Asian Stocks Slip After Nvidia Letdown | Bloomberg: The Asia Trade 8/29/24

This is the Asia tree trade. I'm sure Rihanna in Tokyo destroyed. Well, it's in Sydney. The top stories this hour. Asian stocks are set for early losses as Nvidia's results and outlook fail to inspire investors. Renewed volatility gripping Wall Street in the lead up the company that's led the boom sliding in late trade after a forecast below the highest expectations and questions over its new Blackwell chips. We're hearing exclusively from the CEO, Jensen Huang. Also ahead, more earnings in focus. A big profit jump for China's top selling carmaker could be one day, while rival Li Auto misses estimates. Plus, as of today, it faces what could be Japan's largest foreign takeover. We'll be speaking with the chief of a key government trade agency. Take a look at how U.S. futures are coming online. We had that pressure in the after hours session. Of course, it was all about and Libya sinking after those results. But you really have to put it into perspective because second quarter revenue beat estimates, third quarter revenue forecasts beat estimates. But the thing was that they didn't beat by enough. So we had a lot of skepticism about investment right now and really sort of a disappointing earnings season for the Magnificent Seven. So we're seeing that downside price rally in the after hours session. We're watching the Treasury space as well. We had yields rising and the dollar rising. On the back of that. Take a look at how Asian markets are setting up because we have the Japanese yen also on the other side of that trade under pressure. And not to mention that we have comments from top DOJ official talking about market moves being really in focus when it comes to deciding on the next rate hike. So we had that perhaps a little bit commentary that was received as dovish, really pressuring the Japanese yen in the overnight session as well. Nikkei futures pointing to the downside in the Asian session. It will really be about what happens to those chip stocks. Of course, we have Tokyo Electric in Japan, we have SK Hynix in South Korea. The Korean market has been unchanged for a while this week, Heidi, but we'll be watching those semiconductors very closely. Yeah, absolutely. All right. Let's get some more reaction when it comes to Nvidia's earnings. I want to bring our Bloomberg Technology co-anchor, Ed Ludlow. Just in the last few minutes I saw you were speaking with Jensen Huang. All I heard was sort of positivity and good things going into the near term. Yeah, and I think Huang's comments are kind of consistent with the broader story that the demand for its products is intact. This investment cycle for AI is continuing. There were some specifics around its next gen product. Blackwell Which we can get into, but I think that he's sticking with it this big picture forecast, particularly for next year. Listen to this. What can you tell us about the Blackwell trips? Because, of course, there were concerns that they would get delayed, that there were some disruptions if we get any more clarity. Yeah, basically, the market just wanted more. Right. There have been all this reporting that there was a fundamental design issue with Blackwell. It has a very unique dual die design. And they came out with it and said this is not a design issue. But the production process did face an issue, which we've resolved. They gave us some financial figures, a guide that there would be several billion dollars of revenue from black well, in the fiscal fourth quarter, and it's just expectations are so high. You guys know the stock story around in video and they just wanted more granular detail on that. We're going to have lots and lots of supply and we will be able to ramp starting in Q4. We have billions of dollars of revenues and we'll ramp from there into Q1 into Q2 and through next year. We're going to have a great next year as well. You know, I don't think we go as far as to say Heidi and Cheri, that's fighting talk. But at the beginning of the interview, I don't know if you guys noticed I put the kind of Blackwell criticism of the market to him and he Jensen Huang almost paused. He stopped and was like, well, I thought I'd done a pretty good job of explaining what's going on. But again, the expectations of this market are so high for a name that has occupied 99% of the market so far. Lofty and unsustainable expectations is how Bloomberg intelligence puts it right. Is that sort of really the case that they were, I guess, almost set up to disappoint, given how you used to beat off debate out of debate from this company by this market? Yeah, the overall beat relative to consensus in this quarter gone was four percentage points, I think 4.1%, which is the slimmest beat they've had in six quarters. Now they beat every quarter. But it's kind of getting closer and closer to estimates, which is an interesting trend to follow. I think the principal question is this For a long time they had five customers that was driving all of this. It was the hyperscalers or cloud providers and matter the parent of Facebook. But actually they were at pains, not just during the interview with Jensen Huang, but on the call as well to say, actually, we do business with a lot of other entities now and the demand for what they call accelerated computing. But basically datacentre capacity for training A.I. models is moving beyond that, and they are at least combative on that point that it is becoming broader than just a few select names. One indication that we get in terms of supply next year, and not to mention Nvidia's own suppliers. Of course, we'll be watching those stocks in the Asian session. Without flattering myself, I think that was probably the most important part of the interview or what came out of the interview. He was pretty clear there. Supply constrained in the sense that they're ramping a product in Blackwell and the demand for that product is greater than their ability to supply. But he was also explicit that supply in fiscal fourth is better than fiscal third. And going into the next fiscal year, fiscal 26, it will improve sequentially and get greater and greater. And I think that's probably Jensen Wang's way of saying supply is improving. They rely on TSMC as a contract manufacturer, but they have the leverage in scale to go to TSMC and say we need more of this and we need it quicker. Bloomberg Technology co-anchor, Ed Ludlow. There will be sort of mulling what we heard from that interview with Nvidia CEO Jensen Huang throughout the course of the trading day. But let's get some analysis now from Colorado, who is a senior market analyst. I called Ackerman. Really nice to see you in person for a change, Carl. Is it possible that this is just a blip in the in the brain? We've seen, what, about 10% for Nvidia below the June peak. Do you think that it sort of from here regains its mojo? I think it's just the end of the hype cycle. I mean, I suppose if you look back, you know, three or four months ago and it's always easy to say these things in hindsight when you have the CEO of a major company, you know, signing the glasses of women as if, you know, it's backstage at a motley Crue concert, you start to think that maybe there's a bit of a mania in the market that maybe, you know, price has just been driven by momentum, narrative and hype. And over the last couple of months, we've seen price come back. We've seen still the company deliver a fantastic performance. There's a little bit of doubt over investment from eBay because customers these other Meg seven stocks and we're at a situation now where after a couple of years of upside surprises where you know, it's very, very difficult to predict the outlook for earnings really on the basis that the distribution of outcomes is so significant that, you know, you get these kind of very, very significant upside shocks. We're now in a situation where the stock is richly valued again on a price to sales basis. It doesn't like being up here that much, sort of 40 to 1. You know, we've also got market sentiment just moderating a little bit. And now investors have a pretty good feel of what drives the company's fundamentals. And again, the sentiment high train is just kind of, you know, slow down a little bit. So, you know, I think Nvidia is probably in the future still a fantastic prospect in the very short term. You know, the fact is Taiwan's still very significant. We're just now just talking about it like it's a normal stock asking about whether this is an appropriate risk to take at this price for this company or not in the markets or start thinking about it that way rather than this big momentum. Try this big hype hype IV mania, what's really be normal. And I think we sort of tried to make historical comparisons perhaps to Cisco during the dotcom. But, you know, this one company, one one stop just lifting all boats, particularly across tech. And it takes us to the AM live blog Question of the Day, which is is there replacement? Is there a potential, something else, a thematic or stop a sector or a story that could replace NVIDIA as a broader kind of market driver, particularly, as you say, that the outlook for global equities is broadly more challenging now? Yeah, I mean, as you noted, I mean, the three big factors around this story and widespread so much of the market is this investment boom more broadly, which is a big part of America's macro story now performance. Clearly what it says about investment from the Big Macs and tech names and how it could potentially drive their future growth, and then the fact that now we've got a $3 trillion company that just by virtue of its own results, can shift the market. You know, that's going to be a really big shifter of market sentiment on a day to day basis and a story about flow of momentum almost, you know, self-perpetuating. I think if we were to see a shift in the market dynamics, which, you know, more or less takes the leadership or the story away from in video and move it towards something that's a little bit more sustainable now, is it would be a broadening out of the equity market rally, which would really have to come from this sort of soft landing narrative, these sort of progressive rate cuts, disinflation and a stable labor market where companies which have more or less underperformed because we've seen such narrow breadth and strength, you know, really isolate around NVIDIA and then below that to make seven stocks, you know, a market that is much more firmly entrenched in fundamentals, macroeconomic fundamentals and a solid earnings growth. So the other 493 stocks in the S&P 500 can participate in the rally. So I think that's really what that shift would have to be. It goes back to the macro, that sort of interest rate cut story and a soft landing. But your base case, it it is at the moment. Yeah. You know, we've got a really interesting dynamic going into September where I think the September Fed Funds futures contract implying it sort of 7030 split between a 25 and 50 basis point move. That's like a live poll effectively on whether we get a soft landing or a hard landing at the moment. The markets, wherever you look at basically pricing in a soft landing at the moment, that looks likely. Of course, that's