haidi: very good morning. i am haidi stroud-watts. we are counting down to asia's major market open. shery: i am shery ahn in new york. welcome to "daybreak: asia their asian stocks open the week mixed. beijing dealt crypto a blow vowing to clampdown on mining and trading. the global chip shortage could

be further worsened as taiwan's covid accounts continued to climb. we have further insights into china's bad banks and whether the central government will rescue huarong to prevent a debt disaster. look at the markets right now. we are seeing kiwi stocks under pressure a little bit right now as of course we have the new zealand retail sales numbers for the first quarter excluding inflation rising 2.5% quarter on quarter beating expectations. u.s. futures under pressure after stocks ending the week mixed. for the week we sought gains for the nasdaq 100. citibank futures under pressure alongside u.s. futures. brent gaining .25 of 1% after its worst week and almost one month as investors pricing potential impact of iran deal releasing new crude into the market. haidi: we are seeing movement

when it comes to bitcoin this after another volatile weekend, bitcoin prices fluctuating just shy of 4%, pretty range bound but we are 50% below the high we reached in mid april. let's get more on this with ethereum, dogecoin, other all coins as well. take a look at that chart, 50% lower. the lights have fallen as much as 50%. let's look at what is driving this latest round of volatility. su keenan joins us now. >> the weekend fireworks in crypto could actually impact or increase in the uncertainty a lot of investors in more conventional assets have about the path back to rally mode in the coming weeks, so that will be something to watch. the stomach churning weekend had

some of the most commonly treated cryptos, mainly bitcoin, ethereum, dogecoin in double freefall at one point and then rebounds along the way. if you recall this latest round was kicked off more than one week ago when elon musk tweeted that he was no longer accepting bitcoin as payment for teslas. at then you have the chinese government coming in talking about cracking down on use of the coin. the chinese government on friday reiterated that warning this was an effort to control finances and escalate the volatility over the weekend. someone tweeted over the weekend his support for cryptos over fiat currency, but in the past few hours we have got news that -- it is raining and it's crypto

related activity and that seems to be setting off another wave of volatility. if you look at charts you can see one of the worst weeks for bitcoin, but also one of the worst months. that gives a bit of perspective, according down more than 50% from its peak, still up 25% year to date and dogecoin, which was created as a joke, it down more than 60% from its may peak according to data is still up several thousandfold from its initiation, so that explains why so many investors seem to come back in and by the dips as horrendous as they may seem in the moment. shery:. there is also moves and the

potential fix for energy surge that could give a theory minutes. >> both are important. they are now stopping minor hosting in mainland china. they are also scaling back certain services in some markets and says this follows a warning from the chinese government that it would crackdown on cryptocurrency mining. as for ethereum, software developers of this major rival may be close to obtaining what they say is an energy use to, because we know there is energy

use and environmental concerns that in the past weeks have really rocked crypto in terms of wide swings we are seeing. both ethereum and bitcoin operate under proof of work system that requires global networks of computers to run around the clock. software developers for ethereum are thinking of switching to a proof of state system which would use far less energy, cut energy use by 99% and a theory of supporters are saying this would give it a significant edge in trading and price points over bitcoin. back to you. shery ahn: more with markets

that has -- trading. adam reynolds joins us. the world supply of chips is in danger unless taiwan gets vaccines. a look at the coming outbreak on the island next. exclusive insights into distressed asset managers. details on the race to prevent a debt disaster. this is bloomberg. ♪

-- $550 million to the original plan. spending will be confined to a highways, bridges, and airports. >> the real question is whether republicans will meet the effort that the president is showing. it is a sincere effort to move this country forward, but the president has been clear in action is not an option. vonnie: tehran is likely to extend temporarily a nuclear inspections agreement that expired over the weekend. iranian state tv reports the extension will be on the condition that ongoing multilateral talks lead to a

return of the 2015 nuclear record and the removal of trump sanctions within 30 days. the secretary of state told cnn the u.s. is prepared to return to the original deal. an egyptian court as projected for the second time an appeal to allow the giant container vessel that blocked the suez canal to leave the country. the u.s. -- the authority is claiming more than -- and damages that wreak havoc on global shipping. the ship operator says the demand is inflated. another hearing is set for may 29.

a judge has ruled the lavish lifestyle of the former theranos founder can be presented to jurors in their upcoming trial for alleged fraud. there is evidence she had incentives. thoroughness is known for having developed revolutionary blood technology requiring minimal blood samples. the start of his valued at up to $9 billion before it unraveled. haidi: we have breaking news in the world of golf. phil mickelson has won the championship at the age of 50, golf's oldest major champion of any man's major. we are hearing that historic victory being made. it has been a thrilling championship, an extraordinary conclusion on sunday afternoon,

phil mickelson becoming the oldest major championship winner . he had a two stroke victory to get the trophy there. he is now just a 14th man to win six or more majors in his entire career. congratulation. it will be another busy week in asia, central lakes in indonesia, south korea all set to break steady in the week ahead. inflation is still the main point. we are joined by the assistant director for moody's analytics. it to have you with us as always. we are talking about china, vietnam, taiwan, we are seeing price pressures globally, and of course in the u.s. do you see this being transient given how much of it is energy

prices and how much we could see a disruption from the new ways of the -- new wave of the virus to the recovery? >> we are expecting third inflation we are seeing throughout asia. it will be temporary. we will not see the same issues of inflation in the third or fourth quarters that we are seeing right now. we are expecting commodity prices will come down further and we have seen some easing of late. the bottom line, underwriting inflation remain --

there are specular prices and a lot of time these economic recoveries create relative impotency or economies might be further ahead of the recovery. underlying inflation pressures are remaining quite subdued. haidi: when it comes to real inflationary risks, how do central banks balance risks, either being behind the curve or ahead of it? are we likely to see a more conservative approach? >> i think that is exactly right. central banks will take a cautious approach. we know covid is still a concern

