paul: welcome to daybreak australia. selina: i'm selina wang in san francisco. sophie: i'm sophie kamaruddin in hong kong. we are counting down to asia's major markets open. ♪ paul: the top stories we are covering in the next hour -- u.s. stocks touch a new high at the start of a data rich week. financials lead the gains in the s&p 500. google's parent a loser after hours and shares tumble after first-quarter earnings reveal a slide in ad spending.

a big week for earnings in australia. the big banks report and the rising cost of compensation. selina: later in bloomberg technology global link, we will look at streaming johgiant spotify's results. let's get a quick reminder of how u.s. stocks ended. the s&p set intraday and closing records on monday. financial companies led the gains, while shares in real estate retreated. we saw the benchmark treasury yield climb. the united states dollar was little changed and the euro rallied. investors are assessing whether the economy and corporate earnings will continue to support the equity bull run. let's see how things are shaping up for asian markets. sophie: good morning from hong kong. we are on the eve of the labor day holiday. kiwi stocks adding 1/10 of 1%. aussie features pointing to a flat open before we get a host of production reports from the

likes of beach energy, woolworths and much more. may resume declines with production due in one hour and earnings on tap. we did get data from the boj showing confidence rising to a seven-month high due to increasing oil prices and chinese stimulus measures. japanese markets do remained close, but the yen is holding 1.90dy after falling to 11 overnight. the big data point is chinese pmi. that comes before mainland markets take a three day break which may be a relief given the recent losses suffered by chinese stocks. paul? paul: thanks very much. let's get the first word news with jessica summers. jessica: the trade talks focus shifts back to china amid increasing signs a deal may be close. treasury secretary steven mnuchin and the u.s. team will travel to beijing, having said significant issues remain but

the enforcement mechanisms are close to done. a source within the administration warns president trump may still walk away if he is not satisfied with how the talks are going. boeing has mounted a strong defense of its software system linked to two fatal max crashes but failed to say whether the the original program is flawed. the ceo refuses to concede the software, and insists boeing have the appropriate regulations. the system was activated by incorrect data readings in both crashes. >> we know that in both activities -- accidents, there was a chain of events that occurred. one of the links in that chain was the activation of the system because of the erroneous data. that was a common link in both accidents. we know that we can break that link in the chain. jessica: the imf says inflation in iran could reach 50% if the

u.s. tightens oil sentience on the economy. last week, the trump administration said it would end sanctions to reduce the islamic republic influence. iran was already dealing with the weakening currency, rising prices and expectations of a second year of recession. there is a record number of anti-homes in japan as builders keep on building despite the population shrinking. almostnment survey found 8.5 million vacant properties, including new builds, rentals. that is almost 10% of housing nationwide. japan is not alone. a 2017 survey in china found about 20% of urban properties to be empty. around 65 million homes. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg.

selina: thank you. tumbles aftert first quarter revenues missed revenues and concerns that advertisers are shifting spending to digital rivals. missing wall street estimates of $30 billion. let's look at the numbers with mark bergen. mark, ad revenue did rise 15% from a year earlier but that is still down from 2018. how would you characterize the threat from amazon and its digital advertising business? mark: they addressed that on the call a little bit. google said they see digital advertising as a big field. they are seeing a lot of moving -- money moving off-line. it is a market slowdown. for years, they were known for keeping the number above 20% and rising. there is no clarity around the earnings call about what their plan is to address that concern. unit mark, the hardware

was not exactly a standout either. what happened there? mark: they don't report sales for the number but we get a sense they actually lost this quarter because the money they are spending to market. they named the pixel smartphone device and some of the competition they are seeing in the premium smartphone category. sundar pichai said they were in it for the long-term. he mentioned some traction they are seeing on their home speakers and potential products -- down the line. not many details on that and they are falling behind amazon and apple. selina: what about this closely watched other category? did they say anything about their new game streaming platform? mark: it actually falls under google proper. other bets is more waymo, long-term health care. interesting update they mentioned. waymo and how they are

