Bloomberg Crack of break of day: Australia 02/16/2024

Welcome to DAYBREAK, Australia.I'm Harry Stride. What's in Sydney where markets have justcome online? And I'm Paul Allen.We are counting down to Asia's major trading opens.The top stories this hour. Wall Street looks past of mixed economicdata with the S&P 500 hitting another all time high, US retail sales droppedby the most in nearly a year. Jobless claims decline.Fears of a wider war in the Middle East continue to grow as attacks intensifybetween Israel and Hezbollah in Lebanon. Plus, our scoop on how Apple is readyingan eye tool for developers that will.

Step up competition with Microsoft.Let's get to some breaking news right off the bat.We do have unemployment numbers out of South Korea, the rate droppingunexpectedly to 3%. The expectation was for a reading of3.2%. That's a pretty dramatic slowdown onwhat we saw the month prior as well, although the revised number for Decembernow being brought down to 3.2%. So 3% unemployment rate in South Korea.Interesting story as well. One out of five jobless seekers or jobseekers in South Korea, age 60 plus. So that does tell us something about thestory of the aging population in South.

Korea as well.We've just opened four trades here in Australia.Meanwhile, let's take a look at how we're doing in the early going, buildingon some of the gains that we saw on Thursday.The ASX currently higher by about a fifth of 1%.We do, of course, as you know, have the staggered opening in Australia whereopened an alphabetical order. But we've got the ASX already trading.We had earnings today for the first time from the ASX, a miss on revenue it Ms.on the interim dividend as well. We've got shares in ASX declining by2/10 of 1% at the moment.

BHP meanwhile gaining.We have the news today. The train drivers have called off theirstrike action at the world's biggest miner.See the yields on the Aussie three year and ten year.Not a lot of movement there. The ten year currently at 4.157, theAussie dollar breaking back above $0.65 after yesterday's surprisingly highunemployment. Read 65 of 27 there at the moment.Okay, let's take a look at futures. Meanwhile, for the Nikkei, it looks likewe're setting up for another positive day there, better by a 10th of 1%.New Zealand already trading.

We heard from the RBNZ Governor AdrianOrr a little bit earlier on. He's keeping the inflation fight welland truly alive there. We've got the NZ techs putting on somemodest gains. The yen, meanwhile that's dropping justbelow the 150 level. And we are of course still on watch forpossible intervention from the Ministry of Finance.Yes, certainly at those levels there's always a risk of a fall.Take a look at our setting up for US futures at the moment looking broadlypositive. We did see traders on Wall Street moreor less looking past what is a bit of a.

Chaotic and mixed set of economic data.We saw buy stocks and bonds in the US higher before that inflation reading.That will help kind of define where the Fed goes from here.But we did, as we mentioned at the top, both US retail sales and industrialproduction showing declines. Homebuilder sentiment on the other hand,climbing to a six month high in February.So a real mixed bag there. We are seeing broad positivity a littlebit more. So when it comes to Nasdaq 100 futuresup about a quarter of 1%. We also saw Treasurys ending theThursday session with just small gains.

After paring that advance.That was sparked by the softer than expected January retail sales numbers.And with that next to the calendar in particular with that unexpected jump inimport prices ahead of the CPI data due out on Friday, as well as sort ofbusiness survey saying stronger than expected earnings out of the New Yorkand Philadelphia Fed banks. A lot of sort of mixed messaging forTreasury traders to be dealing with at the moment.We did see demand kind of surging for downside protection when it comes toTreasury options that re cheapening of us ten year yields back towards four anda half percent.

A quick look at oil as well.We are seeing that rise continuing just above $78 a barrel in New York.We risk on sentiment across broader markets, any kind of luring traders backinto crude. And that certainly was a bigger kind ofstory than the IEA's forecast for slowing demand growth.Paul Okay, let's get a little bit more on that US data with our globaleconomics correspondent and occurrence. So and or as Heidi was saying, there aresome real mixed signals there. What's the key takeaway from this retailsales numbers? Look, the retail sales numbers weak.It's mostly covering merchandise goods.

There was weakness there in purchases ofgardening equipment, of construction material, electronics purchases.Purchases were down on the upside. Spending on eating out, spending ongroceries was actually up under month. So it's kind of a mixed picture.It's also hard to completely ignore the fact that it's a month after, of course,the big holiday shopping season. And it was pretty bad weather, heavysnowstorms in the month as well. So there's some seasonal factors goingon there. But, you know, you'd have to say thevery least, it suggests maybe some softening of consumer sentiment,consumer spending.

