Bloomberg Damage of day: Australia 02/08/2024

Welcome to Daybreak Australia.I'm Haidi Stroud-Watts in Sydney where markets havejust come online. I'm an avowed rollers in Hong Kong.We're counting down to Asia's major trading opens and the top stories thishour Asia getting a positive late in as US stocks extend their bull run.A record sale of ten year treasuries at a discounted yield, adding to confidenceof a Fed pivot, Disney's full year profit base as itreveals a big gaming investment holdings, giving a surprisingly bullishforecast ahead of SoftBank. Earningsloss to China replaces the securities.

Regulator in a surprise move that maysignal tougher action to end the market rout.Let's take a look at how is shaping up this Thursday morning as we getAustralia coming online to that staggered open, we're seeing upside ofabout just about a 10th of 1% after the S&P 500 closes, just on the brink ofthat historic 5000 mark. And we had that biggest ever ten yearauction of treasuries really leading the way for how we see some of sovereigns,some of these numbers perform here in the Asian session as well.Watching Australia three and ten yields at this point.We're seeing a little bit upside when it.

Comes to trading in Aussie stocks at themoment. Firmly in focus will be the earningsseason to sort of gathering pace this month consumer spending, the economicrecovery and stimulus efforts out of China, potentially higher dividendpayouts will be some of the things that we are watching for when it comes toreporting from Australia's largest companies.Amid, of course, these RBA expectations to ease policy this year as well.The Aussie dollar at this point pretty muted.6520 We had the dollar kind of pretty anchored within that narrow tradingrange in the overnight session.

So not much of a move when it comes tosome of these Asian currencies so far. Switching on the board to take a look atsome of the other markets that we are watching.Kiwi stocks down by about 2/10 of a percent.We're seeing Chicago index futures looking broadly positive and dollar yenholding pretty steady at that 148 level that we're watching at the moment, upabout 2/10 of a percent amid those gains across US shares.We're watching for that Japan, the BOJ and say deputy governor speech onThursday for any hint they'll of course to the end of negative ratesnow all about that policy normalization.

But here in all 3 hours we're trackingsome of the big names that reported after the bell today.And just take a look. I mean, I think you can see here on isreally standing out. This is the chip designer listed justlast year and it came out with a very strong forecast.It's about the forecast for all of these numbers here but aam is saying for thecurrent quarter they can make as much as $900 million in revenue.You compare that to the average analyst estimate of around 780.So that is a big gap there and that's why we're seeing that jump in afterhours Disney as well.

Again a stronger forecast comingthrough. They're also going to be investing about.5 billion into Fortnite maker Epic Games.PayPal under pressure against the guidance that's coming through here.But to the weaker side because they're actually seeing flat earnings.So these are some of the big movers in after hours.But let's change on Take a look at what's happening in the start of tradefor futures here. Again, fairly steady at this point intime. They've just come online, but put it incontext of the moves they had intraday.

During the session because US stockscontinued to power ahead. We saw the S&P 500 closing withinstriking distance of that 5000 mark is slightly above that there in thefutures. But certainly thing to be tracking againis that how investors are really interpreting the Fed commentary as well,seeming to shrug off this this question of when we're going to see any sort ofcuts. And that also came through from theBoston Fed president. Take a listen.Expecting all indicators to be well aligned is too high a bar.But seeing sustained, broadening signs.

Of progress should provide the necessaryconfidence that I would need to begin a methodical adjustment to our policystance. So again, just another Fed officialthere pushing back on these market expectations of imminent rate cuts.But what we are seeing that need for further easing, of course, is in China.And we have had some more changes as well in terms of the leadership that wehad at the top of its securities regulator has been changed.It's the latest step to hold a stock market slide that's wiped $5 trillionworth of market value from onshore indices since the peak back in 2021.Let's bring in our chief North Asia.

Correspondent, Stephen Engle here.So, Steve, what's the latest?A pretty surprise move yesterday. Yeah, that's right.But also, if you think about the steps that the securities regulator, as wellas Beijing authorities as a whole been trying to do to stop the stock marketslide have been piecemeal at best. And yes, we get a little bit of rally,then it falls back because the overall sentiment has been pretty weak.You have sliding stocks, you have a sliding economy, you have a ongoingproperty slump, you have geopolitical tensions with the United States andyou're coming up on to a hard break, if.

