Bloomberg Damage of day: Australia 02/29/2024

Welcome to DAYBREAK Australia.Marty Stroud, What's in Sydney where markets have just come online?I'm Annabelle Drool is in Hong Kong. We're counting down to Asia's majortrading opens and the top stories this hour.Asia is set for a week, opening ahead of key US inflation numbers.Fed officials emphasizing data will drive the pace of interest rate cuts.Earnings in focus in Let us trade. With Paramount's sales falling even asstreaming subscribers beat the street. Snowflake melting down after itsforecast misses estimates. Plus, Bitcoin topping $60,000 as ETFdriven demand triggers a bull run.

All right.Let's get you straight to the start of trading this Thursday session as we getthat staggered opening, just creeping online when it comes to Sydney.Stocks coming online now. We're seeing a little bit of a flatstart to trading. Broadly speaking, we're looking like abit of a retreat being set up going into the Asian equity session, bothTreasuries and the dollar, strengthening the session ahead of the Fed's keyinflation metric that's expected out on Thursday.And one of the biggest data points to watch interms of how much this would potentially.

Continue to impact repricing around Fedexpectations and when that easing will ultimately come here in Australia.We're also watching some of the commentary from the AustralianTreasurer, Jim Chalmers. Isn't ruling out the economy potentiallyshrank last quarter. Speaking to G10, G20, I should say,counterparts, he's saying that the fourth quarter GDP number was likelyquite weak. Economists are expecting about a 2/10 ofa percent rise in that data due out on Wednesday.But there are some concerns that the Australian economy really weakened quitesignificantly going into the final three.

Months of 2023.That potentially also then plays into expectations for the RBA rate increasesand how much of that elevated inflation picture played into that.Remember the inflation rating that we had yesterday, the CPI rating actuallywas a little bit softer than expectations.The Aussie dollar is really trading sideways at the moment.64 and 96 is what happened despite a little bit of strength that we see inthe US dollar. Switching it out to take a look at thesetup when it comes to Japan and this is a picture as we lookat the start of trading in Tokyo, we've.

Got about 6/10 of a 10th of 1% higher, Ishould say, pretty flat at the moment as we get into the start of trading in thejob market. We're watching for that auction of twoyear government bonds in the session today, again firmly above that 150level. Again, where we're looking atpotentially a little bit more verbal jawboning expected from policymakersthere. We're seeing Kiwi stocks a little bit onthe back foot after the RBNZ decision yesterday Bill.Rate. Yeah, and Heidi, as you said, it'sreally just a waiting game we've got for.

The key US inflation print that's comingup in about 24 hours. But here's the picture we get for USfutures as they come on line here Again, a little bit of weakness creeping in.So similar moves to what we had on the intraday session.What traders, as I said, they're really awaiting that key US inflation print.Ahead of that, we actually had a revision downward to the US GDP at theend of last year, but that data kind of seen as pretty much uneventful by a lotof investors in the market. Still, though, as we said, this thiscore PCE reading could really highlight just the very bumpy path that the Fedfaces to achieving its its 2% inflation.

Target.And what else we're tracking in the session.You can see Bitcoin here, really that asset we've been tracking over thecourse of this week up more than 60,000 or positive 60,000 mark.It actually earlier touched nearly 64,000 again overnight in the US sessionhere. It's that supply demand dynamic.There's more demand coming through, giving investors a piling into theirspot Bitcoin ETFs that's rising faster than the supply that can be issued intothe market by Bitcoin miners here. So it's really just the trading setup inthe session today.

But it is, Heidi, really that focus onthe Fed that we're really also tracking in the session what we've been hearingfrom from Fed officials. Yep, inflation and Fed speak right,though. And as you say, these officials havebeen out in force, repeating that the pace of rate cuts will depend onincoming economic data, suggesting that the path to lower borrowing costs maylook quite different to previous easing cycles.Back in December, my colleagues and I put out what we call projections orforecasts, and the median was two for three rate cuts this year in 2024.Well, we're data dependent.

We're go watch the data.I'm go watch the data. A sign of success to me is that withinflation coming down and the economy so, so strong that we can be thinkingabout doing that, I would say, later this year.Because carefully assess the evolving data and outlook.I do want to see more evidence of that sustained trajectory and consistent withprojections from FOMC participants. I do believe it will be appropriate tobegin easing policy later this year. And when that happens, a methodical,forward looking approach to gradually reducing rates should provide thenecessary flexibility.

