Bloomberg Markets: Asia 04/24/2024

It's almost 1 p.m.in Sydney, 11 a.m. and Hong Kong and Shanghai.Welcome to Bloomberg Markets Asia. I'm Paul Allen.Here are the top stories. A tech rally extending in Asia helped byTesla's surge on its promise of cheaper cars sooner Sensetime soaring in HongKong as it launches a new AI model. Also ahead, we look at why a legion offleet footed Chinese retail investors could be behind Gold's record settingrally this year. And President Biden set to sign a billforcing Bytedance to sell or shut down TikTok after the legislation passes theSenate with bipartisan support.

But we're going to get a check ofmarkets in just a moment. But first, let's get a little bit moreon that tick tock ban or divest bills. The US Senate just voting to pass themeasure. It's now awaiting President Biden'ssignature. Now, the legislation also includes aidto Ukraine, Israel and Taiwan and a one sweeping bipartisan approval.So for more on this, we're joined by our congressional reporter Stephen Dennis inWashington, D.C.. Stephen, thanks so much for joining us.So that Bill basically just waiting the president's assent.Now it's all but certain.

The scene now set for a legal battle, itseems. How long could that drag on for?And what does it mean for a debate around the First Amendment?Yeah, I think there's going to be there's already promises that thecompany will file lawsuits trying to overturn this law and saying that it'sunconstitutional and violating the First Amendment right to free speech.But the lawmakers say that they're they're very confident they'll prevailbecause this is a foreign controlled company.And when there's no right to free speech or a Chinese company, the right to freespeech is for the people on TikTok.

And so the argument is that this is verysimilar to regulations that the government has on who can own broadcaststations, for example, or radio stations.They've had these kinds of regulations in the past.But of course, this is an immensely popular social media networkthat 170 million Americans are using. And so that's makes it such a valuableresource. If you're the Chinese government andthis is, you know, something where it's going to be hard to see how why Chinawould be willing to let it go and let the algorithm wealth of data that it haspotential access to here turn over to.

The Americans.So it's going to be potentially a long dragged out fight, although thelegislation itself is supposed to be resolved to this divestment within ayear. But that'll be up to the courts todecide. Yeah, the divestment within a year.So that takes us well past the US election.But in terms of a Chinese response, I mean we've got the Secretary of State,Antony Blinken, about to head to China. To what degree is this going to dominatethe agenda? I think it's going to become one of thebig issues between, you know, U.S.

And China relations, because, you know,if you think about it, that could be sort of a tit for tat kind of thingswith retaliation. And there's certainly a lot of Americancompanies doing business in China as well.And so I think that's something to watch is whether this will have broaderimpacts on the overall relationship, very important economicand political relationship between the two countries.But one thing that was clear, just talking to senators of both parties thisweek is just how badly the lobbying effort, which was being expensive andtried to talk to prevent this, this vote.

Just backfired.Senators were irate that even their own children were coming under assault fromthe children who were using Tik Tok. We're getting messages.Then contact your senators to tell them to oppose this bill.And they felt that that was heavy handed.So we'll see sort of what happens next. But I don't think there's a whole lot oflove right now for China. China generally in the Congress andcertainly having this kind of control over something that half of Americansare using. Yeah.This battle probably really only just.

Begun.Congressional reporter Steven Dennis there in Washington, DC.All right. Let's take a look at how markets arefaring with overall hung in Singapore over.It looks like a pretty positive day so far.Positive day. And we're seeing the stocks as well asthe currencies climb. It's really about the earnings.I mean, coming into this week, we knew it was going to be a key test of whetherU.S. equities could continue their bull runor even justify it.

And so far, after the first of the MagSevens Tesla reported, we're seeing things quite promising and that'sdriving that rally in the Asia Pacific today.The Japanese, Taiwan, South Korean gauges are seeing more pronounced movescompared to the past two sessions. Hong Kong, something we're highlightingas well. It's one of the world's best performingmarkets this week in the housing has erased the losses for the year.We're seeing a read through from the tech rally into the space as well as theKorean one climbs. And thanks to those stock marketinflows, keeping an eye on the Aussie.

After a hot inflation print.But let's look the board, because I want to look under the hood, take a look atthe e V complex and what is driving some of the moves in the Asia Pacific.The Hong Kong listed shares of Tesla are climbing along with some of Tesla, SouthKorean and Taiwanese related suppliers. And to be clear, it missed on sales.But I think that acceleration of the launch of new models helped to allaysome of the concerns about its strategy, because arguably the lack of new modelsis what is driving that sluggish growth for Tesla sales in China.And we're seeing among the chip names, the South Korean, Taiwan and Japaneseones.