You will, using television terms.And that is a week long holiday where sentiment is pretty weak right now.So something had to be done and it's been a pretty bad year for top officialsin Xi Jinping's, you know, government. You lost the foreign minister, Qin Gang.He was replaced. You have the top, you know, general inthe play replaced at FU. Now you have the securities regulatorabruptly changed given the situation and given the precedents in the past, whenthe securities regulators change, you usually get a boost in stocks becauseagain, they're given a mandate to use perhaps more forceful approaches to stopa potential stock market slide or.

Whatever rectification that needed to bedone. So here's the two gentlemen in questionright now. E Webman, who was the securitiesregulator, the chairman and party boss of the Z since 2019.He is on his way out and Wu Ching is coming in.He's considered to be a hard liner. He takes a more hard line approach todiscipline, which probably is in line with what Xi Jinping would want rightnow. Zero tolerance is kind of his slogan,and he is known as the broker butcher. That's a nickname that he earned, what,in the mid 2000s when he really led a.

Crackdown on malfeasance, if you will,and bad practices within the brokerage industry in China.He shut down 31 different brokerages in China in the mid 2000.So he is going to basically enforce discipline because the CSR seen in thelast few days, as late as Monday, came out and said we have evidence ofmalicious short selling stock market manipulation.So if there is malfeasance happening, this guy is going to root it out andthey're going to have a week long holiday to kind of come up with astrategy. Yeah.Steve, as we head into the the year of.

The Dragon, right.It's supposed to be the most auspicious of the horoscope.Powerful, you know, wealth, success, not exactly the themes that we'reassociating with the Chinese economy at the moment.And we're going to get more data today. Yeah, that's right.I mean, the deflation persists and that's, you know, a real difficultsituation for an economy that is trying to get out of this slump on multiplefronts. As I just mentioned, we're going to getCPI deflation numbers expecting a fourth consecutive month in January of consumerprice deflation.

We know at the factory gate, producerprices have been weak for 15 consecutive months.That's also expected to continue. So, yeah, heading into the week longholiday when people travel, whether they're going to be spending because theMinistry of Commerce has already declared that 2024 is going to be theyear of promoting consumption. It's an inauspicious start to the yearof the Dragon for sure. Chief North Asia correspondent DavidAngle there with us with the latest on China.And, of course, one of China's biggest companies, Alibaba's US traded sharesfell the most since November after the.

Company reported lower than expectedsales overshadowing its move to extend a buyback program.Let's get some more on this with Bloomberg Intelligence senior analystCatherine Lim. And Catherine,the stock has been trading on some optimism, but what was ultimately thebiggest disappointment out of these numbers?Right. I think what brought desktop back tosquare one. So, you know, the last over the lastweek really was that, you know, there seems to be more uncertainties facingthe stock as firstly the company now is.

Pushing for global e-commerce come backin China as well as overseas. So they are going to be spending more in2024, possibly actually giving up. Do you know the profit gains thatthey've actually made in the last one year?And that's one. Secondly, they've also highlighted thatthere are uncertainties in market conditions that may actually hamperdivestment plans, including the IPO of China.So these were the two key things that actually stood out that overshadow whatI would say, do not the large share buyback program by the company.And we know Alibaba really needs to.

Catch up ground, that it's lost to twopeers like PDD. Are we seeing any sort of signals of ane-commerce comeback at all? Well, you know what?We are in a very early stage. What is interesting is that, you know,they've identified Europe and develop Asia as markets that, you know, they area key business AliExpress will be focusing on in the near term.So, you know, that may actually slow down some of the expansion by outside ofus. We'll have to see what actually comestrue over the next ten months. Should we be expecting a tiny IPO totake place this year?.

Well, I guess given the very subduedindications from management overnight, I do think that, you know, it is afunction of market conditions right now. If we continue to actually seevaluations at the current depressed valuations, I don't think that this isan IPO that will come through before May of this year, which is the indicativetimeline that was earlier communicated. It may still be on the cards for thesecond half if the markets and sentiments towards China turn for abetter. That was Bloomberg Intelligence, SeniorAsia Pacific consumer analyst Kathryn Lim there.And turning to another stock we've been.

Watching here, because Disney shares areup in extended trading. That's after the company's earnings beatestimates and it gave an upbeat profit outlook for the year.For more, Bloomberg Intelligence, senior media analyst Geeta Ranganathan joins usnow. Data yet stocks higher in after hours byabout 6%. What's standing out to you from thenumbers. Yeah, I think overall this was really ablockbuster report for Disney. And there are so many different thingsthat I think investors are cheering. So we're seeing some great progress onthe cost cutting efforts.