Let's get more reaction on that now withCarol. She's CEO at BMO Family Office.And Carol, I'm interested. We've had bond markets really digestingthis sort of feeling or or thought that the Fed would be staying higher forlonger until the end of the year. Equity markets, though, have had thathuge run up and perhaps a bit more driven by earnings.But do you think that that Fed narrative has been fully digested at this point intime? Well, let's hope so, because the Fed'sgiving us that has given us that narrative for a very long period oftime.

And they've been very consistent in themessaging, saying higher for longer. No rush to cut and both as a group interms of FOMC meetings and Chairman Powell afterwards and then all theindividual governors have been telling us over and over and over again thathigher for longer was going to be necessary, number one.And that number two, the path to 2% to getting to their target number was notgoing to be a straight line down. And we're definitely seeing that in thedata. But given what we are also seeing in thedata, do you think it's possible, the economic resilience we've seen that thissort of no landing scenario also comes.

Into focus?I think it definitely does, because we haven't necessarily seen a slowing or avast pullback. Our expectation coming into this yearhad been we we thought we would see more slowing than you have.The picture hasn't come yet, but the CPI and the last week were a bit hotter.Consumer spending has been stronger. Consumers are still in flight andemployment has stayed stronger. So I think we've seen quite a bit ofthat already. Kara, how much are you watching for?I guess over elevation when it comes to the tech rally?We've spoken to a lot of people that.

Suggest that this is only the start ofit. On the back of those, um, video numbers,do you think there's a little bit too much faith in this narrative for now?I think it's it's important to separate out what's going on in the economyitself as opposed to what's going on in the market.Markets like to take a story, discount it back and get very exuberant about itin the short run when again, even on the upside, it's not necessarily a straightline to the upside, but the the artificial intelligence build out thebuild out of our infrastructure in the United States and the reindustrialization, all of the investment.

Going on in infrastructure, green grid,battery technology, semiconductor technology that has the capacity tobuild a lasting a longer than a one or two quarter sort of boost to theeconomy. But the market is going to be variablearound that. And so some consolidation coming off,especially after the exuberance of the last two months of last year into theearly part of this year. Some backing and building our absorptionof those numbers would not be undue and nor would it throw off that longer termtrajectory. Wall Street does really want to see someevidence of of.

AI in margins, and we want to actuallysee some sort of profitability coming through from.I I'm wondering how patient you think investors will be whilst companiesactually start to roll out and adopt and integrate into their product offerings.Unfortunately, Wall Street doesn't have a very good record of being very patienton these sorts of things. So they're they're going to expect tosee that productivity improvement, that margin improvement instantaneously.And that's not necessarily going to come particularly if you started parsingthrough some of the earnings announcements we just saw, especiallythe big tech companies that are.

Investing in data centers, they'reinvesting in the infrastructure, they're spending hundreds of billions of dollarsa quarter to put that up. And like we all know, any time youinstitute new processes, new technology, it takes a period of time.So being able to absorb that potential margin flattening or potentially amargin reduction for some period of time until you hit one, that those marginscome will be necessary. But the short term trading mentality ofa lot of Wall Street isn't going to be conducive of that.But then again, it offers opportunity when you get pullbacks in those offers,opportunity for those who can adopt an.

Intermediate or long term mindset.Carol, what do you like in Japan at the moment?We actually like the broad. There's several different ways thatwe're playing the Japanese market. In particular, there's just buying themarket. And it's interesting because when youactually look at the indices in Japan, they are much more technology heavy,like the U.S. indices are technology heavy than, say,the European markets are. And so that buoys the markets.There's also some actively managed funds that we're ableto invest for our clients and that that.

Pick different industries and stuffinside Japan. But the overall market is still poisedfor continued gains, we think, over the intermediate and long term.One of your themes is the industrialization of the US economy.I do wonder how this sort of geopolitical risk aspectplays into that ride. Are there sort of meaningful changesthat we might see if there is a change in government after November?There is that risk out there at the margin.But then again, many of these rules that have been or many of the laws that havebeen put in place that have tax.