all going to depend on that August jobs print. So we'll have to wait and see for that. How much more leeway the zag of central banks here across Asia. We heard from a top official talking about having to still watch market volatility before any moves to come out of it. Yeah, certainly. I mean, I think we're still seeing tentacles a little bit out of whack in the market after the August kind of meltdown we saw. And, you know, there was an element of, you know, fundamental impetus behind that. You know, the BOJ rate hike as well as that softer than expected US jobs print, which again goes back to how important this August and it phase will be. But if you look at the price action recently it's been incredibly weirdly you know we've seen a reversion in in equities a dump in the US dollar on the basis of of these rate cut expectations and things are getting very stretched in both directions. So I mean, we can talk about obviously fundamentals a lot in the central banks being more or less the catalysts behind these moves in the market and the, you know, the source of volatility. But the fuel now is just the fact that we're entering a very seasonally weak period right across the globe. We're seeing a very patchwork global economy and a convergence with the US economy with the rest of the world. That's the kind of stuff that's going to continue to drive this probably period of volatility, especially going into the The. US election and towards the end of the year. Yeah. September is supposed to be one of the worst months of the year for stocks. Right. But when it comes to Asian equities, any fundamentals that could support it in any region, I know we've been talking about that and valuations a lot here in Japan. Yeah, I mean, well, if we pick it apart by regional by country, the Japanese story still seems a little bit weak for me, especially notwithstanding probably on the tactical trade to the upside for the US dollar, which looks a little bit oversold and positioning looks a little bit rich. You know, the economy there is really out of step with the rest of the world. Obviously, the BOJ hiking cycle is out of sync with the rest of the world strongly in wake of global growth. Not great for Japanese equities. So I think those factors will continue to weigh on that part of the market. The really big variable is what happens with China and whether they feel that they have a greater pressure, whether it be for social reasons or simply because of a decreased likelihood of hitting that about 5% growth target that they'll need to increase stimulus, which is sort of lacking. That area of the market is undervalued, but we're lacking kind of those fundamental reasons to to to buy into it and take advantage of those attractive valuations. So that's where really the swing factor is going to be. Otherwise it looks like a fairly typical local growth story. And I think that means that again, without further support from China, it's a it's going to be an underperforming region in global equities and yet Australia continues to outperform but also see some resilience on the macro side, particularly as we've heard from the big miners, kind of saying that their exposure to that China slowdown story has been managed. Yeah, I mean it has been a little bit surprising. And the overall theme is that you do buy the miners when the multiples are low, we start to get to the bottom of the commodity cycle. So there is sort of hope that perhaps that can be an area that potentially bolsters the market from here on. A little bit skeptical on that just because of the absence of any kind of stimulus coming out of China. And then also as well, if you look at where the miners are pivoting is to some of these kind of, you know, battery battery metals, battery minerals, that kind of trade, they're not looking so positive on the basis that, again, there's that China story, but there's also the slowdown potentially in spending from the United States government in the sort of post inflation reduction that kind of year. So I'm a little bit skeptical. I think the ASX 200 will continue to outperform its US counterparts. If you look at other areas in the market, you know, the banks and the domestic sensitive sectors performed better because apparently the consumer is as in such a dire position as we expected in Australia, but still very, very rich, relatively speaking, and it's difficult to see with our make up of our market where some of those major weighted sectors are sort of valued at the moment. That will see a level of outperformance compared to Wall Street. And probably the biggest tailwind will be if we get a soft landing in the US economy, global financial conditions and price and sentiment picks up and we just basically follow in the slipstream of US markets. It sounds good. So great to have you with us. Covid senior market analyst at capital dot com. Coming up on the Asia trade, we take a look at the outlook when it comes to global chips that cycle there with future group and Standard Chartered wealth management as in video sales forecast disappoints some investors plus the chair of Japan's external trade organization will be along with us too. This is Bloomberg. China and the USA. Presidents Xi and Biden will talk in the coming weeks. It follows the trip to Beijing by US national Security adviser Jake Sullivan. As tensions simmer over a range of trade and geopolitical concerns. China correspondent Damien Lowe joins us now in Hong Kong with the latest. I mean, any idea of the details of where when these conversations could take place? Well, these are very initial stages. We're just hearing that the two sides are discussing a possibility of this meeting. So we don't have an idea of where it will be. But bear in mind that President Biden is the only president after Jimmy Carter not to have traveled to Beijing during his time in office, even though he claims that he has spent more time with presidency than any other leader, more than about 90 hours in total. So could this next meeting be his first and final trip to Beijing during his time in office, or could it be on the sidelines of the G20 or the APEC summit in Peru later this year? Remember the last time they met on the sidelines of the APEC summit in San Francisco? That was a very consequential meeting. Even now, we still repeatedly hear the Chinese Foreign Ministry refer back to that meeting, pretty often saying that it is really that foundation of the two sides recommitting to stabilize relations, especially after the spy balloon incident. So pretty, I would say, a significant outcome that has come out of the marathon meetings over the past couple of days. Another significant outcome is that the two sides have agreed to deepen military to military communication down to the theater command level. And remember, this is something that Washington has been pushing for for a long time. They see it as extremely critical to avert any sort of accidental crises in flashpoints like the Taiwan Strait and the South China Sea as well. Meanwhile, John Podesta, who's of course, the US climate representative, is headed to Beijing next week. Yes, this is one of the outcomes that has come out of those talks as well. Both China and the US agreeing to cooperate more on climate change as well as other areas like anti narcotic drug and force enforcement, artificial intelligence. So Podesta will be travelling to Beijing to meet his Chinese counterpart, and the aim is to discuss how to reduce a range of greenhouse gas emissions beyond just carbon dioxide. And also to discuss that thorny issue of how to raise more funds for developing countries, to help them combat climate change and to help with their energy transition. And obviously, China has been under pressure to contribute more despite their status as a developing nation. The two countries also are looking to set new pledges for their climate goals by 2035. And again, China, as the largest carbon emitter, is expected to have more aggressive targets here. But to be fair, China has been making great strides on this front. They are expected to have already peaked carbon emissions. If not this year, then by the end of this decade and their rapid transition to the adoption of electric vehicles, to solar energy and wind energy has been going a long way. And this timing of the meeting is very critical. They are meeting in the first week of September is just less than three months ahead of the key climate meeting. The COP 29 in Azerbaijan, also just ahead of the US elections where we know there be a lot of uncertainty if Trump takes over as president. We know he had withdrawn from the Paris Agreement the last time. So this time the two countries are looking to foster connections between non-state non-governmental institutions to ensure that they can have a more sustainable cooperation that could outlast a change in the US administration. China correspondent Ben Miller there. And staying with China, we've got more earnings results coming through, including in the EV and bought a tech space and about drillers is taking a look at the details. So some big names. Obviously everything is kind of being overshadowed by media today but we have been looking ahead to Bhiwadi in particular. Yeah, we had the results overnight and actually they came in better than expected and already the projections were pretty solid for be wide as well. But we saw net income rising 33%. We also saw revenue rising 26% and importantly quite a strong forecast from the company in terms of what we see for global overseas expansion. That was a really key one to watch. We had an interview with the executive vice president still, Ali, ahead of the numbers and again, really questioning further about how much they see international sales contributing to the bottom line. They're actually expecting that to rise to around half of their total revenue in the coming years. We again, of course, asked what's your timeline for that? Didn't get any specific response on that. But but it certainly does seem like Biden is pushing ahead with the the international again, international expansion plans despite those tariff risks that are building with the extra duties applied, at least in the EU, but also Canada and the US. There was a huge pressure in the overnight session for Li Auto's ADR. So what's going on with that company? Yeah, that's right. It was a slump of more than 15% on Wall Street trading. And really, of course it's reaction to the numbers that came through. This was not really a bright spot on the calendar at all. So Li Auto actually missed estimates and what really played into it here was the overall impact that margin squeeze is having here because the delivery numbers were okay. We saw them also giving their forecast for deliveries through to September 155,000 vehicles. That was ahead of the analyst estimate of around 137,000 vehicles. So the deliveries are getting out there. They're expected to continue getting out there. What is really weighing, though, is the cost competition within China, and that is having an impact because they're selling more cars, but for a lesser price tag. And again, it's all about margins that we're seeing really playing out across the auto industry in China. We also had those numbers up from May one. Yeah, this