haidi: this is "bloomberg daybreak: asia." we just are a few seconds up from the start of trade for japan and south korea, but the focus today really coming through from those numbers on wall street. we had meta, amazon, apple, some pretty mixed outlooks about weakness and apple numbers on china. haidi: and a surprise coming from meta, come at the upper performance, strong profit growth and amazon expected to continue, but it is really the weakness out of china. are there broader concerns over demand for the iphone? we will be watching apple suppliers in these sessions. annabelle: you cannot forget the earnings underway in asia, and we had japanese centers on the docket, but japan coming online. really at the start it is the

market reaction coming through on those big tech numbers from the u.s. apple dropping after hours, that we is from china overshadowing or positive things that came out including a sale speed and meta rising 15% in late trade after its first quarter revenue outlook topped estimates. the focus on the dividend, because it is the first time ever we have seen one of those being issued from the company. in japan that will be playing into the session, you are seeing the nikkei postings and gains, s&p 500 up more than 1% in the session to reversing some of those losses earlier in the week . what else we are tracking their these lenders. sumitomo matsui is one of those. seeing how that stock is trading online, the spread not matching just yet although we are seeing live pricing here.

we will get a truck i know that is going, off about .8 of 1%. that is japan's second-biggest bank reported an increase in third-quarter profit. let's take a look at how korea is faring so far in this session. call related to the u.s., the most correlated market to the u.s. in asia, and you are seeing gains come through as we see the nasdaq decisioning for further moves, higher at the start of trade later. south korean inflation selling more than expected, so we gives us further the signals price pressures are starting to cool given to bok and other central bank sticking with target -- tighter policy settings now. australia one hour into the session. haidi: take a look at how we are trading in australia. this is the picture across the asx as we get into trading fully after the staggered start. about .1 of 1% higher brightly

looking like a pretty reasonable session. big gains across real estate of 2.9%. technology following the highs that we saw for, of course, the big tech names on wall street up by .1 of 1%. even though we see base metals falling on concerns of the china slow down and going into a seasonally off-peak session ahead of the lunar new year holiday, we are seeing miners and materials putting on 1% and industrials trading higher. the only segment trading in the red our utilities. aussie dollar holding steady at 65.77 despite quite a bit of weakness in the u.s. dollar overnight. the largest daily drop this year as we saw the slipping and treasury yields at a renewed concerns about u.s. banks weighing on the greenback. aussie dollar largely unchanged.

oil prices as well, we are seeing oil producers do quite well in the session and sydney, but crude more broadly heading for the weekly drop as talks of the cease-fire continued to advance. biggest weekly loss for oil since november. we also seeing wti down about 5% for the week. also watching new zealand trading as well given that we did see in particular construction coming under pressure with homebuilding dropping to a five-year low, and the could point to broader economic weakness to come. also watering -- watching treasuries really surge, rekindling helps when it comes to the fed easing sooner rather than later. annabelle: certainly concerns resurfacing around a regional banking crisis, but let's bring in our next guest he says the stocks in india and japan go to

become relatively less attractive over the course of this year. the head of asian equities strategy joins us now. it is contrarian because we have seen the run-up in both of those market so far this year even. >> yes, that is very interesting what is happening. if you look at india we are now back to 207 valuation. in some parts of the markets are really overstretched so it is becoming increasingly difficult to find some valuation. this is happening at a time when you will see earnings growth to moderate and more difficulty to expand. we need to be probably a little bit more selective do have a view to hold a bonds that a very attractive, and when it comes to the equity market to look at the

more international rather than the domestic market. japan is a very different story. the long-term driver of corporate governance, inflation expectations back to positivity is a good thing, but watch the bank of japan and the end of negative rate alessi and what it means for the yen and profit. we are pairing some of the enthusiasm at this year. annabelle: we have had so much optimism on japan notwithstanding a dovish boj, but it has been more about corporate governance reforms and other factors that are leaning more growth drivers as well, so when you say you are down pairing give us more context on that. >> japan used to be our top allocation in 2023. it was 16% of the total

portfolio. we are moderately overweight, but we need to be aware some part of the increase came from governance. from the yen and the boost given to the profit by the weakening yen and this massive increase in the competition. this part of the increase will be much more reduced now that we see upward pressure coming back on the japanese yen. haidi: india and japan have been such popular alternatives to china? is it time to start taking a look at china more selectively? >> the thing about china is there has been this incredible

pessimism on the market and some form of capitulation that we are seeing goes through earnings, nine times larger outflows for the foreign investor. it is creating some investment opportunities, because they were having in the cell of good quality companies which are being caught in the selloff. the expectation of large stimulus, while we cannot have too much expectation about that, but we can have more target investment opportunity. one of them we have highlighted is a company.

it is something quite significant, and you have a number of firms which are doing well exporting, and this is where we see some investment opportunities. and for the market as a whole given where we are today and the level of expectation, which is extraordinarily low, we can see some technical bounces happening. haidi: if you keep your expectations low may be will get a little bit of upside surprise. there are broader risks to china particularly if we see more of the deflationary cycle taking hold. >> yes, so the deflationary pressure is one of the key concerns, and it is interesting when we look by sector in china, we have a number of sectors

impacted by regulatory tightening but also doing well. those sectors doing well being very much under pressure in the last 12 months. this will lead very much to overcapacity and fully priced, so there are worries on the deflation coming and on the earnings, which are very much impacting the market, but once again the expectation very low. when i look at earnings, how analysts are revising the earnings china is a -- in emerging asia so we could see rebounds that could happen. annabelle: thank you for joining us this morning. let's take a look at some of the movers because we are 10 minutes into the session so far, and taking a look at how sumitomo is

faring because we had its earnings out yesterday after the bell. this is japan's second-biggest bank and reporting an increase up 11%, so puts it a step closer to record annual earnings even though the stock is seeing weakness. mizhuo we are tracking because it will be announcing its earnings friday. i would will manage its domestic bond portfolio and its lending spread, suggest that question of boj policy implications. let's switch on because they are the focus is on apple suppliers must move into the upside, but that could also be the positive session abusing protect stocks overall. it nasdaq wanted to get into the open as a u.s. futures after some good numbers from big tech, but apple really one of those that did disappoint with its china iphone sales of missing

targets, so dropping around 13% in the final three months of the year. that is what analysts are claiming to, because you are seeing apple dropping more than 3%. we will have more on apple's china challenges and other big tech results just ahead. this is bloomberg. ♪ hey! sarah! if you had to choose would you listen to elevator music all day or deal with payroll compliance? payroll compliance, for sure. gusto automatically calculates and files my taxes for me. hold up, compliance? easier? choose payroll compliance without the ups and downs.

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comes to apple. meta still outperforming by 14.5%. we had the plan to billion dollars buyback doing over investors but really beating on a number of metrics. amazon profit continuing to grow and expectations that would be sustained, but lots of concerns over the weakness in china. let's bring into canaan, mark gurman and poonam goyal to go through these key earnings. let's get the bad news out of the way. a lot of this downside on apple's down to the weakness in the china market. is that it when it comes to apple? >> the china situation is pretty terrible. wall street has been talking about this. analysts have been talking about it. there is something going on with huawei in china.

there seems to be a lot of nationalism, a lot of interest in the hallway - huawei devices. apple took the top spot in 2023 but declined 2%. huawei is only a few percentage points behind apple the market share but something interesting happened. they shot up 36%. the unit declined to receiving from apple, other players in china, those are all going to huawei sales. people in china what that device, and the iphone 15 pro performs so well outside of china overall revenue went up over 2%, so it is a bittersweet moment but less we do more bitter given how important china is. haidi: let's get to amazon, and what stood out to you from the numbers? >> the operating profit was the

biggest surprise in the breast we have ever seen, so the fact that they could deliver operating profit in the quarter, and the fact that it was delivered by better aws momentum and advertising. we feel there position as well to take profit margins up every year as it performs to build scale across its major lines of business. haidi: we are going to get more on meta, that was the outside surprise. su keenan, mark gurman, and our bloomberg intelligence analyst with us. we have a big conversation when it comes to the huge demand of chips we've seen that of ai. ed ludlow is jennie bond with the nvidia ceo. >> we welcome the nvidia ceo. jensen, the conversation is

changing to sovereign ai, and you yourself aren't toronto canada. my understanding is you just met with canadian government officials. what did you agree on? >> i met with minister champagne. i am here to celebrate the research center that we have here in toronto. you probably know the university of toronto is as close to the epicenter of modern ai as it gets. a professor was here, the advances in deep learning, i have met many of them in the early days of the invention of modern ai. so we started our research lab here. there is a large ai community here, and what is needed is for canada to have public

infrastructure that supports the ongoing advancement of ai research and to support local startups and local industries. one of the things about generative ai is it is a form of computer science, computing where a large computing infrastructure is essential to the creation of the large language model as well as the generation of tokens and information that is valuable to come out of generative ai, so most of our conversation is around ai infrastructure necessary in candida, so candida can have its own sovereign capabilities. >> you have spoken about the nationstate level gp specialized cloud or sovereign specialized cloud, and we look at what hyper scalers are doing. when we talk about h 100 we are talking about a design that ships to the hyper scalars.

what is this business plan will you deal directly with governments and states to add to what is already being done in the private sector? >> as much as possible, we should utilize clouds. it is accessible, the technology is martin. our partnership with microsoft and aws and gcp and other cloud service providers make the technology accessible so that everybody can have benefits from it, but there are also regional capabilities in each one of the countries that would like to be able to build on this important infrastructure. artificial intelligence is about the generation of tokens and final analysis. these are numbers that come out of computers interpreted as intelligence in each one of the various domains that we serve.

so the production of these tokens, the generation of these tokens require ai supercomputers . we have the technology, i know how -- the know how to enable each one of the countries to build their own ai infrastructure, so i think you were going to see countries around the world be able to continue use public clouds but also build regional data centers as well as publicly supported infrastructure so that each one of the countries could be able to cultivate advances in their own industries. >> to the governments that you speak to understand those dynamics. politics tends to you move -- tends to move a lot slower. >> in the last 12 months you

have seen india, japan, france, canada now, southeast asia, singapore speak up about the importance of investing in sovereign ai capabilities. it has become abundantly clear to each one of the countries that there natural resource, which is the data of their country, should be refined and produced the intelligence of the country for their country, and it is now possible in quite a democratized way. almost every country should be able to do it for themselves. what is needed is the technology and know-how of standing up ai infrastructure, and that is where we can be helpful to various regions, so i think the

recognition of the importance of sovereign ai capabilities is now quite global. >> jensen, does that recognition and your ability to up extent to china? on my own show bloomberg technology, the academic community and start of community reflect that there is a desire at the nationstate level to have sovereign ai competency, but there was also a lot of work going on with companies. baidu is an example. are you comfortable you will be able to work with china given the political backdrop that we live in? >> we have to comply with american policies. whatever the rules and regulations and laws are, we will comply with that. work closely with the regulators and understand their intentions and their desires. work within those boundaries and be able to create audits for the various countries that are

involved for the comply with regulations that are in front of us. and to be on the -- beyond that, our goal would be to see us as a successful country. it creates jobs and allows our country to stay ahead technologically. it is of great interest of our nation that our american companies are successful around the world, so once we comply with regulations we will do our best to serve the local markets. we have excellent communications with the administration working in full compliance being able to serve in local markets. >> i go back to the hdx or dgs

example. we understand how it works with private companies and clouds. going forward how should we think about sovereign ai is a business line for you? is there a way we can understand how nvidia's work even if it is building supercomputers like in the u.k., what proportion of your overall business that would representative countries are to lead the way? >> the vast majority of the computing market has been the united states into a much smaller degree china. for the very first time every single country will become a computer industry and every industry will become a technology industry, so artificial intelligence or the automation, the production of scale at intelligence matters to every single country, every single industry, so for the very first time there is a new

computer market that is going to be in every single country and every single market. it starts with of course the native computer industry itself. you are seeing a great adoption in health care, great adoption in logistics, transportation of course, manufacturing, the large industries. or the very first time because of generative ai computer technology is going to impact in literally every single country, so some of the markets will be quite large and global. >> our final question comes from our audience. i think you will appreciate this one and it relates to sovereign ai, but it is how ai impacts all of us. the prediction that human level

intelligence and ai will be achieved by the end of this decade. does jensen believe that trajectory and timeline is on track? >> agi from an engineer's perspective required specification. if agi specification was a collection of tests that humans are able to perform and until now know computers can, in that suite of tests whether it is math or english, it could be a law test or medical, whatever the tests are if that suite of tests can be specified and put in front of generative ai, over the course within this decade of my guess would be that at the rate of the current progress it is very likely that suite of

tests would be achieved by a computer. however, there are much larger definitions of human general intelligence, and until we are able to specify what that means, it is going to be very hard to know whether we have achieved and are not, but the definition that i provided which is the ability for a to achieve excellent results on tests that previously were given to humans, that within the decade will be achieved by computers, and generative ai will be a tool that can be used in a large field of science and many industries. >> i know i

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annabelle: taking a look at one very big mover the session today, aozora, a japanese small lender over 20% off in session. it seeing a drop of more than 17% is really significant when you put it in that context. this is the steepest two day drop we have seen for the company center turned public. what exactly has happened here is aozora made a big bet on u.s. commercial property. it is a small lender struggling to compete with the megabanks in japan. it lacked a well-defined base or 10 years ago we decided to expand aggressively overseas to a point where nearly 1/3 of its on was out of the country, and a lot of that was going on to commercial real estate. now it is flagging huge losses. this is the market reaction that

is hugely telling. a lot of markets, a lot of movers driving session dynamic so far. haidi: the two major ones we have seen at the moment that the current of some of these stocks being moved by the big tech story, apple suppliers given the wealth of issues, not just the china's slowdown story but more the product cycle and overall demand when it comes to the iphone. we are waiting to see if this latest episode of the u.s. banking stress might actually change the timing when it comes to the fed. that is what some parts of the market are contending with, but the rebound in u.s. equities is extending into this accreditation asia. stocks up by .5 of 1%, because be accelerating 1.2% higher. south korea cpi pretty much within the targeted range easing much more than expected. some concerns are lingering. we note the bok governor is

really making inflation is corporately at the moment -- core priority at the moment. one important aspect to watch. ozzie -- aussie socks up by 1%. even materials and miners as we see a decline in base metals. that is not a concern for traders today. annabelle: really if there is one mover that is standing on so far in the session that is meta after hours, because it is absolutely popping. this is really coming down to a banner quarter for the company. >> one analyst called it spectacular. plans for a multibillion-dollar share buyback and the numbers just incredible. posted at 25% gain in sales,

profits more than tripled in the revenue outlook for the quarter beat estimates. $37 billion versus estimates of 33 and $60 billion. that is after gaining 12% so far this year. the first quarterly dividend is a surprise and a big deal. 2023 was what zuckerberg called the year of efficiency, cutbacks, and you are playoffs. this along with this share buyback appears to be a signal the company doing well enough to give back. daily active users way. meta will not be focus on this metric. he called it a good quarter and said we have made a lot of progress on a vision for advancing ai and the metaverse. meta fared a lot better than apple and google.

they both get the revenue from digital ads and heavily invest in ai. the cfo says the strong increase in fourth-quarter revenue was due to heavy spending by china-based advertisers as well as ai recommended video content, but on china they say in 2023 revenue from china-based advertisers represented 10% of total revenue, so that is a strong statistic there. annabelle: what is being seen as the biggest challenges for meta going forward? >> one top analysts at the biggest overhang for meta has got to be the regulatory issues. there are still a lot of headwinds and on the atlas call meta said it would be challenging modification of existing consent order by the ftc. they said there is substantial modification could impose additional restrictions and make

it hard for them to operate. they say they're going to challenge this. they say these expected changes could have an adverse effect. meta remains under pressure terrain and harmful content over all of its platforms. just yesterday ceo mark zuckerberg was grilled in a congressional hearing over the rise of online sexual material. zuckerberg rose to offer an apology. that said more people are using meta services than ever before. the company has close to 4 billion users across its app, and analysts say it is becoming the dominant media platform and most of the emerging world, so if you want to bet on the emerging world this remains a

very strong bed. analysts very bullish on these results. haidi: su keenan with the latest on meta. wall street journal says intel is delaying the construction timetable for its $20 billion chipmaking project in ohio. the report cited sources and construction is not expected to finish until late 2026. intel had targeted to production in 2025 of the plant dependent on u.s. government grant money. j.p. morgan and bank of america are said to be in talks to provide as much is a big and dollars in financing for a buyout of docusign. jeffries and deutsche bank are also among lenders considering a role. there are jockeying to buy the platform and what could be the largest leveraged buyout of the year so far. universal music has begun pulling music from tiktok. at the liberalism to artists

including taylor swift and right. universal says the rights offer was below market value, but tiktok calls that a false narrative. tiktok's adoption to generate content is a major threat to artists. a-shares and deutsche bank rose after announced plans for a $733 million share buyback and detailed cuts for 3500 jobs. the company had previously announced these. >> we have focused our efforts on non-client facing staff, and there is been a significant change over the last several years of internalization of activities, the controlled investments that we have made and investments in tech elegy, so having reached a level of maturity and some of these areas , i think the goal now is to drive efficiency without losing effectiveness, so that is where the staff cuts are targeted.

annabelle: let's get back to japan earnings because we've got japan airlines delivering results later friday with hopes of profit support from bloomberg jet fuel prices. let's bring in our asia transport reporter danny lee. >> we are expecting 475 billion yen hovering around quarterly record, so that is a good sign. robust sales for my ticket prices but also ¥20 billion of net income, but it would we are looking closely is what they raised its guidance? what will it four your profit outlook look like, because it's rival had earnings on wednesday and they raise that. just generally falling into line with international airlines in general having to raise the outlook earlier, but we are going to be seeing earnings today on the one month

anniversary of the japan airlines crash that happened in tokyo last month, so one extra thing i will be looking out for is what does this mean for future earnings, because the impact from customers who may be reluctant to channel. much flexibility for customers who do not want to travel at the time, so will there be any impact? third quarter earnings happen prior to the accident. haidi: what about ana? >> they had a pretty good set of numbers, and that is japan's biggest carrier. they really overshot on estimates, but this is the backdrop of foreign tourism numbers coming back to pre- pandemic levels. this is been a boon for japanese carriers, but on the flipside you have domestic citizens with

that stronger yen that has failed to materialize, destroying the spending power for citizens. this is something where it is dragging on airlines like japanese carriers who do not see that demand balance equaling out, so this is something if the yen can strengthen, the boj is very much in focus. it will help railings -- earni ngs. haidi: the hong kong leader's decision to enact a security lot risks efforts to revitalize the city business. we get the details next. this is bloomberg. ♪

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haidi: the bank of england has opened the door to rate cuts for the first time since the pandemic confirming predictions that inflation will fall to target in the coming months. governor andrew berry says the central bank is watching key factors that may cause price pressures to reemerge. >> i think we have now changed to the question really from how restrictive do we need to be to how long do we need to be restrictive? and that is important. we have also taken the upside

bias off. the tragic events in the middle east and the impact they can have in the red sea effects, so i think another question for us is really for how long do we need to maintain the stance going forward. i set a number of times we are not making predictions at this point. we are setting up the framework. the things we think are important to look at really have not changed relay, so services inflation, aspects of the labor market and domestic drivers of inflation. we are seeing the disinflation side of global shocks. >> is there something specific in the set of numbers you look at that will give you the impetus to cut? >> i think a number of things, services inflation is at 6.4%, so well above anything with us consistently meeting the target. with a wage growth we have seen

the official measure come down. it is below where we thought it would be. open question as to whether that was an adjustment of anomalies in the index or really is a move. it is now in line with the other things that we look at. again, there are above levels consistent with keeping the target, but the important thing is inflation is come down long way. we think it will come down further. >> is that thanks to banking policy? >> two things, the major driver is the disinflation side of the global shocks. what bank of england policy has done is to prevent it from becoming domestic embedded in second round effects. we cannot stop global shocks. we all wish we could stop wars, but we cannot. our job is to stop becoming

embedded. annabelle: that was the boe governor andrew bailey speaking to francine lacqua. let's take a look at what we are seeing in the commodities space, sensitive to rate expectations, what will moving a little higher. it was a choppy session on thursday, oil heading for its biggest weekly loss since november as we really track the latest geopolitical developments and in particular what is happening in the middle east. a hamas official says the group is considering a proposal to pause the war with israel and free civilian hostages. the plan for a 45 day truce was presented after talks in paris between officials from qatar, egypt, the u.s., and israel. sources say that the deal has a reasonable chance of success. eu leaders have clinched a deal on the $54 billion financially package for ukraine after

hungarian prime minister viktor orban lifted his veto. ukraine is grappling with a shortage of weapons to fend off the russian military with $60 billion of u.s. aid stalled in congress. president zelenskyy has denied reports that he fired his top general who then refused to step down. in hong kong plans for new security legislation is creating fresh anxiety in the finance hub and could undermine efforts to revitalize the business sector. let's bring in our guest. i think chief executive li has been trying to wage a path over the last year or so convincing investors in people to return to the city. is this a step back? what is the sense of foreign this possible legislation? >> among the business community there is some degree of concern

around uncertainty on processing of this will be implemented, and there are a couple of points to keep coming up in conversation. one is on this idea of the wide ned definition of state secrets. and potentially could touch on issues around socioeconomic development of the city, anything that reveals some kind of private information on that point, so that has created little bit of uncertainty precisely how far that could go. folks who are more sanguine, folks are used to dealing with those constrictions in mainland china are talking on a daily basis to their colleagues across the border, that they are used to figuring out how to manage and there are bit more accustomed to it, so there were two feelings i would say. haidi: how much does this potentially equate to more

geopolitical tensions if there is more pushback? >> this is another interesting element to it. we do have this extraterritorial element, and the fear here is this good and flame geopolitical tensions if, for example, a to pursue someone that was a citizen of another country in the u.s., and that is a practical concern here, because we have seen these pro democracy activists going into self imposed exile. think of agnes shall -- chow going to canada. we have a bounty on several different activist overseas already. i think more broadly the concern is on the one hand john li and the government has tried to project hong kong is business as usual, everything is normal.

on the other hand, they have also got to proceed with all of these national security measures that in some ways step in line with beijing's agenda we have all seen increasingly focus more to security, but that balance is difficult because it seems like one after the other this relentless stream of news focused on national security, and for the most part they want the u.s. government to stop talking about this. annabelle: -- haidi: strictly hard news to contend with. our economy correspondent there in hong kong. we have more to come here on "bloomberg daybreak: asia." this is bloomberg. ♪

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we are working very hard to diversify the business and making good progress. the majority of businesses handsets, and inventory actually stabilized since last quarter. what we see the results especially with deadbeat and raise and eps is that handsets are getting back to normal. we are happy with the health of the android echo system, and we see that in the numbers. oit, we talk about industrial inventory before every other company. we were some of the first want to talk about it. still a smaller percentage of our business, we would like it to be bigger, but that is the lowest quarter end of expect to see growth in the coming quarters. i don't understand this comment on inventory. we are happy with the resultant happy with the number of the analyst revisions that actually came out this morning on this topic. >> i am just reading the

transcript and you said second half of the fiscal year as we see the inventory kind of normalizing in the iot context. you promised we would get an uptick in china sales and we did get that. it does it reflect customers in china having been through in inventories or is this a commitment to ford ordering? signs that the market has demand? >> this is a great question, and i want to start by saying we have two vectors that have two vectors that are very encouraging. the premium tier has proven to be resilient even within the macro uncertainty, and it shows users when they go by their next phone they want a better phone. we are starting to see the first innings of generative ai, and that as brought some excitement. some of our customers had record presales of their new devices,

and what we see in china right now -- i think there was a lot of concern about huawei coming back into the phone business, but huawei is increasing the size and our customers are seeing opportunity and that is reflected in the quarter. we have a lot of orders especially for phones that launch in the market. we are cautiously optimistic since we do not know how the second half of the year will unfold. >> how do you navigate geopolitics when it comes to china? not just macroeconomy. >> we just your business. we focus on what we can control. we are happy we have a strong relationship with china. our technology is differentiated and helping both sides. it is export of semis for the

u.s. we have not been impacted today by any restrictions, and as we diversify the company going from handsets to automotive and industrial, i think we see our china business expanding as well. annabelle: taking a look at how we are sitting up in futures, u.s. futures pointing to further gains. a busy day for wall street, earnings, meta jumping after hours. we need to gains in just about 30 minutes out from the open. pboc saying it provided 28.9 billion dollars for low-cost funds for lending and infrastructure projects last month. the lending program is a tool for beijing to manage the worst of its property downturn. ♪

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