Transcripts For BLOOMBERG Bloomberg 20240703

Welcome to daybreak australia. I am haidi stroudwatts in sydney. Annabelle i am Annabelle Droulers in hong kong. In the top stories this hour, asian stocks primed for gains after an upbeat day on wall street was job data supporting the case for fed rate cuts this year. Around 600 Japanese Companies as well report earnings later today. Haidi president xi pledging fresh investment in hungary as he receives backing for beijings pushback against overcapacity claims. Annabelle we are to the bloomberg tech summit as Silicon Valley leaders talk ai and much more. We will hear this out from snap ceo. Kicking off with breaking news this morning, we have perus central bank making its Rate Decision as forecast by most economists. We are seeing that cut coming through to 5. 75 earlier at 6 . We did action have a decline last month in Consumer Prices that sort of green lit what has been a secondquarter point reduction here but inflation last month slowing to 2. 42 in line with the Central Banks targets and actually toward the end of the year, its going to rise or climb down to around 2 . Of course, peru is not the only centralbank in the region. We have the mexican centralbank which elected to keep its key rate at 11 in the last couple of hours. Haidi. Haidi of course, we are watching what looks to be a very busy friday session here in asia. You mentioned the earnings story when it comes to japan that will be front and center when tokyo comes online. In sydney, futures up by. 3 and we are really primed for some pretty robust gains in this fridays session. It was an upbeat day with jobs data that supported the comfortable case for fed rate cuts this year so we are seeing probably really equity futures across the region are climbing in this early part of the morning. In australia in particular, we did of course see that rally across the last few sessions stall in the previous day and we had a five day run of gains and retailers saw particular weakness. We will be watching for that in particular in this friday session as well but we could see a pop of. 3 for australia and of course, as you mentioned, japan is really want to watch with huge news flow from the earnings calendar today. Annabelle thats right and also the ones that have been reporting across the course of this week so lots of different japanese numbers coming through but in the u. S. , dynamics were a little bit different. We actually saw equities continuing to climb. Futures today again pointing to some smaller upside as well but it has been the level of positivity that has come back through, really reinforced by these bets that the fed is going to have the room to cut rates later this year and we have a higher than estimated jobless claims as well really backing that idea among investors so we have the s p 500 within 1 from its alltime high but a survey as well saying that for the next 10 move, basically, traders are split at this point. Around 52 are saying its going to go higher. 48 seeing a down move. Haidi lets get some views from our next guest, still favoring Big Growth Companies in the u. S. The head of global Asset Allocation joins us now from seoul. Really great to have you with us. When you take a look at the settling of market expectations, the data so far in the communication we have had from major Central Banks, in particular the fed, do you think we are seeing valuations where they should get and do you still see that opportunity across rate sensitive maker cap stocks . Daniel yes, if we look at the overall market, we believe that if the expected rates are going down in the future, theres quite a bit of upside left for the major big tech as well as the s p 500 and also, that affects most of the Asian Countries, particularly tech heavy kospi as well as the taiwan index. If you look at the nasdaq 100, you are seeing a two digit growth in earnings and 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 p 500 is around 5400. If that rate is expected to go down to as low as 4 by the end of the year, we think the s p 500 can rise well above to 5007 hundred territories, and that would have a positive implication for a lot of the countries in asia. Also, if that happens, we think that the u. S. Currency should stabilize as well and that will have a positive implication for the korean won appreciation as well as destabilization of the asian currencies. So yes, we think that the rate will have a positive implication. If the rate goes down, then the implication for the indexes has further upside in the future. Haidi you see further upside for japan as well but it is interesting. You are perhaps even more constructive on some of the other tech heavy markets in asia. The likes of taiwan, korea, and vietnam. Daniel yes. I think we have got to think about what is happening in terms of the overall market. We are seeing the improvement in the productive ratios in the u. S. Because of the ai cycle, a lot of people are worried that in the first quarter, we saw some possible stagflation where the u. S. Gdp growth rates are going down versus the inflation pressures coming in. I think that a lot of people are concerned about that affecting negatively for a lot of the Asian Countries as well but we think that implication is actually a very shortterm effect, residual effect, rather than a structural issue. If the productivity improvement is happening in the u. S. , we think the inflation pressure should come down and that we will have a continuation of growth in the ai