♪ >> welcome to daybreak

australia. we are counting down to asia's nature market opens. annabelle: i'm annabelle droulers. a positive lead in with the 24th record high of the year, investors race for a spike in volatility. haidi: bond traders are trimming their bets. chris waller needs months of disinflationary data. annabelle: holding a key rate with currency markets watching for signs of easing ahead of australia's central bank. haidi: that is the decision, markets online. futures in sydney with an upside, watching names including rio tinto including commodities.

aluminum is the one to watch. a 23 month high. kiwi stocks are up as we get ready for the rate decision. the aussie dollar is looking for leeway overtrading in the key will -- kiwi. in particular as we get the two-year inflation expectation holding steady. we've had the shadow board recommending that the ocr have no cuts until 2025. that is overshadowing the meeting. nikkei futures showing optimism in china futures softer. i wonder if concerns over property have been enough. we have one top fund that

prefers kiwi bonds depending on what we get, lower inflation could make them signal a pivot according to asset management. annabelle: that is one of the key questions to ask, but u.s. futures coming online fairly lack. as we said in the headlines, 24 -- 24 -- 24 records for 2024. big enthusiasm around nvidia and we sell the stock moving higher it is a count down to the earnings results, the bar is high. what does that signal? the current rally is sustainable as investors say? it could lead to a more inclusive market rally but not everyone is so bullish.

one outlier is morgan's mike wilson says ai impacting the bottom line for nvidia. take a listen. mike: aia is everywhere except in the numbers. there have not been a lot of winners, lot of spending but it is not rising the tide. there are ai dollars out there but what is surprising is the overall i.t. spending is flat. haidi: brian is a senior portfolio manager and there are a few different ways look at this narrative. in terms of creating more breadth, you see a high

concentration of flock thing the pullback in the rotation in value. >> that's created key indices. the big one in the u.s. is the s&p 500. top 10 names make up more than 50% and those are stocks you would imagine like alphabet, nvidia, alphabet microsoft. the exuberance begins to fade can you see a rotation in markets. maybe tomorrow after the earnings results but investors broaden exposure, rotate out of growth centric trend into value. maybe tomorrow is the day with big earnings coming up. haidi: what is the trigger for

you? brian: we got here through exuberance through the trade of ai and the growth rate in the u.s., it tends to be in narrowing effect, people focus on you are companies with high visibility. i think about the trigger, exuberance fades and we are seeing that. nvidia will be held to a high standard. anything less than a beat and a rate means downside pressure and rotation or receive see the economy strengthen. if the economy strengthens, investors will leave top names and move into a broader footprint across the u.s. economy. haidi: when you look at the fear gauge, the vix index, below 12

taking us back to pre-covid levels. do you think investors are complacent about risks? brian: they are complacent whether it is being isolated or thinking about how the consumer is weakening in the u.s.. it has been a last bastion of support but seek clear signs of weakening and i'm seeing in the results with consumers trading down, private label goods, deferring maintenance and investments. i'm seeing concerns that investors are complacent. the market expects the fed to

bail but as we think about macro view, i am not confident. letting inflation data stay lower before making decisions that will support the economy in my opinion. haidi: more defensive in positioning, you are saying investors should shift out of growth, which names stand out to you? brian: i don't want to be pessimistic. risks are out there. i want to focus on companies with visible demand through the next phase in companies with great balance sheets that they can use to buy back stock or grow their dividend.

or investing through acquisitions. what i see today is consumer staples left behind as investors seek growth. those stocks are attractive and that is why like consumer staples and not discretionary. weakness is broadening into the middle, a negative sign. let's start with the discretionary and be careful, get bold in areas that are underpriced and commercial real estate is underpriced. cbre is very attractive when we see transaction volumes increase again. haidi: great to chat with you, brian. cohead of the global equity team. turning to central banks, holding rates, a policy decision. bloomberg economics says first quarter inflation will outweigh. our breaking news reporter joins us now. what are the expectations set

here and nuances we might hear? tracy: yes, as you said, the consensus is no change, 5.5%. the central bank projects forward and that's what eyes will be on is the news conference. scope for easing is unlikely story. inflation is above one or 3%. importantly, inflation is a measure of price pressures. if that is a concern for policymakers. annabelle: when it comes to

potential for cuts, when do expect to see those? reporter: markets pricing as many as two cuts in the fourth quarter beginning october but a number of economists are saying it is a 2025 story. essentially because of inflation pressure. it remains to be seen with the fed moving, whether that brings sure. i am feeling 2025 may be the time for cuts haidi: what is the tension of conflicting signals? that is a theme most central banks are battling in terms of working out there right sejal lang? tracy: interest rates can only achieve so much.

