Welcome to daybreak australia. I am haidi stroudwatts in sydney. Annabelle i am Annabelle Droulers in hong kong. In the top stories this hour, asian stocks primed for gains after an upbeat day on wall street was job data supporting the case for fed rate cuts this year. Around 600 Japanese Companies as well report earnings later today. Haidi president xi pledging fresh investment in hungary as he receives backing for beijings pushback against overcapacity claims. Annabelle we are to the bloomberg tech summit as Silicon Valley leaders talk ai and much more. We will hear this out from snap ceo. Kicking off with breaking news this morning, we have perus central bank making its Rate Decision as forecast by most economists. We are seeing that cut coming through to 5. 75 earlier at 6 . We did action have a decline last month in Consumer Prices that sort of green lit what has been a secondquarter point reduction here but inflation last month slowing to 2. 42 in line with the Central Banks targets and actually toward the end of the year, its going to rise or climb down to around 2 . Of course, peru is not the only centralbank in the region. We have the mexican centralbank which elected to keep its key rate at 11 in the last couple of hours. Haidi. Haidi of course, we are watching what looks to be a very busy friday session here in asia. You mentioned the earnings story when it comes to japan that will be front and center when tokyo comes online. In sydney, futures up by. 3 and we are really primed for some pretty robust gains in this fridays session. It was an upbeat day with jobs data that supported the comfortable case for fed rate cuts this year so we are seeing probably really equity futures across the region are climbing in this early part of the morning. In australia in particular, we did of course see that rally across the last few sessions stall in the previous day and we had a five day run of gains and retailers saw particular weakness. We will be watching for that in particular in this friday session as well but we could see a pop of. 3 for australia and of course, as you mentioned, japan is really want to watch with huge news flow from the earnings calendar today. Annabelle thats right and also the ones that have been reporting across the course of this week so lots of different japanese numbers coming through but in the u. S. , dynamics were a little bit different. We actually saw equities continuing to climb. Futures today again pointing to some smaller upside as well but it has been the level of positivity that has come back through, really reinforced by these bets that the fed is going to have the room to cut rates later this year and we have a higher than estimated jobless claims as well really backing that idea among investors so we have the s p 500 within 1 from its alltime high but a survey as well saying that for the next 10 move, basically, traders are split at this point. Around 52 are saying its going to go higher. 48 seeing a down move. Haidi lets get some views from our next guest, still favoring Big Growth Companies in the u. S. The head of global Asset Allocation joins us now from seoul. Really great to have you with us. When you take a look at the settling of market expectations, the data so far in the communication we have had from major Central Banks, in particular the fed, do you think we are seeing valuations where they should get and do you still see that opportunity across rate sensitive maker cap stocks . Daniel yes, if we look at the overall market, we believe that if the expected rates are going down in the future, theres quite a bit of upside left for the major big tech as well as the s p 500 and also, that affects most of the Asian Countries, particularly tech heavy kospi as well as the taiwan index. If you look at the nasdaq 100, you are seeing a two digit growth in earnings and s p 500 is expected to show about 10 growth in earnings and if you apply about 4. 5 Interest Rate, we think that fair value of s p 500 is around 5400. If that rate is expected to go down to as low as 4 by the end of the year, we think the s p 500 can rise well above to 5007 hundred territories, and that would have a positive implication for a lot of the countries in asia. Also, if that happens, we think that the u. S. Currency should stabilize as well and that will have a positive implication for the korean won appreciation as well as destabilization of the asian currencies. So yes, we think that the rate will have a positive implication. If the rate goes down, then the implication for the indexes has further upside in the future. Haidi you see further upside for japan as well but it is interesting. You are perhaps even more constructive on some of the other tech heavy markets in asia. The likes of taiwan, korea, and vietnam. Daniel yes. I think we have got to think about what is happening in terms of the overall market. We are seeing the improvement in the productive ratios in the u. S. Because of the ai cycle, a lot of people are worried that in the first quarter, we saw some possible stagflation where the u. S. Gdp growth rates are going down versus the inflation pressures coming in. I think that a lot of people are concerned about that affecting negatively for a lot of the Asian Countries as well but we think that implication is actually a very shortterm effect, residual effect, rather than a structural issue. If the productivity improvement is happening in the u. S. , we think the inflation pressure should come down and that we will have a continuation of growth in the ai sector. A lot of the countries, particularly korea and taiwan as well as vietnam, has quite significant market i guess, the market share in terms of the chip businesses as well as the i. T. Businesses globally, so therefore, we will have positive implications as the u. S. Productivity ratio goes up in the future. Annabelle have you been