Bloomberg Crack of morning time: Australia 02/09/2024

Welcome to the Work Australia Partystruggle in Sydney, where markets have just come online.I'm Annabel Jewellers in Hong Kong, where counting down to Asia's majortrading opens. And the top stories this hour.Japanese stocks set for a positive open with Korea and China closed and just ahalf day of trading in Hong Kong. Wall Street offering little direction.Janet Yellen warns of a potential failure among non-bank mortgage lenders,telling regulators and lawmakers that they need to closely monitor risks.And we hear exclusively from the CEO of Korean financial giant Shinhan aboutoffering their billion dollar exposure.

To risky U.S.property. All right, let's kick it off thismorning with a rate decision just coming out of Latin America.Peru cutting its benchmark rate by 25 basis points to 6.25%.This is really what have been seen by economists here.But importantly, when you think about the amount of easing that we're seeingfrom Peru's central bank, we're now at 150 basis points of a reduction sincethat cycle kicked off in September of last year.What's happening in Peru is that we're really seeing annual inflation that'scoming back down low around the 3% mark.

It has been a bit of a surprise toeconomists, but this chart here puts it in perspective, because we've basicallysaying all Latin American central banks starting to cut their rates are sort ofgetting ahead, Heidi, of the Fed. Yeah, I'm very, very interesting as wecontinue to kind of watch the landscape of expectations that are building forother central banks as well, right as we get into this latter part of the cycle.Great shot right there when it comes to central bank rates.But let's get you into this out of trading as we head into the end of theweek, the start of the lunar new holidays.And of course, that's really kind of the.

Narrative that is dictating what we'refacing at the moment, right when it comes to stocks and how quiet things arepotentially going to be, given that a lot of markets around the region areeither already closed or will end trading earlyin the case of markets like Hong Kong today.This is a picture that here in Sydney we're seeing a little bit of downside, amixed open on Friday for Sydney stocks and some of these other markets that areactually trading. You can take a look at the marketclosures and changes here in mainland China and Taiwan, South Korea, Indonesiaand the Philippines.

Vietnam, a close.We've seen partial trading in the session today for Singapore and HongKong, and we are seeing that kind of muted start to trading here in Sydney,up just about down, I should say, by just about a 10th of 1% there.We're also watching yields Australia and New Zealand yields climbing in the earlypart of the Friday session after U.S. treasuries fell for a second day onThursday. We saw that selling coming even as USgovernment debt was sold to the tune of $25 billion at those 30 year bonds.It was a lower than expected yield. Still, though, a sign of pretty healthy,robust demand there.

The Aussie dollar holding at 6494.And we're watching for the setting when it comes to the yuan as well.There's quite a bit of pressure that is starting to build though, when it comesto the onshore yuan to weaken past that official line.Yes, certainly something to track, Heidi.But you mentioned how markets looking fairly flat.Well, take a look at their lead as well, because we had U.S.stocks really just struggling for direction in the fire in the priorsession bond markets, they were digesting another big sale oftreasuries.

We still had stocks hovering aroundrecord highs. But still it was that that sense ofcaution that prevailed across investors psyches here because they've got theconsumer price index revisions taking place Friday.And actually, if you cast your mind back to this point last year, that update wassignificant enough to cast doubt on the overall inflation progress.So perhaps a little bit of wait and see ahead of that.And of course, that's what we've been hearing from Fed officials over thecourse of this week. It has been that push back, trackingwhat Powell said in the latest press.

Conference, but telling policymakers andinvestors the markets, it's really about patience.And we heard from the Bank of Richmond president Thomas Bach and exclusively.Take a listen. Gratified to see inflation coming down,hoping it continues to come down. And I think we've got some time to bepatient. If I could get these kind of numberssustained and even better broadened, that's that's what I'm looking for.Sustained and broadening. Joining us now is Bryan Van Cronkite'ssenior portfolio manager at all Sprint Global Investments.And Brian, I'm curious for your views,.

Because we've really heard this I saidover the past few days is continued push back on rate cuts.At the same time, we know easing is coming and the US economy is holding uppretty well. So what are you looking at most closely?Fed officials are what you're seeing in the underlying data.We want to focus on the data and we, the Fed officials are also focused on data.So the market loves to try and get ahead of this, try to predict the next change.But the reality is the Fed has told us what they're going to do.They're going to keep watching, keep observing and looking for inflation tostay below 2%, persistently, not touch.

