haidi: a very good morning and welcome to "daybreak australia." sophie: we are counting down to the asia market open. shery: the top stories this hour -- president biden pitches a minimum corporate tax in an effort to win republican backing

for his infrastructure plan. haidi: the u.s. blocked investments into 59 chinese companies accused of military ties. shery: tesla shares tumble on a report that orders in china may have tumbled by almost half in may. the company was also hit by recalls of more than 5000 cars in the u.s. this is a picture across wall street. we are seeing futures muted, but slight upside after we saw the s&p 500 closed lower by .4%. we have the s&p 500 bouncing back from sasser lows after the report that president biden is considering a lower corporate tax rate, but still not enough to really pull it out, and since we saw meme stocks trading lower, amc tumbling after they cashed in. we have the u.s. dollar climbing

the most in about a month. we had very strong eco-data, if it's eco-numbers for jobless claims. we will keep a close eye on what the commodities space does. strong dollar weighing on the metals index, down the most in three weeks. this after ascending declines and gold futures falling the most since february, so those may payroll numbers will be key for a lot of different asset classes. haidi: let's continue with president biden's minimum tax plan for u.s. corporations. it goes along with a proposal to raise the corporate income tax rate. the biden administration saying

they are absolutely not abandoning that 28% headline corporate tax rate plan. how does this fit into negotiations? >> the biden administration is going through all the tax proposals biden has laid out and finding the ones they think republicans will agree to. they're looking at human infrastructure deal of about $20 million, but biden has identified -- they are looking at an infrastructure deal of about $2 trillion, but biden has identified changes from the way it currently works in that companies currently pay a 21% right, but they can use credit introductions to get their tax rate down to in some cases zero. that has been the case for amazon for years. this is to say even if you have all these special taxes, you have to pay still 15%, but republicans say they cannot pay for tax increases or rollback the trump tax cuts.

haidi: could we still see democrats going at it alone without republican support? >> yes, this is almost certain to happen, if there is a bipartisan deal or not, the democrats will try to do a democrats-only deal later this year with all the provisions in education and childcare, things that biden has laid out. that would be paid for by more taxes on corporations and the wealthy. that is where we could see that 28% corporate tax rate come in. these ideas will not lead to a bipartisan deal but certainly are not dead. >> president biden has had a very busy day. we could even see signing of an order amending a ban on investment in chinese companies. we have seen his signature now on that list. 59 companies with ties to china's military have an named in the list with biden adding several surveillance firms.

the move is largely a continuation of former president trump's policy. we get more from our correspondent in washington. what is different from the trump-era policy? alex: president biden has added 11 companies to the list. his policy really is just about as restrictive as trump's. american investors have to stop putting new money into these companies august 2, and within a year of that, they have to disinvest entirely. that is a little bit later of a timeline then trump would have imposed. he wanted all american companies out of these investments by november. of those 11 companies, he removed two, including xaomi, which sued to try to get off the list. haidi: we know that there are

lots of other sticking points. does it bring it closer to a more functioning relationship and we saw under the previous administration? >> the previous administration was pretty cozy with china until they weren't, right? donald trump to strike a trade deal with china. he celebrated that trade deal in january 2020, and when that pandemic began and the u.s. started blaming china, relations deteriorated. biden has taken steps that kept tensions steady or even raise them, including this blacklist. a couple of weeks ago, he ordered the u.s. intelligence company to do more work on the origins of the pandemic, including looking at it it emerged from a laboratory in wuhan. i do not think the relationship

is getting much better than it was at the tail end of donald trump's presidency. haidi: president biden headed to europe for the g7 summit. what can we expect? >> he is mostly headed there to reintroduce the united states to the world as more of a partner than donald trump positioned us. i think his message to leaders is going to be "we are an ally again, not a partner nation that expects you to do stuff for us. he is going to face a lot of pressure from other leaders to give up more of the vaccine stockpile.

