>> a very good morning and welcome today break australia. we are counting down to asia's major market open. shery: the top stories this hour. the imf slashes the global outlook citing the ukraine war in china lockdowns with key concerns. haidi: u.s. equities rally as

treasury yields climb across the curve on command concerns. shery: netflix users log off and stocks fall 20% as it loses customers for the first time in a decade. impacting 200,000 customers in the quarter. no wonder we are seeing that downside pressure in after-hours trading down more than 25% at the moment. we are keeping an eye on the stock with u.s. futures under a little bit of pressure. the s&p 500 rose with a broad-based rally. every industry group rose except energy because it was under pressure on demand. not to mention the world bank had already done that earlier this week. in the agency -- in the asian session, we see a little bit of the upside. the 10 year yield also hitting a fresh three year high. and that sending the dollar over

higher for a fourth consecutive session. what was interesting was on the others, we were talking about the japanese yen. we have not seen such a long losing streak since bloomberg kept data since 1971. so we are talking about more than half a century or so. this has to do with a rate differential. we are waiting to see if the finance ministry in japan will actually intervene in the markets. we have seen global intervention so far, but traders haven't budged. we really have not seen japan come out and really sell dollars and by yen since at least 1998. the height of the financial crisis in asia. we have seen them try to weaken the yen and even that we haven't seen since 2011. but it's really are broad story about rising treasury yields, the rising dollar, and the weakness in the chinese yuan. it's at a six month low against

the u.s. dollar. compared to the dramatic move of the japanese yen, that's really nothing. but consider the fact that the you want -- yuan has been resilient. this move is actually huge and compounded by the fact that we have growth concerns over china. haidi: currency volatility is adding to the long string of wills when it comes to beijing policymakers as they deal with the lockdowns, the economic slowdown, supply chain issues, and the inflationary outlook. all of these reasons as well as the war in ukraine. reasons why the imf is cutting its global growth forecast for this year. we saw banks cutting their forecast. now the imf sees growth of 3.6%, markedly slower than the 4.4% that we had from the projection in january. it compares to 6.1 percent growth in 2021.

the inflation outlook is also key. the imf is seeing inflation from 5.7%. but the pain is felt in developing nations. so let's get a bit more on the worsening forecast and the inflation outlook for asian markets as well as the market impact that we expect to see in the day cost trading session. let's bring in kathleen hays across asset asia. we were to speaking with the world bank yesterday. what stood out from the imf assessment? kathleen: it's the same story. there are two big drivers. there's the war in ukraine and all of the reverberations. all the negative waves and surging commodity prices that wash over other countries that aren't even in the epicenter. but let's start with the epicenter, one of the big reasons the imf and the world bank has cut their forecast.

ukraine and russia. ukraine's economy is contracting. it's hard to make a reasonable estimation when an economy looks like this. 35%. that kind of damage and destruction will last for many years. russia not so bad, but nevertheless a contraction of 8.5%. you have financial sanctions, you have tighter trade restraints, you have all kinds of things. it might be a small rebound next year. if we look at raider europe, we see advanced europe with 2.8%. germany and italy being hit hard. that is the reverberation. look at china. china has a slowdown of 0.4% cut from 4.4%. china sees one of the major threats potentially to the global economy this year. it's not just that for china,

it's the shanghai lockdown, covid zero. but japan is another example. at the world's third-largest economy. there are surging commodity prices. their economy because forecast has been slashed to 2.8%. for the u.s., you were talking about this big jump in inflation , the forecast, i should say that the imf sees in this economic world outlook report. their forecast for gdp dipped a little bit to 3.7%. but it's all about fed tightening and not about the war in ukraine. although commodity prices are hurting consumers around the world. the market is braced for more aggressive rate hikes after the st. louis fed yesterday said i could see maybe 75 basis points if needed. not my baseline, but it's on the table. charlie evans is saying that he

