:16:25.080 around how sanctions might play up. You'll have picked up, 0:16:25.080 --> 0:16:29.400 of course, a potential increase of sanctions against Venezuela and Iran, 0:16:29.840 --> 0:16:33.520 potential enforcement or tightening the enforcement of sanctions against Russia. 0:16:34.800 --> 0:16:37.760 All of that, I think is raising questions around the 0:16:37.760 --> 0:16:41.680 supply side. Not to mention the slide slowdown in the 0:16:41.760 --> 0:16:44.600 growth of the shales patch. All of that I think 0:16:44.760 --> 0:16:47.480 is just creating a bit more of tightening in the 0:16:47.560 --> 0:16:50.160 overall market, and we'll see how that plays at but 0:16:50.280 --> 0:16:52.440 a lot of it will be based on geopolitics more 0:16:52.520 --> 0:16:53.320 so than anything else. 0:16:53.360 --> 0:16:57.240 At the moment, the gas trading desk once again knocking 0:16:57.320 --> 0:16:58.920 it out of the park, doing very well, putting a 0:16:58.960 --> 0:17:01.720 very good performance in Is there anything that derails the 0:17:01.800 --> 0:17:03.760 strength that's coming through from the gas trading team. 0:17:04.480 --> 0:17:09.359 I think the Q four was indeed an exceptional quarter 0:17:09.480 --> 0:17:13.320 for our trading and optimization organization. We saw the opening 0:17:13.480 --> 0:17:17.160 of east west ARBs through the quarter and we had 0:17:17.280 --> 0:17:20.480 length as we typically do in the Northern Hemisphere winters, 0:17:21.160 --> 0:17:23.320 and that allowed us to take opportunity to take those 0:17:23.359 --> 0:17:26.720 opportunities and create real value. What you have seen so 0:17:26.920 --> 0:17:29.600 far this year at the start of twenty twenty four 0:17:29.800 --> 0:17:33.119 is the ARBs aren't as wide as they were, so 0:17:33.880 --> 0:17:36.880 less running room there and prices. 0:17:36.520 --> 0:17:37.120 Have come down. 0:17:37.720 --> 0:17:41.360 I think with fundamentals being reasserted now as you see 0:17:41.440 --> 0:17:44.720 a better storage balance in places like Europe and Asia 0:17:45.320 --> 0:17:46.520 and a milder winter. 0:17:46.640 --> 0:17:49.280 How do you see the lergy outlook or demand outlook 0:17:49.440 --> 0:17:53.280 kind of evolving and changing as well? Given the economy's 0:17:53.320 --> 0:17:56.959 growth is slowing, rates remain relatively high, the inventories are 0:17:57.040 --> 0:17:59.399 well filled here in Europe, What does the picture look 0:17:59.480 --> 0:18:02.080 like in terms of demand for LNG So far. 0:18:02.040 --> 0:18:04.640 We're in balance from what we see, But the biggest 0:18:04.880 --> 0:18:08.520 determinant of demand growth I think will come from China 0:18:08.600 --> 0:18:12.320 and how China responds through twenty twenty four, early signs 0:18:12.640 --> 0:18:18.480 are positive. While China hasn't essentially fulfilled with some people 0:18:18.520 --> 0:18:21.360 had expected coming out of COVID, they continue to grow 0:18:21.440 --> 0:18:24.880 and we see the LNG growth LNG import growth continue 0:18:24.920 --> 0:18:28.119 in particular at these lower prices now that they are 0:18:28.200 --> 0:18:31.560 able to buy at these levels, and so that's going 0:18:31.600 --> 0:18:35.119 to be a big determinant. What's I think key in 0:18:35.160 --> 0:18:37.560 twenty twenty four is there isn't a lot of new 0:18:37.640 --> 0:18:40.560 supply coming into the market, and so as you go 0:18:40.760 --> 0:18:44.480 back into stock refilling after the winter, I suspect you'll 0:18:44.480 --> 0:18:47.920 see robust demand. So for the coming year year and 0:18:47.960 --> 0:18:50.240 a half, I think there'll be some good demand. I 0:18:50.320 --> 0:18:52.560 think one thing to keep in mind in the medium 0:18:52.680 --> 0:18:56.280 term is China again will draw a lot of gas. 0:18:56.800 --> 0:18:59.040 To give you a sense of that, just in twenty 0:18:59.119 --> 0:19:02.439 twenty four and twenty twenty five, the volume of natural 0:19:02.480 --> 0:19:06.400 gas power generation capacity that China is building is equivalent 0:19:06.440 --> 0:19:09.960 to the entire installed capacity in the UK today, and 0:19:10.080 --> 0:19:12.639 that's just China China's built out, so there will be. 0:19:12.920 --> 0:19:15.800 A look at demand for energy is What is your 0:19:15.840 --> 0:19:18.719 reaction to this decision by the Biden administration to pause 0:19:19.480 --> 0:19:22.920 the build out the licenses, the approvals for export facilities 0:19:23.040 --> 0:19:26.000 LNG export facilities in the US. What's your reaction. Does 0:19:26.040 --> 0:19:27.840 it put any of your investment plans in the US 0:19:28.200 --> 0:19:28.640 at risk? 0:19:29.400 --> 0:19:32.840 I think the short medium term there will be very 0:19:32.880 --> 0:19:35.359 little impact to the LNG markets. What it does is 0:19:35.520 --> 0:19:38.920 it undermines confidence I think in the longer term when 0:19:38.960 --> 0:19:40.879 it comes to US l G, which is which is 0:19:40.920 --> 0:19:44.680 a real shame given the world demand for LNG is 0:19:44.720 --> 0:19:46.639 going to continue to grow and the US is the 0:19:46.760 --> 0:19:50.760 largest supplier of LNG today, So a pause like this 0:19:50.960 --> 0:19:53.920 can can always create more uncertainty, in particular when you're 0:19:53.920 --> 0:19:58.760 looking at long term investments. That and for example the 0:19:58.880 --> 0:20:02.280 behavior of venture glid Global in the US to not 0:20:02.520 --> 0:20:05.520 honor the contracts towards its off takers, all of that 0:20:06.320 --> 0:20:09.400 just undermines confidence in USLNG at the time when the world, 0:20:09.520 --> 0:20:13.000 including here in Europe, really need the stability of energy supplies. 0:20:13.280 --> 0:20:16.280 That's Shell's CEO ay Al Sauan speaking to Tom mackenzie 0:20:16.320 --> 0:20:19.120 discussing some of the big issues facing the sector as 0:20:19.160 --> 0:20:21.200 we look ahead to the next set of results in 0:20:21.280 --> 0:20:25.080 the coming days from BP and Total LG. Very interesting 0:20:25.119 --> 0:20:27.520 to hear his comments on the Biden administration's move to 0:20:27.680 --> 0:20:31.880 pause approving new LNG export facilities. That's something that came 0:20:31.960 --> 0:20:35.040 up at an industry gathering in Florence in recent days 0:20:35.080 --> 0:20:38.360 as well, the Begger Hughes Annual Conference. This year's theme 0:20:38.520 --> 0:20:43.560 was Energizing Change, addressing themes of affordability and sustainability. Our 0:20:43.680 --> 0:20:46.560 energy reporter Laura Hurst was there. I've been speaking to 0:20:46.640 --> 0:20:49.600 her about the atmosphere at the conference and whether she 0:20:49.720 --> 0:20:52.880 felt it was an industry that was ready for change all. 0:20:52.960 --> 0:20:55.960 Certainly there was quite a lot of buzz around LNG 0:20:56.359 --> 0:21:02.000 hydrogen and other new new low carbon rules, but there 0:21:02.080 --> 0:21:05.880 was not much love for the Biden administrations announcement last 0:21:05.960 --> 0:21:10.160 Friday that said there'd be moratorium on l G expert 0:21:10.320 --> 0:21:13.399 so a lot of backlash. They're in the room and 0:21:13.880 --> 0:21:17.080 basically a lot of the gas producers they're saying, this 0:21:17.280 --> 0:21:19.800 is the transition field that we need, and this is well, 0:21:19.840 --> 0:21:23.920 it's going to replace coal. So it essentially criticizing the 0:21:23.960 --> 0:21:26.760 administration for what looks like a political move. 0:21:27.240 --> 0:21:29.960 Yeah, Peny, you of focused on those policy shifts and 0:21:30.040 --> 0:21:32.960 how they're affecting this sector as well. When we think 0:21:33.000 --> 0:21:38.159 about the reporting that we've had from Shell around their earnings, 0:21:38.560 --> 0:21:40.639 is that a strength that we're likely to see in 0:21:40.760 --> 0:21:43.480 this earning seasons across the sector as we're looking ahead 0:21:43.560 --> 0:21:45.400 to the next set of oil majors reporting. 