Welcome to DAYBREAK, Australia.Paddy Stroud. Watson Sydney.We're counting down to Asia's major market opens.I'm Annabel Draw live in Hong Kong. And the top stories this hour.Asian stocks primed for gains after an upbeat day on Wall Street with jobs datasupporting the case for Fed rate cuts this year.Around 600 Japanese companies as well report earnings later today.The presidency pledging fresh investment in Hungary as it wins, backing from anEU member for Beijing's pushback against overcapacity claims.And we're live to the Bloomberg Tech.
Summit as Silicon Valley leaders talk AIand much more. We'll hear this sound from SNAP CEO EvanSPIEGEL. And kicking off with a little bit ofbreaking news this morning. We've got Peru's central bank making itsrate decision as forecast by most economists.We are seeing that cut coming through to 5.75% earlier at 6%.We did actually have a decline last month in consumer prices that sort ofgreenlit what has been a second quarter point reduction here.But annual inflation last month slowing to 2.42% in line with the central bank'stargets.
And they're saying actually toward theend of the year it's going to rise or climb down to around 2%.Of course, Peru not the only central bank in the region.We actually had banks that banks ago as well.The Mexican central bank, though it elected to keep its key rate at 11% justin the last couple of hours Heidi. And of course, we're watching what looksto be a very busy Friday session here in Asia.But you mentioned the earnings story when it comes to Japan, that will befront and center when Tokyo comes online.Here in Sydney, we're seeing futures up.
By about 3/10 of 1%.We're really primed for some pretty robust gains in this Friday session withan update date on Wall Street. The jobs data that kind of supportedthat comfortable case for Fed rate cuts this year.So we are seeing broadly really equity futures across the region climbing inthis early part of the morning in Australia in particular.We did, of course, see that rally across the last few sessions.Still in the previous day we had a five day run of gains and retailers orparticular weakness, we'll be watching for that in particular in this Fridaysession as well.
But we could see about a pop of about3/10 of 1% for Australia. And of course, Bill, as you mentioned,Japan is really one to watch with huge news play from the earnings calendartoday. Yeah, that's right.And also the ones that have been reporting across the course of thisweek. So lots of different Japanese numberscoming through. But in the US, the session dynamics werea little bit different. In this session we actually saw equitiescontinuing to climb. Futures today again pointing to somesmall upside as well.
But it has been that level of positivitythat's come back through, really reinforced by these bets that the Fed isgoing to have the room to cut rates later this year.And actually we had those higher than estimated jobless claims as well, reallybacking that that that idea among investors.So got the S&P 500 now within 1% from its all time high but a survey as wellfrom 22 the research saying that for the next 10% move basically trade is a splitat this point around 52% are saying it's going to go higher.48%, though, Heidi, seeing a down move. Let's get some views from our nextguest.
Bo.Still favoring big growth companies in the U.S.Daniel Yu is head of global asset allocation at U.S.Securities Career and joins us now from Seoul.Daniel, really great to have you with us.So when you take a look at kind of the settling of market expectations, thedata so far, the communication we've had from major central banks, in particularthe Fed. Do you think we're seeing valuationswhere they should be and do you still see that opportunity across rightsensitive mega-cap stocks?.
Yes.If we look at the overall market, we believe that the if the expected ratesare going down in the future, there's quite a bit of upside left for the majorbig tech as well as the US S&P 500. And also that affects the most of theAsian countries, particularly tech heavy cost B as well as the Taiwan index.If you look at the Nasdaq 100, you are seeing a two digit growth in earnings.And also S&P 500 is expected to show about 10% growth in earnings.And if you apply about 4.5% interest rate, we think that fair value of S&P500 is around 5400. If that rate is expected to go down toas low as 4% by the end of the year, we.
Think that the S&P 500 can rise wellabove to 5700 territories, and that would have a positive implication for alot of the countries in Asia. Also, if that happens, we think that theUS currency should stabilize as well and that will have a positive implicationfor the Korean wine appreciation as well as the stabilization of the Asiancurrencies. So yes, we think that the rate will havea positive implication. If the rate goes down, then theimplication for the index has further upside in the future.You see further upside for Japan as well.But it's interesting, you're perhaps.
