paul: good morning. we are now ellie mae from the australian market open. -- an hour away from the australian market open. sophie: welcome to "daybreak: asia." paul: our top story this monday, get ready for a global data dump with more of the world's biggest companies reporting earnings and a dilution of indicators from washington to beijing. socialism survives in spain. we look at to madrid for the latest. moviee latest adventures

obliterates the box office with $1.2 billion on its opening weekend. get a quicks reminder of how u.s. stocks ended the session on friday. the s&p and nasdaq rising to record highs driven by better than forecasted earnings. also considering the u.s. gdp report showing underlying weakness i could see markets pricing in further rate cuts from the fed. this will be closely watched. looking at how we are shaping up in asia, we have japan off-line for the golden week break that marks the start of the new imperial era. we have keeley stocks gaining -- kiwi stocks gaining. s&p.w gains for the over in korea, we could see

stocks snapping a three day decline. we will get export figures along with earnings from samsung, that come after disappointing number that we got from korea. let's get to breaking news right now from spain. spanish socialists have won the election. we will have a little bit more on that result in a little while. for now, let's get the first word news. start with boeing. they say all of the 737 max 8 customers will get a software update as the model remains grounded, following those deadly crashes. a feature known as the angle of on newwill be standard planes and retrofitted to those already flying. southwest said it was told by boeing that the 737 max 8 a key

safety alert after the deadly lion air crash. the ending face coverings for monday, preventing muslim women from wearing the veil. it is in response to the easter sunday bombings that killed over 200 people. minister has admitted the attacks could have been prevented if agencies had acted on known intelligence. chinese industrial company has in march. this as economic recovery seems to be gathering steam. it compares with a 14% decline in the first two months of the year. the manufacturer outlook has reboundriter on output

and improving credit conditions. severe flooding in mozambique. the flooding is spreading following the latest cyclone. the government says at least five people have died and thousands have been impact in rural areas where the storm hit. raising concerns about climate change. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. athie: president xi jinping the second forum signals his determination to clean up and strengthen the initiative and plans to open up china's economy further. kathleen hays is in beijing with a recap. flex --anage to

kathleen: we will see. it seemed to be his intention to address all the criticism and concerns that to many countries have taken on the burden of financing from china for roads or bridges and fallen into debt traps, which all of the chinese particularly want to dispel that notion. the kinds of things he talked about will help to prevent that in the future. our news team is watching and hearing the same things i did. pointing out his keynote speech that was muted on the belt and road initiative. here, outlining steps to clean up the belt and road initiative. there have been too many shady deals and officials and countries like ecuador taking bribes that they should not have. let's look at other issues that were in the joint statement

issued to participants on saturday. it called for high-quality projects. do not invest in something that will not be sustainable, where the country cannot pay it back. urge countries to invest in connectivity. again, pledging over and over, cooperation will be clean, open and green. counted all the new deals that were signed, about $64 billion worth of new participants signing up. >> many great business representatives participated in the ceo conferences. they signed cooperation agreements worth 54 billion u.s. dollars. this shows the belt and road cooperation is in sync with the ands, widely supported beneficial to all. kathleen: i will say on an anecdotal note, when i was at

one of the big hotels where one delegation was meeting, when i was at my own hotel, i swear i saw a few groups of people who actually signing deals. i do not know for sure. it was not my place to intrude as a private citizen, rather than a working journalist. the question, a lot of words and pledges. does it turn into action? rehabilitating the image. any evidence of success there? kathleen: i would say the poster child for a turnaround on belt malaysia'sems to be prime minister. malaysia backed out of a rail project. they are trying to reduce their budget deficit.

and wenese said ok negotiated the cost. now he is a big supporter of the initiative. outside asia, italy is the first g-7 nation to join the belt and road. some are calling for third-party cooperation agreements. greece is one of the struggling countries that has welcomed investment and says it is helping their economy. and boycotted the second belt and road for him and are concerned about the ultimate goals of the initiative and what it means for their trade with the rest of the world. it is not 100%. there are still critics and supporters. that is kathleen hays. thank you for updating us on the belt and road. the new adventures and game

movie is smashing records -- the movie isers endgame smashing records. it has set box office records in 34 back -- 34 countries. we have bloomberg news media reporter. this does not stop at the box office. this was an audacious undertaking spanning more than 10 years of moviemaking. can you break down some of the details? over $1.2 billion globally and its first weekend, helped by the fact that it opened in china overdy and most countries the world except for russia. putting on track to become one of the biggest movies ever, head of the records

set by avatar and titanic, which are tough to beat. sophie: one of the best movies potentially on record, looking to beat the force of weekends. can disney top this kind of record? >> very possibly. where people weeks will be going to see it over and over again. there is data out there saying that people are expected to see the movie more than once. three out of every 10 people are expected to see the movie more than once. there was a huge amount of appetite with so many screenings, a record number of screenings across the u.s. and canada to meet demand. it will carry on for a little bit. the executives are expecting more families to turn out over the coming weeks. this movie brings to a

fans have been describing as phase three of the marvel cinematic universe. will there be a phase four or five given the success of this? >> there will definitely be morbidities. we do not know what they are. we know that the brainchild of disney and the president of , he has mappedl out the next five years. newaid captain marvel, the female lead superhero movie is over $1 billion and she will lead the group of superheroes into the next phase. we expect a more diverse group of characters. what does this mean for the recovery of the movie industry when it comes to cinema goers?