concerned by some of the companies that have underwhelmed this earnings season in the chip sector . And thinking of amd, prince ands, or supermicro. Daniel yes. When you look at the overall ai business, as you know, we are seeing quite significant improvements in terms of the sales about the data centers, but we dont think that there is a heavy investment happening all around all the segment. We see that heavy hardware investment is happening, but as far as that, its difficult to get it out so we think that the companies with a very strong market share will continue to show significant improvement in terms of the earnings as well as the growth rate. As far as the other companies iq mention, amd, they might have somewhat too much expectation already priced in so therefore, the price improvement might be lagging but overall, we think nvidia as well as most of these major Hardware Companies would have a very strong Earnings Growth rate and i think that the share price should move accordingly. Some people might be saying that a lot of these companies are already highly overpriced but we think that if we look at the earnings as well as the potential growth in the ai segment, we think that it is not necessarily that expensive. Haidi what about chinasoft as well . We are seeing a lot more investors turning positive on this group but are you in that camp or are you a little bit more cautious still . Daniel well, i think that we can say, in the shortterm, we are quite positive because if you look at chinese government, they have some to spend, to use. As you know, they are cutting Interest Rates as well as providing liquidity, and also, they are supporting a Property Market so in the shortterm, we think that lower Interest Rate environment would occur instead of depreciating and effecting positively on the export side. We think that there is some more positive news happening in chinese stocks. However, in terms of a long run, we think their competitiveness is not necessarily rising. Other than some of the major sectors like the ev segment and renewable energies. If you look at the i. T. Segment side, they are improving in terms of the competitiveness but nevertheless, we think that their competitiveness is not as high as most of the other countries that you are compared with so therefore, in the long run, it might be not necessarily a positive environment to invest but as i said, in the shortterm, a huge liquid injection is always positive and therefore, Interest Rate sensitive stocks and the be sensitive stocks of china might show some positive rise over the next may be several months per se. Annabelle daniel, great to have you with us. On the back of those ocbc numbers, the offer they have made, we are seeing the announcement that they have announced a 1. 4 billion voluntary unconditional general offer for the 11. 56 stake in Great Eastern according to a filing with the s gx. They intends to increase the investment from the current state of 88. 44 with a view to delisting the insurer from the s gx stn so we are seeing that they are commenting that the Capital Position will remain strongly and then after this Great Eastern offer that they do intend to use internal cash to fund that offer. They expect that this will be earnings, adding to ocbc with a view to do list after that. They are basically increasing their 11. 56 stake and that it does not currently own in Great Eastern holdings. They are talking about the vast opportunities in one of the worlds Fastest Growing regions. That offer price of it represents almost a 37 premium over the last price. We didnt really see Bloomberg Intelligence expecting that the capital strength that ocbc could make more deals. We are seeing that bigger buffer than peers that it has, meaning potentially that ocbc has the further room to expand via m a and other deals after it did purchase cbas indonesian unit so we did earlier, if you missed that. Get the numbers from them. Revenue from lending gained. Fees surged as well. It was again one of the singaporean and regional lenders that reported profits that beat estimates. You can get that story and the roundup of some of the other stores you need to know to get your day going in todays edition of daybreak. Terminal subscribers can find it at dayb and its in the bloomberg anywhere app. You can customize those settings as well so you just get news on the industries and assets that you care about. This is bloomberg. So this is pickleball . Its basically tennis for babies, but for adults. It should be called wiffle tennis. Pickle yeah, aw whoo these guys are intense. We got nothing to worry about. With e trade from morgan stanley, were ready for whatever gets served up. Dude, you gotta work on your trash talk. Id rather work on saving for retirement. Or college, since you like to get schooled. Thats a pretty good burn, right . Got him. Good game. Thanks for coming to our clinic, first ones free. Haidi you are watching daybreak australia, taking into live pictures here. This is the snap ceo speaking at our Bloomberg Technology summit in San Francisco, someone who has reshaped a snap over the last couple of years but he is speaking about a possible tiktok ban in the u. S. A challenging situation for our team and our business and fastforward into you know, i think, back into a 22, we were a little worried. Real rates are 7 . I remember when you did that. Things might have to change, and so, you know, we were really concerned about the macroeconomic environment and sure enough, rates went up and that impacted the highgrowth tech sector so they have been a lot of ups and downs but the important thing for us is to try to adapt to those changes, to try to communicate as openly as possible with our team, with our partners, and just work through it but it has definitely been a learning experience. With a lot of those downs for the industry, you guys have