They are the ones that are climbing.After Texas Instruments seen as a bellwether for the sector, it gave apretty solid forecast. So that is driving the moves in the AsiaPacific today, Apple. All right, Thanks very much.Well, ever mentioned Tesla that Tesla shares surged in late trade after apromise to accelerate the launch of more affordable models, and that followed adecline in first quarter profit margins and sales.Let's get over to Bloomberg Asia transport reporter Danny Lee in Beijing.Danny, it seemed like a failure. Billions.Elon Musk on the call, cracking a few.

Jokes even about alien abduction.But when it comes to low priced models, what's coming next from Tesla?They were really kind of coy, weren't they?We don't know exactly what we're going to get.We might have to wait until August to find out.Yeah. Onto the serious stuff that Elon Muskreally needs to talk about and address, and it's the lack of detail, but somedetail, in fact, the fact that Elon Musk, Tesla will be putting forward a alow cost EV set of affordable models as early as next year rather than the backend of 2025.

And that brings forward the potentialgrowth story for Tesla Ford by around three quarters.And that's important because of what Tesla is facing is notably low growthgoing forward because it doesn't have a lot of products out there that will helpscale and drive its revenue. And particularly because it does have aa kind of model base that is thin. It's getting even older, it's not beingas refreshed as much. And so therefore, it's very much behindon peers, not just in the US where the EV market is, is slowly growing, butstalling in some regards. But in China, where the world's biggestauto market and EV market is, is really.

On a tear and fighting for forcompetition is price cuts. And Tesla has been trying to drive itsperformance through price cuts but it has been struggling a little bit.And this is why this affordable model is to try and drive some of that momentumback into its stock in particular. Yeah, well, the market was braced for apretty horrible quarter and a horrible quarter we got.But we still saw the stock rising very aggressively after hours.And this is even though short interest in Tesla's at a two and a half yearhigh. So is the stage kind of set here foranother battle between the Tesla short.

Sellers and the the Tesla truebelievers? Yeah, the particular true believersbeing the retail investors who believe in Elon Musk believe in that that storyparticularly that the robotaxi and and therefore you know for for someone likeTesla shareholder. It's been a lot of the beating of latebut you know as long as Elon Musk being focused on on and eking out those thosecost cuts particularly with the the the job shedding last week in particular, itis trying to put itself forward onto products it clearly thinks is going tohelp drive the stock forward and put it in a place where it can actuallysee the ground that it doesn't have as.

Much competition in.All right. Bloomberg's Asia transport reporter,Danny Lee in Beijing. Well, let's take a look at how it isshaping up in terms of US futures. Very much reflective of what we'reseeing in Asia right now. Very much in positive territory.We've got S&P is better by a third of 1%, Nasdaq futures better by threequarters of 1%. And the market will be looking to see ifthat big after hours jump in Tesla translates to a big jump at the US Openthe next day as well. Let's take a look at currency markets aswell.

A little bit of softness going on at themoment. The dollar spot index pulling back a tadand we are closely watching the yen. We're always closely watching the yen.But we've been hearing a little bit more about the possibility of intervention asit hovers just below that 155 level. We do have a Bank of Japan meetingstarting tomorrow and the BOJ has pledged they're putting a floor underthe yen. Going to be a priority for them.Okay. Let's get to Wayne Gordon, managingdirector of commodities and effects at UBS Global Wealth Management.And Wayne, I want to start on currencies.

Today.We've really seen traders paring their bets over the past few days about Fedeasing. Do you feel like this is now becomingmaybe a 2025 story when we get rate cuts from the Fed?And what's that going to mean for persistent US dollar strength?I think very much, Paul. It's a DOD independent story and clearlythe data in the US surprised us to the upside this year.I think are looking forward. Clearly, there is still evidence thatinflation will moderate in the back end of this year.And as we go into 2025, definitely we.

Started the year with a sort of 3 to 4rate cut sort of view of the Fed. We were pretty modest compared to somemarket expectations. And as we've moved through the year, wetoo have had to pay that back a little bit.We now think that this probably most likelihood is two rate cuts.September and December targets at the moment.Of course, you've got the US election in the middle, which muddied the waters alittle bit for the Fed, or at least historically it has.So, yes, a little bit of dollar strength in the short termis most likely, particularly given we.