is hoping inflation pressures will ease but he has concerns there, too. let's listen. charlie: obviously, if inflation for some reason began to re-accelerate, i think that would be a cause of great concern. on a path that included these nine increases by december, on the way to december, you would be looking for a confirmation of the storyline. kathleen: we did all these rate hikes year and inflation, that will be a problem. it certainly is. but you also have to listen to the atlanta fed president. the less hawkish members had a chance to talk today and he said he is wary of hiking rates too much too fast and cooling-off the economy. that is something the imf and world bank are concerned about. >> and we are seeing reverberations across the world

when it comes to a hawkish fed, global inflation. asian bonds are getting hammered. what is the outlook? andreea: look, that's right. the emerging market bonds in asia had up to this point been largely supported by more dovish central banks. we are seeing bonds from south korea to the philippines to thailand joining these global bond market routes. that's because the central banks in asia are starting to turn more hawkish. we have inflation starting to creep into this part of the world. and the central bank cannot afford any more pain. because they are coming out of this pandemic, to some extent, the economies were trailing in that part of the world.

what you are now seeing is this selloff in bonds in asia. they are singing this -- seeing this shrinking yield curve in asia as bond yields surge. to give you an idea of central banks in this part of the world turning more hawkish, you have the reserve bank of australia in their minutes saying that covid inflation and wage growth could bring forward an interest rate increase. at the last meeting, they dropped that. this is one of the most dovish central banks. they are also joining the most hawkish brigade if you like. >> a look ahead at what we are expecting in asian markets as trading gets underway. let's take a look at our asian

investors. kiwi stocks, trading is underway. trading flat at the moment. we are seeing sydney futures looking at a strong session. the upside is about .6% when we get into the cash session. the ai sex is trading at the highest since about january 4 or fifth -- the asx is trading at the highest since about january 4 or 5. we really see them leading that selloff and continue to reel. shery: investors are also trying to price in the latest from netflix shares tumbling post market after the streaming giant lost customers for the first time in decades of meteor growth. -- meteoric growth.

with markets being forward-looking, what happens in the next few quarters? >> we were coming into this quarter and we expected it to be a little bit weak, but this was beyond the worst expectations with them losing numbers, losing subscribers. you have the impact of russia, them losing about 700,000 subscribers. and now you will be cycling to a price increase in the u.s. look at their shareholder letter and it looks like there is really a fundamental slowdown. people are questioning if this is a pandemic move forward or if it is a structural streaming story changing. it really looks like the structural ecosystem itself has to undergo a change. >> in terms of the structural transformation that we are alluding to, what does the

future growth pathway for netflix look like? geetha: initially, pre-pandemic, we were looking at a company that was adding about 25 million to 30 million subscribers every year. during the pandemic, that number was inflated up to 40 million. with them losing subscribers, one really has to wonder how they are going to revitalize growth. they do talk about password sharing and being able to monetize some of that. maybe they add a few million subscribers. 100 million accounts freeloading on netflix subscriptions. maybe they will do that but that is a double-edged sword. again, it could elevate. whatever they do, they have to do it really carefully. i would think that they actually have to be much more dramatic in terms of the approach they take and maybe go for the first time and do advertising.

this is something that they stayed away from very deliberately. but now i think it's time to go back to the drawing board and revitalize subscriber growth. >> what do the results from netflix tell us about other media platforms and their performance this quarter? geetha: netflix is acknowledging that competition is having an impact on performance. every major media company has made a pivot to streaming. we just had the merger of warner and a discovery which creates an integrated hbo max discovery plus platform. that goes to tell us that this competition is going to get more and more intense. it also tells us if this is what it is going to look like for netflix, i really fear how it is going to look for other streamers, especially if they don't have scale.

the whole streaming picture looks pretty dark and pretty bleak. >> we have breaking news the bluebird. the justice department is to appeal the ruling against the cdc travel mask mandate. we heard the cdc and the department of justice were reviewing the mask mandate. the department of homeland security reviewing planes, trains, and other forms of public transportation. we heard that from the white house and jen psaki said it was a disappointing decision. we heard the justice department will be appealing that decision. this, of course, coming after the u.s. district judge in tampa, florida, vacated the requirement nationwide.