sector. A lot of the countries, particularly korea and taiwan as well as vietnam, has quite significant market i guess, the market share in terms of the chip businesses as well as the i. T. Businesses globally, so therefore, we will have positive implications as the u. S. Productivity ratio goes up in the future. Annabelle have you been concerned by some of the companies that have underwhelmed this earnings season in the chip sector . And thinking of amd, prince ands, or supermicro. Daniel yes. When you look at the overall ai business, as you know, we are seeing quite significant improvements in terms of the sales about the data centers, but we dont think that there is a heavy investment happening all around all the segment. We see that heavy hardware investment is happening, but as far as that, its difficult to get it out so we think that the companies with a very strong market share will continue to show significant improvement in terms of the earnings as well as the growth rate. As far as the other companies iq mention, amd, they might have somewhat too much expectation already priced in so therefore, the price improvement might be lagging but overall, we think nvidia as well as most of these major Hardware Companies 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 highly overpriced but we think that if we look at the earnings as well as the potential growth in the ai segment, we think that it is not necessarily that expensive. Haidi what about chinasoft as well . We are seeing a lot more investors turning positive on this group but are you in that camp or are you a little bit more cautious still . Daniel well, i think that we can say, in the shortterm, we are quite positive because if you look at chinese government, they have some to spend, to use. As you know, they are cutting Interest Rates as well as providing liquidity, and also, they are supporting a Property Market so in the shortterm, we think that lower Interest Rate environment would occur instead of depreciating and effecting positively on the export side. We think that there is some more positive news happening in chinese stocks. However, in terms of a long run, we think their competitiveness is not necessarily rising. Other than some of the major sectors like the ev segment and renewable energies. If you look at the i. T. Segment side, they are improving in terms of the competitiveness but nevertheless, we think that their competitiveness is not as high as most of the other countries that you are compared with so therefore, in the long run, it might be not necessarily a positive environment to invest but as i said, in the shortterm, a huge liquid injection is always positive and therefore, Interest Rate sensitive stocks and the be sensitive stocks of china might show some positive rise over the next may be several months per se. Annabelle daniel, great to have you with us. On the back of those ocbc numbers, the offer they have made, we are seeing the announcement that they have announced a 1. 4 billion voluntary unconditional general offer for the 11. 56 stake in Great Eastern according to a filing with the s gx. They intends to increase the investment from the current state of 88. 44 with a view to delisting the insurer from the s gx stn so we are seeing that they are commenting that the Capital Position will remain strongly and then after this Great Eastern 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 do list after that. They are basically increasing their 11. 56 stake and that it does not currently own in Great Eastern holdings. They are talking about the vast opportunities in one of the worlds Fastest Growing regions. That offer price of it represents almost a 37 premium over the last price. We didnt really see Bloomberg Intelligence expecting that the capital strength that ocbc could make more deals. We are seeing that bigger buffer than peers that it has, meaning potentially that ocbc has the further room to expand via m a and other deals after it did purchase cbas indonesian unit so we did earlier, if you missed that. Get the numbers from them. Revenue from lending gained. Fees surged as well. It was again one of the singaporean and regional lenders that reported profits that beat estimates. You can get that story and the roundup of some of the other stores you need to know to get your day going in todays edition of daybreak. Terminal subscribers can find it at dayb and its in the bloomberg anywhere app. You can customize those settings as well so you just get news on the industries and assets that you care about. This is bloomberg. So this is pickleball . Its basically tennis for babies, but for adults. It should be called wiffle tennis. Pickle yeah, aw whoo these guys are intense. We got nothing to worry about. With e trade from morgan stanley, were ready for whatever gets served up. Dude, you gotta work on your trash talk. Id rather work on saving for retirement. Or college, since you like to get schooled. Thats a pretty good burn, right . Got him. Good game. Thanks for coming to our clinic, first ones free. Haidi you are watching daybreak australia, taking into live pictures here. This is the snap ceo speaking at our Bloomberg Technology summit in San Francisco, someone who has reshaped a snap over the last couple of years but he is speaking about a possible tiktok ban in the u. S. A challenging situation for our team and our business and fastforward into you know, i think, back into a 22, we were a little worried. Real rates are 7 . I remember when you did that. Things