Have these pop up and geopolitical risksas well, which, you know, the dollar has been performing very well as a as a sortof safe haven currency in those periods. So, you know, these these sort ofongoing geopolitical takes, etc., we'll see the dollar on a bit of a firmerbias, at least into the middle of the year.That being said, there are currencies which can lean against that.And the Aussie dollar in particular is something I know you guys were talkingabout earlier. We had expected a sort of aboveexpectation inflation print for today, given the way wages, etc.are playing out and the tightness of the.

Labour market in Australia.So we have you know, the Aussie dollar is the most preferred currency for us.We have a target of the high sixties by the by the end of this year and intonext year. And for me, the Aussie has been tradingvery much on the rates differentials, but actually things like copper iron orehave recovered nicely with this pick up in manufacturing.We're starting to see on a on a broader basis globally, we think the commodityis going to be pretty well bid and so called, so that we do favour the Aussiedollar on that basis as well. Yeah.And the Aussie got a nice bump a little.

Bit earlier as well.On the hotter than expected first quarter CPI print suggests that maybethe RBA won't be easing anytime soon either.But I do want to talk to you about the yen as well.We've got the Bank of Japan pledging to prioritize yen stability at its nextmeeting that starts tomorrow, of course. Are there any measures that you'reanticipating and would they be effective?Look, I think that definitely the short positioning in the yen is an extremelevels. So any any murmurs or or comments by theBank of Japan to some line in the sand.

For the yen around about that sort of155 level is clearly going to create again volatility in that context.But in the end the fundamentals for the yen continue to reflect thedifferentials on the right side. We think that the Bank of Japan remainpretty cautious to be lifting rates in the current environment.And as a consequence, I guess that we do expect that, you know, the sort of 155was not a hard line in the sand. Definitely will have some resistance toit. And then as we go through the course ofthe rest of this year and into next year, we expect the yen to weaken.That being said, we have pared back yen.

Weakness.Sorry, yen strength, I should say, as we go into next year largely because ofthat the the the trimming of our US Fed expectations for cuts in the back end ofthis year. Sowe still continue to expect the yen to recover or be that may be delayed in theshort term and that recovery might be a little bit less than what we hadanticipated earlier in the year. Mm hmm.All right. Wayne Gordon is sticking with us.Wayne is with UBS at Global Wealth Management.Want to get your views on commodities in.

A moment.But still ahead later this hour, we're going to be talking to former techMahindra CEO C.P. Gurnani.He'll be joining us to talk about his new AI business venture that is calledA.I. on Arrest.And we'll hear why he decided to jump on the bandwagon in that interview comingup later on this hour. This is Bloomberg. Gold's record setting rally this yearhas puzzled some market watchers. Prices have been roaring higher, andthat's despite headwinds that probably.

Should've held it back.But with prices sagging this week, some believe the explanation may lie inChina. So for more on this, let's bring in ourAsia commodities reporter, Sibila GROSS. Sibila, okay, what's this theory ofChinese consumers behind this gold rally?What's going on? I mean, China's been a huge market forgold for quite a long time. We've seen persistent demand forphysical from the consumers, and we've also seen the PBOC buying up a lot ofgold. But recently, what we also have noticedis a huge spike in volume or trading.

Activity on the Shanghai FuturesExchange. That's kind of unusual because we're notseeing that volume of trading activity in, you know, the biggest futures marketfor gold in New York. And we're seeing trading activity jumpovernight in New York. So it does kind of suggest we're seeinga huge speculative demand in China playing out in more recent times on topof the physical demand. All right, Asia commodities reporterSibila GROSS there in Melbourne. Okay.Well, Wayne Gordon is back with us. Wayne is managing director ofcommodities and effects at UBS Global.

Wealth Management.Wayne, I know you've been raising your gold forecasts in view of firmer demand,as Sibila was talking about there. How much of this is a China cautionstory and where are the rest of the pressures coming from?In your intro, you've you've really pointed out the the challenges that manypeople have faced know usually a stronger dollar.Higher rates tends to mean lower gold prices.That couldn't have been further from the truth over the last couple of months.I think the key thing for us is and part of the reason why we we lifted ourforecast recently, I just want to give a.