was an interesting one because we've been really seeing that trend coming across a lot of the consumer firms or consumer facing firms in China. That weakness that's been showing up Meituan actually did better here and we saw them beating estimates and that came down to the numbers we saw for its core business. That's the food delivery business within China that rose a better than expected 19%. So that projection had been for 17% growth in that. Again, yesterday we were talking about the rise of Pinnacle Fund. That's the group based low cost food delivery option. And it really does seem like they're having a bit of a win with that. They're also being able to draw in more merchants who could be attracted to that sort of model as well. All right. Reporter Annabel Jewellers there with the latest on the earnings season. And take a look how we're looking here in Tokyo because, of course, we're headed towards the market opens, but it's a little bit cloudy. We do have Typhoon Shanshan barreling towards Japan's southern island of Kyushu. It's actually made landfall in Kagoshima about half an hour ago. We know that some impact is already being seen by some companies. Airlines have cancelled flights. Kyushu Railway say that it will suspend some bullet train services and manufacturers, Toyota Motor are suspending operations at all 14 of its plans. So do watch out for some of those names in today's trading session. This is Bloomberg. We're expecting Q3 to have more supply than Q2. We're expecting Q4 to have more supply than Q3 and we're expecting Q1 to have more supply than Q4. And so I think our supply, our supply condition going into next year will be in will be a large improvement over this last year. And Veoneer CEO Jensen Huang, they are speaking to us exclusively. Of course, we have seen their earnings results and it was really a beat in second quarter revenue. The third quarter revenue for Castle also topped estimates, but the beat was not big enough for investors following this stock. Of course, expectations were pretty high and we saw the smallest revenue beat in six quarters. So, Heidi, that didn't sit well for investors. And you can see right there the Asian chip stocks that we'll be watching as well as we go into the Asian trading session and and the after hours session seeing a lot of downside pressure. Yeah, and the question that's being asked and in fact, it's it's our question of the day is what can potentially replace in the growth story as a major equities driver. We've tried to draw these correlations, comparing it to the way that we saw the market weighting of Cisco, for example, during the dot com period. But, you know, these really solid earnings a clear disappointment to investors who'd gotten quite used to the beat on expectations. It's been such a relentless driver when it comes to these broader equity gains. The question is whether they can sort of get back to where they were before that June peak. We're down about 10% from that level. And the broader outlook for global as well as US equities looking a little bit more challenging these days. This is Bloomberg. Qantas has reported a full year profit of $1.4 billion and a further on market share buyback of up to 270 million. These numbers are broadly in line with expectations. The flag carrier continued to struggle with the fallout from multiple reputational crises. Glenn Beck's Paul Allen joins us now. So how do you rate the headline numbers? I guess first, the numbers were in line, as you say. Profit was down 16% on year. There's not going to be a dividend. Qantas sees that coming back in the second half of 2025, though revenue was actually up 11% but fuel costs were up even more eroding the profit. As for the outlook, those fuel costs are seen continuing to rise. Capacity that was seen rising as well and Qantas's travel demand and bookings remaining stable. But the real issue is around that reputational beating that Qantas has taken. There were of course found to have sacked 1700 ground staff illegally during COVID. Once flights resumed, there was missing baggage, cancelled flights and then of course the ghost flights scandal where Qantas was found to be selling seats on routes that all flights that never even existed. So a lot of work to be done. Yeah, I mean, really repairing reputational damage is a long term commitment, right? So what is Qantas doing to address this? Well, we have had a number of apologies from the CEO, Vanessa Hudson, over the course of the past few months, and she acknowledged today that there is more work to be done. Already pledged about 150 million to improve customer service or reshore call centres back to Australia, undertake some other measures as well. But the brands took a beating, the brand finance rankings, they slid from 19th last year to 41st this year. In terms of brand strength, I guess the question is though, does it really matter? Because if we take a look at the share prices still up 4% on year, it has underperformed the ASX, but shareholders could still be reasonably happy with what's going on. And there was a very, very flattering column about Qantas as first class in business class services in the South China Morning Post this week as well. So obviously a bit of a PR campaign blitz going on somewhere. 13 buys on the stock, zero holds as well. So when it comes to the bottom line, yes, the reputation has been damaged, but does the market seem to care? Perhaps not. Usually. I'm breaks for Allan there. And sticking with aviation. We're speaking later with the CEO of Qantas's regional rival in New Zealand, Greg Foran, joining us on Bloomberg Markets Asia on those times on your screens right now, let's take a look at how we're setting up and we are sort of bracing for that post invidious slump ride with really despite ultimately another great quarter handily beating revenue estimates in the fiscal second strong data center demand amongst other things. And obviously we heard from Jensen Huang just about half an hour earlier, really strong positive when it comes to the supply side of things and the outlook going forward. But investors were disappointed ultimately, and we do see that playing through from the US session and carried through to here in Asia as well. Take a look at that downside that we see in futures trading, particularly when it comes to the Nikkei futures trading in Singapore down by 1% and a lot of that sort of tech heavy component in markets like Japan, Korea as well, and Taiwan. When that comes online, we'll see the brunt of some of that pressure. S&P futures also off by about 7/10 of 1%. That sort of dampened outlook for tech stocks really is the big theme there, as investors were ultimately underwhelmed by the highly anticipated numbers out of in video. We had some weakness really pointing to the China open as well. The Nasdaq Golden Dragon China index down by 3.6%. And take a look at some of the names that we will be kind of Jason Kelly watching in the Asia session and video in the after hours of over 7% still in seeing weakness across the board on the likes of some of those other heavyweights like Taiwan semi as well. So really broadly a question mark at this point when it comes to how much cooling. We'll see further for the frenzy that's really transformed India into the world's not just the second most valuable company, but also just the most influential stock when it comes to these broader markets. Jerry. Yeah, with a market value of more than $3 trillion and worth more than the next ten largest chip makers combined. We can really not overstate how important this stock is for the broader market. In an exclusive interview with Bloomberg CEO of Nvidia, Jensen, Huang tried to ease investor concerns about its new Blackwell chips, saying that the firm is ramping up production of those semiconductors. We made a mass change to improve the yield functionality of Blackwell's wonderful work sampling Blackwell all over the world today. We show people giving tours to people of the Blackwell systems that we have up and running. You could find pictures of Blackwell systems all over the Web. We have started volume production. Volume production will ship in Q4, Q4, we will have billions of dollars of Blackwell revenues and we will ramp from there. We will ramp from there. The demand for Blackwell far exceeds its supply. Of course, in the beginning, because the demand is so great, but we're going to have lots and lots of supply and we will be able to ramp starting in Q4. We have billions of dollars of revenues and we'll ramp from there into Q1 and Q2 and through next year. We're going to have a great next year as well. Jensen What is the demand for accelerated computing beyond the HYPERSCALERS and matter? Hyperscalers represent about 45% of our total data center business were relatively diversified. Today we have hyperscalers, we have Internet service providers, we have sovereign ice, we have industries, enterprises. So it's fairly fairly diversified. A site outside of Hyperscalers is the other 55%. Now the application use across all of that, all of that data center starts with accelerated computing. Accelerated computing does everything, of course, from well, the the models, the things that we know about which is generative AI and that gets most of the attention. But at the core we also do database processing pre and post processing of of of data before you use it for generative AI, transcoding, scientific simulations, computer graphics, of course, image processing of course. And so there's tons of applications that people use our accelerated computing for and one of them is generative AI and the DACA. Jensen Huang They're speaking exclusively to our Bloomberg Technology co-anchor, Ed Ludlow. Coming up next, we take a look at the outlook when it comes to Japanese exports ahead of a key government trade group will be joining us amid yen some of the yen volatility. Tariff tensions between China and the west. This is bloomberg. We are bracing for Typhoon Shanshan to really pass through Japan. It's already made landfall in Kagoshima earlier today, but of course, it's supposed to barrel through the island of Kyushu. We've already seen some disruptions. Some manufacturers like Toyota motors having to halt some factories, even affecting the election, campaigning for the leadership of Japan's ruling Liberal Democratic Party. We'll be watching some of those names that have been affected, including those airlines, not to mention, of course, are railway companies and electric power companies as well. Take a look at how futures are setting up for trading at the moment, because, of course, we are seeing some downside when it comes to the tech sector. Given Nvidia's results disappointing investors despite the fact that they beat on second quarter revenue, they beat on revenue forecast for the third quarter, but it was the beat the size of the beat, the smallest revenue beat in six quarters that really investors focused on. Not to mention some disruptions when it comes to their new black wall chips. But let's discuss the market environment and also what's happening across Japan, because we'll be watching very closely Tokyo Electron and some of those semiconductor names coming online in the supply side. We do have with us the Japan Trade