♪ haidi: u.s. stocks rally for the second day and s&p 500 having its highest in four weeks. is among the day's winners, searching after subscriber growth tops estimates. and wider tech ops strive more gains. growth and the seeds of a slowdown. >> and the historic meeting moves one step closer.

donald trump says the u.s. is already talking directly to north korea. it is high-level talks underway, hello from sydney. i am haidi lun and this is "daybreak australia". 6:00 int is just past new york, and over the next hour will look at the action on wall street and how it will play in the asia-pacific trading day. was risk on today, but yet the market. all rising, and you can see more more than 1%. diving into that in a moment. sector in all 11 sectors, information technology rising the most, 2% here. consumer discretionary also near

2%. the only laggard was financials. let's get a reminder of how u.s. stocks ended in what was really going to be a playing on your asia-pacific trading. said, we see a second day of stated performance when it comes to the snp. they keynote being the 100 day. or thethe resistance past month, but does it mean we get more calm if earnings continue the blockbuster way we are expecting? we see kiwi stocks trading marginally higher. at .7339. and we have the aussie dollar what it a little given

comes to sydney futures, and the aussie dollar trading at point 7770. the next move is likely to be up, not down, and they see the risk on hold for 2018 rising, in the impasse of trade tensions on the domestic economy. gold is pretty much flat this morning, and the new york crude falling further from the $67 mark. we see price action when it comes to the oil patch. and iron ore futures catching up a bit there. and jessica summers has the headlines for us. the international monetary fund expects the global economy to continue expanding for two more years. the fund is leaving its forecast for growth this year and next

unchanged at the appointment that global rejects growth will fade as central banks tighten policy. the stimulus aside, tightness and gradual slowdown continues. adopting an approach to simmering trade tensions of the u.s., aging has let anti-dumping duties on exports. china has made their it doesn't want a trade war, but it has promised to fight president trump's take policy and defend its own interests. larrys economic advisor kudlow is downplaying the chances of the u.s. to reenter the transpacific partnership. he says the idea is more of a company policy. could no says watched it the in the preliminary stages of any discussion and officials are interested in a separate deal with china. >> if the united states wanted

to follow through on interests, that would trigger a , and with others were interested in rejoining as well. we'll see what comes of the signals made, but it is not a matter of putting your hand up and getting back into the agreement. as the cut losses administration is considering sanctions on russia. nikki haley was ahead of the curve and discussing them in secretaryd treasure te steve mnuchin says there is some confusion about the issue, but sanctions are being discussed. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. ramy: let's take a closer look

at u.s. market action. positive earnings looming large over trade tensions, but one stock not doing well in after-hours trade is ibm due to disappoint results. su keenan is with us. su: if we look at earnings in terms of how it affected the regular session, what is interesting as they are coming in stronger-than-expected. it is expected bank earnings season will see the market bounce, and we saw that in terms of the general markets. will was interesting is we saw bonds and stocks as the yen moved higher, in some suggest remains the stock rallied, perhaps not as strong. let's look at the big movers. , lot had to do with earnings,

with netflix and subscriber growth and investors saying what they wanted to see. united health exceeding the highest estimates, and beating its full-year forecast. newsmazon getting positive as the supreme court looks at the sales tax issue, which could be very positive for its online empire. let's go to ibm right now, which's falling after hours after the reported orderly margins that came narrower the next abated. sales have stagnated, in the cfo promised that margins what to stabilize the first quarter. the stock has been down almost as much a 6%, so it is the low we have seen in the after-hours session. estimates, and it is important to point out analysts are saying in after-hours that a lot of the performance gates have to do with the weakness of the dollar.