The the company guided to 20% EPS growthin fiscal 2024, which is way above what consensus was expecting.And then just across the board, we're seeing not just, you know, very goodexecution in terms of, again, cost cutting, but also a very clear strategyfor them going forward. And one of the key questions forinvestors kind of going into this quarter was what is their end game withESPN? Is there a strategy for streaming?And they came out, you know, all guns blazing.So they have a new bundled sports service where ESPN is going to be partof another bigger bundle.

And then they have a standalone ESPNstreaming service, which is going to be introduced in 2025.So, you know, everything seems to be going right for Disney right now.Hmm. What is the the new sports streamingservice mean, potentially, when it comes to ESPN's future?Did you ask what its name is? What are the implications for the futureof ESPN? Yes, I think, you know, it's it wasdefinitely a necessary step, I believe, for Disney, because, you know, they'rekind of seeing the writing on the wall here in terms of cord cutting.What it means, I think, for the future.

Is that they are going to be ready whenmore and more people cut the cord. We already have about 30 million peoplewho have cut the cord in the United States.We're going to have tens of millions more who kind of do the same over thenext few years. So this really kind of positions them totake control of their future and kind of control the distribution, which isreally important because up until now, you know, all of these big mediacompanies have only controlled production, not distribution.So this really puts them at the forefront of that.Something else that came out of the.

Earnings was around Disney's plans forEpic Games. And we heard it Bob Iger actuallyspeaking about this. Let's just take a listen to what hesaid. Our new relationship with Epic Gameswill create a transformational games and entertainment universe that integratesDisney's world class storytelling into Epic's cultural phenomenon in Fortnite,enabling consumers to play, watch, create and shop for both digital andphysical goods. How is that sort of investment makinglikely to be viewed by investors, do you think?I think it's definitely a good.

Investment.It's a step in the right direction. I mean, if there's one thing this is notthe first foray for Disney into the video games.I mean, they've had some fairly checkered history here.More, I would say, failures than successes with with direct involvementin video games, which is why they've kind of, you know, always kind of stayedaway from that direct investment and kind of gone to licensing.I think what they're realizing is they have this huge untapped market becauseif you just kind of look at the visitors to the theme parks, they're all theseyoung children and they are you know,.

They are the perfect target audience whoare spending so much of time on video games.And it, you know, kind of makes perfect sense.It's it's it's a great move for them to kind of now invest make us make a fairlysmall investment. But there's potentially a lot of upsideand they can create a whole new entertainment universe which is which isreally important for them going forward. Bloomberg Intelligence senior mediaanalyst Geeta Ranganathan. The all the latest on Disney.Still ahead, the US and Israel giving conflicting interpretations of the Hamasresponse to a hostage deal in Gaza.

We get the latest on hopes for thatceasefire coming up. But before that, we get twin focusestake on the recent fed comments suggesting that the Fed doesn't actuallysee an urgent case for lowering interest rates.The question is whether it matters to the markets.This is Bloomberg. I'm very supportive of being patient,you know, to get to where we need to get.I see at this point the trade off, which is, you know, coming into betterbalance, is still being in favor of continuing to work on inflation.At some point, the continued cooling of.

Inflation and labor markets may make itappropriate to reduce the target range for the federal funds rate.On the other hand, if progress and if inflation for some reason is stopped, itmay be appropriate to hold the target range to steady at its current level forlonger to ensure continued progress on our dual mandate.Fed officials Adriano Caglar and Thomas Barkin, they're on the Fed's rateoutlook. Our next guest says Fed comments don'tmatter when the market has already discounted cards.Joining us now is David Dollar, see at Twin Focus.And David, it is interesting how we.

Operate within this environment whereFed speak is more important than ever, and yet the market continues to sort ofoutrun and outpace those expectations. But pleasure to see both you, Heidi andAnnabel. This the Fed's comments matter less andless. We've already discounted five or five orsix rate cuts. The market will get there or the Fedwill get there. It's just jawboning until until we'rethere. We have already discounted those cuts inthe market. The rate curve already has that in themarket.

And we had a strong treasury auctionwhere people were anticipating it. But I think what matters is the realdata and the hard data as it comes through.David, if you sort of try to draw the similarities between how investors feelabout the US market right now and how investors feel about China, it's sort ofminds are pretty set, right, that they see what they see regardless of whatpolicymakers necessarily is signaling and doing.But what I want to know is how do you see the Chinese economy right now asbeing like a Taylor Swift concert? Boy, you know, when you're you're at theTaylor Swift concert and you press the.