Some of the big corporations here havebeen making the point that customers are now putting more emphasis on valuerather than perhaps spending and splurging the way they were.So this this particular one number doesn't suggest an end to consumer boomor anything like that, but it might suggest that perhaps consumers arebecoming a bit more cautious and at the margins, maybe some steam is coming outof what once were very red hot parts of the economy.Right. And when it comes to the labor market,how significant was that drop in jobless claims for you?Well, you know, this comes out every.

Week.I don't think it changes the overall story today that the jobless claims dip,really. If anything, it speaks to, broadlyspeaking, the labor market is in good order still, Heidi.There's been a lot of high profile layoffs here.A lot of well-known brand name companies have been cutting staff, sometimes insizable numbers, but not yet enough to make a dent on the aggregate overalllevel. But this, of course, is where the bigdebate is. We just had those really strong figuresfor January.

You do have some economists making thepoint that, look, the labor market is softening and job job advertisements inparticular have come off the ball. That suggests companies don't want tohire as much as they used to. Some are arguing the next stage in thatwill be actual job cuts. We're clearly not there yet.Today's numbers don't necessarily push that story in either direction.I think it's fair to say for now at least, the jobs market story continuesto be pretty robust. So what does all this mean for the Fed?And you mentioned the retail number might have some seasonal factors.There is the biggest story here still.

CPI.Well, we didn't also have the industrial darling I you mentioned and that wassoft and suggesting the manufacturing sector is still under pressure andthat's kind of going against the grain of what people had been thinking, thatthere was a bit of a pick up in manufacturing.So, you know, you're getting pockets of softness, you're getting mixed signals,mixed signals on the consumer, as we discussed, some pockets of weakness inmanufacturing. But broadly speaking, the labor marketis still strong and the Fed has made it very clear they're going to be verycareful about how they move forward from.

Here.They want to be concerned. Inflation is heading back to the 2%target. And given the strong inflation targetthat we had earlier in the week, you'd have to say to that sense of caution andreticence on their part to signal at least a near-term rate cut will continueuntil, of course, we get a material shift in the data.A global economics correspondent and a current there with a wrap up of theslate of dates. And let's bring in for some analysiswhen it comes what this means for the markets.William Curtin is a portfolio manager at.

Milford Asset Management.When always great to have you with us. So pretty messy across the board.You were looking at a number of these data points in terms of how it kind ofdirects the trajectory from here. Did it change anything for you,a mixed start or is quite just a good summary of that retail sales data?But if we look towards what's happened so far this year, we went into the yearwith a lot of the markets and commentators and participants veryconvinced that a recession was coming and the US economy would slowsignificantly. And of course we were originallyexpecting rate cuts to begin in the US.

In March.The data on aggregate so far this year has been surprisingly resilient orsurprisingly strong. Now, it's not every data point.There is mixed reports like the week of retail sales that could have beensomewhat to do with the winter and seasonal effects in January.But there's been a lot of signs that the economy isn't slowing it.As expected, jobs reports have been generally pretty robust.So, you know, confidence has been improving to I've seen manufacturingreports and prices paid by businesses have ticked up.And this keeps at the moment pushing out.

The time of when we expect rate cuts tooccur. Now, what we have tonight will likely bethe icing on the cake of the recent data we've seen over the last few weeks.And that's the pie. So given in the context of a hotter thanexpected core CPI report this week, the pie is now very important.The same price is paid today from a week or so ago indicates that we mightactually see some upward pressure on the pie also.So we're very keen to see where that number comes in tonight because I thinkit will drive a lot of market direction, obviously in the final session this weekin the US, but also into next week.

If the API is in that sort of same trendand hotter than expected, does that reinforce thesort of theme that perhaps we'll see a quicker than expected rotation of backinto energy resources? Yeah, that's the risk.One thing to keep as we are in a full blown bull market and you expect what isdriven by these teachings. So when you're in a bull market of thismagnitude, they can take a surprising amount of contrary news to to drive thatrotation out of technology stocks. And there's something else.I mean, I would have thought in most circumstances the kind of data was seenon economic strength so far this year.

Would have already driven a rotationinto cyclicals. But the earnings have been strong by thebig take on these things as very powerful fund managers institution ofthis has been sucked into the sector to make sure that they participate inretail, of course, as is chasing it as well.So we think a hot pie report would give a reasonable chance that you'll seecontinued rotation tonight and next week like we saw in the in the session of theUS today and overnight with a rotation started to begin.So, yes, certainly a very old number. I think rotation would beginagain.