that puts pressure on the ceo who is trying to turn things around after dealing with five co s of declining quarters. let's go to gtv to find this chart, this tells us that snp eps estimates are as high as they can be. so we are setting up for a downturn here. ramy: earlier today goldman sachs had first-quarter earnings out. the interesting thing here is this stock fell, explain this. strong, came in very but they also announced they will hold off on their buybacks for now. been a downer on the stock, although there is a plan going forward. what is interesting about the

stock performance, it has been a challenging past year coming off of 2017. banks, andfor many the trend of benefiting from volatility -- we got into the bloomberg and see that a lot of these banks are continuing to benefit from an improvement from the prior quarter, and goldman is leading the pack. volatility hitting a two-month high with oil, and oil rebounded a bit. what is the major driver in these moves? su: short-term we have the supply report that comes on. wednesdays and that is helping prop up prices. we are going to see a bullish report. there's also positive news that is supportive of higher prices on the opec front. we have seen volatility return, so it is a traders stream in many ways if you're on the right side of trade. because goldold,

has been a safe haven play, but you see a downturn in metals in the past week. keenan with a wrap of the overnight action. president trump says the u.s. and north korea are speaking directly at extremely high levels, and his potential meeting with kim jong-un, the president spoke in florida the japanese prime minister. bloomberg white house reporter is in mar-a-lago and judges over the phone. what is trump hoping to accomplish? this is a freight relationship. this is a relationship that has deteriorated over the last year. they are linking to get on the same page when comes the issue of north korea. the president announced he's made with north korea, and took the japanese government by surprise, and there are now looking to get on the same page. like they not feel

are on the sidelines, and they want a sense of what the president is looking to a comp vision that meeting, and what he is willing to put on the table. what the and stage and then game will be one that president and kim jong-un sit together. another issue they will discuss is trade. president trump has issued new steel tariffs and aluminum tariffs, and a number of u.s. allies were able to get an exemption, but japan did not get in the exemption, and that is something prime minister abe look for as well in the meeting. does the president have to say about the highly anticipated meeting with kim jong-un? put that into the context of the meeting he had with abe. >> the president said the meeting is on track to take place in early june or earlier. he said that direct talks are already taking place between

high-level u.s. officials and officials in a kim government. colleagues reported that high-level u.s. officials have actually spoken to kim jong-un himself, it does appear that these talks are moving rapidly and quickly towards a summit. that is part of the reason the president want to have prime minister abe here in mar-a-lago so they can have two days of talks and make sure they are on the same page before the president has his meeting with kim jong-un, which looks more and more likely it what happened next few weeks. japan, who is reluctant to have the rest sitting on quickly with north koreans, want to have their say. one thing prime minister abe wanted to have on the agenda is of the japanese citizens objected and held in north korea. ramy: japan wanting a voice to

what is happening here. you touched on trade with steel and aluminum tariffs, but it is more than that, isn't it? trump may push japan into a bilateral agreement. what is the detail there? toluse: you have seen various comments were the trump administration on trade, and president floated the idea of getting back to the tpp deal. japan and the other 11 countries moved forward, and it looks at the president is considering getting back into tpp. earlier we had the u.s. preference is to have a bilateral trade deal of japan. it is not there how that will work out, but it is something the administration is looking to do. that is going to be high on the agenda in the two-day meeting, to get the u.s. and japan on the same. page when it comes to trade the president was blunt in there are major differences with japan and the u.s. and they will try to work that out in the next days.

on thislot riding meeting of the two heads of state, especially with prime minister abe, and his poll numbers down at its lowest since he took office. will get back to you more in the next coming hours. more on the summit joined the u.s. and japan coming right up, and we will hear from a guest this is the meeting will be tense and tough for both sides to reach agreements on trade, as well as north korea. haidi: and rebecca goldman sachs first-quarter earnings and because of a turnaround that sees its highest revenue in three years. this is bloomberg. ♪

ramy: welcome back as we count down the sydney open with futures looking like this, up 4/10 of a percent. catching little support after the stellar opening and closing

over here in the united states with the s&p 500 up and at its highest since march 21. you are watching "daybreak australia". president trump is hosting japanese prime minister shinzo i day in mar-a-lago, and north korea is high on that agenda. wasnalysis from washington, a north asia associate at the woodrow wilson center. what are your expectations coming out of this meeting? there is a long-standing alliance looking frayed at this stage. you think trump is going to get deliverables as he likes to get away from these meetings? >> both men but certainly like to come across as winners. he wants tot trump, come across as strong.