Bit of a sense around that, though, thatwhile we did lift our forecasts, we had our forecast for $2,300 an ounce in theshort term at a period when gold was trading close to 2400 an ounce.But longer term, we see this diversification trade for goldcontinuing in a pretty strong way. And it's the reason we have the 2500forecast as we go into next year. I think the keys to this has been thatChina demand has been very much undervalued by many parts of the thefundamental story and I think also a level of underreporting.I think as well, it's often it's very difficult to get a handle on the flowsgoing into China and where they're.

Actually where those flows are going to.I think the key thing for us is, though, that we see exports of gold to China,Hong Kong have been very strong over the last in the back end of last year andalso this year. And on the back of that, I thinkofficial sector buying is also a little bit going under the radar.And of course it also is a little bit more difficult to track some of thoseflows. But at least anecdotally, from what weunderstand, the fiscal the demand for gold from of the official sector is alsobeing very strong. Of course, these these dynamics havebeen playing out in gold for the last.

Couple of years and that is indeedwhat's seen gold continue to lift in prices despite often you saw interestrates rising or even real interest rates, which is key for gold also risingand sort of creating this interesting dynamic where some of thosetraditional drivers of not not necessarily being driving the price ofgold overall, the consolidation we're seeing right now is broadly expectedfrom our perspective. As I said, we had a target of 2300 inthe by the middle of this year. So this call it consolidation we see isreally healthy. Obviously, this spread between Shanghaiprices and London prices has been very.

Much a feature and that is also veryunderstandable from a fundamental perspective because you have a quotafor imported gold into China and of course has been a lot of pressure onthat quota because really, if you want to diversify your investments in China,there isn't much else. You know, the the real estate market hasbeen under incredible pressure. The stock market has been highlyvolatile and gold has been the volatility of gold has been very low incomparison to those other ideas. You know, for us as a as a wealthmanager, we've always advocated by to use gold as a diversification within abroader portfolio context.

And I think that's what's important tokeep in mind you. Wayne just got a couple of minutes left,but I do want to get your views on oil as well.Even though we've seen tensions in the Middle East abating somewhat.The price has been ticking up over the past 24 hours or so.What's your view on oil? And are you a buyer of energy names?Yeah. Look, we like oil, you know, we tradingoil, you know, sort of range between us 85 a barrel and $95 a barrel.We like the ownership of diversified energy, in particularUS Energy is a is a key call for us.

So from the view perspective, the marketis still broadly under supplied. The upside to growth in the US, ofcourse has also led to an upside on the demand for oil.Of course, what's keeping oil a little bit more subdued in these, you know,geopolitical spikes is largely around there is a reasonable amount of sparecapacity sitting in opaque. OPEC can respond, particularly SaudiArabia can respond with that spare capacity if required.And of course, they've been very much standing sitting on their hands, Iguess, with respect to to any movements in increasing capacity, etc..And that has seen the oil market remain.

Relatively tight.We do think it will remain tight going into the summer.We see mixed seasonal demand for gasoline starts to pick up and aconsequence we think oil prices can continue to maintain this range.That being said, the energy companies are probably a good opportunity to notonly be buying in and it doesn't quitereflect these more elevated levels of oil prices.At least the valuations don't yet, but also the fact that they are returningcash to shareholders. And we think that this is a reallyimportant dynamic that people should be.

Still allocating to the traditionalenergy companies within a portfolio context over thelonger term, because in the end, demand for oil continues to rise and we thinkthe price is very well supported here. All right, Wayne Gordon, thanks so muchfor joining us with your insights. Swaine Gordon there of UBS Global WealthManagement. We have plenty more ahead.This is Bloomberg. All right.If you're holding this stock since time, I congratulate you on the very niceWednesday that you must be having better than 30% right now.And in fact, the stock has been.

Suspended because of this huge gain thatwe've seen since TIME has unveiled the latest version of it since November.Generative AI models. So the market very excited about that.However, we do have some Bloomberg intelligence analysis for you, whichsuggests maybe you want to breathe through your nose a little here.It says, Although Sensetime has deep technological expertise in the air,lacks a competitive edge and is a small player might continue to struggleagainst Tencent, Alibaba, Vida and Huawei.Or as this sensetime shares better, by 31%.Plenty more to come.

This is Bloomberg. We can say that the relationship isgetting worse. It's true.But it's getting worse quite slowly. And there's more stability to therelationship, but that when there is conflict, the conflict does not escalateout of control. Rather, the escalations are targeted andcalibrated. That's Ian Bremmer, founder andpresident of Eurasia Group. He was speaking to us earlier.Lack of silence at the moment between the US and China, of course.Anthony Blinken, secretary of state, is.