emphasizing getting the ride-hailing business up. they are testing in arizona. they also mentioned, the cfo said they are looking at trucking and licensing which has potential for waymo to really begin to sell revenue if they license the technology to other companies. paul: mark, privacy is a big issue with tech giants. with that weighing on avenues -- add revenues in any way? mark: they talk a lot about the emphasis of the new privacy they put in place with android. there is a trade-off. the more they restrict data collection from third parties and what google can collect, the less it will hurt revenue. the question they did not answer was around chrome. chrome has big impact on smaller ad companies.whether they will cut off ad tracking capabilities with the chrome web browser. that is something they said they will expect to see more privacy

and want to be a leader on this. that will have a trade-off with their ads business. paul: mark bergen, thank you for updating us on those results. still ahead, the blackstone boss tells bloomberg the democratic tax policies could be a threat to the economy. selina: next, beating the blues. a tech ceo tells us how to build a portfolio that is resilient to we downturn -- a downturn. this is bloomberg. ♪

paul: we are counting down to the citi open. we have futures looking very quiet at the moment. just one point difference right now. we will have the open in about just under two hours time. i'm paul allen in sydney. selina: i'm selina wang in san francisco. you are watching daybreak australia. now, returning to the u.s. market close. the dollar falls ahead of the

fed's decision this week and the s&p and nasdaq set fresh records on the latest round of earnings. su keenan joins us with more. how are investors assessing whether the economy and corporate earnings will continue to support this equity bull run? su: we are starting to see it play out. the mixed of earnings last week drove us to an all-time record for the s&p and nasdaq. what we saw in this latest session is the s&p and nasdaq again expand above those levels. let's go to the market snapshot because we did see far less of a gain and a much more tentative market. what we have got is the s&p financials in the lead. that was the biggest gainer. the s&p 500 up about 1%. direction,ooking for holding around $63 on some unnerving moves by the president, announcing he had directly spoken with opec. again, you got the market sort

of on hold as we wait for the fed on wednesday to announce its latest move on interest rate decisions. they are not expected to raise rates. and you've got the u.s. trade talks with china about to resume in beijing. let's take a look at some of the big movers. intel down for the fifth straight day. they disappointed last week. that has been a negative for a lot of the chipmakers, one of the big momentum groups last year and some part of this year. worldwide taking a big move lower as amazon moves into their space. trade desk, an online trading platform with access to china which seeks to influence advertising trends in china, got a big move higher. facebook riding the move higher. if we can go into the bloomberg, one of the issues is one of the key pieces of the big risk on rally are still in place.

if you look to the far right, you can see in oil and many of the other sectors, we are starting to move lower even as the blue line, the s&p 500 makes slightly higher moves. paul: su, we had some big movers after hours as well. even dig your potential mover tomorrow. tell us about that. su: let's take a look at the after hours earnings. we are in the peak season for earnings. about 80% of the s&p 500 have reported so far have exceeded. alphabet is of concern because google is not showing the kind of advertising growth that investors expected. western digital also coming in with a disappointment after hours. john being technologies, a food tech nobody that is starting to be the sweet spot of what wall street and silicon valley investors are looking for. that is up 3%. apple would be the marquee name after hours this time later

tuesday. what we are going to see is a lot of investors focusing on those iphone sales and shipments. we know about the disappointing sales in the holiday. we will hear more details on that. a lot of shareholders want to know what those are as opposed to what we have seen in the recent months. selina: you mentioned trade talks. they will be getting underway later. significant issues remain. how are investors reacting? su: let's talk about oil because that has been very much impacted by the u.s.-china trade talks, but also these latest moves. if you take a look at the oil chart, you can see it has been a bumpy week because the waivers for the sanctions for iran expire this week. president trump issued a statement that he had directly talked with opec in terms of trying to talk down the price of oil. you've got a lot of will investors on the sidelines that

have been waiting for the other shoe to drop. you also have bitcoin, a closely watched technical gauge. short of giving the first cell signal for bitcoin in two months even though you saw that kind of bump up in the latest trading. big picture for bitcoin, it has come back about 50% since the start of the year. down 74%. i don't know if we have a big picture for oil. bitcoin going back for the past two or three years and it was up astronomically in 2017. there were a couple of scandals with related crypto companies, tether. that gave a lot of crypto investors a bit of a jolt. there are some tentative issues for that commodity, if you could call it that, going forward. paul: all right, su keenan. thank you very much for that update on the markets. when your business specializes

