>> welcome today bake australia.

we are counting down to asia's major market opens. annabelle: the top stories this hour. traders supporting the case for a u.s. soft landing with wall street extending record highs. tiny stocks meanwhile except for reality check as optimism over rescue measures fates. intel share slide in late trade after bleak forecast for the current quarter. visa also lower, despite profit beating estimates. plus microsoft closes at a $3 trillion valuation for the first time, joining apple in exclusive club of tech titans. paul: let's take a look at how we're setting up for trade around the asia-pacific today. no traits in australia today, close for the national trades today but we are up and -- up and running in new zealand. as annabelle mentioned, it was a good day for u.s. markets,

hitting another all-time high. not really translating to risk on sentiment for the asia-pacific. it's been kind of a flat couple of days for the nikkei, it was flat yesterday and off about .75% the past two days. we've seen the yen strength and a little, relatively speaking. futures for the asx in positive territory. annabelle: another great day for u.s. stocks, six straight days of gains we've seen. u.s. gdp one of the things that stood out because it grew at an annualized pace of 3.3%. meeting forecast for the fourth quarter. those numbers telling us the u.s. economy is strong and could withstand all the fed hikes as well. that's why you saw stocks continue to rally even as we saw futures coming online. a slight bit of weakness creeping through.

market reaction to a lot of earnings reports, some of those likewise coming after the bell. visa down more than 3% at this point. citing the stronger u.s. economic numbers, there also seeing low double digit growth over the course of this year but also weakness in levi, a disappointing outlook for the company and they are announcing job cuts to come. western digital firmly in the red, seeing adjusted losses for the current fiscal quarter. the numbers not expected to be as bad as first thought, and intel, a significant drop leading the losses. a disappointing forecast for the current period with concerns about competition from other chip players.

it suggests headwinds from seasonality in pcs and service. that first quarter guidance does really seem to be what investors are looking at in particular. >> that miss was surprising to most, including us. we were expecting some weakness in the psg, industrial and networking enterprise, but the hope was that the core products, pcs and servers, would be better and offset some of that weakness. it was like a double whammy, and that's what resulted in a significant mess. paul: it wasn't all bad, the fourth quarter wasn't too bad, there was a big reversal of what

we saw in the year prior. what were the drivers for that? >> the upside was primarily pcs and something we called out in our preview, most of the old inventory was depleted. we saw customers drawing down on the newer generation products, so that really help them. so they had significantly higher. annabelle: what about moving forward, we know that intel has its own accelerator. is that something that is likely to boost the bottom line and how is it paring from the competition from nvidia and other companies like apple, for instance? >> nvidia is the leading horse there and amd has done good income back.

intel has been touting that pipeline, but did not give any additional data points about the customers or when to expect revenue. so we don't see that as a bullish or optimistic note. yes, they are saying that is what they are going after, but by now you would've expected much more robust announcements. paul: what are some of the other risks that intel might face down the track? >> the weakness in these markets , if they continue to last longer than anticipated, this could be an ongoing headwind in 2024, along with that, downward seasonality in pcs and service in the first half doesn't help. the worst case could be the weakness in those continuing and you don't see in the second half

what everyone is expecting. paul: we will be speaking with the intel ceo a bit later on for more on the company and industry outlook. that will be coming up on bloomberg technology. our next guest says investor still want the security to survive higher premiums for growth. he is president and cio at gibbs wealth management. thanks so much for joining us. i want to start on some of these big earnings, if we look at one of these charts on the bloomberg, the big tech just keep on rising. how much longer do you see this continue come in if you see pullbacks in stocks like intel, do you have positions on these prices? >> not on intel because i think there's fundamental weakness and concern about their business model.

