.
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Woman: Now, look at this picture.
Man: Ha… ha… ha, Koochi, Koochi, koo, really cute, who is that?
Woman: It’s my son.
Man: You have two sons?
Woman: No, I only have one son, but this is a picture of my son when he was a baby.
Man: Ah… hmm, cute baby.
Woman: Yes, this is my son when he was exactly one day old, the day he was born, ten years ago.
.
.
cute baby
Which is correct:
It is a short form for: What a cute baby!
It is a short form for: He is a cute baby.
Thank you
“What a cute baby!” is more exclamatory than “He is a cute baby.”.
Even without the exclamation mark it would be more exclamatory.
This is a common use of the word “what”.
He is a big baby.
What a big baby. - This is more exclamatory, with or without the exclamation mark.
That is a fast car.
What a fast car. - more exclamatory.
This is a good meal.
What a good meal. - more exclamatory.
There is usually a change in tone as well. It might also be preceded with “Wow!”
What a cute baby.
Wow! What a cute baby!
Wow, what a cute baby!
I think that first we need to know what “ah…hmm” means.
Was Chips cooing over the baby as a human normally would? In this case, the tone of “cute baby” would probably be exclamatory and upbeat.
Or was he stalling as he tried to figure out what he should say? In this case, I would expect “cute baby” to be much flatter, less enthusiastic.
It all depends on the tone.
BTW, the baby in the picture is much older than one day.
Thank you so much, NearlyNapping 
Very nice explanation.
Thank you so much, Arinker
Very nice explanation.