Uber button and you just don't know whenit's going to come, but you know it will come.And so that chaos that exists in the Chinese market is expected.And I thought the insight intelligence from Bloombergwas excellent from Steve. And look, it's a chaotic market, theeconomy slowing. We've we've got a problem inside of realestate. The market knows that.But there are real companies underneath that.And in Katherine mentioned Alibaba. Alibaba trades at about four times cashflow ex the assets and the company has a.

High R away and it's still growing.So so that Uber or that car will come I think calling the day week and monththat that market bottoms though is impossible.What is this I know in the United States.Go ahead. No, no, continue.Yeah. What I was going to say that's differentin the United States is that bad news is skipped and good news is just that goodnews. I I'm very surprised that the U.S.public markets has not been more concerned by the news out of New York.Community Bancorp specifically.

Highlighting one of the largest assetsin the world, which is apartments and multifamily.So that's gone in reverse. And I'm I'm shocked that there has notbeen more concerning for the market as a whole.And I can only imagine that people believe with the rate cuts will powerthrough it. It's interesting you talk aboutA.B.C., because we have, of course, been watching that very closely.But at the same time, you are seeing some pressures when it comes to theJapanese island as or as well as a result of their exposures.Do you think there is a broader theme.

Perhaps developing as a risk for 2024 ofthese portfolio pressures and risks? Oh yeah.I believe we lowered real rates for, you know, give or take, 15, 20 years andwe're just starting to lift them up. So to me, this is the second canary inthe coal mine of what happens is you raise real rates.And the first one was the implosion of SPACs and IPO money in the U.S.public markets. The next one is we cut off long durationassets and apartments. And I think there'll be more.I think there will be more regardless of what the Fed does.Yeah, I'm interested how that plays into.

Longer duration assets because you'rehighlighting private equity venture capital here.We've seen these plays really staying on the sidelines, at least in the M&Aspace. Is this going to also cause a crunch, doyou think? I thinkit's going focus. We meet with hundreds if not thousandsof private capital credit managers a year.And and we hear the same thing over and over again, which is we're slow to putcapital to work. We're also slow to get capital back.And as a result of that, there's a.

Logjam.And that logjam is, you know, people don't have money to refresh.And then and I think that is just a slow motion credit crisis, very differentthan the credit crisis that's ongoing in Asia that we highlighted earlier in theshow. I guess then maybe it calls us out ofthe box thinking. And one of the views you've highlightedhere is a preference for Greek equities, which is an in a market that we talkabout too much on this show at least. Why is that?I don't know that I ever invest in the Greek market, if it has been has been along time.

We've been warming up to emergingmarkets. It is an area that has lagged.Greece in particular. It was hard for me to believe, butthey've cleared up their fiscal problems.They're actually running the largest fiscal surplus in Europe at this point.On the earnings estimates for the securities are going up and to the rightof double digit earnings growth. The stocks trade for about six timesearnings. You know, really, it looks up into theright and there's still a lot of skepticism.All right.

Something to be tracking close to thatwas David Daghlian is CIO at Twin Focus there.And you can get a roundup of the stories you need to know to get your day going.In today's edition of DAYBREAK, Terminal subscribers go to Daily Go.It's also available on mobile in the Bloomberg Anywhere app.You can customize your settings so you only get news on the industries and theassets that you care about. This is Bloomberg. You're watching DAYBREAK, Australia.Here is some of the top bank stories that we're tracking this morning.And Bloomberg has learned that Citadel.

Was among the hedge funds that receivedMorgan Stanley's trade leaks for favored clients.Other recipients are said to include people at serious Capital, SocGenCapital and Evolution Capital. Prosecutors haven't accused any allegedbias side participants of wrongdoing. Morgan Stanley paid $249 million tosettle the investigation. Sources say New York Community Bancorphas been reaching out to investors for capital to finance a large portfolio ofresidential mortgages. The bank is said to be considering asynthetic risk transfer backed by a portfolio of about $5 billion of homeloans.

NYC is under pressure over its worseningcredit quality. Ripples from the US from the troubles inthe US commercial market have now spread to Europe, with bonds at Deutsche APBslumping over the bank's property exposureand. Come on.Let's take a look at how it's shaping up this Thursday, which is about half anhour into the start of trading here in Sydney, just extending some of thosemodest gains. We are poised more broadly across theregion for a pretty positive session there, with that edging higher in theearly part of trading speeches, pointing.