2%, and then start slashing rates below2% persistently. The risk is, though, that while we'rewaiting for that to happen, the employment situation could be gettingworse. And if it gets worse and we seeunemployment move higher, the market likely will take a move lower from thatbecause the fear is the Fed's typically into recession.So we're watching the data. Specifically, we're watching theemployment market to see if that moves before inflation gets down low enoughfor long enough. And of course, we're in the midst ofearnings season as well.

And what are you what are you trackingfrom that and what are the key themes that you've seen so far?A few things. We've seen companies actually do quitewell when it came to Q4 numbers, with a few exceptions, but guidance is veryconservative in my mind. Guidance is coming in with a lot ofdoubt about not just the U.S. economy, but economies globally.Europe is still slowing down. China certainly is slowing down.And almost all companies in the U.S., as you go up cap can't escape the impact ofChina. And so we're watching that guidance.We're seeing companies who are.

Concerned.So our focus, a stock pickers and portfolio managers, is not so much ontrying to navigate these various economic directions, but what are thesecompanies doing specifically on their own to drive their own destiny?How are they using their balance sheets in their capital to invest inacquisitions for R&D or buybacks? That's what we're focused today to tryto pick the winners from the losers over the course of the next 12 months.Brad is interesting. You talk about the inevitable exposureto China, because I think for certainly the last year and prior to that, USinvestors have given a pretty big shrug.

When it comes to what happens in China.Right. Are we seeing less of the Americanexceptionalism, the more of, I guess, a globalist approach now?Well, I think that's true. I guess because they're uncomfortable,Right? We can look at the two differentdynamics as two dilemmas happening in China for U.S.investors or for global investors, frankly.One is that your company's exposed to that.And so you have dropping sales and challenging margins as a result, andthat's putting pressure on it,.

Especially relative to expectations.We came into the year 2023 thinking that China was going to rebound, butZero-covid is over. We'll see a growth of the economy.It just hasn't happened. It been very disappointing.There's a second dilemma, which is structural, but what's going to happengeopolitically? What kind of multiple do you put on ourearnings stream that comes from China? If you're not sure if they're going tosell into China or be welcome in China in two years or five years.So that's another challenge. So I think the shrug is more of I don'tknow what to do with it, so how can I.

Try to avoid it?How do I try to minimize my risk and look elsewhere, if I can, at the U.S.or global investor? Elsewhere global.Does that include Japan, which is obviously one of the you know, I thinkfrom a two of the hottest Asian markets outside of India as well last year.It's interesting you said that you're actually not in a rush.You're not worried about, I guess, a FOMO trade.I'm not in Japan right now. I think Japan could be reallyinteresting over the next five, six, seven years.But I don't know if that moment is the.

Next six months or next 12 months itwill happen. But if you look at the potential throughour process, our process is all about how companies use their balance sheet todrive a unique future, right? How can they use that capital in anoffensive way? And if you just model out the Japanesecash flow streams, Japanese balance sheets, they're ridiculouslyundervalued. But that doesn't take into considerationthe governance factors, the culture factors which are very real and veryokay. But as those evolve, which I thinkthey're starting to evolve, the upside.

Potential in Japanese equities ismassive. President invest, their timing matters.And so we're doing a tremendous amount of work in that country right nowlooking for businesses that are looking to shift that mindset, looking toembrace what considered now to be a more Western culture of governance.So they do step on that gas a little bit by using their capital more efficientlyto drive higher ROIs, ROIC and ultimately higher valuations.But I don't think in the rush today you can be patient and do your work now andjust wait for that right moment. I'm just taking a look at your notes,Brian.

And I can see that CBRE is one of thestocks that you're highlighting here. Commercial real estate focus, of course.I'm curious what you're making of the stress that we're seeing in this sector.Well, there's two things here. The stress that we're seeing and I thinkin many cases is overblown. Right.There's an exaggeration of the impact of all commercial real estate as the focusis on office as an example. Offices are part of it, but it's noteverything. Now, there's two things I like whatCBRE. CBRE has a very stable cash flow stream,good facilities management, but they.

Also have a transaction based businesswhich has gone down because interest rates moved higher, causing buyers andsellers not to agree on price. But CBRE is investing through that.And when that industry stabilized, which I think it is now, we're going to see alot of transaction volume. A lot of companies and owners of realestate need to go out there and roll their debt.They need to increase their equity and that's gonna create transactions andCBRE be a winner in that situation. So there's a little bit of turmoil inspace right now. But the CBRE case, all they want isactivity but are exposed to valuation to.