Incentives, that have shovels alreadydug in the ground, it's going to be hard to reduce some of that.But there's chances at the margin if the projects are well underway, wellpromoted, well funded and already started, there's there's risk dependingon the outcome of November. There is some potential risk at themargins, but we don't think it's going to offset the trend that's there becausethere are many fundamental reasons for companies to want to move manufacturingback closer. We saw we learned many lessons duringthe pandemic. Whether or not we learned them at thegovernment level, we certainly learned.

Them at the personal and the businesslevel. And there's a lot of different decisionmaking going on that it would get a boost with some government aid.But whether or not that's there, it's most likely going to continue to playout. Carl, always great to chat with you.Live here at BAM, our family office. Well, coming up, our interview with theBNZ governor Adrian Orr after the central bank's decision to hold ratessteady will be, of course, getting the outlook when it comes to the economy,some of the risks to the inflation outlook.We rejoining us at 11:15 a.m.

Sydney time.That's a 8:15. If you're watching this morning in HongKong, take a look at Bitcoin next.Surging past $60,000 for the first time in over two years as demand widens.We take a closer look at the rally next. This is Bloomberg. Taking a look at the price of Bitcoinhere and you just on that continual march higher over the course of thisweek. So we've supported the 60,000 mark andwe're now trading at the highest level in about two years, up 3% so far just inthe session today.

Bitcoin, the the the dynamics aroundthat. I mean there's some of the things thatare pretty well understood at this point.We had the spot Bitcoin ETFs, filings, those have been approved, they'vestarted trading. And then also you've got other thingslike leverage that's starting to creep back into the market after several yearsof dry spells. But let's get more on this and bring inBloomberg's crypto and Defi reportedly our Shannon may I mean I mentioned someof the fact is there there's there's a spot Bitcoin ETF says leverage there'sthe bitcoin halving event but what's.

What's having the biggest impact do youthink at this point in time. Thanks for having me today.I think the story of Bitcoin can be seen quite simply when by supply and demandissue, we have this huge demand coming from Bitcoin ETF, as was the anticipateddemand from the Bitcoin ETF. While on the supply side, I just thinkthere's not enough bitcoin available for sell at the moment.I saw the numbers. There's at least 70% of total bitcoinsupply actually has now been moved over over a year.So that's I think that's a pretty sort of surprising and strong fact as beingthat there's not much supply in Bitcoin.

The big question is the sustainabilityof this rally ride. Do you think the drivers are strongenough for it to continue? I think as far as what I can see, basedon everything we heard from either traders or investors, that it's likelythat Bitcoin may hit a new all time high in the near-term future, which would bevery unique because in the past, if you look at the Bitcoin previously all timehighs usually have happens after the Bitcoin having.But this time around I think the market is kind of like predicting that it willhappen ahead of the Bitcoin Harvey event.

And as you said, we've got that Bitcoinhalving ahead. So what are we expecting out of that?Historically speaking, because the Bitcoin halving is over and half thereward for mining you block on Bitcoin. So this in fact will reduce the rate atwhich new bitcoins are created enter into circulation.But in the past Bitcoin has been sort of moved all to high in the past.But this time I think again because we have this new event of a Bitcoin ETFcreating huge demand for this asset. Therefore, we're seeing bitcoin pricesgoing crazy even ahead of the happy event.I'm curious what you're seeing in terms.

Of liquidity on exchanges, traditionalcrypto exchanges, given this amount of flows that's going into the Bitcoin ETF.One of the concerns in the lead up to these ETFs being launched was that itwould take traders off crypto exchanges. Are we seeing that phenomenon takingplace? I think that's a great question becauseusually people tend to say because all the ETF flows, meaning that theliquidity in the crypto market actually has improved much.But if you actually look at, I think a great metric to look at the funding rateon crypto exchanges, which is showing that there is a lot of leverage in themarket.

I think to some degree it's indicatingthat there's just not enough cash in the crypto market itself.So I don't think the ETF flows have really affected or sort of like sort ofthe carry out impact into the crypto market itself yet.Thunberg's reaction there and you can get a roundup of the stories you need toknow to get you going. In today's edition of DAYBREAK, Terminalsubscribers can find that at Davey Go. It's also available on the mobile in theBloomberg Anywhere app. You can customize the settings as wellas you just get the news on the industries and assets that you careabout.