0:21:45.800 --> 0:21:48.280 Well, it really depends which company you're looking at. So 0:21:48.640 --> 0:21:51.720 for example, Shell, much of their beat was thanks to 0:21:51.760 --> 0:21:54.600 their gas trading. They had what the CEO called an 0:21:54.640 --> 0:21:59.040 exceptional quarter on gas trading, and Shells Tears like BP 0:21:59.240 --> 0:22:01.600 have quite a big, big trading unit as well, so 0:22:01.680 --> 0:22:03.879 it could be reflected there. But there are a lot 0:22:03.920 --> 0:22:08.080 of other areas which aren't looking so bright. So for example, chemicals, 0:22:08.280 --> 0:22:12.880 chemicals for Shell was down almost by a billion dollars Excellon. 0:22:13.040 --> 0:22:15.840 They've got a very big chemicals unit, so we're likely 0:22:15.880 --> 0:22:18.440 to see weakness there. So it's a bit patchy, And 0:22:18.680 --> 0:22:21.439 of course in general commodity prices are softer than they 0:22:21.480 --> 0:22:22.760 were this time last year. 0:22:23.200 --> 0:22:27.000 How are these companies when we think more broadly adapting 0:22:27.160 --> 0:22:30.720 to the energy transition as well, Laura, this is something 0:22:30.800 --> 0:22:32.920 that we look out for details of of how it 0:22:32.960 --> 0:22:35.360 affects their business when we gets earnings updates. But I'm 0:22:35.440 --> 0:22:38.800 keen given that you've been having those conversations at the 0:22:38.840 --> 0:22:41.400 Baker Hughes conference as well as you're reading us where 0:22:41.480 --> 0:22:42.439 the industry is now. 0:22:43.840 --> 0:22:46.560 Well, so you've got, on the one hand, the American 0:22:46.640 --> 0:22:49.200 majors that's on Chevron, who pretty much for the last 0:22:49.240 --> 0:22:51.720 few years to have stuck to their guns of oil 0:22:51.760 --> 0:22:53.879 and gas, saying, this is what we're good at, and 0:22:54.400 --> 0:22:56.200 we're not going to, you know, go into ash or 0:22:56.280 --> 0:22:58.480 win because that's where we're going to make money and 0:22:58.560 --> 0:23:01.840 that's not where our competency lives now. Shell and BP 0:23:02.080 --> 0:23:05.080 they both kind of went down the renewable route that 0:23:05.880 --> 0:23:09.000 have pivoted back to oil and gas as of late, 0:23:09.400 --> 0:23:13.399 so there's definitely a retreat there to Talentgy is probably 0:23:13.480 --> 0:23:16.760 the one that has a little more of a footing 0:23:17.040 --> 0:23:19.480 in the renewable side, with quite a big focus on 0:23:19.920 --> 0:23:23.520 power generations as well as having a very big print 0:23:23.600 --> 0:23:24.679 in the eland G market. 0:23:25.320 --> 0:23:27.159 One of the other factors that these companies are all 0:23:27.200 --> 0:23:29.439 having to deal with, as well as disruption to shipping 0:23:29.800 --> 0:23:32.959 in the Red Sea. How much is that a factor 0:23:33.040 --> 0:23:35.120 that we should be watching out for as we continue 0:23:35.119 --> 0:23:36.959 to look through the season of earnings results. 0:23:37.840 --> 0:23:41.320 Yes, absolutely, I mean it's an important trip point. At 0:23:41.359 --> 0:23:44.480 the moment, the industry is managing that they're shipping around 0:23:44.520 --> 0:23:47.480 the cape or rather the hon of Africa, and so 0:23:47.760 --> 0:23:51.080 at the moment it's kind of being managed. And while 0:23:51.240 --> 0:23:54.240 swan the video, Shehell said, they're also looking at other 0:23:54.320 --> 0:23:57.960 things like swapping tankers from one region to another. So 0:23:58.520 --> 0:24:01.280 at the moment it's manageable, but it's definitely something that 0:24:01.560 --> 0:24:05.520 could overstill into the wider region and could become more 0:24:05.560 --> 0:24:06.119 of a problem. 