>> welcome to "daybreak australia." >> i'm shery ahn in new york. >> and in hong kong, we are counting down to asia's major market open. >> here are the top stories we are covering. the sterling falls as the u.k. parliament rejects options to replace the brexit deal. the split is 11 days away. and political action in australia, handing down the last budget before the election. and there is new cash.

and trade talks moved to washington. there are a list of concessions that could produce a deal. >> let's get things off with a check of how markets have closed in the u.s. major indexes higher by more than a percent. dow jumping the most since february 15. the s&p 500 advertise level since october. and financials leading the gains today, adding to the best quarter since 2009. u.s. futures unchanged. but we do see the growth concerns a retreating globally on positive manufacturing data out of china. let's see how we are setting up for asia. >> futures are pointed at gains for asia, so the momentum could keep going. punk say closing in bull market territory. chinese stocks rising. and we are pushing closer to a fresh record. now to check in on the dollar as we have the federal budget announcement do later today. we do have the aussie losing

some steam this morning, coming back toward the 71 handle. and we have a move and 10 year yields, 1.85 level. the rba might be forced to act, even with a robust jobs market credit the kiwi dollar using -- jobs market. the kiwi dollar is moving back. and the bank it could be cutting rates in may and august on growth concerns. let's check in on the pound as the u.k. parliament rejects all brexit alternatives. cable near 1.30 once more, reaching after being boosted overnight before the vote on soft brexit hopes. haidi: first word news now with jessica summers. jessica: china's top trade negotiator is heading to the u.s. with a range of trade concessions as negotiations resume.

they was cap tariffs on imported cars and it they plan to work on other concessions this month. tehy want to keep the momentum going. this as the two sides enter what could be the final stretch. -- european condition jean-claude juncker has reiterated criticism of china, days after xi tried to ease concerns in paris. jean-claude juncker told german lawmakers that he, angela merkel and micron told xi it is unfair for chinese companies to have advantages in the markets. and he says that they undermine, policy. aviation regulators say that a fix for the grounded boeing jets are unlikely to win approval. the safety system linked to two fatal crashes is being reworked by bowing to make it less aggressive, and less likely to

malfunction. it was supposed to be shown to the faa last week, but the schedule has been pushed back. the agency says boeing needs more time to carry out additional work. reports from the usa rolling stones' frontman make jack or er going to have -- mick jagg is going to have heart surgery in new york this week. the stones had to put their latest tour on hold in the u.s. and canada after doctors told jagger he was not fit enough. the tour began in january in 2017, crossing europe before landing in america. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. >> thank you. sterling fellows u.k. lawmakers failed to agree on a plan b for

brexit, rejecting all options before diplomate -- to replace theresa may's unpopular deal. none commanded a majority. and you know deal brexit is 11 days away. straight to london now, guy johnson. yet lost by three votes, we do not have a majority for any of the options. what next? guy: that is the big question that everybody is grappling with in london this evening. tomorrow morning, we will have a cabinet meeting, which is going to last about five hours. theresa may should be kicking around all options in front of her and they are not ruling out the possibility of bringing back her vote for the fourth time. already it has failed three times. some of the options put forward by the mps this evening to command a bigger majority than theresa may has managed to get for her deal. so we find ourselves at an impasse once again and it is difficult to say which way ford will be the best one -- way

forward will be the best one for the u.k. across the continent, there is a lot of talk about the fact that a no deal brexit is looking increasingly likely. tweetingean parliament that it is looking all but inevitable for a no deal brexit. that is not the deal in the u.k. at the moment, but it is hard to see which way the u.k. goes next. ofwe set up for another day brexit options on wednesday and another vote, but in the meantime what is theresa may's survivability looking like? guy: i think that -- the election idea has done the rounds over the last two or three days, and i think what may have changed the viewpoint of the government at the moment is the fact that the latest polling points to the fact that the

