♪ haidi: very good morning. we are counting down to asia's major market open. kathleen: i'm kathleen hays in new york. the fed holds near zero while saying that the economic recovery is strengthening. futures rise as jerome powell ensures investors the central bank is in no hurry to pull pandemic support. president biden get set to pitch

spending plan to congress, justifying raising taxes on the wealthy while declaring the u.s. has turned the corner on the covid crisis. we are joined by the former u.s. defense secretary leon panetta. plus, investors digest earnings from facebook and apple. the iphone maker boosting buybacks by $90 billion. samsung is set to report this hour. haidi: let's take a look at our markets. a lot going on in terms of earnings as well as that big biden speech to congress. what are you watching? >> lots to look out for. gains for asia. nasdaq climbing after with the results from facebook and apple. unilever among results that are due. stocks capping a three day and gain. later this morning, sam chong --

samsung results are on the agenda there. we have a heavy calendar when it comes to results in asia. we have trading updates from bull worth australia. in has been a volatile april for sale so far. production numbers from the likes of fort. with the focus on commodities, let's switch out the board now. in singapore, prices edging higher. that's concerns over price control in china. wti slightly under pressure but holding above 63 bucks a barrel. trading your the highest level in over a month with u.s. demand providing a lift. headwinds from india's fiber situation -- virus situation. gold, prices holding gains after powell said it's not time to taper. that sense treasury higher. wells fargo expecting that u.s. yield will rise. kathleen: jerome powell and his

colleagues upgraded their assessment of the u.s. economy but said they were not yet ready to consider scaling back pandemic support. policymakers signaled the risks from the pandemic are diminishing. let's bring in michelle girard. it's great to have you back. we have been watching the federal reserve for about the same number of decades now. [laughter] this is different, right? michelle: exactly. kathleen: don't worry what the numbers are saying now. just wait until we tell you it's time to worry. michelle: and also, there's no worry about a strengthening. the fed has been very clear when they are talking about the inflation outlook and inflation risk. it takes policy to ensure that inflation doesn't go up. it's a whole different fed now.

the fed has changed its approach. is going to tolerate and inflation overshoot. it can allow the economy to run hot. without feeling the need to take action. it's going to wait until inflation rises. it won't move preemptively. the message was, we still have a long way to go before we can think about taking back some of that support. kathleen: if the bond market where to cooperate, you've always worked with the bond traders very close to that task. are they going to be well behaved? i'm not going to look at inflation numbers. strong jobs numbers, keep yields where they are as long as jay powell says he's not ready to talk about it. michelle: we've already seen that yields have moved higher as we've gotten a stream of economic reports week after week

, surprising to the upside. we've seen treasury yields moving higher. most recently they edge down a bit. over the course of the year, we've seen treasury yields moving up. if you look at short-term markets, you are seeing markets pricing in rate hikes even though the fed is signaling that they don't think they are going to need to take action through 2023. the markets are skeptical. they hear what the fed chairman is saying and what fed officials are saying. that they will be patient, that they will not get worried if the economists are strong. this fed will actually fill the need to take action sooner. that's the upward pressure. i think that there will certainly be time over the coming months as the economy performs a strongly if i think. markets worry that the fed will

be less patient than they are saying that they can be now. haidi: when we are looking ahead to the american families plan, what president biden is planning to argue before congress, what are you hoping will be getting through? realistically, a lot of the things are going to be fought hard by republicans and moderate democrats as well. michelle: yes. i have to say, rather than looking through the details of the plan and affecting what may or may not get through, i will say, stepping back, think about the fact that there's another 1.8 trillion in stimulus that is being proposed. there are offsetting tax increases for sure. this is on the heels of a 2.2 trillion american jobs package that was launched last month. we are looking at an economy

that is gathering momentum. yet why -- we are continuing to see that the amount of support is ongoing. i think that that is really the biggest take away. we think the focus will be first on the planned american jobs plan from last month. we think that will be taken up later this year. there's a different chance that that could be a good part of that past. the american flame lee plan is not likely to be brought forward until 2022. there will be modifications made. haidi: what about the elements in the plan that are geared towards what president biden has called a total overhaul, a social welfare overhaul? structural elements like getting paid parental leave, child benefits, middle income families.

are these things going to help address what we have seen in the pandemic? michelle: you know, there's clearly an attempt. you see it from the president, the fed chair. policymakers across the board are absolutely looking to not only make up for what has been -- the pandemic has certainly contributed to greater inequality. just in general, i think the inequality that has been a persistent issue. this along with actions the fed is taking in terms of policymakers, they will be focused on social issues. the success is very unclear. kathleen: one quick question. when does the fed taper? when did they rest rates -- raise rates?