might have to change, and so, you know, we were really concerned about the macroeconomic environment and sure enough, rates went up and that impacted the highgrowth tech sector so they have been a lot of ups and downs but the important thing for us is to try to adapt to those changes, to try to communicate as openly as possible with our team, with our partners, and just work through it but it has definitely been a learning experience. With a lot of those downs for the industry, you guys have been a real early mover. He scaled back on headcount before the rest of the social Media Industry and really the Tech Industry at large did. He refocused on new revenue opportunities. You have kind of been the contra indicator that has led the pack. When you are in the trenches, making those kind of decisions, what did that feel like over the last two years and 18 months, and kind of what were you relying on . Because nobody could point you are not pointing to anybody else and saying, they are doing it. For us, it is that combination about being really optimistic about our business and our ability to execute but really realistic about the environment that we are operating in so i think as we have seen some of these changes, you know, whether it was the disruption with the ad platform policy changes or the macroeconomy or the challenges we faced, obviously, with these ongoing wars, we just try to be brutally realistic about the operating environment but really have faith in our team and our ability to execute through it that allows us to keep that positivity that is so critical and such a volatile period of time. I think in that way, as leaders, our job is to absorb that sorority of external stress but see it clearly and chart a path through it with the team. To throw it forward a second, we have sitting at this moment where folks are looking at ai, everybody is talking about ai including in this room. How are you thinking about the balance in continuing to grow your ad business what you basically just transformed to 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 up, listening to you guys. How are you sitting here, thinking about where the investments go versus the rest of the business . Absolutely. So first of all, all the excitement around ai is warranted. It is real, not hype. It is real. And one of the interesting things about technology is that very often times, you know, the rate of growth of technology is not actually due to the technology itself. It is due to the way that humans adopt it. So very often times, we are paying attention to the way that humans are adopting the Technology Rather than the rate of the evolution of the technology itself because that really dictates, you know, how society will be transformed, how folks will utilize this technology in all of their businesses and of course in snap as also we have long used ai in our recommendations and systems and things like that but what has been exciting is the way we have been able to apply ai to image and video and 3d, which are all real core strengths for us as we open into the camera and into ar experiences. So we are really excited about the way that you can transform images with ai, the way that, you know, graphic artists, 3d artists, would have spent weeks developing some of the models they use in lenses which can generate those onthefly using ai so i think just the explosion in creativity we are seeing through the adoption of these tools is super exciting and the reason why we are at an Inflection Point is not necessarily just the technology. It is the way that humans are adopting it in their daytoday lives. I remember when Mark Zuckerberg tried to buy you and you said absolutely not. Annabelle that is the snap ceo speaking in San Francisco about ai, the applications of course for everyday users. Speaking as well about the Interest Rate environment and a possible tiktok ban in the u. S. Bloomberg subscribers can continue watching it and you can find the big diary entries coming up today and later this week as well as some of the events you may have missed earlier. The tliv blog is well underway. Lets shift to china because president xi jinping has secure his support for his pushback against u. S. And you e. U. Claims of overcapacity. Stephen engle, hungary has always or traditionally had quite a fractious relationship with others in the e. U. So how important is this for chinas ambitions in the region . Stephen it comes at a time of rising trade friction, if you will, with brussels. Ursula von der leyen has been very outspoken against chinese overcapacity issues and the potential dumping of evs and other Green Products in the European Market and again, theres this investigation into potential dumping and subsidies by the chinese government. And the like. And they could be, and the chinese makers i have talked to said they fully expect some sort of tariffs regime on evs. Xi jinping sees a great opportunity with a country like hungary which already has Battery Supply chains. The south koreans are in there. The chinese are in there. They are building this supply chain into southern europe. Excuse me, southern germany, where theres automobile factories in slovakia as well. Look, hungary has cheaper labeler labor. They have a 9 Corporate Tax rate. They are friendly to chinese investment, extremely funny. Victor orbach, the prime minister, basically in lockstep with the Chinese Development model, using lower wages in his country, wideopen land to build these factories, and they are courting that and