A very big degree.So CBRE is a great way to take advantage of what now is stress in the market witha good long term opportunity with a solid business model.Brian, great to have you with us. Brad Van Cronkite, the portfolio managerat Offspring Global Investments. Well, still ahead, Shinhan CEO Jin Dongtalks to us about managing risks for their exposure to U.S.real estate. This is his first interview since takingcharge of the financial giant. Our exclusive is next.This is Bloomberg. And Dan is still we are hearing from theRBA governor Michelle Bullock.

They're speaking before a parliamentarypanel there saying that the economy is well placed to deal with global risks.Interestingly, saying that they don't need to be in the inflation band beforecutting the key rate. The governor says there's some way to gowhen it comes to reaching that CPI target, but certainly not ruling out arate hike, but not ruling it in either. So really treading that fine line therewhen it comes to signalling, she says that an inflation rate with a four infront of it is not good enough. There's still some way to go from themid-point of our range. The board hasn't ruled out a furtherincrease in price, but neither has it.

Overruled it in attempting to bringinflation down while preserving as many of the recent gains in Australia'slabour market as possible. Referring to that as how Phil Lowe, herpredecessor, referred to it as that narrow path.This is her first testimony as governor. We had her home, that first RBA decisionof the year with the first. Under the revamped communicationsregime. With that press conference, theimmediate release of the updated economic forecasts and now straight tothat parliamentary testimony as well. Michelle Bullock They're gettingquestioned by lawmakers saying that.

She'll do what we need to do to getinflation down. That comment about the RBA not needingto be within that inflation band before cutting that rate.We are seeing a bit of a move there in the Aussie dollar in reaction.Well, from Australia to the US in terms of the outlook on Treasury SecretaryJanet Yellen says U.S. regulators are monitoring risks stemmingfrom non-bank mortgage lender. She spoke at a Senate Banking Committeehearing. Ifsc is very focused on that becausenon-bank mortgage companies lack access to the two deposits which banks have.There is concern that in stressful.

Market conditionswe could see the failure of one of these.Let's bring our banking regulations. Reporter Katanga Johnson there inWashington. Sowe did hear from Allen saying warning of the possibility of a failure for one ofthese institutions or more than one of these institutions.What does it now mean for now, I guess, versus them in the futurefor non-banks? Treasury Secretary Yellen today made itclear that now that the Financial Stability Oversight Council has powersto deem a non-bank as systemically.

Important or too big to fail, thatreally the you know, the panel is studying what risks those non-bank firmsmay or may hold, but also if they faced a shock, if there were stressors and onefailed, just knowing that there might be certain counterparty risks to thesystem. And basically this was a signal that nowthat the panel has powers to deem these firms too big to fail, that there's thisstudying that's underway into this, into the sector.And so just tell us more about that significance.If you are saying that there is a too big to fail label that that's beingapplied here, possibly,.

Possibly, though not yet.The regulators would make clear, really. Secretary Yellen and others on the FSOCwant to get more granular detail from non-bank mortgage firms, understandingin what ways they might if there were a shock to the system, how they mightrespond, understanding their their balance sheets and the types they havewith the banking system. She also spoke to concerns about nothaving deposits the way traditional banks do.And while it will be the last time the FSOC designated a non-bank firm as aSIFI, it took about a year and a half, so many, many months ahead before anysuch firms will be designated.

But, you know, six months ago, the paneldid not have powers to deem these firms as fees, and now they do.And so this is the beginning of a signaling that, yes, they're paying moreattention to actually these firms and having to study, you know, what, ropingthem into regulations, just like big banks would mean for the regulators.And as she said of a failure of one of them is possible.That was our banking reporter there, banking regulations.Reporter Katanga Johnson in Washington. Turning to South Korea now, becauseShinhan Financial says its reinforce its buffers against a roughly $1 billionexposure to risky US property bets.

In his first interview since becomingCEO last year, General Dong told us exclusively that the lender can stayresilient amid a wave of credit concerns in real estate.Photo EGA. Our overall exposure to U.S.real estate is about 2.4 trillion won. And I think the risky tranche amounts toabout 1.4 trillion won. For the 1.4 or 5 trillion, we've builtup about 20 billion won in provisions. And for the 1.4 trillion tranche, wehave built up about 20 billion won in provisions.I'm thinking that's probably going to be managed within that.Jane also told us that South Korea will.

Probably lift a ban on short selling inthe first half. He says the company is reviewing how itmarkets equity securities or else after some lawmakers warned of risks forretail investors. Yes, we have stopped selling else and itis a temporary suspension. We temporarily suspended the salesbecause public and media opinion in Korea right now regarding everythingabout e-mails is back. But it's a choice to be made byconsumers. And there are actually many consumerswho are asking about e-mails over the counter even now.So I think we should resume on a limited.