0:24:06.400 --> 0:24:08.280 This is something, of course, we'll continue to be looking 0:24:08.359 --> 0:24:11.959 for details of in these earnings reports as well as 0:24:12.280 --> 0:24:14.520 we look ahead to you you've mentioned BP and some 0:24:14.640 --> 0:24:16.640 of the sort of factors will be watching in their 0:24:16.720 --> 0:24:20.320 results as well when it comes to total Energy or 0:24:20.400 --> 0:24:22.639 other majors in the sector too. What are the other 0:24:22.760 --> 0:24:24.639 themes that you're going to be watching for as we 0:24:24.680 --> 0:24:26.160 get the next set of results. 0:24:26.520 --> 0:24:30.760 Well, definitely anything that talks to demand, because demand is 0:24:30.760 --> 0:24:32.600 looking a little bit weaker at the moment. We saw 0:24:32.680 --> 0:24:36.360 that again this morning from Shells results that product results 0:24:36.440 --> 0:24:39.320 were a lot softer than they were a few quarters ago. 0:24:39.440 --> 0:24:41.800 So that's something that will definitely be looking out for 0:24:42.400 --> 0:24:45.879 and on guess demand. You know, we've had since the 0:24:46.119 --> 0:24:50.760 rest invasion of Ukraine's gases obviously had some very volatile 0:24:50.880 --> 0:24:53.760 quarters and so far this winter has been quite soft. 0:24:53.960 --> 0:24:58.080 We've had a mild winter, so inventary levels in Europe 0:24:58.119 --> 0:24:58.800 were quite full. 0:24:58.920 --> 0:25:01.320 That's our energy reporter Laura Hurst. And of course we 0:25:01.400 --> 0:25:04.760 will have full coverage of those next set of earnings 0:25:04.800 --> 0:25:08.120 from the big oil companies BP and Total next week 0:25:08.240 --> 0:25:11.399 on Bloomberg Radio. I'm Stephen Carroll in London. You can 0:25:11.480 --> 0:25:14.639 catch us every weekday morning here for Bloomberg Daybreak Europe, 0:25:14.680 --> 0:25:17.600 beginning at six am in London and one am on 0:25:17.760 --> 0:25:18.359 Wall Streets. 0:25:18.560 --> 0:25:21.119 Tom, Thank you, Steven, and coming up on Bloomberg day 0:25:21.119 --> 0:25:23.240 Break weekend. The Lunar New Year kicks off at the 0:25:23.320 --> 0:25:26.080 end of the week. Could the holiday usher in a 0:25:26.160 --> 0:25:30.520 new wave of consumption. I'm Tom Busby and this is Bloomberg. 0:25:40.800 --> 0:25:42.840 I'm Tom Busby in New York with your global look 0:25:42.840 --> 0:25:45.280 ahead at the top stories for investors in the coming week. 0:25:45.600 --> 0:25:48.040 The Year of the Dragon is upon us. The Lunar 0:25:48.119 --> 0:25:51.639 New Year falls on Saturday, February tenth, but it's the 0:25:51.800 --> 0:25:55.119 pre festival spending patterns that will give some hints to 0:25:55.240 --> 0:25:57.760 the state of China's economy, and for a preview, we 0:25:57.920 --> 0:26:00.800 turn to Daybreak Asia co host Doug Isner, who spoke 0:26:00.840 --> 0:26:04.320 with Shirley Joo, Bloomberg News reporter in Hong Kong. 0:26:04.720 --> 0:26:07.560 Tom the travel rush for the Lunar New Year holiday 0:26:07.680 --> 0:26:11.159 or Spring festival has already started. A key question is 0:26:11.240 --> 0:26:14.080 whether Chinese consumers are confident enough to give a much 0:26:14.200 --> 0:26:17.800 needed boost to the domestic economy. For a closer look, 0:26:17.800 --> 0:26:21.720 we're joined by Bloomberg Shirley Joo, who covers Chinese conglomerates, 0:26:21.800 --> 0:26:26.880 including companies focused on consumers, gaming, and telecommunication. Shirley, thanks 0:26:26.920 --> 0:26:28.600 so much for taking time to chat with us. I 0:26:28.680 --> 0:26:30.600 want to begin with the fact that as we enter 0:26:30.720 --> 0:26:32.879 the Year of the Dragon, I'd like to know a 0:26:32.960 --> 0:26:34.720 little bit more about the Year of the Dragon. What 0:26:34.880 --> 0:26:35.440 is it known for. 0:26:36.840 --> 0:26:39.520 Well, actually, the Year of the Dragon is supposed to 0:26:39.600 --> 0:26:43.000 be a year of particularly good luck in China. So 0:26:43.160 --> 0:26:46.760 you see more babies being born and you see people 0:26:48.240 --> 0:26:52.000 typically spending more than usual in the Year of the Dragon. 