This is Bloomberg. Take a look at one of the stocks thatwe're watching as we get into the after hours.Paramount up by about 4/10 of 1%. We did see Paramount Global, that's theparent of the likes of CBS, MTV and other networks saying that fourthquarter sales fell 6% to $7.6 billion, accounting for shrinking advertisingacross traditional TV channels. But still, streaming subscribers didrise and the revenue come in below analysts expectations.Still better than expected earnings of $0.04 a share with some exclusions.Wall Street more or less forecasting a.

Breakeven quarter.Let's bring in Bloomberg Intelligence is senior media analyst Peter Ranganathan.So, Peter, what sort of jumped out at you when it comes to these numbers?Well, it was a little bit of a mixed bag, Heidi, I think, for Paramount.So you're absolutely right with the TV numbers, they were definitely worse thanfeared. TV ad sales actually were down 15% inthe fourth quarter. And that's a function just not of, youknow, macro challenges in the advertising market.And a lot of, you know, linear TV struggles as more and more people kindof migrate away from traditional TV to.

Streaming.But you also had the effect of the Hollywood strikes, right?There was less content for most of these TV networks.And that, again, pushes people away from, you know, traditional TV watching.But on the on the positive side, you know, the streaming metrics weredefinitely a little bit better than what we were expecting.So we saw better than expected streaming subscriber gains for their platform,Paramount Plus. But more importantly, and this is a keymetric that most investors are focused on is the streaming profitabilitynumbers.

Now, in the case of Paramount, theydon't have streaming profits. It's really just streaming losses.So it's how much were they able to moderate their streaming losses?And they did a fairly good job on that. But more importantly, they kind of gavesome guidance for hitting streaming profitability in 2025.And that could be seen as, you know, a bright spot.On the flip side, Gator, I'm curious if you've got that more people that arestreaming. We also saw that Paramount's namesakefilm studio sort of struggled as well. So did that sort of play across intothat?.

Yeah, it definitely did.And about so, you know, less movies, some tough comps from the prior year.So we did see the film entertainment or the film studio kind of take quite a bighit, both in terms of theatrical. They didn't have a lot of content outthere as well as in terms of, you know, home entertainment revenue.And then you look look out going into 2024.Again, you know, those those content strikes are going to have a palpableimpact on the content slate for this this year.So there's not a whole lot of product out there.Their biggest movie for this year, which.

Was Mission Impossible, actually gotpushed out to 2025. So again, the content slate looking alittle bit light. So we're going to have some of thatspillover get into 2024 as well. But we know that the family thatcontrols Paramount has been weighing offers for the company.You've written some research looking at sort of these questions that are loomingon its valuation. Yes.So the thing with Paramount is, yes, you're absolutely right.In terms of all of the M&A rumors and this has really kind of been swirlingnow for almost two, three months.

Those options, though, the exit optionsfor Paramount seem to be dwindling day by day.So just yesterday, we had some news that one of the other media players in thespace, Warner Brothers Discovery, is really no longer interested in lookingat a deal with Paramount. You know, we've had some other offers,but potentially not for the whole company, only for maybe the studio partof it. And in terms of valuation, you knowwhat? We did have one offer from Byron Allen,which was for the entire company, which was, I think, you know, value thecompany at about $30 billion enterprise.

Value.I think that is pretty much in line with the kind of way that we are thinkingabout the company from a some of the parts valuation perspective.But right now, I mean, if you kind of look at paramount valuation multiplesversus some of its peers, the company is actually trading almost 50% higherversus its peers. But that's not based on fundamentals.That is completely just based on this prospect of of M&A.And if something doesn't happen quickly, then those multiples are going tocompress. That was at Bloomberg Intelligence.Senior media analyst Kata Ranganathan.

Thanks very much for your time and othercorporate stories we're following today. Morgan Stanley says Rolex sales lastyear topped $10 billion for the first time as the Swiss brand gained marketshare. Their report estimates Rolex produced1.2 million watches, with sales rising 11 per.The brand's retail market share in its segment stands at just over 30%, a levelMorgan Stanley describes as unprecedented.And video insiders sold about $80 million worth of stock after theChipmaker's earnings beat sent shares to a fresh record.According to the Washington service.