let's get you over to vonnie quinn with the first word headlines. vonnie: ukraine's army says russian forces are attacking along the line of combat in the donbass region. lotta ms. linsky says moscow has launched a new campaign focused on conquering -- volodymyr zelenskyy says moscow has lost a new campaign focused on conquering the area. allies have continued to ramp up sanctions against russia. sri lankan police say one person was killed and others were injured when police opened fire on protesters. officials say they fired live rounds in central sri lanka after teargas failed to disperse crowds. pakistan has appointed a new finance minister after key talks with the imf.

the appointment was confirmed via text message after cabinet members were sworn in. economic aid to the three-time premier, ismail will be responsible to steering the nation to the second-fastest inflation, dwindling reserves, and ongoing covid. global news 24 hours a day on air and on bluebird quicktake powered by 2700 journalists and analysts in more than 120 countries. on vonnie quinn. -- i am vonnie quinn. >> a country exposing structural weakness. >> and recession fears are overstated in the u.s.? but justified for europe? details ahead. this is bloomberg . ♪

>> there is a lot of uncertainty. >> global economic growth. >> growth is in a difficult place. >> tightening global liquidity. >> will they be able to retain margins? >> what is being said about current conditions? >> the market rather focusing on the hard numbers going forward will be more focused on the guidance.

>> this is a time for a defensive play. >> the worry is, what is the outlook for the next quarter or the rest of this year? >> i don't think, frankly, any of us know. >> let's bring in our next guest of that says they year-end rally may not materialize. always good having you with us. the earnings outlook at least so far seems to be rather positive. are you concerned about profit margins at this point? where do you see the opportunities in this more challenging time? >> profit margins have been revised from 13% to 12%. we are still above 10% which is the historical level. we need to remember that we have been up. last year, it was very supportive conditions. and even though we have inflation and interest rates, we are still above certain levels. globally from europe and asia

coming to the u.s., that is going to draw down the second half of the year. we believe we will see the beginning of next year. shery: where do you see the growth opportunities given we see more concerns about a potential recession coming in the u.s.? eva: so when it comes to recession, from a global perspective, europe is in worse shape. they are likely headed to a recession. they have increasing food costs, energy costs, the bread basket from ukraine is going away. and you have supply chain issues due to china's lockdown. do we think the u.s. will have a wrist session? we don't think so. we do think the odds are increasing. issues in europe and asia will

affect the u.s. but the u.s. is largely energy independent. it is not the biggest producer of food. -- it is also one of the biggest producers of food. the country factors to look at when you are investing in 2022 -- the u.s. will benefit from that perspective as well. shery: energy materials have been a favorite inflation play. what is your preferred exposure? you think energy stocks are starting to peak? eva: energy and materials are priced and elastic. we favor them but there is not a lot of movement. these prices have been built-in. what we favor more is health care. and there are very few pockets of opportunity, but health care has been moving. you always need health care

regardless of the price you pay for it. there are opportunities there. countries have factions overseas. nike has a supply chain issue. and you also have restaurant chains that are tracking rising food costs and rising labor costs. you have financials struggling. there are very few pockets of opportunity. and we need to look where there is pricing elasticity. shery: we saw netflix really shocking investors, streaming stocks getting dumped after that first lawson subscribers. -- loss in subscribers. when you look at what is happening in big tech, what are your favorite options?

eva: netflix to us was more of a covid play. we were not really positive netflix because there are better opportunities out there. what we are looking for our technology companies that can be beneficiaries of inflation. companies that are in the automation area or the outsourcing area. they will benefit. even more companies are wanting to automate their product. they are looking for automation, artificial intelligence, and these types of technology that will help them introduce tensions in the labor market. haidi: let's take a look at some of these numbers coming in from

rio tinto. it is shy of the 73 point one million tons that we were expecting. we were expecting shipment's between 320 million tons at 335 million tons. still to come on daybreak australia, this is bloomberg. ♪

haidi: let's get a quick look at the business headlines. a johnson & johnson sighting currency exchange headwinds. they shaved $2.5 billion of anticipated stories of the year. johnson & johnson dropped guidance. the pandemic waning in recent months. the financial times is reporting that blackstone has provided -- decided against elon musk and his twitter bid.