On his way.I suspect we'll be having some interesting conversations about Ticktock, divestment any way. We've got mainland markets about to headto their lunch break. Here's how we're doing.CSI 300 looking pretty flat right now. But elsewhere, some of the otherbenchmarks performing better. Got the Shanghai Composite better by athird of 1%. The offshore yuan at the moment holdingpretty steady there at 7.24, the 56. All right.We've got Japan about to return from its lunch break.April Hong is here for a look at what's.

Been going on in Japanese markets andoverall, very much a risk on sentiment today.Yeah, risk on. But we're also first checking in on whatwe're seeing on the Japanese currency. As you know, Paul, that yen weaknessdoesn't show signs of stopping. And that's despite this chart here whichshows you the relative strength index, the yen.Yen has been in overbought levels in the past two weeks.Now we are watching that 155 level and out and life contributors have beentalking about the US GDP numbers that could potentially be the first window ofwhen that reaches the level because.

Steady growth is expected that couldmean stronger dollar. There's also been some debate on justthe levels of short positioning and I'm sure you get into that with our AM Lifecolleague Mark had more in just a bit. But let's take a look at what we'reseeing in the Japanese stock markets as well as the Nikkei has been showing amore pronounced move today compared to the past two sessions.It's being driven by the chip making and the related stocks as we got the likesof Tesla and Texas Instruments improving some of the market sentiment thanks towhat we heard post earnings. And that is driving the moves in thestock markets for now, Paul.

All right.Thanks very much for that overall. Let's stay on Japanese assets now.Bloomberg Markets Live strategists say shorting the yen, not exactly a crowdedtrade right now. They also believe that any rally spurredby action from Japanese authorities will likely end up being brief and far frombrutal. All right.For more on this, let's bring in AM live executive editor Mark Cudmore.And Mark, we are on the eve of the BOJ meeting and the Bank of Japan hassuggested it's quite eager to put a floor under the yen.It's the Ministry of Finance is job,.

Though, to conduct intervention.How close are we to some sort of policy change from either the BOJ, all theMinistry of Finance. So there's two ways to two sides of thestory as this do everything. I think the first we look at it is thatthere's almost nothing price for the Bank of Japan, and therefore the riskreward is probably to position for some kind of hawkish surprise to the Bank ofJapan. And that makes sense.There's also precedent for a Friday afternoon New York intervention from theMOF after a disappointing Bank of Japan that happened, I think it was inSeptember 2022.

I may have my exact month wrong.So there is a potential that we get intervention this week.However, there is a couple of other qualifiers here for why generally Iremain very bearish. The yen, even if the risk reward is lessadvantageous to be bearish this week. And the reasons are.First of all, people have got very excited by the CFTC short positioning,but the CFTC is only a small subset of the market.It's the CTAS. It is not a catalyst for reversing thetrend. It does can give a rebound in the yenmomentum if it really rebounds along.

Way, but it needs a separate catalyst.Second of all, there is no reason for the MOF to come in and intervene at themoment. Sure, Yen is at a, you know,multi-decade low against the dollar, but the pace of decline is not drastic andit's in line with fundamentals until U.S.yields start turning around more dramatic and coming lower.I just don't see intervention really working.So I think that the positioning is not too stretched.I think the market is the discretionary traders have been reluctant to getparticularly short the end because that.

Risk reward of the BOJ picking upbecause that intervention risk. And I think that even if we do getintervention on Friday afternoon, which could be more powerful, will that thatwill really just be seen as a chance to re short the yen buy.Those discretionary traders were standing aside at the moment.Overall, the story is Japan offers deeply negative real yields, not aparticularly attractive growth story. It is suffering from the commoditiesboom. This is not a currency with any majorfundamentals behind it. Sure, it's cheap, but cheap things cankeep on getting cheaper if there's no.

Reason for them to rally.Yeah, there's a there's a lot of macro factors stacked against the yen at themoment. And I mean, chief among them I guessalso is those Fed easing bets. Just keep on getting cut back.I think we're down to one or two potential rate cuts this year.So with that in mind, even if intervention did get conducted, is itworth it? Well, exactly.This is why I think that the most, you know, kind of directed by the Bank ofJapan will be very reluctant to intervene.They want to keep the verbal.