Association. This is the largest trade organization that promotes trade and investment between Japan and the rest of the world. JETRO chairman and CEO Naughty Hugo Ishiguro joins me here in the Tokyo studio despite the bad weather. Thank you so much for coming in. Thank you. Let's talk a little bit about the foreign investing environment here in Japan, because there has been so much focused interest from overseas. What are some of the key trends that you're seeing in terms of the size of the interest, where the investments are coming from? Okay. Yeah. Recent years, we have seen signs of the fragmentation in trade and investment to follow because of the heightened tension between the U.S. and China. And that's why the so still, China is a very important market for Japan. But the Japanese businesses increased interest have been expanding their business in Asia and India and Middle East rather than China. And on the other hand, looking at the investment, the iPhone of holding a direct investment in Japan. So lately, so big large scale investment project with the semiconductor sector and including that TSMC and the Micron are having. I don't want to one after another and also the in the digital related to services I W s and Google and Microsoft and Oracle, those are bigger companies have announced large scale datacenter investment project in Japan was the latest as I said so fragmentation of the global economy becomes more and more. So maybe investors interested in an increasingly in Japan's stability of Japan. So and also the where we are to develop the infrastructure. So how about because of the cheaper Japanese yen as well? Are we seeing more interest from foreign companies, for example, the latest one was couche-tard trying this. If it happens, the biggest foreign takeover of a Japanese company. Seven and I. But at the same time we're seeing 7 to 9 trying to get government protection. Is this sort of mixed messaging when it comes to also your job having to promote these investments to come into the country? Yeah. And so as you said, thanks to the weak, in the end, foreign investors are interested in Japanese market. And so not only Japan's stability, but also the weakening is attractive for them. And that's why they we promote for the indirect investment they mandate. Will it make your job more challenging if we do see the government actually protecting these sort of takeovers from the likes of Couche-tard? We have seen activist investors also wanting more value from some of these companies and assets depending on what happens here. Could this be the litmus test of what Japan is actually prepared to do in terms of foreign facing businesses? Yeah. So you mean export? Investment control. Yes. Yeah, of course. So if we do have to use technology and those kind of the defensive data industry, we will check the such kind of factors. But yeah, generally speaking. So we do not concern about that. Yeah. Because seven and I, for example, operates convenience stores, but they want to be classified as a national security risk company. Yeah. Mm hmm. Yeah. National security related to the businesses that we have a concern about that that they're generally speaking so well. Well, we work for the investment. Mm hmm. Yeah. And the government says it wants an active market for desirable M&A transactions. Right. But there is a question which I think, you know, Sherry was also sort of alluding to is how far are they willing to go to open up this market to foreign investors? Do you think that is still a question mark at this point? Bellamy Is there a question mark when it comes to foreign direct investments? Given, of course, that the government is welcoming them, But at the same time, some of these companies don't want these investments or takeovers, at least, you know, we'd like to promote that foreign direct investment. And so we don't have any objection about that when it comes to these investments. As you said, the cheaper yen. Is it making those flows in terms of what comes in and goes out in terms of these business flows changing? What are you seeing in terms of trends planning needs? So let's see. So our foreign direct investment increased by the 10%. And so it's a very favorable situation. Yeah. You also mentioned, of course, the trade flows, given the fragmentation of the world. Where do you see the investments going into the United States and from the United States, depending on what happens in the November presidential elections in the U.S.? Yeah, I don't recognize that such an impact of the election, but that maybe so Japanese businesses are very conscious about the result of the election. Yeah, because a lot of Japanese companies have seen benefits, especially coming from the Inflation Reduction Act, coming from the Biden administration. Are they sort of preparing for any changes on that front? Maybe so. They wait and see the situation. I think, yeah, of course, so far related to the semiconductor sector, very favorable, the current situation. And but of course, the situation might be changed and that's why the Japanese businesses are wait and see who fall off while hoping. You mentioned also when it comes to semiconductors, those TSMC investments here in Japan. Anything else that's in the pipeline? Pipeline? Okay. So the pipeline, yeah, of course, not only the semiconductor, but also, as I said, the datacenter and also the A.I. businesses and those kind of the data related to industry will be welcomed. Are you worried about more trade restrictions coming up, though? Yeah, a little bit of a worry about that because as I mentioned, so tension between U.S. and China heightened and so that's mean that export control and investment regulation might be strict. How is Jetro trying to navigate that? Yeah, we'd like to provide that information to the Japanese businesses accurately. And when it comes to Japan, also acquiring talent is so important, right? Especially when you have changing demographics. How difficult has that been? Especially highly skilled professionals when earning in Japanese yen is in right now what it used to be before? Yeah, so lacking in Japanese and that's not surprising at the moment. So definitely we need the highly skilled to for professional because as you mentioned, so demographically we are losing the walking age generation and that's why they definitely we need a highly skilled professional voting professional. Anything that the government is trying to do right now, making no one taking the example digital or try to effort through the foreign students in Japan to introduce Japanese businesses and we have a job fair with some kind of the some show of the for the voting for these students because you go to was really good to have you with us bracing for the typhoon. Thank you so much for having me. Japan's external trade organization chairman and CEO joining us live here in the Tokyo studio. And of course, if you missed any part of that conversation, TV go is your function. You can also dive into any of the securities or Bloomberg functions that we talk about and become part of the conversation. Do send us instant messages during our shows. This is for Bloomberg subscribers only. Check it out to go. This is Bloomberg. The head of the world's largest vaccine maker says governments need to invest early in health to protect their economies as well as their people. The Serum Institute of India CEO, Adar Poonawalla spoke to our colleague Haslinda Amin for the latest edition of Latitude. I think a healthy population is always going to be a more productive population, and that's good for the economy. It's good for everything. I think it's common sense. It's just that sometimes the political will isn't there in some of these countries to prioritize. They want to do it, but you know, they have these other priorities. So I hope that they can keep this as a priority because workforce that is, you know, 20 or 30% down during a pandemic or an outbreak or is suffering from endemic disease in certain areas, there's certain diseases that, you know, keep spreading is not healthy, it's not productive. And, you know, if you want everyone to perform at their best and you want health care costs to be down, you don't want to be burdened with insurance costs and other costs. I think it's important to invest early in health and child health, in women's health, and I hope that continues both in India and other parts. I know COVID took the world by surprise, and some say Disease X is coming sooner than you expect. Is there a sense when Disease X might hit the world? No, I'm I'm not losing sleep over which day and when it's going to come out. But we're definitely prepared. You know, we have a huge testing infrastructure in India, for example. We can detect now, you know, new diseases that can come about. And if they're spreading, then, you know, we can take action. We've got a huge vaccine and pharmaceutical industry in India. So India is very well, I think, poised. But when the crisis comes, we stick to what we've committed. I think that's important. So let's see what happens. You can catch the full episode of Latitude with Haslinda Amin, premiering today on Bloomberg Television at 8 p.m. Hong Kong. You can also watch it on our YouTube channel. And these are the songs that we'll be watching when trade opens in Korea, Japan and Australia very shortly. Do watch out for. Those are stocks that could get hit from the typhoon approaching Japan. We're talking about airlines and railways. Typhoon Songshan is barreling towards the coast. It's already made landfall in Kagoshima. Hundreds of domestic flights and some bullet trains have already been cancelled. Do watch out for those manufacturers as well, because automakers like Toyota, Nissan halting some of their plans. Asian chipmakers also in focus. Of course, it's all about Nvidia. The results finally came in. They were beating on revenue, on revenue forecasts, but really not beating by enough. So and video took a hit in the after hour session. We are watching for those chip makers across Asia, of course, SK Hynix, TSMC, Tokyo Electron, some of those names to watch, Heidi. As you said, Cherry, not enough. It was a good set of numbers, right? And in fact, when we heard from the Nvidia CEO, Jensen Huang, he was very optimistic going into the near and mid-term forecasts when it comes to supply, when it comes to the quality of their product and how he sees this boom story continuing to play out. But ultimately the the merely good results, which is not enough for investors that were expecting the sort of stellar performance that perhaps we've seen in the past. The earnings beat was a modest one. Forward guidance perhaps left something to be desired as well. So all of this continuing to kind of consolidate these worries that the frothy valuations that we've seen across I am broader big tech may be kind of difficult to justify. The question now, of course, is whether NVIDIA manages to go back to its June peak. We're down about 10% from those levels. Given the broader macro environment seems a little bit more challenging is certainly the outlook for for for broader stocks, not just in the US but globally also seems to be challenging as well. So that is a set up as we are just minutes away from the start of major