Bloomberg Sunrise: Australia 01/19/2024

Toa very good morning. Welcome to DAYBREAK Australia.I'm Heidi Starbucks in Sydney. We're counting down to Asia's majormarket opens. Good evening from Bloomberg Worldheadquarters in New York. I'm sure everyone.The top stories this hour. A big tech rally fuels a rebound in USstocks with the Nasdaq 100 closing at a record high.And Tsmc's positive outlook lifting chip makersOil runs alongside equities as tensions shimmer in the Middle East and Americanstockpiles fall to the lowest since.

October.Geopolitics also high on the agenda at Davos, where we'll hear from the RBAgovernor and the CEOs of Bank of America and Trip.com.This was a close on Wall Street. The US dollar is gaining For the fourthtime in three sessions. We have mega caps leading those gains.Apple getting an analyst upgrade as well.We're watching the Philadelphia Semiconductor index saying its best dayin more than a month. And this, of course, coming after we sawthat positive outlook from TSMC spurring hopes for a global tech recovery.Treasurys ended the session a little bit.

Mixed.A two year yield was down, the ten year yield was slightly up.It was really a reaction to resilient data jobless claims dropping to thelowest level since September of 2022. Last week the dollar was mixed versuspeers. Of course, we did have the Bloombergdollar index topping its 200 day moving average oil rising alongside equitieswith a widening conflict in the Middle East, adding to those gains.And we also had U.S. crude stockpiles dropping to the lowestlevel since October. But, Heidi, of course, it is all aboutthe Fed trajectory and what kind of.

Clues we can get from Fed officials.And today we heard from the Atlanta Fed president who wanted to see moreevidence that inflation was going to stick around the 2% inflation target.And he really didn't want to go what he called back and forth on those ratecuts, that that would be the biggest fear, that if they had to cut and thenraise them again later, if inflation moves higher, that that would really notbe good for the US economy. We also heard from the Philadelphia Fedpresident Patrick Harker also saying that he expects inflation will continueto move toward the 2% target. It really is continuing to be aboutcommunication and signaling from these.

Fed speakers right as we get into thisyear, which potentially markets have priced in five, maybe six rate cuts, thesort of expectations of really running perhaps ahead of the commentary thatwe're actually hearing from policymakers.But at the same time, we've got to go back to the data.Right. We know that this is what share Powelland his colleagues will be looking at very, very closely in the coming months.And at least when it comes to the jobs market, we're continuing to get, Sherri,more and more signs that the US labor market is just showing signs ofresilience and latest numbers.

Jobless claims plunging to 187,000.This is the lowest since September 2022. New York posting the biggest declinefollowed by the numbers for Michigan. So these continuing claims falling for athird week as well to the lowest since October.So really kind of underscoring the robustness of the labor market at thestart of this year. We've also, of course, been hearing alot of these conversations taking place at the World Economic Forum in Davos.Take a listen to what some of our guests and these industry leaders, policymakersand business heads that we've been speaking to have to say about theiroutlook for rates.

It's going to be a bumpy year.The market may be a little bit ahead of itself in terms of rate cuts this year.I have no doubt that we'll get two rate cuts.At some point. They're going to have to start cuttingbecause they have a space to cut in. The economy can keep growing.The markets have now priced in what I think is probably excessive interestrate cuts in the US. We still see rate cuts and we areactually predicting that they start sooner rather than later.Our core team has four cuts and four cuts 24 and 25.The six rate cuts.

That's a pipe dream.If we have a soft landing, that's not happening.I think markets are being a little exuberant, expecting as many rate cutsas they've put in. The market is not calling for a 175basis point cut by the Fed. Really?How about this? No way.No way at all. They're going to be prudent.They're going to be thoughtful. Let's bring in Matt Lloyd, who's thechief investment strategist at Advisors Asset Management.Matt, great to have you with us.

So what's your positioning in terms ofhow you feel about market expectations versus how you think the Fed willactually proceed this year? Yeah, that touches on probably theprimary question and maybe it's two. It's when and why.If you look at what the Fed is doing, what the numbers are saying and andreally the salient figures out there and metrics, you look at what you mentionedbefore, the job market is pretty robust and strong.You now see some shipping issues. There's still some inflationary concernsout there. And I think when you look at the win,it's really the win is now trumped the.

What and why of what people should doinvest now. It's when when is it going to happen?And then the reason on the rate cuts is, you know, you look at the differencebetween the futures and you look at expectations and you look at what theFed is trying to transform into the DOT plot.Maybe it's not plot anymore, but three cuts versus 6 to 7 cuts, which are kindof in the market, maybe the shadow expectations.You start to see that the winners actually become more problematic on thisin that situation. And then it's going to have torecalibrate all the assumptions that are.