domestic pressures, from insurance, local government taxes, rates driven via immigration and local government policies. ironically some say servicing costs created five high interest rates are now passing on to consumers. it is a bit of a circle so a lot of inflation pressures coming from things that the reserve bank does not have control over with its interest-rate lever. annabelle: that was tracy withers with the rba decision three hours from now and they are watching very closely with the fed does, run and center for the function, get around about that story and more to get your day going in daybreak.

it is available on mobile in the bloomberg app. more ahead, this is bloomberg.

♪ annabelle: after unparalleled gains, china has been hit by blows including a trade war

presenting a unique problem for the president who cannot bank on economic strength. tom has been looking into this for today's big take. tom, that is the crux of the issue because china does not have elections where people can vote. that is not the case in china. you've got income growing. how is that frustration or -- or -- or does lester expressed at all? tom: we frame this in ronald reagan's famous question in 1980, are you better off than you were four years ago. in the u.s., the answer was no and that is why jimmy carter

packed his bags and left the white house and ronald reagan became president. now in china, for the last 40 years if you ask chinese people are you better off, the answer was a resounding yes, incomes were rising, wealth was rising and that was a crucial underpinning. if you ask that same question today, the answer is much more complicated. many people we spoke to, their incomes are not rising, they are falling. average income is climbing, but many are doing better and the real estate crisis is hammering wealth in china. chinese people are not worse off in terms of income than they were, but income is rising slowly and in terms of wealth,

anyone in china is feeling less rich than they used to and the concern is chinese politics will face a new challenge. haidi: at a time when social welfare is not great. always complaints about health care, hospitals, childcare and schools. so i suppose what is going to be the straw that breaks the camels back? we've seen the leadership survive many instances where you think this might just be the thing that pushes things over the edge. labor protest that we've seen. tom: my view is china faces this challenge but the communist

party is resilient and adaptive. it is demonstrated that in the past. we can think about it in terms of three dynamics. the first, putting stimulus into the system. china does not have a bazooka but beijing is wielding water pistols and firing them in the real estate sector. the second part of the strap is a narrowing of the space for dissent. entrepreneurs were welcomed into the communist party. there was space for civil rights lawyers and labor activists to have a voice. under the current leadership that is not the case. and the third part of the strategy comes back to your

points, haidi, missing social services, missing welfare. the third part is the common prosperity agenda, recognizing when the pie is growing slowly, it needs to be shared out fairly. haidi: to get the economy back on track is that mean internal paresh means that we see the economic policy likely to let go of the trajectory even if it means more complaints from u.s. and europe? tom: lots of western economists would say the problem with china is consumption is not strong and what xi jinping needs to do is boost spending, spend more on education, health care, pensions, on ointment, get household income up so households can consume more in

the economy is more balanced. clearly that is not xi jinping's view. his view is the long-term driver of chinese competitive this, economic dynamism, is moving up the value chain, dominating electric vehicles and sustainable energy. as we have seen with sweeping tariffs on industries of the future and in europe with investigation into electric vehicles subsidies, that could be a problem down the line. the u.s. and europe were willing to pay for the first stage of china's development by buying textiles or signaling strongly now that they are not willing to pay for the second round of

china's development, high-value manufactured goods which they are targeting. haidi: chief economist tom with a great big take. you can get more on how china is navigating the slowdown on the terminal. you can also listen to the asia podcast on iheart radio, and spotify. more to come, this is bloomberg. ♪ recipes written by hand and lost to time. are now being analyzed and restored using the power of dell ai. ♪