it comes after sources say a group is helping muska take the social media company private. coming up next, cutting the outlook from china. this is

vonnie: you are watching daybreak australia. the imf is cutting the global growth forecast while projecting even faster inflation in china's renewed virus lockdown. it now sees economic expansion slowing to 6.3% in 2022, down from a forecast of 4.4% in january. fund also -- the fund also sees inflation remaining higher for longer. >> it is a clear and present

danger for many countries. even prior to the war, it surged on the back of soaring commodity prices and supply demand imbalances. many central banks like the federal reserve had moved toward tightening monetary policy. more related disruptions amplify those pressures. vonnie: atlantis had president has warned against hiking rates too far beyond neutral. policymakers should not act with such vigor that they harm the economy. the chicago fed president says inflation is likely to force the fomc to raise rates by next year. british prime minister boris johnson has apologized to the u.k. parliament for breaking lockdown rules that he devised. he said he did not think at the time that he had done anything wrong. he apologized for attending the downing event -- downing street event on his birthday. the police are conducting

investigations into other gatherings during lockdown. >> not by way of litigation or excuse. purely because it explains my previous words in this house. that it did not occur to me then or subsequently that i gathering in the cabinet room just before a vital meeting on covid strategy could amount to a breach of the rules. i repeat. that was my mistake and i apologize for it unreservedly. vonnie: global news 24 hours a day on air and on bloomberg quicktake powered by 2700 journalists and analysts in more than 120 countries. haidi: let's get back to the imf report. it is cutting china's gdp growth estimate to 4.4% from 4.8%. that is about -- that is from

the government's target of about 5.5%. kathleen: i'm very happy to welcome helga berger, the imf's director of the china division. he is the one who we are going to hear all about the chinese economy. it is great to be with you in person in washington again. thank you for joining us. it's not an upbeat time for the global economy or for china. where do you think the economy is now in china? they have the 4.8 gdp forecast. people say that is backwards looking. we are looking at weaker numbers which would probably underscore the consumer spending numbers we got recently as well. what is the trajectory for china's economy? >> momentum is pointed down. some of that is reflected in the q1 numbers that were quite positive. january and february were strong

but march is pointing down. it continues through april. consumer spending, the ukraine war has ramifications for china as well. energy prices are very high. and we have an ongoing issue with the real estate sector that is still in crisis. we have an undercurrent. kathleen: how much weaker will it get? and what will determine that? there is a lot of question about the shanghai lockdown, the shenzhen lockdown. will there be another variant? property markets are weak. there is a long list for china. what is your sense of how this is going to play out in the next six months? helge: our forecast is out there and it has come down quite considerably. we started at 4.8 in january for gdp growth. we are down to 4.4. it's because of the factors you just listed.

all three of them, real estate, the ukraine war and global energy market, and the domestic covid situation could get worse. so these are all drivers. there are also risks going forward. kathleen: asymmetric. you are not looking for a big rebound. it really stands out in the world economic outlook where you talk about the big drivers. right there in the top four easily is china's slowdown. why at this point of time is china's slow down so important for the global economy that you place it with the war in ukraine? helge: a lot of headwinds the world was facing together. a large economy like china when he down rather than up is an issue -- pointing down rather than up this issue. there is increased support on the monetary side as well as

when there is more room for activity. kathleen: does the pboc need to do more on the monetary policy side? people keep waiting. we got the rrr cut. maybe people are looking at the loan prime rate today. what good does it do to provide liquidity or credit? they can't operate because they can't get to the factory. helge: good question. there is more coming. we have heard communication. but i think it is really up to fiscal policy to step up. we have room for fiscal support that focuses on household support rather than traditional infrastructure. haidi: i guess when you're talking about fiscal support, we have seen a big step up already

as this chart on the bloomberg shows. i wonder how much we can really do given the pressure from the local government side of things. helge: i think china is giving on the economic circumstances. which is still helpful to provide additional fiscal support. if you do it right, there will be less spending to achieve the same goals that you do with the wrong spending. household support is critical. households are affected most by the covid situation. we know consumption has been fairly weak. there is a lot of scope for support to be very effective had i think that is the important part. shery: at the same time, the gdp is starting to rise as well at a debt is growing faster than gdp