Priced into the market because of that,whether that's equities or the debt market.I love that you're talking about the markets trying to work through the fivestages of grief in 2022. What stage are we at the moment and whatis that a precursor to, I guess, for the rest of this year?I think we go through all five stages at every point of the day.It just depends on what you look at, that cacophony of information that's outthere. I think, you know, when you look at it,the acceptance to a degree is more that the soft landing is going to occur.So that's that's where everything is.

So as an investor and always have towatch the blind spots and look at the, you know, asymmetrical risk and rewardscenarios of it. You have to start seeing what's notpriced in, whether that's the no landing or whether it's the hard landing.We're seeing a little bit of a definition shift in the soft landing,which most people would say a soft landing is still growing, but they cancut rates and so forth. Now we're seeing people kind ofrecalibrate the soft landing to a shallow recession.We're in the shallow recession aspect to it, and that's not necessarily somethingthat should make everyone run for the.

Doors.What I should say is just be a little bit more pragmatic about it.Look at those things that have value. I think one thing that's probablyunderestimated and is shown is that value outperforms growth in presidentialelection years pretty much by a wide margin.And so we think that that's a good place to be a little bit more overweighted invalue and quality in that side. And then just measure risk Internationalhas some very good risk reward scenarios.Unfortunately, their economic numbers are a little bit more anemic, a littlemore troubling.

So there may be some more volatility inthat aspect. But I would love to say acceptance, butI think that changes by the hour. Does the international include emergingmarkets? Because we have seen the big losses thisyear already. What am stocks losing more than 6% yearto date? And we're just in the middle of January.So could we see some more upside of what you like as value at this point?Yeah, really, international investing really is always geared more towardsvalue in general. I think when you look at emergingmarkets, you really want to follow what.

The dollar does and the dollar is goingto be in a trading range. And there's a couple of reasons for it.If you look at the dollar and if it's if there's a little bit more of a boundmove in interest rates, then you'll see the dollar kind of rally a little bitaround it. If there is a recession or there'seconomic troubles, there'll be a flight to safety that could stabilize andincrease the dollar. However, longer term, you're going tosee some the budget deficit issues, the refinancing of debt at higher rates, thedebt to GDP ratios, which is going to ultimately keep the long term trend ofthe dollar down.

That's long term bullish for emergingmarkets. So you're going to see some volatilitythis year in emerging markets. But the amount of dollars invested inemerging markets relative to, you know, the US assets is as low as we've seenand the value based on the price multiples and so forth.And even the growth going forward doesn't translate to earnings.But we would be a long term believer in emerging markets.China's really kind of dragging it down into China for the contrarian and valuebased investors. The the the Kenyans are going off inChina, and that's usually as value.

Investors where you want to look at it.It's just hard to do that with the negative feedback loop we have.So we like emerging markets. We'd probably be systematic, methodicalabout it throughout the year and look at the dollar.If the dollar rallies, that would probably be a good entry point because alittle bit depressed. But we like emerging markets, especiallyover the long term. We continue to talk in 2023 about howemerging markets seem to be really getting detached from where China goesfrom here because Chinese stocks really underperformed by emerging markets.Ex China actually did not that bad.

Same thing for when it comes to mcurrencies. Can we see that trend continue in 2024and therefore see more upside for EMS even if China doesn't recover?Yeah, I think you're hitting on a really key tactical point in what's going onin. This has to do with globalization in thejust in time manufacturing and you start to see the cost of labor in China.You know, you look at the fertility rate and demographic situation.So it's naturally going to increase wages.We've seen that dramatically over other various emerging markets.So that trend is going to benefit that.

So you're going to be kind ofdiversifying your your manufacturing base.You're going to see a lot more storage here in the United States for those thatare utilizing it for domestic. I do think that there is going to be adelineating case for that because some of those challenges and they'll stillhave a massive impact. China will definitely.But I do think that the other kind of satellite emerging markets and I it'shard to say like India as a satellite, but, you know, you look at India, youlook at Taiwan, and I know there's tried challenges there.Vietnam, those are all places that.

Actually we would be a little bit morebullish on. And even in South America, if you lookat like Brazil, I still like Brazil in a sense with some of the agriculturalaspects and where they're becoming a bigger player in the emerging markets.But I do think your point is well said. It is it is going to see a little bitmore of a break and it's going to be maybe a little bit more individualizedis what you want to be versus. Maybe doing a broad based.Matt, how much are you watching your politics for this year?I mean, it seems in a lot of ways extraordinarily extraordinary how howinvestors have been pretty sanguine,.