In terms of that tech rally, though, isit too early to call the end of that? Because we keep getting interesting newsflow today from open. I also Bloomberg reporting today thatApple's got new AI developments as well. So even at these elevated prices isthere's still a pretty strong temptation to keep adding to your positions.No, exactly. If if that people are necessary or notparticipated in that. Very hard to dispute that most of thebig technology companies reported increasing claims of CapEx spending onbuilding out their infrastructure for I'm and all of that supports Nvidia'srevenues.

So of course Nvidia result out next weekis going to be probably the single key thing that willtell us later for now that the boom in ICE folks will continue or not.But in the context of all the CapEx being seen, I'm sure NVIDIA is stillseeing a huge amount of demand. So we wouldn't be beating wholesaleagainst it. In fact, a lot of the earnings growthfrom many of those magnificent seven big stocks are very strong even and and notslate that doesn't make the P multiples are trading on to unreasonable boost therest of the market when doing constructing a portfolio.You know we would we would to balance.

Out having some of those technologyloans by having some of those out-of-favor sectors like energy ormaterials or or financials so that if the rotation does begin and less andless, you'll be winning on some of the stocks that have been rotated into.William, before we let you go, I just want to quickly get your views on Japanas well, of course, slipping into a surprise recession yesterday.I'm just wondering if that changes your calculations about what the BOJ doesnext and your investing approach. Yeah, Japan is obviously been anabsolute star performer and a lot going forward.And weight currency means that exporters.

Are getting very good, very goodearnings growth, the rebuilding of supply chains and different countriesaround the world for geopolitical sort of reasons creates a lot of demand forthese businesses and in relatively loose monetary conditions basis.The rest of it is all good feel for this rerating in this bull market.Now, the challenge we go ahead is whether Japan gets in some kind ofstagflation or environment. Inflation, of course, still runningnear around 3%. The economy's in a recession and it'salmost what we call stagflation, which many countries around the world aregetting into, including where I sit.

Today and New Zealand.If the currency continues to be weak, that's the key thing that they are isconcerned and trying to push back on now.Now they'll try, intervene and use certain reserves to prop up theircurrency. But if it doesn't have sustained impact,it could be the catalyst to force them to go even tighter on monetary policy.And that becomes the heat one for Japan, the Japanese market and the greatmomentum that it's been saying, and I really am.Quick read on China before we let you go.The bar seems very high for significant.

Outperformance or rebound there.Are you opportunistic at all now will be fast react as if we see thedata in positive is probably where I would put it and we're watching itclosely for a long time. The markets consumers in China wouldalways give it the benefit of the doubt to the Chinese policymakers that theywill stimulate and they will come out of this.Now, given a lack of significant stimulus over the last year, theirconfidence is gone not just by market participants, but also the consumer inChina is very depressed. We've got deflation and prices.The consumer is saving and is very.

Cautious and not spending.So we think the situation probably is getting weak enough that China.Well, we'll begin to really do some serious stimulus measures if we seethose coming in, if we see that turn the confidence on the Chinese consumerpositive, then it could unleash a huge wave of spending by the Chineseconsumer, which would be very bullish for resources, Chinese equities, thesentiment towards China, which is very bearish, but where we want to see signsthat that's occurring before we on the front runner and see the go way.All right, William Curtain, portfolio manager at Milford Asset Management,thanks so much for joining us.

Still to come, traders flock to Japaneseequities as stock prices hover within sight of an historic peak reached wayback in 1989. We'll have a preview of Japan's marketopen coming up later. First, though, strikes between Israeland Hezbollah in Lebanon intensify, raising the fear of a wider war.Details next. This is Bloomberg. Rather more fears of a wider war in theMiddle East, growing as strikes intensify between Israel and Hezbollah.The group has fired a barrage of rockets in retaliation for the killing of one oftheir commanders.

Let's bring in Bloomberg's MichaelHeath. And we've seen really kind of the focusof a more regionalized conflict taking place in Lebanon now.Yeah, that's exactly right, Heidi. And we've seen this week sort of aratcheting up of the the fighting between Hezbollah and Israel.Obviously, that fought a war earlier this early this century, whichdevastated Lebanon. And and this this is a real concern.I mean, Hezbollah is the most powerful militia in the Middle East.For Israel to then engage them as well, that would really probably signal thatwe're going to start to see an.