there's a lot of pressure on biden to release many more millions of doses in order to snuff out the pandemic before more dangerous variants emerge. haidi: let's get a check of the markets as we set up for the open in asia this friday morning. sophie kamaruddin is with us. sophie: stocks higher as we wrap up the first trading week of june. check out the yen, trading near that low. you have gold retreating further from 1900 after falling by the most since february. pulling up the terminal, it is rpi policy day. we do have a six meeting of the

central bank on hold with bond buying very much in focus. ahead of this decision, you have india's stocks reaching new records and pushing the market value of india's market above $3 trillion for the very first time. shery: let's get to vonnie quinn for first word headlines. bonnie: thank you. the white house says joe biden will address hackers when he meets with the russian president. the russian government has denied knowing about for being involved in the attacks. meanwhile, russia says it is eliminating the u.s. dollar from its national wealth fund to reduce its exposure. the finance minister says it will shift to be long euro and gold.

it affects about 119 million dollars in liquid assets. the move comes less than two weeks before a biden-putin summit in geneva. jbs says global facilities are all operational after a cyber attack the weekend disrupted american and australian facilities. jbs says it was able to limit the losses produced during the attack to less than one day's worth of production. spacex has launched more than three tons of supplies found for the international space station. the resupply mission to the iss should arrive saturday. the cargo also includes thousands of tiny frozen sea creatures that will be thawed and revived for study to

determine the effect of spaceflight. i'm vonnie quinn. this is bloomberg. haidi: coming up, we will take a look at nonfarm payroll data, the inflation prospects, and how it affects monetary policy. coming up next, our guest gives his market outlook. this is bloomberg. ♪

>> you got the meme stocks moving. >> you've seen a lot of excitement go back into the meme stocks. >> amc and gamestop are the two top stocks in the russell 2000 value.

>> the speculation is intense. >> the appetite is there as long as the speculative fervor is there. >> money chasing forest, chasing ideas. >> it is very much a social media phenomenon. >> it is not trading on pure fundamentals. it is trading on momentum. >> people have to think about what is the fundamental value. >> as we said back in january, rocket ships go back to their launch pads. >> buyer beware i guess is the way i would put it. >> reaction to the wild swings of amc's stock. let's bring in the ceo of sneed -- smead capital management. the market cap of this one stock soaring is worth now about half the companies in the s&p 500. that yellow line would be the s&p 500, $30 billion of red, the

mid-cap, blue, the russell 2000 surpassing all of that. what do you make of this rally? is it sustainable, given the fundamentals of value is now out the window? >> we have been dealing with valuations being in question for a long time. you've got brand-new businesses that generate huge sales growth in three or four years based on some exciting new technology, and people don't seem to be very bothered by astronomically high prices. we move there into meme stocks for -- or bitcoin. it is a symptom, a symptom of the fact that the price of money is incredibly historically low, and that liquidity keeps finding its way into different things, but it is likely to be inflationary at some point, and

therefore, the best investments are likely to be the beneficiaries of that inflation going forward. shery: are we headed towards a turning point now that we are getting such strong jobs numbers? we have payroll numbers out tomorrow. what should we be watching out for, especially as investors are worried about some fed tapering down the line? >> there's just so many ironies in all this. the best way to solve scarcities is to produce. increased supply. there is a scarcity of oil in the body politic. they are adding scarcity on purpose to quicken the transition to alternative energy. we own the oil stocks. they are doing well. they are going to do a lot better if the body politic is in play. at some point in time, for every action there is an equal and opposite reaction, and at some

point, those prices will negatively impact the economy. as long as it is booming, no one cares about higher wages for higher gasoline because things are just going so well at the moment. haidi: i want to throw up this chart taking a look at nonfarm payrolls. are we getting to a point where value is going to be better news to the economy? >> what happens when inflation really does consistently rear its ugly head for, say, a 10-year stretch? let's say we go from minuscule inflation to 4% or 5% inflation over the course of the next 10 years? you are going to see a compacting of price-earnings ratios. ironically, some of the biggest

risk in this marketplace is stocks that have historically traded at 18 times earnings because they are great companies and long-term slow growth blue chips trading at 35 times earnings. that's where a lot of capitalization is at risk. apple was trading at 40 times earnings. what or four years and inflation picks up? where are you going to take the price-earnings -- price/earnings? there's more money to lose in capital basement stocks and there is in some $30 meme stock. we like continental and conocophillips and others. we like owning attractively