Even more constructive on some of theother tech heavy names or tech heavy markets in Asia, the likes of Taiwan,Korea and Vietnam. Yes, I think that we've got to thinkabout what's happening in terms of the overall market.We are seeing quite of the improvement in the productivityratios in the US because of the air cycle.A lot of people are worried that in the first quarter we saw some possiblestagflation where the US GDP growth rates going down versus the inflationarypressures coming in. I think that a lot of people areconcerned about that affecting.
Negatively for the a lot of the Asiancountries as well. But we think that the that implicationis actually a very short term effect. It's a signal of fact rather than astructural issues. If the productivity improvement ishappening in the US, we think that inflationary pressure should come downand will have a continuation of growth in the air sector.A lot of the countries, particularly Korea and Taiwan as well as Vietnam, hasa quite significant market. I guess the market share in terms of thechip businesses as well as the I.T. businesses globally.So therefore they will have a positive.
Implication as the US productivity ratiogoes up in the future. Have you been concerned by by some ofthe companies that have underwhelmed this earnings season in the chip sector?I'm thinking about AMD, for instance, or SUPERMICRO.Yes. When you look at the overall APIbusiness, as you know, we are seeing quite significant improvement in termsof the sales about the data centers. But we don't think that there is a heavyinvestment happening all around all the i.t segment.We see that heavy hardware investment is happening, but as far as the software,it's very difficult to figure it out.
So we think that the the companies witha very strong market share will continue to show a significant improvement interms of the earnings as well as sales growth rate.As far as the other companies, like as you mentioned AMD's, they may have asomewhat of a I guess, too much expectation already priced in.So therefore the price improvement might be a lagging.But overall, we think the media, as well as most of these major hardwarecompanies, would have a very strong earnings growth rate.And I think that the share price should move accordingly.Some people might be saying that a lot.
Of these companies are already highlyoverpriced, but we think if we look at the earnings as well as the potentialgrowth in the segment, we think that it's not necessarily that expensive.What about China stocks as well? Because we're seeing a lot moreinvestors turning positive on this group.But are you in that camp or are you a little bit more cautious still?Well, I think that we can say in the short term we are quite positive becauseif you look at Chinese government, they have some bullets to spend to use.As you know, they are cutting interest rate as well as providing liquidity andalso they are supporting a property.
Market.So in the short term, we think that lower interest rate environment and withthe currency depreciating and affecting positively on export side, we think thatthere is some more positive news happening in in Chinese stocks.However, in terms of the long run, we think that their competitiveness is notnecessarily rising necessarily other than some of the major sector like EVsegment and the renewable energies. If you look at the IP segment side, yetthey are improving in terms of the competitiveness.But nevertheless we think that the competitiveness is not as high as mostof the other countries that you compare.
It with.So therefore, in a long run it might be not necessarily a positive environmentto invest, but as I said, in the short term, a huge liquidity injection isalways positive and therefore interest rate sensitive stocks and liquiditysensitive stocks of China might show some positive rise over the next maybeseveral months per se. Daniel, you're head of global assetallocation at U.S. Securities Korea.Really great to have you with us. We've got some breaking news on the backof those ocbc numbers, the offer that they've made to great Eastern.We are seeing the announcement that.
They've announced a $1.4 billion seeingvoluntary, unconditional general offer for the 11.5% stake in Great Eastern.According to a filing with the SGX, they intend to increase the investment inGreat Eastern from the current state of 88.44%, with a view to delisting theinsurer from the SGX, S-T. So we are seeing that they arecommenting that the capital position will remain strong even after this greatEastern offer, that they do intend to use internal cash to fund that offer.They expect that this will be earnings adding to ocbc with a view to delist.After that, they're basically increasing the 11.56 stake that it does not alreadycurrently own in great Eastern Holdings.
They're talking about the capitalizationon the vast opportunities in one of the world's fastest growing regions thatthat offer price of 25.66 represents a almost a 37% premium over the lasttraded price. We did really see Bloomberg intelligenceexpecting that the capital strength for ICBC could ignite more M&A and moredeals. We're seeing that that bigger core Tierone buffer than peers that it has, meaning potentially that Ocbc has thefurther room to expand via M&A and other deals after it did of course purchaseCBA's Indonesian unit. So we did earlier if you missed that,get those numbers from overseas.