Escalation, a widening of the conflictsort of thing. At this stage, I think.You know, the local press in the in the Middle East is sort of saying on a scaleof 1 to 10, this is only a one. But because I've always kept below acertain level of engagement. But it does you know, it does seem to begrinding up. So it's going to be very, veryinteresting to watch. I mean, obviously, a lot of Israelishave had to be evacuated from that north of the country because of this fightingwith Hezbollah. Hezbollah's too close to the bordercompared to what they were supposed to.

Do under the ceasefire when they lastfought. So, yeah, it's it's it's an issue thatis escalating gradually, unfortunately. Well, let's talk about what's happeningat the other end of the Gaza Strip. Israel says it's arrested Hamascombatants at another hospital in Khan Yunis, which is not far from Rafah.What more do we know? Yeah, well, so so they've they'veundertaken this this raid on the hospital.And this is the other major hospital in the enclave.And there's conflicting reports, obviously, about and there's been saidto be Al Jazeera saying that doctors.

Have been injured and that Israel hasbeen quite it hasn't been precise enough in its in what it's doing here.Now, Israel says it was going in there because it had information that therewere hostages had been held there. There were the bodies of hostages.And this is part of the state of Israel's policy of No Child Left Behind.They not only they're trying to get the hostages, they're trying to get to thecorpses of anyone who has died as well. So far, there's no sign of that.They have said that they've arrested militants, including people who wereinvolved in in October seven in the attack on the initial attack on Israel,as well as mortars and grenades.

They said mortars had been fired fromthat area. Now, we know Hamas does shelter amongcivilians. Israel also says that there's probablytunnels underneath it like was found in in Gaza City.So how much does show shelter among them?But again, it's a terrible look for Israel.I mean, this is a hospital. We're in a you know, in a humanitariancrisis, there's not enough medicine. There's a lot of people suffering.And then you got to right at a hospital, it really, really does doesn't do a lotfor their image.

We've also seen key US allies releasedsome pretty strongly worded warnings. Yeah, Yeah.I mean, Australia, New Zealand and Canada came out yesterday in a jointstatement. The interesting part was just that theydon't normally do joint statements. These three, these three countries andagain, just sort of almost demanding a humanitarian cease fire.And I guess the sense is and Germany also has spoken out on this, but thesense is that, you know, these people are sort of cornered, all thesecivilians. There's more than a million people stuckin this At the end, as Paul said, of of.

Gaza.There's nowhere for them to go now. And it's almost like it's you know, it'sset up for a massacre because if those people can't be shifted elsewhere andwhere we're to, Israel can say all at once that it's only trying to targetmilitants, but the fallout is going to be devastating.We're talking tens of thousands of people who die in this.And that's why there's such opposition growing in the world.And it's going to be difficult for Israel to handle this.Definitely. All right.Bloomberg's Michael Heath, we do have.

Plenty more to come on DAYBREAK.Australia. This is Bloomberg. Well, the Australian retailer to miningconglomerate Wesfarmers remains optimistic when it comes to growthdespite higher costs putting pressure on consumers and businesses.I spoke with the CEO, Rob Scott, after the company reported first half earningsthat beat expectations. This is a time, a moment in time whereobviously households in Australia are doing a pretty tough with inflation costof living pressures and we've worked really hard to ensure that we'reoffering fantastic value across our very.

Broad range of businesses.Well, we're saying that consumers are being very discerning about their spend,I'd say at a general level. Unemployment is still relatively low.Population growth is benefiting retail spend.So there are some positives that. But as I said, value really matters.And so we're saying fortunately across our businesses, we're seeing growth incustomers, growth in transactions, albeit the basket size is a bit smallergiven those cost of living pressures. And within our businesses.The standout performance recently was the Kmart business.Given the very unique anchor private.

Label product we have, we did have datathis week showing that I mean, employment, unemployment, I should sayin Australia is at a two year high and there is cooling when it comes to thelabour market. You are Australia's largest privateemployer and I do wonder whether you can give some commentary around how you viewview hiring conditions at the moment. Well, look, I'd say that generallyAustralia is in pretty good shape, but I think there are a few headwinds that weare dealing with in Australia at the moment, although we've seen inflationcome off a bit. There's still a lot of domestic costpressures that are creating challenges.

For business.We've got labour costs, power costs, accommodation costs, domestic supplychain and freight is continuing to go up at very high rates.So I think that that is one of the major challenges as we look to the year ahead,that if we don't see those domestic cost pressures start to normalise, theninflation may be more persistent and obviously that will then lead tobusinesses employing less people, providing fewer hours of work.So I guess that is the risk factor on the year ahead.But it's why we across our business is very focused on trying to control whatwe can control to keep our costs down,.