i think it's going to be up until we start seeing those rate cuts within the u.s., right now the expectation is that as rates steady next week, it's going to be about that trend. the 10-year yield, the five year yield, those are going to be the signals that will continue to -- the trend we saw for much of 2023, with the exception of ai. that continues whether you are a small are large-cap. as long as that is holding rates steady we will see that -- we will not see broad participation within u.s. stocks. paul: in terms of the rate cut expectations, their really healthy gdp numbers earlier today in the u.s.. we have a chart that illustrates out as well. blue expectations out of the

water. what does this mean for the timetable from your point of view for fed easing? is march off the table now? >> i don't think so. some of the other numbers we're seeing are very good as well. i think we could potentially see cuts within march, but certainly the idea of a soft landing is really becoming much more expected and perhaps much more possibility. one of the things we are going to be facing as we go through the year, regardless of what the fed does, is that because we are in such a political year, i think people are going to read into whatever they do with more of a political tendency and that might affect how the market looks at things. so more volatility as we get

closer to the presidential election, unfortunately. annabelle: when it comes to the sectors you are investing in, when you have that environment where many people are still referring the large caps, you've still got this air of u.s. economic exceptionalism. where should investors be looking to as an alternative sector to invest in? >> there are some really good opportunities, think getting close to, there are some areas with exceptional growth, within the large-cap, particularly health care and some of the industrials that are still trading at very reasonable valuations and are not extreme. once we do get more comfortable with the idea of rate cuts coming in, certainly small and mid-caps are trading at three year lows, well below the average when it comes to valuations, but still have very good growth rates that are

equivalent to most of their large-cap counterparts. there are those few exceptions like nvidia that still have exceptional off the chart growth and probably will continue to outperform the market. i think investors need to be willing to look outside the box as soon as we have that transition and add to this rally. annabelle: i feel like every time we go into a new year, we say this is going to be the year that value outperforms growth and it doesn't actually end up being the case at all. so what is your view on that dynamic as well? >> we had a false start, we thought into december that we were starting to see some brett, the beginning of the small and mid-cap rally. when you look at fundamentals, it makes sense when you're

looking at what is happening, either when it comes to the economy or earnings, it all makes sense. certainly this behavior we been seeing since december 27 is a bit surprising. given that we are still long in the tooth and we are looking to have the fed finally change, but with regard to win that's finally going to happen, you can use a lot of the u.s. treasury as your indicators. when we see that trend in yields go down, it has been closely correlated that when we saw the small-cap start to outperform, it's exactly when those rates change their trend from going down to going up. it's easy to use the bond market

as an indicator on when you shift your investments on the equity side. annabelle: here in asia the big story this week has been the pbo saying it would cut the rrr for banks by 50 basis points. i'm curious where you are sitting how much this is coming up in conversations you are having with clients and the recommendation you're given off the back of that as well. >> it hasn't come up as much. what we've been seeing more when it comes to discussion round asia is with the rally of japan more than about chasing that rally than those discussions, certainly i think there's still a lot of risk when it comes to some of their changes. not ready to jump in just yet, i think we are seeing a little more safety and financial stability in wanting to jump into asian stocks, rather than

focus on emerging markets. they can certainly use japan as a proxy. annabelle: coming up, we will have more on the chinese equity rally because bloomberg economic sees more rrr cuts in store for the country after the pbo support measures, more of those to calm. this is bloomberg. ♪ avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh hey, brent! if you had to choose, would you watch paint dry or compare benefits plans? compare benefits. gusto makes it easier to find the right plan for my team. i think i'm going to need new glasses. no problem. you're covered. choose benefits without the mess.

paul: the nasdaq golden dragon slipped in the u.s. on thursday and futures for reason hong kong also fell amid signs the initial optimism over asia's rescue mechanisms maybe fading. the pullback comes after the biggest three-day rally since

2022. the pboc said it would cut the reserve requirement ratio for banks of 50 basis points and bloomberg economics is predicting a further 50 point cut to the rrr by the end of the year. paul dobson, the question is around the durability of this rally. >> that's right, the rally we've had so far this week has been promising in mainland markets, but one is a continuing run of good news of things they can hang their hats on, the support fund and from the cutting interest rates can only go so far when investors really want signs that china is going to boost the underlying growth problems with the real estate pickle, the deflationary or disinflationary spiral that is