in china for the last couple of years, particularly when it comes to long financial corporate's. is that a concern? is this creating more of those longer-term systemic risks? helge: you always want to be watching the balance sheet of firms. but currently, i think it is a lack of demand. that is where macroeconomic policy is. it's not so much about regulation or about other issues that you may be worried about. fiscal policy can and should be stepping up. kathleen: what kind of steps should the fiscal policy consist of? we got the 23 steps announced in the last 24 hours. they seem to be aimed at helping small businesses, consumers, the economy dealing with the impact

of lockdowns. which china hopes are temporary. are they on the right track? helge: our understanding is that it is an agenda for regulators and the pboc. they are rightly focused on providing support for small firms. fiscal policy has help households. households are vulnerable to shortfalls in employment. we have seen unemployment surge upwards in march. somewhat surprising, but here we are. fiscal policy can help by investing in the social protection system. there is a lot of room to improvement and holes to fill. there are adequacy issues that can be addressed. it will also help going forward, helping with the balanced recovery. kathleen: the international monetary fund's division chief for china. and it is certainly a big job.

and we look forward to seeing how this turns out. helge: thank you. kathleen: back to you in our new york studio. we will continue more on the international monetary fund and more about this big, big change in the outlook for the global economy. haidi: some of these seismic shifts we are seeing. don't miss out on another key interview with the imf and the next hour. we will be joined to talk about all of these moves and the volatility of the yen with the outlook of the japanese economy. shery: the global forecast being downgraded and that is seen in commodity spaces as well. it is really pressuring crisis. we have seen sugar fall more than 2.5% in the last trading session. this after surging more than 20% in recent months. this as we continue to see

concerns about the supply disruption. the concern about extreme weather in different parts of the u.s. and south america. orange juice is falling as much as 11% as one point. that would be its worst day since 2010 over concerns there may not be as much demand out there as had been expected given we are seeing the economic concerns as well. and coming up next, china saying it signed and -- a security agreement despite pressure from australia in the u.s. to reject. -- to reject it. we will have more on that next. this is bloomberg. ♪

shery: you are watching daybreak australia and time for morning calls from global strategists. coming to by both growth and value stocks. markets are two bearish -- too bearish. investors should build a portfolio with tech, biotech, and innovation stocks combined with metals and mining. hedge funds diversifying portfolio's given the market volatility according to ubs global wealth management that says the funds do better in times of stress.

ubs recommends exposure to private markets and direct real estate for long-term investors. haidi: take a look at what we are seeing across australia and new zealand, both of those sovereigns taking a tumble across every part of the curve pretty much yesterday as we saw asian bonds trying to play catch-up with treasuries overnight. and after the four-day weekend as well. a bit of downside when it comes to the three year and 10 year yield down by just over 2.5%. we are watching the aussie dollar as well, just under $.74. there has been volatility in the currency. if you look at the support trendline, it looks like that level at $.73 could give some momentum, an indication that we are seeing overselling. take a look at the equities side.

it has been a robust string of sessions when it comes to trading for australian sock -- stocks. the a sx -- asx trading the highest since the start of january. we expect a pretty strong session today given the futures are indicating an upside of .6% on the back of the s&p rebounding. investors still continuing to look at the inflation outlook as well as what the fed will do. turning to china, beijing says signs of a security agreement -- australian voters are turning their backs ahead of the upcoming federal election. the australian government -- we are joined. we did see this packed -- pact in china being signed.