you have 15 seconds to answer. michelle: there was such a lead up and how high the hurdle is for taping. after today, the earliest is 2022. we don't have the first rate hike until 2024. haidi: great to have you. coming up, david westin joins us. >> we will talk to a former secretary of defense leon panetta ahead of bidens address to congress. that's coming up next. this is bloomberg. ♪

david: welcome back. president biden is about to deliver his first speech to a joint session of congress since he took office in january.

we are joined now by leon panetta, chairman of the into for public policy. he previously served as the director of the ce -- cia. i could go on and on. inc. for joining us. leon: to be with you. david: whatever you think about the republicans and democrats, this president has had a very aggressive, ambitious policy program in front of him. is it possible to go too far, too fast? is it possible to have overreach? leon: obviously, the president is getting some high marks for the way he has handled the presidency. the ability to restore the trust in the office of the presidency itself and out he has handled the pandemic. he's obviously painting out a very bold vision about the country and where we can go. the ultimate test for any president is not the vision but

what he can get done. i think the bottom line here is that there are going to be a lot of changes in what he's proposing as he tries to work with congress and tries to get a vote that can pass anything. i think we are looking at a lot of changes before we see what the final product is. david: you were in the white house with bill clinton when he was president as the chief of staff. we need to consolidate at some point. we need to follow-up and make sure this stuff gets done. how do you strike that proper present -- balance? is president biden striking it? leon: it has to begin with the ideas that he's proposing. there's no question that we need help on infrastructure. a lot of the elements of his proposal are areas that the american people think need to be addressed. at the same time, if you are

going to get the votes that you have to get, particularly in a very tight senate. the senate is evenly divided. the winning vote is the vice president of the united states. you have to get all the moderates in line. i think the bottom line here is that he's going to have to prioritize what it is that he wants to move. whether or not he will really try to reach out and build some bipartisanship on some of these issues. i think the american people have indicated that that is something that they want to see done. i think the president will have to do it if he's going to be able to get some of these pieces passed by the congress. that will be the ultimate test. he cannot get trapped by the partisan writ -- gridlock that we've seen happen in the past and could happen again in the future. david: he's proposing to touch what some would say is the third rail, raising taxes. a lot of taxes on individuals

and corporations. president clinton raised taxes just before you went to the white house. what are the risks and that -- in that? leon: up -- the budget that clinton past was one that reduce the deficit by $500 billion. we did 250 billion in spending savings and 250 billion in revenues and taxes. as a result of passing that budget, plus the prior budget by bush which was pretty much the same, we were able to ultimately balance the budget. not only balance it but create a surplus. we are a long way from that today. ultimately, if you are going to build a fair and balanced budget, you have to look at spending as well as revenues in order to be able to do what you want to get done. david: is it possible to get enough money off of the affluent

as well as corporations? is there enough in the tax code without going into the middle class? leon: you know, it's going to be hard to just put everything, that much of a burden with regards to taxes, just on one side of america. really, there's obviously some justification for some increases here. they have to be looked at. i think there's probably some bipartisan support for some of those increases. the just put it all on one side of america, i think is not something that's going to be very viable. it has to be balance. it has to look fair. obviously, you have to raise the money you need in order to pay for it if you are serious about not just adding it to the dead in the future which is already

about $28 trillion. david: having been in so many of the state of the union addresses, foreign policy not play a large role unless there's a true emergency pending. give us a minute or two about the foreign-policy policy and national security issues that the president may want to address tonight. can he get out of the speech without talking about china? leon: it's important for the president to emphasize what he has already said. america is

needs to be. we need to be working with our allies to build alliances. we need to address who are adversaries are and recognize the threat that they represent. i think that president biden tonight should talk about the role of the united states as a world leader, building arm -- our alliances and being able to confront china and russia as well as north korea. deal with around. -- iran. those are the challenges that these child -- this president has to confront if he's going to be able to address our national security needs, which he should. david: having been secretary of the defense and cia, what are the realistic expectations we should have with regard to iran? not everybody in the room tonight will be supportive of this. leon: no. if he's able to get them back to the table and back within the limits that were established for enrichment, that would be an important step. to do that, there's going to have to be a trade-off with regards to sanctions. there are working groups that are working on both ends of this. as we've seen recently, iran continues to challenge american

forces in the gulf. if they continue to do that, they will continue to keep the relationship very volatile. i think this is too tenuous to make any predictions right now as to whether or not we will be able to get them back to the table. it is an effort that's worth making. david: is it possible to have a deal with them that we could verify that we could really trust? leon: again, that has to be part of the deal. you can't just have them say what they are going to do and not do inspections. you know? ronald reagan make sure that you got to validate what they are doing. i think they get up by by the provision and eventually. inspections prove that they were abiding by it. we have to get back to full inspections on what they are doing. if we will make any progress whatsoever with regards to limiting their enrichment

abilities. david: that's a tall order but maybe it's possible. thank you so much, mr. secretary. currently chairman of the panetta institute for public policy. kathleen: don't miss bloomberg's special coverage of president biden's address to the joint session of congress beginning at 8:30 a.m. in hong kong and 8:30 p.m. in new york. there's putting more to come on daybreak asia. this is bloomberg. ♪

haidi: china construction bank is another company to benefit from china's economic recovery. net income rose by 6.8% in the first quarter as pressure eases on state lenders to support the economy. the bank is rebounding from its

worst earning slump in a decade. authorities ordered lenders to dole out cheap loans to struggling is this is and consumers. returned to profit in the first quarter as global crude traffic rose to pre-pandemic levels. asia's top refiner posted a profit of $3 billion, recovering from a $2.7 billion loss last year. margins have improved along with china's border -- broader economic rebound from the pandemic. deutsche bank posted its strongest quarter in seven years and raised its outlook. income from trading debt securities rose 34% as the lender avoided losses from the collapse. it's considering one of the banking industry's most flexible returns to office policies, allowing staff to work from home after three days a week. wants to cut costs by reducing office space. we had a whole host of tech earnings out.

kathleen: let's get the market impact with mark greenfield. how will these u.s. tech results impact asian stocks? mark: it's a bit of a goldilocks scenario if you are a multi-asset investor looking at the world this morning. you've had stunning results coming out from the big tent companies in the united states. there seems to be a near insatiable demand for their product. keep improving earnings. a pretty benign state meeting. you have a weaker dollar. if you pull all those things together, it would give you reason to be pretty optimistic if you are an equity fund manager coming in to asia today. some of the themes which have been apparent in the earnings of the major companies like apple and facebook could certainly spillover for some of the large tech companies which are in china, south korea, or taiwan. all in all, even with the

absence of japanese markets today, he -- it would be surprising if we didn't see a decent day ahead from the asian markets. there's a slight risk with joe's speech. he will be raising issues of taxes in the united states. there's a lot to get through on that. all in all, if you are looking at the weaker dollar and the strong tech earnings, you are thinking that today is a good day to measure the policy on asian stocks. haidi: you mentioned the decline in the dollar. we saw the green black -- cream backsliding to session lows about those comments about the pandemic risks being curtailed. what's the outlook for the greenback? is the weakness going to be sustained? mark: one of the significant things that is happening is another very bad u.s. trade deficit. probably the worst on record. even if you adjust for history,

it's a very stunning number. it shows that as the u.s. economy grows, the fact that we will get even more stimulus in the united states and low interest rates, it would indicate that the trade deficit will get worse before it gets better. that spillover is obviously going to places like europe and asia. that's why you see the euro back above 1.21. that's very significant for asian currencies. the last time that the euro was rising in the way it has been this week, we saw a very good spillover tatian assets. it was good for the currencies and equities. really, the performance of the euro is crucial to emerging markets as well. it takes a lot of the heat out of what you see in brazil and other currencies like that. certainly everybody is really welcoming the softer u.s. dollar. it looks as though it will be here for a while. kathleen: what if this vaccination rollout just

continues to accelerate? millions and millions of americans vaccinated. the openings are happening. more stimulus will hit the economy. we could get great jobs and retail sales. does the dollar still stay week? mark: initially. the increased spending seems to be finding its way out of the united states to some degree. the come -- consumer spending. americans love products which are mostly made outside of the country. you will certainly get the impetus of the fact that people travel around. there will be some internal spending as well. in terms of what they buy, some of it is geared towards foreign products. the thing that will level it out more so is when the rest of the world is up to speed in the way the united states has been on the covid vaccine rollout. that's a long way off. haidi: you can follow more on

this story on our markets live blog. that's on the bloomberg at mliv . kathleen: up next, we break down apple's stellar earnings with jean monster.

haidi: apple sales crashed estimates on strong demand for devices amid the pandemic. $90 billion, up 54% from the same time in 2020. our next guest says results like these c shares up by 10%. there remains a question of sustainability. joining us is gene munster. great to have you on. the problem is how they maintain the interest in their devices given the return to normal. people going back to work, the office, school. gene: there's a fundamental

paradigm shift in how we are working and learning, working from home, working remote. ultimately, that creates a multi-year accelerating digital transformation. i think that's how this whole story continues. i believe that apple will continue to benefit from that. this idea that apple has had its best days, it's best days are behind it. that has been a long traveled road. we've heard investors say that for the past 15 years. ultimately, they keep delivering. haidi: they do keep delivering. it's easy to look at the components of this earnings release. there were some one-off things like benefiting from the newly lockdowns in europe. if you strip out the seasonal effects of the pandemics, do you still have a good growth story? gene: you do. it grew 70%. if you back that out, it's about 40%. 30% growth.

i think this can continue at 10% growth for the next couple of years. most analysts have the growth starting to mitigate to 5% next year. i suspect what we will see tonight's analysts thinking about their mark -- models. they won't make many revisions to 2022. i want to put a finer point on that. for next year, we are looking for $5.70 in earnings. i suspect the modeling will come out to about five dollars which gets to your question about what is the underlying growth. what is the sustainability of this story? maybe i can answer this in a different way. these growth rates at the current levels are not sustainable. what is sustainable is apple growing at a higher growth rate than what we have seen over the past several years in that 10% plus growth rate. kathleen: analysts keep saying, we can't keep going like this forever.

people can only buy so many iphones. you can start changing them. people don't care if the changes aren't that big. and you're very positive outlook for apple, do you see that they still have the scope? they still have the potential to broaden their market, get more people hooked on macs. is that part of what you are seeing for apple? gene: it is part of it. think of it as two different flywheels. the first is what you described. it is starting to add new users to its base. they mentioned that two thirds of the sales in china were new to mac. that is still relatively small market share, 8% of the global pc market. the iphone is 18%. they are expected -- expensive products. it will grow that base. i see the biggest part of this story is that we can fast

forward three months to a year. what will we be talking about then? three things that will keep this growth story going. one is hardware services, apple 360 bundles to be able to pay apple one monthly fee and get your phone, your computer, your services. second is augmented reality. we will hear more about that in june. third is whatever they will do in transportation. it is those flywheels. for me, what is equally as important is for them to do what they have done for the last 25 years. which is on the market and step into a new growth curve. i think those are coming. kathleen: we can think back to when tim cook first took the reins. for a while people were like, tim cook is a really good ceo. steve jobs was the genius, the creator. how would you characterize and

rank tim cook and what he was done for apple now? gene: he's done exactly what we were hoping he would do. he took over close to eight years ago. what he is done has been great at continuing our operational excellence. he's done a good job of recognizing that there's a lot more that they can do with their existing products. that was a big negative against tim cook. apple wasn't going to get to any markets. that's not the case. we still have not seen a major blockbuster product under his reign. again, augmented reality, those glasses will eventually come to get what they will do with transportation. when you put it together, i would think that he's the gold standard for a ceo in terms of his posture, in terms of the way he delegates, his clarity.

i think he really takes that to heart and it comes across in the results. kathleen: i want to iq up -- ask you about microsoft. they had a pretty good quarter. the way this was described was, good but it had to be more blockbuster. do you buy that? what does the future look like for microsoft at this point? gene: we are seeing some of that. some of that was overseen with the apple results. to answer your question about microsoft, i ultimately come back to, what is the innovation? what businesses and segments? how will they disrupt new industries? with apple, we've outlined what some of those are. in the case of microsoft, they could do something wrong with augmented reality. it's their core business around office and cloud. i see that as part of the reason why microsoft traded off despite the great results.

those investors are asking the same questions about sustainability. as they think harder about that, getting into that next big growth curve. microsoft has not done a good job of that historically. that has weighed on the results more recently. haidi: how do you feel about facebook? the numbers look pretty good. sales numbers jumped the pandemic behavioral trends. gene: yeah, impressive. this is in the category of a company i don't like their products. i do like the stock in the near term. the growth rates, mid 40% growth rates. google was up 30%. they outpaced that. despite this new change that apple has made to tracking ads, they still gave very upbeat guidance to factor in that change for the june quarter. they talked about some of the

hard concepts in the back half of the year. when you put this together, the story continues to be the same. they have a powerful engine to get new users. it's like clockwork. they had a percent new daily active users per quarter. that is something that is what advertisers want. as the economies start to wake up again, brands are wanting to spend up for ads. we saw that with facebook business. i want to finish the thought about the sustainability question and the movement in the after hours. i think they will have sustainability in their business for the next few quarters. i beg the question about beyond their advertising business, how much -- they -- what are the other things they will be getting into? haidi: we hear from jay powell continuing to waive away the worries of impending inflation, saying it's not time yet to

adjust policy settings. what does that mean for evaluations? if you make any tweaks to your portfolio. gene: the interest rates are a big factor, especially with tech and that we can interest rates changing how these higher multiples. we think a lot about that. our latest thinking is that rates are going to go up. inflation will happen. is that already priced into the market? some of these numbers that we've seen show that these economies are coming back. i suspect that it will have a small negative impact on some of these tech companies. the bigger impact is going to be, in the u.s., in terms of how we see tax law changes, we will hear that soon from president biden. kathleen: do you buy the

argument that this is it for silicon valley? no venture capitalists will take their money and put it in a very risky investment. if the potential gain they get from that, given the high amount of risk, seems disproportionate. gene: we will see when the tech law comes out. ultimately, there is something that springs eternal. hope springs eternal with investing intact. specifically, even though you can put some restrictions and take away some of the upside, i don't think it changes a typical investors view that they want to be part of the future. it's part of humanity. i believe that it's a near-term negative hit to some of these tech names in the broader market. ultimately, what will come back as once these new tax rates have been digested and people get comfortable with it, they start to focus on how lives will be

different. i'm a big believer that the pace of innovation is going to keep accelerating. it sounds easy to say. it's hard to imagine how fast that will come. ultimately, these companies will benefit from that. kathleen: thanks to gene munster. haidi: we are just getting quarterly earnings when it comes to samsung at the moment. this is the final earnings. we've already had the preliminary numbers. there's some indication as to the strength of these numbers. just over 7,000,000,000,001. we are waiting for more numbers. third-quarter quarter consolidated sales coming through at six he 5.3 9,000,000,000,001. we are getting that consolidated net number of just over 7 trillion one.

we are getting updates on the inheritance tachy's -- tax issue. the family saying that they would be paying $11 billion of and her tense taxes. they will be donating art as well as one trillion in medical facilities. we are getting updates on a change in the amount of the samsung electronics stake being given to the air. let's go through some of those numbers we are getting across in the bluebird. stephen engle has been covering the story and has more. in the context that we have seen the preliminary numbers, what are you seeing now? stephen: we got those per luminary numbers on april 6. three weeks later, they are fairly confirming those numbers. higher than estimates. the third quarter consolidated net income. the first quarter was better than the earlier guidance from late last year that samsung gave. they thought there would be a

dip in the first quarter. the global recovery from the pandemic is going stronger-than-expected. prices have rallied. we were looking at the possibility of a memory trip gross marvin improving -- margin improving after rising through 2020 as more servers were built and more people upgraded their phones. they needed memory. we may need to see more guidance on those prices. lcd panels have been doing well for samsung. their premium smartphones has driven the smartphone handset division. the s 21 outsold its predecessor to the one in the first six weeks since it launched. it's been a hot seller for samsung. trip shortage has been it -- been a big key that we will be looking at.

automakers and other industry executives have been voicing their increasing concern about a shortage in chips. it looks like we have a confirmation of the numbers that we got to limit narrowly for the first quarter. kathleen: they say that they should increase in the second quarter. that's a harder question than the whole world rebounding and having a broad-based of demand for all kinds of products that need chips, that need samsung. stephen: that's right. one of the concerns in the first quarter was the texas plant shut down for a few weeks because of power outages in texas. that was concerning because of the trip shortage. we are just getting some guidance from samsung saying that the foundry business has seen full resumption. also giving some guidance on the second quarter. the chip business earnings should increase into the second quarter which we are into right now. market conditions are improving

for component businesses in the second half. we are getting various headlines coming from samsung as it reports its final numbers for the second quarter. what we will be looking for for the rest of the morning is how they break down the four main divisions and profitability. haidi: that global trip shortage is continuing to weigh in the second quarter. we will keep an eye out for the update when it comes to the growth margin as well for a gauge on profitability for the company. stephen engle with those final thoughts -- samsung numbers. you can much more -- get much more on your bloomberg. get commentary and analysis from our team of expert editors. lots more to come on daybreak asia. this is bloomberg. ♪

haidi: positive breaking on india. u.s. emergency covid-19 assistance for india is topping $100 million. deliveries of all kinds of equipments are starting on thursday from the u.s. oxygen support is one of them. personal protective equipment. more diagnostic tests. in fact, the u.s. is also going to redirect its own order of astrazeneca manufacturing supplies to india. there has been criticism of the u.s. out there for not moving

faster. the richest country in the world , so far ahead of many other nations when it comes to rolling the vaccines out, not having done more. this is something coming from the biden harris administration. they want to trumpet the horde of what is happening. this is at a time when india is sorely needing it. let's get to vonnie quinn with the first word headlines. vonnie: we will start with the fed. jay powell and his colleagues upgraded their assessment for the u.s. economy but say they are not yet ready to consider scaling back pandemic support. while keeping policy asset purchases unchanged, the fed strengthened its outlook and signaled that risk has diminished. powell says inflation is reflecting what he calls transitory factors. the u.k. government has secured an extra six 2 million doses of the pfizer coronavirus vaccine as part of a booster program to protect the most vulnerable people against covid-19 before winter.

scientists are deciding which groups of people should get the booster shot this year after they have been given their first two doses. at athletes competing at the olympic games will be required to take daily covid-19 test under updated rules. all participants will also have to take to test before flying to japan, according to a newly released playbook of antivirus measures. vaccination remains not obligatory. tokyo entered a third state of emergency this month. global news 24 hours a day on air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. i'm vonnie quinn. haidi: lnc group is taking its streaming best misses -- businesses public in the u.s.. the president director told us why they are not opting for a traditional ipo. >> this back -- thus back --

decisive cash and the balance sheet. the prince of a love this back -- principle of this back as been going on for more than 20 years. [inaudible] why in the u.s. and not in indonesia? [inaudible] >> are you concerned that there has been a lot of talk about a greater regulation on spacs? that could give rise to a greater requirement of disclosure. with that affect you? >> we have signed an agreement

with manufacturers. now we are analyzing the perspectives. i think we should be able to meet the requirement by the fcc. we will have a deal by the end of q2. at the latest, july of this year. >> some are saying that you will be valued at 573 million u.s. dollars. can you confirm the amount? what do you intend to do with the funds? >> that's on the equity valuation. [inaudible] what we are going to do with the funds, we are going to expand.

the competition is very intense. since we are very strong in the local content, we are going to use it to grow. [inaudible] >> talks with disney are now over. there's no chance of that being revived. >> since we started the business, it grew very well. [inaudible] >> i want to take a look at your partnership with former president donald trump. there was a lot of enthusiasm. you said before that you get inspiration from mr. trump. given the way things are ranked

right now, has the enthusiasm about working with trump state hi or has it plateaued? >> [inaudible] a few years became -- before he became the president of the united states. nothing changed actually. [inaudible] >> one of the projects is the bali project. it was initially targeted at the wealthy. was an ultra deluxe develop. are you still sticking with the plan? fewer wealthy indonesians are prepared to spend money. >> [inaudible]

we will add more entertainment projects into that project. it's not just pure hospitality. with this property situation, if you want to be successful, it's not that easy. [inaudible] kathleen: there's plenty still ahead. this is bloomberg. ♪

kathleen: back to sophie kamaruddin and for stocks to watch. sophie: heavy earnings lineup in south korea. samsung with a spotlight on its first quarter results. they are beating estimates. strong demand for tech. labor and business costs weighed on operating profit. net profit jumped. lg electronics on deck as well. we will be looking for more details on the strategy after the company decides to exit the communications business to focus on growth areas like auto. haidi: the market opens in sydney. this is bloomberg. ♪

>> i'm kathleen hays. haidi: and i'm haidi. welcome to daybreak: asia, our top stories this hour. asian stock the boys to gain, listed by an optimistic fed while keeping rates on hold. president biden is set to deliver is $1.8 trillion plan for american families in the first speech of the joint congress.

plus, investors consider positive news. katheleen: let's get a look at how the markets are doing in asia with sophie and hong kong. -- in hong kong. sophie: japanese markets are closed thursday, in sydney stocks are opening to the upside, keeping a close eye on commodity players. [indiscernible] they say it is still on track to hit targets for annual output. also keep an eye on steel stocks, this after china slept taxes on a range of exports from the mainland. we are seeing shares game about one points of percent this morning. check out the aussie dollar. the dollar holds losses sparked by the fed's decision, remarking on an improving economy. cash treasury openings levy higher, 10 year yields below

that 161 level. check out the open in south korea. earnings are front and center. the cost be getting 4/10 of a percent. the korean won adjusting to a high be. [indiscernible] update on the bond issuance plan. switching up the board for commodities, best month since april, 2016. we are causing gains for the likes of iron ore in singapore, gold holding onto gains this morning. when it comes to the water complex, ubs saying 10% upside led by energy and material. we are seeing energy under pressure. new york route is losing some ground, but holding your a sixui

we are having conflicting news about the oil market, seeing improving signs of appetite in the u.s.. haidi: we are continuing to get first quarter earnings results. our guest joins us now. great to have you with us. when you take a look at positive earnings, how much of this has been priced into asset thy ration? -- valuation? guest: [indiscernible] there could be an argument that a lot of the positives are pricing to the market. if you look at the level of pe trading at and some bond and credit markets, they are very tight. i want to make the case that there are many signals that tell us there could be more but is market to go.

the spread between earnings yields and where real yields are is still at a historically high level. second, different levels between growth and value stocks. very wide levels. i do think that not all of the positives are priced in, for the s&p we could see something as high as 30% year on year. [indiscernible] haidi: one of the risks you are hearing is this evergreen concern about the inflation situation deteriorating significantly. is that something you are taking into account in terms of your decisions? guest: absolutely. in some ways it's a question for

the market. the fed addressed it in the meeting as well. we do expect inflation pressure to clear over the next few months. a lot of this will be due to base effects. the underlying momentum will be transitory, this is an inflation scare, not a crisis. innovation and demographic change remains very much in the background, and we do think that ultimately, the turbulence we are seeing in terms of inflation will be self-limiting, and the picture will ship to the underlying fundamentals such as earnings, which will drive equities further over the next 12 months. katheleen: you also say that your overweight in u.s. and asia, and cyclical sectors. can you be a little more specific on the part of it?

guest: and china there is some fear it could be premature. the authorities in china are taking a very political approach, and the credit we saw during the pandemic was smaller. the backlash will be smaller as well. in terms of sectors, we think that cyclical sectors tend to have higher economic growth. that includes financials, industrials, energy, commodities, real estate, and the thumb forget -- let's not forget. infrastructure in the u.s. will have a direct impact on driving earnings as well. haidi: katheleen: in terms of the

biggest risks to your outlook, the biggest upside risk could be a picks up steam, boom, things are better. guest: i think -- [indiscernible] second, inflation could get out of hand. i think the vaccine rollout is going to slow over the near term. we are not going in a straight line towards reopening. but some of the larger picture in india and emerging markets. if you zoom out, vaccinations are increasing slowly, and global rates and hospitalizations are falling as

well. the economic data -- pmi numbers, consumption numbers, these are on the uptrend. katheleen: they sure are. in the bond market, we have in mentioning the fed. with thick of that in terms of sovereign bonds. when you look at the corporate market, what are you buying? guest: delight -- like emerging markets. [indiscernible] we know that chinese authorities are going to encourage more healthy behavior. more important, in our view, we

think it is very important to diversify into some emerging markets. exposure to the cyclical sectors we think are the beneficiaries of the economic uptrend in this early part of the cycle. katheleen: a post pandemic cycle. thank you so much to eli lilly. -- eli lee. don't miss an exclusive interview. he joins us later. let's get to. . vonnie quinn for the first word headlines. >> joe biden will unveil a plan to expand education and childcare for families. it will be paid for by the largest tax hike on wealthy americans in decades. among the provisions, prekindergarten and community college will be free and the child tax credit will be extended.

meanwhile, the top tax rates will be raised to 39.6%. republicans are blocking at the price tag. the u.s. says it is delivering supplies to india in the coming days to help with covid relief efforts. the white house says the first shipments will arrive thursday continue into next week. they will carry oxygen, ppe, tests, drugs and vaccine supplies. india has reported more than 18 million cases with more than 200,000 deaths. the u.k. government has secured 16 million doses of the pfizer vaccine as part of a booster program to protect the most vulnerable people against covid-19 before winter. scientists are deciding which groups of people should get the booster shot later this year after they have been given their first two doses. a thai opposition coalition is

calling for the resignation of the government over what it calls a failed vaccine rollout. the leader says they may also pursue legal action against the prime minister. the decision came as he met with private sector representatives to find ways to accelerate efforts. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: still ahead, official coverage of president biden's address begins in just under half an hour. be sure to stay with bloomberg for that. coming up next, another big tech beat with samsung posting better profit. that comes with blowout results from apple and qualcomm as well. we have at all ahead. this is bloomberg. ♪

katheleen: samsung's first quarter earnings beat forecasts and the final numbers are strong. our correspondent is back, joining us from hong kong. but stands out to you? -- what stands out to you? reporter: samsung gave doppler literary numbers so we knew where the company was having. this time we have a little more guidance on the individual. a few things stand out. the numbers are better than what analysts are expecting. $6.4 billion beat estimates of 67,000,000,000,001, that was the average forecast. basically, samsung is writing the boom of stay-at-home demand for computers, home appliances

and cloud services. it's created a global chip shortage. that is where some of the stands out. samsung on the semiconductor division. earnings should improved significantly in the second quarter as their guidance, saying prices will continue to rise through the second half. they're also saying the foundry business in texas, which was shut down for a few weeks because of a power outage in austin, they are now back at full resumption. samsung saying they will respond to foundry demand through supply expansion. samsung has warned of a serious imbalance in the chip market. rivals say shortages could extend into next year, 2022. the other thing that stands out in addition to their comments on chip shortages, is the mobile

market. they are saying they launched the hotselling galaxy handset which outsold predecessors two to one in the first six weeks of sales in the first quarter. they are guiding lower. the mobile market overall will recover to pre-covid levels in the second half of the year, but in the second quarter, mobile business revenue and profit will decrease. they have that big f 21 launch in the first quarter which boosted revenue in that quarter, but in the second quarter, samsung is saying they are going to see part supply issues. not just in chips, but mobile phone part supplies, global crunch is going to be hitting their mobile business. that is what stands out to me. we do have breakdowns. largest divisions, i to operating profits. semiconductor operating profits.