going on in the consumer space as well. we haven't heard a great deal on that so far. so the hope is still there but each day that goes by, that there is in a more decisive policy to join up with the stimulus and support measures that we've seen, the more concerned investors might get. annabelle: a lot of concern that we are perhaps shaping up for japan if occasion of the economy, that we are looking for a lost decade. what are you hearing from people you speak with about that? >> it's an interesting question. i've been coming to the conclusion that there's another way of looking at it. it's more about the idea that china is playing a very long game here, maybe there's some sort of reward for it in that much longer term horizon. but they're doing is getting to grips with some of these that

problems with the inflated property market that has been -- a real issue and was building up toward a sort of double. it has been a harsh lesson for everybody, but that is now starting to feed through and at some point i guess the market will be able to recover. at the same time there's a pivot toward the tech space, the green space, that played a significant part in china's gdp growth last year already. we are in this long-term, you could call it a technology arms race or space race or something like that were china is trying to innovate in the u.s. and the rest of the world is trying to innovate and pick up in all of these ai and tech areas. the u.s. is ahead and is using its superiority to try to keep china back. on the flipside, longer-term, maybe by focusing in these areas there will be a period of pain for china, but it could pay off

at some point in the future. that's one reason value investors are looking at chinese equities and thinking it's an opportunity they don't want to miss. paul: in terms of playing the long game, japan played the long game with deflation for decades. can china avoid that fate? >> yes, absolutely. that's the risk that you get caught in that kind of trap, and there is a certain amount of depression within the population , there is that cycle of lower prices, there is price competition. car dealers as a prominent example of price cuts but also in the retail space, picking up market share at the expense of higher price retailers. that's a sign that not everything is right, confidence isn't there in the economy. snapping that is something that needs to be done to avoid that japanese case.

what we saw from the japanese side is, it took forever, we finally got there in recent months but it took forever for the equity market to clawback all the losses it saw when the bubble burst. annabelle: thanks for your time, paul dobson from singapore. you can get a roundup of the stories you need to know in today's edition of daybreak. terminal subscribers, it's also available on mobile. you can customize your settings so you only get news on the industries and apps that you care about. this is bloomberg. ♪

annabelle: microsoft shares have closed with the tree chewing dollar valuation for the first time as optimism over ai fuels and advance.

it's now one of only two stocks to top that level along with apple. meanwhile the company has announced job cuts to 1900 positions across its gaming's division, including activision blizzard. chris joins us now. i'm interested because a lot of companies out there have ai offerings, but what is it about microsoft suite that stands out among the big tech landscape? >> their position in openai has been the big news there, you saw the news today about the ftc giving scrutiny of that and other operators. so that is the big story there. we'll games a very different, these cuts are being driven by the huge acquisition three months ago of activision blizzard, already a sizable videogame operator.

it's not unusual to see cuts after a big merger like this. paul: as a closet videogame span, i'm disappointed to hear that news, doesn't sound like a bit of a waste? >> indeed, it is a survival game. we are seeing this across the board in the videogame industry. the biggest titles thrive in the projects that companies were working on are getting cut. for example, this week right games and tencent initiated sizable layoffs. we broke the news just today that they killed her project that was going to be a live streaming service, twitch. we're seeing countries focusing

on core businesses. annabelle: you mentioned the inquiry from the ftc, how significant do you think that regulatory risk, in some ways china's crackdown on big tech and concerns of monopolies could be of precursor for what we could see another markets, including europe. >> ai has been the big unknown in every industry, we are all wrestling with how big this is going to be and what issues it presents. the ftc is just an inquiry at this point, so it may not amount to any suit or sanctions or anything like that. this has been a very aggressive ftc and overall, particularly regarding tech companies.

this is something we will be monitoring very closely. paul: other corporate stories we are following, jamie dimon is moving some of his top lieutenants to new senior roles. one will oversee the corporate -- corporate investment bank, it positions them for wider experience as jamie dimon prepares potential successors halfway through his five year retention package. and it a joint venture will pay 9.7 buddha dollars for damages caused by 2015 disaster. a resolution of the damages would help ease the legal uncertainty hanging over the companies. it killed as many as 19 people and contaminated waterways in two brazilian states. sign of resilience, revenue

includes louis vuitton and christian dior. it jumped 9% in the fourth quarter. overall organic sales rose 10% and then topped estimates. the company's cfo sees business normalizing after post-pandemic boom. plenty more to come on "daybreak: australia." this is bloomberg. ♪

paul: we are just getting some breaking news out of japan. it is amiss in tokyo, coming in

at 1.6% on the year. the expectation was for 2%, so a slowdown in those inflation numbers. something of a myth for tokyo cpi. it will be interesting for the boj. it does raise questions about how sustainable this 2% inflation goal is. tokyo cpi on the year for the month of january 1.6%, well short of estimates. annabelle: maybe one of the reasons for the boj to continue with their easy policy settings. let's shift to what we saw in the u.s. session overnight because a lot of movers there to note, standing out, tesla, the worst start to tesla stocks for

a year. that steepest intraday drop in months but not a great outlook coming through from the company. ng, we saw its production expansion plans halted by the faa, and a lot of airline ceos now calling out the plane maker, so quality control is one of the key focuses for that company. ibm to the flipside, we saw that stock climbing the most in four years, a strong outlook for this coming year. and microsoft notable today, given across the 3 trillion market cap and value for the first time ever on a closing basis but joining apple in an extremely exclusive club. after hours, intel the major one, we had its earnings out after the bell and really a disappointing forecast for the current period. the company saying sales in the first quarter will be 12.2

billion-13 $.2 billion but an average analyst estimate was $14.25 billion. so not a great outlook coming through and that's being reflected in that steep after hours drop of more than 10%. let's get more on the disappointing outlook with the founder and principal analyst at lopez research. just start off with what your reactions were to those numbers that came out about 90 minutes ago. >> it actually had a very strong year, but it was clear q1 would be a disappointment. it should not be a surprise given what is going on in the business right now. nvidia continues to be very strong, so we will see issues for nvidia in q1. it's a pricing but it ended quite positive.

annabelle: intel has been losing ground with all the frenzy on ai spending, seen as being a laggard in that area. do you see them playing catch-up at all? >> what has to happen for them to win is for them to be asked for there to be a big market shift, moving from everything being to data centers and more about being at the customers premises. so there's opportunities for that, but this takes a while for enterprises to be in the cycle and using ai on premise. while they do that, intel has to wait. it is just unstoppable for nvidia right now. paul: so it takes a while, what sort of timeline do you see before that cycle starts to turnaround for intel? >> we've got the ai pc, which

their kind of targeting q3. you expect to see a big bump in q4 around what's happening with ai in the enterprise. i think the strategies take a lot longer to roll out than any of the tech members appreciate on the enterprise side. talk is not the same as putting money down and rolling out infrastructure. you have google, aws, microsoft, there is a lot of dialogue going on. paul: we saw some of the analyst ratings there, what is your outlook for 2024? >> i think in a lot of ways they

are a sleeping horse. the market will come to them, it's just a matter of when and how long investors are willing to hang on. it will take multiple quarters to rollout. i expected to be a better 25 year. nobody really considered that it is a long-term plan, it's not a quarter over quarter, easily done growth right away. annabelle: you mentioned the choice at some could make to turn to the club for that solution instead. what are you seeing in terms of competition between aws for instance and microsoft as well? >> microsoft had big market moment last year and everybody started thinking about microsoft. between april and november, 80 lbs cayman strong with their bedrock services.

i think aws will be very strong. it's helping people think about open versus commercial open source. there is a lot of activity there. rising tides in ai will raise them all next year. annabelle: what about when it comes to devices, there is ai integration we are seeing into the likes of samsung for instance. how do you see that playing into the competition in that area of the market? >> you have ai at the edge, and there's clearly no winner in

that space right now. this is one area where companies like intel and samsung win, chips can go into the devices that will make those devices smart and intelligent and ai ready. so there will be a lot of opportunity in that space. it's just that longer rollout in the sense of many different devices. paul: maribel lopez from lopez research, thanks so much for joining us. later we will speak with the intel ceo for more on the company and the industry outlook as well. that will be coming up on bloomberg technology. three of the biggest names in tech, alphabet, amazon and microsoft have received inquiries from a u.s. regulator about their investments and partnerships in ai. su keenan joins us with more from new york. what is worrying the ftc about big tech's alliances with ai

startups? su: they want to make sure the competitive landscape stays competitive. these subpoenas to five different companies are clearly a shot across the bow and ai is in the regulatory spotlight. the chair said these companies cannot use claims of innovation as cover for lawbreaking. company formation probing exactly what the $19 billion in investments by microsoft, amazon and alphabet, google into ai are all about. you're looking at video of openai's bots playing video games. these companies have really gathered a lot of attention.