Given that there are two activeconflicts that are still playing out, even across oil prices, perhaps wasstarting to see a little bit more of a bigger move across the futures curve.How big a risk is that, do you think? Yeah, it's a big risk and it's always aprominent risk out there and it flares up in election years, kind of usuallyexacerbated. This is not being exacerbated if this isactually realized and this is what's causing maybe what we're talking aboutwith the dollar rally, kind of a risk of flight to safety, if you will.Now, remember, flight to safety is typically they have to land, refuel, andthen they take off again.

So the dollar rally will probably bejust a little bit premature. But it absolutely is something that'sprominent. And this is where really measuring therisk reward, high quality in the sense of what you're looking at.It is contagion, that there's contagion inside this, all the different areas.You see the news now with what's going on with Pakistan and Iran.This is a hotbed. This is something that's not going to beable to be isolated. I think that that's going to create alittle bit more angst in the markets, which with market money market rates ashigh as they are high yields on.

Sovereign debt.As far as the US Treasuries, you're going to still continue to see a floodthere, which we've already seen. You're seeing households on $2.3trillion of treasuries never seen before because of that nervousness.And it's a cash proxy, if you will, for it.So you're already seeing it a bit with the high levels of cash and high levelsof high grade debt. But I think that there could be thatcould be the capitulating moment in the markets where there's a risk to say, allright, we're just going to pause on risk for the short term.And so I do think it's already played.

Out.There's probably a capitulation moment in that from from those geopoliticalrisk for sure. Does the outcome, whatever it is of theUS election, tactically change anything for you?Yeah, I think that because it's so played out and it is very polarized, webecome more tribal as as because ideologically speaking and so forth, Ido think that somewhat is as priced in and we always are kind of overamplifying the risk of uncertainty moving forward, the way we see Congressbeing really kind of middle of the road, both parties kind of having, you know,50, 50 very low margins.

It's almost going to be more of anemiclame duck sessions, which isn't necessarily good in the in the timeswhen things are going great. That's actually not a bad thing.When you have these consultations and you need things to kind of get done,That legislative constipation, so to speak,does not help out. So I think that that's what the marketsare somewhat priced in for already. I don't think there's going to be a bigculture shock whoever wins on this, because we've already seen thisideological shift over the last eight years.So some of it's not going to be priced.

In, but I don't think it's as visceralas the geopolitical risk out there. Matt, great to chat with you as always.Matt Lloyd, chief investment strategist at Advisors Asset Management.Well, coming up, Israel vowing to control security in the Gaza Strip afterthe war despite calls by the US. An update next on the crisis playing outin the Middle East. This is Bloomberg. Well, Ukraine is aiming to organize acall with Chinese President Xi Jinping to push forward its blueprint for peace.The Ukraine Russia war is among the top geopolitical issues being discussed atthis year's World Economic Forum taking.

Place in Davos.Bloomberg's Annmarie Horden has more. When will central banks start cuttingrates? How geopolitics is impacting the globaleconomy and, of course, what to make of the consequential U.S.election coming up in November. These are the top themes at this year'sWorld Economic Forum in Davos, Switzerland, and more than just abusiness meeting. This was really a conference as well fortop foreign policy minds. We had Secretary of State Antony Blinkenat the same conference of Iran's foreign minister.Even as we see at this moment,.

Hostilities continuing in the Red Sea.But one geopolitical risk that really overshadowed the event was Ukraine.That's because President Zelensky was here making his pitch for the aid tocontinue, and not just from Washington and Brussels, but also from the privatesector. We spoke to Dmytro Kuleba, Ukraine'sforeign minister, who said he was reassured that that aid is on the way.Well, we received assurances that the aid is on its way.The good news is that we we see that the Congress is not debating the aid toUkraine. The discussion is on the border issue.And there is there are no disagreements.

On whether and to what extent Ukraineshould be helped. And when it comes to the elephant in theroom, former President Donald Trump. Kuleba says that Ukraine is ready forwhoever Americans elect in Jordan. Bloomberg News, Davos.Israeli Prime Minister Benjamin Netanyahu says his nation will insist onsecurity control over the West Bank and Gaza Strip after its war with Hamas isover. Let's get more from Nick Wadhams inWashington who leads Bloomberg's US national security team.And Nick, this is not making Washington too happy.No, I mean, the Biden administration has.