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and startups start up. because it's smart, dependable, and steady. all words you want from your bank. for nearly 160 years, pnc bank has been brilliantly boring so you can be happily fulfilled... which is pretty un-boring if you think about it. ♪ >> one of wall street's bears is turning positive. michael wilson see is a record high of about turn from his previous view. >> i would not be surprised,

think about this year, we had three similar outcomes. one was a soft landing consensus and that you have a no landing re-acceleration with stickier and way shannon stagflation. and then you're back to a soft landing. you cannot roll out a recession. these could all happen with a higher than normal degree of certainty. that is the headline, no one knows any. at a point in time, our mistake was we do not know as much as everyone claims to, that is humility. anyway, the point is our report in this update was about how to make money when you have zero

upside and that is what clients pay us for, how will we navigate that? we talked about sector ideas. that's not the headline people want to write about, but that is what we want to talk about. >> we will talk in a moment. are you saying the price target is not important? >> is not important. they don't care about the target. one of the most important things is out for generation has been spectacular. the way we measure it is this is the best we've seen since we started recording. that's what people care about. return to help them with what

kinds of stocks work and when we skew you need to pit it toward different securities. it is a soft landing outcome. we are not confident that we want to make the bet. it means large caps over small, over discretionary. overweight utilities and slowing growth. >> do you see areas that are important? >> large-cap quality. not just high-growth, cyclicals. it is of the quality and we see

it clearly. it has been the best factor for the last year, a classic late cycle winner. annabelle: that was morgan stanley's equity strategist speaking with our colleagues. and fed officials are speaking. susan collins saying the fed is well-positioned.

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♪ annabelle: singapore airlines

confirmed one person was killed and others injured after a flight hit turbulence. avril is in singapore and what do we know? avril: this was a tragic incident. the flight was supposed to be uneventful. set off from heathrow to land in singapore, 13 hour journey. the one it was over, we heard how it hit severe turbulence and passengers reported how they were in one seat and then we saw pictures you are seeing, oxygen mask getting deployed from the overhead compartments and things crashing. very turbulent incidents. we heard how one person died, a

man in his 70's because of a heart attack. several others were critically injured and rushed to the hospital. the flight made an emergency landing. what we know is that singapore authorities, transport investigators are being sent to thailand to help with investigations. the civil aviation authority is doing the same. haidi: what if we heard from singapore? >> yeah, they've confirmed injuries and talked about sending condolences to families of victims and in terms of thinking about whether such incidents, they are rare.

airbus said 240 incidences of turbulence reported to them and out of them, 30% resulted in injuries, flight safety experts say 75% of such injuries occur when cleans are above 30,000 feet. see you get the sense of how it is not common occurrence, such injuries on such flights. haidi: interesting story on the bloomberg takes a look at the impact of climate change with severe turbulence doubling or tripling. if climate change continues to play out, so interesting take their when it comes to this incident. sticking with climate,

governments will need to increase spending, $34 trillion. let's bring in the head of a peck with the mounting costs of this transition and are we close to meeting it? >> thank you very much. if you look at investment requirements, in the economics-based transition which does not take into account targets, investment is 18% lower so while investment numbers are high, it highlights we are seeing the actually additional cost of paris agreement is not

significant compared to just economic based transition. haidi: so then when it comes to getting to net zero, what are the key technologies that could help reach that point? guest: there are nine classes that put us on track to hit climate goals. half are commercially scalable. those are degrading. we need to invest more, scale up renewables. if you look at solar rates globally, we are aligned with net zero, but we have to scale up more and deployed energy storage and dvds, these things are commercially available, we just have to accelerate.

the one that is borderline is heat pumps. they are being rapidly deployed, but not globally, we need to scale. then we get into technologies at the far end. carbon capture, storage, fuel, demand, if you look at these areas, these are where we have made progress and momentum. the amount of scaling compared to what we are on track for is significant. there needs to be attention into these areas. similarly nuclear power, we would have to scale up deployment if we want to be on track. annabelle: what are the broader implications? we talk about the need to fill

the transition gap. guest: if you look at our net zero scenario, it not zero. we look at coal and oil in both scenarios we see demand being in decline so in both scenarios we expect demand to have peaked last year. this may sound surprising as we hear about coal power additions in china, but it is important that even though china is increasing capacity, load factors continue to decline. for oil similarly in the economic transition we see peak by the end of this decade and a decline. in a net zero that happens this year. gas is the only one where the scenarios diverge. we see a study recovery from low