Drive productivity, to help our teams bemore productive and efficient on their day to day roles.Some of those calls have come down like international freight costs being one ofthem. And we have heard from the RBA governortalking around the fact that inflation expectations are coming down and lookingpretty well anchored as so the markets are expecting easing from the RBA laterthis year. How much of a time frame would you allowin terms of the pass through of some of those cost reductions to the consumer?Well across our businesses, we've had good visibility to some of the decreasesin costs associated with imported.

Products, the decrease in raw materialcosts in areas like timber and also the fairly significant reductions post thecost of that inflated container shipping freight rates.And we have flown a lot of that through to our customers in price.But as I said, those some of those cost savings are being offset by domesticcost pressures and that is the challenge we face.That is Wesfarmers CEO Robert Scott there.Still to come, we're going to take a closer look at Japan's markets.Stock prices getting very near an historic peak, which we haven't seensince 1989.

Australia is also putting in pockets.1989 Taylor Swift kicks off ERA's tour in Melbourne later on Friday.We'll get all the details next. This is Bloomberg. My guess is that if we were to use thenumbers, more holistic definition of what's what's the recession, I'm notsure the UK would qualify. I'm not sure that Japan qualifiesbecause one key ingredient which is missing is the reaction to the labourmarket acts of investment.Chief economist Guillermo speaking about Japan's economy unexpectedly slippinginto a recession.

Take a look at how are setting up as wetake a look at NIKKEI futures looking pretty positive at the moment.This, of course, potentially a bit of a game changer or at least a headscratcher for the Bank of Japan in terms of picking that perfect timing to exitnegative rate strategy and put through that first rate hike.And of course, the weakness that we continue to see in the yen is also apart of that, a part of that conundrum as well.Having said that, we see some pullback when it comes to the US dollar.Of course, a bit of caution going into the API numbers today as well.And we're seeing dollar gained sitting.

Under that 150 level.Let's bring in our asia equities reporter for more.When it comes to trading in japan, wendy sue joins us.So the rally this year obviously stand out.Japan and korea are probably the two stand out.We're again about 2% away from that 1989 high.Is there a sense that we'll see the momentum to get there?Yeah, we're getting actually pretty close and I think a couple of differentdrivers, one of it being really the inflation part, right?Even with the pretty weak GDP yesterday,.

The market seems to have already kind oflook past that and focus on the fact that Japan seems to be exiting deflationat the moment. And also, macro wise, you have a prettystrong U.S. market.And also the weakness in China is still continuing, which makes it a morefavorable, which makes Japan a more favorable market.But also, when you just look at the fundamentals, sides of things, earningsseems to be pretty strong, as we can see from the earnings season this this time.And also the TSE reform, a lot of people are citing this to be one of the keymajor factor for a Japanese rally to be.

So strong.And I think from a flow perspective, it's also pretty supportive.We've seen boring investors buying five weeks of Japanese stocks straight.And we're also waiting for the latest data later todayWhen you're heading into the end of last year, we had a number of commentatorssaying, well, maybe we're setting up for a correction here.It hasn't materialized of some investors been caught by surprise by thismomentum. Yes, absolutely.Just yesterday, we saw a city raising their target for topics.And Nick.

And also just in the past couple ofweeks, you see Jp morgan coming in, Morgan Stanley and also Bank of Americaall raising their target. So it seems like this rally is reallycatching some investors by surprise. But we did caution.Yes. Last last year that there might be apotential appreciation of the yen weighing on the market.But when you see the Fed more unlikely to cut rates at the moment, and also theBank of Japan maintaining a relatively dovishaccommodative monetary policy at the moment, it seems to be still supportingtheir rally going forward.

How's earnings shaping up?Yeah, we're right now nearing the end of the earnings season.I would say overall it's quite positive. We see more earnings beat them.Ms. But also we're seeing pretty big priceshare price reactions around the earnings.A lot of volatility. And some people say that that might becaused by some of the newer foreign investors coming into the market tryingto join the rally, but still trying to get a hold of what's going on in theJapanese market. But we do we didn't see really a lot ofsome of the good earnings results from.

Major Japanese companies, from Toyota,from SoftBank. And the other day we had Tokyo Electronalso hitting record high after after revising their their earnings.So those positive earnings actually provided a new catalyst for the rallythis time. Asia equities reporter winnie ser whilespeaking of 1989 at Taylor swift kicks off the Australian leg of our era'stotal later on Friday with the first of her seven shows across Melbourne andSydney. The highly anticipated concert couldgenerate as much as 1.2 billion Aussie dollars in economic value in Melbournealone.