Said very clearly that they believe theonly real future for the Gaza Strip is a Gaza Strip that is run by Palestinianauthorities. So you have this tension point herebetween what Netanyahu is saying and what the Biden administration hasadvocated for repeatedly. So big question of how this is going toplay out going ahead in the next few months.But today, already the State Department essentially rejected Prime MinisterNetanyahu's claims with a spokesman, Matthew Miller, saying, listen, there'sa real opportunity here for Israel and there's essentially no path forward, butone where the Gaza Strip and the West.

Bank are run by the Palestinianauthorities. So this is a crisis that we're justgoing to have to see how it shakes out, whether they can move Prime MinisterNetanyahu off of that insistence he's maintaining.President Biden says these strikes haven't deterred the group.So what options remain now? Well, it's a great question.I mean, so we have what's happening between Israel and Gaza and then thesort of proximate issue, which is the Houthi attacks on commercial shipping inthe Red Sea. The Biden administration has nowlaunched a series of attacks designed to.

Degrade, degrade the Houthiscapabilities. But they essentially recognize, listen,this is not going to deter the Houthis. The group has said as much.So I think what you're going to see now is a bid where they're going toessentially keep up these strikes, but also look to sort of on the back endpressure Iran to exert some influence over the Houthis to get them to stop.The question is, how do you do that? How do you press Iran without gettinginto a direct conflict with them and keep this this war, the violence in theregion from spreading even even further? So far, that is a question the Bidenadministration does not have an answer.

To.Bloomberg's national security editor, Nick Wadhams, there.And not surprising, oil remains volatile as the conflict in the Middle Eastcontinues. Plus, US crude supplies fell sharplylast week, not to mention that freezing temperatures have also curbed somerefining operations. So we're seeing oil futures movinghigher in New York and London trading. Bloomberg Su Keenan joins us now withthe latest. So let's start with the shipping chaosin the Red Sea. Yeah, there's a general view that thesituation has now gone from bad to worse.

And that the general result of the USand UK strikes on the Yemen bases of the Houthis has been to result in sharpdeclines in whatever shipments had been going through the Red Sea.And that's an area that handles about 12% of the global trade.The result of these attacks has seen the flows of oil, gas, grain aremeaningfully decline and be diverted through other routes.Additionally, as has just mentioned, we had bullish inventory data here in theUS, a decline in oil stockpiles that took us to the lowest level we've seensince October. So analysts and traders are saying we'rereally searching for direction as we.

Entered 2024 with volatile days wherewe've seen swings of oil between $2 or more in one direction or the other.Layer on the fact that one of the big themes for 2024 for oil has been theoversupply of oil. Again, you're looking at green on thescreen in this latest session. But bigger picture you can see whereoil, which had been heading higher, has really moved sharply in both directionslately. The IEA is saying that oil markets lookreasonably well supplied for the year as supplies outside Opec+, which includethe US, are a main reason that we're seeing supplies grow faster than globaldemand.

And that big picture is a bearish effecton oil. Severe winter weather.Of course, we are seeing all the crazy videos and pictures across social media.Has this had the impact when it comes to Gulf Coast refining capacity?Yeah. Short term, it's really crippled ourGulf Coast refining capacity. And that was just one of the extrabullish factors. If you live here in the US, on the EastCoast, like New York, we're all feeling the frigid temperatures and lightdusting of snow in New York. But in the northwest Dakota, severedumps of snow.

What's unusual is that this cold weathersnap extending even into the southern part of the country, such as Texas andthe Gulf Coast, where you have the major bulk of the refining industry.Temperatures in Texas have fallen well below freezing in the past week.That has shut about 15% of the U.S. Gulf Coast refining capacity.And these disruptions come at a time when ample supply of fuel on hand hasbeen limiting the impact of the price. That said, with a lot of the tradinghere in New York, where you can feel the cold weather, a key gauge of cold timespreads has been surging on this combination of factors over Su Keenanhere with the latest on oil prices.

And of course, we're following thelatest when it comes to a temporary spending bill here in the US.The US House of Representatives is set to pass the temporary bill to avert thepartial U.S. government shutdown this weekend.It's already clear the Senate and will head next to President Biden's desk.We're just seeing the latest line drop on the terminal from the White House,saying that President Biden will, in fact, sign the stopgap funding bill.The interim measure will fund that. Some U.S.agencies that are set to run out of money through March 1st and othersthrough March 8th.