To Japanese equities rising as well.Hong Kong shares potentially headed a little bit lower.And of course, we are getting into the start of the holidays in China as well.Personnel change at the CAC could boost sentiment. The Carlyle Group is warning that marketexpectations for five or more Fed rate cuts are excessive.CEO Harvey Schwartz also told us exclusively that the company moved awayfrom the troubled commercial real estate sector some time ago and that one of thevery fortunate things that I inherited when I showed up at Carlyle is one ofthe best real estate investing teams in.

The world.Their performance over 20 years is truly extraordinary.When I talk to them about commercial real estate, they really started backingaway from office many, many years ago. We don't see it as a sector where yet wesee real opportunity. So I think there's going to bechallenges, but I think this plays out over many, many years because in somerespects we can see this problem, but it's a problem that will have to bedigested by the markets over a number of years.Yeah, let's get a little macro here, because part of this problem is beingcaused on the heels of higher interest.

Rates and you have a market now thatstill expects more than five rate cuts before the January FOMC meeting of nextyear. Do you believe that those five rate cutswill come to fruition? So we have a pretty unique perspectiveon this because across our portfolio companies we have in excess of a millionemployees and we see the data and the performance.I would say that if you step back and you think about historic Fed behavior,the Fed typically either is fine tuning or cutting dramatically or raisingdramatically. And when we look at the data from ourportfolio companies and then you look at.

Strong GDP, unemployment numbers thatare quite attractive when you see inflation has really stopped materiallyand paused at this stage, I don't think we should be rooting for five or eightrate cuts. I think that would suggest anenvironment that actually requires a lot of attention from the Fed.I think we should be hoping for fine tuning because I think the economy is inbetter shape than people are giving credit for.And I think the Fed's done a fantastic job navigating us.So what is a more realistic view of where rates go?In our model, we would expect the base.

Case to be two or three cuts.The Fed, we expect to be very data sensitive.We're watching this closely also. But again, my crystal ball may be asgood as ours and we'll see what happens. Events are hard to predict.What's the risk then, that we tip over from a soft landing or even no landinginto a recession? What would cause the tides to turn?I think you could see if you had an unexpected market disruptiongeopolitical event. But remember, the Fed has communicatedto us that they're watching this data very carefully, and so hoping formultiple rate cuts.

I think it's a little bit of a recencybias. I think it's the people really saying,Oh, I really enjoyed that QE that we were experiencing.I think as market participants we should want a normalized cost of capital and ifwe can get there through this process, I think it'd be an extraordinary outcome.And I think it actually may, I think, be great for business opportunities.I think it'd be really good for Carlyle and I think it'd be great for investingclients. I think we've seen a lot of outflow.That was the Carlyle CEO Harvey Schwartz speaking exclusively with BloombergSonali Basak.

And let's shift focus now to this partof the world and Chinese equities. On that countdown to the Lunar New Yearbreak, taking a look here at futures and you can see a little bit of stabilityperhaps we're finding here. You've got some regulatory changescoming through. We were talking about the personnelchange at the CCRC overnight. So that raises hopes perhaps that newmeasures are in the pipeline. But still,the valuations, these are looking extremely cheap and that that pessimismdoes continue to persist. Let's bring in our guest now.This is Eddie Chung, senior emerging.

Markets strategist at Crédit AgricoleCIB, here this morning in the Hong Kong studio with us.So, Eddie, where do you think we're out in the selloff now? Do you think we've hit the bottom atthis point in time? I think it's still early to say we'reout of the woods right now. I mean, what we're seeing is, yes, thereare taking much more positive steps towards change.It does look like policy easing is on the way.We do expect more policy easing on the way, as you mentioned as well.The valuations are very attractive.

But while we're at one day heading intothe Lunar New Year or about to go into a break, I think it's probably still moretime is needed for there to be more concrete policy action.The problem right now is if we look at market expectations versus what's reallycoming out, there's still a bit of a gap there.So markets are when they see the news, they jump a little bit and then one ortwo days after that kind of goes back. So it shows you that markets are stillexpecting a bit more. But then I think another tangiblequestion as well, do the authorities really have to do that much more to meetthe market expectation?.

There are two aspects of that.In our view, the economy is recovering is a bit of a bumpy road.I think the big issue is when they really get out of this deflationproblem. So we had the CPI numbers today stillexpected to see deflation. But as we gradually improve, I would saycloser to Q2, then maybe they don't have to do as much.I want to bring your attention to this chart here because.This is looking at the performance of the benchmark in China, the CSI 300,after we have seen leadership changes at the securities regulator in the past.And you can see here that there has been.