Insiders unloaded the most stock in amonth since September, and Nvidia's latest results topped elevatedexpectations, while also delivering another strong revenue forecast.Microsoft is investigating reports that its co-pilot chat bot is generatingresponses that users have called disturbing and sometimes harmful.The chat bot was introduced as a way to weave AI into a range of Microsoftproducts and services. The tech firm says some users havedeliberately tried to fool co-pilot into generating the responses.And we'll have more to come on DAYBREAK, Australia.This is Bloomberg.

You're looking at the AustralianParliament in Canberra there where the Philippine president, Ferdinand MarcosJr, is set to use a rare address to Australia's Parliament to outline howthe two nations intend to deepen their ties.You're looking at, of course, Prime Minister Anthony Albanese speakingthere. At the moment these are defence andeconomic ties and of course all of this is against the backdrop of China'sgrowing military presence and footprint in the region.We're expecting to hear greater detail from Marcos on hisstrategy when it comes to this newly.

Struck strategic partnership withAustralia, as well as his vision for the country.He's the first Philippine leader to address a joint sitting of parliament inCanberra. He said he wants to serve as a bridge toconnect the two nations. We have seen this strengthening willmoves to strengthen ties with traditional security partners underMarcos, with the Philippines, including the US and Australia, against the faceof intensifying pressure from Beijing in that South China Sea region.Well, speaking of China, also focus when it comes to China's tech sector.Baidu's ideas fell after fourth quarter.

Profit plunged worse than expected, 48%,highlighting the growing costs of training and developing A.I.to fend off competitors. The results followed disappointingnumbers out of Alibaba to another sign that the private sector is running outof steam. Let's bring in Brendan Ahern, CEO atCrane Shares. Brendan, whichever way you look at it,it has been a trying few years for the private sector, particularly acrosstech. It looks like perhaps with thefinalisation of some of the moves on Alibaba that we were starting to turn acorner.

Let's talk about Baidu first because isthis a sort of, I guess, expenditure that investors are willing to toleratewith the opportunities of AI? Well, I think I think you your pointout, you know, the Chinese equities have been eviscerated as an asset class.I think it's a considerable underperformance relative toparticularly U.S. equities has really weighed on investorsentiment. A lot of the assets have moved out ofthe region into India and Japan. But but but particularly to U.S.and U.S. technology.So I think Baidu's results, I mean, they.

Missed revenue by 15 basis points andthe stock was down nearly 8%. Adjusted net income adjusted EPSactually did beat and they made some progress on A.I.in terms of the revenues generated incremental, small, but certainly astart. So in general, I just think it's moreindicative of a lack of interest in Chinese equities today.So I'm just thinking about one thing, Brendan, that I suppose that's the youknow, the big question is to what meaningfully revives sentiment, right?Is it something that significantly boosts the Chinese consumer or is it away out of the property sector malaise?.

Or is it something else entirely?What do investors want to see? Because so far, policy measures havebeen unimpressive to them. Yeah, Yeah.We've not seen a proverbial policy bazooka.Certainly, you know, ultimately investors want to make money and capitalflows to where it's treated best. And I think there is an effort to repairsome of that trust. I think there has been a change in thetone and tenor out of Beijing to foreign investors, foreign corporations.There's clearly an effort to stabilize the mainland Chinese market, but I thinkinvestors want to make money and.

Certainly buybacks dividends, but moreIPOs of a chicken or ant financial or moving spin out of PINDUODUO orcertainly Bytedance's IPO and tick tock. You know, if investors are making money,they're willing to put up with a lot. And at the moment, you know, we've seena small rebound over the last ten days. And I think I think hopefully that thatlittle trend does continue, that if we can make money in China, more money willflow back in. Brendan, what do you think then, interms of looking at China's tech sector? Where do you want to be betting at thispoint in time? Do you want to still focus on sort ofthose more the big private names by the.

Alibaba Tencent?JD Or do you want to be moving more into to more state backed firms instead?I think there's an argument. Certainly in the short run that mainlandstate owned enterprises are beneficiaries of state intervention.You know, if it's central Fujian or other members of the national teambuying Chinese equity ETFs at the same time for foreign investors, they'realways going to gravitate to the growth sectors, the consumer discretionary,technology, communications are the names that really that that they can resonatewith. You know, it's easy to say Baidu,Google, Alibaba, Amazon.