and so central banks are going to be quite hesitant to really start to withdraw monetary stimulus that they implemented last year. they are more concerned about making sure the economic recovery is underway before they started to withdraw that, because if they do we draw that too early they will have their economies get into trouble, so it is all about taking a slow and steady approach, and if inflation does reach target ranges just for a few months, they are willing on the most part to look through that the goal being the economic recovery will strengthen. shery ahn: how much will currencies be because we saw the

inclination currency underperforming and the korean one showing foreign outflows surging recently. >> that is a good point. we are expecting banks and agent will keep rates steady, and while it would have been nice, they will not be able to do that because of concerns around stoking capital outflows. particularly in places like indonesia, particularly because of capital outflow issues so

what we are expecting bank of indonesia and bank of korea, they will keep rates steady because they are concerned about capital outflows and stabilizing currencies. shery ahn: intranet we continue to see a mixed bag whether it is weakness in the retail sector but really strong numbers in the industry side of things. what will industrial profits look like this week? >> we are expecting return for industrial profits to china. back in april, march we were seeing china closing down, moving to cobit restrictions and also high industrial profits elevating commodity prices as well.

shery ahn: we are going to the whole region with you right now. our expectations for final gdp numbers for taiwan? >> we are expected to see a strong result for taiwan. the more important for taiwan is we are seeing that coming now, so we will see a bit of a blip in the june quarter, which is good news for taiwan because they weren't really the golden child of asia for a while even that they were able to control covid effectively for quite some time. shery ahn: assistant director for moody's analytics helping us dive into what is happening in taiwan because that coronavirus outbreak is in focus, new infections and threatening for the restrictions which could

impact already squeezed global chip supplies. stephen engle is taking a closer look and joins us from hong kong. what are key developments we need to know at this point about the island? >> it will be a critical week to see if they can contain the operate. yesterday we had 2672 cases, which was the first of several days that we got below 300. it is quite a surge, saturday it was 355, so 600 plus new

infections over the weekend, bordering on perfect storm because again you have a drought that is severely affecting the country, there have been blackouts, lockdowns threatening to go to level four, further restrictions, further ordering of businesses to shut down, and the key question is will critical chipmaking business is down in the central part of the island, will they be exempted or will they have to curtail production? that as you said is a key component of the already squeezed global chip supply, so big questions there. again, vaccines, this is an

under vaccinated island, because of politics, decisions by the government to secure that did not, and they are still waiting on other vaccines to, the island, so a bit of a waiting game right now to contain the damage island. haidi: when you were talking about politics, are they playing? a. there will be a world held meeting starting today. todd said to being -- said to be included. the u.s. has argued for taiwan to be included given their success in containing the virus

up to out so they have something valuable to bring to the china as blood china through state media said beijing had made appropriate arrangements for taiwan's jim, someone that taiwan about was spreading shameless lies: texas playing a role as well, leon taiwan turned down beige option for committed goat director the drives. state media its pledge to send always be politics involved in people's lives are at stake obviously.

haidi: stephen engle there. it baylor really on air flight has been critical of its president. and eu have reacted with outrage. bloomberg. terry forced it to divert to maine. they arrested of alexander lukashenko reacted with outrage. ross presti has more. what we know about the event race? just the angry reaction the eu and now the u.s.. >> definitely a remarkable day in the skies and on the ground there, and we have had a very sharp and unified outrage from european officials in the

lockdown. we have also had the u.s. chipping in with its response. basically the flight, on route from athens to lithuania -- lithuania was basically diverted by a fake bomb threat it seems to land in the capital of belarus on the orders of president lukashenko, an ally of russia's potent with the passengers on board and once on the ground a dissident journalist who has been critical of the president was arrested. we do not know what his status is at the moment and the outrage is unified and loud. some countries have called this

state-sponsored hijacking. we expect to hear from eu officials on possible sanctions against belarus. the belarusian government has already been sanctioned by your. shery ahn: this coming at a time when president biden could be holding his first summit with president putin as soon as next month, so what action is the less likely to take care. >> we had an animated response from secretary of state antony blinken in the past hour calling for the release of the journalist who has been arrested, and to basically supporting an inquiry by top international airline bodies associated with the u.n. maybe suggesting that flights should no longer be allowed to

fly over belarusian skies, and the u.s. would be supportive of sanctions. so we might hear of it inquiry from the international civil aviation and others. it will be to find a response to measure up to this incident, because clearly to engineer this forced landing, doing something like this, the leader was not too worried about the consequences, so if you does not care how much damage will be

done by sanctions or actions by other organizations will take, so that is the take at the moment and we will see over the next few days. haidi: given that there are already sentients after the election post -- i should say crackdown postelection, i am wondering is there a precedent for comparison that we can make for an incident like this? >> i am sure some of our aviation historians might be able to point to jets being downed accidentally or accidentally on purpose, but this specific incident of faking

a bomb threat, having an airline land under false pretenses, i cannot remember anything like this, and you

♪ >> i am really monitoring the marketplace and trying to discern between transitory and permanent so that we can figure out when the right time to move is. >> i am in the world of the one we make substantial progress, we will start to taper, and i think that is exactly what our forward guidance says. >> it makes sense to discuss the unintended side effects and efficacy of some of these tools. they were put in place last

year, i think very appropriately because we were in the middle of a pandemic. as we emerge from it, i think it will be much healthier for the recovery and for the u.s. economy to begin weaning off of these purchases. >> weighing in on u.s. economic policy. markets are doing this right now, take a look at the kiwi stocks under a little bit of pressure, but not really moving much. sidney futures not doing a lot, but of course this coming at a time when we just had kiwi retail sales rising two .5% quarter on quarter and beating expectations. we are seeing nikkei futures muted, slightly to the upside after we saw the japanese yen weakening against the u.s. dollar in the last session. we are watching jgb's, they have

been under pressure led by superlong maturities because investors are growing cautious about another debt supply. we are also watching u.s. futures muted again but slightly positive as we ended the week mixed, treasury yields also little changed at the moment. let's get to vonnie quinn with the first word headlines. vonnie: new data shows extended slowdown and the spread of covid-19 in the united states. figures reveal the country recorded its first week in june with infections under 30,000. the cdc warned that under vaccinated areas had become hotspots for the mutations from india and says there is surveillance of the more transmissible variants. malaysia says it will begin enforcing stricter curve use without forcing -- curfews without forcing nationwide lockdown. starting tuesday, businesses will only be permitted to open between 8:00 a.m. to 8:00 p.m.