in volatility, what do you do when there is none? that is the challenge for intech investment management. the focus is on this area of the market. an even more relevant question this week. markets in japan closed. china taking the rest of the week off starting tomorrow. two of asia's largest economies are shutting trolleys. adrian is the chief investment officer of intech. he joins us now. you have a market model based around trading volatility more than anything else. what does that make you the anti-buffett? >> the couple venturi buffett perhaps -- the complementary buffett perhaps.it is on the premise that volatility is not just a source of risk, it is also a source of return if you harness it correctly. paul: as we were discussing a moment ago, volatility missing

in action. i want to show you this chart that we have on the terminal at the moment. it shows volatility very much at an all-time low, a historic low. is this normal and that has been affected what you do in your day-to-day? adrian: it is a family interesting. the last four or five years have been characterized in global equity markets by a continuation of the long-running bull market. with these sort of episodes, punctuation if you will, of drawdowns and spikes in volatility that have nonetheless been fairly quickly closed up. we lived through one of those. the s&p is at an all-time high again. it didn't look that way at the end of last year, of course. selina: where did you see the greatest sources of volatility in the coming years? trade tensions, trump, brexit? where does the opportunity lie given what your firm does? adrian: yes, i think that is

really a playoff between the geopolitical instabilities that we are seeing now worldwide. many areas of the globe. still combined with, especially in the u.s., a pretty robust economic picture. the question is where is the trade-off? i think many folks would say after 10 years plus, the longest bull market ever by some metrics, it should be running its course. they have been saying that for at least three or four years now. so far, they have been wrong. the challenge is when will they be right? i think that makes it extremely difficult for investors not just intech. we see volatility as an opportunity as well as a challenge. i think that does make the case for strategies that can nimbly adapt without necessarily taking a bet on whether the bull market

is going to be over soon or not. selina: what will the long asia holiday mean for global market volatility? you have japan and soon china closed. two largest chain -- asian economies. also in the middle of trade negotiations with the u.s. adrian: of course, there will not be too much volatility in those markets if they close. ime other sort of cases, guess there is not a recent precedent for such a long holiday. for japan, once in the many generations to the thing -- type of thing. if there is a little bit of a lull, whatever volatility there may have been during that time catches up at the end. we will find out in a couple of weeks. paul: how have your global returns been so far this year and what can you do to protect yourself against downside risk if this bull market comes to an end? adrian: we are big proponents of

strategies that can adapt to the volatility regime. it would be lovely if we can actually predict what is going to happen. i think that is exceptionally difficult. from a practical point of view, we believe the case for risk management is stronger than ever. it is really hard to do it in the face of strong markets. at a time where it is almost counterintuitive. of course, after you have faltered, it can be too late so the time to do it is in a way before things crash. we saw through the cycles, the equities strategy did exceptionally well relative to the market in the fourth quarter last year as the markets were falling. this year, the defensive strategies have lagged a bit through the cycle that has held up very well. the real point is not so much backward looking. it is forward-looking. that sort of uncertainty, are we back to 2017 where we have

almost no drawdown? 2% drawdown was the max intrigue your daily drawdown for the msci. that is exceptionally low. a riggelman to have another incident where we are down 10%, 50% and pick it up in the next few months? or the next downturn going to be worse? hopefully not gsc level. anything like that, very hard to predict. paul: predicting the future is a trick. adrian: tell me when you can do it. paul: thank you adrian banner from intech. you can get a roundup of the stories need to do in today's edition of daybreak. bloomberg subscribers can go to their terminals. it is also available on mobile on the bloomberg anywhere app. you can customize your settings so you're only getting the news on the industries and assets you care about. this is bloomberg. ♪

