Haidi welcome to daybreak australia. We are counting down to asias major market opens. Annabelle the top stories this hour, asias chip and tech stocks sent to take the spotlight after nvidia delivers a bullish sales forecast, bolstering confidence in the ai frenzy. Haidi Anglo American agrees to talks with bhp, opening the door to what could become the biggest mining deal in over a decade. Annabelle plus, we speak would live with rbnz governor adrian orr about the Central Banks office hold and why he is still worried about sticky inflation. Haidi that is a Big Conversation as we continue to talk about risks when it comes to economies deciding when the first easing move will comp it we have more data coming through across the bloomberg and it australia pmi. The may flash manufacturing pmi coming in unchanged. Still in the contraction territory. The composite number coming in at 52. 6. Also that a bit of weakness from the previous reading of 53. The preliminary Services Number maintaining a little bit of strength above 53, but still some softening from the previous reading. We have seen recently the rba resuming that conversation about rate hikes potentially at its previous may policy meeting before deciding to stand pat. On these balance of risks we are seeing some signs that Economic Indicators are starting to soften after a string of tightening. Lets look at how all of this is feeding through as we look at the futures picture across australia. Seeing quite a bit of weakness expected. We have sydney futures down by about 1 . Even as of course we have seen the big risk factor of what we saw across markets this week, the nvidia forecast shattering estimates. The ai boom still intact. Some of these concerns about the fed minutes showing higher for longer narrative remains very much on hold. We are seeing a bit of a struggle for sentiment today. New zealand looking pretty flat. Chicago net and nikkei futures. Watching the chip related sectors to outperform. China looking weaker as well. Annabelle it really is that focus on nvidia and the performance we are seeing afterhours as well. You can see this climb of around 6 . You mentioned some Key Takeaways from the numbers so far, really strong sales, a bullish outlook. We have a stock split coming. We have a lot of coverage coming up with our team, but lets take a look at what happened in the intraday broader session. Futures are just coming online this morning. And you are seeing them again modestly higher but fairly range bound. Intraday, it actually was a story of declines that came through. We had the fed Meeting Minutes coming out telling us that officials, no rush at this point to cut rates. We saw the twoyear yield climbing somewhat. The dollar a little higher as well. But the action, very much what is happening in afterhours today. Yes, nvidia. Another one is what is happening with live nation. Were seeing that stock dropping as much as 10 . We do understand the u. S. Justice department is seeking to break up live nation and ticketmaster. That is a bloomberg scoop and we will have more details on that just ahead. But really, that emphasis and attention, everything over the course of this week comes back to nvidia. Bloomberg intelligence says the companys results prove the continued Strong Demand momentum for its ai chips. Our Senior Semiconductor analyst joins us now for more. We know the expectations going into this number was sky high. Yet again the Company Seems to have been able to meet those or even exceed them. Kunjan this has become the new norm now. We did expect exactly what happened. However, i want to point out the magnitude of the beat this time was a bit lower than what we have grown accustomed to seeing, in the high Single Digits or double digits. But we think the capital return to shareholders, 10 to 1 stock split, 150 increase in dividend, and the cash flow increase, should offset if there were any concerns around growth. Haidi how much longer can this extend . Just every time we are more than impressed by the stock and by the company and by the outlook. Is this sustainable . Kunjan from the visibility we have, it looks like it is sustainable. Again, it is very hard. You dont see such stories, at least i have not seen a story in this sector for the past 20 years. So, something very unique. We are going from visibility year round. At this point, the demand signals continue to be strong. The top four cloud and hyper scalars have increased spending for calendar 2024 by 44 . Those make up about 40 of nvidias revenue. If you just focus on those were spending almost 50 or more this year, that alone could drive this rally. We are also seeing significant demand outside of this cloud Customer Base coming from other companies, which the company positively guided to the high single billion dollars this year. A lot more demand from other areas coming and supporting this continuation of growth. So, for as much as we have visibility into 2025 and 2026 fiscal, we think this can continue. Annabelle it is that question of where youre at in the demand cycle. This is something jensen wong has been speaking about in the Earnings Call if we take a listen to what he said. The next Industrial Revolution has begun. Companies and countries are partnering with nvidia to shift to shift the trillion dollar installed base of Traditional Data Centers to accelerated computing. And build a new type of data center, ai factories, to produce a new commodity, artificial intelligence. Annabelle it is not just about of course the focus on the data centers. What else are we hearing about the other business divisions and these new chips it is bringing onto the market . Kunjan like i said, growth you are starting seeing the next chip, the architecture which we expect to sustain this growth rally, is not even really a chip, it is a