Chinese Banking Corp, the first quarterprofit rose revenue from lending gained wealth and trading fees surged as well.It was again one of these Singaporean and regional lenders that reportedprofits that beat estimates. You can get that story and the round upof some of the other stories you need to know to get your day going.In today's edition of DAYBREAK. Tomorrow, subscribers can find that atday be go. It's also on the mobile in the Bloomberganywhere app. You can customize those settings as wellso you just get the news on the industries and assets that you careabout.
This is Bloomberg. You're watching DAYBREAK.Australia taking you to some live pictures here.This is the snap CEO speaking at our Bloomberg Technology summit for thisyear in San Francisco, someone who's reshaped SNAP over the last couple ofyears. But here speaking about a possible TikTok ban in the US situation. For our team and for our business.Then sort of fast forward into you know, I think we we back in 2022 or whateverwas kind of raise our hands were like, hey, we're a little worried.I think real rates are like negative.
Seven.I remember when you did that and everyone would crazy things might haveto change. And so we you know, we were reallyconcerned about the macroeconomic environment and sure enough, rates wentup and that really impacted, you know, the high growth tech sector.So there have been a lot of ups and downs.I think the important thing for us is just to try to adapt to those changes,to try to communicate as openly as possible with our team, with ourpartners, you know, and just work through it.But it's definitely been a learning.
Experience and with a lot of thosedowns, you guys down for the industry, you guys have been a real early mover.You scaled back on headcount before the rest of the social media industry andreally the tech industry at large. Did you guys refocused and retrenched onnew revenue opportunities? You've kind of been the contra indicatorthat's led the pack, like when you're in the trenches making those kind ofdecisions. What did that feel like over the lasttwo years, 18 months, and kind of what were you relying on?Because, you know, nobody could point you weren't pointing to anyone elsesaying they're doing it.
We have the air cover to do it, too.I think for us, it's it's where that combination about being reallyoptimistic about our business and our ability to execute, but really realisticabout the environment that we're operating in.And so I think as we've seen some of these changes, you know, whether it wasthe disruption with the, you know, ad platform policy changes or the macroeconomy or the challenges we faced, obviously with these ongoing wars, wejust try to be brutally realistic about the operating environment, but thenreally have faith in our team and our ability to execute through it.That allows us to keep that positivity.
That I think is so critical in such avolatile period of time. So, you know, I think in that way asleaders, our job is to absorb that sort of external stress but see it veryclearly and chart a path through it with the team to throw it forward a second.You know, we're sitting at this moment where folks are looking at AI everyone'stalking about, including in this room. How are you thinking about the balanceand continuing to grow your ad business, which you've just basically transformedto a certain extent over the last 18 months and invest in AI?And maybe there are some other executive teams who are perking their ears uplistening to you guys, like, how are you.
Sitting here thinking about where theinvestments go on AI versus the rest of the business?Yeah, absolutely. So so first of all, I think all theexcitement around AI is is warranted. It's real, not hype.It is real. And I think one of the interestingthings, though, about technology is that very often times, you know, the rate ofgrowth of technology is not actually due to the technology itself.It's actually due to the way that humans adopt it.Right. And so very times like we're payingattention to the ways that humans are.
Adopting the technology rather than therate of the evolution of the technology itself, because that really dictates,you know, how society will be transformed, how folks will adopt andutilize this technology in all of their businesses and of course, in SNAP aswell. So we've long used A.I., you know, inour recommendation systems and things like that.But what's been very exciting is the way we've been able to apply AI to, youknow, image and video and 3D, which are all real core strengths for us.You know, as we open into the camera and into our experiences.And so we're really excited about the.
Way that you can transform images withAI, the way that, you know, graphic artist 3D artists, you know, would havespent weeks developing some of the models they use in air lenses now cangenerate those on the fly using AI. And so I think just the explosion andcreativity we're seeing, you know, through the adoption of these tools issuper exciting. And the reason why we're at aninflection point is not necessarily just the technology, it's the way that humansare adopting it, you know, in their day to day lives.I still remember when Mark Zuckerberg tried to buy you and you said,absolutely not.
That's the snap.CEO Evan SPIEGEL speaking at our Bloomberg Technology summit in SanFrancisco about AI. The applications, of course, foreveryday users speaking as well about the interest rate environment and aswell a possible tick tock ban in the U.S.We're going to leave that there for now. Bloomberg subscribers can continuewatching a live go that you can also find big well, the big diary entriescoming up today and later this week, as well as some of the events you may havemissed earlier t live blog as well underway.But let's to shift now to China because.