Our economics reporter study Patti joinsus now from Sydney. Highly anticipated seems like a wildunderstatement, right to Melbourne in particular expected to be her biggestshow yet. Yes, I was surprised to see that number,$1.2 billion of it just coming from the mayor of Melbourne.It includes everything, indirect benefits as well from people flying infrom overseas hotels, flight tickets, spending while they are in Melbourne.So nobody is going to just come in, fly in for those few hours and go back.So people are kind of making a little holiday around it.So the economic benefit that includes.

Everything just in Melbourne is 1.2billion. We don't have a figure for Australiawide, but it's definitely going to be big and economists and RBA will bekeeping an eye out as well. Yeah, to your point, even the RBAgovernor Michelle Bullock noted the impact of this concept, even in ananecdotal sense. But it speaks to something broader,doesn't it? She talks about her children notspending on other things so they can spend on this.So what are the implications there? Yes, that is I guess that is what we aregoing to see from chatting with.

Economists.It looks like this is going to be a sugar rush where people will spendaround this time, whether it's those bead bracelets or sequined dresses.But then later in the year, we are going to see the cutbacks because, look, theeconomic condition is is is getting tighter with interest rates at a 12 yearhigh expected to remain there. And other issues like property prices,rents, electricity. So people are feeling feeling the pinch.And while they are going to spend here, there will be cut later.All right. Economics reporter Swati Pandey, thatnow Seoul set to host one of the most.

Hotly anticipated Major League Baseballseason openers next month. Bloomberg's David Iglesias spoke withthe city's mayor, Ozzie Hoon, about how he's looking to make MLB games regularevents in South Korea. This is the gorgeous Skydome.Things are quiet now, but in a few weeks, Major League Baseball season willkick off in Seoul, of all places. It will be the L.A.Dodgers debut of a $700 million man, Shohei Ohtani, as they face off for twogames versus the San Diego Padres. And according to okay one, the mayor ofSeoul, there are plans for Korea to host more MLB games in the future.But he's aware that the city's.

Infrastructure does need an upgrade.The Hungarian told us all has the only domed stadium in Korea.It's a small to medium sized dome stadium that seats about 20,000 people,but it's a very popular venue. It was built about ten years ago andneeds some repairs. We are currently spending a considerableamount of money on renovations. The mayor says the South Korean capitalis preparing itself to host bigger events for more people come through toget here. The Sports Mice complex in Champs IL,the sports facility that hosted the 1988 Seoul Olympics, is undergoing extensiverenovation.

There are plans to build a new domedstadium that can accommodate about 30,000 people.Seoul wants to see 30 million tourists descend on the city annually.And with the lure of culture, these big sporting events music, art, fabfestivals. Officials are confident that number isactually within reach. The big question remains, though, wherewill everyone stay? Seoul does not have enough hotel roomscurrently to house those kinds of big numbers.So unless authorities are able to take that issue and pull off a makeover asthrow as some of the city's medical.

Clinics do on a daily basis, they'llprobably need to find a more creative solution to house those incomingtourists. It has been around, and Korea is not acountry where Airbnb is active. Policy based deterrence measures havebeen implemented. If the number of tourists increasesrapidly, a significant number of tourists can be accepted through Airbnbalone. If policy regulations are improved asthe government has set its goal of receiving a large number of tourists.Deregulation policies are being reviewed under the new administration.As for seeing Ohtani in person, tickets.

For the first game were sold out in anhour. Seats for the second go on sale in.March in Seoul. David Inglés.Bloomberg News. You can watch us live and see our pastinterviews on our interactive TV function.TV go. And there you can also dive into any ofthe securities or Bloomberg functions that we talk about.And you can also become part of the conversation by sending us instantmessages during our shows. This is for Bloomberg subscribers only.You can check it out at TV.

Go.This is Bloomberg. You're watching DAYBREAK.Australia Open Air has teased a new air system that can create realistic lookingvideos based on text prompts from users. The system called Sora can quicklycreate videos up to a minute long. On X open air CEO Sam Open wrote.The tool will initially be made available to a limited number ofcreators. Staying on air and Apple is nearing thecompletion of an artificial intelligence tool for app developers that will stepup its competition with Microsoft. For more, our technology reporter MarkGurman joins us.