conservative party may lose the general election, and as a result of which it has become more toxic. it really is hard to see how you can break this impasse at the moment. nick boles, who put forward the 2.0 option, has resigned. he said his colleagues within the conservative party are not able to compromise at this point. and judging by the mathematics generated this evening, it is looking difficult to see how that is going to happen. as you say, we have one more try at this taking place later on this week, but if you look at the incredibly close votes on the customs union, three votes, possible that an -- brexit could happen. the real question is with the eu except -- accept a long extension based on the fact that the u.k. is aiming for this

development. the u.k. has to come up with an option and the eu has to agree to an extension to let it happen. shery: is it a possibility we could see a soft brexit? the sterling is declining, but is it rather convincing? guy: to be honest, everybody i talked to tells me that sterling is pretty much untradable at this point. they are trying to get a sense of what is happening, but it is incredibly difficult. you have seen that market, according to traders and strategists, this was written this morning, basically saying you cannot trade sterling anymore, it is too difficult to get a handle on what will happen next. sterling is becoming a less useful indicator as to what is going on. >> ok, guy johnson. another eventful evening in london.

we will get more that no doubt through the course of the week. here in australia, the treasurer hitting down his first federal budget, or his last one, potentially,, later on on tuesday aiming to boost reelection hopes with a vote expected to be called the next month. the fiscal plan is expected to -- and we go to canberra now. paul, what are we expecting? paul: the headline out of this will be the return to surplus. we have not seen one of those for a very long time in australia, more than 10 years. aboutrplus forecast to be $4.8 billion for 2019, 2020 could be as high as $9 billion. and it has come about as a combination of good management and some good luck. we have had higher-than-expected commodity prices. a weak aussie dollar, strong employment and a better tax tick than expected, so a healthy set of numbers expected to be

unveiled at this afternoon. there is also in election coming up. so this budget will contain some sweetness, too. there has already been signaled tax relief for the middle income earners, one-time payments to help with energy bills, and also $1 billion for road infrastructure as well. there is likely to be some more goodies given away in what will be in election-year budget. haidi: but given it is an election budget and votes are coming in may, what is the likelihood of the budget getting enacted? paul: well, that is a very good point. the budget may not get enacted at all. some of my colleagues are calling it the ghost budget. if the government does not get reelected, this budget will not be passed. for the treasure, electionp this for an

likely to be on the 11th order may 18. the government intended to campaign strongly on its economic credentials. but they are also counting on the electorate forgetting all the dysfunction of the past six years, the internal infighting that has seen two prime minister's cut down, now onto our third prime minister in six years. the government has to convince voters to look past that. the opposition party has been putting forward an alternative budget and that might be closely watched, because that could be the one that ends up getting enacted. >> in the meantime, we have the reserve bank meeting today. again, not expecting much movement, but certainly carefully scrutinized, signaling on what is to come. paul: very carefully watched. and about three years ago the last easing cycle began when

they cut rates, and later down to 1.5%, where we are now. no movement expected today, but of course the rba now having a mutual stance, really trying to balance contradictory pressures here, with a house prices declining, but then again jobs, the employment has been strong, wages are stagnant, and the growth forecast is weaker going ahead. so we do have the market pricing in already a rate cut around august. and some economists, a growing band of them thinking we could be at 1% by the end of 2019. already forallen, the delivery of the budget today. still ahead, two aussie rate cuts this year and a gdp growth below consensus. andrew tells us what is behind the gloomy forecast. >> metlife's ceo says exposure to us consumers can help avoid trader risk.

more on global fixed income strategy,. straight ahead -- income strategy, straight ahead. this is bloomberg. ♪

>> where are counting down to the start of trading in sydney. decision day is also budget day in canberra. and we are waiting to know more about the fiscal policy that could drive over the next year or so. we are taking a look at sydni features, looking pretty positive. and asian features largely pointing upward, positive on u.s. manufacturing and adding to the good news story that was being built yesterday, kicking off with china pmi's seeing a recovery as well. shery: you are watching daybreak australia." more on the big u.s. rally in stocks, where the s&p 500 closed at a ties level since october and the dow ended with a 330 point gain. reallywas this all about

