Daybreak Weekend: US Home Sales, Europe Stocks, Softbank Investment
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Bloomberg Audio Studios. Podcasts. Radio. News. This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our daybreak anchors all around the world. Straight ahead on the program, a look ahead to some fresh new home sales data and what the U.S. housing sector has in store for 2025. Also, what to expect next year in the U.S. retail market.

I'm Tom Busby in New York. I'm Stephen Carroll in London. We're asking what's on the horizon for Europe's stock markets in 2025. I'm Doug Prisner looking at SoftBank's announcement of a major investment in the U.S., as well as a potential merger of Honda and Nissan.

That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 1130 New York, Bloomberg 99.1 Washington, D.C., Bloomberg 92.9 Boston, DAB Digital Radio London, Sirius XM 121, and around the world on BloombergRadio.com and the Bloomberg Business App. ♪

Good day to you. I'm Tom Busby, and we begin today's program with the $50 trillion U.S. housing sector. 2024, a dismal year for housing because of sky-high home prices, stubbornly high lending rates, and so few homes on the market. This year on track to be one of the slowest in decades for home sales. But...

There have been some bright spots. We could see another on Tuesday with November new home sales data. And there's hope for the year ahead. For more on what to expect, along with his outlook for home building and sales in 2025, we're joined by Drew Redding, Bloomberg Intelligence U.S. Home Building Analyst. Drew, thank you so much for being here. Thanks for having me. Well, after we saw last week existing home sales for November rose nearly 5%, what do you expect to see this Tuesday in that November new home sales report?

So for the new home market, we do expect to see a pretty nice sequential bump, just like we saw with housing starts. You're probably going to see a snapback in the south, which was down almost 30% sequentially last month due to the disruption from the hurricanes. So we should see a nice pickup. With that being said, though, while the new home market has outperformed the recent rise in rates to more than 7%, has definitely slowed activity in the market.

We recently heard results from Lenar, who's the second largest builder in the country and one who's focused on driving higher volumes. And basically their orders were more than 10% below the low end of their guidance. So, you know, while the new home market has outperformed with affordability as bad as it is and rates actually creeping up, we are seeing a slowdown there as well.

Now, are you seeing that slowdown nationwide or is it in the south where, you know, where Lenar is? Or you also heard from Toll Brothers recently, too, saying they see a bit of a slowdown, right? That's an East Coast high-end builder.

Yeah, that's a good question because when we look into 2025 we see regional dynamics taking more of a front seat to how the builders actually perform now. The challenges we're seeing on the affordability side and you know with higher rates and how that's impacting demand that's across the nation everybody's experiencing that but.

When you look at local markets, there are some issues that you have with supply. And a lot of that is in the south. So inventory levels have been a big part of the discussion over the last couple of years. Not a lot of resale supply, so builders have benefited.

But now we're starting to see existing home supply meet or even exceed 2019 levels. And where we're seeing that the most is in markets in Florida and Texas, which are among the most important markets for the builders. So that's something that we have to keep our eye on as we look out to next year. So inventories going up in the hottest housing markets since the COVID-19 hit, does that mean they've matured or saturated the market?

So there's been a lot of construction there. You know, in Florida, one of the problems you have is with all the storm related activity, you have more homes coming on the market. The condo market has really slowed down. I think you probably have some

people who invested in rental properties, perhaps putting their homes back on the market. So, you know, those were two of the strongest markets, certainly since COVID. We saw a lot of migration into Florida and Texas, which is starting to slow down as well. So I think part of it is, you know, market saturation, which is leading to this higher rent towards what we think you could see is a shift in the competitive dynamic.

So, as I mentioned, builders have benefited from a lack of resale supply. So as more of that comes on, we think they're going to have to continue to get more aggressive on pricing and incentives, which could put pressure on prices in those local markets. And some of those incentives, not just financing, but also upgrades on appliances, quartz cabinets, you know, that type of thing. Is that what you mean?

Yeah, that's right. I think, you know, for the most part, you'll see the financing incentives used by the lower end of the market. So entry level buyers and maybe the first time move up buyer. But when you start to kind of get up the income spectrum, think of a Toll Brothers home buyer. Typically, you're seeing them use any incentive dollars to make upgrades to the house. So it's a little different depending on what part of the market you're talking about.