ticket sales in the u.s. down 17% compared to last year. definitely. rival lastpected to year's record. this year we have a massive amount of movies. we had a lion king we make a final starel and the wars installment of the trilogy. this was quite a deficit in the box office. there had been disappointments such as the dumbo remake. it looks like things are getting back on track. sophie: thank you so much. china'sead, more of biggest banks about the report earnings. we get an expert preview at david marshall. paul: first, a tech investment officer and head of equities

sean taylor will be with us. find out what he sees will be the biggest risk to emerging markets. that is next. this is bloomberg. ♪

paul: it is a jampacked week ahead and we have a whole lot of names earnings and more on trade talks in beijing. he will be hearing from the fed with more payroll data. about some ofl us these catalysts. su: we had strong earnings from amazon that helped to drive the s&p and nasdaq to new records. a big question as we kick off the week. crude was lower on friday as president trump announced he wants to bring prices down and is removing waivers for sanctions on oil from iran. we will get to that in a minute.

let's go into some of the big movers. you have been talking about disney and the box office for avengers. hathaway will have its annual investor day coming up. a financial newspaper offering suggestions on the way they might prop up underperforming stocks. has news out that there that southwest airlines told that a special safety feature on the max jet had been removed. millionsn offer of from a service company backed by the sovereign wealth fund. that is likely to put this stock much higher on monday. let's go into bloomberg. this one is called the bottom line on gdp. stronger-than-expected gdp helped to drive the market higher on friday.

this is gdp. this is what is called the real, final sales. it is when you strip out the inventories. they are viewed tactically as investment, but when you take it as, it normalizes inventories are used and it definitely shows a lower number. that is something that the market internals might reflect on as we get later into the week. tuesday,eeting on there will be a press conference at the end. it is widely expected that there will not be a change in interest rates but there will be a lot going on behind the scenes that we may or may not hear about. we saw the likes of amazon and ford driving wall street to record highs. give us the highlights. in techave big names and other fields. apple will be a marquee report.

let's talk briefly about apple. sales are still falling. it will really be a focus. is news pressure. we will get the latest details. financials, mcdonald's. mcdonald's also a turnaround story that has tumbled a bit. a looklick, let's take at how oil is doing. the biggest decline in two months. he had been in touch with the saudi's.

the may 1 deadline being set for the waivers being granted. those waivers for sanctions will be removed and we actually that china and turkey will continue to buy oil from iran. that will likely raise tensions and create headline risk this week. let's get some expert advice head of the equities. we are in the thick of earnings season. what is your report card so far for the first quarter results? friday itl outperformed. the u.s. is at an all-time high. one of the risks is divine in markets. we do think with improvement to economic data, that will come

later in the year. sophie: we are seeing some concerns coming through when it comes to china. nearly 6% last week. valuations asrt they are? >> they can stabilize. i think we will see lower endings than people expect. that could cause a selloff in the market. the data is improving. the markets did not go up on earnings. what are you expecting from the pmi out of china? >> we would expect a little more improvement this month. had seasonality from the chinese new year. maybe that goes down a little bit. seeing very strong

economic over the next few months. the stimulus will be on and off. they are study. -- whatthat is the real the chinese government is trying to do. how they are interfering with the markets, just to keep credit going. stable.o be i just went to get your thoughts on the gdp numbers that we got and the implications there. president trump calling those numbers -- saying that they smashed expectations. we know that if you dig deeper, the story is a bit different. what will that mean for the em? >> the interesting thing again and em havethe u.s.

gone up this year because of the change in interest rates. we have had a change this year. we had that economic growth coming through. the numbers are very positive. think that you will see any real change in interest rate. if you look, futures will change. i could be something short-term. i think em is being driven by rates and driven by china. there is a lot under the hood that has changed. some of these markets have acquired big physicals.

a market like indonesia that would normally not do well because of the election coming up -- the election that happened, they have done better. india has been driven not by economic movements by peer political i expect -- pure political expectations. sophie: you are looking good on asian corporate bonds. do you seem -- you see further room? >> the market is not mature enough. we have to be very selective. on the higher-quality, a lot of government support their, looking very interesting. very difficult elsewhere. to get good yield. volatility of the oil price and commodity is a bit risky. some of thego into

less stable emerging markets. asia is in the middle. it has better balance sheets. live in the credit rating for the last five years. it has improved. market affects the credit market and it is quite low. thatves the impression asian companies are highly indebted, but they are not. that is where we usually buy. sophie: thank you so much. .hat was sean taylor plenty more to come on daybreak asia. this is bloomberg. ♪

sophie: a quick check of the latest headlines. first word profit beat estimates.

profit at southeast asia biggest banks 1.2 billion u.s. dollars. its performance ratio 1.5%. rising interest rates will benefit the overseas bank. hspc has started a cost review that could lead to job cuts. bloomberg sources say flint accused leadership group of incompetence. seek --told they could we are told they could seek cuts. asian review says they plan to cut in half the number of employees at the tokyo headquarters. the pans biggest think has decided mother functions performed could be automated with a high tech. many of the staff will be

relocated to the domestic sales division and overseas branches. -- we up, pedro sanchez's will be live in madrid, next. this is bloomberg. ♪ so with xfinity mobile