Intervention because they know that ifthey come in and actively intervene, it matters for a few yen, it matters for aday or so, but ultimately the world's going to go brilliant.You've just given us better levels to sell the yen.And that's what I think is holding back the left from kind of action rather thanwords. And you're right.And ultimately the trend for higher US yields has more to go.We're still pricing in rate cuts in the US.Why are we pricing in rate cuts? Where is the growth slowdown?Where is the deflationary trend?.

There is no justification at the moment,nothing obvious unless it's a hidden problem and there's no sign of that.There's nothing obvious for why the Fed will cut rates at the moment.So overall, there's still room for us yields to move higher, which is going toput further upward pressure on dollar yen.So therefore, you know, this week is the week where intervention risk is a riskonly because the Bank of Japan meeting and because of the risk of a hawkishsurprise. This is not the week where people wantto be long dollar yen, which is why discretionary traders are standingaside.

But if there's intervention, they'llpile in long duration. And if we get through this week withoutintervention, without a hawkish surprise, they'll also pile in next weeklong delay in either way. So either way, people are going to pushdollar yen higher next week. It's just whatever we push it from.On the subject of piling in, Mark, we saw Tesla having a huge surge afterhours today, even though that first quarter set of numbers was every bit asdisappointing as we thought they were going to be, the outlook was prettygood. And it seems like investors and tradershave decided, yeah, actually one swallow.

Does make a summer of the bulls all backon equities now. Look, as you know, Paul, I am verydeeply in the bullish camp for stocks all year.And I know look, I don't get down to the micro.I'm not kind of studying why Tesla suddenly rebounded now, but it has had avery, very large decline. But so I don't look at the single namestocks, but you know, it is good sign for bulls like me that even Megacap techin this week were four of the magnificent seven are reporting earningsthat they are kind of driving this rebound right now but I think the rallyin stocks should expand.

I think it should go to emerging marketsthings you go to value value stocks. I think generally there should be abroadening out of the rally here. The macro factors are really good.Global growth is picking up from too pessimistic expectations.And we have central banks where you know that they are still have a very dovishreaction function. Sure, we're going to see higher yields.We're seeing higher yields for the best possible reasons because growth is muchstronger than people thought. We're not seeing higher yields becauseof bad reasons where it's just inflation and no growth.This is a positive stocks environment.

It's a growth environment or consumerswill keep spending. That means earnings will keep growing.Mark, as you finish off your thesis there, we've just put a chart up on thescreen. It's Jp morgan's price target for theS&P. That's at 4200.So you have a bit of competition from the Bearswhen it comes to your outlook, what are the risks to your bullish outlook?And genuinely, I don't see a major near term risks at some point.Obviously, like any bull market, it will come to an end, but I don't see why it'sgoing to come to an end on a very short.

Term basis.People worry about valuations and they are assets are expensive, but they'renot crazily expensive. They're just expensive and they'reexpensive for a reason because the macro backdrop is good.So you look at where will be those big risks that are going to take thismarket. Is it commercial real estate?No, not systemic. It's going to be an ongoing problem, butnot systemic. Is it regional banks in the US?No. A thousand regional banks go bankrupt.We still have too many banks in the US.

It would be very, very problematic formany sectors, many states in the US. But we already know that sadly, the USeconomy is very bifurcated. It is driven by a bunch of companies ina bunch of states. And therefore that will keep the economycharging on or keep the consumer spending.I am not seeing a systemic risk now. There can always be a black swan, but bydefinition, and people often misunderstand this, a black swan is as arisk that I cannot identify and not predict, because that's the whole point.It's something that is not possibly on my radar yet.Otherwise, I expect volatility to.

Continue because yields will continue togo higher and therefore raise the discount rate, which makes it harder forstocks. But they're rising for the right reason.And that's why through the volatility, stocks will continue to climb.The wall of worry for now. Maybe something will change in a fewmonths. Way off yet.Yep. We can't talk about the unknownunknowns. M Live executive editor Mark Kavanaghthere. Thanks for joining us.Let's take a look at the rupiah.

That's something we do know about.It's getting fairly soft at the moment.616,000, a big part and 169 right now. It's slipped about 5% since the start ofthe year. And this is a very live currency at themoment because we are awaiting Bank Indonesia's policy decision.We are expecting to get that in just a few hours time.Now, according to a survey of economists, the central bank couldpostpone monetary easing to later on this year if not early 2025, as it waitsout some of the uncertainty around the Fed's right path, as well as thecontinued tension in the Middle East.