also 30% of private sector employees will work from home. australia's government reporting promising pfizer vaccines to inoculate the entire country by the end of the year. 2 million pfizer doses should be available in australia each week starting in october. the health minister told the paper that shots will arrive by the end of june with 7 million more expected in the third and fourth quarters. 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 already quinn -- vonnie quinn, this is bloomberg. shery: the plans to clean up the balance sheet baffling investors. how they will test china's debt ridden financial system and the investors and banks caught in the middle. over the weekend, we heard from

one person pretty knowledgeable about these things saying that we are talking about it too big to fail scenario. >> we had the editor coming out saying that he had the possibility for bondholders it is highly unlikely. initially it was one of the first ever local media reports to comment on the possibility of a financial restructuring at the firm. >> that was editor rebecca choong wilkins with the latest. a lot more analysis up ahead. bitcoins extreme volatility could weaken traders on a roller

coaster ride. elon musk weighing in on twitter saying that the true battle is between fiat and crypto and that he supports the latter. but galaxy digital ceo with a chance to buy the dip, he spoke with tim stenovec and the cohost. >> crypto at its core is about remaking financial infrastructure and consumer infrastructure country and a more transparent, just, fair way. it came as a response to the 2008 crises. we talk to the people in the middle of it, they are revolutionaries. everyone gets excited with the gambling aspect of it, but at its core, it is really about rebuilding a system in the way

that is more fair. tim: did you buy this dip? we saw a decline of 30% at the end of this week. >> i bought on the dip. tim: kathy would was on -- cathie wood still thinks the price could get to $500,000. what do you think the price is ultimately for bitcoin? >> that is a decent target. crypto in the ecosystem with bitcoin has taken this lane of store value. we have this financial system in the u.s. where the old head of the central bank is actually running the treasury department. if you believe an independent central banking, we have lost it. we have a central bank that is printing money nonstop and because of it, fiat currencies are being devalued and debased.

gold is rallying, bitcoin is the new digital version of gold is rallying and i think that the bitcoin will or so passed -- bitcoin will surpass gold and three to four years, and i actually think that gold goes higher. how is it going to get there, it will get there with more adoption. i was on the phone with the head of one of the largest pensions in the country yesterday, and they are unbelievably deep in the weeds and bitcoin. have not bought a lot yet, but are deep in the weeds, so i see institutions looking at this as a hedge versus arc has re--- versus our treasury department's as an ability to get the economy landed with deficits that continue to grow and a congress that wants to and maybe should want to spend to deal with this inequality gap that we have. it is not the boston tea party anymore saying stop spending

money with the progressive party on the democratic saying we should have ubi. tim: who is a pension fund? michael: i cannot tell you our customers are. jennifer: we also saw yesterday that the u.s. treasury announced it once every crypto transfer larger than $10,000 to be reported to the irs. is this a good thing? michael: the crypto community is going to work in tandem with the regulators to try to get fair regulation that helps the industry expand with making sure the government has the confidence in the system that they need. >> galaxy digital's my cult -- michael nova gratz speaking to bloomberg.

and speaking exclusively to bloomberg about futur proofing. this is bloomberg. ♪

>> today we begin a new series. generation x looks at how

prominent families and business leaders are adapting for the future. >> at the helm of one of the richest and the most famous families in the philippines. the third son of the country's so-called tuna king to, a chinese immigrant who built one of the'nations largest 10 food companies from scratch. he took it public and it is now worth more than 1.6 billion dollars and the group has diversified beyond canned tuna to meat, dairy, and property. for the first installment of generation next, christopher po speaks exclusively about where he is leading the business. christopher: facilities has a long development to runway economically, and i guess the difference with what we do property development, all of our projects are sustainable or green projects.

we entered the industry and 2010 with partners and we have developed quite a few green buildings and now, last year we also launched the first leed certified green community in the philippines, so aside from doing better for the environment, we also believe in it as a good financial investments. >> given how diversified the country has become, -- company has become, is it foreseeable that tuna will cease to be the key product for the company, even though, it was the first product that was conceived by your father? christopher: the simple answer

is yes. while we still believe we have a long runway for our legacy businesses, but the other parts of the business are growing fast, so for the last three to four years, it has been growing at a compounded rate of 30% to 40%. definitely over time, the business will become a larger part of the pie, and three or four years ago, that was only 10%, but at the end of last year, dairy is close to 30% of total business. by definition, overall, the diversification, over time the legacy business will become less and less and really our way, the

drastic movements or pricing. we are seeing some inflation, but because we have diversified portfolio, we are able to insulate ourselves. haslinda: you are getting into plant-based means. to philippines known for being a meeting to population. what is your thinking behind that -- or being a meat eating population, what is your thinking behind that? christopher: the market is changing and there are certain parts of the population and the market that habits are changing, mindsets are changing. there is environmental pressure not just in the philippines, globally. so far, our plant placed -- plant-based business started in

the philippines, but we are making it available in foreign markets as well. we are kind of joining the big arena, so let's see how we do, but certainly, we are off to a good start in the philippines, and the reception has been quite so warm among vegetarians and vegan communities. haslinda: you are looking at ada international markets including the likes of the u.s., u.k., china, singapore, lots of competition. increasingly competitive space for the like of them -- likes of impossible foods and beyond meat. what is your strategy? christopher: our strategy, we are used to to the philippine market where price points are very important, so the strategy is value. it has to be delicious, number one, and deliver value.