We have more to come on DAYBREAK,Australia. This is Bloomberg. Take a look at how we're signing up forthe Asia training session. We're seeing Kiwi stocks rebounding aquarter percent after losses in the previous session.The Kiwi dollar also holding pretty steady and we might see some upsidegiven that, of course, Wall Street had gained ground for the fourth time inthree sessions or so and the ASX 200 has already been down for five consecutivesessions. And you're seeing right there thefutures are pointing higher.

Also, when you were looking at NIKKEIfutures, we could see some upside. We're seeing futures up 1.6% after threesessions of losses. Already the Japanese yen very littlechanged after falling to the weakest level since November.Of course, today the big data point in Japan, it's CPI report, which willlikely back the Bank of Japan's assessment that that upward pressurethat we saw on input costs earlier last week is starting to weaken.We have plenty more to come on DAYBREAK. Australia.This is Bloomberg. Welcome back.JPMorgan Brains CEO Jamie Dimon paid to.

$36 million for 2023 as the bank notchedthe highest profit in the history of American banking.That's an increase of 4.3% from 2022. Bloomberg Finance reporter CatherineDoherty joins me here in the New York studio.So given how JPMorgan Morgan outperformed, how widely expected wasthis? I think it was very expected across thestreet. Not the same for the other banks thatare going to report in future weeks. But for Jp morgan, it's all about Dimonand what he's done for the bank in the last year especially.Remember March, we had a very tumultuous.

Time in the banking industry.Jp morgan and with Diamond's help step forward, had bought First Republic, andthat has helped them really grow into this new historical moment for the bank.And I think that you're seeing Dimon being rewarded for that for all of theeffort that he's put in, not just for First Republic, but for keeping the banktogether and really focusing on growing profits moving forward.What can we expect for this year, whether it's Jp morgan's performance orJamie Diamond's performance? I think we'll expect to see a littlemore of the same. You're hearing that from him as we'regoing into 2024.

He is expecting he's a cautious, I wouldsay, or at least more cautious than what you hear from other executives that seemvery, very positive about the path ahead.He is pointing out some uncertainties that are still needing to be sorted outwith the Fed cutting interest rates. That not necessarily a guarantee.And in terms of the timing of that, that's also something that is hard toprice in at this time. But with more certainty, I think thatwill help with any Wall Street business. And Jp morgan is saying that they don'tneed to rely on one source such as investment banking, that they're tryingto invest in across the entire business.

Line.In the story or do we expect increases, bigger paydays for other Wall StreetCEOs? I think it's really going to depend.You might not see the same increase as Dimon, perhaps flat, if not down forsome of the other banks, especially for a bank like Citi that's thinking aboutreining in expenses they might not give their CEO, Jane Frazier, the same bumpthat Dimon has got this year. But it remains to be seen.I would say that we look not just at the banks profitability, but how theirshares are performing. That is reflective of how investors areessentially expressing how they view the.

Business and how each business isprogressing. So you might be able to get a littlehint on how each CEO will see their pay based on where their stock has performedover 2023. Remember, this is pay that is for 2023,which could be also reflective of how they view the move going ahead.But they're rewarding each CEO for the work that they've done in the past year,not necessarily a reflection of how they see the year ahead.You know, it's a long running joke, right, that he says that he'll stay forfive more years regardless of when he's been asked that question.We know that 2026 is when he's he's.

Committed to stay.How much longer do you see him leading JPM?Do you see beyond that date? I do see beyond at least that's what hehas said himself. 2026 is not a hard stop for him.He's talked about his enthusiasm that he has for running this bank, and he hassaid that as long as that enthusiasm remains, he doesn't see any reason whyhe wouldn't be leading the business. And you might as long as you you alsosee this signal today from the board giving him this pay bump.I think they're on the same page. As long as the momentum continues, aslong as he has the desire to stay.

That's another question.If things change and maybe there's another potential role in government oracross. It would be hard to see another rolethat he would see as as appealing as the one that he has today on Wall Street.But you never know. Things could change.But at the moment, I don't expect or I don't think anyone that I've spoken toexpects Dimon to step into a new role at any time soon.Any help in keeping him happy with that $36 million paycheck for 2023?Finance reporter Catherine Dougherty there in New York.Well, when it comes to Bank of America.

CEO, they say four interest rate cuts bythe Fed in 2024 and 2025. He told us that the US central bank nowhas space to cut as the economy continues to grow.Our core team has four cuts and four cuts 24 and 25.And so if you sort of sort that through, people wouldn't interpret that.But that is actually higher for longer because you came off of 25 basis points.And if you end up at three and a half, you know, next year, eight quarters awayfrom now. So I think the team, Mike and teambasically are saying they're going to have to start cutting because they havea space to cut in.