So for more on the path of the rupiah,let's get over to Bloomberg's Indonesia economy reporter Claire Giles.So, Claire, you're following the Bank of Indonesia today, not consensus aboutthis decision. What are we expecting?We're expecting cooler heads may just prevail today for Bank Indonesia.The central question facing the central bank is, is the rupiah weaknesstemporary or will it be persistent? And after a huge drop last week, we'reseeing a bit of risk on sentiment coming back.We're seeing the rupiah getting a bit of relief.It's on its third straight day of gains.

And this is up as much as 0.4% today.So that may just be enough to convince policymakers to hold the rate at 6% andinstead rely on Hawking on raising its hawkish stance and saying that we'lljust use our interventions in the spot the bond markets to weather anyvolatility that may come up. That being said, we really can't ruleout any surprises when it comes to buy. It's not averse to surprising themarkets. So if there's any rupiah weakness, itmay still filter in today. Expect the decision to come down to thewire and that may still swing their calculus.If we're looking at how by positions.

Itself in previous decisions, it tendsto act fast and act big just to prevent any further weakness from from hittingthe rupiah hard. Yeah.There must be a temptation, surely, to deliver a surprise rate increase likehow they did back in October. What's the balance of probabilitiesaround that? So there's a slim majority of economistswho do see a rate hike could still happen now.But we do have the benefit of hindsight from what they did in October, the ratehike that they delivered then, in the wake of the Hamas Israeli war ended upspurring more outflows as investors.

Tended to view it as a panic rate hikeinstead. So there is a sense that 25 basis pointsmay not really be enough to stand against bigger external factors, such asa possible Iran, Israel war and the Fed's rate pivot that's getting delayed.So Bank Indonesia will want to stay calm and instead preserve its bullets and notwaste it on any knee jerk reactions. And that means its rate cuts for thisyear may also be delayed. It signaled earlier that it may happenas soon as the second half of this year. That may be pushed back to the fourthquarter or even in 2025. And Bank Indonesia is not alone in thisfight.

It's become an all of government effortreally to stabilize the rupiah that's reached 16,000.You also have the government telling its state enterprises to stop making largedollar purchases, and it's also telling its exporters to start repatriating itsdollar earnings just to start building up that dollar war chest again.All right. Bloomberg's Indonesia economy reporter,Claire job there awaiting the Bank of Indonesia decision.Still to come, our exclusive interview with the former tech Mahindra CEO, C.P.Gurnani. We're going to hear why he's decided tobet big on AI.

He's got a new business venture withInterglobe. We'll hear all about it shortly.This is Bloomberg and. All right.Let's take a look at how a tracking on the Indian markets.At the moment, the Sensex showing some modest gains at the open, about a thirdof 1%, those gains are fairly broad based as well.We've had Indian rates traders pushing back expectations for an interest ratecuts. Meanwhile, maybe a little bit too far.According to Bank of America, the.

Reserve Bank of India likely to cut itskey policy rate by about 100 points in the next two years.But there is a feeling from Bank of America that maybe that's a little bittoo aggressive. But if we take a look at how stocks areperforming well, it's very much in line with what we've seen across the rest ofAsia at the moment. The Sensex there better by a quarter of1%, the Nifty rising also by a similar amount and pretty much echoes the riskon tone that we've seen across the region.Okay, we're still waiting to connect with our next guest.While we achieve that, we'll take a.

Short break and we'll be back shortly.This is Bloomberg. Shares of Europe's biggest softwarecompany, SAP, rose the most since January after it forecast record revenueexpansion from its cloud services. CFO Dominic Eisen told us it sold downto the boom in artificial intelligence. The advent of A.I.has clearly propelled the story of the transformation to the cloud to move ourcustomers from their on prem installations onto cloud, resulting inan uptick on a constant currency basis by 25% in our cloud revenue.Our more forward looking so-called CCB, which is basically the 12 month aheadsubscription revenues we've already.

Contractually locked in, is even growingat 28%. That's a record growth.And all of that is driven really by the core offering we have in the cloud,which is called the Cloud ERP Suite. That offering has actually generated inexcess of 30% growth for nine quarters in a row now.What is the demand, Dominic, in terms of the specific applications of artificialintelligence in the cloud that you see most commonly invested in by thecompanies, who are your clients? Well, it's a broad set of applicationsthroughout the enterprise. Some on H are on finance, on the supplychain, so there's actually no exclusion.