ben: this is the worst case scenario for australia and the u.s. they have worked for years to avoid the chinese government to get a security foothold in the pacific. now that has come to pass. the big factor on both sides is the spike is still being signed. we do not know what is in the agreement. in the original draft that was leaked, what was in the agreement was that the chinese government would have the request of the solomon islands sending troops to help with domestic unrest. this comes after some businesses were burned in the solomon islands. there was a provision that would allow chinese military ships safe harbor in the solomon islands in the event they needed it which would effectively give the chinese government a safe harbor for their ships just 2000

kilometers from the australian close line -- coastline which is very worrying. they say this is the worst foreign policy failure in 80 years. >> it is such a crucial time of the australian elections, so what does the first week of the campaign look like? ben: it has been a rocky start. what polls are currently showing is despite there being a big early lead to the labour party, that has really shrunk. we are seeing voters turning away from both the government and the opposition. and turning to minor parties like the australian green who are at about 12% and the far right one nation party at about 4%. if these results came to pass on election day, what we would see is a minority government,

probably with labor and liberal parties forming government. >> coming up names, -- coming up next, big names in private equity are helping fund elon musk's twitter takeover. this is bloomberg. ♪

>> a quick check of the business headlines this hour. sources say affirmed try to expand selling based on inflation trading businesses and the plan backfired. u.k. consumer prices surged to a 30 year high driving volatility in the markets. the ceo of credit suisse is stepping aside after more than two years on the job -- less than two years on the job. he has informed management he is pursuing other opportunities within the company. his new role has not been finalized. his exit comes on the heels of a shakeup. the singapore start up is said to replace their ceo amid an investigation into the firm's accounting practices.

they say directors have been holding regular talks to consider the future. it is backed by sequoia capital india. companies are lining up to broadcast cricket. amazon, disney, sony, and reliance industries are among the firms to purchase bids. it is the world's third biggest sporting event by viewers. over 380 million people watching matches last year. shery: take a look at the after our movers we are watching. the streaming platforms, especially netflix losing more than 25%. they really cratered after they lost 200,000 customers in the quarter. they expect to lose another 2 million in the second quarter. that is not really looking great in terms of what to expect for the rest of the year.

you can see the rest of the peers like disney and roku down about 4%. asset management equity partners have decided against providing equity funding for elon musk's bid to buy twitter. let's get more from sarah frier who heads bloomberg's big tech coverage. sarah, what is the region -- the reason for the funding of this buyout? >> this is one of the largest leveraged files in history. we also reported that apollo is still interested. but it is going to be a few days before we hear whether elon musk has secured funding for this possible deal.

he offered his share price to twitter and offered to do it, but he said he may not be able to pull it together. he may not be able to get the backing he needs to pull it off. so we just have to watch as he reaches out to contacts, reaches out to various private equities. his own investments. >> we know there are other options. but it has been on shaky footing. >> there is a lot of hesitancy in the market price. the markets did not really shoot up in price. it was clear that he didn't have the cash on hand. he would have to make a deal

using other people's money to get there. he does not have a lot of liquidity good to go. there was skepticism about getting this to go through. if he does not complete the deal for twitter, he might pull out his nearly 10% ownership stake. that could have an effect on stocks. >> sarah frier heads bloomberg big tech coverage and the latest on twitter. take a look at some crypto assets right now, bitcoin gaining ground for a third consecutive session. it is still above the 3000 level. this has we continue to see crypto assets struggling along with risk assets in recent months. they recently came off that one-month low, still within that trading range of around 35,000 to 45,000. we are watching the optimism,

warning rivals not to ignore blockchain. the ecosystem building around crypto is, in his words, nothing short of them aging -- of amazing. haidi: we know investors have backed crypto and embraced that risk. they are passionate about the entire asset class. but if the investors are raising eyebrows and doing double takes, we continue to see broader market angst. this is according to pitchfork data. but a lot of these companies are less than a year old and giving some potential back. we are talking about prominent investors like softbank ringing the alarm bells when it comes to these valuations. coming up in the next hour,

don't miss out on another key interview when it comes to the state of the global economy. the imf japan chief will be joining us to talk about yen volatility in the outlook for the japanese economy. that is it for daybreak australia. daybreak: asia is next. this is bloomberg. ♪

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haidi: a very good morning. we are counting down to asia's major market open. shery: welcome to daybreak asia. our top stories this hour. the imf cuts global growth outlook and warns of risks from central banks tightening. we will discuss with the japan mission chief. investors look at a surfer treasury yields