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this is "daybreak asia." in the philippines the central bank governor says an interest rate cut is only a matter of time. this after last year's series of hikes. the next policy meeting is may 9 area he says any action than will depend -- is may 9. he says any action will depend on oil prices. they have gets reversed 175 basis points in rate increases last year. tens of thousands of people marched through downtown hong kong in the city's biggest demonstration since the 2014 occupy movement. many carried yellow umbrellas,

the symbol of the pro-democracy talks last time. the were protesting extradition law that threatens to erode the one to -- one country, two systems policy that gives hong kong policy -- hong kong autonomous status. of mozambique said five people have died and 150,000 have been impacted in the largely rural areas where this storm hits. this is the first time mozambique has been hit by two severe cyclones in one season, raising concerns about global climate change. the justice department of the u.s. said to the house judiciary committee that william barr may skip a hearing on the mueller report if committee lawyers seek to question him. the democratic planning -- committee plan to ask about

russia's involvement in the u.s. elections. it is unusual for people to counsel a witness. -- question a witness. 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. keenan. this is bloomberg. pedro sanchez will return as prime minister of spain. our reporter joins us from madrid. the socialists won the most seats, but now what? reporter: now what happens next is after this very impressive results for the socialist party, the prime minister has to go out some pacts with other political forces so he can govern. the most obvious one is the one to his left, the into establishment force which looks

like it could be a comfortable partner for him. but even with the votes from him, he still needs more support. that could come in the form of one of the two catalog parties that have been elected. what is the problem there -- cattle on -- charles: his first choice is other parties, there is a nationalist party which would perhaps also be an obvious partner for him. negotiates -- these negotiations go forward. -- catalog the -- catalog an parties represent an ambition to separate from spain. are not ideal partners for sanchez. orhas said he would seek

would be open to speak at any political force, that is within the bounds of or that respects the spanish constitution. the separatist party does not. they support a separation from spain. question,to your sanchez will try to extort other policies before he speaks to catalan. sophie: thank you for that update. the madrid bureau chief. president trump lit up twitter was at a stronger than forecast rate. the problem is economists have said a strong headline number masks components inside the report reinforcing speculation on a rate cut this year. our policy editor kathleen hays is here with the numbers and response. why isn't first quarter gdp the

big one the president is celebrating? kathleen: it is a big number but the president took that headline number on gdp which was 50% bigger than forecast for this of gdp the first quarter in the united states. it usually comes in on the weaker side. let's listen to what the president said at a rally in wisconsin on saturday. mr. trump: 3.2% in the first expectations,ng and accelerating our economic profile. that was with a shutdown, a lot of different things. kathleen: let's look at what he was looking at. 3.2%. you can see the far right-hand side 3.2% is supposed to be

thand 2.2%, even less first quarter. looking at the chart to the left, numbers that look more like the second and third quarter of 2018 when gdp was is it 3%, 4%, the problem is not 2018. the tax codes are wearing off. what didn't use of gdp, the trade war. when u.s. businesses -- what did juice up gdp, the trade war. consumer goods into production, inventories of those as well. when you piled up inventories, which is what happened, shows first quarter gdp, it makes it higher. the problem is the gdp's as a trade deal are getting closer, businesses. doing that. was thething about this consumption and business investment got weaker. let's look at another chart from

the library. you can see consumer spending which is 60%, 70% of gdp which is around 4% year-over-year, now 1.2%. bloomberg economics says don't worry, it will pick up again during by healthy income growth. --is not what you see investment has flattened out. i think you can see there is growth to say economy is still on track but not the kind to say it is heating up. people are putting weight on the slowdown in consumption because it will be key to see the economy pick up. you will see consumer spending pick up as well. paul: another issue is inflation. what about the pullback? will the fed be looking at that closely? it is something they

will watch closely, not a fluke. one thing to tell you, let's look at another chart. they are getting ready to meet on monetary policy this week, the fomc having a two-day meeting. and on a quarterly basis, they have it down to 1.4% is theer-year, this wrong direction. the red line is 2% target. you are moving away from it. later today on the u.s. personal income report, we will have the monthly reading on these deflator's. maybe they will look better, but the forecast is for 1.6% year-over-year, not much better. chicago fed president charlie evans when asked by a reporter about his speech, what about inflation, it will fall further. what does that mean for policies that could set the stage for a rate hike? the bar for the next move is no longer growth, it is inflation.

the fed has got to see inflation rising. the question is if it is inflation that will continue, what will it mean for the fed. we will hear more when the fed wraps up later this week. kathleen hays, thanks very much. campaigning in australia to go before the election. the prime minister's ruling coalition has narrowed the gap with labor. the australian government reporter joins us now. what does the poll show and how close could this election get? >> it does show it is getting closer which is a surprise from where we were when the election was called earlier this month. the news poll in the australian showed there is only a 2% differential between labor which still leads and the liberal coalition government.

that was labour trailing by eight points before the election was actually called. there is quite a bit of narrowing there. the election is getting more and more tight and interesting than we thought a few weeks ago. why is the government making ground on labor? >> i think there is a few points. the advantage, that is one, given the platform with its policy agenda of tax cuts. of, going outort on national security which is one of the strengths and also feeding in to that is putting caps on immigration and integration -- refugee intake. there is also a point to make, they seem to have underperformed so far in this election.

labor went hard last year putting out all of its policies on the table, leaving its self a little bit short for new announcements in the election campaign. some of those policies it put out such as tackling climate change, and well-received. others have been probably a little more cautious and have received some of economic policies particularly the drive to redistribute voters' wealth in a bid to tackle generational inequality. there is that aspect and there the idea that scott morrison seems comfortable on the election campaign, on the trail. he is a former media executive who is going hard on his strengths, and he is looking quite comfortable. starts he thought at the

of the campaign he didn't have much to lose and now he is making up some good ground. taking all of that on board, is there any good news at all? leads -- laborl still leads. it is a good place to be, letting markets -- the markets are always a good gauge about where elections will fall. labor is pretty comfortable, comfortably in front to win. one laborernd person told me last week he would much rather be in this position than in the government position because they have a comfortable lead, even in today's news poll that would show labor will have a reasonably comfortable 10 seat margin to win. that said, there is still a few