Mark, we did see Apple's stock pop onthe publication of your story. Apple often late to these sorts ofparties, but often with quite a good product as well.This is the year of generative AI, not only for all the big tech companiesAmazon, Google, Open Openai, but Apple especially.That is the focal point of their software development, their servicesdevelopment for 2024. In June, you'll see them make their biggenerative AI related set of announcements.Now it's core to any is a new version of Xcode.Xcode is their flagship programming.

Software that allows Apple but alsothird party developers to write their software.Right? And so this software is going tointegrate generative AI in order to use large language models and otherartificial intelligence and machine learning technologies to help developerswrite code, to predict the code, to fix their code, to test their code.So this is a major effort for the underlying infrastructure that's goingto power all sorts of new applications into the future.Mark, we know that Apple tends to be a trendsetter, but in this case, they'replaying catch up.

How urgent is this need for an AIstrategy and investment? And howdifficult is the competition going to be for Apple?Apple is definitely playing catch up here in artificial intelligence.They were essentially caught flat footed by GPT in efforts from Openai.They are very much behind, but they're going to be operating a little bitdifferently. They're trying to operate from aposition of strength here. They have their own underlying largelanguage model, their generative AI system.The software side of that is codenamed.

Ajax.We wrote about it last July. But at this point, what they're lookingat is not chat bots. They're looking to apply that genetec toapplications. You can imagine a new version of theirweb browser that can auto summarize articles.You can imagine a keyboard that can better predict what you want to typenext based on who you're communicating with.You can understand there'll be more augmented reality functions powered byartificial intelligence across their product lines as well up to the VisionPro down to the Apple Watch.

So I think there's definitely a lot tolike from what Apple's position position is going to be no matter how late it isin terms of when we're going to start being able to live and breathe thisstuff. I would anticipate some beta releasesfor the developer community and those in the public who really want to get theirhands dirty with this type of stuff sometime in June, and then it'll bereleased in consumers before the end of the year.Another great scoop there. Mark Gurman Bloomberg TechnologyReporter. Well, Australia is moving closer tomandatory restrictions on usage.

The Government has named a panel ofexperts to advise on the potential guardrails for the development and useof AI. And our next guest is one of the 12experts in that group. Joining us now is Jeannie Patterson,professor of law and director of Center for Air and Digital Ethics at theUniversity of Melbourne. Jeannie, thanks so much for joining us.Just want to get us started. Can you give us a background on thestate of the current regulatory framework around an Australia or wherethe holes where are the risks? Well, we don't have a regulatoryframework for AI in Australia that's.

Specifically aimed at AI.What we have is general law. Now that general law can do a good jobon most things, but AIS developing so quickly, it's so ubiquitous that it'sfelt we may need some guardrails, particularly in relation to things likedeepfake, frauds, misinformation, disinformation, want to have guardrailsagainst those harmful uses so that we can benefit from the opportunities thatAI does offer society. Andto your point on the ability to create misinformation.You might have heard us report a moment ago on Openai's new product, Sara.This will convert a text prompt to a one.

Minute video.You don't need to have much of an imagination to see where that could takeyou. How did regulators keep up with thissort of technology? Well, that's precisely the purpose ofthe expert group that's been gathered together to advise the government onwhere those short of guardrails are needed to protect us.Now, some of the solution is in law, but some of the solution also is in thetechnology itself. It's possible and indeed, I thinkessential that we're looking at how tech developers and those who apply thetechnology can build in safeguards.

Against the misuse of this technologyand to cause harm to society, individuals and democracy itself.Judy, it's hard to see how regulatory and legal frameworks can keep up withthe speed of the development of the technology and the ability that it'sbeing used for ways that, you know, as Paul mentioned, we probably can't evenimagine right now. Do you think that this is an area whereregulators will always be trying to play catch up?I'm optimistic in the ability of regulators to respond to technologies,and that's because what we are looking at is a combination of responses, notjust one law that will fix these.

Problems, but a whole suite of socialresponses that go from education so people understand the technology more tothese technical safeguards that I'm talking about in a lot of talk aboutwatermarking, for example, right through to mandatory laws that put specificobligations on developers and those who use the technology.So I think a coordinated response is possible and available to us if we act.Now, that seems to suggest that that requiresa truly coordinated response and coordinated regulatory and legalframeworks across various sectors. Do you envisage a situation where we'llsee specific legislation covering.

Protection of children and usage, forexample, health care and other industries?And how difficult is it to get buy in from all these various parts of theeconomy and society? Well, I think that's part of the job ofthe expert group, in fact, is to make sure that those voices from thedifferent part of the economies are heard and that we understand theresponses that are necessary. And you're quite right.This is a this is a coordinating effort. We already have steps in place toprotect children through the safety commissioner.And the question is how we find the gaps.