President Xi Jinping has secured theHungarian prime minister's support for his push back against U.S.and EU claims of Chinese overcapacity. For more, let's bring in our chief NorthAsia correspondent, Stephen Engle and Steve.Hungary has always or traditionally had quite a fractious relationship withothers in the EU. So how important is this secure end forChina's ambitions in the region? Absolutely.It comes at a time of rising trade friction, if you will, with Brussels.Ursula von der Leyen, the EEC president, has been very outspoken against China'sovercapacity issues and the potential.
Dumping of EVs and other green productsin the European market. And again, there's this investigationinto potential dumping and subsidies by the Chinese government and the like, andthere could be and the Chinese EV makers that I've talked to say they fullyexpect some sort of tariff regime on EVs.Now, Xi Jinping obviously sees a great opportunity with a country like Hungary,which already has EV battery supply chain, that the South Koreans are inthere, that Chinese are in their Seattle, they're building this supplychain into southern Europe excuse me, southern Germany, where there'sautomobile factories in Slovakia as.
Well.Look, Hungary has cheaper labor. They have a 9% corporate tax rate.They are friendly to Chinese investment, extremely friendly.Viktor Orban, the prime minister, basically in lockstep with the Chinesedevelopment model, using lower wages in in his country, wide open land to buildthese factories. And they are courting that.And that's why Xi Jinping is wrapping up his European trip the first time in fiveyears in two friendly countries to China, and that isSerbia. Serbia.Thank you.
And then also now Hungary.So it look, I'm just going to pick up the statements from Xi Jinping.He says we will strengthen cooperation in our development strategies, deepeningties in trade, finance and our economies.He also wrote, by the way, in a ruling party, Hungarian newspaper, on the pathof Chinese style modernisation and development, we see Hungary as atraveling companion. Now I want to change the page because wedid get the actual readout from the Hungarian government.Viktor Orban statements, but this is from the Chinese readout of his meetingwith Xi.
It reads like it was written by Beijing.Okay. Hungary does not identify with therhetoric of so-called overcapacity or de-risking.Hungary's determination to deepen cooperation with China is unswerving andwill not be interfered by any force as they really do.Beijing does need to get a new English thesaurus because unswerving isdefinitely a word that the Beijing authorities use quite a bit.So I'm not so sure that Viktor Orban used that word.But again, we have to attribute it to the Chinese readout of Viktor Orban'scomments towards Xi Jinping.
It's sort of Chinese diplomatic finger,right? Such a fun game.Which companies are poised to benefit the most?You know, obviously in Xi Jinping's new three, thebig, you know, green story, if you will, the electric vehicles as well asbatteries, solar and the like. Already we're seeing Viktor Orban'sgovernment trying to create the infrastructure for the EV industry inthe European bloc, the EU trading bloc, by courting the likes of BYD, they'rebuilding a massive plant in Hungary. Also, we're expecting some sort ofannouncement with Great Wall Motor.
We got a statement yesterday saying thatNIO has been in talks as well with the Hungarian government.Seattle has their facilities and building out even further in easternHungary. But also the South Korean big batterymakers have already been in Hungary. They're supplying, again, as I said, tothe German automakers in Bavaria, in southern Germany, also in Slovakia, Ibelieve it is so again in the new three that Xi Jinping has been pushing fortechnology, green technology are going to benefit.And Viktor Orban is in lockstep with Xi Jinping on that development model.Our chief North Asia correspondent David.
Can go there.One of the other stories that we're following across geopolitics, an Israeliprime minister, Benjamin Netanyahu, has struck a defiant tone against PresidentBiden after the US withheld a shipment of bombs as a warning against invadingthe southern Gaza city of Rafah. And a post on ex Netanyahu said Israelcould stand alone in its war on Hamas. But in the later clip for an interviewwith a US talk show host known as Dr. Phil Netanyahu said he hoped Israel andthe US can find a way to repair ties. More to come here on DAYBREAK,Australia. This is Bloomberg.