And so I think I think investors willalways gravitate to these growth gear names as opposed to the slow no growthsectors despite very high dividend yields.Right. And in terms of the geopolitical overlayinto all of this, what are we sort of expecting from Chinaand from the likes of, say, NVIDIA, for instance, that has sort of beenrejiggering some of their chips to meet that demand from China?Yes, certainly. I mean, Chinese, their export drivenmanufacturing, if it's PlayStations or iPhones, there is a that requires chipsfor not necessarily domestic use, but.

For part of that export drivenmanufacturing sector. So I think I think there is a move fromthe Biden administration. Corporate America does have a say inU.S. law, as in Washington, D.C.And so a very profitable company like NVIDIA, no different than Apple orExxonMobil or Nike. Boeing, which are highly geared or havevery high revenue exposure to China. The U.S.government is going to go out of their way to hurt those companies.You know, there's a lot of bark in terms of media, but there's not necessarily alot of bite and and even even President.

Trump.Yeah, there's a lot of talk about tariffs, but we all know Walmart paidthat tariff bill. Chinese companies did.And that passed on to U.S. consumers and is inflationary.So so it's good it could political TV fodder but you know, economically, ithasn't really hurt China in a overly prescriptive way, at least thus far.Brendan, thanks for your time. That was Brendan Ahern, the CIO at CraneShares. And amid insatiable demand for AI chips,Bloomberg Intelligence sees the global semiconductor manufacturing marketnearly doubling in the next eight years.

A handful of chip tool makers are alsoset to dominate key technologies. Let's get more from Asia Pacifictechnology analyst Masahiro Wacka Tsuji. Masahiro, how will the Chipmakingequipment market change by 2022? Yeah.We analyzed that the Chipmaking equipment market in 2032 could almostdouble from 2023. And this is because the chip makers willaggressively invest and the chip CapEx will also, you know, chipmakingequipment market will be, you know, almost doubling because of the chipmaker. We had almost doubled the CapEx and inorder to expand the production capacity.

And therefore the next generation chipsfor logic chips or maybe nano chips to a DRAM chips.And if we based on the our upside of scenario analysis, we could have thatthe market could be almost 2.5 times as much in 2032 compared with the 2023.And now we are seeing very strong demand from the artificial intelligence chips.So I think that the chip making equipment market should be prettyinteresting and the promising market going forward.All right. What about the competitive landscape?It's close, but, uh, yes, we think that thecompetitive landscape for the chip.

Making equipment suppliers should becontinue to be quite favorable. And it's a pretty interesting market.And if we look at the specific products, for example, a recent graphene TUS assaymale dominates around almost a 90% of market share.And if you look at the quarter developed by market, Tokyo Electron dominates 90%.So I think that that chip making to the market will have a favorable competitivelandscape and that this means that they can generate quite high operating profitmargins. See, in 2032, we think that includingASML or maybe Tokyo Electron or Kerry, top five or six or seven companies willgenerate to say 30 to 40% operating.

Margin because of this competitivelandscape. Bloomberg Intelligence Asia-Pacifictechnology analyst Masahiro Cascada Bloomberg is also at the World TradeOrganization Ministerial Conference in Abu Dhabi.And you can catch our conversation with the US Trade Representative KatherineTai later on Thursday on Bloomberg Surveillance.More ahead here on DAYBREAK. Australia.This is Bloomberg. Hong Kong's real estate sector is facingan uphill battle even after the government's most forceful attempt yetto revive the market.

Authorities have eased home by leviesand mortgage lending restrictions as part of sweeping measures to revive thefinancial hub of China. Economy editor Jill de CES joins us formore. And Jill, this is one of the sort of keytakeaways from the Hong Kong budget address yesterday we saw developa-shares really showing that market watchers were a little bit surprised bythat full elimination. But is it really going to be the sort ofcure for the woes of the real estate sector?Yeah, I think that at this point, the problems within Hong Kong's propertymarket are just still so severe.

These are curbs that were introduced inthe aftermath of the global financial crisis.The idea was that at the time interest rates were plunging.They really needed to cool homebuyer demand down.But they've existed for so long because that's what's really has happened.I mean, Hong Kong is still world's least affordable housing market.And so but at the same time, you're still having all of these issues withthe homebuyer demand that's ultimately leading to these property curbs to beremoved. Obviously, as you mentioned, marketsweren't expecting something that was.