paul: this is bloomberg technology global link. i'm paul allen in sydney alongside selina wang in san francisco. let's take a look at the top global tech stories of the day. selina? selina: get ready to add wework to the list of highly anticipated ipos in 2019. the shared office giant says that initially filed in december for what will be likely the second-biggest u.s. public offering of the year, just behind uber. just like some of this year's big name tech ipos, wework is losing money. losses exceeded $1.9 billion, while revenue came close to $1.8 billion. intel shares fell for a ninth straight session following last week's weaker than excited earnings. the company cut its full-year outlook predicting the data center group would post its first decline in a decade. shares have dropped as much a 13% over the past five sessions, the longest streak of losses since september. in a worrying sign for tesla

deliveries, the finished goods inventory including cars ready for sale at top $2 billion for the first time. the count was a rise of 6% for the end of 2018 and up about 90% from a year earlier. tesla attributes the increase the longer time it takes to deliver model 3's outside of north america. spotify has become the first music service to reach 100 million paid customers. the company added 4 million new subscribers in the latest quarter but also losing more money. bloomberg intelligence analyst joins us from new york. what did we learn from this earnings report? >> you learned that customers are pretty loyal to spot a five and they are able to grow internationally as well. getting to 100 million premium subscribers, they have been doing that by first offering promotions and getting subscribers onto their free platform to that move up. they are seeing growth

internationally. they launched in india and reached 2 million subscribers within the quarter. that is what you are continuing to see despite the competition. they have been able to really keep their customer base and continue to grow. i think that was the biggest take away and gross margin was a little better than analysts were expecting. paul: seema, apple and amazon cannot seem to stop spotify. why is that and what can they do to keep up? seema: the market is very large but i would say spotify's customer base is very sticky. they tend to target the millennials and gen z. they have a lot of promotions, including the student promotion. as people develop their playlist and set up their subscription, they are less likely to switch. i think there is a customer switching cost involved. they have innovated, they are quirky. they give them random stats at the end of the year and that resonates with millennials, but

usually those that really established their playlist. i think that is protecting them to some extent. selina: spotify is losing money due to label payments. what does that mean and how long will that last? seema: label payments is what spotify pays to the music industry basically for the rights to have that content. there in the process of negotiating that right now. goods goesr cost of to paying the label so it is a huge cost. the company feels optimistic about the negotiations, but in the near term they will continue to see that. ,aul: all right, seema shah thanks very much for joining us. that is bloomberg technology global link. don't miss bloomberg technology 7 a.m. in sydney, 5 a.m. in hong kong, and 5 p.m. in new york. coming up next on daybreak australia, we will hear from blackstone boss steve schwarzman

about investing in china and his view on the strength of the u.s. economy. this is bloomberg. ♪

paul: it is 8:30 a.m. in sydney. the market open is 90 minutes away. futures not doing a lot despite u.s. stocks continuing to push higher. i'm paul allen in sydney. selina: i'm selina wang in san francisco where it is 3:30 p.m. and you are watching daybreak australia. let's get to the first word news with jessica summers. is stillgoldman sachs deciding whether to plead guilty to charges related to the malaysia scandal. the bank previously placed the blame on a road employee. u.s. prosecutors have already told senior justice department officials that goldman should plead guilty but ceo david

solomon told bloomberg that nothing is decided yet. startedve not even suggestions by the justice department. we will do that for the shareholders and for the client and get behind this as soon as we can. growth: thailand has cut forecast on slowing exports and expects the weakest expansion for three years. gdp has been rising 3.8% this year due to the global slowdown and the fallout from the u.s.-china trade war. the central bank is excited to keep the benchmark rate at 1.2 % and a stimulus package to help boost growth. indonesia may change its capital city as gridlock and population growth reaches breaking points in jakarta. it is already home to 30 million people with traffic congestion estimated at $7 billion a year in lost productivity.