Taking you back to our big tech summitin San Francisco, where we're hearing right now from the SNAP CEO, EvanSPIEGEL. What's important, though, is trying tobuild tools that do help facilitate that connection and bringing people together,especially at a time when we know that real world interaction and communicationis vitally important. So even though, you know, the mapsometimes may make you feel like, oh, you know, I wasn't invited to lunch, wehear from people all the time that they're able to actually connect withfriends they haven't seen in a while, even sometimes like it was.I was at the airport and I didn't.
Realize a friend I hadn't seen sincehigh school was there. And so I just sent him a message and wemet up and it was such a special moment. I wouldn't have been able to do thatwithout that map. So I think, you know, trying tofacilitate those real world relationships is important andunderstanding that on balance, sometimes that means that people do feel left outis something that we need to be aware of and also, you know, do our best tomitigate when possible. We talked about teens and young people.You guys are really strong. They're 87%, I think, of of these arepeople under the age of 25 in developed.
Countries are on SNAP.Is that still the right what's the reason?I think it's like more than 75% of living not there, but to remind that wedo have a t live blog that's underway where you can get more from ourBloomberg Technology summit underway in san francisco. But Aussie dollar bulls are in a sweetspot with UBS recommending buying the currency over the euro and the Swissfranc. Bank of America, meanwhile, says anexpected rebound in China's economy is another reason to buy.Let's bring up food.
Wine also leaves our markets live Asiacoverage in golf. Are you sort of convinced that thisconvergence of all the positive factors is going to play out for the Aussieworld on the next like 1 to 2 months? It'snot too hard to see some strong Aussie dollar gains against everything you knowabout the US dollar. Thewe're kind of in a position where the main risk would be if we getbad jobs numbers out of Australia, that would obviously unhinge the the latesttack from the market and from the central bank, which is towards the ideathat the RBA is not going to cut rates.
This year and that in fact there isstill a risk of a hike. It's been very interesting to see theway things have evolved so that although the Statistics Bureau brought in sometime back a monthly CPI report indicator that's proved to be a fairly unreliableguide to some extent. And what matters even more than everbefore just about is the quarterly CPI print, so we don't get another one ofthose until July. So unless you get a severe breakdown ofthe indicators, then the RBA looks like being the most hawkish of the majorcentral banks at the moment in its stance in that it is definitively onhold for the rest of the year.
Absent that downturn in inflation.And you would you would argue that you would need to get both poor jobs dataand a severe slowdown in inflation in thatto cue CPI in order for the RBA to say okay, we're going to put a rate cut backon the table for 2024. Got that.We've actually just got some breaking news right now.Jp morgan, we understand they announced last year that they were going to beadding Indian government debt to their benchmark AIM index starting in June.So that's obviously a milestone for what Asia's third largest economy.But we're just actually getting some.
More details on this in particular here,because what we're hearing from Jp morgan is that they're saying that thatinclusion is on track and also most of their clients are ready for this.They're expecting somewhere around the vicinity of 20 to $25 billion of foreigninflows. That assumes an index neutral position.So got this whole inclusion story. I mean, there's there's the potentialbenefits in the sense that you could see perhaps structurally lower interestrates. It could provide some relief for therupee. But you've also got concerns thatperhaps this could increase volatility.
In the markets there as well.So net net. Is this good or is it bad news, do youthink? Well, overall, I think it's good newsfor Indian marketing in general. Provided we can get over the hump of theongoing Indian election, which has been causing some concerns, especially inequities market. But even with bondson the back of the initial, you know, decisions by Jp morgan that it was goingto be included. You know, this is confirmation of thatand of the timing. There was a fair bit of inflow that camein to Indian bonds as a result.
But that had slowed right down in recentweeks, even running into the election. And it was fairly obvious that alongwith the general risks that there were around that around that time, you know,when we had the high US CPI and the potential idea that the Fed mightactually hike rates, that meant it wasn't a good time for the bond marketin general. Indian bonds definitely went off alittle bit at that time. And foreign inflows, you're pretty muchstopped. So there's that looming appetite there,I think, in general for Indian bonds, given what's been going on, provided,you know, the election doesn't spring.
Any nasty surprises.So that's there. And then you have this.So it is a signal that the medium to long term outlook for Indian bonds andpossibly to some extent for the rupee is more bullish than it was and inparticular quite bullish for for bonds. There are those tactical factors that Imentioned here, including if we we've got US CPI again next week.If that was to come out strong, robust enough to drive fresh declines intreasuries, that would also have an impact on the bull case for Indianbonds. We're also watching the UAE and there'ssome questions about the adequacy of.