You would think with the Federal Reserve lowering rates for a third time to end this year that, you know, happy days are here. We're going to see lower rates. But there's no indication of that in the mortgage lending market, is there? Not yet. No, there's not. And, you know, as I mentioned earlier, we're actually above 7% now. I think last time we checked, we were about 7.13% on the 30-year mark.

So we're up about 100 basis points since the Fed started cutting rates, which isn't what a lot of people were expecting. You know, a lot of that has to do with the fact that you've still got a solid economy. And I think some of the policies put forth by the new administration are expected to perhaps be inflationary, which is why the market is reacting the way it has. Wow. A lot of challenges in 2024. Looks like a lot ahead. Well, our thanks to Drew Redding, Bloomberg Intelligence, U.S. home building analyst.

We move now to the U.S. retail sector, how it's faring during this make-or-break Christmas holiday season, and what to look for in 2025. And for more, we're joined by Mary Ross Gilbert, Bloomberg Intelligence Senior Equity Analyst covering retail. Well, no doubt, Mary, Americans continue to spend a ton of money at stores, restaurants, auto dealerships, travel, and more, despite stubbornly high inflation affecting them, along with a lot of economic uncertainty.

How has the retail sector fared this year, especially the last few weeks leading up to Christmas? Yeah, so the retail sector is actually been doing quite well. And we got that with data that came out this past week with GDP coming in at 3.2 percent ahead of estimates of 2.8. And that's really driven by consumer spending.

So when you look at the retail sector, we think that some of the retailers that could outperform, two that really come to mind on the specialty apparel side would be Aritzia and Abercrombie & Fitch. And we were looking at consumer transaction data during this holiday season, and they're tracking well ahead of estimates right now.

In the department store space, if you look at the players there, you've got Nordstrom. And Nordstrom also has an off-price concept, which also caters to consumers looking for value, speaking to high inflation that we're experiencing right now. We think Nordstrom could be a leader in terms of outperforming estimates out there. And then it looks like Macy's is tracking a little bit ahead.

Kohl's is kind of close, but they could be at a greater risk of missing. And that's mainly due to merchandise issues that they've had. So the estimates for them is for comp sales to decline 7% in the quarter.

In the off-price sector, we think they're going to benefit from strong sales during the holiday season. They tend to be a big draw, especially as we get closer to Christmas. Right now, according to consumer transaction data, their sales are tracking in line with estimates.

So we think they could be an outperformer as well in this space. Now, the off-price center is obviously attracting a lot of lower wage earners, other consumers, but some consumers have changed their shopping routines because of high inflation. Higher wage earners shopping where they've never shopped before. Is that right? That's absolutely right. It's happening at off-price and it's also happening at Walmart.

And so Walmart is able to capture additional share in other categories such as apparel in general merchandise when they have those higher end consumers in their shopping groceries for the lower prices. And off price, they're also these higher end consumers are able to get even the designer brands. They're able to get Gucci, Prada,

All of these brands will also have some of their products in the stores. So it does have the higher end. It also has the middle end and the low end in terms of brand breadth across off price. And so that's been a big draw. Now, Walmart, what have they done right? Walmart's stock is up 80% this year. They have hit it out of the park. What is it that they've really latched onto here?

Walmart has really done a good job in a number of ways. One is with their delivery and they have this Walmart Plus program where you get free delivery usually same day. Frankly, even without using that, you can get delivery. So you can buy all your household goods that way. But most consumers really like to shop weekly.

And so while they're there, they're able to capture other merchandise. So they're just doing a really good job executing and really delivering what the consumer wants. So groceries, necessities and everything else as well. Exactly. Wow. Now we have seen, though, a lot of store closures over the past year.

family dollar cvs macy's also dozens of bankruptcy filings big lots route 21 express the body shop do you expect to see even more i mean is the retail environment that cutthroat that tough and with e-commerce you know that factored in is it getting tougher for smaller retailers if you're not walmart target kohl's or some of the others

It really comes down to a retailer by retailer basis, and it also depends on how levered they are. So usually it's the ones that have a lot of debt and where they're misexecuting. So, for example, if you look at Kohl's, Kohl's piled on extra debt when they ended up doing a stock repurchase a few years ago. It was about a $700 million cash that they spent on repurchasing their shares.