given the situation on the domestic front in the united states, he's to come across as a strong leader, and having a win which stand front strong in that respect. and the same for prime minister public support has fallen greatly due to a scandal of crony capitalism. like the previous meetings between the two men, this will be a meeting that will be fought with conflict. , this will be the fourth meeting president will have with prime minister abe and the first three focused on building personal relations and being able to focus on the commonalities that the two countries have. this time the two issues that are at stake are north korea and trade. on both issues, there's a lot of conflict, especially on the trade front. haidi: let's start looking at

the north korea issue. there's criticism that north korea has gotten to this point without having to give up anything. basis, is there a chance washington is going to give them an easy deal, perhaps on the eliminating icbms? and you think tokyo sought beijing, and tell her that play out in these sessions? >> from tokyo's perspective, what is happening right now is to north korea has not given up anything. it has gone from a pariah state to a country where theaters are eager to have a summit meeting with. meeting withve a the south korean leader, and he has already had a meeting with president xi.

, ifn was a six party talks not bilateral come up with north korea as well. the concern north korea has it will marginalize and not be part of the conversation. what japan wants from north korea is different than what the united states wants. the united states ultimately what -- there's concern the trump administration will be out of with icbms being circuit. medium chore range missiles will be in place, and that would main under threat for japan from north korea. ramy: back to trade. japan wants the u.s. to go back to the tpp. not sure where donald trump stands right now, but the united states by all accounts once this

bilateral trade agreement. will either be possible right now, looking ahead, what is more likely? it seems the bilateral side, maybe? >> the u.s. has made clear it was to see a reduction in the trade deficit it has with japan. how do they achieve that objective? it is not clear how they will do it unless it is bilateral. from a japanese perspective, a bilateral is something they want to avoid. prime minister abe has given a lot of lyrical capital to get japan on board the tpp. he has put a lot of political capital to make sure tpp moves forward even without the united states. put the united states to come into the mix and try to change that scenario is something that tokyo would like to avoid. japant the same time,

does it want to make concessions to the united states that will be inevitable with a bilateral trade deal. a true when for tokyo at this summit meeting before the japan be part of the exempted countries to the steel and aluminum tariffs. that is going to be something that abe will play hardball on. ramy: after these two days, if nothing comes of this event and mr. abe goes home empty-handed, this he survive? ?- does he survive >> he has put a lot of personal effort and having. a relationship with president trump the understanding is that he not only has a special relationship with trump, they and a very good rapport,

that will translate into a japan "to pursue its national interest of the united states. we have not seen a translation of personal relations having an impact on japanese national strategy. putg, empty-handed would abe in a weaker position. that said, the opening remarks from this meeting have been very welcomed something very by the japanese. they have good body language and good personal chemistry. right now at the starting gate, it seems to be a good beginning. ramy: we will see if that bro-mance gets rekindled and who wins on the golf course. you can get ae, roundup of the stories you need to know and get your day going in this edition of daybreak. goto dayb on your terminal and go mobile on the bloomberg

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haidi: i am haidi lun in sydney. ramy: and you are watching "daybreak australia". a quick check of business flash headlines. one person died when an engine exploded on a southwest plane headed from dallas to new york. in the fight made an emergency landing in philadelphia after the engine shuddered a window, killing a passenger. the last some of them that happened in buffalo in late 2009. tesla fell on news it temporarily suspended production

of its model three for at least a second time this year. the company says it will last up to five days and the planned output strategy. the suspension indicates tesla has no quick fix for the model through production, and analysts say it will inevitably increase the company's cash turns. ramy: starbucks is temporarily closing more than half of its domestic outlets so staff can undergo rishel biased training -- racial biased training. starbucks will shut at least 8000 stores on may 29 after a public outcry at the treatment of two black men. and manager called police after they waited at a table without ordering. sachs up next, goldman with a surge in income trading revenue, but rebound isn't enough to convince investors. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.