markets opening across Asia. Looking to track that US session lower. This is Bloomberg. This is the Asia trade war. Counting down to Asia's major market opens after pressuring the after hours session and video results in. Heidi was upbeat when it came to second quarter revenue. Third quarter revenue forecast also topping estimates. But the beat wasn't large enough, so that disappointing. Some investors mainly good and not stellar share. That was sort of the takeaway there. Right. And just adding to the already compounding concerns about frothy valuations across the broader mega-cap and tech sector. And I guess the question is whether this is the blip in this sort of ongoing journey or whether we start seeing stocks coming back to Earth and what could potentially replace in video, you know, if there is any other sort of thematic that could take the place of how influential this one single company has been. And in the Asia Open, of course, we'll be watching those Suppliers Forum video. Of course, we have the likes of TSMC, SK Hynix as well. But you're looking at the downside already and the Japanese Open, of course, we had a little bit of weakness for the Japanese yen in the overnight session as well. Treasury yields rising, the dollar gaining ground and the yen under a little bit of pressure, especially with a top official talking about having to watch market volatility for any big moves in the future. But really, our eyes very much focused on those semiconductor names, especially when it comes to South Korea. Take a look at how the Korean market is coming online. The Cosby has really not done much in this week, but we're watching the names like SK Hynix, which really get more than 5% of their revenue from Nvidia. The top supplier for video here in Asia is also TSMC. We'll be watching for the Taiwan Open there. Samsung is also trying to really sell more to NVIDIA as well. We're seeing that downside pressure of SK Hynix more than 6%, Samsung Electronics more than 3% at the moment. But we're watching the Korean one, which is also weakening against the US dollar. Heidi. Taking a look at the first couple of minutes as we get into the staggered session here in Sydney and of course the relatively sort of low correlation to two big tech names could be something of a of a benefit for Australian stocks, given that we have seen just that sort of commodity story, the recovery that we've seen across the miners, even against a backdrop of structural weakness from China, the pretty resilient numbers out of the likes of Fortescue as well as BHP this week really lifting the broader markets here in Australia. But take a look, a little bit of weakness there as we head into the open. And of course, most of that market's losers are just waffling online, if you will. The Aussie dollar is holding pretty steady 67, 86, 68 is kind of the the test level that we're seeing to see if we kind of have that further endurance and the next leg up for the Aussie dollar, given that we have seen that iron ore story kind of hold up. Okay, perhaps surprisingly resilient despite the steel mills situation that's ongoing in in the in sort of the Chinese steel mills story as well. Right. Taking a look at Treasuries as well. We're holding a pretty kind of solid auction demand levels at the moment. That is largely still driven by the Fed's story, of course. But the prevailing story at this point, of course, is what we're seeing from video, what it means for the broader story and these valuations across tech mega caps. We did hear exclusively from the Nvidia CEO, Jensen Huang, who really earlier brushed off these concerns over admitted production snags. The highly anticipated Blackwood Ship, of course, was front and center in this set of numbers. He told us that they're ready to ramp up production. We're going to have lots and lots of supply and we will be able to ramp starting in Q4. We have billions of dollars of revenues and we'll ramp from there into Q1 and Q2 and through next year. We're going to have a great next year as well. Well, let's bring in bloomberg intelligence analyst Guy Johnson Vonnie Quinn. John, great to have you with us. And sort of that this sort of prevailing sentiment seems to be merely good, was not good enough right after so many stellar beats from this company. Was this a surprise to you that investors didn't feel like this was enough? Oh, it wasn't. We're sort of expecting it didn't call it out in our preview. I mean, look, their own spectacular track record recently is becoming their biggest sentiment headwind. Fundamentally, this was, again, a solid quarter. The demand tailwinds continue to stay strong. This past earnings season, we saw most of its largest customers beat on their CapEx guidance for the year and outdoors estimates for those CapEx spending have continued to increase there. And we have been aware of the black rail delays for the past four weeks. Of course, they were not reflected in in the most up to date estimates yet. So we do not think this was a major surprise. What moving forward, if we're seeing this beat being smaller and smaller, what are the concerns right now that this optimism might remain and what does that mean for supplies out there when it comes to video? Megan Like in terms of our optimism, we keep a close eye on demand signals, especially from the large customers, as if you don't see any pause or any slowdown talks from them, which we have not seen yet. There are no concerns that on the supply side, I think this is merely a timing issue. You know, this pushes out the stronger black belt ramp, which could have started earlier in the year if nothing went wrong out to 25. So it creates even a more likelihood of upside to the 25 numbers. And again, the key point to remember here is there is no alternative right now at scale versus the black. Well, what you can get for the customers. So the customers either have to make a choice of waiting for the black box. Shipments are consuming what's available right now from the hopper CDs. Yeah, we did hear on exactly that efficiency from Jensen Huang when it comes to just how much more attractive the black always versus the hope, I take a listen. Well, the most important thing that we do is increase the performance of and increase the performance efficiency of our next generation. So Blackwell is many times more performant than Hopper at the same level of power used. And so that's energy efficiency, more performance worth the same amount of power or same performance at a lower power. So the new Blackwell platform clearly is front and center here. Does that continue to sort of drive the upside narrative? If not, you know, if we are in fact, getting to kind of the bottom of this hype now? Well, definitely the Blackwell ramp in calendar 25 will be a key driver that could make or break this year, optimize, especially for Nvidia. So that remains to be seen. Other than that one, a few other key things that validates demand broadening outside of large cloud players is one when you look at their percentage revenue contributed by the cloud service providers, it adds at its low that it has been in the recently at 45%. That means companies diversifying out of just the cloud players. And secondly, this is the first time we saw the US sequentially revenues actually decline slightly low single digits, which we saw. Rest of the world, including China, increased significantly. What implies that there's a significant demand, pent up demand which was not being served due to Hopper being supply constrained, is now getting served and the demand is increasing in the broader world, not just limited to the US. So money. Bloomberg intelligence senior industry analyst with the latest on NVIDIA earnings. So we're trying to digest the market reaction. Let's bring in our next guest remains overweight on US equities, including the broader tech sector. With us now is Audrey Go, head of asset allocation, a Standard Chartered Wealth Management. Audrey, always great to have you with us. Is this just a blip when it comes to market sentiment because of Nvidia's results? Yeah, we certainly think so, because if you look at our overall portfolio, construction was to keep a modest overweight becomes to go back with ease. And so the U.S. equities as well. And let's not forget, you know, since the beginning of this year or even since the market's peak in in the middle of July, and, you know, actually markets have a very stellar rebound. So some profit taking, you know, ahead of also weaker seasonality in September together with ongoing sort of intellectual risk coming to November as well. So some sort of money being taken off the table by investors is entirely about surprise to us. And we do believe that falls this weaker seasonality in September. We can probably see markets trading higher as opposed to barring all major surprises in the US elections as well. We saw the S&P 500, the one point have one of the worst days since the meltdown that we saw earlier in the month. When it comes to levels of volatility, how are you hedging? Well, I think if we look at what happened in early August, a big part of it is probably due to technical related positioning, but technical improvement actually. So from our perspective, this is likely to be temporary. But having said that, also because we are in a weaker seasonality in August and September, and so that's when traders vacation market liquidity has also been fighting as a result of that, and that really exacerbated the actions. So from our perspective, what we have been advising clients is really to maintain a balanced allocation because our major base case for the macro reserve is that we are still likely going to see a soft landing coming off in the U.S. and the extension of global economy as well. And the Fed is actually cut interest rates come September two. So that should also be a tailwind for markets because after being high for the last two years, finally they are coming down and that should be a support for valuation, especially for growth sectors like technology as well. Audrey Much has been made of just the outsized influence of NVIDIA as one single company, one single stock on the broader not just tech sector but broader markets. Right? And that goes to sort of our question of the day from the in my blog, which is, is there something else that could potentially replace NVIDIA in terms of its influence and ability to lift broader market confidence? Historically, we've sort of tried to make comparisons to the likes of Cisco, but there are few comparisons, right. What do you think? Or is this sort of an idiosyncratic story with Nvidia? Nvidia? I do think that there is a network effect stemming from the positivity or even these very strong growth until winds coming from an idea as well. Because if you look at the entire story we are talking about right now, demand coming from datacenters, upscaling by corporates into enable related platforms of computing power. But this is also likely to spill over to the consumer side because if you think about it, perhaps the next leg of sort of a tailwind will go from a consumer needs. That replacement demand, for example, is replaced from traditional PC to the AI enabled PC. Also, handsets have flows to enable handhelds as well. And I