0:26:52.160 --> 0:26:56.879 So there is expectation that the recovery this year would 0:26:56.920 --> 0:26:58.360 be faster than last year. 0:26:58.960 --> 0:27:01.000 So a travel as we know, is obviously a big 0:27:01.080 --> 0:27:03.480 part of the story when it comes to celebrating and 0:27:04.000 --> 0:27:07.600 being with family and friends. Are the expectations pretty high 0:27:07.640 --> 0:27:08.000 this year? 0:27:09.920 --> 0:27:13.359 Well, I think for domestic travel in China, the expectation 0:27:13.520 --> 0:27:16.800 is certainly high because we've seen last year, even though 0:27:17.000 --> 0:27:21.200 you know, China's economy was slowing down and people spending 0:27:21.359 --> 0:27:25.840 power has declined and the consumer sentiment wasn't that good, 0:27:26.520 --> 0:27:29.600 travel was really one of the bright spots in China 0:27:29.760 --> 0:27:33.560 last year. So the expectation is that the trend will 0:27:33.680 --> 0:27:37.640 continue this year. People, you know, because they don't want 0:27:37.680 --> 0:27:41.560 to spend on any big ticket items and the demand 0:27:41.720 --> 0:27:45.040 for international travel is just starting to pick up but 0:27:45.520 --> 0:27:49.119 still pretty weak, so people tend to you know, seek 0:27:50.080 --> 0:27:53.359 entertainment and leisure for during domestic travel. 0:27:53.640 --> 0:27:56.240 Yeah, the most recent data that we had on the 0:27:56.320 --> 0:27:59.880 PMI services for China showed a bit of an improvement. 0:28:00.119 --> 0:28:02.080 It was small, but it may have been kind of 0:28:02.119 --> 0:28:05.080 a leading indicator that people are expecting some of the 0:28:05.160 --> 0:28:08.920 services industries to do well during the holiday period. Is 0:28:08.960 --> 0:28:09.760 that a fair statement. 0:28:10.640 --> 0:28:17.640 Yes, services industry, especially experience led activities. For example, last year, 0:28:17.760 --> 0:28:20.520 we saw the box office doing quite well and we 0:28:20.680 --> 0:28:24.720 saw people typically spending on food and drinks, like they're 0:28:24.800 --> 0:28:28.600 buying beer, going to restaurants, they're going to second tier 0:28:28.760 --> 0:28:34.040 or thirdier cities for barbecue and yeah, people tend to 0:28:34.359 --> 0:28:37.520 I think during an economic slowdown, when the outlook is 0:28:37.720 --> 0:28:40.719 still not very certain for a lot of people, they 0:28:40.840 --> 0:28:44.680 tend to splash out on just instant gratification activities. 0:28:44.800 --> 0:28:47.440 So when you look at things like ticket prices or 0:28:47.880 --> 0:28:51.400 movie tickets, are prices generally higher than they were a year. 0:28:51.280 --> 0:28:55.680 Ago, well, definitely, if you you know, buy China standards, 0:28:56.480 --> 0:28:59.800 movie ticket prices in China now would be higher than 0:29:00.320 --> 0:29:03.880 a few years ago, but the increase isn't that much, 0:29:04.120 --> 0:29:07.720 and generally ticket prices in China is still fairly low. 0:29:07.840 --> 0:29:12.000 For example, we're talking about fifty yue for seeing a movie. 0:29:12.400 --> 0:29:15.480 That's why a lot of people from Hong Kong, which 0:29:15.600 --> 0:29:19.520 is neighboring you some inland Chinese cities like Shinjin. A 0:29:19.600 --> 0:29:22.080 lot of people are going to Shinjin to watch movies 0:29:22.200 --> 0:29:23.320 because it's so cheap. 