Basis, depending on the atmosphere.But I think the way that we've been selling and the system for sales needsto be reviewed and improved. I think it can be seen as a short break.You mentioned you might need to review how some of the products were sold andmaybe some of the marketing information. Once you resume selling these products.Do you see a need to change the way you've sold them to the public?Come on. The most is being sold over the retailcounter. But what I'm saying is that we couldlimit that and induce sale over a more specialized counter.We have a wealth management channel that.

We call PWI, and we're looking atconducting the sale via that counter. So asset allocation is the mostimportant thing for general retail customers.And we're looking at ways to limit sales and encourage sale via counters where wecan guide and consult to make sure that asset allocation is done correctly.We're looking at a lot of different things, but I think that's probably whatwe'll do. And as a final question on the lasttopic. Are you are you expecting to have you doyet? Are you expecting to settle anything youexpect to find?.

Have you provisioned anything forcompensation, for example, or is it too early to say at this juncture?The authorities are doing on site inspections now, and I think differencesamong banks will have to be sorted out. And once that is sorted out, I thinkwe'll have to come up with a mutually acceptable solution.The short selling ban in Korea and you run a securities arm.And I'm wondering what you think about the optics that are sending to the worldat a time when Korea wants to show it's opening up its financial system, itsfinancial market, and becoming an international finance center?They're committed.

And I don't think the suspension ofshort selling will last long, and I don't think it will last long becausethe authorities also adhere to the principle that we need to allowinvestors to make decisions freely in order to move forward toward the globalmarket. I think it is intended to complement theshort selling system because there are incomplete features to the system andthere are some shortcomings that need to be addressed.Maybe then, once completed, short selling should be resumed as soon aspossible. It is most important to create anenvironment for investors to invest.

Freely.But you can't continue to take something that has shortcomings.I think the inspection and supplementary work will be done quickly, and I believeauthorities share that perception. We'll authorities will resume as soon aspossible when those things are addressed.So I'm looking forward to that. What's your sense on timing?So we know it's going to come. We know it's this is not permanent.But could you give us a sense of how long do we have to wait?Actually, I think we need to complete some I.T.systems to improve the shortcomings that.

Have been found now.And as for the timing of that, I think it will probably be resumed during thefirst half of this year. Andthat was the Shinhan CEO, Jin Dong, speaking exclusively to our markets,co-anchor David Inglis in Seoul. And you can get a roundup of the storiesyou need to know to get your day going. In today's edition of DAYBREAK, Terminalsubscribers go to be go. It's also available on mobile in theBloomberg Anywhere app. You can customize your settings so youonly get news on the industries and assets that you care about.This is Bloomberg.

Indonesians head to the polls next week,choosing a new president and government to lead the country for the next fiveyears. Investors will be closely watching forsigns of policy, continuity or change ahead in what's Southeast Asia's largesteconomy. Bloomberg's chief internationalcorrespondent for Southeast Asia, Haslinda Amin, has more on what's atstake. Campaigning has been intense inIndonesia to win the support of more than 200 million voters spread of a vastarchipelago with 17,000 islands. It's a three way fight for the top job.Leading opinion polls is Prabowo.

Subianto, a military general turneddefence minister who's accused of human rights violations.Prabowo ran against outgoing President Joko Widodo in the two previouselections and lost both times. Now the two are teaming up.Prabowo's vice presidential candidate is Jokowi's eldest son, prompting criticismamong people who see the pairing as an attempt to create a political dynastyrekindling Indonesia's past. Janja Purnomo, the former governor ofCentral Java, was one supported by Jokowi, but they have since fallen out.He has the backing of the largest coalition partner, the PDP, orIndonesian Democratic Party of Struggle,.

Which incidentally, is also Jokowi'sparty. And finally, on his bus, we're down anacademic who became the governor of Jakarta.He's been the most critical of Jokowi's policies, and his running mate hasstrong ties with the largest Muslim organisation.This is a consequential election with a lot at stake.During his two terms in office, Jokowi helped to propel Indonesia onto theglobal stage, establishing stronger ties with both the U.S.and China. We think that there will be veryimportant implications to the region.

Jokowi has has pushed for like mineraldownstream investments. A lot of investments have been coming infrom China, from South Korea, from the U.S., from Europe.So it could have some of the implications on the regional economyboom and whether Indonesia will continue with the policies of the presidentialadministration. At home, he spent billions of dollarsfunding infrastructure projects and greenlighting policies such as movingthe capital from Jakarta to Nusantara and expanding the high speed rail,prompting debt concerns. Indonesia aims to become the fourthlargest economy in the world by 2045.

Whether it gets there are not may dependon how this government shapes its policies and priorities to drive growth.Haslinda Amin limited means. Another political story that we'retracking closely. Pakistan's voter count is facing lengthydelays with the election commission receiving results from a small minorityof polling stations. The commission has so far offered noexplanation for the delays. The party of the former prime minister,Nawaz Sharif, has so far said little on the elections.Rival Imran Khan's PTI is claiming on social media that its independentcandidates are leading in the polls.

More to come here on DAYBREAK,Australia. This is Bloomberg. You're watching DAYBREAK.Australia taking a look at how oil is trading so far.This is WTI, of course, on line for about half an hour so far.And you want to say again that a slight extension, that uptick here in thesession, it's really being driven by these doubts over the Gaza deal for thehostage negotiations that are being carried out between Israel and Hamas.And Netanyahu, essentially, the Israeli prime minister dismissing any sort ofpotential cease fire and saying that he.

Sees no other solution in total victoryin the war. And so that has led to that price gainthat's also being added to by trend following algorithm.So a bit of algorithmic buying, Heidi, is also playing into the complex thatwe're seeing for oil so far. Yeah, And speaking of the Canadianprovince of Alberta, though, is among the biggest oil producers in the world.Output rose above 4 million barrels a day for the first time last November,matching China's output. Production is surging as oilsandscompanies prepare for an expansion of the Trans Mountain pipeline, which runsto Canada's Pacific coast.

The premier of Alberta, Daniel Smith, isin Washington this week drumming up business for the province's energyresources. He joins us now from our studios inD.C.. Premier, really wonderful to have youwith us and we do appreciate your time on what is undoubtedly a busy trip.Can you give us an idea of of what's been achieved, some of the discussionsand deals that are being sort of been on the on the agenda and on the table foryour visit? Well, one of the main things that Iwanted America to know is that we really are the largest supplier when they areimporting oil there, they're importing.

It from Alberta, 56% of what they importto augment their own supply and their own production comes from us.And we want to make sure that that people understand that we want to be aresponsible and are a responsible provider of this resource.We have a target to be carbon neutral by 2050 using technologies like carboncapture utilisation and storage, as well as expanding out into ammonia andhydrogen production. And we really look at the challenge thatwe have as being one where we address the dual problems of of solving globalenergy poverty at the same time as reducing global emissions.So we are in the process of.

Transitioning away from emissions, butby no means are we are we transitioning away from production of oil and gas.The transition prospect makes it a complicated and interesting landscapewhen it comes to demand. And you've said that you want to doubleoil and gas production from your province.Oil output recently at record highs. Natural gas output, I think about thehighest since 22,009, I should say. How do you see the doubling of that in aworld that is shifting very quickly away from decarbonization?Well, I look at the America they've they found the pathway as well.I mean, they continue to increase their.

Production.At some point, their fields are going to fall off and production there are goingto need to replace that supply. And we believe that Alberta is going tobe ideally situated to do that. The other thing I'd say is that we'vewe've heard loud and clear from our international partners, particularlySouth Korea and Japan, that part of their model in moving away from coal isto be looking at things like hydrogen and ammonia.And we believe that we should be that that principle supplier to not only ourAmerican friends, but but also our friends around the world.So I look at the entire picture of.

Reduction of global emissions as onebeing where the the wealthy nations will achieve that target by 2050.China has a target of 2060, India has a target by 2070.And as we develop the technologies to to be able to develop these resources withwith the fewer and fewer emissions that's going to be be able to ensurethat we're able to meet that global demand for energy as well as have alower and lower emissions target. So I think that we can achieve all ofthat. So Premier, I'm interested how the TransMountain pipeline expansion plays into that, because we know it's been morethan a decade in the making.

Andwhat will its construction mean, do you think as well?What sort of message does that timeline send to the two other investors outthere looking at potentially more pipelines being built in your province?Well, I would say America is one of our dearest friends and best tradingpartners and our principle and in some ways only customer.We supply the rest of Canada as well as supplying America.But when we now can can reach Tidewater with both of our our natural gasresources through coastal Gaslink and LNG Canada, which will be up and runningin 2025 as well as through Trans.

Mountain Pipeline, we have the abilityto diversify our our customer base. I think we still will have America asour principal partner and our principal customer.But once you have those products on the ocean, they really can go anywhere.And so I. I note with interest that the Americanshave said that they might be pausing on their LNG export.I look at that as an opportunity for us if if we can be an additional supplierof the world to the world of this vitally important energy source that'salso lower emissions, lower polluting, I think that we have a role to play inbeing able to to to expand our markets.

That way.And so which markets are you looking at in particular, for instance, Asia in oilsands crude? Would you be looking to export any ofthat to Asian refineries? How much do you think that they wouldactually be buying as well? Well, I would say that the the valueproposition on these heavy forms of crude is very high because they can beused for a variety of things, not only combustion and diesel, but also forasphalt. And whether we're we're driving gasolinepowered vehicles or zero emissions vehicles, we're all going to need roadsto to drive them on.

We also know that a barrel of oilalready has 6000 different products that you can make out of it.And so being able to to find those additional markets so that they can berefined locally to whatever that that unique mix is for each nation, we areabsolutely open to having those conversations.And I think that that's going to be a new a new era for my province as well asfor Canada, that we can finally talk about the ways in which we can meet thatthat global demand. So I'm looking forward to having thatconversation. On the interest on the on the issue ofLNG.

I know that Japan is very keen on eitherhaving LNG export, but I think principally they're interested inammonia. And one of the things about Alberta isthat we have one of the best geologies in the entire world for carbon captureutilisation and storage. My, my officials tell me that we havethe ability to sequester the equivalent of all of the emissions that havealready been produced by man so far. To give you some idea of just how howgreat our geology is, so if we're able to capture the CO2 and then in turnexport ammonia to be able to meet that market, I think that that opens up anentirely new conversation with our with.

Our friends in Asiafrom geopolitics as a continent overlay when it comes to energy markets.Right, as well as trade. We've just been talking about trade withAsian markets for your province. And do you imagine if we look at thepossibility of a second Trump presidency, we are seeing Donald Trumpleading in the latest Bloomberg News morning consult swing vote.Does that bode well or ill for your province and the businesses that youkind of have control over in terms of global trade?Well, in in our current environment, Alberta and America are trading $161billion worth of products.

So I would say that we will have astrong and healthy relationship regardless of what the what the politicsare in the White House. I always do get concerned when I hearpoliticians talking about putting in new taxes and America by first policies.But what I'm hoping is whether it's a Republican White House or a DemocratWhite House, that that we look at the special relationship that we havethrough the US mexico-canada free trade agreement and that we look at havingNorth American energy security, North American supply.I think that that having Canada and Mexico work in conjunction with theUnited States is really the way that.

This continent can be a powerhouse.So that's the other part of the message is that whatever protectionist measuresor extra taxes come in, I, I hope that that Canada can carve out an exemption.I want to ask as well on the ownership of this Trans Mountain pipeline, becausewe know that the Trudeau government has said it doesn't want to be the long termowner. Bloomberg has been reporting potentiallyon some sale of it, but we understand from some indigenous leaders in thecommunity that that process has stalled. Where does this sale stand and whatshould they be doing as well? We've been very successful with whatwe've called our Alberta Indigenous.

Opportunities Corporation, essentiallyputting up a backstop so that we provide a loan guarantee so that these kinds ofassets can be transferred into the hands of Indigenous ownership.We were able to bid to backstop a major deal that Enbridge negotiated with 23nations. So now they get a long term revenuestream of dividends. And we've already told our federalcounterparts that we're prepared to use our expertise as well as that that kindof support, so that we can make sure that there's a significant portion ofthat pipeline that ends up in the hands of the nations in Alberta and BritishColumbia who are going to be impacted.

So I think we've got a successful modelthat has proven out that that it can work.We've actually had so much success that we've increased the amount of loanguarantees. We're willing to backstop up to $3billion. And if they if they were to follow themodel that we've put forward, I think having the the First Nations as ananchor owner would then go a long way towards enticing other other owners.I don't foresee that being a huge difficulty in the.Getting it into private hands. But they do have to get the indigenousownership there first, I do believe.

Premier, thanks very much for your time.That was Danielle Smith, premier of Alberta, Canada, and leader of theUnited Conservative Party. You can watch us live and see our pastinterviews on our interactive TV function.TV go there. You can also dive into any of thesecurities or Bloomberg functions we talk about, plus become part of theconversation by sending us instant messages during our shows.This is for Bloomberg subscribers only. Check it out at TV.Go. Shares surged almost 48% in New Yorkafter spending helped bolster the chip.

Design as forecast.And the CEO, Renee Huss, told us that the remarkable opportunity presented byA.I. is still in its early stages.This is really the result of strategies that were put in place a number of yearsago that are now just really starting to come to fruition.Yeah, when we think about the vindication, when we think though, stillabout basically more of your technology going into more types of equipment,you've managed to see a diversification out of phones.Paint us the strategy of ARM going forward, because many would say actuallyyou're not just in the overall designer.

Of chips.You're basically making the chips look fabulous in some ways.How do you see that relationship going forward with Qualcomm, for example?Well, a lot of folks, as you said, didn't really understand the companywell and where we fit. And obviously, we had a lot of growthattached to the smartphone market. But ARM is in a lot of devices thatpeople may not naturally think about. We're in a Tesla vehicle, we're in aFord F-150, we're in a ring smart camera.We're in in the Samsung TV, a Samsung Smart appliance.So just about every device you can think.

Of has arm inside and just about everydevice you can think of needs more and more compute, particularly as AI is nowdriving a whole new demand cycle. Talk to us about AI Jeffries reallysingling that out. The analyst there saying that thisreally shows you a beneficiary from A.I., but where does the AI focus come?You of course, we're in in video before. They are all about A.I.accelerators, and I'm interested as to whether or not that would be an areathat you get into other than service. Well, right now Nvidia has a greatpartner there. Grace Hopper.Chip, a super chip, uses a lot of arm.

CPUs in combination with her GPU, whichis a really, really great solution for high end A.I.training in the data center as well as inference.But when you start moving to smaller devices, say smartphones or PCs, fullA.I. is going to run there too.If you look at some of the recent announcements by by Samsung and Googlerelative to their smartphones, there's a lot of things such as circling an imageon a browser and then having that browser go off and do search based onthe the circle that's A.I. that's actually running on a smartphone.And what we're seeing is really a drive.

For more and more compute capacity torun these AI algorithms so that people don't even know what they are yet.But what designers want to do and need to do is future proof their designs withmore and more compute. And that is really driving a stronglicensing cycle for us in terms of more demand.That was the IOM CEO, Rene Hines, speaking to Bloomberg TechnologyCaroline Hyde and Ed Ludlow. And ARM was a key focus for SoftBank oris a key focus for South Bank as it repositions its strategy around.So that was sort of really what came out of SoftBank's earnings yesterday, wherewe saw it swinging back to profit after.

Four quarters of losses.Let's get more on that now and bring in our tech reporter Min Yong Lee for us inTokyo. Min Jong, I'm curious, what was your keytakeaway from from the numbers that came out?Like you said, they swung to profits for the first time in five quarters andtheir vision fund unit also reported profit helped by a recovery in theirassets. And of course, while Arm's resultsdidn't have a huge impact on the earnings itself, as you see from theshare price reaction, the surge in ARM shares are having a very positive impacton SoftBank's own shares because.

SoftBank owns 90% of aam and there was alot of focus around how the company SoftBank is focusing on arm trying tomaximize arm's technology to for for future growth into A.I.and how Masayoshi Son is very busy always thinking about what to investthat can help maximize the potentials of arm.But another key thing was their new investment activity is remains quitesmall and minimal. So there is a lot of questionssurrounding what is happening with new investments, both at the Vision fund andalso at the group level. So that's a key question that's hanging.We got some answers as to that Paytm.

Stake right before the shares plunged.Mm hmm. Mm hmm.Mm hmm. So one of the things SoftBank is doing,they keep offloading a few of the key assets they have.And 111 of them was Paytm. We spoke with the Vision Fund CFOyesterday. Now we need cover.And he told us that a majority of of the stake has been offloaded before therecent share share start Crash, buy by Paytm and based on uncertainties thatwas surrounding Paytm. And now SoftBank only owns about 5% ofPaytm, compared to roughly 18.5% that.

SoftBank owned around the time ofPaytm's IPO. And I think we can expect not just Paytmbut some offloading of shares of these keyassets by SoftBank going forward as they continue to kind of manage exits and newinvestments going forward. Bloomberg Technology.Reporter I'm only there with the latest on softbank.Take a look at some of the other corporate stories that we're trackingthis hour on. Bloomberg has learned that Goldman Sachsis under investigation over whether it improperly charged fees for futurestrades.

Sources say the US regulator has sentsubpoenas for information about those transactions.It is the latest regulatory headache for the bank, which paid $50 million lastyear to settle at least four CFTC cases. ExxonMobil plans to leave EquatorialGuinea within months, ending almost three decades of oil drilling.That made the country and OPEC member, the small West African nation, becameone of the world's hottest oil provinces around the turn of the century.But output has since dried up, along with foreign investment.Bloomberg has learnt that Saudi Arabia is set to hire banks, including Citi,Goldman and HSBC, for a secondary share.

Sale in Aramco.Sources tell us the world's biggest oil exporter is also in talks with otherbanks over the offer that may come in the next few weeks.A follow on offering would raise about $20 billion, making it among the biggestin recent years. Australia's Woodside Energy is in talksto buy liquefied natural gas from several US export terminals, includingenergy transfers Lake Charles Project in Louisiana, which isn't yet underconstruction. Lake Charles is one of the projectsaffected by the Biden administration's pause on granting new LNG exportapprovals.

Energy Transfer's request to extend itsextend its existing permit for the plant was denied last year.We have plenty more ahead here on DAYBREAK.This is Bloomberg. Richmond Fed President Tom Barkin sayspolicymakers have time to be patient about rate cuts, pointing to a stronglabor market and continued disinflation. He told us exclusively that he's lookingat data around this time of year with a cautious approach.I think the data has been remarkable. It's been remarkable across the board.The fourth quarter GDP, 3.3%. The jobs numbers last month and I thinkall of them do talk about an economy.

That's fundamentally healthy.That's a great thing. I'm always cautious about numbers aroundthe turn of the year. I mean, they're big seasonaladjustments. A great example would be the jobsnumbers last month. The actual jobs were actually down twoand a half million because a lot of the retail folks who were hired forChristmas then got laid off after. But the seasonal adjustments bring it upto a positive 353. So that's a pretty big seasonaladjustment. I just I look hard at it.I'm glad to see it coming in.

That's the best data we have, but I'mnot sure I'm going to take too much out of any one month.Markets are obviously interested in if and when the Fed is going to cutemphasis on the when. And I know you've said we don't have tobe in any rush, but with the data like this, basically,are you telling people, you know, we're doing fine with rates where they are?Well, I have said you don't have to be in any particular hurry.You've got a dual mandate with employment and inflation and theemployment side of the mandate. I mean, it's actually operating athistoric levels, 3.7% unemployment, job.

Gains.We talked about initial claims, job openings.It's a very strong labor market still. And so gratified to see inflation comingdown, hoping it continues to come down. And I think we've got some time to bepatient. I know you said you don't have a roadmapfor rate cuts. Yesterday, Carlyle Group chief executiveHarvey Schwartz said investors should not be thinking the Fed would cut ratesfive times this year because that would imply something's wrong with theeconomy. I assume you would agree with him.Well, it's hard for me to get into the.

Market forecast because there's alwaystwo elements going on in those forecasts.One is rate normalization under a healthy economy and inflation comingdown. But the other, of course, is the economytakes a wrong turn and you come down faster.And so those things are a weighted average to me.There is certainly a model that you take rates down quickly.That's not a model that's good for the economy.That's just one of the things that could happen.And then there's the model where, you.

Know, you toggle rates down as, youknow, the economy comes back into balance.Well, how do you make a judgment then on when you think it'll be appropriate tocut? What are you looking for?The phrase I think the chairman and others have used is measurable progresstoward the 2% target. How would you define that?If I could get these kind of numbers sustained and even better broadened,that's that's what I'm looking for, a sustained and broadening.Richmond Fed President Tom Barkin there speaking exclusively to BloombergSurveillance.

Take a look at the setup as we get intothe start of trading across Asia and is going to be sort of holiday quiet andright. A number of major markets across theregion. A look closely at other already off forlunar new year holiday or we're seeing holiday shortened trading for the likesof Hong Kong, for example. So it is going to be lower volumes andreally a lack of guidance in terms of how much trading action we see in thedays to come. And particularly today, we are seeing alittle bit of upside there when it comes to trading in Australian equities, upabout just shy of a 10th of 1% really.

We heard from RBA governor MichelleBullock in her parliamentary testimony saying that inflation doesn'tnecessarily need to be back within the band for the RBA to consider rate cuts.But really kind of trying to tread that fine line between signalling too much ineither direction. We're seeing Kiwi stocks of by about4/10 of a percent. The Nikkei futures signalling upside,they're 4/10 of 1% higher. We are seeing the yen potentially facingmore downside pressure. But equities, the Nikkei set to climbafter we heard from the BOJ deputy governor yoshida suggesting thatpolicymakers won't hike quickly even.

When they do finally end negativeinterest rates. In Japan, we're seeing S&P futureslooking pretty flat at the moment. And just a reminder, market closures inChina, Taiwan, South Korea, Indonesia, the Philippines and Vietnam.When it comes to Hong Kong and Singapore, they get an early end to theday.

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