This severe.But at this point, when you've got interest rates high, is the remaining inHong Kong. Right now, it's difficult to see howthis leads to ultimately a longer term improvement within the local propertymarket. So I think what a lot of investors arelooking out for right now is whether you see sort of any short term gains.I think we have to look to see what happens with any future property saleson the market. But at this point, it's just really notclear that this is going to lead to any sort of long term sustainability withinthe housing market.

How strong is a correlation betweenwhether or not we see a sustained pickup in the Chinese economy?You talk about the malaise across the property sector.Tourism, retail slowed down as a result in Hong Kong.Does that is that really the crux of when we'll see a recovery for Hong Kong?Yes. I mean, I think you nailed it at thispoint. You know, this economy is incrediblytied to what's happening within the broader Chinese economy.We saw this during the pandemic in particular.I mean, you know, obviously, Hong Kong.

Had a lot of its own issues with sort ofisolating itself from the rest of the world during the pandemic, but also theslowdown in growth that we're seeing within China's economy feeds into someof these broader concerns right now. Hong Kong is trying to deal with a bunchof other headwinds. Tourism, in particular, is a massiveissue. You've seen a big drop off over the lastseveral years. This budget that Hong Kong announcedjust yesterday, that includes some measures to sort of tourism pick upagain, really remains to be seen how much that's going to play into it.But when you've got, you know, sort of a.

Lack of visitors from mainland China, inparticular, a major key source of tourism revenue for Hong Kong because ofsome of these broader issues with China's eroding wealth within the middleclass, I think that it's going to be kind of difficult for Hong Kong toactually see a meaningful turn around. We've seen them forecast growth ofaround 3.2% over the next several years. We'll see whether that comes tofruition. Channel economy editor Joe Day saysthere and you can get an insider's guide to the money and the people shaking upthe finance hub in our new Hong Kong edition newsletter out every Thursday.You can sign up via Bloomberg dot com.

Slash newsletters.Well, the Philippine president Ferdinand Marcos Jr is addressing a joint sittingof the Australian parliament as part of his state visit to the country that'staking place at the moment in Canberra. It has become crucial for us now toenvision the shape, the breadth and the depth of our strategic partnership andhow it must move forward as we weather the storms of global volatility.Let's get some more analysis on this from Bloomberg's government reporterAndrew Alonzo joining us now. So we've seen a strengthening of thesetraditional alliances with the likes of Australia and of course the US as wellunder Marcos.

Is there a sense of urgency to buildthese relationships in light of a more assertive Beijing?Yes, definitely, for sure. And Marcos, this speech is expected tocenter on that. That's one one of the aspects hehighlighted in the early part of his speech.So only he said that the security of Australia and Philippines are very muchintertwined. So in the face of so much tensions,especially in the South China Sea, that we're seeing talks, Marcos is expectedto highlight and provide more detail into how much or how further deepensecurity ties with Australia.

Another aspect that he said he wants todo is also to try to bolster economic ties with Australia.So he's aware that security ties or security, the securityrelationship between the two countries should also come with a deepening ofeconomic relationship. So he would also seek todetail ways of how to improve trade and investment ties between the two nations.And on that point, Andrea, Yeah, as you say, we've seen Canberra trying totrying to boost its relationships with countries that are in South East Asia.We've seen the Philippines looking to strengthen ties with traditionalsecurity partners.

But how have those in a practical sense,how have those expanded relations really played out over the last year or so?Yeah, So as a background, so Australia and the Philippines have elevated theirties to what what is called strategic partnership.So in concrete terms, we have seen thePhilippines and Australia conduct joint maritime patrols in the South China Sea.So this is a big step because it shows how interconnected their military is.There are also efforts for Australian soldiers to join up on military drillsin the Philippines. So also Australia has pledged to supportthe Philippine Coast Guard,.

Which is in the forefront of our recentclashes in the South China Sea with Beijing's vessels.So they have Australia has pledged to support the Philippine Coast Guard interms of drugs and having more awareness in South China Sea.So these are just the few steps that we've seen being taken by the twocountries. And in the past year we expect measureslike this to be stepped up, to be bolstered with the elevation of the tiesbetween the two countries. Glen, that government reporter AndreaCollins are there in Manila. Some of the other political stories thatwe're following this hour.