we will be priced very competitively against the companies that you mentioned. second, the market will continue to change, sorry strategy is to get in there and get our hands dirty and learn. it is going to evolve and we need to be in their i think, with climate change, sustainability top of mind among consumers, policymakers, we need to be in this space, and a big part of why we are here is we are doing this in several market simultaneously is really to learn it, so that we can evolve with the markets. haslinda: 90% of families lose their wealth by the third generation. how are you preparing? how are you looking at succession? christopher: as i am 50 years old, my father is 90, and the net generation --

next-generation, we have 12 family members. we are creating a professional business that is -- we have external shareholders, but the vision is that the family will continue in terms of ownership. the next generation, the spread is actually quite large. the eldest is 30 years old and the youngest is three years old, so we are actually having serious conversations about succession. we are very curious to find what responsible ownership of means, and then there is maybe out of the 12 of that generation, maybe a handful that was want to work full-time or day-to-day, but the rest need to become mindful of at least what responsible

ownership is like. we have tried to be quite structured, we do have family counsel, family development council where we track the careers of several members of the family. and basically grooming the next set, even as succession will happen 15 to 20 years from now, we are already starting. haslinda: if you look back and people look at your journey so far, what are some key takeaways that you have learned? christopher: so many. me personally, i believe in human capital, i believe in building an organization and as the next generation or second generation leader in the family enterprise, i think it is my job, or are a job to really train up the human capital and

align them with our vision and our values that brought us here, so it is really for me, the learning as people where that really makes the difference, and that is what makes the enterprise, the enterprise. the other thing i would say, key learning especially for what we have seen recently in this pandemic is on one hand, we want to be very efficient, and optimize everything that, but we need to keep things in reserve. financially, we want to make sure that our balance sheet is not to levered. that we have resources available for things that are unforeseen,

even our mindset when you think about supply chain, historically, the mindset has just been -- but now we have to think about disruption in supply, so we need to keep more inventory, so that sort of mindset of thinking through the what if's is an important one. >> that was century pacific food executive chairman christopher po speaking to haslinda amin. you can catch generation next every monday on daybreak: asia. this is bloomberg. ♪

♪ >> i quick check of latest business flash headlines. social media managing editor says they are nowhere near defaulting on their $20 million in the offshore bonds. asset management company should not be allowed to default by the ministry of finance or by regulators. evaluating its financial resources and ability to continue operating as a growing

concern after the pandemic nearly wiped out its cruise business. they reported a net loss of $1.7 billion for 2020. the company says it may consider additional measures to improve its finances and including restructuring debts. indonesian airline garuda needs to completely restructure its business. it expects no more than 70 aircraft down from the 142, including low-cost carriers. only 21 aircraft are currently in service due to missed lease payments. >> counting down to the start of trading, tokyo and seoul are some stories we are watching today. in south korea, the finance ministry said to sell $2.1 trillion in government bonds. authorities will update the country's coronavirus case tally

and just over half an hour. president moon jae-in has returned home from his trip to the u.s. keep an eye as au and south korean leaders agreed to end the restriction of his -- seoul's development of long-range missiles. also watched chipmakers as both leaders agreed to could= to cooperate over -- softbank's first female directors is resigning. still joining growing criticism to hold the tokyo limbic system are as scheduled.

haidi: extending the virus day of emergency including tokyo as we continue to count down towards the summer olympics. all of this according to bella newspaper. let's get over to isabel reynolds in tokyo. what does the extension mean as we get closer and closer to the olympics? isabel: this is the latest in a series of reports. it is currently set to end, so extending a buy as long as three weeks would take us to just a month before the olympics opening ceremony in tokyo. as many as 80% over the population thinks that the olympics should be postponed or canceled. the international olympic committee made clear last week that the games can be held under a state of emergency. i think the point out is that a

japanese state of emergency is not quite as strict as you might think and other countries and the restrictions are pretty light and the main one -- and having said that, there are strains on the medical service, so that is something. >> what are business leaders saying? isabel: the latest to come out against the games -- >> our government reporter in tokyo for us. we have the market open in sydney, sold, and tokyo, next. this is bloomberg. ♪

♪ >> welcome to daybreak: asia from bloomberg's world shery ahn. >> i'm haidi stroud-watt. u.s. futures dip. japan's reportedly planning to extend the virus emergency measures and including in tokyo.

precariously close to the start of the olympic games. the world supply of the semiconductors is under a new threat to just as virus cases mounted in putting production at risk for risk. -- at risk. shery: we do have energy and real estate gaining right now. gaining ground after seeing its biggest loss in a month, in a week over a month period. take a look at the japanese yen, but this after weakening in the u.s. dollar. and especially the super long maturities of investors, growing a bit cautious. take a look at what it is doing right now, we are turning a little bit of green, but still muted at the open. consumer discretionary stocks

leading declines in south korea. we are given the outcomes of the moon jae-in, president joe biden summit last week. haidi: let's take a look at how the rest of the region is trading. we are seeing australian stocks trading flat, up by .1 of 1%. the aussie dollar trading at $77.05. the decision where we are expecting to see a slowdown in bond purchases. and that is given the pace of the economic recovery and the ever supported measures being outlined. s&p futures are pretty flat, and we are also seeing a pretty calm session when it comes to trading treasury futures in the asian open.