system, it is a platform solution. Dont forget, there is a big piece of Software Offering that they have which has just started. But we expect almost 100 growth in that business as well which will start showing up in significant billions of dollars of revenue in the next two to three years. Haidi there was talk about new pipeline offerings. Is there any indication that there is a risk of self cannibalization for its products if people are more interested in what is to come . Kunjan i would not say it is self cannibalization. I would say that there could be some timing shifts, where if a customer had an option to wait a couple of quarters to get the more better performing product, they might decide to do so. However, the supply for all products remain constrained, so they can easily ship that product to a customer willing to take that right now. So it could cause an intermediate shortterm time shift, but it should not cannibalize any of their use. Annabelle that was our Bloomberg IntelligenceSenior Semiconductor analyst kunjan sobhani. Lets get more on the Broader Market analysis and a Key Takeaways for investors about the nvidia numbers. Lets bring in our guest, deborah cunningham, joining us in the hong kong studio. As we were saying, there were so many expectations for a lot of investors that we would see if further rally perhaps if nvidia managed to impress the market. And also perhaps that it could broaden out to other sectors as well. What is your view on that . Deborah i think my slightly exceeding expectations and getting to a point that may be is lowering some of the expectations Going Forward, it allows for the market continued to continue on its pace, but i dont know if it causes a huge rally Going Forward. I know that certainly the outlook from an ai perspective and nvidia and other Tech Companies allows for amazing assumptions of growth, given this is a sector that is going to be impacting the education sector, the defense sector. Im in the Asset Management sector, we have various uses we are using, business, social. So i think there is plenty of room to go. I am not sure it is today, based on these earnings. Annabelle what do you see testing then . If you are saying the rally will not be sustained, what drives it weaker . Do you see weakness in the Consumer Sector . Deborah i am not saying it will not be maintained. I dont think it will go too much further. I think it will be maintained at the levels it is now. Expectations could be higher if the u. S. Economy continues to perform quite well. When you look at the employment situation, there is no real thought process that that will be slowing down at any point in the near term. Inflation, the feds notes just came out that basically confirmed higher for longer for a period of time, that where we are is going to be the place we stay at, that is restrictive enough. They dont need to go higher or lower because inflation still has some stickiness. So i think we are looking more for, at least in the initial timeframe, maintenance rather than continued outperformance. Haidi maintenance, does that also include perhaps more rotation out of the rate sensitive sectors . And maybe taking a closer look at value . Deborah definitely value we think is on the upswing. It was beaten down very far for a long period of time. Were now to the point where we think that turnaround is solid and will continue. So yes, we do think that value in a broader base of stocks may be what sustains and is providing the next leg forward. Haidi you say cash remains king. How much would there be in a balanced portfolio at this point for cash . Deborah when we were in a zero rate environment for such a long period of time, 10 of 12 years, people got really good at bucketing their cash. Only operating cash at that point remained in the cash sector. Very small, probably 5 sector of most peoples allocations. Ultimately at this point i think we have a lot of operating core cash because rates are greater than 5 . And to go with that longer data cash into other sectors at this point, you take a hit in what youre getting from not guaranteed, but a pretty much solid 5 p 5 plus at this point. I think there will be some rotation out, but not the 5 level it was in the zero rate environment. I think that was kind of a floor. We are looking at something that is being maintained somewhere in the 5 to 10 area. Haidi speaking of unusual rate environment, it has been a very busy year for japan. What expectations have you built around what the boj will do, and how much, how exciting this next leg of the rally might be . Given we have seen a pullback and redirection of flows either to domestic bond markets or other markets, be it india or china. Deborah we certainly think that there is positive momentum in japan, and what we have seen from 10 basis points to positive 10 basis points from an official rate perspective is leading that. Its hard to see where it gets to a point i mean, i think the economy has to continue to be diverse and growing. With gdp negative in the first quarter, there is room to grow obviously at this point. So the expectations are, again, sort of tempered because of where we think kind of the diversity and growth is coming from in japan. Probably you get that diversity and that growth when you go more broadly into other asian sectors at this point. Annabelle and what are those other asian sectors you are looking at in particular . In hong kong now, you mentioned you were in singapore. What is standing out to you . Deborah full employment picture seems to be everywhere. The consumer seems to be very strong in most regions. China definitely has slowed down, but seems to have reached kind of a bottom plateau and is starting to pick back up again. So, im not sure there is outstanding growth in any particular area at this point, but we are