U.S.congressional leaders have reached a deal to avoid a partial governmentshutdown. The agreement on a four year fundingpackage clears the way for Speaker Mark Johnson to allow a vote before aSaturday deadline. Republican leaders are backing the dealdespite the risk of a backlash from conservatives demanding new immigrationrestrictions. Republican Mitch McConnell, who steppeddown as his party's leader at the Senate after the November election.The 82 year old has been in the chamber since 1985, leading Republican senatorsfor more than 17 years.

His departure sets up a fiercesuccession battle set to be driven by loyalty to Donald Trump.I have the honor to represent our state and do the important work of ourcountry. But Father, time remains undefeated.I'm no longer the young man sitting in the back hoping colleagues wouldremember my name. It's time for the next generation.A New York appeals court has denied Donald Trump's record.Quest to temporarily delay payment of the state's $451 million verdict againsthim. That's even after the former presidentsaid he may be forced to sell properties.

To cover the judgment.Separately, the US Supreme Court says it will rule on Trump's bid for immunityfrom criminal prosecution. Trump has been pushing to delay anytrial until after the November presidential election.Well, Heidi, just bringing our viewers attention to some breaking data comingout. Now we've got industrial productionnumbers that are dropping for Japan. And on the year on year level, we'reactually seeing the number coming in a little bit better than what had beenexpecting. So we were foreseeing a drop here of1.6%.

That was what the survey had suggested.It's actually come in at a contraction of 1.5%.What's really playing into the numbers over the course of January is autoproduction. It was a period where we had a temporaryproduction halt by day two motor. That's a Toyota subsidiary that makeslight vehicles. And that was over a safety scandal.So those auto production issues could have been playing into the figures.But as I said, industrial production on the year contraction of 1.5%, a littlebit better than had economists had been expecting on the month.So we did actually see it going past the.

Estimates here.So a contraction of 7.5% and the survey reading had been four 6.8% contraction.That is the the industrial production side to it.Well, at Bloomberg Economics Team, it's worth noting they are saying that wecould expect production to pick up over the course of February because Daihatsuhas resumed its operations. We know that from yesterday and we areseeing better demand for Japanese cars abroad as well.So something that's playing as well into the semiconductor cycle, that's alsoboosting production through exports there.So that's the industrial action you're.

Seeing retail sales here on the year andthat actually was better than what economists had been expecting.So that's the reading there year on year, up 2.3%.The survey had been for 2% on the month as well, better than what economists hadbeen saying. So gains of 0.8%, the survey had been4.54%. So again it just points to those figuresperhaps. Yes, Japan is in a technical recession,but still we are seeing some stronger data points coming through.We'll have more ahead on DAYBREAK Australia.This is Bloomberg.

Taking a look at crypto prices here, andyou've got Bitcoin just pushing back to that 64,000 market nearly touchovernight. But Bitcoin really the the the focusover the past few sessions see given that rapid ascent we are seeing.What's driving it. Well it comes down to yes what triggeredit was the spot bitcoin ETFs we're seeing demand for those but also itcomes down to the supply and demand dynamics of the sector as a whole,because given that move into those ETFs, you're seeing a lot of demand for thetokens and that's outstripping the supply of new coins that are beingissued or created in the mining process.

You've also got leverage that'sre-entering the crypto market and we haven't seen that, Heidi, for severalyears in the digital asset space. Certainly a dry spell question, ofcourse, always with these sorts of fast rallies is how permanent.Yeah, and we were talking earlier about, you know, just how much really thefundamentals have changed or maybe haven't changed when it comes to thisasset class. And but what about 11% away from arecord high for Bitcoin? How quickly things have turned in thisrecent run of bullishness, if you will. But take a look at what we're watchingwhen it comes to currencies around the.

Region.We're seeing the Bloomberg dollar off look pretty flat at the moment.We have seen, though, some pretty robust dollar gains ahead of the key inflationdata as the Fed really highlighting their scrutiny of ICO data.We're seeing a lot of weakness there for the Kiwi.Speaking of which, our interview with the RBNZ Governor Adrian Orr is comingup next.

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