pessimism over the growth outlook retreating a little bit on china's economic numbers? susan: what you had was easing concern about global growth, but also some technical factors on the s&p 500 that are very positive, and is some would say bullish for the market going forward. one strategist said good news for investors wondering what the next -- list would be. you have weakness in the dollar and extended -- in extended trading. treasuries rising the most since january, that had a lot to do with the u.s. factories beating estimates in march. and the chip index, as it can see, one of the biggest performers. also, the banking index up almost as high as the tech index. that was an area of strength. and let's go to the bloomberg, because there is something called the golden cross that technical analysts now see in the s&p. a bullish signal is the title of the chart, you can find these at

gtv. the is now a lot ofre -- there is no a lot of momentum and you only get this signal when it is setting up to go higher. there will need to be more days to make this play out, but those who trade on the technicals are very encouraged indeed. let's go into oil as well, because oil tends to take a cue from the market when the stocks are up. that is when we see oil up. it is aiming at $62 a barrel. that is coinciding with an opec output slide, the saudis slashing their output and it is coincidental with donald trump's call for loyal -- call for lower oil prices. oil short-term is on a trajectory higher. and let's go into some of the most active stocks, some of the biggest movers. wynn resorts up there. up more than 8%.

this has to do with a strong indication of revenue out of its macau resort. concerns about weakness in china. the semi conductors, that is part of the play for that sector. bank of america rising higher, pacing bank gains. one of these is not like the other, lyft, it cratered, down by the unit of the day almost 12%. but it has fallen even more intraday. shery: talk about this new kid on the block. >> on friday, it was such a rock star, but by today we saw the humbling effect for lyft. what is the concern from analysts, and how it could spread to other ipos? su: the number one concern in these startups is a group of them, call unicorns, because the valuation is so outsized, as it was with lyft. i have a three-day chart because we are now entering the third day, but you notice it was the

big star, as you said, on friday. now it has dropped below its ipo price. that is of concern. and analysts see more downside ahead. the doubters are questioning the growth conjecturing -- growth trajectory. also questioning what will happen with other ipos in the pipeline, including post-mate, highlyst, all equally valued, so will the same analysis, with lyft not meeting its valuation, apply to these. snap was also a rock star out of the chute. it took four months for it to fall below its ipo price it is still trying to get back. >> su, they give. -- thank you. we will take a closer look at the boost of markets and

economic optimism. drew is a chief market strategist at metlife. great to have you paidsu was -- you. su was talking about bullish sentiment in the market, whether it is the golden cross, or growth concerns over the global economy receding. what will drive markets in the next few weeks? drew: i think it will be the growth concerns receding. people in fixed income markets and equity markets have a difficult time pricing political risk. so as that abounds, whether it is u.s. china trade or brexit, what have you, the people who invest have a difficult time trying to figure out which component -- what they are worth. what if option one for brexit is better than option six? you end up getting dysfunction where people are uncertain. and they do not make great decisions. shery: if you are a bit scared

and concerned about external factors affecting your investments, how strategic would it be to invest in domestic stocks, geared toward u.s. consumers, at a time when the retail numbers have been rocky? drew: i like the u.s. consumer. i think if you are going to try to avoid it trade issues -- to avoid trade issues, being more exposed to the consumer is probably a smart move. they may not always been money, but if you are thinking -- spend money, but if you think about, can they afford to pay back what they are borrowing -- i think the answer is yes. the jobs market is strong, wages are good, there are more job openings than the unemployed right now, and interest rates do not seem to be going anywhere. so for people who are worried about getting hit from these political sides, the u.s. consumer seems to be the apolitical choice. sectorthe manufacturing

is staging a recovery, albeit on the back of a robust labor market. i want to draw a chart on the manufacturing gauge that rebounded from the two-year low, the biggest conservator was employment, snapping this slide with the biggest gain we have seen in three years. given we still see exports and imports both falling to around two year lows, will this be enough to kind of make the fed reconsider how import and the dedication to not just being patient, but potentially seeing more easing this year? drew: i think it will be are seeing in the ism survey is really reflective of the strong environment that we are in globally. there are areas of weakness, certainly europe is an area of weakness, but it seems like china is moving forward because of this the most packages they