think this is due at this nascent stage given that, you know, I have only been around with us for the last 53 years in terms of mainstream media. So we do see that that's likely to be a sustainable sort of secular thing for now. But of course very closely investments valuation also quite matters. And I think for many investors today, actually it is not so much a growth story that we have concerns about, but really how much we are paying for these people starting to really which I think if you look at tech stocks today, some of them valuations are indeed pretty lofty. You've talked about the laggards, of course, and the sort of optimism over the broadening of this market. Where do you see opportunities in those that have yet to perhaps catch up? So I think in the near term we can see the rise of financials as well as some of the success we have next. For example, healthcare doing better. I think it is a function of market rotation because back in the middle of July, I suppose early August, when we have seen investors actually rotating out from tech, which are quite well owned and also well bought into the legacy energy, financials, oil smallcaps for that matter. And to me, I think that's a sign of healthy market dynamics because typically speaking, if one is expecting an impending recession to come, then those wouldn't be the natural candidate to rotate out of tech intellectually. Probably going to we've seen tech and add on some of the defensive sectors of the market as well. So we actually progressive thought when we see some of the rotation into leisure spark over the energy sector in the financials which have been lagging year to date. How do you go ahead of us in allocation of Standard Chartered Wealth Management? Great to have you with us. Take a look at some of the big movers in the early Asian session, because it is really all about those chipmakers and of course those suppliers to Nvidia, SK Hynix, for example, gets more than 5% of its revenue from sales to NVIDIA. And we're seeing that downside of more than 6% after Nvidia sank in the after hours session. Despite the revenue beat, Samsung Electronics also falling more than 3%. It's the worst day since August 5th. Remember August 5th when we had that really big meltdown across global financial markets with that unwind of the yen carry trade, Tokyo electron also falling in sympathy, 2.7% at the moment. Take a look also at some other stocks across Japan, because we do have this typhoon barreling through Japan, especially near the island of Kyushu. Typhoon Shanshan has already impacted some of these companies, including Japan Airlines, A&E having to halt hundreds of flights. Also, railways are having to hold some bullet train services. And of course, we're also watching those manufacturers like Toyota, Nissan to have to halt some factories Heidi. Yeah, watching airlines when it comes to this part of the world, to Qantas, the impact of natural disasters or weather events, but of it's own sort of reputational undoing, bad full year adjusted net income there was expected to decline. We saw the profit falling as the airline really investing more to repair those reputational issues. We also saw a decline more broadly when it comes to airfares as well. So that underlying profit falling 16%, perhaps not quite as bad as expected, but coming in at 1.4 billion USD. So more or less in line with analysts expectations. But a slump in international passenger revenue was five for the second half of 2024. We're seeing, of course, gradually but steadily capacity coming back online following the pandemic. More ahead on the Asia trade. This is Bloomberg. China and the US say President Xi and Biden will talk in the coming weeks. It follows the trip to Beijing by US National Security adviser Jake Sullivan. This ascension is, of course, more of a range of trade and geopolitical concerns. China correspondent me joins us now from Hong Kong Women. Any clarity on how and where these talks could happen? Yeah, the two countries are in discussion to set up these talks. No idea when or where yet. But as of now, President Biden is the only president since Jimmy Carter who has not yet visited Beijing during his term in office. So could this be his first and last time to visit Beijing before the end of his administration is a big question. And if not, there are still a couple of opportunities for them to meet, for example, in Brazil during the G20 summit or in Peru during the APEC summit. And this is going to be quite an important meeting to cap off the end of his administration, because this is a time when both countries will want to ensure that the waters remain calm, that there are no crises that could rule over the next few months, because that will really take the momentum into the next administration and really set the rules for the next four years. A very important outcome from the marathon meetings that Sullivan has had with Wang Yi is that both countries have now agreed to deepen military to military communications down to the theater command level. And this direct line of communication is extremely important to invite any potential crises and flashpoints like the South China Sea and like the Taiwan Strait as well. China has been calling on the US to stop arming Taiwan, to stop condoning the so-called violation of the Philippines in the South China Sea. But of course, Sullivan Sullivan has been reiterating its concerns. The US has concerns of stability in this region, also saying that the efforts, the current efforts to prevent high technology from undermining U.S. national security, those are important as well. Even as China and Wang Yi is calling on the U.S. to stop curbing China's legitimate development rights here. John Podesta, who's the US climate representative, is headed to Beijing next week. That's right. This is also one of the outcomes that have come out of those talks as well. The two countries agreeing to cooperate on climate change as well as anti-narcotics and enforcement and artificial intelligence. So Podesta is going to travel to Beijing to meet with his Chinese counterpart. The goal is to discuss how to reduce a range of greenhouse gas emissions beyond just carbon dioxide. They're also going to discuss a thorny issue of how to fund more money, send more funds to developing countries to help them, help protect them against climate change, and to help them with the energy transition. And again, Beijing is expected to do a little bit more, even though they're holding on to that status as a developing country. The two countries also set to make new pledges for 2035. And this is where China also, again, faces more pressure to do a little bit more, given that it is the largest greenhouse gas emitter, even though it has already been making great strides in transitioning towards green energy, for instance. And again, timing is extremely critical coming just ahead of the US election, where there's going to be uncertainty about what Trump would do if he wins the presidency. Would he be pulling out of the climate change, international climate change agreement? So that's where the two sides are. Also looking to deepen non-governmental cooperation on climate change as well. China correspondent Emma miller Sticking with China, earnings results coming through, including in the tv and tech space this spring. Reporter Animal drillers and stuff would be a big jump in second quarter net income. Yeah, that's right. Actually rose 33%. And then we also saw the the overall picture for revenue, as should say, rising 26%. But broadly, the results were solid for the company and we were sort of expecting that going into the numbers. But one of the key things that was really going to be the question was what were they going to do about the overseas expansion plans? Would they be looking to to push ahead aggressively, even in the face of tariffs from the likes of the EU, the U.S., Canada? And it does appear that, yes, they are going big on the international expansion. And we actually had an interview with the executive vice president, Stella Ali, just ahead of the numbers, asked about that and and ultimately what it boils down to with a few different questions and a bit of prodding, it sounds like. But we did get to the point that they're expecting for overseas sales to account for 50% of their broader market. We just don't know the timeline for that. Exactly. We've been also watching MATALON very closely. The Chinese food delivery company just upgraded to overweight on Morgan Stanley. How good were their results? My twins results were actually solid. They really stood out, especially in a wave of of Chinese commerce or consumer facing companies that have really been facing those twin headwinds of not only the economic malaise, but also very stiff competition in the space. But it seems like one is managing to fend off both of those threats for now. We actually saw better numbers coming through for the broader business. But the big focus on the core local commerce segment and we saw that gaining 19%. The expectation had been for 17% growth. Of course, the company isn't just resting on its laurels here. We actually had a warning coming from its founder talking about telling investors not to get overly optimistic going into the second half of the year. They're still expected to keep optimizing the operational efficiency. But certainly, as we say, yes, this company doing better than others and also managed to approve a $1 billion buyback or room to buy back shares for up to $1,000,000,000. And you can see here the results of that, because maintenance shares have been outpacing the gains we've seen from Alibaba JD dot com over the course of 2020 for. All right, Tech reporter, animal controllers there with the latest with those earnings coming out of China. We have more ahead on the Asia trade. This is Bloomberg. Let us win the corporate front. French prosecutors have charged Telegram's CEO Pavel Durov with complicity in criminal use of the app, including for drug trafficking and sharing images of child sexual abuse, they said. Telegram also refused to help run wire taps on criminal suspects. The billionaire has been ordered to post a €5 million bail and banned from leaving France. Telegram didn't immediately respond to a request for comment on the charges. Berkshire Hathaway has become the first US firm outside the tech sector to top $1 trillion in market value. Warren Buffett's conglomerate has rallied this year on strong insurance results, outperforming the S&P 500 with a 30% gain. Berkshire joins an exclusive club dominated by tech giants, including alphabet metal platforms and NVIDIA. Shares of Salesforce jumped in extended trading after the company reported a strong profit outlook. The maker of customer management software sees profit exceeding $10 per share for the fiscal year topping estimates. Salesforce also announced that CFO Amy Weaver will step down from her position once a successor is chosen. HP, though, is slipping in extended trading after cutting its full year profit outlook on a continued downturn in its printer unit. Printer supply revenue is seen as HP is leading a profit driver. The disappointing forecast eclipsed the first revenue gain in two years, suggesting an end to a long slump in demand for