weeks to go until may 18 and the government is making up some ground. we have -- you never know, it could be an interesting race to the finish. paul: australian government reporter, jason scott perry never a dull moment. -- jason scott. never a dull moment. we will talk about chinese bank earnings and the outlook for the sector. this is bloomberg. ♪ loomberg. ♪

sophie: this week will deliver more heavy results from korea and samsung's final numbers which come after the chip macker -- chipmaker flagged failing profit and we had disappointing results from korea which gave investors more reason to worry. jumping into the terminal, earnings analysis is not limited to any tech sector. a warning of challenges after

boosting a profit drop and the u.s.-china trade war making itself felt on refineries and chemicals. about two thirds of companies on the kospi have reported they missed estimates. that is as analysts are further downgrading their earnings forecast for korean companies. for the first quarter, seeing lower estimates. down cycle, that has been tracked on gdp growth for south korea, paul. paul: investors also watching some of the in -- the big earnings this week including chinese lenders like think of china and icbc, refiners of sinopec, petrochina and china southern airlines monday. later in the week we will have apple airbus, national australia bank, macquarie, alibaba and hsbc. they are the ones to watch.

for more on the banking results, we are joined by the asian bank senior analyst david marshall's. what are you expecting from the sector? >> we are seeing your on your profits are increasing. we see profit rises and low, middle digits. some of the joint banks like china merging banks can do better. looking forre still the banks, but we need to look underneath those numbers. if we look at revenue, that is good, other income, actually increasing. limiting the profits and giving banks operating earnings. you look at what they are choosing to do, a big part of the increase is being set aside for loan-loss positions. that is either a good thing

because they are beefing up reserves to put them in a it could be not so good if in fact the battle loans are at a quite high level in the banks need to set aside these earnings to cover the bad loans. it is a mixture of both but i would like to estimate -- show that the level of loans we are seeing is cutting the income statement every year and forcing them to set aside more provisions. it is elevated, particularly for an economy like china's, growing to these numbers. they are at such a high level it would be more like what you see in a mild recession. what strikes me with china's economy growing the way it is, still seeing quite a high level of loans. if the economy were to slow further or have a recession, the impact on chinese banks would be severe. the good news is the economy is stabilizing this year thanks to the government stimulus measures. looks like a reasonably

near-term outlook but longer-term still that question of whether china can keep its economy growing without resulting to more stimulus. paul: we had some savage comments last week from haman saying china was in a bad place, the country on the biggest credit binge in history. when you talk about bad loans, would you go that far or are they overcooking it? heree problem is people and others are saying for the last 10 years, since the global financial crisis after which to liftt rip on credit it out of the financial crisis, they predict a bad debt crisis in china but it is constantly deferred. i wouldn't say it is right around the corner because the chinese government has levers to pull to prevent it from happening. the credit growth which had been

constrained in the last couple of years because it has been trying to ramp down on the credit growth in china were in the fourth quarter of this year it has taken off. the big banks have shown year to date loan growth of 6% in the quarter. if you were to annualized that, it would be 20% loan growth. that will not happen because we see frontloading in china. they lend in the first quarter when you quotas become available. the rest of the year, they tail off. will tail off in the second half and that might have a dampening effect. the bigger picture is probably no crisis this year, the year after. the question is can the chinese government find a way to keep the economy growing for incomes and jobs without ever relying on the credit stimulus? looks difficult because every time the economy slows they allow more stimulus to happen. people could be proved right

eventually but the government still has levers to pull to keep things moving for couple of years. prevent -- given that credit push there is a drive to go to the rural sector, to risk private businesses read how will that impact for chinese banks, given the balancing act they have to contend with? it is not helpful and they pushed the big chinese banks to lend more to private enterprises and relatively low interest rates. the government tends to use this method of exultation to force them to channel. relatively low rates. that is not helpful to the bank profits. we will have some impact on the credit quality but think the banks will get around this. lending to small companies that are affiliates, the big

companies, part of supply chains to limit the risk they face. there is pressure is that16, from that -- from that profitability. this is crucial for the chinese banks. at the start of last year it was relatively high as the credit squeeze was still in place. then interest rate started to come down. smallerhelpful for banks because they have more market funding for that will help their margins, less favorable for the big banks because they are interbank lenders. overall it is a helpful factor for the chinese banks. lots of things are impacting them but looks like decent in terms of operating income this year. the key question is how much they decide to set aside for low-level reserve and how much they need to because of the loans coming through. sophie: thank you so much for setting us up with that. , senior analyst

for asian banks. you can get a roundup of the stories in need to go to get your day going in today's edition of daybreak. subscribers can go to dayb on the terminal. also available in the anywhere app. customize settings so you only get news on industries and assets you care about. this is bloomberg. ♪ mberg. ♪

paul: quick check of business flash headlines, a shareholder rebellion at buyer and might worsen -- bayern might worsen. top and fosters are frustrated -- top investors are frustrated with the just -- the strategy that led to the monsanto takeover. they lost $39 billion in market value. there are lawsuits that alleged the weedkiller roundup causes cancer. the japanese government and nissan have refused to engage in

merger discussions with renault. the discussions have sunk to a new low after what sources characterize as -- the former leader had been seen guiding the company's towards a merger when he was charged last november with financial misconduct at nissan. the new avengers end game movie is smashing box office records, getting $1.2 billion in its first weekend. it is the first to exceed $1 billion on opening. it brought in $330 million in china, setting records in 44 countries. the previous record was held by the earlier avengers movie infinity war. sophie: here is a preview of the market open in south korea. japanese markets off-line, futures looking mixed, weakness after the asx 200. taking a look at stocks to watch, and will pacific in view

after they cut their proper -- profit operating target. domestic performance took a hit. this one beat the highest estimate for the first quarter. 72% year ons with a year jump. and another with something in the first quarter, causing credit suisse to raise them to outperform. the korean government will spend over the next decade to develop a memory chip industry. looking at kohl's. they had a better start after price inflation. and we have big aussie bank results -- results with macquarie and nap on the lineup. a lot will be on that space. coming up next on this hour of daybreak asia, we have an interview of -- with bill locke and we will talk about earnings and opportunities outside of china. the market open in south korea and australia is next.