consumer electronics operating profits, 1.1 2,000,000,000,001. display panel operating profit. is the billion won. that was the market responding? shares up slightly. haidi: the inheritance tax issue. does that cloud the outlook? reporter: it does to a certain degree. we knew there was going to be this inheritance tax. south korea has the largest inheritance taxes in the world. the biggest cloud the fate of the heir apparent, his son who is in jail right now after being convicted of financial malfeasance. that is the bigger cloud. these big divisions i just talked about cap their -- have their own expertise in their

managers, and they kind of run independently. you need that figurehead leader. obviously, they are showing not necessarily. we are not sure exactly how long this will play out. essentially, on the inheritance tax, they put out a statement yesterday, it is our civic duty and responsibility to pay all taxes. $11 billion. haidi: our chief north asia correspondent with samsung. from big tech to big tech, back-to-back tech earnings in the u.s. session. cap across all second-quarter estimates on the back of surging demand for devices. >> on mac, we set an all-time revenue record. in fact, the last three quarters for mac have been his three best quarters ever. haidi: let's get over to san

francisco with ed ludlow. any naysayers when it comes to apple just keep getting proved wrong. a lot of questions of how sustainable this is post pandemic. reporter: especially in like that apple did not give full-year guidance. they said the usual uncertainty. what was interesting is growth was broad-based, not just the apple smartphone. smartphone or iphone revenue jumped from one year ago, they saw really strong demand from the ipad. also, the macbook computers which are using their own processors. member, apple used to use intel processors, now uses its own. tim cook specifically said that that performance is driving sales. it is interesting because they are one of the beneficiaries of the pandemic, still continuing the benefits. that is the question. what happens when the world recovers? there also seeing double digit

growth in more categories in china, for example, for the reopening is much further ahead and there is still room to run. the other big number was a number of paid subscribers across their services division. it's up to 628 million. one year ago it was 140 million. that is significant growth and they think that has room to run. katheleen: i want to ask you about facebook. i want to preface this, we spoke to someone earlier who said he is negative on their longer-term outlook given a lack of innovation, but positive for this year. reporter: it's interesting, growth in north america facebook has plateaued. they are still edging out new subscribers. one reason is the advertising market is hot right now. the economic reopening is driving a trend of businesses wanting to spend on advertising, so when consumers leave their home their products or interfaces.

facebook did warn of headwinds on the advertising business. that picture tells a story, but remember, the same period a year ago was impacted by covid. the story with facebook is the apple privacy update. once again, facebook like that as a potential headwind for the rest of this year. that said, they downplay the material impact that it had. they are worried but not that worried. right now, they are running the cycle behind revenue and other side -- advertising. haidi: we heard the resilient chip story being flagged in the samsung earnings. what do we see out of qualcomm and how are they able to navigate the supply crunch? reporter: they really maxed out the opportunity. they have supply constraints, prioritized higher value. they prioritize the automotive industry. they said line of sight

suppliers are improving. if they hadn't been so supply constraint, they are in a pretty good position. of course, samsung outsources manufacturing. katheleen: that is ever west coast reporter and tech correspondent ed ludlow. keep it right here. of the more to come on daybreak asia. -- plenty more to come on daybreak asia. this is bloomberg. ♪

haidi: [indiscernible] we are seeing another thing unfolding with huarong. with the big three rating agencies with solid investment ratings on huarong, on a creditwatch mid april when we were watching the bonds selloff.

a lot of critics are saying this is another case of the ratings agencies getting it wrong and acting too late. >> absolutely. the rating agencies really were caught holding the bag. they not only had investment grade ratings, they had pretty high grade ratings. what happens is rating agencies don't consider standalone financial strength, or the likelihood of government providing support. in some cases, the relationship between the two could be so strong that a standalone credit analysis is irrelevant. i am quoting the report. in the case of huarong, on a standalone basis, moddy's gave them a jump rating. the rating agencies actually gave them a seven notch uplift,

that is the problem. ratings agents were quite slow --if you consider the relationship, you have to consider the political atmosphere. the ratings agencies are quite slow at catching the shifting waves. katheleen: i just can't help but think of 2007 and 2008, how the rating agencies in the u.s. totally blew it on all of those things. in this case, give us an example of an investment grade sop that is falling out of favor. is huarong out of favor? >> that is open for interpretation. what i want to say is less december, china opened china galaxy.

in january, [indiscernible] he was given a death sentence, and he was very quickly executed. now we are just guessing whether huarong is out-of-favor. there other examples. president changing thing -- president of china, we see a lot of coal miners. and energy company with triple rated and defaulted last month. there are examples. katheleen: thank you so much. up next, bloomberg's live coverage of president biden's addressed to the joint session of congress. joined david westin in a couple of minutes. president biden is going to start speaking just after 9:00 p.m. eastern time.

we will be carrying that entire thing live, in following up with more coverage on bloomberg markets. keep it right here. this is bloomberg. ♪

david: from bloomberg world headquarters, welcome to a special edition of balance of power. president biden is about to address congress. this is the 99th day of the administration. the president will declare the u.s. has turned the corner on the pandemic and late how to plan for federal spending and tax sites. with us are our guests.