0:29:23.920 --> 0:29:26.160 When we looked at the latest activity data for the 0:29:26.280 --> 0:29:28.880 month of December, I think the unemployment rate was around 0:29:28.960 --> 0:29:33.440 five percent. So has there been an urge among companies 0:29:33.560 --> 0:29:36.239 in the services industry to bring back workers. Now, at 0:29:36.320 --> 0:29:37.719 least on a temporary basis. 0:29:38.320 --> 0:29:42.280 I think the demand is certainly picking up, and I 0:29:42.440 --> 0:29:46.000 think the reason why we've seen a lot of Hong 0:29:46.080 --> 0:29:50.440 Kong people going to Shinjin to shop and spend on 0:29:50.720 --> 0:29:55.880 entertainment partly is because the service industry there performs much 0:29:55.960 --> 0:29:59.800 better than in Hong Kong. And I've heard that that's 0:30:00.200 --> 0:30:03.800 cause because there because there were a lot of layoffs, 0:30:04.360 --> 0:30:08.360 the youth unemployment was pretty high, so people just went 0:30:08.440 --> 0:30:12.400 to Shinjen and started their started up their own businesses 0:30:12.600 --> 0:30:18.040 like street food stalls and restaurants are able to hire 0:30:18.200 --> 0:30:24.320 younger employees, and they typically are more creative and they 0:30:24.840 --> 0:30:29.760 you know, provide better services to customers. And that's one 0:30:29.800 --> 0:30:32.400 of the reasons why a lot of Hong Kong people 0:30:33.280 --> 0:30:37.640 who are used to the sort of subpar service quality 0:30:37.720 --> 0:30:40.400 in Hong Kong because you know, it's a very cut throw, 0:30:40.760 --> 0:30:44.920 very fast paced city, they feel that the service quality 0:30:44.960 --> 0:30:48.160 in Chinngin is much higher, so they all flocked to 0:30:48.280 --> 0:30:51.200 Hinjin to shop and to entertain themselves. 0:30:51.280 --> 0:30:53.560 Surely, one of the other destination points that I think 0:30:53.600 --> 0:30:56.640 of is Macau. Obviously, gaming a big part of that story. 0:30:57.040 --> 0:30:59.840 How do you think the gaming companies, the casinos will 0:30:59.840 --> 0:31:01.880 do this year during the holiday period. 0:31:02.640 --> 0:31:05.280 Well, last year for casinos it was a great year, 0:31:05.720 --> 0:31:09.720 so people sort of expected, you know, the recovery would 0:31:09.800 --> 0:31:13.640 do quite well. But actually the performance of Macau casinos 0:31:13.760 --> 0:31:18.200 exceeded the expectation. And I think it's because Macau is 0:31:18.280 --> 0:31:23.240 shifting to attract more, you know, mass market tourists after 0:31:23.360 --> 0:31:28.640 Beijing's crapdown on the VIP gamblers. So we saw casinos 0:31:28.760 --> 0:31:33.960 hosting more concerts and more conferences and more sports events 0:31:34.440 --> 0:31:37.160 to draw in a lot of people to Macau. And 0:31:37.360 --> 0:31:40.720 this year I think the growth will sort of start 0:31:40.840 --> 0:31:46.080 to stabilize, maybe because the Penta travel demand among Chinese 0:31:46.200 --> 0:31:49.320 to Macau could slow down at a certain point of 0:31:49.400 --> 0:31:53.440 the year. And also, you know, casinos typically are spending 0:31:53.600 --> 0:31:58.240 more to attract these people, so their earnings may you know, 0:31:58.320 --> 0:32:00.800 the growth may not be as fast as last year, 0:32:00.880 --> 0:32:04.240 but generally, I would say sentiment wise, it's still quite good. 0:32:04.360 --> 0:32:08.440 People are still going to Macau to see concerts and 0:32:08.520 --> 0:32:11.320 then they may just you know, drop by casinos to 0:32:11.440 --> 0:32:17.320 gamble and shop luxury. So I think, so far, I 0:32:17.600 --> 0:32:20.000 see Macau is still on the recovery track. 0:32:20.120 --> 0:32:22.120 Well, that's a great transition because I want to talk 0:32:22.160 --> 0:32:25.520 about gift giving next. Traditionally, aren't the red envelopes given? 