♪ 8:30 a.m. in sydney. positive when it comes to futures. second day of gains for u.s. stocks amid better than expected earnings as we get into what has ♪ ♪ is anticipated to be a blowout earnings season. >> you are watching "daybreak: australia." let's get first word news with jessica summers. president trump says the u.s. has begun direct talks with north korea ahead of its potential meeting with kim jong officials have had

discussions at high levels and five locations are under consideration for the talks. he has given south korea the go-ahead to negotiate a peace deal with the north and believes he is responsible for the success of the recent winter olympics. >> north korea is coming along. south korea has plans to meet with north korea to see if they can end the war. jessica: china has cut 1% off the reserve ratio requirement, freeing up $207 billion. the pboc says it will be used to repay financing, adding $64 billion to the financial system. hopes it willnk ease conditions for businesses and individuals. his underlying its growing status and asia by overtaking america as its main export market for vietnam. the u.s. with the top buyer for

15 years as hanoi it relied on washington to counterbalance its neighbor. u.s. airlines face possible the right to overfly russia is expiring. there is no indication negotiations are imminent. representatives are looking for help from the state department after moscow pulled out of talks this week. passover east russia everyday following the cheapest and fastest route to asia. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. thank you for that. haidi: just getting rio tinto

numbers, 100% target achieved. of copper output, 140,000 tons, just shy of the estimate of 143,000 tons. these are the output results for the first quarter. .e'll get you more detail let's get you an update on the markets. a buoyant mood, the second session of gains for u.s. stocks, earnings continuing to impress. .25%ealand building gains, , the kiwi dollar at 0.7342. sydney futures looking positive. the aussie dollar .70 770. the risk of the rba staying on hold for 2018 rising. japan, 1.07 as

bilateral going on. also trade numbers out of japan expected to show a strong trade surplus. that is how we are sitting, risk on with that u.s. 10 year yield pulling back as well. let's get more on what we should be watching. adam haigh is here with us. been patchy for japanese trading, small cap doing well, but what about the earnings season? >> one big focus for small caps is wage pressure and underlying changes in the labor market in japan and how that will feed through to profitability and erode gains we have seen. gtv,is chart shows in your small cap has done well against large cap. there is that since it may be time to rotate into larger caps.

if wage gains come through and we see the impact in this earnings season, we may see performance swing back in favor of large caps. many foreign money managers based their large cap japan exposure on again theory -- eight yen. about whether that will be weaker or stronger, so that continues to be a problem, keeping the yen strong. shinzo abe continuing to struggle domestically and politically, so there is a caveat, but if we see wage pressure, we could see small caps dial it up a little bit. haidi: if you look at where we dth ofing next, the breat the gain is one positive signal. >> in many markets around the world come very low for him

rallies. that has lent itself to the idea it is not a real, long-term money coming back in, just short-term speculative flows. the focus at fun strap are making the point gains will come from the breadth in the rally. this lack of volume combined with valuations stretched in many people's eyes does make it tough from here. haigh, bloomberg's markets editor, thank you very much. switching to the united states, bond revenue the highest in years, but apparently investors are not convinced. fixed income finally rebounded here. what is the story? it is different than we were expecting from the banks that

have recorded. >> exactly. bond trading at goldman sachs has always in a big business. they have not been that way in the past couple of quarters. we have been looking for things to rebound, and they did, 23% increase from last year, but that was not enough for some investors. , plus 21% ono rise the quarter, but 23% was where it came in. you did not see the stock acting favorably at all. falling.dman sachs why are investors not happy here? >> it goes back to this sustainability picture. they wanted this rebound, but they feel like it is not twoainable necessarily, and , they wanted to see more of a rebound because they could see the strategy is panning out, but the time you see the stock fall is when ceo harvey schwartz was

saying they will scale back from their buybacks in the quarter to conserve capital. moving on to the rest of the big banks come up out with results on wednesday. what are the expectations? >> morgan stanley is a very egg equities trading shop. we have seen rate increases from all banks. we saw was 30% from three banks, bank of america, goldman sachs, and citigroup as well. good results from j.p. morgan at are expecting an increase in morgan stanley. our estimate is 6.5% increase, so not 38%, but analysts were often their expectations for other banks, so we could see morgan stanley surprise there. it would be interesting if we did not see that because they are the leader in equities