positioned real estate. again, it is so bizarre, but the two premier companies own huge amounts of land in the biggest suburbs, which is where the population runs to from the inner city, where millennials found houses to buy an hour and a half from the expense of cities that they live close to. we like the homeowners. the problem is there are not nearly enough single-family residences in the united states. you are not going to get 60 -- 65 or 70 year old baby boomers are not going to move out of their house like they used to because of all the things that have happened. lastly, pharmaceutical and biotech companies are very attractive. they are the cheapest relative to the index in a long time.

haidi: so great to happy with us. let's take a look ahead to the aussie markets. we saw a jump in energy names helping propel the benchmark to a fresh record. kathy woods is here with us. what are we expecting? >> we are not getting much direction this morning from futures, which are flat. across the region, it does appear asian shares could be a little bit weaker following declines in rest stocks. also overnight, commodities like gold were lower, so that could have an impact on commodities. it is possible commodity moves might be a drag on the overall market today. shery: what could we see in the currency space? freighters are now the least bearish we have seen in eight

months. jackie: analysts have said there the least bearish in a couple of months. the higher currency we have seen here has some impact on the market could show the dollar is a bit high. we have seen a succession of record highs for the australian market, so it has not had that much of an impact overall, but it is something investors will definitely be watching for as the australian market peaks. haidi: it is time now for more new calls ahead of the asian trading day with sophie kamaruddin in hong kong. what are you watching? sophie: i'm watching the offshore you on -- offshore yuan . rbc capital saying actions to rein in the renminbi's strength will taper its effects on the

economy. but another analyst says the close correlations between the two currencies means one could top 1120 when the offshore falls , sparking competition between china and korea for the same tech and auto exports. haidi: auto also holding steady at very broad selloff. sophie: jp morgan analysts are focusing on demand growth in the coming months, saying that if it comes in hotter than expected, that could push prices above 80 bucks a barrel faster than anticipated base case scenario for late 2021. we do have demand growth potentially impacting everything from priced directionality to refining to oversupply, so we are closely watching. haidi: millennials are falling

behind their parents in just about every way. their time to build wealth is running out. ♪

shery: here's a quick check of the latest business flash headlines. tesla shares tumbled on a report chinese orders dropped by almost half last month. the stock fell by almost 5%, adding to a more than 30% slide from its late january peak. monthly orders in china fell to about 9800 from more than 18,000 in april. tesla is also experiencing recalls on the model three and y vehicles.

the new unit will allow aunt -- ant continue consumer lending, its most lucrative operation. google says it will notify users about being tracked by advertisers following a move by rival apple to create iphone privacy. google has been mulling a way to give users a means of control with a less stringent option than apple's. it will become available in late 2021. haidi: let's take a look at how we are setting up for this friday session. we are seeing tepid trading in the futures markets, given that we are seeing a number of traders sticking to the sidelines as we await that key nonfarm payrolls number in the

u.s. signs of tightening in the labor market heading off tapering moves in the fed. sydney futures are also fairly uninspired. sales in that market trading pretty close to that record high. broad weakness we are seeing across the region. s&p futures also unchanged. coming up next, former new york fed president bill dudley joins us to discuss inflation being seen as transitory, but he says longer-term risks remain. this is bloomberg. ♪

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shery: former new york fed president bill dudley says he does not see the unwinding of a bond facility as a taper signal. speaking exclusively to bloomberg, dudley says he believes current inflationary spikes are temporary. >> you really need to have pressure on resources, and pressure on resources starts with labor. it is probably premature to expect a real labor problem because we still have a lot of people out of work because of the pandemic.