China's reserves and therefore itsability to be able to defend any further slumps in the currency.Is this sort of building a bear case? Well, I think it underscores that youcan never be too sure that, you know, that that the bear case has gone away.I mean, one, I'm a little bit cautious because, you know, the metric citedis, is you're based on developed markets withan open capital account. That doesn't describe China on either ofthose values. So the the line from this being low tothis being a problem is is a little bit more conflicted.It's not so straightforward.
But there is a strong overall bear caseon the yuan. The PBOC has had a lot of success whenit stepped in. It's been helped by the fact that theJapanese have managed to at least cap declines in the yen.So all of that has been, you know, helpful.But on the you know, this metric underscores that there may be limits towhat the PBOC does. And the big risk for the yuan inparticular and Chinese markets in general that's going to grow over thecoming six months is the US presidential election is coming.And that is going to highlight the.
Potential from either side of politicsfor fresh tariffs, for fresh confrontation with China.We've got the tick tock case going. All of that indicates that we can getplenty of volatility and that it's going to be hard for the authorities to domuch more than slow the yuan's decline. I mean, for that matter, slowing thedecline is all they want to do, which again is one of the reasons why themetric is it's yeah, it's an ominous backdrop without being a game changerbecause the game at the moment for the PBOC is slow the declines.China's economy is recovering, but it's still weak.They're looking to ease policy.
So all of that says the yuan is on theback foot. The main thing is the PBOC wants to makesure it doesn't actually tumble backwards.That was Garfield Reynolds there who leads our Markets live Asia coverage.And from the U.S. to the Bank of England, because we heardfrom Governor Andrew Bailey, who says there would be a case for cutting ratesin the UK if the economy and inflation play out as expected.He spoke to us after the Monetary Policy Committee voted 7 to 2 to hold ratessteady. Our forecasts are conditional on anumber of things, but one of the things.
That obviously I'll conditional on is weuse the markets curve to set them up. So I think it's important that if we,you know, if we find the forecast with the market curve produces a bestjudgment which has inflation below targets or above target, but not attarget at the at the sort of horizon. We say so we say this is where we got topress collective judgment. Is that now?It follows. I think this is a comment I made earlierthat what we're saying is if am if it's, of course, critical, if the worldevolves, as you know, that that forecast suggests it was well, probably the casewould be therefore for a less.
Restrictive part of the policy.So is generational. Everything is conditional.Is June to live meeting all meetings a lot.So is June likely? That's a different question.I think the key points I would make is that we have changed our view on thelikely persistence of inflation on second round effects.I know, and it's good news. We think that we think there wasevidence that suggests that will be less pronounced than we thought they would bebecause of judgments. And, you know, for me, I'm not lookingat, you know, particularly these three.
Key indicators services, inflation ofpay and the quantity side. The labor markets are really judged thispersistence question how it will evolve. Governor, there is an assumption lookingat history, that once you cut, you continue cutting now without prejudgingwhat you'll do. Can you give us an idea of how you seethe cycle different to. Well, one thing I would say about this,which is sort of quite interesting and it's something that we looked at duringthis round, it's quite soon the history of the NPC that most of the cuttingcycles cycle in inverted commas, have actually been prompted by some sort ofshock or other, rather than being what I.
Might call a natural cyclical sort ofwe've reached the top and now we go down to restraints of those curves so wedon't have a lot of I mean, I would just caution there isn't a lot of sort ofhistory, right? So so what you're telling us is becauseyou're you're not cutting in a recession, it could it could actually beone and done. Well, I think what would be unusual, butI would say, you know, I said earlier, nothing's settled.There are no fights accomplished. Nothing's ruled out.Governor, what can you tell us about the the play between, of course, interestrates and cut rates?.
Some may find it confusion becausethey're pulling in different directions. So the message was definitely cute.Is that cute? He operates in the background for us.We don't think it has large impacts on terms of markets.But the other points and this is really the critical point when we sit down todecide on what the right interest rates setting is, we take into considerationeverything, including markets, obviously, and markets will haveabsorbed, if you like, and taken into account the impact of it.So in other words, Q2 is always there, if you like.If there is any effect from kids, they.