personal computers. Take a look at how markets are trading at the moment. Trading? Oh yeah. Take a look at Japan, Heidi. Nikkei down 6/10 of 1%. Of course, we're following what's happening in the semiconductor side of things. Tokyo Electron falling alongside, of course, the big ones in Korea as well, like SK Hynix, Samsung because of video results. And of course, all to do with what's happening in that air investment side of things and perhaps skepticism that some of these stocks may have gotten overstretched. But we're talking about the tech sector leading the declines in the Japanese equity market. Same thing sort of for most of the markets across Asia right now. The Japanese yen, a little bit of gains. We are headed for the second month of gains for the Japanese yen against the US dollar, which is a big thing given that we were at that 160 level just in July. But take a look at how Tokyo is looking right now. We're expecting rains and showers as we're headed for that Typhoon Zhongshan to really barrel through the country. It's really around the southern island of Kyushu and some of those airlines that have been hit, manufacturers that had to hold operations, not to mention even election campaigning for the leadership of Japan's ruling party has been halted. This is Bloomberg. And video tumbled in the train after delivering an underwhelming forecast that admitted production snags with its highly anticipated black wall chips. In an exclusive interview with Bloomberg Technology CEO Jensen Huang told us about the government deals driving so-called sovereign A.I.. It's not necessarily. Sometimes it's deals with a particular a regional service provider that's been funded by the government. And oftentimes that's the case in the case of in the case of Japan, for example, the the Japanese government came out and offered subsidies of a couple of billion dollars, I think, for several different Internet companies and telcos to be able to fund their infrastructure. India has a sovereign initiative going and they're building their infrastructure. Canada, the U.K., France, Italy are missing somebody. Singapore, Malaysia, you know, a large number of countries are subsidizing their regional data centers so that they could become able to build out their infrastructure. They recognize that their countries knowledge their country's data. Digital data is also their natural resource, and not just the land they're sitting on, not just the air above them, but they they realize now that their their digital knowledge is part of their natural and national resource, and they are to harvest that and process that and transform it into their national digital intelligence. And so this is a this is what we call sovereignty. You could imagine almost every single country in the world will eventually recognize this and build out their infrastructure. Generally, you use the word resource, and that makes me think about the energy requirements here. I think on the core, you you talked about how the next generation models will have many orders of magnitude greater compute needs, but how will the energy needs increase and what is the advantage you feel NVIDIA has in that sense? Well, the most important thing that we do is increase the performance of and increase the performance and efficiency of our next generation. So Blackwell is many times more performant than Hopper at the same level of power used. And so that's energy efficiency, more performance worth the same amount of power or same performance at a lower power. And that's number one. And the second is using local cooling. We support air. We support air cooling. We support cooling. But liquid cooling is a lot more energy efficient. And so so the combination of all of that, you're going to get a pretty large, pretty large step up. And video. See Jensen Huang there speaking exclusively to our Bloomberg Technology co-anchor Ed Ludlow a little bit earlier. Let's bring in Olivier Blanchard is a research director at the Future Rome Group. Olivia, great to have you with us. You know, you said there was no room for error in these numbers. There wasn't really error, though. It was there. It's just that investors wanted more wanted something that was more stellar and more of a blowout. Yeah. Thanks for having me. I'm wearing Nvidia green today for. For Nvidia Day. No, it's interesting because Nvidia delivered. Right? Actually over delivered. They came in ahead of expectations, so they're doing what they need to be doing. And still investors didn't quite reward them with the with the reaction that I think Jensen probably expected. And I think you can you can sense as frustration of the beginning of that that interview for sure. Were you surprised by any of the commentary or the focus on Blackwell Because it also feels like investors were maybe getting way ahead of themselves on the timing for that. I think that's what it is. I think in a way, India is a victim of its own success in the sense that it's it's grown so quickly and so well. It's exceeded expectations repeatedly that it sort of trains investors to expect that much additional performance out of it. And what we're seeing is the market is sort of adjusting. So there's there's a couple of things going on. One, that type of growth isn't necessarily realistic or sustainable in the long term. Two, it's not necessarily in the long term either. But three, there are also supply constraints, right? And so Nvidia can only grow as quickly as as it supply allows it to. And Jensen pointed out in the interview that obviously supply is improving, otherwise they wouldn't be able to grow at all. But there are structural limitations to the pace of growth past a certain point. And so I think we're bumping into a little bit of that, even though I think Nvidia's is faring better than I expected, even on that point. And you may ask me about demand, and I think it's more of a supply issue than a main issue. I don't see demand slowing down. I just see the ability to respond to demands becoming less and less agile. I was going to say, what does a demand picture look like? And if demand is a solid, as you say, does that mean just more upside for companies like NVIDIA and its suppliers as well? That's correct. And so it's good news for everybody because obviously, as India grows and expands its offerings and demand continues to grow, it also allows the AMD in the world and other competitors to come in with with their own solutions. And AMD gaining market share, as it probably will over time, isn't necessarily a negative for NVIDIA either. I think it's a more story of silicon diversity and and being able to create ships that are more custom or semi-custom for the types of applications that will that will grow out of the next 2 to 3 cycles. So I think it's all upside but we do still are still dealing with sense of like the idea. Yeah. We're expecting Samsung's high tech chips to actually get certification from India. We have seen Samsung sort of lagging SK Hynix. We know that TSMC is also a top supplier for home video. What will the competition landscape look like for these suppliers? Well, they have a tough a tough few quarters ahead of them. I think in is still the company to beat in many ways. And I think the point's been made already in video today is to the a I the the the the opportunity which Tesla was to the opportunity of the very beginning of the cycle. And so they have a lot of ground to cover and video obviously has a huge lead on everybody else. They also have an impressive software moat that's going to be difficult to overcome. But we're talking mostly about GPUs, right? There's also CPUs that are very important. They constitute about 20% of the chip market for for inference and training and then on device. So you also have MPOs, which are carrying a lot of the load so that you don't have to. So this again, there's the silicon diversity issue is is going to open up a lot more opportunities for other companies and also on price as Hyperscalers and other companies are looking to improve their margins, they're going to start looking at at offerings and options that are maybe a little bit more price centered than that in video. Olivia. Olivia, You sort of refer to, you know, or allude to the sort of existential crisis that investors are dealing with at the moment in terms of trying to work out when we're going to see that transmission ride of the boom into sales being lifted at these companies efficiencies. And we did see a little bit of upside for Salesforce, for example. Do you think the market is framing this in the correct way? Because, as you say, companies like home video looking at the long term, what should we be expecting in terms of when the adjacent companies like the software makers and corporate start sort of seeing that impact? Right. We should start seeing that at the beginning of the coming year and beginning of 2025. I think it's the explosion of demand for air capabilities has sort of outpaced the developer side of it. So the software is is coming. It's just we haven't necessarily seen the killer apps in a lot of the those markets. But what's really interesting and encouraging is that every single industry, whether it's research, healthcare, finance, education, applied sciences, every single industry has invested in this. So, you know, we're seeing with Walmart, for instance, you know, focusing on on air as well, we're starting to see this sort of like long tail of applications enter the market. But I think it's it's going to take a few cycles to start maturing and to start taking going in a direction that investors can understand. Right now. It's still very much a chips hyperscalers and sort of like building out the air infrastructure play for the next probably 2 to 3 years. Olivia Blanchard, Good to have you with us. Research director at the Fletcher Group there with what to expect from a video and from the Chipmaking sector. Take a look at how the semiconductor manufacturers are faring right now in the Asian session. We're seeing Samsung Electronics see the biggest loss since the market meltdown on August 5th, of course, earlier this month. SK Hynix is also losing more than 4% at one point, losing almost 7%, of course. SK Hynix, one of the big Suppliers Forum video 5% of its revenue coming from video Tokyo Electron down, Renesas also down, Heidi, is really a down day broadly across markets. Yeah. Take a look at how with our Australia of course our sort of relative de correlation with big tech make a little bit more of a help in terms of limiting the downside. But we are seeing some of these earnings stories really failing to lift these stocks. Right? We're watching Wesfarmers, the net income for the full year actually meeting estimates of retail segment. The segment was expected to sort of provide a bit more support to those full year numbers. And New Zealand, that was a full year net miss. They're coming in at about 146 million Kiwi dollars for the net income, so just a slight miss there. And also watching Qantas as well, we're seeing a bit of a flip flopping when it comes to Qantas shares at the moment. The outlook of course in question as well as fuel costs coming in slightly below expectations. But of course for Qantas, the profit falling on some of these reputational