that is why xi jinping is wrapping up his european trip for the first time in five years in two friendly countries to china. That is serbia, thank you, and also now hungary so im just going to bring up the statements from xi jinping. He says we will strengthen cooperation in our development strategies, deepening ties in trade, finance, and our economies. He also wrote, by the way, in a ruling party hungarian newspaper , on the path of chinese style modernization and development, we see hungary as a traveling companion. Now, i want to change the page because we did not get the actual readout of Viktor Orbans statements but this is from the chinese readout of his meeting with president xi. It reads like it was written by beijing. Hungary does not identify with the rhetoric of socalled overcapacity or derisking. Hungarys determination to deepen cooperation with china is unswerving. And will not be interfered by any force. Beijing does need to get a new english the source thesaurus because unswerving is definitely a word that beijing authorities use quite a bit. I am not so sure viktor orban used that word but we have to to attribute it to the chinese readout of dictator or bonds comments towards xi jinping. It is like chinese diplomatic speak bingo. Such a fun game. Which companies are you poised to benefit the most here . Stephen obviously, in xi jinpings new three, the big, you know, green story, if you will, the electric vehicles as well as batteries, solar, and the like, already, we are seeing victor or bonds government trying to create the infrastructure for the ev industry in the european block. The e. U. Trading block, by courting the likes of byd, and they are building a massive plant in hungary and also, we are expecting some sort of announcement with great wall motor. We got a statement yesterday saying that they have been in talks is well with the hungarian government. See atl has their facilities, building out even further. In eastern hungary, but also, the south korean battery makers have already been in hungary. They are supplying come as i said, to the german automakers in bavaria and southern germany also, in slovakia, i believe it is. So again, in the new three that xi jinping has been pushing for technology, green technology, they are going to benefit and viktor orban is in lockstep on that development model. Stephen engle there. One of the other stories that we are following across geopolitics , Benjamin Netanyahu has struck a defiant tone against President Biden enacted the u. S. Withheld a shipment of bombs as a warning against invading the Southern Gaza city of rafah. Netanyahu said israel could stand alone in its war on hamas. In a later clip for an interview with a u. S. Talkshow host known as dr. Phil, netanyahu said he hoped israel and the u. S. Can find a way to repair ties. More to come here on daybreak australia. This is bloomberg. Annabelle taking you back to our bloomberg tech summit in San Francisco where we are hearing right now from snap ceo evan spiegel. That do help facilitate that connection and bring people together especially at a time that we know that real world interaction and communication is important. Even though the math might make you feel like oh, i wasnt invited to lunch, we hear from people that they are actually able to connect with friends that havent seen in a while. I was at the airport and i didnt realize a friend i had seen not since high school was bare. I wouldnt have been able to do that without a map. So i think trying to facilitate realworld relationships is important and understanding that on balance, some people do feel left out. Its something we need to be aware of and do their best to mitigate. 87 of user, people under the age of 25 in developed countries are unsnapped. I think its more than 75 . Annabelle we do have a tliv blog to underweight where you can get more from haidi aussie dollar bonds are in a sweet spots for analystsa recommending buying the currency. Bank of america sees an expected rebound in the China Economy is another reason to buy. Our guest covers live currency coverage. Garfield, are you sure this will play out for the aussie . Garfield in the next one to two months, its not too hard to see some strong aussie dollar gains against everything. Everything that the u. S. Dollar. Everything about the u. S. Dollar. We are kind of in a position where the main risk would be if we get bad jobs numbers out of australia, that would obviously unhinge the latest pack from the market and from the central bank, which is towards the idea that the rba is not going to cut rates this year, and that in fact there is still risk of a hike. It has been interesting to see the way things have evolved so that although the bureau brought in some time back a monthly cpi report indicator that has proven to be a fairly unreliable guide, to some extent, and what matters more than ever before is the quarterly cpi print. We dont get another one of those until july. So unless you get a severe breakdown of other indicators than the rba looks like being the most hawkish of all of the central bank at the moment in its stance in that it is definitively on hold for the rest of the year, absent that downturn in inflation. You would argue that you would need to get both poor jobs data and a severe slowdown of inflation in the two q cpi in order for the rba to say, ok, we are going to put everett cut back on the table for 2024 we are going to put a rate cut back on the table for 2024. Annabelle we are just discussing