this is bloomberg. ♪ ♪

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>> good morning. asia's major markets have just opened for trade. >> welcome to daybreak: asia. paul: our top stories this morning, asian socks as investors prepare for a data dump. from -- criticism from southwest airlines. >> lending income rises.

how markets are trading in asia. japanese markets off-line for the golden week break. in australia, a change for the asx 200 this morning. this after we had the asx 200 climb for pre-gse levels last week. the aussie dollar trading study with sovereign bond looking at little change. have in new zealand, we gains above 10,000 points while the kiwi dollar hovering below that 67 u.s. cents handle. triggereda three drop by that disappointing mess in gdp numbers as well as results from corporates, we are seeing the kospi gain ground. the korean yuan is below that

1158 handle against the dollar. paul: let's get the first word news now. >> we start in spain. spain's socialists have won the election. that may include support from catalan separatists. months as the head of a minority government, 47-year-old sanchez was forced to call a snap election when he failed to pass his budget. says anbank governor interest rate cut is only a matter of time after last week's series of hikes. the banks next policy meeting is on may 9. the governors has any action then will depend on oil prices. if they remain high, rates would remain unchanged. the bank has yet to reverse rate increases from last year. tens of thousands of people marched through downtown hong kong in the city's biggest

demonstration since the 2014 occupy movement. many carried yellow umbrellas, the symbol of those pro-democracy protests five years ago. sunday's rally was against an extradition law. severe flooding is spreading in mozambique following the latest cyclone. the government says five people have died and more than 160,000 have been affected. it is the first time mozambique has been hit by two severe cyclones in one season, raising concerns about climate change. global news 24 hours a day on air and @tictoc on twitter powered by journalists and analysts in 120 countries. this is bloomberg. much.thanks very fasten your seatbelts.

markets pricing for a data deluge. it's going to show whether the world economy can rebound. kathleen hays is here with what to expect. let's start with the u.s. federal reserve. what do we hope to learn from their policy? obviously no one is expecting any kind of move on interest rates. there has been enough momentum in the u.s. economy in terms of ,obs, in terms of wage growth there are still those who think you could get one more rate hike. on the other hand, when we see what has been happening to inflation, people think the fed could be queued up for a rate cut. when i say people, economists. bond traders think maybe we could get a cut. let's jump into our bloomberg library and look at this chart on inflation. it is a quarterly inflation

reading. if you want to take the most alarming view, you can see the headline moving farther away from 2%, not getting back up to surpassing it. this will include the monthly rate on a headline pce deflator. the core pce deflator. they may not be as weak as this. the interesting thing will be to see what the policy statement says about this, how they characterize inflation. do they acknowledge inflation is back? jay powell will be pounded with questions here. after the fed meeting, the jobs report. this is another one. will wages continue to rise? if there is any sign of faltering, they have the expectation the next meeting could involve a rate cut. on the other hand, if you see a blowout drop report, maybe those views recede.

big numbers out of china this week as well. what is expected? >> they want to start by looking at purchasing managers indexes. when china's economy started to show it was bearing the brunt of the trade war, we really saw it showing up in the purchasing managers index for manufacturing. services have held up well. the manufacturing numbers have been worrisome. on tuesday -- that is just tomorrow, isn't it? everything is rebounding. even the manufacturing gauge has started to pull higher on new export orders, which have been week, also moving up. the blue line is services. those numbers happen holding up well. china just hammered its economy with stimulus.

targeted financing for small and medium businesses. tax cuts. all kinds of incentives. they have signaled we think we have done enough. that is why these numbers are so important. china has figured, we have done enough for now. we want to get back to an evenhanded, balanced approach where we don't have to do stimulus or reduction. just keep it where it is. that is why that number is going to be important to markets this week. paul: let's take a look at europe. what is on the news agenda they are? >> europe has been the most worrisome economy globally. their economy was starting to look a bit stopped even before the trade war started hitting. numbers have gotten weaker. german numbers were slashed a couple weeks ago. people are particularly looking

to see numbers out of france and spain. england meeting this week. -- bank of england meeting this week. we can only assume mark carney will say the economy really could be fundamentally looking for any good at actually is. the uncertainty of brexit is taking a toll. looking at what the u.k. has to say, what these indicators are starting to look like. more on what investors should be watching this week, let's bring in our next guest. sean is the senior economist with oxford economics. as kathleen just mentioned, we are waiting on pmi data. are you looking for more signs of stability? the weekend, we did see that rebound in industrial profits.

how durable is recovery? >> q1 is usually volatile. we are looking for stabilization. how durable can it be? overall, we believe there are downward pressures facing the .conomy despite the stimulus sophie: south korea, we are going to be getting data that could lead to more worry. assessment? >> from the south korean economy we will be getting trade data. it does not look good.