The economy can keep growing.The last thing you want to do is tip this thing over into the consumerspending good shape. Their credit is in pretty good shape.The credit statistics are bizarre. It's normalizing.It's normalizing 19 and 18. Those are like 50 or good records in ourcompany. It's not normalizing to stress.It's normalizing the base case. So if you think about that, they've gotaccess to credit. Inflation hurts, especially medianincome. That's tough on people.That's what you read about.

But in the end of the day, they've gotto set up, so they have to start cutting less.The drag. It's too strong in the housing market's.Got a little more on to it. You've got to get a car purchases up.You got to do these things that kind of keep the economy rolling.Just on that housing point. How much do rates have to drop beforeyou really see the mortgage market come back?Well, I think the two parts of that equation,if you got all the people in the consumer, say ifyou get a six handle consistently high.

Fives, low sixes, then people sort ofget just in time, too. And so when I got my first mortgage,eight and a half, I thought I had a deal.You know, I first went into business in the prime rate was 23.And so I was very used to that. People aren't used to.So it's going to just take time for them to think about it differently and getused to the pricing has got to flatten out and adjust.Their wages have to come up. But the good news is, you know,most Americans have a fixed rate mortgage, which in an inverse sort of isa is an asset right now and to have a.

Against the market.And so it's going to be slow in the first part of next year.It should start picking up as people get more and more used to this.And frankly, there's just a turn off in housing because people get divorced, getsick, you die or move to a bigger house. Those are very pleasant things.But the reality is that's what we need to get the housing.So there's always an activity. It's just that the refinance activitiesor is it mortgage tourism? But that's that's done for a while.But the the purchase activity will pick up because people have kids and wanthouses and things like that.

I'm curious, you know, in your in yourearnings call, you expressed some cautiousness around your outlook.Other CEOs of certain financial firms have been less so, particularly at thisDavos meeting. Talk about hiring, talking about theincredible boom in M&A, IPOs, everything coming back.How do you explain the difference? Well, we're cautious because economy isslowing down, and that's just how you have to manage expenses.You know, we have a big enterprise. We over the course of last year probablywent down four or 5000 headcount. We still hired 15,000 people last year.Bank of America CEO Brian Moynihan.

Speaking with Bloomberg at Davos andsaying, on balance, as we look ahead and add more than calls given, of course,that we're headed towards the major trading day, Morgan Stanley CEO alsospoke to us, Ted Peck saying that the drought, the mergers and acquisitionsshould ease once the Fed begins to lower borrowing costs with some level ofpredictability. Speaking with Bloomberg, Pick sayspredictability will be good for its core investment banking business.He also spoke about the opportunities he's seeing in Asia, as the bank expectsits wealth business to drive growth. When you talk about five or ten yearsand you think about the amount of.

Aggregation and transparency of wealthoutside the U.S., particularly in Asia, I've been going a lot to Japan.I go every quarter. We doubled down on Japan.It's one example of a of the kind of place where we could do extraordinarybusiness. While on Japan.Some market watchers say Japanese stocks risk becoming a crowded trade investor.Enthusiasm for Japanese equities dominating the region, with 59% ofAsia's fund managers overweight on the country, according to a Bank of Americasurvey this month. And that popularity has convincedstrategists at HSBC and Stockton that.

The market has risen too far andinvestors should start taking profits. The top picks showing signs ofoverheating its relative strength index recently reaching the highest since May,the last time it breached the overbought threshold in September.That market share fell around 9%, but it has just been an astonishingly strongrun out of the gates for Japan so far this year.And, Heidi, of course, we continue to hear very strong voices coming out ofDavos. This time the governor of India centralBank saying that rate cuts are not yet on the horizon with no firm evidencethat inflation has settled.

Shaktikanta Das added to the chorus ofpolicymakers warning that investors are getting ahead of themselves with bets onmonetary easing. Financial markets all over the worldhave started talking about rate cuts, whereas the central banks are nowherenear it. As per their stated, the euro as per thestatements which are coming out from various central banks.So far as India is concerned. Inflation has moderated from the peak of7.8%, which we saw immediately after the onset of the Ukraine war.Inflation has steadily moderated. It has come within our target range of 2to 6%, but our target being 4%.

We are still, you know, moving towards4%. So we have to reach 4% till we reach 4%on our kind of a sustainable or durable basis.I think it would be too premature to talk about rate cuts, but theprojections are that you get to 4% before 2025, which means you get therethis year. Could we see possibly rate cuts in thesecond half? You see, I have said is today in anotherforum that next year our expectation of average inflation average for the wholeyear starting first April 24, 25. The average headline inflation isexpected to be is likely to be 4.5%,.