compared to february before the start of the pandemic, we are still short about 8 million jobs. hard to have an inflation problem if wages are still quiescent. shery: how much control does the fed have over inflation? >> i think they still have control at large in that they can determine how fast the economy grows. the supply disruptions we see right now they cannot do very much about. what we saw used car prices

is a confluence of two things, ship destruction eliminating new car production and until car prices. quickset raises the question of the reaction from the federal reserve, in other words, they can change or observe decline in these prices should it start to tighten policy. the fed is going to unwind its nearly 14 billion dollar portfolio of corporate debt and corporate debt etf's. is this policy a template for how the fed will handle other additional market situations going forward? >> i think what they are doing with the corporate bond portfolio is pretty unrelated to the whole notion of monetary policy because it is actually a pretty small portfolio in terms of size, and it is not typically part of their portfolio mix, so i would not take that decision as implying anything about taper . >> does the fed, though, actually really want to see that target hit? we get a lot of talk out of the fed about how this is transitory. there seems to be a lot of general thinking that if expectations themselves do not rise, you basically do not get

there. you look at market pricing, we are somewhere around 2% or so on five-your forwards with regard to inflation expectations. that is pretty much in line with what we have seen the last 10, 20, 30 years as far as inflation goes. expectation has not risen, despite all the anecdotal evidence we have on the ground that inflation is here and is real. >> as it is, inflation expectations have risen a bit because they were pretty low going into the pandemic, and that is one reason why the fed has changed their long-term monetary policy framework, to target a 2% framework -- to target 2% inflation average rather than at any period in time. they are sounding pretty comfortable with what is happening. in that respect, they are probably pretty happy about that. you are right, though, inflation

expectations are will behave. i think what we are seeing now in inflation is going to turn out to be transitory, but i think there could be a longer-term inflation problem just because the fed's monetary policy regime is a very different one where they said it will be slow to lift off in terms of short-term interest rates. romaine: i'm curious of your thoughts on the wage inflation situation. we saw wages hold up pretty well during the covid induced recession here. the idea that we would see some sort of meaningful appreciation above the -- whatever it is -- 3%-plus rate that we have in at here -- is it even possible given that we are coming off such a relatively high lore, that we would see a meaningful bump up in inflation? >> it is possible, but it is hard to imagine a big wave inflation spiral at this time,

given that you are still 8 million jobs short of where you are going into the pandemic. a six-point sent unemployment rate is still well above the 3.5% rate we reached in february 2020. haidi: former new york fed president bill dudley. the government may withdraw support sooner than expected as the economy recovers, but the s&p 500 did rise after president biden indicated he may be open to a lower corporate tax rate than the 28% he proposed. robinson stephens wealth management economist joins us now. he made it clear this was not an abandonment of the headline proposal. what is, i suppose, the best case scenario when it comes to

being able to fund the infrastructure investment plan but also not cause significant deterioration in corporate sentiment? >> the best case scenario is that all those fingers and toes you have crossed that it will all turn out ok, you can raise the money and not negatively impact the economy unduly, working against what you are trying to achieve with the spending is going to all work out. it is a bit of a high wire act and not easy to pull off, but i think this is exactly what needs to happen. there is, i think, a good argument for continued investment in u.s. infrastructure from the standpoint of sustaining the long-term economic growth, but if the financing of it negatively impacts growth at this point unduly, then it will become a serious issue in terms

of the debt, economic activity in the current term, employment, and so on. haidi: speaking of employment, you take me very nicely to our next question. nonfarm payrolls coming at a time we are seeing robust recovery continue in the u.s. if the labor market continues to tighten, does this take the fed court of two talking about tightening? >> if you look carefully, they are in fact starting to talk about it -- not talk about it, but talk about talking about it. that is the first step. i think bill dudley laid out the issues from the fed standpoint very clearly. the concern is on the labor market side. even if the number tomorrow is going to be a big number on the upside, and i think it might, given the adp report today, the answer, the stance is still

going to be from the fed, this is transitory. we are going to find out. i'm not sure that we have clear insight into exactly how tight the labor market is. haidi: exactly. we continue to see these emergency unemployment claims decline as well. we have seen a cutting back on that supplementary insurance. how much of those benefits really affected the supply of labor? >> i think there's some effect. there's a lot of people looking at it, and the conclusion has largely been that it is on the margin. a little bit of influence, but probably not the major part of the story. a huge slide into august, but especially in these next eight weeks, in the united states, we are going to see a number of states which have abandoned the