I would say it's really, really broad.We have brought about 30 use cases recently to the market.We are planning another 100 to come. We already have more than 27 27,000customers using AI powered use cases in the corporation.The 3 million users we have by now in the cloud are really benefiting to makethemselves more productive and to fight, for instance, rising inflation insalaries. How much are you winning market shareversus simply just capitalizing on the incredible demand that we see right nowfor artificial intelligence? Well, undoubtedly, on the cloud P suite,we do win market share.

I mentioned the 30% plus growth we have.The market is more in the low to mid teens.So that's a very tremendous outperformance.It's like more than twice the performance of the market.So from who? Who are you gaining market share from inparticular? Well, sometimes it's kind of homemadesolutions we are displacing. Sometimes it's also against our keycompetitors. It's also the fact that SAP has beenmore focused on the on prem installations that is software deployedby the customers.

Now, we are really moving to the cloudso we can convert that huge customer base on prem into the cloud, and thatdrives the growth. That's S&P CFO Dominic Isom speakingthere to Bloomberg's Lisa Abramowitz. And our next guest has just launched aventure called A.I. on OS targeting clients in the travel,transport, logistics and hospitality industries.Joining us exclusively now, C.P. Gurnani, executive vice chairman of A.I.on OS. And you might remember him for playing akey role in tech Mahindra's transformation journey as well.CP Thanks so much for joining us.

First of all, I just wanted to talk youto talk us through this new venture of yours, A.I.on so on. So what is it?How does it work? Thank you, Paul.And I think we are very, very excited becausetechnology has never had such an exponential leap as what we have seenwith not only the conversational AI, not only the DNI, Danny AI, but cognitiveAI, all coming into shape to create solutions.Number two, we work with partners,you know, who are willing to go that.

Extra mile. Help clients definehow to not only structure the data, but actually bring it for the usage, takinginto account the compliances of each of the country.The third part out here is customer experience a customerin a normal situation. I think everything goes fine.It's only when there is a disruption, when there is a flood.I mean, we just saw the floods in Dubai. When we see the, you know, hurricanes insome different part of the world. I think what we see is that is the timehow to make sure that we start doing.

Things from a customer point of view.And this particular segment has done well on a localised level.The whole of detail edge, but I think there is a requirement of combiningpieces of technology and bothering you air for the customer.See, a lot of the power is within large companies at the moment, like Microsoft,Google, Matta and Facebook. Can Indian startups compete with thesegiants and should they? I think that's the best part of theslide that on one end, I mean, you just had an epic guest on the show.We worked with ASCAP, we worked with Microsoft, and we will definitely beworking with some of the startups.

Because what we are doing is actuallycreating an operating system and that's why we name the company as Iona's eight.On OS and that OS will integrate what is already available.We are not here to reinvent everything andI'm very happy that there is so much of a recognition that air with human touchand that's what it is all about. So where does India have an advantage inthe air space then? And how much money do you think there isto be made in the sector? You know, ultimately we are here tobuild an institution. We are here to create a service offeringwhich appeals to our customer, which.

Appeals to our own people, and which isalso relevant. So I'm sure.There is. A net business effect.But at this stage we are having fun creating, I don't know us as aninstitution. It's a Greek word, which meanseverlasting. And I do believe we are creating a greatinstitution. Are there potentially some risks here aswell, places like India, also the Philippines, that a lot of coding workgets done there, A lot of call center work happens there as well.Do you think generative of AI is.

Threatening jobs in these industries?I mean, the fact is that. There would be.Some jobs which will get lost because they will get automated.But the good news is overall, the pie is increasing overall.The cake is becoming so large that the new jobs will get created.So I personally believe that upskilling and creating new skills is the India'sadvantage. And I would consider India is ready forthat advantage. All right, Keep going on.We'll have to leave it there. But thanks so much for joining us.C.P.

Gurnani is executive vice chair of AnEye on Arrests. All right.Before we leave you, let's take a look at how we are tracking on markets.And we are, of course, closely watching any stock related to Tesla.We saw Tesla have that huge after hours move.The first quarter wasn't much to write home about, but we expect that that theoutlook very warmly received by investors.However, Tesla promising something be it a new car or a robotaxi coming up onAugust the eighth. Take a look at chip stocks as well.Since time, of course, as we've been.

Reporting, suspended after that big 31%jump. That is it from Bloomberg Markets, Asia,DAYBREAK, Middle East and Africa up next.This is Bloomberg.

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