trading. if we did not see that, that would probably be an issue. fixed income, we are expecting a decline of 5%. .aidi: looking ahead to that coming up next, beijing takes the carrot and stick approach with washington on trade. find out how that will affect china's economic policy and domestic market. that is next. this is bloomberg. ♪

ramy: welcome back. haidi: the imf says the global economy will keep expanding for the next two years come a but warns after that trouble is ahead. the seeds of the downturn have party been sown. about that. what are we expecting from the

imf this week? >> a gathering of central bank governors and finance ministers. i suspect we will hear that global growth is ok, longer-term challenges, and more challenges trade, the rise of protectionism. it will be interesting to see how much that issue does dominate, especially when we have u.s., chinese, and the g20 gathering as well. whether tensions will get worse doing these meetings in washington, or if there will be a pathway agreed among them. if anything, the rhetoric seems to be getting worse. haidi: you talk about trade being the top of the agenda. the carrot and stick approach china is taking, how is that playing out. allowing foreign

carmakers to rome more freely, with commissions of course, but at the same time, they responded quickly by putting those duties on sorghum, and lots of different issues. clear they don't want a trade war, but are willing to retaliate against the as. for what they perceive sanctions. we will look ahead to that and get back to you in the next hour. thank you very much. more on the markets now. u.s. stocks rallied for a second day thanks to better than expected earnings. senior us is a investment analyst for asian equities and emerging markets. inant to pick up quickly terms of this carrot and stick approach. you noted that xi jinping was

reconciliatory in terms of moving ahead. do you think there will be a lean higher way -- either way and which stick is bigger? >> it seems he does not want to escalate the situation. it is a carrot and stick approach beijing is taking. president xi jinping's remarks were reconciliatory last week, promising to increase market access and a decreased investment restrictions, and lowering tariffs. beijing a company that with the 170% import duty on sorghum, about $1 billion worth of imports. the message from beijing is we are willing to work with you and give some concessions, but also willing to retaliate if this escalates further. markets,'s get to the your main focus point, in terms of investing amid trade tensions, what is your outlook moving ahead, caution i presume?

think we will continue to invest in individual companies that offer compelling upside. we spent time determining intrinsic failure of companies regardless of headlines or the news flow. we were able to purchase stocks at a large discount to intrinsic value. we think violations are high for select names that are widely and. .e are still -- widely owned we are still finding good guy value.good a lot of them have grown and .ontinue to grow at high rates they are still trading at such rates and valuations. haidi: one of the interesting

parts of your notes is you try to invest alongside good entrepreneurs because you often see terrible governance and chinese companies. you also have the beijing put in place. how do you reconcile that? onen the long-term we found of the ways we have made money is investing alongside those entrepreneurs that have good relative tocation state-owned enterprises and pay attention to return on investment of capital and more shareholder friendly and better governance in the long-term. they tend to be innovative and dynamic, and so we think there are still a lot of profitable investment opportunities for entrepreneurs on the ground. haidi: i wanted to get your reaction to the tranche of data yesterday, but in particular that retail sales eat was pretty ingressive.

i offer up this gtv chart. this is not the chart i wanted to bring up come a chart that shows of doubling when it comes to online sales in the e-commerce sector every 2-3 years. 35% growth in the first quarter when it comes to online sales. companies like tencent, the valuation is superhigh come a but would you continue to look at these fintech e-commerce stories ring shielded from the global trade attention story? >> they are fantastic companies to hold for the long-term. as you note, valuations are high for them. you start to ask who the incremental bar would be to come beenthe stocks, so we have looking at smaller cap, mid-cap companies which have exposure to some of these underlying trends

in consumption and retail growth at lower valuations. ramy: let me pop in here. i want to talk about currency effects and the yuan, appreciating 9% to 10% since its high. the pboc and beijing is comfortable with this. we are seeing manipulation accusations from donald trump in the white house. what gives here and what is the trajectory you are seeing? >> president trump has indicated he is comfortable with a weaker dollar, and we are seeing that in the dollar index relative to renminbi. you have a difference and fiscal position between the two economies. china is targeting a smaller deficit as percentage of gdp, where the u.s. is looking to head in the other direction. perspective, they