have put in place. the u.s. never needed a stimulus package, they just needed the uncertainty to fade. as you see these events occur, you will see people gain more confidence. the people gaining confidence are the u.s. consumer we spoke about. they have money to spend. and in the last couple months they have been saving more than spending, so that is bad news for those couple months, but good news for their ability to spend later. >> the old curve inversion we have spent a good part of the last couple weeks talking about, does that signify that there are some recessionary conditions to come? drew: the risk is going up, but we need to be careful, a plot of the models used for in versions translating into recessions are actually month average models. you need the aversion to be persistent over a long time. and so these flirtations we have had with him versions are not enough to do it. so they do not actually trigger anything yet.

we need to see this kind of environment be sustained for longer than it has been. and if you look at kind of what has been going on lately, you know come of the curve right now on a one-year, 10 year basis. two year tenure basis, not inverted. if you are going to worry about a recession, you need to see the inversion invert and is stick. and -- and stick. and we have not seen that happen. >> we need more than a casual flirtation, troop. -- true. great to have you with us, drew. and lots more to come. this is bloomberg. ♪

>> let's get a quick check of the latest headlines. it is already a bumpy ride for lyft investors after the highest profile stock sale of the year last week, the shares dropped

12%, falling well below the ipo price of $72. wall street analysts highlight concerns about how fast it started making money and note the possibility of growth slowing down. tesla has reached a settlement with the u.s. environmental protection agency over hazardous waste violations at its manufacturing plant. the epa said that has a failed to comply with standards, a requirement for managing potentially dangerous products. tesla will pay a $31,000 penalty and will purchase $55,000 of equipment. for the local fire department. >> ryanair was a huge polluter last year, that is according to brussels. it is a company that does not run coal-fired power plants during the top 10. since risen to third 2005, on course to become the

single biggest in midair of greenhouse gas within the next 30 years. >> coming up next, china offers an olive branch to the u.s. as trade talks resume. this is bloomberg. ♪

>> it has half past 9:00 in sydney. features are looking positive, as our asian equity futures, this after u.s. stocks rallied overnight and the manufacturing gauges suggesting that we are seeing a recovery when it comes to employment, manufacturing gains, and retail sales due to fall slightly. this starting with the china pmi recovery earlier this week. >> i'm shery ahn in new york. it is 6:30 p.m. and you are watching "daybreak australia." here is jessica summers. jessica: sterling fell as u.k. lawmakers failed to agree on a plan b for brexit, rejecting

options put forward to replace theresa may's gielgudt -- deal. no policies got a majority. and this could leave the prime minister was no clear idea on what to do next. she will host a cabinet on tuesday morning with a no deal brexit 11 days away. and the eu government is struggling to reach a consensus on a mandate for trade talks with the u.s. that threatens a delay that could further irritate washington, after the block already refused to include agriculture in the discussion. eu ambassadors meet on wednesday and we are told that france is expected to push back on giving the green light eliminating industrial tariffs. the algerian leader has agreed to step down before his term ends, after weeks of mass protests. the official news agency there he will go before the 20th of this month.

-- 28th of this month. the president sparked demonstrations it he announced he would stand for a fifth term as president. more proof the world is drowning in plastic, a dead whale was found to have 22 kilos or 48 pounds of plastic waste in its stomach. the world wildlife foundation says the rubbish included tubing for electrical wiring, throw away plates, shopping bags and a detergent bottle. the wewf says plastic waste has killed five other whales in the past two years. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. hong: let's get back to kong for another check of the markets. sophie: the strong start to april will be put to the test.