also very long in a business cycle. Just to be able to maintain and keep going i think is proof of our session or something that is negative from a Growth Perspective being on the horizon. It is not great, outstanding growth we are looking for, but more broadly diversified across the region, maintained growth. Annabelle thank you for your time this morning. Deborah cunningham, cio for global liquidity markets. You can get a roundup of the stories you need to know to get your day going in todays edition of daybreak. Of course that focus very much on nvidia. Its available on dayb on the terminal and on mobile in the bloomberg anywhere app. We will have more ahead on daybreak australia. This is bloomberg. Annabelle time for morning calls ahead of the asia trading day. The Goldman Sachs ceo says he currently expects the fed will not cut rates this year. He still does not see compelling data that would support the move. But he adds that the average american is already feeling the pinch from inflation. He says that could heighten the risk of a real and palpable economic slowdown. Meanwhile, some investors see a week chinese currency burnishing the appeal of Hong Kong Listed shares over there is on the mainland. They expect hong kong stock to draw in more capital as a local currency pegs the dollar for higher for longer u. S. Rates. They add fears of a yuan devaluation could further motivate investors to favor hshares instead. This years Hong Kong Investment conference is beginning thursday and we will hear from seymour capitals wendy chen joining us in the next hour for a preview and we will have more in store for you friday was special guests joining us live during daybreak asia. Haidi it is the bank of korea decision day today expected to keep the benchmark rates steady and releasing new policy decision in the next few hours. The central bank may also be revising its growth forecast higher. Lets bring in our Korea Economy editor for more. Like a lot of these regional Central Banks they are having to recalibrate what the trajectory it looks like in the cycle. Potentially does that include pushing back easing expectations given we have seen rate of growth, some other indicators coming hotter than expected . Sam you are quite right about it. I think the bank of korea is one of several banks that have to recalibrate because the economy is doing too well. Especially with south korea come of the exports are doing very well. Better than expected. That is larger because there is a lot of semiconductor demand and korea happens to be the biggest maker of memory chips, advanced memory chips that get supplied to Companies Like nvidia. And that is really leading the gauge in exports and helping the economy expand much faster. Which means that the bank of korea has no real incentive to go ahead with a policy pivot. So we are expecting a rate hold again today and we might seeing that for some time to come, too. Annabelle that is what i was going to ask. Is that the expectation, that we just a standing pat for quite a period to come for the bok . Sam thats right. For today, its very likely because the economists that we have surveyed come everyone of the 21 economists we have talked to expect a rate hold today. Many of them are thinking that a rate cut is going to happen probably sometime in the Fourth Quarter. The governor said earlier this month the b. O. K. Might have to reconsider whether a rate cut is even needed this year. We are going to have to watch whether he retracts that comment today or even builds upon it. But for the time being because the economy is doing so well, it expanded much faster than anyone forecast in the first quarter. We are thinking that a rate hold is going to stay for quite some time. Haidi what are some of the other concerns for the broader economy that would be weighing on the mind of the b. O. K. Committee as they make these decisions . Sam i think one factor that could be taken into consideration Going Forward is the credit market. There has been sort of a slump in the real estate sector with a lot of developers struggling with the debt that piled up during the pandemic era. How will that unfold in the coming month with so much debt . There is going to be a lot of restructuring. If that plays out in a way that hurts the economy i think the b. O. K. Is going to be taking that into consideration as it recalibrate his timing for the rate cut, potentially. A private spending slowdown could be one concern for the b. O. K. , but we are seeing resilience in Consumer Spending for now. Its so there are a few factors, but for now, things look pretty strong. Haidi our Korea Economy editor sam kim. We will be speaking with the rbnz governor adrian orr to talk about what is coming next for the rbnz after that hawkish hold yesterday. This is bloomberg. So, what are you thinking . Im thinking. speaking to self about our honeymoon. What about africa . Safari . Hot air balloon ride . Swim with elephants . Wait, can we afford a safari . Great question. Like everything, it takes a little planning. Or, put the money towards a downpayment. On a ranch. In montana. With horses lets take a look at those scenarios. J. P. Morgan Wealth Management has advisors in chase branches and tools, like wealth plan to keep you on track. When youre planning for it all. The answer is j. P. Morgan Wealth Management. Haidi another story we are following, shares of Live Nation Entertainment falling. Bloomberg revealing a Justice Department move seeking a breakup over the business over antitrust violations. The case is related to ticketmasters unrivaled control of concert ticket sales. The 2010 merger of live nation as well as ticketmaster has been the subject of several antitrust investigations ongoing. So this is such an interesting case in terms of this antitrust suit now upon them