The business is underperformed. And even this year, when they were supposed to be showing traction with a turnaround, and they have Sephora. So they are getting consumers in and the Sephora business is up 9% on a comp basis. But the overall comp sales are down 6% to 8% in the latest quarter. And part of it was just mis-executing. They took

some of their private brands and shrunk it in the store. And those private brands were a great draw to the lower end consumer. And that's where they got hurt. So now they're having to backtrack and bring back in those brands. They also took out jewelry when they brought in Sephora and jewelry was really important, especially when you think about the holidays. So it's going to take some time for them to turn around.

So they're struggling right now. But some of the other companies, Nordstrom. Nordstrom is really...

up their game with their full line business and that's now comping positive. And then of course, they also benefit from having the off price. It's a fast growing off price business. So that's helping Nordstrom sort of lead, I think in the department store space. And you spoke about Macy's closing stores. Yes, they will be closing about 150 stores. They haven't happened yet. They always wait until after the holiday. So they'll be shutting 65 stores

when their quarter ends at the end of january and then of course they'll close the other 85 over the next two years and maybe they'll be able to accelerate it and get it done next year oh boy well a lot to look forward to our thanks to mary ross gilbert bloomberg intelligence senior equity analyst covering retail and coming up on bloomberg daybreak weekend we'll look at what's on the horizon for europe's stock markets i'm tom busby and this is bloomberg

As criminal ransomware and state-sponsored attacks continue to escalate, a bolted-on approach to cybersecurity isn't cutting it. In fact, the more security tools an organization uses, the more security incidents it has.

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Take your business further at T-Mobile.com slash now. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. Up later in our program, we'll discuss SoftBank announcing a major investment in the U.S. as well as a potential merger of Honda and Nissan. But first...

In 2024, Europe's political situation has been decidedly rocky. The bloc's two largest economies, France and Germany, both facing tumultuous governmental shifts, sending shockwaves reverberating around the continent and in its economies. Will 2025 bring better fortunes for European investors? For more, let's go to London and bring in Bloomberg Daybreak Europe anchor Stephen Carroll.

Tom, European equities this year have underperformed their American peers, which have benefited from a high concentration of technology stocks. According to Bloomberg's survey of 20 strategists, the Stock 600 index will end 2025 at 535 points, indicating gains of less than 3%. Compare that with the forecast for the S&P 500 to rise 7.5% on average, and as much as 17% under the most bullish outlook.

This year, the European index is heading for one of its worst annual performances against the S&P on record. Despite the gap, the index has managed to rally towards the year end. The benchmark is up almost 1% in December as optimism over potential Chinese stimulus measures boosted sectors most exposed to the Asian nation's economy, such as makers of luxury goods and autos.

But could there be more trouble on the horizon? 2025 will bring elections in Germany, also looming President-elect Donald Trump's touted trade tariffs. Uncertainty looks to be on the cards during the coming year, but some investors are still optimistic. Lucy Baldwin, Global Head of Research at Citigroup Global Markets, says European equities will still serve a purpose in her portfolio.

Clearly, the consensus out there is that you've got a set of policies coming through across trade, across fiscal, across immigration, and obviously across the regulatory reset, that net-net are probably going to boost US growth, maybe a little bit inflationary. Hence, this view that you're going to see now less rate cuts. You've seen obviously the back end steepening as people are a bit nervous about the

fiscal impact on, of course, the overall debt burden that the U.S. is carrying. All of those things together, I think, have obviously given rise to this view of U.S. exceptionalism as a trade continuing. I think, to be honest, it's really hard to bet against it. We'd still be overweight U.S. equities. We're still expecting...

double digit returns just about next year. But what we are saying is to barbell it with some other exposure around the world. Don't have all of your eggs in one basket. So we would barbell it with actually some European exposure. What is in the US part of that barbell on that end? And secondly, what is giving you conviction? Is it a valuation story in Europe now? Or is it the ECB is essentially going to be the backstop for European equities?

Yeah, I think you're right. I think there's a range of factors for Europe that are potential catalysts. I definitely think the path for the ECB to cut is a more clear-cut one than the U.S. debate, right? I think we can see a scenario where you get really substantial cutting from the ECB all the way through next year, a little bit like the Bank of England story. So, that's definitely one support/catalyst. I think another could be potential ceasefires, resolutions of various conflicts around the globe.

I think another could clearly be China. So, although I think the caution on China is that it may well be a sort of shorter-term fix, we would expect to see some fairly substantial fiscal coming through. I think that's increasingly becoming the consensus that you're going to see that as we go into next year.

that China will do what is required there to support that market and obviously to try and get the households out there, the consumers out there spending, feeling confident. But obviously, they've got to do that without further jeopardizing the housing market. Is that a big bazooka call from China or is it more marginal and incremental?