Which is several ups and downs.And unless we see a clear, you know, a clear evidence of a clear sort of unlesswe reach 4% and unless we see clear evidence that it is going to sustain atthat level, it will be really premature to talk about rate cuts.And at the moment, as I speak to you. The topic of rate cuts, the topic, youknow, that aspect is not on our table. It's not even under discussion.Our focus is now to remain actively disinflationary to bring the inflationto 4%. That was the RBI Governor ShaktikantaDas speaking with Haslinda Amin in Davos.And you can catch up on all of those.

Conversations, which is live on ourinteractive TV function. That's at TV go.You can also dive into any of the securities or the Bloomberg functions wetalk about, plus become part of that conversation.You can send us instant messages during our shows.This is for terminal subscribers only to check it out at TV.Go. This is Bloomberg. You're watching DAYBREAK, Australia.Some of the corporate stories that we're tracking.Spirit Airlines says it is not pursuing.

A restructuring plan following thefailed takeover by JetBlue Airways. Shares of the discount carrier fellagain, despite promises to strengthen its balance sheet.The stock has wiped out more than half of its value since Tuesday's courtruling, blocking JetBlue's $3.8 billion bid.Day one security says it's ramping up capabilities in Japanese fixed income asit gets ready for a long awaited shift in monetary policy.The brokerage is Deputy President Keiko Tashiro told us investors in Japan andoverseas are paying more attention to rates as the Verge gets closer totightening policy.

We've been preparing for a while notjust the sales because of higher interest rates and they have been haschanged the policy on yield curve. So we've been preparing.We're seeing people more interested with interest rates.So we will be allocating resources when we see its curve.Bloomberg Bloomberg has learned that Bobby Jones Company is no longer ontrack to have the largest ever hedge fund debut.Sources say he's told investors a Bain Capital now plans to launch with 5 to $6billion below its earlier ambitions for as much as 10 billion.They lowered expectations, underscore a.

Challenging environment for fundraising. Across the industry,Heidi, the World Bank says developing economies will face a demographicliability unless they can triple the number of jobs being created for youngpeople over the next ten years. World Bank President Andrew Banga spoketo us at Bloomberg House in Davos. To look at jobs in the global South.This bubble of young people coming through the pipe requires 1.1 billionjobs to be generated in the global South over the coming decade.We are currently on a pathway to generate 325 million a quarter.There's a small gap there.

We need to worry about that gap.And I think that getting the right attention on on jobs and women and youngpeople is kind of important. The second thing that's really importantexternally is in Africa. But I think the future of many parts ofour opportunity for growth and world productivity and safety will come fromover the coming 20 years. Africa.600 billion people are not connected to power.I think electricity is a human right. You don't have electricity.You've got nothing. Nothing.And so.

We're dedicated to changing that aswell. So externally, there's a whole series ofthings and we can talk about what we're doing on each of those.If we get a chance. But internally, I've said that the 19months that it took from starting the project to getting approval of theboard, I'm going to bring it down to 12 months over the coming year.If I can do that. I mean, look, even if I get to 14, I'lldeclare victory because 14 is better than 19.But you've got to set a plan. And I have all colleague from MasterCardin the audience.

He will tell you I tend to chooseambitious targets and I'll declare victory if I do 90%, because 90 isbetter than that. I was.And and I if he goes there, he goes. So I'm going to do the same thing hereand aim for that. And then there's a series of otherthings being done inside from career development planning.Right now, a lot of the career in the World Bank depends on who you know, andthen you work to them. I want to change that to what you do andhow you do it, which requires really transparent career planning.There's a lot of things to be done to.

Help make people in the bank feel thatthis is the best place for them to be. World Bank President Ajay Banga, theBloomberg house in Davos. We'll have a lot more from the WorldEconomic Forum. Bloomberg's Francine Lacqua hosting thepanel. When it comes to the global economicoutlook, we'll be hearing from the ECB as well as the German finance minister,Christian Lindner, color founder David Rubenstein, and Saudi Arabia, the Saudifinance Minister, Mohammed al-Qahtani. Welcome back.One of China's biggest names in tourism says the sluggish economy and slumpingmarkets are not deterring consumers from.