stockstures hinting that could track their rise on wall street by u.s. equity futures, marginally lower earlier in the session. shares in wellington set for another day of gains, another fresh high in range, but switching out the board to check in on the kiwi dollar. the currency is under pressure, losing as much of a third as 1% after business confidence took a hit. the rba may need to cut rates this year on growth concerns. and the aussie dollar, we are looking at the pound now, down 2/10 of 1%, moving to the 1.30 handle against the greenback. the backurkish lira on foot once again, giving back overnight rebounds. 5.51, despite tightening liquidity. and we are watching sydney. elizabeth gains saying the miner is to develop another bridge

project. and this following rio tinto and the lagging in output from the psycho damage. production will be cut by 6.8 million tons in the year. coal producers after the chairman of -- said the company is unaware of restrictions on shipments to china. more on trading getting underway in asia. we are looking at another day of gains. hong kong injuring bull market territory yesterday. and there seems to be good news building up to u.s. manufacturing, china manufacturing, but what do we need to say for this to continue? >> we need to keep in mind that we kicked off the rally, the asian markets, we saw hong kong go up, the china market at its highest since may, and also the rally in india. and across the board in asia,

really. the s&p 500 futures opening a little bit lower this morning, so those gains will be paced. having said that, there is optimism following the china manufacturing number on sunday. the next thing for the markets now is those jobs numbers in the u.s. on friday. to see whether the rally that we have seen in the bond markets will be unwound. those yields spiked higher overnight. and there are some patchy pieces of economic news out of the u.s. with retail sales easing in february paid i think the next thing will be -- in february. i think the next thing will be the jobs numbers in the u.s. but look, we have trade talks going into the market is looking for something more positive to come out of those. but then on the flipside, you do have all of those announcements

and we kind of kicked off the rally yesterday. even though the futures are higher, you know, we will have to see which way trading plays out today. haidi: in the meantime, the reserve bank of australia is meeting today. expected.ge will decline across the pacific. up, afterde is lining the fed set the pace. and the top three candidates are australia, new zealand and south korea. meeting today and we are unlikely to see any moving rates, however, the markets are pricing in a 25 basis point cut in august and probably another one in the first quarter of 2020. we do have a slowing economy,

deepening decline in house prices. and tension -- and attention will turn to the budget tonight, to see whether the government will deliver on tax cuts and any handouts to proper spending from consumers who are highly indebted here. same picture in new zealand. the central bank has turned a dovish. the market there is also pricing in a 25 basis point cut in august and probably next year. and also, in south korea, what traders are telling us is they are increasing bets on the korean central bank unwinding a rate cut delivered in november. shery: the fourth consecutive month of exports slumping there. thank you, andreea. ond her charts on gtv your bloomberg. china offering a trade olive

branch as negotiations resume in washington. they say they will expand the expansion on the retaliatory tariffs on u.s. autos. our china correspondent is joining us. tom, what is the latest? tom: yes, so when we reported on the u.s. tariff suspensions yesterday, it was not entirely clear that this was indeed a play or a ploy by officials to smooth the way on trade talks. but we have been talking to the talks ino beijing and they have confirmed it is part of the play, along with the ban on the controlled substance. now, this is a drug that china produces to a huge extent. it is the largest producer of the opioid and it was responsible in 2017 for about 28,000 deaths in the u.s., something the president brought up with xi at that meeting in

one is our ace in december. so -- in argentina in december. so they are making good on that. and we also have a continued suspension of a 25% tariff on u.s. autos. it comes of course after those constructive talks between the u.s. and chinese aside. that is how they have described it. china talks about new progress being made in those conversations. and the vice premier on the chinese side is in washington and negotiations could start on wednesday in what is the final leg of these talks. both sides going through the text of the document to try to get an agreement before they put it to the two presidents. europe is stepping up its

criticism now of trade practices by china. tom: yeah, that is right. this is the eu commission president jean-claude juncker telling lawmakers in germany that when he, angela merkel and on marcht down with xi 26, they pointed out, the europeans, that it was unsustainable that the chinese companies could have access, free access to european markets, but european companies could not have the same access the chinese markets. he said it was not sustainable, so that points to the european patience running pretty thin with china, not just on trade, but on concerts -- on concerns with the cybersecurity, and about its investments in europe. chapo juncker saying the investments will make it difficult for the block to be united when it comes to challenging china on its policy, particularly on its human rights record. so, yes, these concerns run deep