I think it could well turn into more of a big bazooka call depending on where things go. It's a really delicate balance for them, I think, because you've got to let that housing market clear somehow. At the end of the day, you've got too many properties relative to the declining population in big chunks of the country. So it's a very difficult thing to do.

thing for them to manage, that transition away from a very property investment-led economy into one that is hopefully going to be increasingly about GDP being consumption-driven. But to make that happen, you've got to do it very carefully and thoughtfully. It's going to take some time. But we would be surprised if you don't see some fairly concerted focus on the fiscal side in China as we go into next year, which should help Europe and certainly a lot of sectors, hence, for example, our recent upgrade in luxury.

Talk to us about where else you're seeing strength in European equities as well. So luxury linked to the Chinese picture too, but is there anything that's a bit more domestically focused that actually might look better next year?

Yeah, I think there's going to be some interesting areas where, for example, we've had interest and demand from clients to look at names that are exposed to potentially a Ukraine rebuild, areas that are exposed to the U.S. story, right? Maybe more positively. There's a view, I think, forming that the tariff –

trade war risk increasingly morphs into more of a negotiating set of tactics and maybe therefore Europe can play some of that to its advantage next year. I mean, we saw in Trump 1.0, the reality was that the car makers, if you want to get access, European car makers to the US consumer, you've got to go build, invest, put your factor

up in the United States, employ some American workers, and that's how you get your access to that market. I think that's likely to be part of what we see again this time. So, I think there's going to be stocks in Europe that are going to be positively exposed to a fairly constructive domestic backdrop in the U.S., if that is to continue. Clearly, that is a big if, and there are some risks around that. But that would be how we think about it. Actually, weirdly, in many ways, we think that the biggest wildcard next year is actually the U.S. economy.

Lucy Baldwin from Citigroup there speaking to me on Bloomberg Radio. Now, Bloomberg's research also offers comfort for investors in that relatively few strategists predict major declines for the stock's 600. 85% of them actually see the index closing out next year at above 530 points.

In fact, earnings growth expectations for next year are spooking some market participants. So-called bottom-up estimates for 2025 from analysts studying individual companies see earnings per share growth of 8% for Europe. That's only slightly shy of the projections for the U.S.,

So guaranteed instability and potential profits. What else is in store for Europe's equity markets in 2025? I've been discussing this with our senior equities reporter Michael Masika. Let's say nothing went really wrong, but I guess it didn't go as right as for the US. Europe is, you know, kind of have problems with the politics.

And that has had a big impact on markets this year. Since the European elections, the Stock 600 has done pretty much nothing. And the following French election, the political instability that we're seeing in the core European markets, now we have an election in Germany as well, coming in next February, have been kind of deterring investors from being in the European equity markets.

And is that continuing into 2025 then? Will political turmoil be the dominant theme of the coming months as well?

Well, what's funny this year is normally political instability is kind of a temporary thing. And you have market reacting quite strongly at first and then things quiet down. And you can see that on the bond market, things tend to quiet down. But at the same time, Europe has like a habit of messing things up like that. And

And so, yes, I think we can have an overhang that's going to remain, especially in France and in Germany, because people want to know, investors want to know where things are going, how money is going to be spent. Is there going to be stimulus in Europe? Those are the big questions. It's a sluggish, there's a sluggish growth, economic growth on the continent.

And that needs to be addressed. And it can't be solely addressed by the ECB, which is expected to catch rates quite a few times next year. I mean, at least four times by the summer, I guess.

And, you know, there's more needed to spur that economic growth. And that's the only way that you will have an equity market performing strongly and especially compared to the U.S. Well, is the comparison the key issue here? Is that essentially the performance of stocks in the U.S. and particularly some of those AI-linked stocks have been so spectacular that it's just drawing investor interest and Europe looks relatively unshiny and a bit dull by comparison?

Yes, exactly. And you have also the impact from passive flows. I mean, you got to realize that today 75% of the MSCI world is US equities. So when you put money into a global fund, it's going to be like driven to the US. A lot of it is going to be driven to the US.

And so that's a problem for Europe. So on that side, it makes things much more complicated. Having said that, you have a region, which is the US, which is priced for perfection. I mean, super high earning growth, good economic growth, very, very high valuations.