have been willing to tolerate this so far, but the pboc probably does not want to see substantial appreciation from here given the negative impact to exports. it is something to watch. haidi: i did want to bring up the chart i had a before, this doubling when it comes to e-commerce sales. i think it is so impressive and points to the broader picture of that the government has been attempting to rebalance towards domestic consumption for the best part of the last 10 years. given that we have the strong retail sales numbers that they have successfully done so and we are seeing that transition away from reliance on manufacturing and export growth? beijing continues to strike a balance between maintaining a stable level of growth and enacting structural reforms. in 28 teen, the economy has been strong. 2018, the economy has been

strong. china has been serious about delivering and de-risking, a downward pressure on growth, but the retail data has been strong from what we are hearing, company visits on the ground, retail sales holding, same-store sales growing year at a strong pace, and we continue to lie consumer companies in our portfolio. haidi: thank you for joining us. dalton investments, asian equities senior emerging markets analyst. the booming job market. this is bloomberg. ♪ is is bloomberg. ♪

ramy: welcome back. haidi: you are watching "daybreak: australia." the job market on a tear with 400,000 created last year, most

roles being filled by women, the participation jumped in february to the high since record-keeping began. our economy reporter has more. i guess i'm cynical. toit that we are mortgaged our eyeballs and we have no choice but to go back to work? >> yes. no one is 100% sure. i think the financial pressure is key. we have record household debt, stagnant wage growth and the pressures on households in australia is high, so women who might not have opted to come back so quickly or work at all have been pushed back into the workforce. .here are other issues for highfliers like yourself, companies have become sensitive to keeping talent and offering flexibility, much greater flexibility, for women to have children, or just to allow people to manage life better.

rise of part-time roles is a big think that has allowed older women returning to the labor force to come back in. been of the jobs have generated in health, which is traditionally dominated by women. the financial pressure is central there. haidi: what does the data show us? there is almost a bit of a lag. to two years ago, not much change, but it has shot up in the past 18 months. haidi: you can see that no boring on the chart. >> there is still a difference, but it is narrowing. women tend to outperform men at university, school, so we are

seeing the labor force get back in touch with reality to some extent. ramy: we are talking about women , but forgive me if i have to put the man question. what is happening with the mail participation rate, 70% in the 1980's come and now almost 70%. what is happening there? therehink part of it is have been cases of men dropping out of the workforce. you have to forgive me a little bit because i've data is sketchy in terms of understanding things in the relatively short-term, but men have wound down. i don't have a particular answer thereu on that other then are a lot of people who have moved on to disability pensions. we have one of the highest rates in the developed world. i think there are a lot of .orkplace injuries

that has been a significant issue. it comes back to the rba as well. it means you have a lot more spare capacity in the labor market. .hat reduces pressure in turn, the rba can stay on hold. this is an area the central bank is looking at in terms of the labor market. whatonomist yesterday said is more important? it's not the employment rate at full employment, but the underemployment rate coming down to 13%. that has traditionally seen wait growth go of 3%. really fascinating stuff. get back to work. our austria economy reporter

there. that is almost it for "daybreak: australia." daybreak: asia is up next. >> japan for the next couple of hours, the summit between trump and shinzo abe, but trade data coming through out of japan looks like president may not be too pleased with these numbers, expecting a trade surplus for march. a chief economist joining us in hong kong to talk to lose -- through those numbers and what to expect from these talks at mar-a-lago. talking with be the a.b. chief investment officer. it is all about earnings overshadowing geopolitics. earnings and china tariffs, and possibly an individual stock look. haidi: lots more to come. we are watching out for the japan trade numbers as well as

any rate through in the trade relationship between the u.s. and japan is the two leaders meet in mar-a-lago. stick with "daybreak: australia." this is bloomberg. ♪

this wi-fi is fast. i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops. oh boy. wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's.

>> it is 7:00 a.m. here in hong kong. i am yvonne man and welcome to daybreak asia. u.s. rallies rallied for a second day on the back of industry heavyweight. trade on aloser in narrower first quarter profit margin and revenue was flat without the dollars help. 7:00 p.m. in past new york. the imf sees two years of growth. seeds of already been sown. the historic meeting moves one