the province is a front runner for the new capital. the government says any move might take 10 years and costs around $30 billion. hoto will endor his 31 year reign tuesday, voluntarily stepping down for health reasons. to imperial heir will come an end with a traditional ceremony at the imperial palace in tokyo. it is the first voluntary abdication of the throne in japan in more than 200 years. akihito will make way for his son, the crown prince. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. selina: thank you for that report. now to hong kong with sophie on what to watch in australian markets this morning. sophie: as we wait for a potentially lackluster start to

sydney trading, a fairly busy morning when it comes to updates. we have heard from independence group of production as well as mining with the annual output forecast at 300,000 ounces. we got an update from newcrest as well. the midpoint of the range. nufarm saying there is no change the guidance provided in march when it cut its forecast on weak margins seen in australia and europe. we are also watching nine entertainment on a report it agreed to sell its regional newspapers in a $125 million australian announcement due any minute now. we are watching southern cross as ad market were generally weaker in the third-quarter, with fourth-quarter trading seen ahead of last year. the would your cost excited to be flat. we are watching virgin australia as it announces it has deferred delivery of the 737 max to july

2021, converting 15 of those orders to max 10. its business in canada. that update comes ahead of results due this friday at a time when australian banks grapple with mounting costs. broadly speaking, jumping into the terminal after a weak first-half earnings. the weakest since the gfc. with trading conditions remaining subdued, goldman saying there may be a heightened level of earnings downgrade at the year-end. paul: sophie, thank you very much. let's get more on what we should be watching as trading gets underway with andreea. another record session in the u.s. amid optimism's on earnings but more data to come this week. what can we expect? andreea: we did have that good data out of the u.s. with consumer confidence rebounding which helped nudge the s&p 500

higher. you also have a much better than expected earnings season with almost 80% of the s&p 500 companies that have reported better results, much better than expected. we have a chart that shows global learning revision getting close to positive territory. while all of this is encouraging and it will probably support the market, there is pmi data out of china which will be very important. you also have the fed and jerome powell's press conference will be very closely watched. we have had solid data out of the u.s., but there are questions about the underlying strength of the economy. at the end of the day, china and japan are shut. a lot of global markets closed for the may 1 holiday. there is still a lot of going on that trade is up. you also have the trade talks.

probably looking at a fairly lackluster session for asia today. selina: there are signs that china stocks surge might be coming to an end. what is your take on that? andreea: that is right. investors are running out of reasons to keep being bullish on chinese stocks. this is a market whose value has gone up by $2.5 trillion this year. big markets everywhere else around the world. we have a chart that shows that is actually running out of steam. chinese stocks suffered their worst week compared to the rest of the world. since 2016. among the reasons, uninspiring earnings seasons and that there will be less aggressive stimulus policy. after some encouraging numbers. analysts are also concerned that the shanghai composite index has failed to hold above some key support levels.

those things are flashing warning signs that there are headwinds ahead for chinese stocks. paul: all right, andreea papuc, thank you very much for that. you can check out our library for some of the charts we have been talking about on gtv . china's five biggest banks have reported increases in first quarter profits. bad loans are rising too, since the fastest pace since 2015. our chief north asia correspondent stephen engle is tracking the earnings from basic. what can we glean from the report card? stephen: you have all these policy supports and mandates from the government tuesday simulate the economy, you are going to get bigger balance sheets, record lending in the first quarter. that will improve the balance sheets and profit as it did in the big banks in the first

quarter, but it also raises the specter of increased nonperforming loans and down the road, the prospect for potential provisions for those bad loans. that could weigh future profitability. we can break down the big banks that did report yesterday. four of the top five reported yesterday, ad bank was the one anomaly, it reported friday. it was a similar picture for nonperforming loans and profitability. icbc, 5.2 billion yuan rise. that is $770 million in the first quarter increase in nonperforming loans. it is the biggest quarterly increase in debt in three years and the highest level since at least 2006. the world's biggest bank. it is a concern. china construction bank, the number two lender, bad lonas rising -- loans the most since 2016. loans rising.

the biggest increase since the first quarter of 2017. similar picture of the other banks. bad loans and as a percentage of total lending did fall slightly but that was due to the expanded balance sheets i talked about. selina: let's get into the actual earnings themselves. bad loans are rising rapidly. how much provisioning is needed to offset those bad loans? stephen: that is the big question going down the road because that will probably limit the profitability going forward into next year. let's look at some of the numbers. icbc profit rising 4.1%. net interest income rising 8.2%. these are solid results for the first quarter. tcb profit up 2.4%. similar picture. you can go on the bloomberg terminal and see all the numbers. bocom up 4.9% in net net income -- in net income. net interest income rising 19%.