breaking news. Jp morgan announced last year there would be adding Indian Government debt into their benchmark e. M. Index. That is a milestone for agents thirdlargest economy. But we are just getting more details on this. What we are hearing from jp morgan is they are saying that inclusion is on track, and also most of their clients are ready and expecting somewhere between 20 billion to 25 billion of foreign and. So garfield, this inclusion story, there is the potential benefits in the sense that you could see perhaps structurally lower Interest Rates, it could provide relief for the rupee. But there are also concerns that perhaps it could increase volatility in the market. So, netnet, is this good or bad news, do you think, . Garfield overall i think it is good news for Indian Markets in general. Provided we can get over the hump of the ongoing indian election which has been causing some concerns, especially in the equities market. But even with bombs on the back of the initial decisions by jp morgan that it was going to be included, and this was confirmation of the timing. There was a fair bit of inflow into indian bonds as a result. But that slowed down in recent weeks even running into the election. It was very obvious that along with the general risks there were around that time, we had the high u. S. Cpi and the potential idea that the fed might actually hike rates. It was not a good time for the bond market in general. Indian bonds definitely went off a little bit and flooring inflows pretty much stopped. Foreign inflows pretty much stopped for so there is that looming appetite they i think in general for indian bonds given what has been going on prevented the election doesnt spring any nasty surprises. So thats there. And then you have this. So it is a signal that medium to longterm outlook for india bonds and possibly to some extent for the rupee, is more bullish than it was, particularly quite bullish for bombs. There are those technical factors that i mentioned. Including if we get u. S. Cpi again next week, if that was to be robust enough to drive fresh declines in treasuries, that also would have an impact on the bull case for indian bonds. Haidi we are also watching the you won. There is question about the adequacy of chinas reserves and, therefore, its ability to defend further slumps in its currency. Is this building a bare case bear case . Garfield it underscores that you can never be too sure that the bear case had gone away. I would be cautious because the metric side of it is based on developed markets with an open capital account. That doesnt strike china on either of those values. So the line from this being low to this being a problem is a little more conflicted. Not so straightforward. But there is a strong overall bear case on the yuan. The pboc has had a lot of success, it has stepped in. It has been helped by the fact that the japanese have managed to at least cap declines in the yen. All of that has been helpful. But this metric underscores that there may be limits to what the pboc does. And the big risk for the yuan in particular and Chinese Markets in general that is going to grow over the coming six months, is the u. S. President election. That is going to highlight the potential from either side of politics for fresh tariffs, fresh confrontation with china. We have the tiktok case going. All of that indicates that we could get plenty of volatility and that is going to be hard for the authorities to do much more than slow the yuans decline. For that matter, slowing the decline is one of the reasons why the metric it is an ominous backdrop without being a game changer because the game at the moment for the pboc is to slow the declines. Chinas economy is recovering but still weak. They are looking to ease policy. All of that says the yuan is on the back foot. Main thing is the pboc wants to make sure it doesnt actually tumble backwards. Annabelle Garfield Reynolds leaves our markets like asia coverage. From the pboc to the bank of england. We heard from governor andrew berry, who says there would be a case for cutting rates in the u. K. If the economy and inflation play out as expected. He spoke to us after the Monetary Policy committee voted to hold rates steady. Our forecasts are conditional from the number of things. One of them is leaves the market curves to set them up. So its important. If we find the markwest with the market curve produces the best judgment which has inflation below target or above target or not at target, we say so. This is where we have got to. The judgment is that. It follows, i think, and this is a comment i made earlier, we are saying that if the world evolves as the forecast suggests that was, probably the case will be there for a less restrictive policy. Everything is conditional. Is julian a live meeting . All meetings are live. Is julian hike likely . The key point i will make is that we have changed in view on the likely persistence of inflation, or the second round effects. We think there is evidence to suggest it will be less pronounced than it would be. But that is a judgment. For me, i am looking at the indicators, services inflation, pay, the labor market, to judge the persistent question of how it will involve. Governor, there is an assumption looking at history that once you cut, you continue cutting. Can you give us an idea of how you see the cycle different to others . What is quite interesting and something we looked at during this round is that most of the cutting cycles have actually