in europe. they want reciprocity, they want equal access the chinese markets, and they are now ramping up criticism. but europe is divided. that was highlighted by italy holding -- italy signing up to the belt and road initiative. tom in beijing, pressure coming from all sides on beijing. >> coming up, the rba cutting rates twice this year. we will talk about that next. this is bloomberg. ♪

i'm i'm haidi lun. >> the bond market continued to selloff as a stronger manufacturing in asia has carried over to u.s. factory data, leaving germany standing

alone as the weak link in the global chamberour policy -- in the global chain. our policy editor is here. is it too premature to be celebrating? caf au lait -- kathleen: everybody is waiting to see if the federal reserve will rebound in the u.s. china coming to the rescue with purchasing managers going back above signaling growth, so the bond market selloff has carried do today with the u.s. purchasing numbers from the institute of supply management also coming in stronger than forecast. take a look at the bloomberg library. take a look at this chart. you can see it is a simple chart. here is the white line. the overall purchasing managers index had fallen as low as 54.2, fell two points in february. it peaked up over 60. and the fact that has been falling made people nervous.

it came back up to 55.3, reassuring investors and economists that there is a good chance things are not getting worse and the second quarter, at least with manufacturing, is looking ok. another member, retail sales. this was a weaker point at the end of the year. that is why you see the kroger's supermarket with a snow all around it. instead of rising by a couple tenths of a percent, retailers fell, taking out auto sales. so it was a surprise. this was a big question mark for first-quarter growth. it was weak. but will the consumer start spending again? yes, there was cold weather, drop in building materials, making sense you would not build as much if it is snowing. the bond market really focused on the purchasing managers, particularly because china was stronger. >> much less encouraging as we

keep pointing out, when it comes to what europe is doing. what is actually hurting manufacturers in germany? kathleen: its gauge had quite a tumble. it has had an ongoing disruption in the auto industry. it also has the threat of a disorderly brexit hanging over the economy. germany is even more export dependent than china, half of its economy comes from exports of goods and services, mainly goods. take a look at this chart. back to the bloomberg library. you will see not only the eurozone number, actually not holding in so bad, still signaling growth. but the eurozone, france and germany peaked toward the end of 2017, they have done nothing but go lower, but the german of her has to but nervous at this point. let me see if i can update this.

actually, what happened is the german never got even weaker. so this is what is really disturbing people, what is happening there. we do not have a chart of the u.k., but what is interesting is the country with the worst threat of a harder brexit hanging over it actually had its purchasing manager index, manufacturing gauge, jump to a 13 month high. so many businesses are nervous about what will happen they have been building inventories like crazy, said that boosted the pmi rather ironically. >> given the environment, does that mean central banks will turn more dovish? >> i think that this means that watching and waiting, you are reassured by the manufacturing numbers. if you want to go to the european central bank, maybe they ended their stimulus too soon. they will have to target loans later this year, but that is a big question mark for them. the u.k., they can only wait and

watch for brexit. they could be doing well for a rate hike this year, but brexit could undermine the economy. now china is expected to maintain stimulus, they have their rates high enough, enough space to do this the months, but even with the pmi number, they expect to keep it going into some could say we could have another cut in the reserve requirement ratio, rrr, within the next month or so. upry: kathleen setting things very nicely, just like the markets. predicting the rba will cut rates not once, but twice. in july, thens again in august, bringing the cash rate to 1%. we are joined now by our guest in sydney. i am wondering, given we have seen -- bottoming out and a

recovery in china, the manufacturing gauge in the u.s. rebounding as well, here in australia the labor market is robust, and potentially we will get more people -- more fiscal spending from either side, so is the market overextended when it comes to pricing in what we think with the rba? >> i do not think so. on the regional picture, we have a cautious view. my colleagues, we think that china data is looking a little soft, particularly over the next months. and we are looking for rate cuts in india this week, in korea by the and of the year, in malaysia and the philippines. so the backdrop for australia is soft, so not a good starting point. but that is really compounded and coming at a bad time, over extendede an consumer and a housing market that is turning down. it is not all negative. we have some fiscal stimulus