And on the other hand, you have another region which has great companies that are heavily discounted to their US peers, that are priced to fail. And, you know, the asymmetrical return is kind of positive for the continent if you look at that on a relative basis. So, you know, investors have to be diversified. I mean, is that the bullish case for European equities? They're cheap, get them now?

Well, they've been cheap for a while, especially compared to the U.S., and the valuation gap has been widening over the years. But, you know, there is a point when things can't be ignored, and that's usually when there's a turning point. So, yeah, we'll need a catalyst to do that.

to narrow that gap. It won't go back to zero. That's pretty much impossible, just given the split in terms of sector exposure from the European markets. We're not as tech heavy as the US and valuation in tech are much higher. So just on that basis, it's impossible. But there is narrowing possible, especially in some sectors like, you know,

oil or mining or industrials where some discounts are still visible.

What about the sectors that have been leading lights in Europe in recent years? I'm thinking about luxury and I'm thinking about pharmaceuticals, some of the, you know, Novo Nordisk in Denmark being one example as well. I mean, what does 2025 look like for those sectors? So for the luxury, it's a very specific case because the industry has been driven by the Chinese consumer market.

mostly during the past 10 years. And the way that sector has been working

was 8% price increase and 2% growth a year. And that's how you manage to grow your revenues over the years. That might not be possible in the years to come because the consumer might not be ready to pay as much for luxury items. And having said that, they are now trading on much lower multiple than they used to. China has pledged

pledged like a lot of stimulus and keeps pledging stimulus. They're now focusing on the consumer. So, you know, we can find some growth within the Chinese consumer that would be positive for the sector. But that's the key for the sector to perform next year. As for the pharmaceutical industry, I think

It's going to be about the US policy and we need a bit more clues after the after Donald Trump takes office to have a clearer picture.

My thanks to Bloomberg's Michael Masika. I'm Stephen Carroll in London. You can catch us every weekday morning here for Bloomberg Daybreak Europe, beginning at 6 a.m. in London and 1 a.m. on Wall Street. Tom? Thanks, Stephen. And coming up on Bloomberg Daybreak Weekend, we'll discuss what comes next after SoftBank announces a major investment in the U.S. I'm Tom Busby, and this is Bloomberg. ♪

As criminal ransomware and state-sponsored attacks continue to escalate, a bolted-on approach to cybersecurity isn't cutting it. In fact, the more security tools an organization uses, the more security incidents it has.

According to new research from Google, companies that use 10 or more security tools average 14 incidents per year. That's more than double the amount for those that use fewer than 10 tools. To proactively manage cyber attacks, organizations should invest in productivity tools across email, documents, and video conferencing that are secure by design, hopping off the treadmill of software patching and lightening the load on their embattled IT and cybersecurity teams.

To learn more, visit g.co slash workspace slash more secure. From the Delta Sky Club to the Jet Bridge, Delta Airlines relies on 5G solutions from T-Mobile for Business to power operations and serve customers faster. Together, we're putting 5G into the hands of ground staff so they can better assist on-the-go travelers with real-time information throughout the airport. This is elevating customer experience. This is Delta Airlines with T-Mobile for Business.

Take your business further at T-Mobile.com slash now. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. This past week, the founder of Japan's second largest publicly traded company pledged to invest $100 billion in the U.S. over the next four years. For more, let's get to Doug Krisner, host of the Daybreak Asia podcast, for a closer look.

Tom, it's an eye-popping pledge. In making it, the CEO of SoftBank, Masayoshi Son, appeared alongside President-elect Trump at Mar-a-Lago. My confidence level to the economy of the United States has tremendously increased with his victory. So because of that, I'm now excited to commit this $100 billion and 100,000 jobs into the United States.

This is double of last time, as President Trump said. That is Masayoshi San, the CEO of SoftBank. Now, the 100,000 jobs that he is pledging focused primarily on artificial intelligence and some related infrastructure. That would include things like data centers, semiconductors, even energy. But there is one major question looming. Where will this money come from?

To help us answer that, let's bring in Bloomberg's Catherine Thorbeck, who covers tech for Bloomberg Opinion. She joins us from our studios in Tokyo. Thanks for taking time to chat with us. I'm going to ask you that point blank. Where is $100 billion going to come from? Where is Masayoshi Son going to get this?

So that's a very good question, Doug. And right now, SoftBank on the balance sheet has about $25 billion in cash. So it's not immediately clear where this money will come from. It seems like he's going to have to go out there and raise it.