That move higher.Overnight, we had the news that that we had a replacement coming through.How do you think the market is likely to interpret that today?I think the timing is certainly very interesting as right ahead of the lunarNew Year, given everything that has been happening.They replaced the securities regulator. I think the general expectation they seethis as a bit more positive. Markets are inclined to be a bit morehopeful into the year of the Dragon, and I think that is just another aspect ofall the broader changes that are coming through.But I think the reality is we really.

Don't know yet.The issue is we have to wait and see until after the Lunar New Year.Are there going to be more things happening?What is the real tangible change happening?I think there are suggestions that things are happening behind the scenes.But in terms of is this the turnaround I think is stilltoo early. Does it to be more market reforms?I mean, most of the focus have been on stimulus measures, on fiscal measures.But does it need to be more capital markets reforms, you think, to be ableto stoke confidence?.

Because, you know, on the macro fromwe're getting the inflation numbers later on today, we're not expecting amarket improvement, just sort of further muddling through that deflationaryspiral. Yeah, absolutely.Well, basically, I think we expect more reform or easing or macro support acrossa whole host of measures, whether it's monetary easing, fiscal easing propertymeasures, market reforms. These are all things which markets aredesperately calling for right now at this point in time.So our view from the monetary side, we expect more are cuts, maybe at leastanother 50 basis points,.

Fiscal fiscal support from the centralgovernment. That's also like that's also very muchneeded property support to rebuild confidence.I think we've seen a lot more of those already, but it's just really when itcatches on and really kind of ignites the market.So we're not seeing that. I think the biggest issue right now isconfidence and it's how they bring that about.But confidence can also be a very fickle thing.So it's not like, oh, you do A, B, C, and D, and therefore confidence comesback.

It's really how they manage to massagethese animal spirits and brings things back.How well correlated or anchored is the fate of China to the rest of theemerging market complex? Now, would you say?Because I think throughout the course of last year there were points where wethought, well, that correlation actually seems to be getting weaker.Is it still going to be one of the major themes for AGMs?Absolutely. I think well, as you as you rightlynoted, I think what we have seen so far is there has been a bit of a correlationof China markets.

But I think China still has a veryimportant role to play, especially within the Asia context.And whether it is talking about trade, whether it does lift sentiment.So right now, in our view for Asia is there's a bit of a triple threat.The first threat is coming from the Fed, that Fed rate uncertainty.Second, it's about sentiment. So where is China going?That so far hasn't been that great. Thirdly is the geopolitics.So I think if we get this China rebound or we get at least sentiment stabilizinga bit, I think this can be also one of the aspects why we're more optimistictowards Asia over the course of this.

Year.What else is going to perhaps drive optimism around Asia, particularly forthe key markets? Taiwan and Korea is where we're at inthe chip cycle. So we've sort of seen some mixed signalscoming through. Where do you think we're at right now inthe recovery? Well, what we have been consistentlysaying is, yes, we think the chip cycle is coming, but we think it's going to beslower than expected. But I think what has been interesting asmarkets have, we can't say complacent. Our markets have kind of gotten ahead ofitself.

If you look at the performance of thestocks index, basically the rally is huge.Well, partially it's also driven by the factor.But fundamentally looking at some of the data, looking at TSMC revenues, lookingat talent exports, looking at Korea exports, it is very clear that there's abit of a segregation going on in the chip cycle.The top end of the value chain is recovering a lot faster.The lower end I think is still a bit muddle through at this point in time.So need to be a bit more cautious. I think what that speaks to though, isfor currencies like the Korean one for.

Thailand, these can perform a bitbetter. We have been seeing the foreign investorinflows coming through and I think that will be more supportive of theirperformances in the coming months. Eddie Jones, senior emerging marketstrategist at Crédit Agricole CIB, either with us in Hong Kong, where I'mholding shares only sold and extended trading after the chip designer gave asurprisingly bullish forecast, suggesting its push beyond smartphonesis helping fuel growth and profitability.Its majority owner, SoftBank, is also on track to post one of its strongestquarters in years when it reports.

Earnings later on Thursday for more thanspring of Bloomberg Technology or bottoming only in Tokyo's June festival.What did we hear from aam. Yes like you just said it's a it's givena surprisingly bullish forecast for the March quarter and it has bolstered armsshares in after hours trading and while arm's share price increase itselfdoesn't directly impact SoftBank earnings it does provide a big push forthe total value of SoftBank's assets. One of the key metrics for for SoftBankand we do kind of expect a path for SoftBank shares when it starts tradingtoday too. And also SoftBank itself is forecast tohave a pretty positive quarter itself.