been prompted by some sort of shock or other. Rather than being what makes you call the natural cyclical sort of we have reached the top and now we go downwards. So i would just caution, there isnt a lot of you are telling us that because you arent cutting in a recession, it could actually be oneanddone . I think that would be unusual. But i said earlier, nothing is settled. Nothing is ruled out. What can you tell us about the play between Interest Rates and qt . Some might find it confusing because they are pulling in different directions. The message we have always given it qt is that qt operates in the background you dont think it has large impacts in terms of markets. The other point, the critical point from when we sit down to decide on what to put Interest Rates setting, we take into consideration everything including markets obviously, and markets will have absorbed, if you like, the impact of qt. In other words, q2 is always there qt is always there. If there is any effect of qt, it is captured in that market and we set the rates to reflect that. You dont think it is confusing for markets . I dont think so. You are not expecting to end it before the end of the year . I dont think there is any difficulty if we get support when we cut Interest Rates to have qt going on as well. Haidi d. O. T governor andrew berry elite Bloomberg Francine Lacqua there. You can watch live and catch up on past interviews on tv. You can also dive into any of the securities and bloomberg functions that we talk about. And join in on the conversation, too, by sending us instant messages during our shows. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. Haidi the ceo is downplaying concerns over a slowdown in spending for ai. That arm ceo told us what he is confident of the chip designers longterm growth. We are actually forecasting higher growth this year, north of 20 . We also signaled to the market yesterday that 2020 five, 2026, 2027, we see growth continuing. We have incredible visibility to our business and we are very confident of the growth rate going forward. The cell phone has been your bread and butter. Who are we looking from a cell phone perspective. Is the market looking strong to you . We have many mixed messages coming from china demand, for example. The cell phone market particularly for arm has been incredibly good growth rate. Our version nine which is now being used in many premium mobile phones, it drives a higher royalty rate for arm. There is also more complex cpus that go into that that is also better for arm. Another thing we are seeing, its not just the smart phones, as these ai models are moving so fast, the hardware can keep up with the software. The Software Innovation is happening so quickly that by the time the hardware is ready to run those models, everyone wishes they had more performance. More and efficiency. That means it is driving growth in our licensing activity. People are looking to do more design chips faster and faster and that is good for us going forward. I think you will see more and more innovation not only with smartphones, but across all tech devices. What has been keeping up is your evaluation. Boy, do you think there is too much exuberance around it are valuations and are you going to make the most of it by lifting in the u. K. Too . You know, i can think about the valuations is much as i think about the ai opportunity, which i think is under called in terms of just what it is going to mean relative to society and what it can do for the planet. I think we are in very, very early days in terms of the capabilities of what this could unleash for our society. Incredibly excited to be part of it, but i dont think we are part of a hike cycle at all, there is a lot of innovation taking place and frankly the innovation thats taking place and the inventions that we are seeing is just breathtaking. So i dont personally view it as a hype cycle at all that was arm coceo rene haas, became a bloombergs Caroline Hyde after arms earnings and Bond Investors earlier this week. Sticking on that theme, nissan forecasting a stronger than the expected profit. The japanese car maker sees robust sales in the u. S. And china as it rolls out new models. Our get agendas from tokyo. What sort of Market Reaction should we be expecting our guest joins us from tokyo. What sort of Market Reaction should we be expecting at the open . May send projected a profit of about 4 billion coming from strong sales in japan and asian and asean and new models that they plan to roll out in the u. S. And china. It will also benefit from the weaker yen because it has accelerated that weekend a lot in the last one or two years. When the market opens, we will see because mason actually revised down its forecast last year so the Market Reaction would be something that we need to look at how the market reacts to it. Do they believe nissan can fulfill it . Because they also plan to have additional 1 million of annual sales within three years. So todays Market Reaction will show if the markets believe nissan can achieve this goal. That is really something that i really cannot talk about, but it is something we need to watch out for. As for the weak yen, japanese automakers have been benefiting from the weak yen so far and mason has said 70 billion of yen for a profit. But he expressed concerns that volatility in the weaker yen actually affects their Business Planning and strategy making. So they wish to see it stable yen although the weekend yen so far has been benefiting