been a real early mover. He scaled back on headcount before the rest of the social Media Industry and really the Tech Industry at large did. He refocused on new revenue opportunities. You have kind of been the contra indicator that has led the pack. When you are in the trenches, making those kind of decisions, what did that feel like over the last two years and 18 months, and kind of what were you relying on . Because nobody could point you are not pointing to anybody else and saying, they are doing it. For us, it is that combination about being really optimistic about our business and our ability to execute but really realistic about the environment that we are operating in so i think as we have seen some of these changes, you know, whether it was the disruption with the ad platform policy changes or the macroeconomy or the challenges we faced, obviously, with these ongoing wars, we just try to be brutally realistic about the operating environment but really have faith in our team and our ability to execute through it that allows us to keep that positivity that is so critical and such a volatile period of time. I think in that way, as leaders, our job is to absorb that sorority of external stress but see it clearly and chart a path through it with the team. To throw it forward a second, we have sitting at this moment where folks are looking at ai, everybody is talking about ai including in this room. How are you thinking about the balance in continuing to grow your ad business what you basically just transformed to a certain extent over the last 18 months and invest in ai and maybe there are some other executive teams who are perking their ears up, listening to you guys. How are you sitting here, thinking about where the investments go versus the rest of the business . Absolutely. So first of all, all the excitement around ai is warranted. It is real, not hype. It is real. And one of the interesting things about technology is that very often times, you know, the rate of growth of technology is not actually due to the technology itself. It is due to the way that humans adopt it. So very often times, we are paying attention to the way that humans are adopting the Technology Rather than the rate of the evolution of the technology itself because that really dictates, you know, how society will be transformed, how folks will utilize this technology in all of their businesses and of course in snap as also we have long used ai in our recommendations and systems and things like that but what has been exciting is the way we have been able to apply ai to image and video and 3d, which are all real core strengths for us as we open into the camera and into ar experiences. So we are really excited about the way that you can transform images with ai, the way that, you know, graphic artists, 3d artists, would have spent weeks developing some of the models they use in lenses which can generate those onthefly using ai so i think just the explosion in creativity we are seeing through the adoption of these tools is super exciting and the reason why we are at an Inflection Point is not necessarily just the technology. It is the way that humans are adopting it in their daytoday lives. I remember when Mark Zuckerberg tried to buy you and you said absolutely not. Annabelle that is the snap ceo speaking in San Francisco about ai, the applications of course for everyday users. Speaking as well about the Interest Rate environment and a possible tiktok ban in the u. S. Bloomberg subscribers can continue watching it and you can find the big diary entries coming up today and later this week as well as some of the events you may have missed earlier. The tliv blog is well underway. Lets shift to china because president xi jinping has secure his support for his pushback against u. S. And you e. U. Claims of overcapacity. Stephen engle, hungary has always or traditionally had quite a fractious relationship with others in the e. U. So how important is this for chinas ambitions in the region . Stephen it comes at a time of rising trade friction, if you will, with brussels. Ursula von der leyen has been very outspoken against chinese overcapacity issues and the potential dumping of evs and other Green Products in the European Market and again, theres this investigation into potential dumping and subsidies by the chinese government. And the like. And they could be, and the chinese makers i have talked to said they fully expect some sort of tariffs regime on evs. Xi jinping sees a great opportunity with a country like hungary which already has Battery Supply chains. The south koreans are in there. The chinese are in there. They are building this supply chain into southern europe. Excuse me, southern germany, where theres automobile factories in slovakia as well. Look, hungary has cheaper labeler labor. They have a 9 Corporate Tax rate. They are friendly to chinese investment, extremely funny. Victor orbach, the prime minister, basically in lockstep with the Chinese Development model, using lower wages in his country, wideopen land to build these factories, and they are courting that and that is why xi jinping is wrapping up his european trip for the first time in five years in two friendly countries to china. That is serbia, thank you, and also now hungary so im just going to bring up the statements from xi jinping. He says we will strengthen cooperation in our development strategies, deepening ties in trade, finance, and our economies. He also wrote, by the way, in a ruling party hungarian newspaper , on the path of chinese style modernization and development, we see hungary as a traveling companion. Now, i want to change the page because we did not get the actual readout of Viktor Orbans statements but this is from the chinese readout of his meeting with president xi. It reads like it was written by beijing. Hungary does not identify with the rhetor