coming through today. but we are on a cautious below consensus growth end of the spectrum and we think the reserve bank is going to have to move over the course of this year and deliver a little more interest rate support. haidi: the household wealth affect. i want to put up this chart, taking a look at government spending, picking up where consumer demand has been waning. you can see the split in the red and blue, consumer household consumption. is this expected to be worse as we continue to see declines in the property market? >> the government has been a strong point for the economy, and the government is rolling out infrastructure spending. we will probably get another announcement on that front tonight, so that is helpful. so there are things on the positive side of the ledger, but the headwinds are pronounced, low wage growth, high debt levels, low precautionary savings, so they really are

vulnerable. and we think home prices will continue to go lower with reduced investor buying, increase lender caution, and the tightening in the lending conditions. so we think that there are material headwinds for the economy. >> already in the rba minutes, we actually saw some members concerned about the slump in housing prices, so what do we need to see for them to move? andrew: i think it is not so much a house price story, it is a labor market story. and the governor has been pretty clear here, the labor market goes to the core of the issue on a number of fronts. the rva is projecting reasonable growth and unemployment going down over time. in turn, that will mean inflation could pick up a fraction. if the labor markets are soft, then it unlikely wage growth will accelerate much and inflation will drift below the target. but more importantly, if the labor market does weaken, then

that will weigh on the consumers with low savings, and it could cause some forced sales in the property market, which would add to the downside risk there. everything is coming down to the labor market. we see the signs in the forward leading indicators, the business surveys, that things are softening up. we are also guided by the fact that gdp in the second half of last year was a week. -- weak. so we see a sufficient reason to believe that unemployment will go up over the next couple quarters and we think that is going to bring the rba to the table. >> how will the fiscal stimulus help in impacting the labor market, and when can we expect that to materialize in the real economy? andrew: so we are going to see a tiny bit of that come through in q4. the budget is an economic and political document, so the metrics here are that the budget

is usually held in may each year, but it has been brought into april ahead of them election. the government has let it be known over the last week that there will be money going into people's bank accounts pre june 30 to help them meet higher electricity bills. so that is fairly modest. but we will also see personal income tax cuts in july, so that will be helpful for the second half of the year. >> from australia to south korea, the outlook for rate cuts is quite extraordinary and at the theme this year is going to be easy money across asia, is that the us some should that the markets -- the assumption that the markets are working on? >> i think that is right. i was looking at the bloomberg survey and i saw 24 out of 26 analysts are looking for rate cuts in india this week. you look at the markets leaning that way in a number of markets. so the markets are reflecting

the weaker growth data that we have seen. and really just starting to estimate cuts in a number of countries. >> it is really something. andrew, it is always a pleasure. more ahead on "daybreak australia." this is bloomberg. ♪

a check of the latest headlines. deutsche bank said to have hired morgan stanley to advise him merger talks with commerzbank. deutsche bank had already recruited citigroup, while morgan stanley is working with bank of america. potential for the merger is increasing. labor unions are openly against the deal. and some deutsche bank investors are also unhappy. shery: u.s. auto regulators opening an investigation into

claims that thousands kia cars caught fire, even without being involved in a crash. th traffic safetye agency says it has recorded more than 3000 complaints involving more than 100 injuries and one death. kia says they are cooperating with the inquiry and have provided comprehensive information on the issue. >> taking a look at the market open in australia. the broadest set up here, good times here to stay? couldentially, this continue and we do see the aussie features rising further fourth section. and this is an early gain of about 4% on a key day that will offer insights into the economic outlook with the federal budget to be unveiled earlier in the year than usual. the government expects to dish out about $4.6 billion in tax cuts and cash handouts ahead of a likely me election. so that is the set up as we wait for cash trade in sydney.

plenty ahead with rba decisions on cap this tuesday. -- on tap this tuesday. this is bloomberg. ♪

haidi: very good morning. i am haidi stroud-watts in sydney, where australian markets have just opened for trade. shery: good evening. i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." haidi: our top stories this tuesday, sterling falls as the ukip parliament rejects all options to replace theresa may's brexit deal. the split is 11 days away. political action. josh will hand down the