0:32:25.560 --> 0:32:28.400 And that's just basically giving cash, right, You're not giving 0:32:28.440 --> 0:32:28.840 an item. 0:32:29.440 --> 0:32:33.880 Yes, so that's a you know, long time Chinese New 0:32:33.960 --> 0:32:39.040 Year traditions. So people just put very new newly either 0:32:39.120 --> 0:32:42.520 iron them or you go to bank for new banknotes 0:32:42.600 --> 0:32:45.360 and you put them in the red packets and you 0:32:45.520 --> 0:32:49.000 give it to your security guards, to your relatives, to 0:32:49.600 --> 0:32:54.280 any people seeing more junior to you, like you know, 0:32:54.560 --> 0:32:56.200 children of your relatives. 0:32:56.400 --> 0:32:58.720 So for friends and family members, And if you wanted 0:32:58.760 --> 0:33:00.520 to spend a little bit more money and you were 0:33:00.640 --> 0:33:03.600 interested in giving let's say, a particular item, whether it 0:33:03.720 --> 0:33:06.120 was a luxury good or something else, do you have 0:33:06.200 --> 0:33:08.440 a sense of kind of the price range that the 0:33:08.520 --> 0:33:12.320 average person would spend giving a gift to a family member. 0:33:12.800 --> 0:33:14.840 Is it less than fifty dollars us? 0:33:15.320 --> 0:33:19.320 I will say it would be more than fifty dollars US? Okay? 0:33:19.400 --> 0:33:22.000 And how might they spend that? Might they buy a 0:33:22.120 --> 0:33:24.320 device of some kind. Might it be a piece of 0:33:24.440 --> 0:33:27.719 technology or a piece of clothing. How would the average 0:33:27.800 --> 0:33:29.520 consumer go about choosing a gift. 0:33:30.360 --> 0:33:33.600 We saw the general trend last year is that people 0:33:34.360 --> 0:33:38.640 just sort of you know, they prefer to spend on 0:33:39.440 --> 0:33:44.640 less expensive items and they didn't spend as much on 0:33:44.920 --> 0:33:49.400 luxury items as before. So we've seen like a decline 0:33:49.520 --> 0:33:55.800 in spending over for example, jewelry, high fashion clothing, handbags, 0:33:56.880 --> 0:34:00.880 and these are actually not for traditional Chinese New Year 0:34:01.000 --> 0:34:05.000 gifting as well. So for Chinese New Year gifting, I 0:34:05.040 --> 0:34:09.480 would say, really people would spend more on the sort 0:34:09.480 --> 0:34:16.480 of healthcare products and medicine and you know, dried seafood. 0:34:16.840 --> 0:34:21.200 These are more like preferred by Chinese families. 0:34:21.640 --> 0:34:23.640 So the other question then that I have would be 0:34:23.840 --> 0:34:26.000 how do you acquire these goods? Is it going to 0:34:26.080 --> 0:34:28.560 a brick and mortar a physical store or is a 0:34:28.600 --> 0:34:30.480 lot of commerce being conducted online? 0:34:31.040 --> 0:34:34.440 A lot of commerce would be conducted online. So in China, 0:34:34.600 --> 0:34:38.040 e commerce is everything. That's why we've seen a lot 0:34:38.120 --> 0:34:41.960 of luxury brands they even though they want to maintain 0:34:42.280 --> 0:34:47.160 their very high and exclusive image, they have to set 0:34:47.239 --> 0:34:51.640 up shops on some of China's biggest e commerce platforms 0:34:51.760 --> 0:34:55.719 because they know that's the best access to Chinese consumers, 0:34:56.160 --> 0:34:59.880 especially after COVID, you know, during COVID. People just did 0:35:00.200 --> 0:35:04.840 everything online, and delivery in China is so fast and convenient. 0:35:05.320 --> 0:35:09.080 If you order, for example, at ten am this morning, 0:35:09.520 --> 0:35:12.799 it's likely that your products will be delivered by noon. 0:35:13.160 --> 0:35:17.000 So people just find it so convenient and you can 0:35:17.080 --> 0:35:21.759 find everything online. So e commerce is really a dominating 0:35:21.920 --> 0:35:24.680 force in China. That's why you've seen a lot of 0:35:24.840 --> 0:35:28.799 the mid range or low range shopping malls in decline. 0:35:28.960 --> 0:35:31.759 So if you go to China, chances are that you 0:35:31.800 --> 0:35:34.920 will see some shopping malls that have no people in 0:35:35.400 --> 0:35:38.320 and sometimes you know, maybe the lights aren't on because 0:35:38.480 --> 0:35:39.279 nobody's going. 