as well as openai which has a relationship with microsoft. the fifth target of the subpoenas is anthropic, that is in ai start of that began in 2021. was put together a many of openai who were dissatisfied at the time. the concern is that some of the most promising ai startups are now depending heavily on the old guard and dominant tech companies for both financing and infrastructure needs. the regulators want to make sure that everything is compliant with the law in that regard. annabelle: it's interesting because usually the justice department conducts antitrust investigations when it comes to big tech. so what has change in this instance? >> one of the democratic members of the federal trade commission has criticize these tech giants for structuring the transactions in a way that is designed to

circumvent u.s. merger law that would've required to companies to notify antitrust enforcers. in other words, they're funneling billions into the companies without actually merging into them. they're doing what are call market studies to issue subpoenas and gather info but they don't have the authority to launch probes are aid in existing probes if there are others in other departments. microsoft invested more than $13 billion in openai. you had google back in october commit to backing anthropic with $2 million and amazon agreed to invest as much as $4 billion in anthropic. these are large sums of money, as our colleague chris engine earlier, the e.u. also looking into some of these agreements between large digital market players and generative ai developers and providers. it should be clear that ai is

now firmly in the spotlight of regulators, not just here in the u.s. but in europe as well. paul: bloomberg's su keenan there. no trade here in australia today, close for the public holiday, it is australia day. new zealand trading a little softer to the tune of .5%. strip out energy and fresh food, we might learn a little more on the boj's inflation expectations when we get the minutes from that last meeting out in about eight minutes time. plenty more to come on "daybreak: australia." this is bloomberg. ♪

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you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh paul: bloomberg has learned that russian president vladimir putin is using back channels with the u.s. to test the waters for talks on ending the war in ukraine. let's go to washington and gregory white. any sign that this outreach from putin suggests a genuine desire

for some sort of deal to end the war? or could there be another possible motivation here? >> there's a lot of skepticism about this. there have been signals from sources on the russian side suggesting there had been outreach, the kremlin indicating there might be some greater flexibility on ukraine security arrangements than before. the u.s. side so far says they haven't seen any sign of the kremlin's position changing on this. so there's a lot of questions about whether this is genuine or just discord among ukraine's allies where there is already a lot of difficulty in getting aid approved as the war continues. annabelle: does the outreach perhaps signal increasing confidence from russia? >> it certainly looks like that from the russian side, that

putin feels like, since abe long believed they could outlast the west and the difficulties in improving aid for ukraine for this year, last year's ukrainian forces was backed by substantial aid from the u.s. and its allies , which was disappointing in recovering territory for ukraine. there's a scene set the war may heading into a stalemate and that might be beneficial for putin and it would be a sign of confidence on his part. paul: there is a continuing debate in congress over a two ukraine, how to set fit into all this? >> the u.s. approval process has dragged out longer than bankers

had expected as republicans in congress pushed a deal on the u.s. border with mexico in that has been difficult to reach. genuinely political support for ukraine has faded a bit as the war in the middle east has drawn attention and questions on what the strategy is going forward. certainly if you were putin, to send messages like this might raise further questions to opponents of further aid. annabelle: that was gregory white in d.c.. be sure to tune into bloomberg radio to hear more from the days big newsmakers and get in-depth analysis from the database team broadcasting -- from the daybreak team. plenty more ahead, stay with us.