despite concerns about the bad loans, total earnings estimated to grow at the fastest pace in five years, but there is a big but. the provisioning that could come down the pike. we are seeing, according to bloomberg intelligence, icbc and bocom loan provisions could offset mild revenue gains this year, restricting growth to mid single digits in 2019. selina: stephen, thank you for that report. blackstone chairman and ceo steve schwarzman sees a potential threat to the economy from higher taxes. he has also been defending the fed and think the chinese economy is looking solid after stimulus. he spoke to bloomberg at the milken conference in beverly hills. steve: china has stimulated its economy like they said they would when the tariffs went in. i was therefore weeks ago -- there four weeks ago. the people at the central bank were telling me that worked very nicely.

now you are seeing the result of that which has surprised some commentators that china's economy looks pretty solid now in the sixes, 6% growth. i think that would have surprised some other people. it did not particularly surprised me. they have the ability in china to really force money into their system to create growth. they are doing it and it has been successful. >> are you putting more money into china at this point? are you investing more heavily and where? steve: we just bought a company there. i think china is a harder place to it invest for outsiders. you always have to be prudent and thoughtful when you invest. we are looking in the real estate area as well. it all depends with what happens

and what values are. >> tim geithner over the weekend was talking about the strength of the economy and the bull market we have been in for a long time. he says the only thing we have to avoid is dumb mistakes. what can be a dumb mistake that we collectively can make either from a policy decision or market decision? steve: well, i think there are a lot of mistakes you can always make. i think if there is a really dramatic change in the tax area, if the democrats win for example, a lot of the things that some of the candidates are talking about, i think that would be sort of a disincentive. it could have a certain psychological's shock value and logic would say that it would slow the economy. that is one of the things you could do. the other thing is that the fed could increase interest rates.

i haven't seen for at least a asade a fed that is unresponsive to the real world. people worry so much about the fed doing the wrong thing. aen if you start making mistake, and correct it almost right away, which is what happened as a result of the october 3 response, the fed is the guardian of the system. they are not the enemy of the system. if we have a lot of wage inflation or some thing else, it andd seem somewhat unlikely they start increasing interest rates, probably because it is a smart thing to do. ofis only when they get out

cycle where they think something is happening that is not and then prosecute it all the way, i the-- tend not to think people there are in the business of making mistakes. paul: that was blackstone chairman and ceo stephen schwarzman there. next, u.s. officials gearing up for negotiations in beijing with big issue still unresolved. we will dig into those talks next. this is bloomberg. ♪

paul: i am paul allen in sydney. selina: i'm selina wang in san francisco. you are watching daybreak australia. the trade talks shift to beijing this week with steven mnuchin saying the enforcement mechanisms are close to done. jane cali, one of australia's leading experts on china, the acting director of the australia center on china in the world and joins us.

at the belt and road for a she addressed some problems, but would this be satisfactory for you? how much contention is there now between china's economic and geopolitical motivations when it comes to this initiative? jane: there is still so much contention around everything to do with the belt and road initiative. xi jinping talks it up as a win-win economic strategy that is meant to deliver growth and prosperity to the entire region. there are many other people describing it as china's plans to take over the world and one riddled with problems. i think the biggest problem that is highlighted is this is a form of debt diplomacy where china is luring countries into unsustainable financing, huge financial difficulty and ultimately make them beholden to the demands. selina: now, politics aside,

from your research, how effective is chinese money spent overseas right now? jane: that is a really good question and we really need to look at the academic evidence on the topic to understand and. there is a report coming out from academics across the globe, debt burdened in africa, latin america and the pacific. the overwhelming finding in that research is that there are very few countries, venezuela as one exception, where china is the primary cause of debt problems in the country. the belt and road funding in particular takes up a small proportion of the debt problems across the world. while there are some cases that are problematic, that is not -- p lot of the debt burden or tra ideas overblown. just how about the idea of flat out waste and corruption as