this is a combination of soft chinese import demand. we have the slowdown in the global tech cycle, which weighs significantly on exports. there is definitely export headwinds. positively, we see more fiscal stimulus, which should provide some kind of used -- some kind of boost. some kind paul: we have strong gdp numbers, which perhaps disguised deeper truths. what does that mean for fed policy? think the fed is very much in a wait and see mode. we did see it fairly good q1 outcomes from the u.s.. if you delve deeper, really it was on inventories.

exports, a large fall. consumer spending was also quite weak. we also had inflation gauges. quite a lot of hurdles if we see the fed raising rates. we expecting they are going to remain on hold. it is primarily the fact we do not see inflation above 2%. a dovish tone combined or theasonable earnings, markets adequately pricing risk from the oil markets? sian: the oil price is fairly manageable. if we start seeing oil prices rising, that starts becoming more risky. less so for the u.s. and developed economies. philippines, the

we have two rate cuts in place. if we see oil prices at higher, that puts those at risk. indonesiaek we had leading its policy change for a fifth month. the governors saying cutting rates as a matter of time. what directions you see a regional banks in southeast asia taking? sian: the philippines, we see a bigger fall. environment is that inflation is more moderate. we don't think they're going to be able to unwind all of it. that will be dependent on where we see the oil price going further. we are looking at oil prices averaging 72, 70 four dollars a barrel, which is probably still manageable at this point.

where is indonesia positioned in this landscape? >> indonesia, we don't think a rate cut is on the table. they are putting measures to improve liquidity. the governor is still quite concerned about any possible risk to the exchange rate. we are in a fairly low volatile moment at -- market at the moment. we could see an em selloff, which would weigh on indonesia. paul: we want to get your thoughts on trade as well. we have a potential signing ceremony at the end of may. even if that's get -- that gets the sign on the dotted line, what is going on in terms of infringements and enforcement? sian: that's very much the case. there is a lot of political will for a trade deal to be had.

there has been quite a lot of concessions saying they will buy more u.s. goods. there are still a lot of hurdles. there are a lot of hurdles around intellectual theft, property theft, as well as the enforcement. i think that is really the risk. we could end up in an environment where we have a more protracted negotiation continuing on. doesmuch depends on, what the u.s. want to impose on china in terms of what violations and how china could retaliate or not. >> there's more trade talks in the background between the u.s. and japan. not too much came out of that meeting between shinzo abe and president trump. where do you see that going? sian: trump has been concerned

about access for the u.s. manufacturers. that's going to continue to be a key concern for the administration. japan has made a lot of concessions. the big risk is whether or not the u.s. does decide they are threatened for more automobile tariffs, not only for japan, but the euro zone. that would be quite damaging for the u.s. economy and global economic growth more generally. thanks for joining us this morning on bloomberg daybreak: asia. still ahead, and exclusive interview with the cfo of china education group. plus, a new revelation raises important questions about the safety of boeing's 737 max 8. what southwest airlines is saying, next. ♪

paul: this is "daybreak asia are co--- daybreak asia." is an: mark, it abbreviated trading week. how will that affect equities? a dampergoing to put on the outlook. a short week in china. apmave important and manufacturing numbers out of china. we did get decent industrial profits over the weekend. it can be hard for people to get too much enthusiasm.

china's main indices are in the midst of a correction. hard for people to get to bullish when they are about to go on a long break as well. we have also got the president saying he sees cloudy outlook for the global economy. there's plenty of reasons why traders would want to look back over the past quarter, see what has worked and what has not. we have also got banking results out. what they will be looking at is the outlook for the second and third quarters. we know the first quarter has been an improvement, but they want to know, is this sustainable? carry stimulus going to forward into the second or third quarter? that is what investors want to know. they are not ready to make a big judgment one way or the other. course we had u.s. gdp data on friday.

president trump saying they smashed expectations. economists a bit more guarded. how might asia react to? mark: some of the details are not quite as exciting as the headline numbers suggest. importantly, the inflation parts of the report were quite subdued. justify why the fed is on a pause. that can be taken well. it is a goldilocks scenario. there was enough to suggest there is momentum in the u.s. economy. it might not be going gangbusters, but at least enough to keep corporate profits chugging along through the second quarter. the balance of the report is probably favorable for equity markets. thanks for joining us. well, let's talk about boeing. questions being

asked about that troubled 737 jet. southwest airlines saying after the deadly lion air crash in october, it learned there was a malfunction that was not a standard feature on the 737 max 8. news' transport reporter joins us from singapore . can we explain this latest revelation? what does it mean for boeing? >> boeing only revealed to southwest after the lion air accident in october last year that the standard warning system in the previous 737 version was not available on the 737 max 8. actually, you had to pay additional fees for that future. a lot of the airlines actually thought since it was already a standard feature on the previous 737, a lot of airlines expected

that to be a standard feature. it seems like they only found out after the accident. sophie: how is boeing addressing this issue? update boeingware is working on, they are going to standard with the angle of attack indicator being a standalone feature. i think they are addressing it. it was not communicated enough, i think. they are putting it back on the standard. a lotlly this will ease of airlines' minds. the grounding of those planes expected to last longer than we thought. how is that going to affect airlines' operations? >> we have seen airlines saying

they were planned into the early max.of models without the on the pretext the max will not be operating. a lot of airlines are getting hit with cancellations. as we approach the summer peak season, that is going to hurt airlines operations, given that a lot of people will want to travel. aside from the full-service carries, this is going to hit the low-cost carriers, obviously because they do need the to address.apacity that is approaching very soon. gohie: bloomberg subscribers to their terminals. it is also available on mobile. you can customize your settings so you only get the news on the