>> markets may enter a new phase where there may be low volatility, let's bring in jenna lee, founder and ceo of a quanta based hedgefund. great to have you with us, no wonder we saw jp morgan recently raising their 12 month target recently. despite some cautioning about south korea's overdependence on tech, what do you make of this? jenna: make of the positive outlook in korea? you look at the largely macro economic cycle, meaning that developed markets will do some demands numbers out there for emerging markets to produce semiconductors, and we are seeing this pickup in certain

sectors that are represented by -- and a lot of volatilities from the recovery stage with something we call midcycle, which is more of a normal cycle where you see and tend to see equity markets picking up between five to 15% a year. >> how sustainable is this rally led by retail investor, when many of them our momentum based and go with the trend, and institutional investors, especially with starting to lead? jenna: you see a delayed response with the retail investors, and and especially looking at technical signals

singulair leave. -- singulaly. i'm afraid that some of them will have to sit tight as the market slows down. you can see anywhere between 5% to 10% drop at least twice within this cycle, and that is what we have seen in the past and it is likely to occur again. >> what are the opportunities that you are seeking and the asian market and i know that going overweight is with the u.s. and one of your strategies, but do you see it in their part of the world? jenna: we are always positioning our portfolios for the midterm. if a short-term investor likes retail investors, i definitely would have a neutral weight and it could be anywhere between 10%

to 20%, but those who have access, you should look beyond six months and getting into the developed markets. >> where does the reflation trade, the commodity trade and particularly, because only spoke to you and february, you have been putting more money into commercial markets. >> if you would like to believe that you are a sophisticated investor, you have the ambition out of cyclical sectors between now and six months forward. for those who are seeing with the momentum strategy, they link for a little longer, and end up being -- seeing some drawdowns. you have some other exposures and as you correctly mentioned

in the beginning of this segment. so some alternative stocks, given crypto. >> we saw the moon-biden summit and their agreement to terminate the guidelines that will allow south korea to now develop longer-range missiles. what are we expecting in this industry, aerospace, and i am not only talking about south korea, but perhaps we are seeing a more assertive china in the region as well. >> i may not be the best person to cover military space and that pacific industry has been very discreet, and especially given the geographical sensitivity around it. overall, what you are seeing is there is a lot of bilateral and

multilateral talks that are happening, and tailwind, rather than headwind for this, i would say the local missile manufacturers who will be given more patriotic and influence by the population as well. this is a continuation of i think the conflict between china and the u.s. impacting the regional markets. once again, you have to be very wary of not making a single bet into any sectors, given that this is a midcycle, meaning there'll be more volatility than what you have seen in the past year. >> it was great having your thoughts, thank you. founder and ceo of aim.

let's get to vonnie quinn with the first word headlines. vonnie: the united states has joined the european union nations and strongly condemning the intersection of an airplane flying -- of the unprecedented violation of european air travel protocols led to the plane being forced to land. local authorities then boarded and arrested a journalist to had covered protests against the belarusian presidents before the flight was eventually allowed to resume. tehran is likely to extend the nuclear agreement that expired over the weekend. iranian state tv reports that the extension will be on condition that buys letter over -- bilateral talks will return to the accord. secretary of state antony blinken told cnn that the u.s. is prepared to return to the original deal.

an egyptian cortez rejected an appeal to allow the giant container vessel that blocked the suez canal to leave the country. it claimed more than $900 million of damages with the ever given that got stuck in the canal. it wreaked havoc on global shipping. the ship operators said that the demand is inflated. the lavish lifestyle of elizabeth holmes can be presented to jaros -- jurors in her upcoming trial. having developed revolutionary blood testing requiring minimal blood samples, and the start up was up to $9 billion before it unravels. global -- 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. >> still ahead, assessing the

outlook for bad debts manager with the current head of aipac. coming up next, the latest on the covert outbreak in taiwan and the impact is having on the chip industry. this is bloomberg. ♪ ♪

♪ >> the coronavirus outbreak in taiwan is sharply in focus as new infections threaten and could squeeze already squeezed global chip suppliers. joining us now is debbie ruth. what is going on when it comes to the vaccine situation, supply of vaccine, and how that is threatening to potentially even

worsen chip supply? >> partly, it is the lack of vaccines available in taiwan, only about 1% with vaccinated so far, and the government is still waiting for companies, and the problem here is that we have seen more cases of local transmitted, and reporting the a stafford contracted the virus over the weekend. but chip production in taiwan has not been disrupted so far. the u.s. does not supply or try to supply with more vaccines, this could be leading to a

logistical problem for chips that a lot of u.s. companies including carmakers need. shery: this is compounding the issue that given that drought and lack of water, some of the chipmakers have been hit and there are some concerns that this is really not a good idea. what is taiwan saying? >> we have seen the u.s. commerce secretary gina raimondo with concerns that the centralized chip production in taiwan is not a good idea for america. we have seen that in order to communicate concerns from some circles in the u.s. and other countries that taiwan is trying to tighten its control to china by targeting technologies going

to china. taiwanese government has also notified job listing websites to remove job listings that seek local taiwanese to go work in china, particularly in the semiconductor industry, so they can help prevent taiwanese technology feed to china which had been a concern in some circles in the u.s. as well. >> asia tech reporter debby wu . let's turn to japan, poised to extend its virus state of emergency. that is according to a newspaper. it was set to expire by the end of the month, but let's cross over isabel reynolds in tokyo. even if authorities go ahead with the tokyo olympics in july, i cannot imagine it being popular among the public. isabel: you are absolutely right.

we have already seen a series of polls showing that as many as 80% of respondents think that the olympics should either be postponed again or canceled. as you say, the emergency, we have seen reports now showing that it is likely to be extended beyond the end of the month, and that takes us to one month before the opening ceremony which is july 23 in tokyo. having said that, john coates of the international olympic committee made very clear last week that he thinks the games can be held even under state of emergency in tokyo. >> that is the business community, is there much support at this point? isabel: it seems rather strange to a lot of people because people said it is being held for the commercial reasons despite the health risks. but in fact we saw over the weekend, softbank's businessman

coming out against these games on twitter. we have already seen rack attend -- rackatan's, and a pole of large businesses and japan say they are much opposed as the general public is. >> how much of this is also because of geopolitics given that beijing is hoping that the next olympics and the schedule of the tokyo olympics just need to be fit? isabel: one of the initial purposes of the game was to establish japan's or reestablish japan's presence on the global stage just as china was emerging and dominating the region, they were saying that we are still here. if that is canceled, it is a little bit embarrassing, so that

could be a factor among some politicians and some circles in japan, i think. >> government reporter isabel reynolds in tokyo. and coming up next, south korea president to america, we will get the details ahead. this is bloomberg. ♪