0:35:39.760 --> 0:35:41.960 One of the things that's popular here in the US 0:35:42.000 --> 0:35:45.920 around holiday time and gift giving gift cards, where the 0:35:46.239 --> 0:35:49.000 gift giver doesn't actually have to purchase an item. They 0:35:49.080 --> 0:35:52.680 simply purchase a card with a dollar value that they 0:35:52.760 --> 0:35:55.360 can give the recipient, and then the recipient would in 0:35:55.440 --> 0:35:59.000 turn decide what they want to purchase with that card. 0:35:59.400 --> 0:36:02.320 Is that way of gift giving popular at all or 0:36:02.560 --> 0:36:05.680 is there the kind of the obligation to come up 0:36:05.719 --> 0:36:07.200 with a gift per se? 0:36:08.239 --> 0:36:11.759 I think the red packets would really cover a lot 0:36:11.840 --> 0:36:15.600 of that. So as we discuss just now, cash giving 0:36:15.920 --> 0:36:20.759 is a big thing, and particularly nowadays in China, cash 0:36:20.840 --> 0:36:24.600 giving on social media. For example, we chat is one 0:36:24.640 --> 0:36:28.400 of China's biggest social media platforms. It's actually got a 0:36:28.600 --> 0:36:33.600 virtual red packet giving service, so you can just you know, 0:36:33.880 --> 0:36:38.920 send your relative or your friends ten bucks or one 0:36:39.040 --> 0:36:40.680 hundred or even one thousand. 0:36:40.880 --> 0:36:41.080 Wow. 0:36:41.840 --> 0:36:45.319 Yeah, and you can spend you know, and they can 0:36:45.400 --> 0:36:46.120 spend anything. 0:36:46.760 --> 0:36:48.680 Surely, before I let you go, can you just tell 0:36:48.760 --> 0:36:50.960 me share with me how you're planning to spend the holiday. 0:36:51.000 --> 0:36:52.080 Are you planning to travel? 0:36:52.640 --> 0:36:53.239 Yes, I do. 0:36:53.640 --> 0:36:56.440 I'm planning to go back to England, China where my 0:36:56.600 --> 0:36:57.200 parents live. 0:36:57.520 --> 0:36:59.759 And when you get together with them, what's kind of 0:36:59.800 --> 0:37:02.320 the typical way that the family would celebrate the Lunar 0:37:02.360 --> 0:37:02.680 New Year? 0:37:03.280 --> 0:37:07.320 So first we would just have a big dinner and 0:37:07.520 --> 0:37:10.840 we will watch this you know, annual it's a big tradition, 0:37:11.120 --> 0:37:17.800 annual spring festival gala organized by state media, the quality 0:37:17.880 --> 0:37:22.239 of which I would say has been in decline every year. 0:37:22.600 --> 0:37:27.400 And the younger generation are you know, starting to not 0:37:27.560 --> 0:37:30.800 want to watch it anymore, but out of filial piety 0:37:31.000 --> 0:37:34.080 and out of family duty, because your parents are all 0:37:34.160 --> 0:37:36.000 watching that, you have to watch with them. 0:37:36.200 --> 0:37:38.840 Shirley, thank you so much for helping us preview the 0:37:39.040 --> 0:37:41.800 lunar New Year festivities. It's the Year of the Dragon 0:37:41.960 --> 0:37:46.360 coming up, surely. Jiao covers Chinese conglomerates, including companies focused 0:37:46.400 --> 0:37:50.360 on consumers, gaming, and telecommunications. I'm Doug Prisner. You can 0:37:50.480 --> 0:37:53.560 join Brian Curtis and myself weekdays here for Bloomberg day 0:37:53.600 --> 0:37:57.560 Break Asia beginning at nine am in Hong Kong, eight 0:37:57.680 --> 0:37:58.680 pm on Wall Street. 0:37:58.880 --> 0:38:01.520 Tom Our thanks to Doug, Anne Shirley, and that does 0:38:01.600 --> 0:38:04.160 it for this edition of Bloomberg day Break Weekend. Join 0:38:04.239 --> 0:38:06.399 us again Monday morning at five am Wall Street time 0:38:06.440 --> 0:38:08.560 for the latest on the market's overseas and the news 0:38:08.680 --> 0:38:11.680 you need to start your day. I'm Tom Buzzby. Stay 0:38:11.719 --> 0:38:14.560 with us. Top stories and global business headlines are coming 0:38:14.680 --> 0:38:15.520 up right now.