Will capture it because we'll capture itin the movement of markets and then we will set back rates to reflect that.But you don't think it's confusing for markets this kind of a pullback?I don't think so. So you're not you're not expecting it toended before the end of the year to make sure that there's no confusion in whatyou're doing. To my mind, any difficulty if we get tothe point where we're going to cut interest rates to have cutesy going onas well. Bury Governor Andrew Bailey there withBloomberg's Francine Lacqua. You can watch us live and catch up onour past interviews in our interactive.
TV function.That's our TV guide. You can also dive into any of thesecurities at the Bloomberg functions we talk about.You can join in the conversation two by sending us instant messages during ourshows. This is for Bloomberg subscribers onlyto check it out. It's at TV Guide.This is Bloomberg. The CEO is downplaying concerns over anair spending slowdown that was fueled by his company's lukewarm revenue forecastfor the fiscal year. Romney has told us why he's tooconfident in the chip design as long.
Term growth.We're actually forecasting even higher growth this year north of 20%.And we also signal to the markets yesterday that in 25, 26, 27, we seethat growth continuing. So we have incredible visibility intoour business and we're very, very confident of this growth rate goingforward. I want to focus in on the cell phoneplay, Renee, because that's been where your bread and butter has been inhistory. How are we looking from a smartphoneperspective? Is the market looking strong to you?We've had many a mixed message coming.
From China.Demand, for example. Overall, what we've seen in thesmartphone market for ARM has been quite a good growth rate in terms ofroyalties. Our version nine, which is now beingused in many of the premium mobile phones that drives a higher royalty ratefor ARM. There's also more complex CPU's that gointo that that's also better for ARM and going forward.Caroline One of the things that we're seeing and it's not just in smartphonesis that as these models are moving so fast, the hardware can't keep up withthe software.
The software innovation is happening soquickly that by the time the hardware is ready to run, those models everyonewishes they had, they had more performance, they had more efficiency.So what does that mean for ARM? It's driving growth in our licensingactivity. People are looking to do more and moredesign chips faster and faster, and that's all all good for us goingforward. So I think going forward, you're goingto see more and more innovation happening not only in the smartphonesacross all these edge devices. Rene, what's been keeping up is yourvaluation.
Boy, I mean, do you think there's toomuch exuberance around AI valuations out there?Are you going to make the most of it by. Well, we have talked to one point oflisting in the UK two. Yeah.You know, I don't think about the valuations as much as I just think aboutthe opportunity, which I frankly believe is under called in termsof just what it's going to mean relative to society and what it can do for ourplanet. I think again, we are in very, veryearly days in terms of the capabilities of what this can unleash for oursociety.
Incredibly excited to be part of it.But I don't think we're part of a hype cycle at all.I think there's a lot of innovation taking place.And, you know, frankly, the innovation that's taking place and the inventionsthat we're seeing, it's just breathtaking.So, no, I don't personally view it as a hype cycle at all.That was the CEO rene has speaking with Bloomberg's Caroline Hyde after AMSearnings underwhelmed investors earlier this week.But sticking with that earnings theme because Nissan is forecasting a strongerthan expected operating profit on cost.
Cuts and a weak in the Japaneseautomaker also sees robust sales in the US and China as it rolls out new models.Our auto and aviation reporter surprising joins us from Tokyo.And Sabrina, what sort of market reaction do you think we should beexpecting then at the open? Hi.So Nissan has projected an operating profit of ¥600 billion, which is around$4 billion. As you said, it will be coming fromtheir strong sales in Japan and ASEAN and the new models that they plan toroll out in the US and China. Nissan will also benefit around ¥70billion from the Beacon.
Because it has accelerated, weakened alot in last one or two years. When the market opens, we will seebecause Nissan has actually got revised down its forecast last year.So market reaction will be really something that we need to look howmarket really reacts to it. And they really believe that Nissan canfulfill it because they have also announced they plan to have additional 1billion of annual sales within three years.So today's market reaction will really show that if Nissan if market playersreally believe that Nissan can achieve its goal.So that's really something I really.
Can't talk about, but something we needto watch out for. But as for the weekend, Japaneseautomakers have been benefit fitting from a weekend so far.And Nissan has also, as I said, said a 70 billion of yen of profit from theweekend. But Nissan CEO Mark Woodward hasexpressed concerns that of volatility, what volatility in the weekend isactually affects their business planning and strategy making.So they really wish to see a stable yen, although a weekend so far has beenbenefiting them and they have projected forex rate at 145 so far for this yearand 100 Mazda expected later.