issues that the airline continues to grapple with. Bloomberg News business reporter Angus Whitley has been looking at this. And I guess you've just gotten off the conference call as well. What did we hear? Yeah, I think as you said, Heidi, the headline numbers tell us a couple of things about the current environment, not just the past year. Earnings down 16% to a little over 2 billion AUD. That that tells us that Vanessa Hudson is still picking up the mess or picking up the tab, I should say, for the reputational mass left by her predecessor. That's impacting earnings. And also we're seeing fares moderating and that's what she said on the on the call, which I just got off. She said International fares particularly are going to moderate this 12 month period out to June 25, and that says more capacity floats back into the international market. And we're seeing Qantas flood international routes with more planes and competitors are doing the same. And that's good news for for passengers when we've seen international fares moderate and that's going to continue perhaps easing off towards the end of the 12 month period out to June 25. But it all tells us the story about Hudson sort of challenge is she's trying to reset the pendulum back towards passengers and staff and perhaps away from investors and shareholders who probably prioritize. It's safe to say, under Alan Joyce. The question is, can you keep up your margins and the returns to investors while taking care of passengers a bit better? Yeah, particularly in sort of a broader backdrop of suffering demand, right? Is that sort of playing into the equation, particularly as with cost of living and some of these sort of household pressures? Are we expecting Australians to travel as much as they typically love to? Yeah, it was interesting. Hudson had a few words on that. In the call. She was asked whether the demand was holding up. She said it is it's stable and she even said that customers seem to be prioritizing air travel over other discretionary spending during a cost of living crisis. So she said that trend really underpins what she described as an optimistic outlook for the next 12 months. And as you said, the stock not doing huge amount this morning. It's swinging sort of few cents up to a few cents below. It was about 1% up last time I looked this morning. There have been a lot of calls for broader competition in the markets, given of course, the dominance of Qantas. What are we seeing on that front and what could the outlook be then for Qantas? Yeah. Qantas is of course the dominant airline in Australia. It's got 63% of the domestic market when you include its low cost division, Jetstar. And we've seen just last month the collapse of regional airline Rex in Australia and that was the fourth least the fourth Australian airline to fail in as many years. And that's I suppose, reignited the debate about Qantas's strength in the market, its grip on the market and the degree to which competitors can flourish and challenge Qantas locally. So, you know, that's not going to go away any time soon and the Government is changing the way slots are allocated at Sydney Airport and the way slots are allocated at Sydney, which is Australia's main gateway, is probably the most effective lever to pull when it comes to letting airlines challenge Qantas. Because, you know, if you get the right slots at the right time, then you can start attracting passengers. And one of the reasons why Rex failed, at least in the major state capital, is because it didn't have the right slots that it wanted between Sydney and Melbourne. So that's one to look out for. And also, you know, will we see Rex back to him in what form Rex is? The local regional carrier has been for more than 20 years currently in voluntary administration, administration and administrators looking for a buyer for Rex. And that'll be interesting to see where Rex passengers end up. Will it be Virgin Australia? Will it be Qantas? Hmm. Bloomberg News business reporter Angus Whitley very in fact will be speaking to Qantas regional rival. The CEO of Air New Zealand joins Bloomberg after the full year profit missed estimates. Greg Foran joining us on Bloomberg Markets Asia on The Times on your screen, this is Bloomberg. We're bracing for a typhoon falling. We're not really seeing that much rain here in Tokyo, but we know that it's going to barrel through the southern island of Kyushu. The system is currently equivalent to a Category two hurricane. We've already seen some disruptions in airlines, railways, also some manufacturers, Bloomberg Intelligence now saying that the typhoon could be costing Japanese insurers ¥100 billion or more and put the earnings of some companies at risk. Asia insurance analyst even them joins us for more on this. So how would the losses from this typhoon compared to previous ones in recent years, Steve. Yeah, hi, Sherry. Good morning, everybody. And yeah, and Heidi. So I think what we're looking at here is that this one is going to be close to normal in 2022, mainly because it's heading to a similar region called Kyushu and southwest of Japan. Now, based on the current images that we've seen and the data that we've we're we're looking at, the wind speed is actually quite strong. So we're talking about 180 kilometers per hour, to be exact. That's sort of a borderline of Cat three in the hurricane scale. The other things that we're looking at is the amount of rainfall. I think that's that could be a concern because of the amount of rain that can dump in the next 24 hours or so. So to give you some perspective, anywhere about 600 millimeters in a 24 hour period is considered very severe. Imagine back in last year in Hong Kong during a black rain time, we would definitely be quarter over 600 millimeters of rain in a one day period. What should the public be looking out for in terms of impacts and potential damage over the coming days? Yes. So I think you know that the track is quite important as well. What we are seeing at the moment, it's right now is focusing on the it made landfall in the Cook Oshima Prefecture. So with a population about one and a half million people to Kyushu, altogether about 11.5. So that's about 9% of the Japan population. But at the moment, it seems like most of the wind damage is going to be focusing on Kikuchi Mai Prefecture. Like I said, flood damage could come in that prefecture along with Miyazaki. So combined together, we're talking about a few million populations in that area. The other things of concern is definitely the duration of the impact. This this storm is actually quite slow. It's only moving about 15 kilometers per hour. So the longer it stays, the more impact it could be. I mean, there are so many natural disasters here in Japan, whether it's typhoons, earthquakes, tsunamis. What measures do these insurers have to withstand these losses? Yeah. So actually, in fact, Heidi, Sherry, we the insurance companies have already budgeted a lot more for this year due to climate change or whatnot. In fact, earlier this year, there's a number of a hailstorms that already jacked up the the insurance claims around April and May timeframe. So this year is definitely going to be above the ten year average. So the insurance companies thinking about 30% or more now, how are they going to offer that? Luckily, the Japanese stock market has been pretty good except some volatility earlier this month. But then overall, they're expecting really, really a lot of windfall in terms of equity gains for this year to shoulder some of the losses. Bloomberg Intelligence Asia insurance analyst David LAMB. They're joining us. More ahead on the Asia trade. This is Bloomberg. The Made in China blockbuster video game blacksmith Wukong is smashing playing records, receiving widespread critical acclaim, but a list of forbidden talking points in the game, including spreading, quote, feminist propaganda, is sparking criticism. Bloomberg opinion columnist Catherine Goldberg joins us now with the latest. So, first of all, Catherine, what is this game? Because I'm not necessarily a gamer. And what exactly is a controversy here? Sure. So this game, black myth, Wukong, it's sort of one of the first made in China blockbuster games, and it's really immensely popular and it's also really quite stunning. But some of the gamers outside of China, when they receive the game, they also receive this list of what to talk about and what not to talk about as they streamed it. And on this list of forbidden topics was, quote, feminist propaganda, whatever exactly that means. And that's almost sort of had an opposite effect in the West, where gamers are actually drawing a lot more attention to this issue. And it was sort of a curious thing to mention. You know, they didn't have to include that on the list of forbidden talking points. But as a result, a lot of people are sort of questioning why they did that and what exactly they mean here. Yeah, tell people not to do something will want to do it more. So tell us a little bit about what could be behind this whole idea of not wanting them to discuss feminism. Sure. So this studio behind Black Myth Wukong Game Science, there have been reports in the past alleging a rampant culture of sexism, including some very crude remarks from leadership at the company. And I should note that this this company has not publicly responded to these allegations. But this issue is bigger than just this game studio. You know, sexism in gaming has been a big issue in China and beyond China. And so I think, you know, we shouldn't be discouraging these kind of conversations. You know, 45% of gamers in China are women. And so that's a very big potential customer base. So instead of, you know, you know, trying not to talk about these issues, I think they should really be getting ahead of these kind of conversations. So we know that Chinese state backed news outlets are sort of constantly saying that the backlash is part of the Western agenda. The fact that we're seeing this from tech companies both inside but also outside of China, also sort of doing this, is this is this an indication of sort of trying to curry favor with with regulators, with the government after what's been a pretty difficult few years? Right. So I think multiple things can be true here. You know, I think a lot of people in China really see this made in China game. Being so successful abroad is really a win for China. And even, you know, women gamers abroad, Chinese women gamers that I've spoken to have really been trying to celebrate this. And I think some of the backlash is, you know, some people are saying it's racism. But I do think, as I mentioned earlier, you know, half of gamers in China are women. And the rate of new gamers, new female gamers in Asia is growing at almost double the rate of new male gamers. So I really think companies should be paying attention to this. And I think, like I said, instead of trying to sort of dismiss these concerns, you know, you're instead of trying to alienate sort of half the world's population, they should be talking about this. Bloomberg opinion columnist Catherine Thornburg here with the latest on that story. That's it from the Asia trade. The China show is next with a market opens there. This is Bloomberg.