industries you care about. this is bloomberg. ♪

sophie: dbs first quarter profits beat estimates. profit at southeast asia's biggest bank was a 1.2 billion u.s. dollars. be risingxpect to domestic interest rates will benefit rivals when they report results. mitsubishi plans to cut in half the number of employees at its tokyo headquarters. japan's biggest bank has decided some of the functions performed by the 6000 staff could be automated with new robotic and ai technology. many of the staff will be

relocated to the bank's domestic sales division and to overseas branches. the new "avengers end game" movie is breaking box office records, the first to exceed $1 billion on opening. office records in 44 countries. the previous record was held by "infinity war. -- infinity war." tol: nissan have refused engage in discussions with renault. relations have sunk to a new low after a slump. carlos ghosn had been seeing guiding the companies towards a merger when he was charged with financial misconduct at nissan. the, look ahead to what world's fx markets will be watching this week. we will be joined by a

commonwealth bank strategist. this is bloomberg. ♪

>> this is daybreak asia. we start with the latest news from boeing, which says all 737 models will get a software update. a feature known as the angle of attack alert will be standard on all new planes and retrofitted into those already flying. southwest airlines says it was told by boeing the 737 max jet lacked a safety alert after the deadly lion air crash in october. the province of chinese industrial companies rebounded in march as economic recovery

gathers pace. official data shows profits jumped almost 14% from a year ago. may 14% decline in the first two months of the year. a record tax cut and improving credit conditions. to the u.s., the justice department has told the house judiciary committee attorney general william barr may skip a thursday hearing on the mueller report. that is of committee lawyers attempt to question him. committee plans to allow counsel from both sides to ask about mother's report in u.s. elections. it is unusual for councils to question a witness. preventing women from wearing the veil. it is a response to the easter sunday bombing that killed 253 people. the government has banned -- i

should say blamed the bombings on an islamic group which has also had help from outside. beenttacks could have prevented if agencies acted on known intelligence. global news 24 hours a day on air and @tictoc on twitter powered by more than 2700 countries. in. 120 this is bloomberg. snapping a three-day drop up 0.3%. shares are above 10,000 points. retreating after four straight weeks of gains. that pushed the benchmark to pre-gse levels. energy is the worst performer.

shares falling the most in 2019 as it warns of challenging conditions ahead on rising oil prices. , a banker cut its operating profit target. ground.gaining lastly, a hotel climbing as much as 5.6% after it beats the highest estimates for the first quarter. paul: joining us now, we have commonwealth bank of australian currency strategist joseph. thank you for joining us today. let's start with the u.s.. we had an interesting gdp. gray on the surface. economists are not so warm about it.

a meeting from the federal reserve. we are not expecting any change from the fed, but an interesting press conference. what are the downside risks for the u.s. dollar? >> the manufacturing index is going to be weaker than economists expect. the regional has been less exclusively week. the other one is the number in the non-fund payrolls report. there is a risk evaluation could fall short of expectations. that will get them interested about rate cuts until next year. paul: what will that mean for the u.s. dollar versus the yen? there are to mystic pressures emerging in japan. what will work against the weakening u.s. dollar will be out of europe. in the euro zone you have the pmi and core inflation weaker than expected. that will give support to the

u.s. dollar. that could mean the aussie could be looking heavy around 70. where do you see the aussie tracking this week given we have chinese pmi data had? -- data ahead to? we got a positive surprise. you may get another positive surprise with april data. over the weekend you have industrial profits. me ais indicating to positive surprise for china. i am just concerned about some of the australian economic data out this week which is very focused on the housing markets. the housing market is very soft in australia. sophie: we are seeing the kiwi

dollar slightly higher this morning, but funds are turning more bullish on stocks data. what is your assessment? joseph: i would not be too bullish on the new zealand dollar. this week is crucial. the governor has said there are two things he will be looking at for his next policy decision. that is inflation, that was very weak, and secondly, the market data this wednesday. look for wages data in that report. 0.2%.0.4 or that is going to open the door for the government to cut interest rates next week. at the moment, an interest rate is plenty of room to go. we had goldman sachs the other week. they liked the aussie long versus the kiwi.

where would you stand? aussie is simply too weak compared to australian commodity prices, particularly iron ore and gas. should be higher against the kiwi. next year we have a big event with the r.b.i. meeting. where's you stand? >> they will keep rates on hold. fully expect them to keep using buyers -- easing buyers in. sophie: turning to the euro, trading at a two year low, will we see a lower range established? what would that mean for the currency? coming out ofings europe this week our q1 gdp

growth and core inflation. leading indicators suggest both could be below consensus expectations. there is a reasonable risk to the euro. the u.s. isid, going to fall back this week. sophie: we cannot leave out sterling. we have the boe on tap this week . expected to hold rates. we have brexit uncertainty continuing. what does that mean for the pound? joseph: there is a simple risk the bank of england removes forward guidance. that would make the bank of england the last of the g10 central banks to move away from a target by. that i do not think is fully priced in. talking aboutbeen trade a lot as we count down to what could be a final resolution at the end of may.

when you look at the yuan, what do you think is going to be an acceptable range for the u.s.? >> the yuan has more upside. the year closes to seven if and when the chinese and u.s. governments do have their trade plan agreed, we will see a short-term bump to the yuan. the longer-term problems the current-account has collapsed. this fiscal stimulus we are seeing in the chinese economic data will spill over into imports. seee is a risk this year we chinese current-account turn into a deficit. sophie: thank you for the roundup of the currency markets. next, we are speaking exclusively with the china education cfo. we will be talking about their earnings and opportunities outside of china. this is bloomberg.