In that regime to ensure that we've gotgood safeguards. And similarly, in the medical field andmedical the medical field is working very hard to utilize the best of AI.So it's about coordinating with them to work out where they need assistance,actually to promote innovation and where they need protections againstuses that are problematic. And I'd actually say one of the bigchallenges with the increasing reliance on AI is actually cyber security andhacks, and that's something we also need to be very aware of.Now, for various reasons, the year 1989, I've been pretty steady in the news flowtoday, but that was also around about.

The time that the Internet was justgaining steam. So if you look back at that period ofhistory, there are any useful guidelines from the development of the Internetthat you can apply to the regulation of AI technology.I think the lesson we learn from the Internet is that we need toact early but be adaptive. And there were lots of suggestions aboutwhat was going to happen to the Internet and whether it was going to be a benefitor a negative. And I think we can say it's probablyboth. The regulation needs to be open endedand flexible enough so we don't stifle.

Innovation, but it needs to be able torespond to those harms I've mentioned in particular disinformation,misinformation, cyber cyber fraud, really.And the other comment I'd make is the thing we learnt from the Internet isit's dangerous to predict too far into the future.So this is an ongoing conversation that we need to havevery quickly. Many in the industry would prefervoluntary safeguards. Self-regulation is not going to beenough. That's again, one of the things thatthis committee is talking to, talking.

About.And I have to say that I think that voluntary safeguards have a place, but Ithink the general feeling in the community is that voluntary safeguardsmay not be enough. And we need these other kinds ofguardrails put in place along with and I repeat this again and again.Information so people understand information, education, so peopleunderstand this technology and can take their own decisions about how theyinteract with it and the precautions they themselves take to keep themselvessafe. JD Patterson, Professor of law anddirector of the Center for AI and.

Digital Ethics at the University ofMelbourne. It's a pleasure to have you with us.More ahead here on DAYBREAK, Australia. This is Bloomberg. You're watching DAYBREAK, Australia, thetop corporate stories that we're following today.Jeff Bezos has unloaded another 12 million shares of Amazon valued at $2billion, bringing the total sold in the past week to over 6 billion.It earlier disclosed plans to sell as many as 50 million Amazon shares.The sales also come as he recently relocated to Florida from Seattle, amove which could save Bezos millions in.

Taxes.The U.S. Justice Department plans to scrutinizethe new streaming service proposed by Walt Disney, Fox and Warner BrothersDiscovery. That's amid concerns it could harmconsumers, media rivals and sports leagues.Sources say regulators will look, too, at the terms of the joint venture onceit's finalized. Disney, Fox and Discovery announced anew streaming service earlier this month.General Motors is mulling a shift from mainstream models in China by focusingprimarily on luxury vehicles.

The carmaker is struggling to bounceback from years of declining sales and profits in the world's largest carmarket. And now a product strategy in Chinawould mark a big reversal for GM, which entered that market in 1997.Ford Chief Financial officer John Lola says a smaller, cheaper electric vehicleshould be available in a couple of years.The firm is looking to ramp up its development in the face of low costChinese EVs. The carmaker was hit by multiplesetbacks recently, including strikes at some of its factories.We are developing a low cost EV platform.

So that we can be a big part of thisS-curve when it comes time. And that is, I think, coming in a coupleof years from now. And I think it's going to be a biginflection point for the industry when more affordable EVs come online.It's getting some breaking news across the Bloomberg terminal at the moment.We're hearing from the Atlanta Fed president, Raphael Bostic.He's been saying that it might take some time to be sure that inflation isheading back to 2%. Bostic saying victory not clearly inhand. We're not done with inflation, and thereis a risk that a new demand boost could.

Reverse the progress that has been seenso far. So he's saying the Fed needs to see moreevidence that inflation is headed sustainably towards 2%.Inflation is expected to fall, but much more slowly than the markets areanticipating. Bostic also saying there is no urgencyto cut with the labor market strong and the economy looking strong as well.So the Atlanta Fed president Raphael Bostic making those remarks.There may take some time to be sure that inflation is heading to 2%.All right. We're going to leave that there.Bloomberg subscribers, though, can.

Continue watching at live go.You'll also find the big diary entries coming up today and later on this week,as well as some of you, some of the events you might have missed earlier.Market opens in Seoul and Tokyo next. This is Bloomberg.

Sharing is caring!