Getting back to travel.We spoke at Davos, where Trip.com Group CEO Jane Sun about the trends she'sseeing in the domestic and international markets.For our business. It's doing very well.We have four segments. The first one is domestic travel.Not only we recover fully to 2019, we far exceeded 2019 by more than 50%.The second second part is our outbound travel, which is to bring Chinesetravelers from China to the rest of the world.So we look at both demand side our search as well as the supply side.The demand side already exceeded 2019.

Level.However, on the supply side, we still have two major hurdles.The first one is the visa application still takes too long, particularly toEurope and to the United States. The second hurdle is the flightcapacity, a shortage of the labor. I'm very hopeful in 2020 forward tobetter in that segment. I'm curious, though, whether Chineseconsumers want to travel to Europe and the US in the same kind of numbers wesaw in 2019, or is something shifted as some of the international relations havefrayed now? Really, Chinese people are taught for 20years we travel by Confucius.

History is it is better to travel 2000miles than to read 10,000 books. So parents always want to use travel asa means to educate their children. When you are traveling, you are not onlylearning theories, you are working with the people along the way.So Chinese people enjoy traveling. Well, I'm just curious to see how thispairs with some of what we see in the economic data and some of what we'reseeing out of even official rhetoric that just demand is not there.You look at loan demand falling off a cliff regardless of rates that have beenfalling pretty significantly. You talk about the potential for somesort of further stimulus.

Where is the disconnect in all of thedemand that you're seeing on your site and what we're hearing about from all ofthe other indicators? Yeah, because China is very big.We need to look at different segment certain segment to have a pressure.For example, real estate might have some pressure.However, if people are not buying houses, they are disposable.Income is increasing. So the segment that's doing very well isdoing very well. Entertainment is doing very well.For example, concerts, music festivals, opera.These are doing very well.

Wellness products are doing very well.Trip.com group CEO James Wan that we Bloomberg's Lisa Abramovich in Davostaking a look at some of the other stories that we're following this hour.Space X rocket was launched earlier carrying the first all Europeancommercial crew to the International Space Station.The team is expected to dock at the orbiting research laboratory 250 milesabove Earth on Friday. The blastoff is a landmark mission forEurope as its space industry struggles to get off the ground due to delays.Japan's space agency is attempting to shake off a series of recent setbacks inits latest attempt to land a probe on.

The moon this Saturday.A successful soft landing would put Japan in an exclusive company alongsidethe U.S., the former USSR, China and India.The agency, JAXA, lost contact with the Lunar lander in 2022.Tokyo firm ISPACE also failed last April.Sherry Tiny Take a look at how we're setting upfor the Asian session. We are seeing a little bit of upside forKiwi thoughts reversing those losses that we saw in the previous session.We're seeing also the Kiwi dollar really steady at the moment.Same for the Aussie dollar.

The ASX 100 of course, had lost groundfor a fifth consecutive session and fallen to the lowest level in more thana month. And we're seeing some upside when itcomes to futures trading right now up 9/10 of 1% and the Aussie also holdingsteady. We are waiting for Nikkei futures rightnow up 1.6%. We have seen three sessions of lossesfor Japanese stocks already. The Japanese yen at the moment littlechanged after falling to the weakest level since November.But the biggest data point, of course, Heidi, today will be Japan's CPI report.And we have seen Tokyo inflation.

Already.That's, of course, a leading indicator for the national trend, weakening lastmonth to the slowest pace in over a year.So that sort of gives you an indication that perhaps the Bank of Japan was rightwhen they thought that those upward pressures on input costs were going toweaken. And of course, we're going to hear fromthem directly on next week with the BOJ decision.Yeah, big changes ahead for the BOJ this year and also for here at Bloomberg TVas well. Quick programming note, DAYBREAK.Australia will be back next week with a.

New 7 a.m.Hong Kong time slot. You can tune in at 6 a.m.Tuesday to Saturday for balance of power.Live from Washington, breaking down the biggest political news in what is, as weknow, going to be a pivotal election year.Monday 6 a.m. slot will feature the best ofBloomberg's long form programming. Well, that is just about it forDAYBREAK, Australia. We are going into DAYBREAK Asia next.As we do, it looks like we're ending the week, the trading week in Asia.That is on a high note.

Asian equity futures are looking prettyhappy at this point, looking to rally into the end of the week after thosegains led by tech on Wall Street. The Nasdaq, of course, closing at afresh record high, watching some of these Apple suppliers in Asia with Appleclimbing on that analyst's upgrade and also keeping an eye on gains expectedwhen it comes to chip makers as well. That Taiwan semi outlook really liftingsome optimism across chip makers that we could see a more robust recovery thisyear. The open here in Sydney is next.This is Bloomberg.

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