consumption levels and by 2050 we see continuous growth and demand beyond 2058 so in the transition, gas demand is 12% higher than 2022. in the net zero we expect gas demand would seek around 2027 and there would be a gradual decline. we expect demand will be less than half of demand in 2022. annabelle: that was allie, thank you for your time. checking out on markets we are 20 minutes out oh then and you can see a little upside coming through. yesterday we saw the asian gauge

snapping seven days of advances. a little bit of a reversal, it is a big countdown and overnight we saw nvidia advancing, a lot of expectations and a high bar for the company. can we reach it? more ahead. this is bloomberg. ♪ (office chatter) is it me...or is work not working? at least, not the way it could work. your people are buried in busy work. and you might be thinking... can ai make it all work? can ai help your people work... without all the workarounds? feel better. make customer service work the way customers expect? that one. make your old tech work with your new tech? thank you. and todd here is wondering, can ai do all that...

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♪ >> there is a gap between demand and supply. other factors will cause that gap to widen further. electrification, heavy industry moving to lower carbon intensity. when we think about the natural decline, it will put pressure on the supply side. demand will grow. so the pressure will be acute as we move on in time. haidi: megan o'neill speaking to us, this is how we are trading, fairly range bound, the focus is

on the opec-plus meeting where tensions are the status quo. this is a picture, decline through the new york crude prices. industry report pointing toward inventories. wti is dropping for a third straight session. 1% lower on tuesday, stockpiles rose by 2.5 million barrels last week and we saw a rise in pushing supplies. elsewhere when it comes to commodities, big news has been aluminum, 20 three month high. rio tinto was the big schrager for that. some supply concerns for the metal, cargoes from refineries in cream lanham -- queens land, we saw a big spike in aluminum

price. annabelle: some of those metals are key in the ev transmission. coppola is one of the ones we are tracking. our next guest founded robo car startup which develops driverless cars on specialized roadways. the company winning the backman of sam all in and suzuki. they are developing a robo car network. joining us is mark, founder and chief strategy officer. we were showing the vision of the glide cars. how would i slain this to my mom, how do you explain what they are? mark: it's great to be here. i appreciate the question. this is a mass transit system but instead of using big trains

or bird also slightly don't today we give every passenger their own vehicle and it is the vehicle you see on the screen, a battery electric autonomous vehicle and you get it to yourself. the way you get a ride-hailing vehicle, it drops you off where you want to gold and does not stop or anyone else and that is how it works. it is like mass transit but for the cost of a train. annabelle: ok. so you got some high-profile backers like suzuki, expanding in asia or, setting up an office in tokyo, we want to know exactly when and how you are planning to deploy the funds? mark: brilliant. right now the paperwork is coming through, we will be setting up a larger office.

i will be there to open it so we are moving as fast as we can. we have fantastic investors and partners. you mentioned suzuki. there are other companies we are partnering with and the purpose is to bring the technology to asia-pacific. what we are solving for his urban transit mobility, from work to home in home to work without congestion. the way we do it is with mass transit and the problem is the technology that the industry offers for the last 100 years has been rail technology. trains, subways, train technology. train technology is so expensive to the build and to operate that most cities cannot afford it so most cities are stuck in

congestion with people having little or no options other than being stuck in traffic. what we are doing is bringing a new technology that is 1/10 the cost of rail to build, but also to operate, which means we can offer mass transit for the first time in 100 years with no subsidies and we can build more of it. we need partners and we built that to our dna which is where fantastic partners come in to help us deploy the technology. haidi: tell us about those partnerships. can you give us details about the manufacturing side? mark: as you can see, instead of big buses or trains which is how we think of mass transit, we

shrunk the system down to the individual vehicle and that means the vehicles can be produced with commodity automotive supply chains. within that world, we decided to pick the best player we knew which is suzuki and they are able to produce our vehicle and that is what we would like to do. haidi: can you tell us about your funding plans, right? in terms of where that will be the void and critical priorities for you? mark: certainly. if you think about the ark of any startup or technology-based enterprise you have to come up with a thesis, prototype it, prove that it works, work out the kinks and bring it to mass production.

