haidi: welcome to "daybreak: australia."

in sydney, markets have just come online. annabelle: we are counting down to asia's main trading opens in the top stories this hour. japanese stocks set for positive open with korea and china closed. and have to have trading in hong kong. on offering little direction. haidi: janet yellen of potential failure of marketing, telling regulators that lawmakers should closely monitor risk. annabelle: and we hear exclusively from a ceo about buffering there billion-dollar exposure to risky u.s. property. let's kick it off with a rate decision just coming out of latin america. peru cutting its benchmark rate by 25 basis points to six points when 5%. this is really what had been seen by economists but when you think about the easing from peru central bank, were now at 150 basis points of a reduction since a cycle kicked off in

september last year. what is happening in peru is that we're seeing annual inflation coming back down lower around the 3% mark. it has been a bit of a surprise to economists, but this chart puts it in perspective because we have basically seen all latin american central banks cutting their rates, getting ahead of the fed. haidi: very interesting as we watch the landscape of expectations building for other central banks as well as we get into the latter part of the cycle. let's get into the start of trading as we head into the end of the week and the start of the lunar holiday. when it comes to socks and how quite things are potentially going to be, given that a lot of markets around the region are either closed or will end trade early like in the case of hong kong today.

a mixed open on friday for sydney stocks and some of the other markets, mainland china and taiwan, south korea and indonesia and the philippines and vietnam are closed. partial trading for singapore and hong kong. and a muted start to trading here in sydney, down by about .10%. australian and new zealand yields climbing after u.s. treasuries fell for a second day on thursday. selling coming even as the u.s. government debt was sold to the tune of $25 billion and 30 year bonds, still a sign of pretty healthy, robust demand there. quite a bit of pressure starting to build, weakening past the

official line. annabelle: you mentioned on seat markets looking fairly flat. u.s. stocks really struggling for direction in the prior session, we still had stocks hovering around record highs, but still that sense of caution that prevailed across investors psyches because you got the consumer price index revision taking place friday. cast your mind back to this point last year, that update was significant enough to cast doubt on the overall inflation progress. perhaps a little bit of latency ahead of that. and fed officials, that pushback, telling policymakers and investors the market it's really about patients. take a listen. >> i'm gratified to see

inflation coming down. we got some time to be patient. if i can get these kind of numbers sustained or broaden, that's what i'm looking for. annabelle: joining us is the senior portfolio manager, i'm curious for your views because we haven't heard it said, this continued pushback of rate cuts. at the same time we know easing is coming and the u.s. economy is holding up pretty well. what are you looking at most closely? >> we want to focus on the data. the market loves to try to get ahead, trying to predict that next change. the reality is the fed has told us what they will do, they will keep keep watching and observing and looking for inflation to stay below 2% consistently. the risk is that while we are waiting for that to happen, the

employment situation could be getting worse. the market likely will take a move lower, the fear is tipping into recession. so we're watching the employment market to see if that moves before inflation is lower. annabelle: and we are in the midst of a earnings season as well. what are you tracking from that and what are the key themes you are seeing so far? >> companies do quite well with a few exceptions, guidance is conservative in my mind. guidance is coming in with a lot of doubt, europe is still slowing down, china slowing down and almost all companies in the u.s. can escape the impact of china. so we are watching the guidance and seeing companies concerned. our focus is not so much on trying to navigate these various economic directions, but part of the companies doing specifically to drive their own destiny?

investing in acquisition for r&d and buybacks. that's what we're focused on to pick the winners and losers over the course of the next 12 months. haidi: you talk about the inevitable exposure to china, certainly the last year and prior to that, u.s. investors have given a pretty big shrug when it comes to what happens in china. are we seeing less of american exceptionalism and more of a globalist approach now? >> i think it is because they're uncomfortable. there are two dilemmas happening in china for u.s. and local investors. you have dropping sales and challenging markets as a result, that's putting pressure on expectations. we came into 2023 thinking china was going to rebound. it's been very disappointing. the second dilemma is

structural. what is going to happen geopolitically? if you -- the shrug is more of, how can i minimize my risk? by looking elsewhere in the u.s. or if we can. haidi: does that include japan? it's interesting you said you are not worried about the trade. >> i think japan can be interesting over the next six or seven years, but if i don't know if that moment is in the next six or 12 months. it will happen, but if you look at the potential through our process, it's about have companies use their balance sheet to drive unique future. how can the use that capital in an authentic way?