supplemental pay, the programs themselves will end in september, so we will get a little bit better sense of what the influence is, but i think it is relatively minor. i think the bigger issue with the number of people that have dropped out of the labor force and a certain amount of skills mismatching perhaps with the jobs coming on. shery: we continue to see supply chain disruptions, commodity prices rallying, all playing into inflation concerns. where do you see that going? >> there is where i would be a little bit more on the fed's side on the transitory. i do think there will be in some cases a demand-side response to these higher prices, if it is in construction or some other areas. more problematic once again on where the price increases are in things like trucking where they

tend to stay in place. i think the commodities side, we will probably see some backing off as supply chains will open up, some of these issues will be resolved. haidi: thank --shery: thank you, as always, for being with us. we continue to talk about when the fed will start to taper, but these low rates have been going on forever. not to mention with the pandemic and liquidity, the overheated economy and overheated housing market continue. prices worldwide rising even before the global crisis. average prices jumping more than 7% in the 12 months to march. you know what? we are feeling it here in the u.s. gains of more than 13%, the steepest since 2005. in new york, demand still outpaces supply in the suburbs,

and i have given up trying to move to the 'burbs because we are being squeezed out of prices right now. haidi: i was going to say, i know you guys have been in the market for a while. shery: not anymore. we have seen the price gains in asia, the second steepest globally. you can see a pattern in terms of countries trying to eliminate covid. south korea, 5.8 percent. japan, 5.7%. the index benchmarks, the average prices, and i will tell you when it comes to sydney, we have seen an almost 10% gain in property prices in the last three months alone. everyone is doing the same thing. everyone is upgrading, renovating, upsizing, and there was one property pretty close to

us, beachfront, that went for almost $1 million above guidance. it is just crazy. shery: up next, shares of tesla falling over 5% on thursday after a report on chinese orders. we will get you the latest. this is bloomberg. ♪

haidi: millennials of age 40 are falling behind their parents in nearly every way. they are worse off financially than the boomer generation in a range of metrics. bloomberg took a deep dive into the data. i'm one of the oldest millennials here, and i've got to say, reading this is really, really depressing. just compare our generation to our parents' generation. what is lacking? olivia: it is really more about what millennials have, which is big debt. the reason education has become so much more valuable is the labor market has changed and education is getting more expensive. put that together, and the debt

burden has grown and affected everything. haidi: in what ways are just the economy is different now? olivia: the millennial generation got hit with two major recessions, the first being the financial crisis in 2008 and now, of course, being the pandemic. one of the reasons millennials don't own homes is just fear of homeownership after the debt crisis, and another reason is that keeping them from building up that nest egg. >> you talk to millennials, and house renovation is what they do all we can.

homeownership is scary. what can we do to catch up? olivia: we were told by student loan advisors especially for student loan debt to go on a repayment plan. the federal government does offer some relief, and that can be a huge help. another thing is making the right investments. millennials have way more investment tools at their disposal than previous generations did, so it is really just diversifying your portfolio. shery: --haidi: what about investments? we have seen a lot of the meme stock and retail investment boom, and a lot of that are younger people. olivia: you might be surprised to hear that stock ownership is lower among millennials that it was among baby boomers at the same age, and some of the reason for that is they just do not have the spare cash on hand to

put into the market. usually, when we see people not investing in the stock market, they are definitely not investing in homes, either, so it really is depressed across the board. haidi: that is really depressing. you don't have enough cash to put into the market? tell us what we are seeing across the board. this has hit another new generation as well, right? olivia: right. moving forward at this point really depends on the type of person. we know that people have a cumulated a huge amount of savings thanks to stimulus checks during the pandemic, so it goes back to the case of recovery we talked about for so many months and it plays out for millennials just as it has for other generations. haidi: we really appreciate your time despite this being an unfortunate story. speaking of millennials, they