in the context of public service which is what mass transit is, we have a layer in their making sure everything is extremely safe. safety standards we apply in order to operate like in the u.s. as we contemplate japan and asia-pacific, the standards are very, very, very strict. so we have now passed all the thresholds of the recess of inventing the technology, proving it works, designing the technology and now we are in the stages of demonstrating we are 100% safe to move people into vehicles. the last step is the hardest, most expensive and most obligated step. that is what we are deploying our final phase toward. haidi: as you said, you -- you are looking at crowded cities in

asia. these are in focus, but how do these work when you have a scenario with heavy congestion and also the volume of people, would you want something bigger than a glide way? something that can transport more people? mark: i'm so glad you asked. what we design is a technology that is counterintuitive to how we think of mass transit which, we think of big things like big trains, big buses. it turns out you can packet vehicles. the internet takes a data file, brexit up two packets and routes them across a network between bones if your emailing a photo.

we do the same thing with people and small vehicles. so we go from small fleets of large vehicles like trains to large fleets of small vehicles like those you have been showing. in order to make that work you need two types of technology and both are driven by ai. i'm sure that will not surprise you. it is changing the world. you need ai to drive vehicles, autonomous driving is understood. the second thing is you need the operating system to coordinate the fleet of vehicles carefully, such that all vehicles can move unencumbered, d conflicted. but crucially to give high pacitti a little space. so the lanes we use are dedicated, only two meters wide, the size of a bicycle lane, half

the size of a car lane. we can move 10,000 people per hour while giving everyone their own ride, so you do not have to share, that is extraordinary. from inexperience point of view and congestion relief point of view. in order to relieve congestion you have to do two things, provide capacity, 10,000 people per hour per lane is good. but also, provide a fantastic experience in my first job was at apple. my team members come from companies like that, where we start with the passenger experience because what we are competing against is not trains, it is personal cars. we want to get you out of the car so we provide experience that is always personal and private, a point-to-point journey, we do all of that for the standard fare of a public

transit ticket. so we provide the greatest capacity at the lowest cost with the best passenger experience and crucially, the lowest carbon footprint. that is key to get cars off the road and provide greater equity mobility. haidi: mm-hmm. all right, mark seeger, the founder of glide waves. got exports in trade numbers rising 8.3%, we are seeing exports in china rising more than eu, falling. a widening in the trade deficit. 460 ¥2.5 billion. the japanese yen fairly steady. ♪

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haidi: japan's agricultural bank under tension. investors looking toward results for heavy losses from its holding. osha investing editor has more. they are in the spotlight for the wrong reasons. russell: just a little background, many may not have heard of the bank, japan's biggest agricultural bank.

rather than being conventional, it's more like in investor. millions of farmers around japan, it has billions in assets. during negative interest rate era it had been investing abroad for higher returns including foreign bonds. over the last couple of years with those rate hikes, the value of those bonds has declined in the bank is finding itself in a situation where funding costs are higher than returns. so really it is looking to bite the bullet and realize that losses will clean up the balance sheet. and of course that means realizing losses. looking at ¥500 billion this year as it cleans up and then in order to do that, it will have

to raise capital so looking at ¥1.2 trillion, cap and hand to farmers around japan. farming cooperatives that will step up and help the bank. haidi: that was russell ward from tokyo. a quick check on crypto space, a lot of market moves or ether, over the past few days, up more than 20%. real euphoria sweeping through because there's growing optimism investors would approve an etf fund that directly invest into the token. more ahead, this is bloomberg. ♪ boring is the unsung catalyst for bold. what straps bold to a rocket and hurtles it into space? boring does. boring makes vacations happen, early retirements possible, and startups start up. because it's smart, dependable, and steady.

all words you want from your bank. for nearly 160 years, pnc bank has been brilliantly boring so you can be happily fulfilled... which is pretty un-boring if you think about it. annabelle: this is daybreak asia

, counting down to the open. it is that big camp down from investors to the nvidia numbers due out later, and the sky high bar, can we jump over it? haidi: and what happens to the rest of the market? we see more breadth being created, maybe a rotation into value. certainly, central banks are not further off, we have the rbn decision and expectations are to be unchanged, but we are watching for any nuances or communication about how close we are to easing. annabelle: not just the rbn but fed officials over the past hour, the boston fed president, susan collins, cleveland fed president, and also the atlanta fed president reinforcing this

need to keep