And I also think, you know, a lot of tech reporters were sort of getting deja vu when we heard this announcement because flashback eight years ago in 2016, when Trump was first elected, Masayoshi Son came out and he pledged $50 billion, a $50 billion investment in the U.S. tech ecosystem and said he'd create 50,000 jobs.

And it does seem like SoftBank came through on that investment, that $50 billion figure, and mostly from its Vision Fund. But one thing that's not totally clear is if those 50,000 jobs were actually created. A lot of the investments went into startups and private companies that don't disclose sort of their hiring figures. And some of it went to sort of WeWork and Uber and DoorDash, which some of those companies actually had layoffs. And WeWork obviously went bankrupt there.

So I think we should really be keeping a close eye and sort of demanding a little bit more accountability this time on the jobs figure specifically, this 100,000 jobs figure. And that said, I mean, I am curious how much of this $100 billion investment was sort of preplanned versus sort of timed to Trump's win and his victory and how much of it

But like I said, he doesn't seem to have the cash on hand. So we'll have to see how it all plays out. But there's a lot of questions. Can you conceive of a situation where he has to actually sell assets in the portfolio in order to raise these funds?

So I think it was kind of a wise sort of suave move on Massa's part to sort of go out there with Trump and show that he has Trump's support and his backing. And I think that in some ways will sort of raise his profile as he goes out there and tries to raise more funds. And it's been a little hit or miss with Massa's investments over the years. There have been some big wins and obviously some very high profile losses there.

But he has recently been doing better. I mean, Arm was a very good investment, especially ahead of this AI wave. And, you know, more recently, Masa has been coming out at events in Tokyo and speaking very passionately about how he wants to go all in on AI and how this is the future. And, you know, he's made comments at investor events saying that this is what he was born to do. So he does seem to have a lot of enthusiasm for AI. And it does seem like he was planning to invest in it heavily. And the U.S. sort of makes sense because of its AI ecosystem.

So, yeah, I'm curious how he will exactly get this money and where it will go. But it does seem like this was sort of on his radar for a while. The title of one of your recent columns, as I recall, was Masa Tries to Make Up for Past Mistakes. And one of the things you point out is that some of his investments have really been aimed at reinvigorating Japan's technology arena. And I'm wondering whether or not this move into the U.S. would come at the expense of putting more money to work in Japan. Yeah.

That's a good question. And, you know, I have a lot of respect for Massa. I think sometimes he sort of gets a bad reputation in Western media. But I recently read a biography about him, which kind of explains a lot about where his sort of appetite for risk comes from. And, you know, he really has one of those like –

stranger than fiction sort of stories. I mean, he was born to Korean immigrants in post-war Japan, faced a lot of discrimination, was essentially born in a slum in southern Japan. And then he became the biggest single foreign investor in both communist China and the U.S.,

So he has quite a rise. And I think when you sort of come from nothing, you're losing it all is sort of relative, if that makes sense. And some of this is from a recent biography that came out from a Financial Times editor, Lionel Barber. But I think he's had a really interesting sort of run of it. And I think, you know, not all of his bold proclamations actually play out. But I think he's not afraid to sort of

go all in and make these big bets and then sort of see how it all sort of falls together. Yeah, he was a big backer of WeWork. We know how that ended. But as I kind of mentioned earlier, a lot of the focus on this $100 billion investment will be on artificial intelligence. And one of the things that we know of Masayoshi Son's big bets has been on

what is being referred to as super artificial intelligence. Can you help me understand that? Sure. So he has said super artificial intelligence is what he was born to do. He speaks very boldly about that in his sort of true masa fashion. And that's basically artificial intelligence that's

hundreds or thousands of times smarter than humans. And, you know, there's a big debate going around in the tech sector of whether we'll see this in our lifetimes, whether we'll see this at all, whether it's, you know, just more hype. And it's very possible that, you know, Masa is sort of feeding into this AI hype cycle, you know, and inflating a lot of sort of AI companies.