them and they have a projected forex rate at 155 so far for this year. Haidi honda and mazda are expected later. Expectations are pretty high for under. Most are on guidance. So priya yes. For honda we are expecting a bright outlook, around 9 billion operating profit that the market is expecting to released today by honda because they sold a good number of cars in the u. S. Last year. We see that hybrids are again becoming popular and hybrid demand in the u. S. Is expected to continue this years and ev demand is expected to lower. So we are expecting a strong outlook from honda as well. Honda has also launched new series in china this year during the beijing auto show which will go on sale this year. Marketplace will also be watching if for any possible comments from hondas ceo regarding their potential alliance with nissan, which they announced in march. As japanese automakers are struggling with china, nissan and honda are studying if they can do something about japanese automakers slow evmaking strategy. Annabelle that was the, our back and aviation reporter from tokyo. Our auto and aviation reporter from tokyo. Bloomberg has learned that this car fetched an ipo. The company sold shares that marked the biggest u. S. Ipo this year in a chinese company. Shares will start trading in new york on monday under the symbol zk. Tesla is cutting jobs in china amid a slowdown in ev sales and intense competition. Additional layoffs began this week affecting departments from production to customer service. That cuts include at teslas shanghai plant, home to more than half of the companys global production. Haidi and the Japan Current account balance data is just crossing. The bloomberg the march trade surplus is coming in at ¥491 billion, slightly shy of expectations, almost ¥550 billion the current account surplus coming in at ¥3. 9 trillion. Adjusted current account surplus just over ¥2 trillion for the month of march. These numbers have come under increasing scrutiny when we saw bloomberg analysis looking at the bojs accounts suggesting that japan did intervene in recent sessions to support the yen. That changes in the accounts suggesting we saw a ¥5. 5 trillion intervention. We are also hearing now from the finance minister suzuki speaking in tokyo, as he tends to at this time of day, it really commenting on the wage numbers we had yesterday, aiming for a wage growth that exceeds inflation. See wage growth years games also comment seeing wage exceed last years gains. Also commenting on what is appropriate when it comes to levels of the yen and reiterating they will take appropriate measures on fx without hesitation. We do have much more coming up here on daybreak australia. This is bloomberg. Sandals jamaica sale is now on with rates from 199 per person per night. Visit sandals. Com or call 1800sandals haidi bloomberg has learned apple plans to push many ai tools through Data Centers Using its own chips. Sources say the highend chips will be deployed in Cloud Computing Services Designed to process the most complicated of ai tasks. The company is expected to live out its ambitious the ai strategy in june. Meanwhile apple issued an apology for its latest ad for the ipad pro. The images of musical instruments, televisions and other creative tools being crushed into an ipad sparked fierce online backlash. Among the critics was actor hugh grant who said the ad promotes the, destruction of the human experience. Apple will not air the ad on television as planned, belle. Annabelle i have actually just finished watching that ad right now and i have to say it is extremely depressing. [laughter] i can understand the reaction. I think you grant hugh grant encapsulated well. It is technology and would love what it can do but you cant replace things like painting or toys or that there i mean, extremely depressing to watch. [laughter] i was tracking who made this, was that in house, was that out of the house with an agency . We are actually not sure at this point in time. Haidi that is really interesting. As you know, apples products have been so key for creativity. Creativity is an hour dna. It was a rare misstep in the way the messaging came across. An apology, you will not be seeing it again. The market opens in seoul and tokyo are next. This is bloomberg. You know whats brilliant . Boring. Think about it. Boring is the unsung catalyst for bold. What straps bold to a rocket and hurtles it into space . Boring does. Boring makes vacations happen, early retirements possible, and startups start up. Because its smart, dependable, and steady. All words you want from your bank. For nearly 160 years, pnc bank has been brilliantly boring so you can be happily fulfilled. Which is pretty unboring if you think about it. Annabelle this is daybreak asia. We are counting down to asias major market opens. If the wall street session was any guide, we can expect optimism. The question is how sustainable those moves are. Perhaps a bit of a lack of conviction in some traders right now. Haidi yes, and the data, goldilocks for now in terms of the sentiment towards what the fed will do next, but it is also a busy end to the week. 600 Companies Reporting earnings in japan as one example. So we have a lot to get through it and a lot of ability to move these markets. Annabelle thats right. Also recapping the bigger movers , bigger earnings that came out yesterday. One of the names we are tracking in tokyo today is nissan, with a strong output for them. The weaker yen playing into that. And we heard from