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paul: this is "daybreak asia are ."--- this is daybreak asia sophie: china education group reported an increase in operating profits for the first time in 2019. joining us is the cfo. thank you for joining us this morning. congratulations on your results. let's talk about the future of the group. the group has been on the acquisition trail. 60% of proceeds used in the public listing have been used in those efforts. will funds be allocated toward further acquisitions? >> most funds had been allocated to acquisition.

fiveve already acquired schools in china. all are higher education. we have the largest university in the largest vocational school in the country. sophie: are there going to be synergies from acquisitions of other institutions? >> definitely. we have covered 98% of the programs which the high school graduates will later take. paul: when you are looking at acquisitions, you looked about

100 potential targets. our many of those outside of china as well? yes. so far we are looking at 200 targets in the country and also targets overseas. although we have done five onshore, we are looking for foreign opportunities. where are you seeing the best potential for growth? bill: first, we prefer to be english-speaking. the management team as well as the students and teachers. we really would like to have some synergy with our school in china. from we cancoming

export our student to the school we acquire as well as we have the program we can bring from overseas to our school in china. so that after taking this degrom our student -- after taking this program our student will get -- how will rising regulatory risks add pressure on profit growth? how are you navigating that? bill: it is going well knowing in the markets. so far, very promising for the higher education as well as vocational education. encouraging. boost vocational

education by a one million student quota. the way to go on vocational education is very good. sophie: how are your margin forecasts looking? the newlyave all acquired schools, we have been able to increase profit margins. have a school management system which is certified by the iso 9001. the program development, even including finance procurement. system.an efficient going forward, we believe we can change our profit margins at the

person level. confident youre can keep profit margins at present level, what does that mean for tuition fees? are you going to have to raise them? have proposede plan to raise her tuition between 5% to 10% per year. tuition is still pretty low. it is about $20,000 to $30,000 rmb per year. most of the students can still afford. unlike the students on government grants to support

education, and this is very typical, most students are paid by the family. it ate been able to keep a very affordable level. of china, looking at a demographic, population growth has peaked. what is your plan long-term? markets are not going to be growing. bill: right now for the higher education and vocational market, that is about 50 million students in the market. listed schoolest in hong kong on higher education see our market share will continue to grow. in the vocational education space we did see policies from the government. do you see more measures being

introduced in the near-term that would look positive for your industry? >> definitely. vocational education is not only what the government is looking at, even overseas. most of the education experts have a concern. students would not be able to find jobs, which they have been. -- which they have been studying. thank you so much. bill mok, china education group cfo. don't forget our interactive function where you can catch up

on interviews and dive into any charts we have been talking about. become part of the conversation by sending us messages. check it out at tv . this is bloomberg. ♪

sophie: dbs has kicked off singapore bank earnings season,

reporting profits that unexpectedly rose. let's get more from bloomberg intelligence asian-pacific banking analyst. --t drove that growth fiasco that growth? >> numbers were good. the margins were the highest since 2010. market related income did very well. there was a decline in provisions. those were the factors that drove earnings growth. margins are growing up. how long do you think this can last? that is a fair question. if you see what singapore banks have been doing, they actually drove mortgage rates higher in january and march. libor has come up six basis

points for the year to date. are quiteds interesting given global rates are on a downward trend. the key point to note is singapore banks are still very high. we could see another quarter of margins uplift. what are the risks from here on? >> growth has been slowing. this has been the expectation for a while. loan growth coming off. that is one of the key issues. trade could give it a nice uptick in the second half of the year. thirdly, the biggest risk i see from here on is the asset quality challenges. and welate in the cycle need to monitor risks carefully. there is less room to go down

from here. provisions could rise from here on. thanks for joining us. let's get a quick check of the latest business flash headlines. banksf china's biggest report earnings on monday. bloomberg intelligence sees topline growth. gains may benue eroded. china merchants bank may outperform its peers. big bank posted a 4.3% rise in profit as authorities push more lending. reviews started cost that could lead to job cuts and 's rebuke of top managers last month. say he accusedts with staffompetence,

to be informed around midyear. a shareholder rebellion may ignored aer they no-confidence vote against the ceo. top investors are frustrated with the decision to back him and his strategy that led to the $63 billion month santos takeover. has lost lost -- beyer market value related to lawsuits alleging roundup causes cancer. the japanese government and nissan have refused to been -- to engage in conversation with renaud. -- renault. carlos ghosn had been seen driving the companies toward a merger when he was charged last november with financial misconduct at nissan. of what toreview watch in markets later this morning.

the banking space certainly is focused. results due out this morning. in china after agate bank's results, we will get results from ccb. check, given china's push into credit in an attempt to boost the rural sector as well as private businesses. earlier we had david marshall liking concerns about -- flagging concerns about the industry. we also get numbers from china eastern and seen opec -- sinopec. we will see how the company fears in the face of rising oil prices. paul: thanks very much. before we hand over to the bloomberg markets: asia team, let's look at how markets are trading right now.

asx offalia we have the about 0.3%. the materials sector higher. it is the heavyweight financial sector dragging things down. that is off 0.6%. today.kei closed the start of a ten-day golden week holiday. things looking very positive in new zealand. percent. up by 0.5 that is it from "daybreak asia." our markets coverage does continue as we look ahead to the start of trade in hong kong. standby for bloomberg markets "china open." ♪

>> it is 9:00 a.m. in singapore. welcome to "bloomberg markets china open." -- >> a mixed start. a roller holding for coaster week of eco-data and earnings. biggest banksna's are top of the bill for earnings reports. >> a marvelous weekend for marvel. the new avengers movie obliterates the box office with a record-breaking opening. we are hollywood bound with the latest.