But at the same time, you know, he was sort of humbled by WeWork, I think, and he was sort of humbled by some of his more high profile losses and sort of, you know, going back to his initial $50 billion investment in the U.S., it was very wide. It was like sort of any startup, any tech company, you know, robots that make pizza. WeWork was sort of the high profile one. I think this time around, he is very focused on, OK, does this have an AI element? Will this help

build AI infrastructure? How does this sort of tie into creating super artificial intelligence? So I do think we'll see a little bit more sort of discipline in that sense. But at the same time, A, so many tech companies right now are all touching AI. So it's a little bit less harder to miss in that sense. And B, we just sort of never know with MASA. I mean, you

Yeah, I think there's just really more questions than answers at this point. But I do think we should try to hold him to account, especially with this jobs figure, the 100,000 jobs. So what do we know about the way in which the investors in SoftBank have been reacting to this news? Are they giving confidence, their confidence in Masayoshi-san or not?

So I think initially after, and I'd have to check the latest figures, but there was initially a sort of small jump in SoftBank in the U.S. after Massa appeared with Trump. And I think some of that is, like I said, he's

I think it was sort of wise to go out, step out with Trump and, you know, take advantage of this moment and show that, you know, he has Trump's blessing and, you know, show that they're sort of side by side and get all those eyes on him. So I think that was sort of a wise move. But going off that, you know, I don't think it's clear that

this investment announcement was necessarily timed to Trump's win, or if it was sort of, there was a series of pre-planned set in motion events to invest in AI in the US. Catherine, thank you so much for your time. She is Catherine Thorbeck, Asia tech columnist for Bloomberg Opinion, joining us from Tokyo. We move next to the Japanese auto industry, where Honda and Nissan are reportedly exploring a merger.

Now, these negotiations hold the potential to create the world's third largest carmaker, giving it a better position to compete against industry leader Toyota. And we hear the transaction could be expanded to include Mitsubishi Motors. The Nikkei is reporting official talks and possibly a public announcement could come as soon as December 23rd. For more, we are joined by Tatsuo Yoshida, senior auto analyst at Bloomberg Intelligence, joining us from the Japanese capital.

Thank you for making time to chat with us. So obviously, this is one way of dealing with competition globally in the market for automobiles. But can you help me understand the degree to which there is perhaps excess capacity in auto manufacturing in Japan?

Yes, there is excess capacity and all the manufacturers are now consolidating the production lines or closing the factory. So they have to deal with it. The reason behind that is two things. One is diminishing population in Japan. Domestic car sales is declining over time. And then also extension of the overseas production. Make the vehicle where the demand is. That's the Japanese policy.

One of the things that's very interesting, especially when it comes to electric vehicles, Tatsuo, as you know, China has really been dominating this space. How much of this consolidation in Japan is related to competition from China?

It's a big threat. As far as right now, the big EV market is limited to China, more or less Europe, and then California and then other states following California regulations.

But from a long-term perspective, EV is the way to go. So the EV, move to the EV is slowed a little bit, but Japanese car companies should not stop the EV development. And then EV development requires money, people, and then technology. So getting together, joining forces, for example, Honda, Nissan, Mitsubishi, that will help those three entities.

Earlier in the year, I think Honda and Nissan decided to work together on electric vehicle batteries and software. Is it fair to say that Toyota is a little bit behind the game when it comes to EVs? The company made a bet maybe that hybrid vehicles would be the path forward. Maybe they were caught a little bit flat-footed with electric vehicles?

Actually, it looks Toyota is behind, but it's kind of purposely slow. Toyota's strategy is 360-degree strategy. They have money. They have people. They have a lot of resources. They can do everything. Of course, Toyota is developing...

EV for China, Europe, and then California. Help me understand how Honda and Nissan use mechanized manufacturing processes, robotics, as a part of their production process. When it comes to the conventional vehicles, like internal combustion engine vehicles, their production system is kind of state-of-the-art. Actually, they are not behind the others. Actually, they are leading the global automobile manufacturing.

But when it comes to the EV manufacturing, they tend to use the existing system. So in other words, it's different from the newcomers like Tesla or BYD. They can start from scratch, dedicated production system for the EV. They can do that, but Japanese cannot do that. Tatsuo, thank you so much for joining us. Tatsuo Yoshida is Senior Autos Analyst for Bloomberg Intelligence.

I'm Doug Krisner. You can catch us weekdays for the Daybreak Asia podcast. It's available on Apple, Spotify, or wherever you get your podcast. Tom? Thanks, Doug. And that does it for this edition of Bloomberg Daybreak Weekend. Join us again Monday morning at 5 a.m. Wall Street time for the latest on markets overseas and the news you need to start your day. I'm Tom Busby. Stay with us. Top stories and global business headlines are coming up right now.

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