Expectations are pretty high for HondaMAZDA'S Disappointed on guidance. As for Honda, they we are also expectingto see a bright outlook for Honda around nine $9 billion operating profit market.A market is expecting Honda to release todaybecause they sold a good number of cars in the US last year.And as we see that hybrids are again becoming popular and hybrids demand inthe US is going to do is is expected to continue this year as and even as demandis expected to lower down. So we are expecting a strong outlookfrom Honda as well. And Honda has also launched new CDs inChina this year during the Beijing Auto.
Show, which will go on sale from thisyear. So and Marketplace will also be watchingfor any possible comments for from Honda CEOregarding their potential potential alliance with Nissan which theyannounced in March. As as Japanese automakers are strugglingin China, Nissan and Honda are studying if they can really do something aboutJapanese automakers, slow making a strategy.Sabrina, That was surprising, although an aviation reporter from Tokyo andother stories that we're tracking this morning in the auto space.Bloomberg's learned that Geely's high.
End electric car brand Zico fetched some$441 million in an expanded US IPO. Sources say the company sold 21 millionideas for $21 a. That marks the biggest U.S.IPO in three years by a Chinese company. Shares are going to start trading in NewYork on Friday under the symbol z k. Tesla is cutting more jobs in China amida slowdown in EV sales and intense competition.Sources tell us that additional layoffs began early this week, affectingdepartments from production to customer service.The cuts include staff at Tesla's Shanghai plant, home to more than halfof the company's global production.
Heidi.And while we do have the Japan current account balance data just crossing theBloomberg the March trade surplus coming in at ¥491 billion, that is slightly shyof expectations of what was ¥550 billion.The current account surplus coming in at ¥3.39 trillion.The adjusted current account surplus at just over ¥2 trillion for the month ofMarch. Of course, these numbers have come underincreasing scrutiny. When we did get a Bloomberg analysislooking at the BOJ's account suggesting that Japan did intervene in recentsessions to support the yen, that Bank.
Of Japan account changes, suggestingthat we saw that five and a half trillion dollar yen intervention.To that end, we're also hearing now from Japanese policy makers, the financeMinister Shinichi Suzuki, speaking in Tokyo, as he tends to at this time ofday, really commenting on the wage numbers that we had through yesterday,aiming for wage growth that exceeds inflation, seeing wage growth outpacelast year's gains. And also commenting a little bit when itcomes to the levels of refrained from commenting on what is appropriate whenit comes to the levels to the yen. But again, reiterating they'll takeappropriate measures on effects without.
Hesitation.We do have much more coming up here on DAYBREAK, Australia.This is Bloomberg. Top corporate stories this hour.Bloomberg has learned that Apple plans to push many new tools across devicesthrough data centers using its own chips.Sources say the high end M2 ultra chips will be deployed in cloud computingservers designed to process the most complicated of tasks.Apple was expected to lay out its ambitious A.I.strategy in June. Meanwhile, Apple has issued a rareapology over an online ad for its latest.
IPad Pro.The images of musical instruments, televisions, paint cans and othercreative tools being crushed into an iPad sparked a furious online backlash.Among the critics was actor Hugh Grant, who says the ad promotes the, quote, adestruction of the human experience. Apple now won't air the promo ontelevision as planned, though. Well, Heidi, I'm actually just watchingfinishing off that ad right now. And I've got to say, it's extremelydepressing. Ad?Yeah, it's it's I can understand actually the reaction.And I think Hugh Grant encapsulated it.
Fairly well.Yes. There's there's technology and we lovethe what it can do. But you also just can't replace some ofthose things that you see, things like painting or or toys or that they'reextremely depressing to watch. I was just also tracking, well, who madethis, because that's always the big question, was it in house?Was it at a house with an agency? And this one, we're actually not sure atthis point in time. That's a really interesting pointbecause, well, as you know, the Apple products have been so key for creatives,Right?.
And as they say, creativity is in ourDNA At Apple. It's important to design products andempower creatives. This was really a rare misstep when itcomes to the way that messaging came across.So an apology, we won't be seeing it again.Market opens in Sydney, Seoul in Tokyo. And next, this is Bloomberg.