well? it seems like this initiative is rife with that sort of thing. jane: it is. the important point is the realize the corruption problem is often not coming only from beijing, but also the responsibility of the local government. that in turn affects how the rest of the world should respond to it. a second example, if you look at the pacific, some are saying china is pouring money into the region and causing problems there. in fact, it is probably most often away the local governments are handling it. the appropriate response from the australian government is to find ways to help local governments make the money more sustainable. corruption is a problem and it is a problem emanating from china and within the country's themselves as well. the question then is what you do about it. paul: how do the traditional partners in the pacific,

australia and new zealand, stay engaged when there is all these sums of money flowing in from china? good governance? jane: i think good governance is absolutely the key. it is a good example of where we need to cooperate with beijing rather than competing against them. most recently, the australian government partnered up with the u.s. and japan, saying they will compete with china in the pacific region on infrastructure. if we go and compete when the problem actually lies with the host government, they will just be pouring money out to bad. whereas cooperating with the chinese and local governments to ensure all money invested is used wisely -- let's face it, china has most of the money to spend. we are offering in comparison. the good response is all about governance and ensuring that infrastructure financing is right. selina: fascinating insight.

thank you, jane golley, acting director of the china center. watch us live or see past interviews under interactive tv function. you can also dive into any of the securities of the bloomberg from since we talk about and join the conversation by sending us instant messages during our shows. check it out at tv . this is bloomberg. ♪

selina: i am selina wang in san francisco. paul: i'm paul allen in sydney. you are watching daybreak australia. let's get a quick check of the business flash headlines. contrasting fortunes for big energy in china. first quarter profits will 20% on lower oil prices and shrieking earnings from refining. net income fell $2.3 billion from $2.8 billion a year ago. petrol china reported steady

income of $1.5 billion as higher explanation and broughton earnings offset its own slumps in refining. selina: resuming talks on a $38 billion bid for occidental. couldors agreed the offer reasonably result in a superior proposal. although they did say the chevron agreement remains in place. anadarko formerly declared the bid to be better, chevron would have four days to respond. paul: spotify has beaten all of his rivals to reach 100 million paying responders -- subscribers, and boosting confidence and has lots of room to grow. however, the quarterly loss was $.79 a share, almost twice what the market expected. even so, competition from apple, amazon and youtube has done little to slow spotify's growth

around the world. atina: profit is soaring china's largest insurer. 77% in the first quarter to nearly $7 billion. the strong rally in chinese stocks helped income jumped sixfold in operating profit was up more than 20%. it had been a strong start for ping an. outpacing benchmark gains. it is a big week for us trillion earnings. we have the big banks leading the way and analysts are forecasting messy earnings, grappling with a slumping housing market and the mounting costs of compensating customers for years of wrongdoing. peter has the story. what are the main issues dragging on the earnings? peter: as you just said, two main issues are the slowing housing market. we are seeing one of the biggest declines in housing markets in a generation, particularly led by sydney and melbourne. impacting the mortgage business

which is a big part of the business. another is the mounting costs of the findings for misconduct. a lot of this comes from compensating customers who were given that a device, sold bad products. earlier this month, australian bank take a charge just for these. the total compensation bill has now exceeded $1.1 billion. we will be looking for more from the other banks on what is happening on that front for them as well. selina: how much of a toll as the royal commission and the misconduct taken on these banks? peter: it has taken a big toll. it is getting larger. with national australia bank taking the big charge, westech took a charge -- westpac took a charge of a quarter billion dollars. it is the money they are spending internally on dealing with that. everything from technological

upgrades to compliance to their own legal bills. it has taken a big told. it is also constraining what they can do. we have seen some of the banks that are looking to get out of there will management and personal advice units having to shelve or delay those asset sales. in national australia bank's case, it cost them their ceo and chairman. they are looking for a new leadership team as well. national australia bank, given the charges they are taking, looking at a cut in dividend. that will be a big blow not only for the bank, but the shareholders as well. selina: thank you, peter. plenty more still ahead. we will look ahead to earnings with mark newman. this is bloomberg. ♪

paul: good morning. yeah under an hour later the australian market open. our away fromr in the australian market open. selina: and i am selina wang. sophie: welcome to "daybreak: asia." selina: asia pacific stocks look set to drift, leading more important data from china. googles parent is a loser after hours. revealing a