♪ >> we are watching some of the korean defense and chip stocks. they are moving on some of the key policies after president susan damien -- moon jae-in summit with the united states. we are seeing the jump and the likes of taiwan and some of the aerospace and chip names as well. president biden said that he

would also appoint a special envoy to address issues regarding north korea. let's crossover to our east asia government editor for more. what are we expected from the envoy? >> we are getting a seasoned moon, who is versed in north korean relations. it is whether north korea wants to negotiate. putting off discussions on its nuclear arsenal as it tries to build the leverage, north korea has given no indication that it is looking for talks. the envoy is there, he knows what he is doing at the experience, but if north korea is ready to go to the table, that is another matter. >> we also know that both leaders agreed to scrap the bilateral guidelines.

housing fiction is that for china? jon: it will be a concern for china, because it means that south korea -- it will be able to increase the range of its missiles that could hit parts of china, but south korea is looking to get rid of these restrictions for decades and they see this as a part of the security sovereignty, and increasing the range. south korea is also looking to develop it an aircraft carrier and other ways to protect its power to more regions under president moon jae-in. this fits into the overall push to south korea's traditional territory. it will be a concern to china and the biden administration will appreciate having an ally on board. but this is also a long simmering concern of south korea, and i am sure that they are happy to see these

restrictions being lifted. >> we know the vaccinations have been discussed, especially for the south korean servicemembers that come into close contact with american services, but also a south korean producer to make vaccines, what do we know at this point? >> the details are still being worked out, but this is one of the goals of south korea, this is one of the things that moon jae-in talked about before the summit, to get some south korean cooperation. and putting up the domestic production of vaccines, and we may see more of this come out in the coming days with a few more of the details of what may be involved. >> we will be watching the producers very closely. a quick check of the latest business flash headlines, and the managing editor's, saying that they are nowhere near defaulting on the $20 million offshore bonds.

saying that the state owned asset management company would not be allowed to default. earlier in may, it was reported that they will reject liquidity. evaluating financial resources and ability to continue operating as the growing concern after the pandemic nearly wiped out its cruise business. it reported a net loss of $1.7 billion for 2020 while liability succeeded by more than $3 billion. the company says it may consider additional measures to improve finances including allotting new shares and restructuring debt. indonesian airline garuda needs to completely restructure its business. it expects no more than 70 aircraft, down from 142, excluding low-cost carriers.

it is in the initial stages of offering early retirement to employees. >> let's take a look at the first half hour of trading in asia on monday morning, a cautious start and this as inflation concerns continue to weigh on their minds, and remaining in focus as china attempts to tamp down on prices. this is despite expectations of an extension to the state of emergency across cities, and it is trading pretty flat, and coming out of the biden moon summit. we are also seeing flat treating. -- trading. new zealand is off, and we will be watching for any signals for

the lower bond purchases going forward as well. >> a -- not a lot of movement, but this is after the japanese yen weakened. we do have another debt supply this week and unchanged, but this at your it grew the most in two weeks, so perhaps a little bit of selling today and this after very strong export numbers , and we are seeing leverage selling. do not miss a big interview ahead, the largest energy generation company in india, and it joins exclusively. we were looking at how the world's biggest -- and gaining bigger piece of the pie. this is bloomberg. ♪

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haidi: the world's biggest businesses were doing fine until covid-19 arrived and now they are doing even better. the top 50 companies by value added $4.5 trillion of market capitalization in 2020. >> the world's biggest companies are cashed up and thriving. last year, the top 50 raked in nearly $800 billion in profits, equivalent to almost 1% of global gdp.

let's break down the trends. 30 years ago, there were no chinese firms in that group. now, there are eight. and tech titans are on the rise, from three companies then to 21 now. makeup firms are changing the look of the economy. they are -- mega firms are changing the look of the economy, adding fewer workers more inclined to add capacity in the cloud the bill factories and when they do invest they often have enough cash without having to borrow. they are paying less tax. the median rate for the world's biggest companies has dropped from 35% in 1990, to 17%. president biden's corporate tax plan and china's regulatory crackdown both suggest policymakers are trying to rain and that makeup firms. -- mega. firms. and the last three decades half the top 50 companies have been

new so maybe they should not get too comfortable. shery: let's get more perspective with our asia economist. pure research looks into the world's biggest firms and the way they have come to dominate the global economy. just how big have a gotten? >> that's right. so we delved into financial data for the 50 largest companies by market cap for the past 30 years. one where they have gotten bigger is there going market valuations. as of the end of 1990, the market value of the biggest listed firms totaled $1 trillion equal to about 5% of the world gdp at the time. fast-forward 30 years to the end of 2020, that ballooned to $23 trillion, about 28% of global gdp. in part that reflects rising asset prices. but it also reflects investor's of future profitability. that means they expect to

biggest companies have the potential to get even bigger. haidi: as you talk about companies becoming bigger and commanding more market share, how has that shown up in the data? >> you're right. that increase in size gives them the ability to stifle competition, bill customers, and squeeze workers. it also gives them the ability to shape regulation. what we have seen of the past 30 years is these mega firms have seen higher profit margins and lower tax burdens. in 1990, the median profit margin for the top 50 firms with 7%. by 2020 that had doubled to 18%. the effective tax rate fell by half. >> they are paying less tax and more profits, where's the money going? >> we found where it is not going is toward capital investment. 1990 the top of the list

included big industrial giants like exxon mobil and ge, the meeting firm spent 7% of revenues on capex. fast-forward to 2020 with the rise of tech platforms that has come down to 4%-5% of revenues. instead we found they are on a lot of cash. as of the end of 2020, the amount of cash on balance sheets totaled 1.8 really dollars, enough to fund their entire capex of 2020 by five times over. what is important here is this challenges conventional wisdom about how to manage the economy. if lowering taxes is not spring investment, and companies are sitting on piles of cash big enough they do not need to borrow, then that raises questions about whether additional policy tools can have the same effect as they have in the past. haidi: hour asia economist justin jimenez. studios and cinemas stepping up efforts to draw people into movie theaters.