are chasing work opportunities to hit those financial goals. being hired at larger companies can be difficult for people of diverse backgrounds. one ceo says his company will not put that above merit. >> we are highly sympathetic to diversity, but we don't want that to override merit. i start doing that, i start overwriting the company's mission, literally, and that is not what our employees want from me because they are there for a reason as well. we do a lot of really constructive things around diversity, mainly creating real opportunities for real people, changing the trajectories of their life and careers, and we love doing that. i'm not the person who is going to make a lot of public pronouncements and have indictments about what is wrong with the world, but we are going to do very specific things that help real people connect to opportunity, and we can. for example, we work with

universities to help them shape their curriculum, so the people that graduate can be employed, either by us for other companies. these are very constructive, real things that have effect, you know? that's what i like to do. that's how i, this whole set of issues. emily: you're not worried because of the pushback of liberal silicon valley? x you know, i will tell you from my own experience talking to many ceo's, among other names that you know, privately, we are of the same mind. just publicly, they find it difficult to be that way. there have been some voices recently, a lot of people are sticking more precisely to what other people are thinking and believing, so i think we need to come to a more moderated, real place, rather than -- there's really no room for hysteria and outrage. we are ceo's, ok?

we run companies, and we have to put in results for our employees and partners and investors and customers, so you cannot get distracted in that mission. when you do, you might as well hang it up and let somebody do it. shery: let's not get to first word news with vonnie quinn. vonnie quinn. bonnie: the white house says it will send 20 5 million covid-19 vaccine shots to multiple countries across the globe to central and south america, africa, and asia, including hard-hit india. another 6 million will go to countries including mexico, canada, and south korea. despite vaccinating 40% of its population, china cannot yet open up because it cannot analyze how well it worked in its covid-free population.

china has used lockdowns and border curbs to prevent imported cases. u.s. infectious diseases expert anthony fauci says it is possible the world will never learn the origin of the coronavirus pandemic. he says he believes the virus jumped from animals to humans, but he says reports of researchers from a wuhan lab do lend credibility of a possible lab leak. hong kong will reportedly deploy police on the anniversary of the tiananmen square crackdown. police officially banned the usual victoria park vigils for a second year, citing covid safety

concerns. global news 24 hours a day and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: tesla shares tumbled after a report claimed chinese orders dropped by almost half. the stock was already down 30% from a late january peak. david welch joins us from our bureau. what was in this report and what more do we know about the details of it? david: this is the second month we have seen tesla sales drop in china. it has been a cue raise many antennae because they are looking to china. the stock was down 5%. sales were down 9800 vehicles in may from more than 18,000 in

april, and they were also down in april from march, so you see this steady trendline downward. there are some mitigating factors. we do not have the data yet for may, but in april, they exported 15,000 vehicles almost from their shanghai facility to other markets, so they are using china as an export factory, but you still have to figure that if they had a lot of demand in china, they would keep more vehicles there, and that is why i think the stock is down. the company is not really explaining this -- we do not know if it is all exports or they are losing some momentum in the market. it is difficult to decipher, but clearly, they are losing momentum in a market where they should be wanting to gain market share and gaining more customers and filling that base. haidi: plenty more ahead on "daybreak." this is bloomberg. ♪

>> it has been incredibly successful. it is amazing to work with them day-to-day. obviously, it is a big legacy, but i just focus on the work at hand, growing improving proving my skill set, and the rest, we will see what happens. we are seeing hotels start to improve, not back above where they were before covid, but

improving, so, yeah, it's getting better. haidi: daniel hendler speaking about learning to take over the ropes from his grandfather at australia's biggest apartment developer. you can catch the rest of the interview at 7:40 a.m. hong kong time on "daybreak asia." russia investigating the feasibility for large-scale green hydrogen projects. meanwhile, according to the union, the afr is reporting considering a play for a medical software firm's medical director. shery: coming up in the next hour, commonwealth bank's senior strategist with her outlook for

currencies. "daybreak asia" is next. this is bloomberg. ♪

shery: -- haidi: welcome to "day break asia." haidi: --shery: entered evening from new york. our top stories this hour. 59 chinese companies are accused of military or surveillance ties and am