For the December quarter because of therise in the value of fish and fund assets and some extra gain from T-Mobileshares. So quite a bit of positive news forSoftBank today where there is fact some skepticism.Min Zhong is more around the second of its vision fund that's still got a lotof issues or losses perhaps in its privately held start up.So what are we expecting to hear from those one or that portfolio ofcompanies? You're right, we still don't haveclarity over how the Vision Fund's privately held assets have been markedduring the December quarter, So we can.

Only speculate that the value would bepossibly a status quo or but but there are critics who think that there ispotential for these privately held assets to be marked down or goingforward, which will have a negative impact on vision fund earnings andtherefore SoftBank's earnings too. So there will definitely be a lot ofinterest around what what go to the CFO has to say about these assetsand see if there is any possibility that these private assets willor will rebound as well. But we'll have to see.And what else are you going to be tracking out of this?I think perhaps what they say about I,.

For instance, is, is that going to beanother key thing? Hmm?Oh, yes, definitely. Especially with armchairs soaring likethis and given such a positive forecast, I think there will be a lot of interestaround how SoftBank plays out. Plans on playing up its push into AItechnology and all the startup investments.And of course, any extra plans SoftBank has with ARM with regards to more AIrelated projects or businesses or any new investments.SoftBank possibly plans into the area of AI, which now sounds so promising.There will definitely be a lot of.

Interest around those plans and ideas.All right. A big earnings release we're going to betracking later. That was our Bloomberg Technologyreporter Min Yong Lee there. Still ahead, the US and Israel giveconflicting interpretations of the Hamas response to a hostage deal in Gaza.We'll have the latest on the Middle East crisis next.This is bloomberg. While there are some clear nonstartersin Hamas's response, we do think it creates space foragreement to be reached and we will work at that relentlessly until we get there.US Secretary of State Antony Blinken on.

Hamas's response to a proposal to pausethe Gaza conflict and release dozens of hostages.But Israel seems to have rejected the terms from the militant group.Prime Minister Benjamin Netanyahu says Israel will continue to press on withits fight. Michael hate is here with more.Within that space that secretary blinken talks about.Seems to be a lot of room for interpretation on all sides.Yeah, it's it's really curious, Heidi, isn't it?Because you read Netanyahu's remarks and they're like, this is no deal.This is a nonstarter.

And obviously, Blinken is like, youknow, this is an opening gambit. And the Israeli media says thattheir sources in government say that it was a high opening proposal.So it does seem like there is movement there.And the question really comes down to what's Israel prepared to pay for thesehostages? And, you know, there is significantgroundswell within Israeli society that they have to get these people out.The Wall Street Journal reported that 51 are dead,so we're down to 85. So it's getting very, very difficult forthem.

Obviously, there's the humanitariancatastrophe in Gaza, etc.. But from Israel's side, it's just whatare they prepared to pay here? And and Hamas is obviously they realizethat that the hostages are central here. So that's what it sort of comes down to.So it does seem like something is happening, something is moving that thepublic remarks to some extent are a little bit of show, but it is going totake time, definitely. And Michael, this has been happeningconcurrently. The US has been also carrying outairstrikes in Iraq as retaliation to the servicemen that were killed.Yeah, that's right.

So, I mean, it's a the discussion over aceasefire really will have broad ramifications.I mean, the US, what it's doing is sort of separate.It's trying to show these these Iranian backed groups that there is a price topay. Now, in a sense, it delayed taking ortaking any action in response to the death of those US servicemen.It's almost like they wanted the Iranians, any Iranians who were there tobe gotten out of the way so that as Iran tries to do to the US and Iran canseparate state to state issues and it would just be between these proxies.But the US is going to keep targeting.

Them, clearly.But even if you get a if you get a ceasefire or some sort of truce in theGaza Strip, that could have reverberations across the whole region.It may be that these these sort of attacks on US forces start to stop.The US doesn't need to reply, you know, with the Houthis firing on ships,potentially, that comes to an end as well.So there's a lot at stake. But as I was saying to Hadi earlier, itreally just comes down to what will Israel pay for these hostages?And it sounds terrible to say, but, you know, the idea that you can get rid ofHamas or that you can remove them and.

Release these hostages, it's not reallya start. So the question is, can Israel acceptthat, that Hamas will remain with some role in the Gaza Strip?How is that going to work? There's a lot at stake here.How much of what is a domestic support situationlooking like within Israel? Well, I mean, the the polls show that ifan election was held now, that Netanyahu would lose.But that said, and in a sense, you know, for his own political survival, whilethis war goes on, while this conflict goes on, there's not going to be anychange in the political position of the.

Prime minister.But he he he I mean, he's a very canny operator, but he needs to gauge whatwill what will society tolerate. Obviously, there's a big groundswell ofpeople who want these hostages release. Israel's very, very serious.Historically, it has been. It wants it wants even its deadsoldiers. It wants all of the bones of everybody.So when it comes to hostages, it wants those people brought out.But with it, whether you can square that with a very, very strong right wing,that you can't negotiate with Hamas, that, you know, maybe these people willhave to be sacrificed in order to for.

The greater good to defeat this thiswhat they term an evil. These are these are questions that arejust going to have to be resolved politically by Israel, like MichaelHayes here with the latest, taking a look at some of the other politicalheadlines that we're following this hour.The US Senate has killed a bipartisan bill on the border and Ukraine, withRepublicans rejecting the measure as it was unveiled.Former President Donald Trump had criticized the legislation and HouseSpeaker Mark Johnson said that it would be dead on arrival in that chamber.Majority Leader Chuck Schumer now plans.

A separate vote on aid for Ukraine andIsrael without US border provisions. The Biden administration is planning anew effort to prevent foreign adversaries from accessing Americanssensitive personal data. Sources say the president may sign anorder as soon as next week. We're told the plan focuses onpreventing China in particular, from being able to access data, includinginformation on individuals, finances, genetic makeup and voice patterns.Pakistan will close its borders with Afghanistan and Iran on Thursday asvoters head to the polls. The decision comes after two bomb blaststoday targeting political headquarters.

In the northwest, killed at least 20people in the day before national elections.Former Prime Minister Nawaz Sharif is expected to return to office with hisbiggest rival, Imran Khan, in prison and disqualified from running.Heidi, just bringing your attention or our attention to some breaking headsthat are crossing the terminal now. This is trade data from Japan for themonth of December here. So we saw the current account in surplusfor the period of December coming in at ¥744 billion.That was far higher or lower rather than what had been estimated of ¥1.13trillion, but still a reflection that.

Surplus perhaps of of the amount ofdomestic tourism or inbound tourism that we have been seeing in Japan, travelnumbers recovering to their pre-pandemic levels or thereabouts.The trade deficit also in surplus for the period of ¥115 billion.So something as well that can help sort of ease those those concerns around thecurrency given we had seen a dwindling balance of payments, particularly whenwe had oil at more elevated levels, something that could have weakenedpurchasing power, but still something that could be offering some degree ofrelief to policymakers. But we'll have more ahead.As we count down to the open in Tokyo.

This is Bloomberg. You're watching DAYBREAK, Australia.Some of the corporate headlines that we're tracking.The head of Bytedance's China operation is stepping down a week after thecompany said it needed to make up lost ground in Asia.Kelly Zhong is leaving as a head of Douyin, which is the Chinese version ofTik Tok. Bloomberg has learned that Bytedancewill not seek to appoint a successor and a company wide meeting.Last month, CEO Liang Gruber said Bytedance needed more urgency to catchup in the air space.

Tesla shares jumped after Bloombergrevealed that managers have been asked to identify which positions werecritical, a possible precursor to layoffs.Sources say it's also cancelled performance reviews for some employees.Tesla has roughly doubled its workforce since 2020 to around 140,000 people.Uber has reported quarterly gross bookings of $37.6 billion, beatinganalysts estimates on strong global demand during the holiday period.GROSS bookings include delivery orders, Ride hales and driver and merchantearnings for the current period, overseas bookings of up to 38 and a halfbillion dollars, with a midpoint.

Slightly above Wall Street's averageestimates. And in Asia, we're very, very excitedabout the India market. The Indian market has been one that thathas has always held a lot of promise. But we're seeing that promise come tofruition now there it's not just four wheelers, but a three wheelers.And the growth rates that we're seeing in India are substantial.And we think that, you know, that business can continue to grow over thenext 5 to 10 years. And these are the stocks are going to bewatching when trading opens in Korea and Japan shortly.Asian chip stocks, you can see here,.

They could climb.After TSMC posted a rise in monthly sales on the back of strong demand forAI chips. TSMC has jumped 4.7% in New York, pluskeep an eye on payments. Stocks such as Japan's GMO PaymentGateway as PayPal forecasts flat earnings this year.

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