hollywood focus on big summer movies. a return of pre-pandemic box office numbers only in 2022? >> in asia it has been opened for a long time. china last year was the box office leader, highest box office in the world. chinese near this year was up 30% from 2019. that box office is booming. japan had two of its largest movies, the two largest movies of all time, demon slayer and shin, which opened with limited capacity in japan. taiwan and south korea very good. obviously places like the u.s. and europe have lagged. but this weekend is a pivotal vomit. -- a pivotal moment. universal in the u.s. released movie a month earlier in asia than they introduced it in the u.s., and that is f9, part of

the fast and furious group of movies. it had a fantastic opening in asia, $160 million. and it will open later in north america and other places. so i think the studios are trying to adapt to this environment, by staggering and opening, where it is safe. i think that will be proved this weekend that where it is safe people really want to come. haidi: you talk about the recovery in asia being first out of the pandemic. but we see key markets including japan dealing with subsequent clusters and waves of the virus. planning to triple the number of screens in japan by 2024, are you concerned prolonged virus situation, longer than affect said -- longer than expected vaccine may mean the appetite for returning to bricks and mortar cinemas would be structurally changed at the other side of this? >> i do not see that at all. i mean, again, i have data. i have heard that narrative

before. but you look at the data and where to save and where it is open, people, there is pent-up demand, people are dying to go to the movies. and, look at this weekend in china. for us, it was the largest opening since before the pandemic, internationally. so there are people coming out. of course, it is a really world and you can always find places where it is a little bit better or a little bit worse. but when you look at vaccinations overall, get the united states, for example. new york and los angeles were totally closed until a few months ago. and now they are both on track to be 100% open. godzilla versus kong opened in the united states a few weeks ago, and it did over $150 million. people were coming back. so yes, obviously there are outliers, but the trend is extreme a positive. and where it is safe, people really want to go to the movies, it is demonstrable.

shery: what you expect to get back to pre-pandemic levels, given that you got a record $1 billion in global box office in 2019? >> if you look at a whole year, it is unlikely to be this year because obviously halfway through the year we are just starting. i would guess 2022. when you look at the slate for the rest of this year, because a lot of films were not released during the pandemic, amazing films coming up. you have black widow, three other marvel movies coming up this year, dune come a lot of things. next year is even more incredible, mission impossible, spider-man, avatar sequel, another three marvel movies, drastic world. -- drastic world -- jurassic

world. so i think 2022 will be a very big year. shery: next, huarong's race to prevent a disaster. how the bad bank can make good on $41 worth of loans? this is bloomberg. ♪

>> this is daybreak asia with the first word headlines. president biden says he will not allow in action two up and his infrastructure plan. an aide says find it will change course if it becomes clear a bipartisan approach is impossible. $1.7 trillion revised proposal. republicans want spending confined to highways, bridges and airports, rather than a broader vision. >> the real question is whether republicans what meet the effort the president is showing. it is a sincere effort to move this country forward. the president has been very clear. inaction is not an option. >> australia's government is reportedly, sing enough pfizer vaccine to inoculate the entire. country by the end of the. the sun herald says to me on those who should be available each week starting october.

4.5 pfizer shots would ride by the end of june with 7 million expected and fourth quarters. malaysia says it will begin enforcing stricter curfews this week to contain a surge in covid cases without a nationwide lockdown. the defense minister says starting tuesday businesses will be permitted to open only between 8:00 a.m. and 8:00 p.m. and says 80% of government --and 40% of private sector employees will work at home which will affect up to 8 million workers. golfer phil mickelson has won the u.s. pga championship, making him the oldest player ever to win a major tournament. mickelson turns 51 next month and finished two strokes ahead of the field, giving him is six nature title overall. he won his first major in the masters at 33 in 2004, and has spent much of his career in the shadow of tiger woods.

global news 24 hours a day on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: chinese authorities and huarong plans to clean up its balance sheet is rattling investors. bloomberg looks at how the handling of huarong will test china's vast debt ridden system and banks and investors caught in the middle. we have more on this, what is the latest behind the scenes of huarong, rebecca? >> yes, what we have learned is, unsurprisingly, huarong and regulators have been working very, very closely together. and essentially, huarong management has been in crisis mode, since the delay of those earnings at the end of march. we have learned that huarong executives are writing a weekly written note, about the nature of the company's operations and its liquidities, and really they

have become accustomed to last-minute ad hoc meetings with regulators, when we see these sort of dramatic drops in the bond prices. what is interesting is, it shows this very, very acute interest from regulators, even about the kind of day to day movement of the bonds. haidi: so what is the mood among company executives and employees, given all the uncertainty? >> i think of the one-handed has been quite mixed. one employee said it is business that usual and another said there was concern about whether salaries are going to be made. i think more broadly, there really is now this feeling that huarong is indeed too big to fail, among senior management and among mid-level regulators. i think what is interesting to remember here is, precisely the definition of what failure means in the case of huarong is still up for grabs. it does not necessarily just mean the worst scenario,

unpredictable bond default. it could also mean a haircut on the offshore or onshore bonds. shery: where are investors in all of this? >> well, titan came out with a report of the weekend, it's editorial opinion editor saying, we are not going to see a default on the titan bond evidentially. -- imminently. and i have seen a bit of a rebound among some dollar bonds this morning however it still looks like there's a lot of uncertainty. investors really do not have any clarity over precisely what is going to happen, or the nature of any kind of financial restructuring. although of course some perpetual, longer dated bonds still very close to record lows they hit last week. so, for a lot of investors, we can see they are still pricing in the chance of a restructuring or a significant haircut on the offshore debt.