if you model out the japanese cash flow and balance sheets, they are ridiculously undervalued. that doesn't take into consideration the culture factors which are very real, but as they evolve, the upside is massive. but as an investor, timing matters. we are doing a tremendous amount of work looking for companies looking to embrace a more western culture of governance. so they do step on the gas a little bit by using capital more efficiently to drive higher valuations. be patient and do your work now and just wait for that right moment. annabelle: i see cbre is one of the stocks you are highlighting here, commercial real estate focus. i'm curious what your making of the stress we are seeing in this sector. >> the stress we are seeing i think in many cases is overblown.

there's an exaggeration of the impact, office is part of it but it is not everything. cbre is a stable stream of facilities management but they also have a transaction based business which is gone down because interest rates moved higher but cbre is investing through that. we will see a lot of companies and owners of real estate that need to go out and increase her equity. they will be a winner in that situation. there's a little bit of turmoil in the space right now. what all they want is activity. cbre is a great way to take advantage of what now has stressed the market with a solid business model. haidi: great to have you with us. still ahead, we'll talk about

managing risks or exposure to u.s. real estate. his first interview since taking charge of the financial giant. our exclusive business. this is bloomberg. ♪

annabelle: we're hearing from the rba governor michelle bullock speaking before parliamentary panel, saying that don't need to be in the inflation span before cutting the key rate. the governor says there's nowhere to go when it comes to reaching the cpi target but not ruling out a rate hike but not ruling it in either.

treading a fine line when it comes to signaling the inflation rate. there is still some way to go from the midpoint of the range. attempting to bring inflation down while preserving as many of the recent gains in australia's labor market as possible. referring to that as a narrow path. her first testimony is governor. the first under the revamped communications change with the immediate release of the updated economic forecast. now straight to that parliamentary testimony as well. shall bullock they're getting questioned by lawmakers, saying she will do what we need to do to get inflation down. that comment about the rba not needing to -- were seeing a bit of a move there in the aussie dollar in reaction.

from australia to the u.s. in terms of the outlook, treasury secretary janet yellen says regulators are monitoring risk stemming from hawkish vendors. she spoke at a senate hearing. >> nonbank mortgage companies lack access to the deposits that banks have. there's concern that in stressful market conditions we will see the failure of one of these. haidi: let's bring in our banking regulations reporter in washington. we did hear from janet yellen -- warning of the failure one or more of these institutions. what does it mean now versus the future for banks? >> she made it clear that now

that the overnight -- oversight council has powers to deem a nonbank as systemically important or too big to fail, that really the panel is studying what risks those nonbank firms may hold, but also if they faced a shot, if there were stressors and one failed, just knowing there might be certain counterparty risk to the system, and basically this was a signal that now the panel has powers to deem these firms too big to fail, studying is underway into the sector. annabelle: so talk more about that significant, you're saying there is a too big to fail label that is likely >> >> possibly. possibly, though not yet. the regulators have made clear. secretary ellen and others want to get more granular detail, understanding in what ways if

there were a shock to the system how they might respond in expanding their balance sheet and the times they have with the banking system. she also spoke to concerns about not having deposits away traditional banks do. last time it took about a year and a half. so many months ahead before any such firms will be designated, but six months ago the panel did not have powers and now they do. so this is the beginning of signaling that yes, they are paying more attention to these firms and having to study what moving them into regulations would mean for the regulators. annabelle: that was our banking regulations reporter there in washington. turning to south korea, reinforcing buffers against roughly one billion dollar exposure to risk your u.s.

property bets. in his first interview since becoming ceo last year, he told us exclusively that the lender can stay resilient amid a wave of credit concerns in real estate. >> our overall exposure to u.s. real estate is about two point 4 trillion lawn. i think the risky tranche around's about 1.4 trillion lawn. for the 1.40 5 trillion, we built up about 20,000,000,001 in provisions. for the 1.4 trillion, we built up about 20,000,000,001 in provisions. thinking that's probably going to be managed within. haidi: he also told us south korea will probably lift a ban on shortselling in the first half. he said there reviewing after some lawmakers warned of risks for retail investors. >> we have stopped selling els

and we temporarily suspended the sales because public and media opinion in korea right now regarding everything about els is bad, but it is a choice to be made by consumers. there are actually many consumers who are asking about els over-the-counter, even now. so i think we should resume on a limited basis, depending on the atmosphere. the way we've been selling in the system for sales needs to be reviewed and approved. i think it could be seen as a short break. >> you mention you might need to review how some of the products are sold. do you see a need to change the way you sold to the public? >> mosys being sold over the retail counter. what i'm saying is that we could limit that and induce sale of a more specialized counter. we have a wealth management channel and we are looking at conducting the sale that way.

asset allocation is the most important thing for retail customers and were looking at ways to limit sales and encourage sale via counters where we can guide and consult to make sure that asset allocation is done correctly. we are looking at a lot of different things and that is probably what we will do. >> are you expecting to settle anything? have you provisioned anything for compensation, for example, or is it too early to say at this juncture? >> the authorities are doing on-site inspections now and i think differences among banks will have to be sorted out. once that is sorted out, we will have to come up with a mutually acceptable solution. >> i'm wondering what you think about the optics saying to the world at a time when korea wants to show it is opening up its

financial market and becoming an international finance center >> >>. i don't think the suspension of shortselling the last long and i don't think it will last long because the authorities also adhere to the principle that we need to allow investors to make decisions freely in order to move forward toward the global market. i think it is intended to complement the shortselling system because there are incomplete features to the system and there is some shortcomings that need to be addressed. once completed, shortselling should be resumed as soon as possible. it is most important to create an environment for investors to invest freely come but you can continue to take something that has shortcomings. the inspection and short -- supplement new york will be done quickly and i think investor share that perception. authorities will resume as soon as possible when things are dressed, so i'm looking forward to that. >> what is your stance on timing?

can you give us a sense of how long we have to wait? >> i think we need to complete some i.t. systems to improve the shortcomings that have been found, and as for the timing of that, think it will probably be resumed during the first half of this year. annabelle: that was a ceo speaking exclusively to david ingles in seoul. get a roundup of the stories you need to know to get your day going in today's edition of daybreak. it's also available on mobile. customize your settings so you only get news on the industries and assets that you care about. this is bloomberg. ♪ psst. hey, sarah. hi. if you had to choose, would you listen to elevator music all day or deal with payroll compliance? payroll compliance, for sure. wait. for real? switching to gusto made staying compliant much easier. on top of seamless payroll, they automatically calculate

my taxes and file with the right agencies for me. can gusto help my small business with compliance too? definitely. thank you so much. choose payroll compliance without the ups and downs. that's working with gusto. welcome to ameriprise. i'm sam morrison. my brother max recommended you. so, my best friend sophie says you've been a huge help. at ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. our neighbors, the garcía's, love working with you. because the advice we give is personalized,

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the pony suite, choosing new president and government to lead the country for the next five years. investors will be closely watching for signs of policy continuity or change ahead in one of southeast asia's largest economy. haslinda amin has more on what is at stake. >> campaigning has been intense in indonesia to win the support of more than 200 million voters spread over a vast archipelago with 17,000 islands. it's a three-way fight for the top job. leading opinion polls is a military general turned the fence minister, accused of human rights violations. he ran against the ongoing -- outgoing president in the two previous elections and lost both times. now the two are teaming up.

there is criticism among people who see the pairing as an attempt to create a political dynasty, rekindling indonesians past. the former governor of central java was once supported, but they have since fallen out. he has the backing of the largest coalition partner, indonesian democratic party of struggle, which incidentally is also his party. and finally, an academic who became the governor of jakarta. he's been the most critical of the policies and his running mate has strong ties with the largest muslim organization. this is a consequential election with a lot at stake. during his two terms in office, he help her veil -- propel indonesia onto the global stage,

establishing stronger ties with both the u.s. and china. >> we think there will be very important implications to the region. a lot of investments have been coming in from china, from south korea, the u.s., and europe. so it does have some implications on the regional economy and whether indonesia will continue with the policies of the administration. >> at home, he spent billions of dollars funding infrastructure projects and green lighting such as moving the capital from jakarta and expanding high-speed rail, prompting debt concerns. indonesia aims to become the fourth largest economy in the world by 2045, whether it gets there are not may depend on how this government shapes its policies and priorities to drive

growth. haslinda amin, bloomberg news. haidi: another political story we are tracking closely, lengthy delays with the election commission, receiving results from a small minority of polling stations. the commission has offered no expedition for the delays. the former prime minister has said little on the elections. claimant on social media that independent can

annabelle: you are watching "daybreak: australia." wti online for about a half-hour so far. a slight extension, and uptick

here in the session. it's being driven to doubts over the gaza deal for the hostage negotiations that are being carried out between israel and hamas. netanyahu dismissing a potential cease-fire and saying he sees no other solution then total victory in the war. that has led to that price gain. it's also being added, albert -- algorithmic buying is playing into it. haidi: speaking of the canadian oil producer, matching china's output. production is surging as oilsands companies prepare for an expansion of the pipeline that runs to canada's pacific coast. the premier of alberta is in washington this week drumming up business for the province's

energy resources. she joins us now. wonderful to have you with us and we appreciate your time on what is undoubtedly a busy trip. can you give us an idea of what has been achieved, some of the discussions and deals that are on the agenda and on the table for your visit? >> one of the main things i want america to know is that we really are the largest supplier, when they're importing oil, they are importing 50% -- 56% of what they import jogmen their own production comes from us. we want to make sure that people understand that we want to be a responsible provider of this resource. we have a target to be carbon neutral by 2050 using technologies like carbon capture utilization and storage as well as expanding into ammonia and hydrogen production. we really look at the challenge we have us being one where we

address the dual problems of solving global energy property at the same time as reducing global emissions. we are in the process of trances -- transitioning way from emissions but not from production of oil and gas. haidi: the transition prospect makes it a complicated and interesting landscape when it comes to demand and you said you want to double production, natural gas output is the highest since 2009. how do you see the doubling of that in a world that is shifting quickly away from decarbonization? >> a look at america, they continue to increase their production and at some point their fields are going to fall off in production and they will need to replace that supply. we believe -- alberta will be ideally situated to do that.

we've heard loud and clear from our international partners, particularly south korea and japan, that their model and moving away from colas to be looking at things like hydrogen and ammonia. we believe we should be that principal supplier to not only our american friends but also our friends around the world. i look at the entire picture of reduction of global emissions as one where the wealthy nations will achieve that target by 2050. china has a target of 2060 and india by 2070. as we develop the technologies to develop these resources, that will ensure we are able to meet that global demand for energy as well as have a lower emissions target. i think we can achieve all of that. annabelle: i'm interested how the expansion plays into that. it's been more than a decade in the making.

what sort of message does that timeline send to other investors out there looking at potentially more pipelines being built in your province? >> i would say america is one of our dearest friends and best trading partners and in some ways our principal and only customer. we supply the rest of canada as well as america. we now can reach tidewater with both our natural gas resources as well as through trans-mountain pipeline. we have the ability to diversify our customer base. we still will have america as our principal partner and customer but once you have those products on the ocean, we really can go anywhere. americans have said they might be pausing on their lng export. i look at that as an opportunity for us. if we can be an additional supplier to the world of this vitally important energy source that is lower emissions and

lower polluting, i think we have a role to play in being able to expand our markets that way. haidi: which markets are you looking at in particular? how much do you think they would be buying as well? >> the value proposition is high because they can be used for a variety of things, not only combustion and diesel but also for asphalt. whether we're driving gasoline powered or zero mission vehicles, we will all need roads to drive them on. being able to find those additional markets so they can be refined locally to whatever that unique mix is for each nation, we are open to having those conversations. that will be a new era for my

province as well as for canada that we can finally talk about the ways in which we can meet that global demand. i'm looking forward to having that conversation. the issue of lng, japan is keen on either having lng exports, but principally they are interested in ammonia. alberta has one of the best urology's in the entire world for carbon capture utilization storage. we had the ability to sequester the equivalent of all the emissions that have already been produced by man so far, to give you an idea of how great our geology is. if were able to capture the co2 and then export ammonia to beat that market, it opens up an entirely new conversation with our friends in asia. haidi: we've been talking about trade with asian markets for your province. do you imagine if we look at the

possibility of a second trump presidency we are seeing donald trump leading in the latest poll, does that bode well or ill for your province and the businesses you have control over in terms of global trade? >> in our current environment, alberta and america are trading 161 billion dollars worth of products. so i would say that we will have a strong, healthy relationship regardless of what the politics are in the white house. i always do get concerned when i hear politicians talking about putting in new taxes and america by first policies. whether it's a or democrat white house, we look at the special relationship we have with the u.s., mexico and canada free trade agreement we look at having north american energy

security and supply, having canada and mexico work in conjunction with the u.s. is the way this continent can be a powerhouse. i hope that canada can carve out an exemption. annabelle: on the ownership of the transmountain pipeline, we know the trudeau government has said it doesn't want to be the long-term owner. bloomberg has been reporting potentially on some sale of it. we understand from some indigenous leaders in the country that the process has stalled. >> we have been successful with what we called our alberta indigenous opportunities corporation, putting up a backstop so this kind of assets can be transferred into the hands of indigenous ownership. we were able to backstop a major deal with 23 nations.

we have told our federal counterparts that we're are prepared to use her expertise as well as that kind of support to make sure there is a significant portion of that pipeline that ins up in the hands of the nations in alberta and british columbia that will be impacted. we have a model that is proven it can work. we fed's so much success we've increased the amount of loan guarantees we are willing to backstop up to $3 billion. having the first nations as an anchor owner would go a long way toward enticing other owners. i don't foresee that being a huge difficulty but they have to get the indigenous ownership there first, i do believe. annabelle: thanks for your time, the premier of alberta, canada. watch us live and see our past

interviews on her interactive tv function. become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. check it out at tv . ♪

haidi: arm shares surge almost 48% in new york after asked spending help bolster the chip designers forecast. the ceo told us the remarkable opportunity presented by ai is still in its early stages. >> this is really the result of strategies that were put in place a number of years ago that are now just starting to come to fruition. >> when we think about basically more of your technology going into more types of equipment, we've seen diversification out of phones. pain is the strategy going forward. many would say you're basically making the chips. how do you see the relationship going forward with qualcomm, for example? >> a lot of folks did not really understand the company well and

obviously we have a lot of growth potential for the market, but arm is in a lot of devices that people may not even think about. we are in a ring smart camera, we are in the samsung smart appliance. just about every device you can think of has arm inside it. and just about every device you can think of needs more and more . >> talk about ai, jeffrey saying it shows you are a beneficiary from ai. you were at nvidia before. they are all about ai accelerators. i'm interested as to whether that would be an area you would get into, other than service. >> right now it is a great partner. the super chip uses a lot of arm cpus, which is a great solution for high-end ai training in the

data center. when you start moving to smaller devices like smartphones or pcs, ai is going to run there, too. there's a lot of things on a browser doing search based on the circle, that is ai. what we are seeing is a drive for more and more computing capacity to run these algorithms. what designers need to do is future proof the designs with more and more compute. that is driving a strong licensing cycle. annabelle: arm was a key focus for softbank, or is a key focus as it repositions it strategy around ai.

that was what came out of softbank's earnings yesterday, swinging back to profit after four quarters of losses. let's get more on that now with our tech reporter from tokyo. i'm curious, what was your key take away from the numbers that came out? >> like you said, they swung to profits for the first time in five quarters. profit was helped by recovery in their assets and of course, while arm results did not have a huge impact on the earnings itself, as you see from the share price reaction, the surge in arm shares are having a very positive impact on softbank shares because softbank owns 90% of arm. there was a lot of focus around how softbank is focusing on arm,

trying to maximize technology for future growth into ai and how they are busy, always think about what to invest to help maximize the potential of arm. but another key thing was, the new investment activity remains quite small and minimal. there's a lot of questions around what is happening with new investment, both at the vision find also the group level. so that is the key question that is hanging. haidi: we got some answers before the shares plunged. >> one of the things softbank is doing, they keep offloading a few of the key assets that have, and one of them was pay tm. we spoke with the division fund cfo yesterday and he told us

that a majority of the estate has been uploaded before the recent stock crash, and based on uncertainty surrounding ptm. and now softbank only owns about 5%, but compared to roughly 18.5% that softbank owned around the time of pay tm's ipo. i think we can expect not just pay tm but some offloading of shares of key assets by softbank going forward as they continue to manage exits and new investment going forward. haidi: our bloomberg technology reporter with the latest on softbank. some of the other stories were tracking this hour, bloomberg has learned that governments axis under investigation on

whether properly charged fees for futures traits. sources the u.s. regulator has sent subpoenas for information about those transactions. it's a latest breaking news of the headache for the bank that paid $50 million last year to settle at least four cases. exxon mobil plans to leave equatorial guinea within months, the small west african nation became one of the most hottest oil provinces around the turn-of-the-century. bloomberg has learned that saudi arabia is considering a secondary share sale in aramco. also in talks with other banks over the offer that may come in the next few weeks. follow-on offer would -- offering would raise about 20 booming dollars, making it among the biggest in recent years. -- $20 billion.

energy transfers lake charles project in louisiana which is not get under construction. energy transfers request to extend its existing permit for the plant was denied last year. we have plenty more ahead, ♪ ♪ this is bloomberg. and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

annabelle: the richmond fed president says policymakers have time to be patient about rate cuts, with continued disinflation. he told us exclusively that is looking at data around this time of year that cautious approach. >> i think the data has been remarkable. it has been remarkable across the board. the fourth quarter gdp, the jobs numbers last month, and all of them do talk about an economy that is fundamentally healthy, that is a great thing. i'm always cautious about numbers around the turn of the year. a great example would be the jobs numbers last month. the actual jobs were down 2.5 million because of lot of the retail folks that were hard for christmas and get laid off

after, but the seasonal adjustments ringing up to a positive. that's a pretty good seasonal adjustment. i'm glad to see it coming in, that -- that is the best data we have, but i will not take too much out of anyone month. >> markets are interested in when the fed is going to cut, and i know you said we don't have to be in any rush. but with data like this, are you telling people we are doing fine with rates where they are? >> i have said you don't have to be in any particular hurry. you have a dual mandate with employment and inflation. the employment side of the mandate is operating at historic levels, 3.7% unemployment. it's a very strong labor market still. it is gratifying to see inflation coming down and hope it continues to come down. we have some time to be patient. >> you said you don't have a

roadmap for rate cuts. it would imply something is wrong with the economy, i assume you would agree. >> it's hard for me to get into the market forecast because there are always development going on in those forecast. one is rate normalization, the other is the economy taking a wrong turn and you come down faster. to me there is certainly a model , that's not a model that is good for the economy, that's just one of the things that could happen. then there is the model where you toggle rates down as the economy comes back into balance. >> how do you make a judgment on when you think it will be appropriate to cut? the fraser chairman and others have used is measurable progress for the 2% target. how would you define that? >> if i could get these kind of

numbers sustained an even better, broaden, that's what were looking for. sustained and broadened. haidi: the richmond fed president speaking exclusively to bloomberg surveillance. we get into the start of trading across asia, a number of major markets across the region are closed for the lunar new year holiday and others with shortened trading like hong kong. lower volumes and a lack of guidance in terms of how much trading action we see in the days to come, particularly today. a little bit of upside, austrian equities up about .10%. we heard from michelle bullock saying inflation doesn't necessarily have to be back but trying to tread a fine line between signaling too much in either direction.

kiwi stocks up by about .4%. again potentially facing more downside pressure but equities set to climb after we heard from the boj deputy governor suggesting policymakers would be even when they in negative interest rates in japan. just a reminder, market closures in china, taiwan, the philippines, vietnam and indonesia. hong kong and singapore will have an early end to the day. ♪

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trade. a lot of markets are on break for the lunar new year. keeping track of the ones that are open. we are seeing bright spots and japanese equities are trading. annabelle: the nikkei rose by the most in three months yesterday, hitting a 24 year high. the nikkei up 10%. adding to those gains. we had the yen weakening. trade is closer to the 150 mark. we are tracking the nikkei 225 extending