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paul: you are watching "daybreak: australia."

a record for the fifth straight year, the offshore drilling wants to pump as much of 720 billion barrels of oil, up from last year's 675 billing. the oil fields in chinese waters have accounted for 60% of the nation's total production increase over the past four years. i taxi seeking to raise more than two booths dollars by selling their stakes in japanese chipmaker renaissance electronics, the largest share sale in asia so far this year. offering shares at an 8% discount to thursday's price. investor trying to sell shares, sources say sellers are struggling to find buyers. his battling intensifying

competition ahead of its anticipated. annabelle: we're a few moments away from japanese markets opening here and were keeping an eye on what we get in terms of data dropping here. prices rose 2.4% in december, in line with estimates. it's interesting because it takes is to a three decade high, so does perhaps on one side tell us the boj has reason now two inches late for normalization. when you put it in contrast to what we got out of the tokyo inflation, that core below 2% for the first time in more than a year and a half, those numbers were out just 20 minutes ago, telling quite a different story about the inflation outlook. clearly something to be tracking as the bank of japan does mull

the strength of price growth. nikkei futures pointing to some weakness ahead of the open. let's move to what is happening in the high-power delegation of japanese executives. they return to tokyo from their visit to beijing, but key issues are still unresolved. isabel, what exactly did the mission achieve on the visit to china? >> i think the main thing it did achieve was to reopen the kind of dialogue that this kind of visit had not happen for several years. they were able to meet with the premier and extract a promise to improve business conditions for japanese investors in china. there are a whole raft of problems between the two countries, especially affecting the business sector and none of those were immediately resolved. we still have the ban on japanese seafood in china which is a result of japan's mission

of treating wastewater. the japanese side was seeking restoration of a visa waiver which was not forthcoming for the time being. so there are also some issues that would not result from this occasion. paul: president biden will host the minister in april. what is a state visit to the u.s. going to mean for japan's troubled premier at this stage? >> the announcement finally came , this visit has been on the cards for several months now. it was just a question of when it was going to happen. the prime minister has been in terrible trouble for the last few months, the scandal that has rippled through his ruling liberal democratic party has sent his approval ratings to the worst on record in some polls. so for him this will essentially be a welcome opportunity to change the narrative and talk

about something else other than the money scandal in his own party. on the u.s. side, it's an opportunity to show that president biden believes in these traditional alliances. another potential candidate for u.s. president, former president trump is skeptical about these alliances. it will be an opportunity to show a difference in the view of statesmanship ahead of the u.s. election. paul: our tokyo bureau chief there, isabel reynolds. china and thailand are set to sign agreement waiving visa were -- requirements for travel between the two countries that would start on the first of march. the thai ministry of foreign affairs said the minister will sign the deal on his visit that began on thursday. chinese tourists were thailand's largest group of visitors and

seen as a key to stability. annabelle: the boj meeting minutes from the december meeting, this was a meeting where the boj stood pat once again and committee members voted unanimously in favor of the decision. we didn't get much in terms of specific details when we could have some sort of exit from negative rates. now we are getting a readout from the decision and what went into it, but essentially some of the headlines that boj members aren't seeing much risk of falling behind the curve. we since i would think the inflation target of 2% would not be secure as yet and that it wouldn't be too late to make a decision post spring wages negotiation that happen around march and april of this year. that is something we will watch closely whether we see any sort of sustained wage gains. also saying the prices overshooting risk is small, even

if we do see a spike in wages. paul: here are the stocks we will be watching when trade does open in korea and japan shortly. keep an eye on-chip related shares after intel's disappointing forecast for the current period. gaming stocks are also going to be in focus. microsoft planning to cut 1900 jobs across its videogame divisions, including activation blizzard. market opens in seoul and tokyo next. this is bloomberg. ♪

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>> this is daybreak asia, were counting down to major market

opens ahead of the start training for japan and south korea, about 90 minutes after the start of trade for china as well. the question for those markets today is whether they will be facing any sort of reality check. paul: we have seen a decent rally for the hang seng and the csi 300 off the back of views of -- questions remain about the durability of that. annabelle: ins perhaps a reality for the boj and what they're really seeing signaled in the inflation numbers. we just have the services pbi coming out but the tokyo inflation numbers now telling a bit of a different story. the open for trading of the nikkei and at the start of the day we will be tracking those moves in the wall street session. a strong six-day gain overnight that could translate across the session so far. that focus on those inflation metrics that came out of tok