haidi: rebecca 10 wilkins, air china credit editor with the latest on huarong. our next guest says to the company engage in restructuring which results in offshore bondholders take you haircut that contagion would be spread across tiny credits and asian credits overall. let's bring in the cohead of asia-pacific at alliancebernstein. jenny you would've seen that chart that rebecca referenced before. i want to show up one with the diversion price between short dated bonds maturing in july and longer dated credit, particularly the perpetual. you can see where it would still play out a comes to longer data it is paper, right? so where is the investor mindset in this? what we heard over the week and almost seems to suggest this is a too big to fail situation? >> good morning, yeah, the conference, investor confidence, particularly offshore market is

a --, for sure and it takes time to restore. tom: investors not only need words but need actions. we see that marrone has been acting to the right direction -- we see that huarong has been acting to the right direction trying to restore this investor confidence. huarong may not be a household name but there should be no doubt that it is a system of importance and financial institution with a very strategic mandate to deal with china's bad debt problem. which is crucial to china's financial system. it is also a major sure in both onshore and offshore debt markets 17 trillions of assets. so it is essential, actually, to restore that confidence, among the investors. haidi: does that confidence get restored unless we hear something from authorities, from the government? is that part of the problem crating more uncertainty, that there's no confirmation

restructuring will go ahead, for example? >> well so far what we have been hearing, more and more news toward that, what we believe that a corporate and business recalibration may be needed, to position huarong better for the future. but this does not equal, and it is far from a debt restructuring. so, any debt restructure of huarong most likely will trigger a chain reaction in china. the financial market and the offshore market. particularly the domestic market this is something the government is extremely anxious to avoid. shery: we have already seen the repercussions with the china-u.s. treasury will spread narrowing that gtv chart on the bloomberg showing you that. despite the spread narrowing we know that kind is 10 year yield is a most double that of treasury so how attractive to the chinese markets still are they still right now?

>> china's agb remains extremely attractive, this is major bond market in the world that is actually manifested by very strong inflows into the chinese bond market, since april last year. i think last year we have rmb one trillion inflows in 2020, and i think this year that inflow continued. there are two reasons for the remarkable inflows. one is the widening interest rate differential between the seabees and u.s. treasury and two, the strengthening of chinese currency. we think that is going to continue and we do think so. the very, very short-term a of our and beat may slow down to do some cyclical reasons, right? so for a while the pboc may the enthusiasm of rmb to make sure it does not appreciate too much and too fast and they hurt exports when the world economy is recovering. and two, there could be risks on

growth perspective, should china's policymaker, be overzealous and their attempts to deleverage the economy. of course in the increase of-- risk we remain nonetheless optimistic on the long-term outlook for rmb. shery: how the inflationary picture play into the markets? >> a key question here is whether the short-term flight and prices slows into longer-term inflation expectations. for the last month --and cpi numbers in the u.s., mainly driven by transitory factors. cars, air tickets and so on. so the inflation expectations have moved higher, for sure, and the nominal u.s. rates have been stable. so that means for real interest rate has fallen about 30 basis points and this means policy has become even more accommodative as the economy is recovering.

is this necessary? probably not. so we do think the fed will start to talk about tapering earlier than expected, and that that could continue because the market volatility in the near term. haidi: i want to end on our question of the day on our mliv blog, how do we best navigate data distortions, specifically the wild swings we get when we look at the base effects, right, with a number of data points? also when you take a look at inflationary data that then takes into account swinging energy prices, it takes into account the extreme nature of fiscal and monetary policy stimulus we have seen. how do you get a base level that makes sense for your forecasting? >> [laughter] that is obviously challenging. and well, all the data now is distorted by very short-term, all coming up, -- opening up of

the economy. so those are all transitory factors. and also when we know the major assets price are mainly supported by the percentage qe programs fiscal spending. and run that started to reverse we should expect, we should not be very surprised by the higher volatility that it is going to cause to the market. shery: cohead of asia-pacific fixed income, thank you for joining us. we do have an alert on the bloomberg. show date motor is halting its asean plans from may 24-may 26, due to chip shortages. can date motor, kia, not automakers in korea had to halt some lines this month given that shortage of chips. this coming on the back of president biden and president moon jae-in's talking about

partnering to ease the shortage of semiconductors globally. already hyundai has halted other plans as well. one plan is already halted, the number four and number 54 couple of these. another also shut down domestic factories earlier in may for the first time this year. carmakers and south korea could further hit as we may see some lost vehicle sales in the second half, given chip shortages and other issues. killed a motor though, gaining more than 1% in the past -- -- hyundai but are getting more than 1% in the past five days. this is bloomberg. ♪

haidi: here's a quick check of business flash headlines. shery: bytedance terminated its deal to store international date on alibaba's cloud. dow jones reports bytedance bought service from alibaba than ended the relationship. earlier alibaba reported slower cloud revenue after one unspecified top client canceled its contract. cloud kitchen operator rebel foods is said to be looking to raise at least $200 million in new funding to expand business in india and overseas. the indian startup is working with goldman sachs on fundraising and considering a valuation of close to $2 billion.

they specialize in cloud kitchens or restaurants that prepare food for delivery. the inventor of ethereum believes developers could be close to a breakthrough that would dramatically reduce the amount of energy needed to mind the cryptocurrency. one says technical changes to the weight is developed could be in place by the end of the year and changes could see ethereum energy use dropped by 99 percent, potentially providing a boost to its price and making it more attractive than bitcoin. haidi: taiwan futures, a wild ride for stocks trading on the taiex. it will take some time for that to find stability. .6% lower is where we are seeing taiex futures, after we saw that plunge most in 14 months earlier in the month. we have seen more of an upward recovery for taiwanese stocks. concerns about the virus outbreak and how it could potentially impact production of

semiconductors given the global shortage are now weighing on investors as well. that's it for "bloomberg daybreak: asia." markets coverage continues as we look ahead to the start of trading

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grexit is 9:00 a.m. in beijing. welcome to bloomberg markets china open. i'm tom mackenzie. >> good monday morning. were going down to this first sessions of the week. your top stories today are this roller coaster ride for cryptocurrency continues. that's as beijing reiterates its call for a crackdown. bitcoin swings the wildest since march of 2020. tom: