haidi: a very good morning. we are counting down to asia's major market opens. shery: welcome to daybreak asia. our top stories, the fed says inflation and geopolitics are clouding the outlook as traders price in half-point hikes at the next two meetings. asian stocks set for a steady start with treasury yields tumbling from this year's high. tiny equities set for more pressure.

tesla posts a record quarterly profit but says supply chain will persist through the rest of 2022. i'm sorry, i jump to the gun. [laughter] haidi: i just wanted to remind you the big inflation print we got from new zealand. what does this mean for the rbnz going forward? you would not think he has been more hawkish than the past three weeks after that biggest rate hike in 22 years, but there we have it. we have inflation numbers coming through. 6.9% was the fastest and 32 years. take a look at the trading when it comes to the kiwi dollar as well as the trading pay out when it comes to aussie kiwi. the mist when it comes to first quarter cpi. markets were expecting and even faster rate of inflation than what we got of almost 7%. that will give the aussie dollar a little more of a shove in the direction of a dollar 10 and potentially higher after the cpi mess. the rbnz is likely to raise

rates again but that could also mean the terminal rate is tweaked lower should we see this sense that the inflation trend could be peaking. the kiwi rates are slightly lower after that data. look at this set up when it comes to the equity session. we are seeing another day of pretty good gains in-store when it comes to australia. we have that market trading at the highest since january 4. the 10 year yield is seeing a little bit of a movement. as well as new zealand equities trading software by about .1%. watching some big miners today, particularly after bhp came out with iron ore outlook, pretty much in line with expectations. also watching dollar-yen. we actually see some strengthening when a comes to dollar-yen after so much volatility and the strenuous pace of weakening when it comes to the yen against the dollar. we will be very watchful in terms of any further signs of

verbal intervention or moves by the dlj. shery: i was way too excited to show you this. u.s. futures rebounding after really a session in new york where you saw swings between gains and losses throughout the session. even the nasdaq futures rebounding. it was a bad day in new york. netflix missing on earnings. watching treasury futures as well because this was another reversal. we had treasuries rallying with a 10 year yield rising towards a 280 level. given we have more money managers now thinking inflation could be peaking. bank of america now saying there are perhaps opportunities in the bond space. we are seeing wti muted but this after edging slightly higher in the new york session. of course we have seen germany implement the russian oil ban, not to mention u.s. inventories dropped sharply. but the exciting part of the trading session right now is after hours, because take a look at tesla, gaining almost 5% after they beat on those

earnings. and we continue to see the market rallying right now, especially united airlines, because they are not expecting to return to profitability. they were saying that travel demand has been rebounding, although the caveat is about one hour ago heard from the cdc again that travel mask ruling needs to be implemented again, so the doj will be appealing to that ruling that dropped the mandate. we are still seeing pressure on netflix, but after a 35% loss in the new york session after their first subscriber decline in about a decade, they lost about $54 billion of market value in their biggest drop since 2004. haidi: yeah, that price target sitting at around $300 on consensus at the moment, huge drawdowns when it comes to expectations. let's get back to tesla, it was the bright story today. it warned supply chain will persist the rest of the year, although elon musk says he plans

to rapidly expand manufacturing capacity. >> we're very confident of a 30% growth in vehicle production in 2022 vs. 2021. i think we actually have a reasonable shot at a 60% increase over last year. haidi: let's bring in ed ludlow joining us from san francisco. there was a lot of good. record quarterly profit, surprising sales. we got a tease of the robotaxi everyone is so bullish on. ed: you have a backdrop of continued supply chain pressure. raw material costs were haidi first quarter and rose in the second quarter but they were able to use raising prices as a lever. for the first time automotive gross margins excluding regulatory credits were above 30%. record operating margins of 19%. they are able to control what we are seeing with global inflation because of the demand picture

that is sustained. the difficulty is in areas like shanghai, where they have had to shut down production. they have since restarted, and despite the disruption, elon musk was super bullish that we would see record deliveries in this current second-quarter if they are able to pull a rabbit out of the hat, quote-unquote, but definitely in the third and fourth quarter. there is all these forward-looking statements. a robotaxi version of eight tesla vehicle, no steering wheel, no pedals, to be in volume production by 2024, the cyber product in 2023. the rest is about the reiteration of the annual 50% growth rate, elon musk said they are on track to hit that every year from here on in. in 2022, they could even get as high as 60% growth rate. shery: ed ludlow with the latest on tesla. of course we are seeing big moves in the markets with treasuries rallying as investors

debate if possible inflation peak and whether the bond selloff has gone too far. markets also digesting the latest fed beige book survey. let's get more from andreaa and kathleen. of course we had u.s. real yields turning briefly positive but right after that we saw this treasury rally. what are we expecting >> that's right. we are seeing a dramatic repricing and rates. that is what we saw last night. that is as several investors have come out and said perhaps the bond rout is now overdone. let's start with bank of america saying 10-year treasury yield are offering an attractive level. it's seeing an inflation peak in march and it expectson -- the 10 year to retreat to 2.25%.

it is now around 2.8%. another one saying rate hike expectations are now overdone. it is barely going to drop in u.s. breakevens, which are near rake it -- near record highs. it also expects a rally in german bonds. it sees a likelihood every session in europe because of the war in ukraine. another one saying this double when he of rate hikes and the fed -- this double whammy of rate hikes -- while the short end barely budged last night, which is not surprising given we are expecting aggressive fed rate hikes, again, investors say cash could start coming into the short and, it could be a -- the short end.

it's pretty much priced into the short part of the curve. haidi: what is the key take away from the fed survey? kathleen: headlines on the beige book is the every couple of month survey it does getting anecdotal evidence. it prepares all the fed governors and bank presidents to know what is going on in the ground in communities around the country. the headline is there is more uncertainty around geopolitics and inflation. but the conclusion is moderate growth. when you look at the details, which we are showing you now, it sounds like a lot more than moderate growth. labor demand is strong, hiring being held back by lack of workers, wages being pushed higher. inflation pressures remain strong. manufacturers are seeing spikes in commodity prices allude to the war in ukraine but energy prices were already rising before that. consumer selling is accelerating.

even with this uncertainty it looks like fed officials are ready to start raising rates progressively, even aggressively. mary daly from the syrian for cisco -- from the san francisco fed says she sees a solid case for the 50 basis rate point can may c321e . vonnie: vonnie: . in terms of the imf, i am in washington covering the spring meetings. what they are calling for today is let's help ukraine. they need $5 billion a month and financing just to support themselves at a time when they are under fire and the economy is under stress. haidi: the inflation debate globally continues and there seems to be a growing call of economists wondering if perhaps

we are nearing peak inflation. look at the new zealand cpi numbers that came through for the first quarter. the fastest and 32 years. 6.9% for the first quarter but still missing expectations. we see that weakness when it comes to the kiwi dollar. it is hard for policymakers right now to be able to watch the data but also not move too slowly. kathleen: it is true a lot of this is commodity prices. prices will not rise as fast as they have indefinitely. when they level out it pushing inflation higher. the other thing is even if this is peak inflation, how quickly does it come down as it stays at these high levels. do inflation levels get entrenched? that is what so many central bankers are afraid of. the third point is if you still have your interest rates so low just coming out of a pandemic driven recession and your economies are getting stronger, is it appropriate to keep them there? it may be peak inflation but it doesn't mean central banks will

not continue to raise rates. haidi: we are going to have more big conversations from the imf meetings for us. martin kaufman will be giving us his outlook for the country after its leadership change, plus sri lanka's finance minister telling us what is next in the country's push for imf made -- imf aid. let's get you to vonnie quinn now with the first word headlines. vonnie: the biden administration is expected to announce another 800 million dollars in weapons and support for ukraine. sources say the money will come from the president's job down -- this is the imf called on nations to provide grants and donations to fill a $5 billion a month financing need for ukraine after russia's invasion. u.s. secretary -- janet yellen and others walked out of the g20 meeting after russian officials began speaking. jerome powell, christine lagarde, andrew bailey, and the

ukrainian finance minister also among those who left or turned off their cameras when russian officials joined virtually. russia is on course for its first external default in more than a century. the country was judged to have breached the term of two bonds by derivatives panel afterpay did in rubles instead of dollars. goldman set -- after it paid them in rubles instead of dollars. they could still avert a default if they pay in dollars before may 4. the philippines will await the actions of major central banks before setting a course for rate rises as the central bank says uncertainty is cloud in the outlook for inflation and growth. the finance secretary carlos dominguez spoke exclusively to bloomberg about whether the bsp can comfortably keep its key rate on hold for the first half. >> we will have to watch exactly what other countries do, particularly the u.s.

we don't want to be behind the eight all here -- eight bal lhere, because if the u.s. raises rates, people in the philippines will of course want to follow those rates. so we have to make sure that we rebalance our needs. the need to grow, the need to fight inflation, and the need to preserve our capital. vonnie: 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. shery: still ahead, we discussed how the lockdowns in china have impacted tesla's supply chains, and the road ahead after earnings that beat estimates. but next, global investment firm aberdeen says energy and metal stocks are still attractive. this is bloomberg. ♪ is bloomberg. ♪

>> i see an expeditious march to neutral by the end of the year as the current path. >> the ideas we are going to have to move the path because the inflation is much higher than they were dealing with in 2019. but they will bring it back down. they will come up and back down if they have to. so yes, they will have to move higher than what people may feel a short-term rate is what economists believe and i think their data shows it. shery: the bank of america ceo and san francisco fed president mary daly. our next guest expects equities to outperform bonds. joining us is ray sharma-ong. ray, good to have you with us. we have seen more money managers

seeing some opportunities in the bond space. we have bank of america saying the 10 year actually is a good buying opportunity, that it's a compelling long and they expected to retreat to 2.25% or so. what do you make of this? ray: yes, thank you. i do think there is still some risk and it is not over. there is a key factor that has not been fully determined, which is variables around quantitative tightening. so, we do still see some risk of 10 year yields pushing higher on the back of this. the 3% handle as possible. with the unknown still out there. but post that, once the announcement on the pace, size, duration, and how fast he tightening will take place, perhaps it will signal some sort of peak. shery: at least for now than, does that -- now then, does that

mean you are still positive on the strength of the dollar? ray: definitely. we're positive on the strength of the dollar on the back of some risk-off sentiments for the dollar as well as the interest rate differentials. a lot of the other central banks will follow once the fed moves. and they will favor the dollar. haidi: how fully invested would you be in this environment, given the breadth of uncertainty? do you have preferred ways to try and hedge some of that risk? ray: in terms of positioning right now, the preference is to remain neutral where equity positioning is concerned. risks there have been clearly documented. geopolitics on russia and ukraine, inflation not easing as fast as expected, as well as the fed potentially going into overdrive and pushing the

economy to recession. given these risks, remain neutral. but there needs to be a focus on quality, focus on earnings, as well as allocation within equity and metals. we see earnings being important. given elevated prices in energy and metals due to the conflict in russia and ukraine, we believe the earnings dynamics within these companies will remain very strong. haidi: to what point do you see the yen weakness stopping? because you look at the fundamentals when it comes to that divergence, and it is hard to see. ray: within the yen, despite officials coming out giving some global intervention and some retracement over the last few hours, we do believe the yen can potentially push to 135 to 135. the pace of appreciation has

been so fast and there has been a key shock to consumers and importers locally. however, if it continues this current route, perhaps a potential political issue will arise on the back of the japanese going into july. currently given nothing physical has been done, there will be monetary divergence. japanese yen weaker than the rest of the world, and japan is highly vulnerable to commodity driven inflation. so we do expect the yen to push to 130, 135. perhaps more intervention will come, but we don't see anything now. shery: what about the chinese yuan? because we are not seeing as much easing as we had expected coming from china as of yet, and yet the currency is now at a six month low. ray: the weakness has been driven by two key factors. for macro, there's a lot of

concerns around whether the chinese government is able to deliver on target, which is their target of 5.5% gdp growth this year. headwinds from covid, headwinds driven by their own conflicted covid strategy will cause a drag on that front, pushing the currency weaker. the second is, as you have highlighted, policy support has not been a good option. policymakers have been behind the curve. what they have developed has been fairly underwhelming. case in point, the markets expected a kate -- attend basis point cut that did not happen. the only delivered half. policy is lagging. growth will likely be weak. therefore, the chinese yen to remain for the time being. a lot needs to happen in markets before the haps -- but we expected it to be fairly

strong once they come in. haidi: great to have you with us. you can get a roundup of the stories you need to know to get your day going in today's addition of daybreak -- today's addition of this is bloomberg. ♪ his is bloomberg. ♪

haidi: credit suisse has issued its fifth warning in six quarters. the bank says it expects to post a loss for the first quarter citing the war in ukraine and growing legal costs. they are facing a $210 million charge related to its russia exposure as well as a $630 million in legal provisions from previously disclose cases. the ceo of amazon web services says his unit could look to expand its market share with

acquisitions and there are no plans to spin out from amazon's main business. he said the cloud market still has room to grow, and aws is open to deals of all sizes as it looks to maintain his lead. >> we have no current plans to spin off aws. we think our customs are very well served by having aws be part of amazon. in fact, an increasing number of the conversations i had with particularly big enterprises, they want to make use of the capabilities that amazon has across the company. haidi: bloomberg has learned blackstone is looking to raise as much as $7 billion worth latest green energy fund. the firm is discussing the new fund with potential investors and is targeting returns of at least 13%. blackstone has a commitment to invest $100 billion in green projects over the next decade. shery: tesla continues to gain ground, more than 5% after hours

after reporting those profits and sales that beat estimates. this of course, even despite the fact we saw supply chain issues continuing for the company. united airlines also doing pretty well. they expect to return to profitability in the second quarter, overcoming their first quarter loss. travel demand seems to be rebounding. netflix slightly down after losing more than 30% in the new york session. they raced more than $50 billion in market value after reporting the first subscriber decline in more than a decade. watching the bond space as well, because treasury yields just fell. we saw that collapse, at least in the long and of the curve -- long end of the curve. right now you're watching muted moves in treasuries. we are watching the korean three year yield as well because it is hovering around the decade high and reached last week. getting trade numbers out of south korea in the next hour. in the meantime we are watching

kiwi yields falling for the first time this week as well. plenty more to come on daybreak asia. this is bloomberg. ♪ this is bloomberg. ♪

>> this is daybreak asia. the u.s. economy growing steadily but high inflation is clouding the outlook. rising costs are being passed on to consumers. interest rates are seen to be raised to neutral by year end. >> i see toward neutral by the end of the year. >> wimbledon has barred russian

and belarusian competitors in response to the war in ukraine. the atp called the decision unfair and that the tournament should be based solely on atp rankings. should boris johnson face parliamentary decisions over the party gate? the government says it should be delayed until police finish inquiries. the u.k. cabinet office premises a full report. india's capital has brought back a mask mandate and testing of new variants. the omicron xc variant has been detected. they have reported more than double what they reported last

week. sri lanka is seeking loans from several nations. india is providing assistance and they will speak with the chinese investor thursday. they are also talking with japan as they look to raise $4 billion in emergency funding. 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. this is bloomberg. i am vonnie quinn. haidi: commodities space, energy prices, wta trading like this in the early part of the asian session. new york crude is looking flat. low supply concerns are offsetting a cloudy outlook. we are not seeing much in terms of pricing dynamic. it edged high after a tumultuous session. worries about global supply.

germany has banned russian oil. a drop in u.s. crude inventories . we are just above the $102 level. this is the picture as we monitor the commodities at the center of the u.s. commodity boom, accelerated by the invasion in ukraine. we are watching european gas. price swings as ruble payment demand in focus. corn up one and 3/10 of 1%. the demand over food prices is spurring huge price moves and corn is getting the upper hand in that dynamic. shery: rising food prices are

not helping emerging markets. developing economies have not had to confront these sorts of dynamics since the 1990's. eric martin joins us for more. who are the most vulnerable right now? >> we have identified a number of countries. 13 countries are currently trading in distressed territory. that is up from six one year ago. thinking about how many pressures were on some countries coming into the russian invasion with all the mounting debt from covid and the spending countries did to help provide livelihoods and health care for people. this has been compounded by the

additional pressure from food and energy prices. the imf talked today about the poorest countries in the world spending 60% of their income, people spending 60% of their income on food versus 10% in developed nations. this is putting pressure on government about choosing to add to the debt and going to subsidies and helping the most vulnerable people and their nations. haidi: rising inflation, food insecurity, rising food prices. what are we staying with sri lanka and pakistan? >> a presta -- a protester in sri lanka was killed.

increasingly violent and intense unrest in sri lanka. questions around government stability. but this is not limited to sri lanka. we have seen this in other parts of the world in terms of protesting in the streets. peru and latin america. and in the middle east and north africa, egypt for example depends on imports of wheat and food from ukraine and fertilizer from belarus and russia. a decade ago, the arab spring example. some pressures we are seeing now are in countries that experienced government change then. egypt, tunisia. so a lot of the same stories are repeating themselves a decade later in terms of discontent and

upheaval. shery: the world bank says a new process of restructuring debt burdens is needed as concerns grow about how much they owe china. >> we can help with data. we can help with supply chains. we can provide trade finance which is important in moving around goods. we can encourage countries to find new sources and realize they need to move quickly in order to increase supply. and we can encourage the advanced economies to do everything they can to release excess stock and make more product. they have huge production capacity and i think if they communicate that, it will help with world pricing levels. >> time has become incredibly

important as we talk about hunger. the average is half the income of every household goes to spending for food. sri lanka stopped paying debt payments as a result for their need to buy food and fuel. how much do you see this becoming a routine issue at a time where it sri lanka says imf aid will take six months, which will be tough for them? >> different countries are in different positions. sri lanka waited in order to tackle their debt problem and they continued making debt payments which drained resources. other countries have different problems. each one unique. i was in romania and poland last week. they face changes in energy supplies in europe.

the world needs a resolution process for debt that is more robust and starts earlier than what we have now. had a meeting this morning china was called to convene a creditors meeting for zambia. that would be helpful because they stopped paying creditors over a year ago and still does not have a pathway to a debt resolution. i think the world needs to work hard to provide the path. >> what are the obligations from the developing world? how much is owed to china in terms of loans and other debt? >> not all the data is transparent. the world bank puts out numbers on it. there are different ways to cut it so you have to be careful.

the official debt, china is 65% of the total amount owed to creditors of official credits, meaning government to government credits. that is one type of data. shery: looking at the current speedy -- current seat -- currency space now, u.s. real yields turned positive briefly last session. the euro is unchanged at the moment. we saw solid earnings in europe that supported risk assets including equities overnight. we are watching the japanese and chinese yuan which saw the biggest move against the u.s. dollar. we saw pboc set a fixed rate

lower which led to more selling in the offshore space. the japanese yen is falling for a 14th session at of 15. it rebounded in the last session but that is not being reported, especially because that boj had to come back in and cap the yields. we are seeing them trading at the lowest and weakest in more than two decades. haidi: we have interviews coming up from the imf meetings. we will get the outlook after leadership change and sri lanka's finance minister will tell us what is next in the push for imf aid. next, we will break down some numbers. and looking at highly

anticipated robo taxis. this is bloomberg. ♪

shery: we are tracking the fallout of the global supply chain crunch. a short squeeze on nickel prices have eased, opening a window for flows into china where supplies remain tight.

booming demand for animal fat is leading to big pay raises for traders. the niche market is hot with the war in ukraine disrupting energy supply. and tesla's better than expected first quarter includes a warning on supply chain challenges. construction is still -- production is still constrained. we will break down the earnings numbers in a few moments. haidi: tesla and competitors in extended trading. this is what we see. tesla, good news. sales across the board. pretty uneventful call from elon musk. a lot of uncertainty including rising material cost and concerns about supply chain.

tesla and elon musk suggesting it will be sticky for some time. moderate gains across other automakers. gm, ford getting a boost. tesla is the first of a number of big automakers to report their numbers in the u.s. and we are seeing potentially less upside from tesla given that we saw broad destruction from the tech craze overnight. netflix really driving down overall names across the nasdaq. bloomberg users can get more about this. elon musk said he still expects to rapidly expand production. >> we are confident of growth in

2022 versus 2021. i think we have a reasonable shot at a 60% increase over last year. haidi: let's get some feedback from an equity analyst. there was a lot to like out of that call. the numbers, the prophet to bid on sales. -- profit, to bid on sales. what stood out to you. >> elon musk showed that tesla coo record profitability when his factories were running pretty smoothly for most of the country -- most of the quarter. a high watermark from a profitability standpoint. likely to dip in the second quarter before rising.

it shows tesla is achieving scale as it ramps up production volume. haidi: looking at the automotive growth margin chart, steadily rising. some suppliers upping their costs by 30%. we had ongoing supply chain shortages with chips. can this be sustained, given that they have flagged to the supply chain price issues will be sticky? >> by the end of the decade i think they will reach the high 30% use of manufacturing and structural improvement that will allow --

that will lead to less welding and overall cost of production. and a having pricing power to raise prices and for tesla profits, it is set to grow as values grow. shery: do you still have the cell: tesla with a 700 target? >> i do. well i see a bright future for tesla i still think they are not likely to reach the 20 million vehicle delivery target soon. i do not think they will surpass toyota. it will be in the top 10 but i see a smaller market for tesla, mostly in the luxury auto sector versus toyota or volkswagen who sell to all consumers.

shery: we will continue to see this musing by elon musk about the company grading upstream to lithium. >> if it integrates upstream it would likely come from buying a lithium company. whether that company is still developing projects, tesla does not have that area of expertise within the company. so if it did that it would likely lead to higher profit margins from being a lithium minor -- miner but i do not think it will necessarily allow them to sell more cars. i think tesla will be a luxury auto compared to some of the cheaper autos competitors are coming out with. shery: and the teas about the

robo taxi. haidi: so many analysts are bullish on tesla. are you excited about this from what we know so far? >> i think it is still a work in process. there is an opportunity for tesla to sell the robo taxi and offer it as a product to consumers but they will likely face competition. i don't think it will be a situation where tesla gets this autonomous technology working and suddenly dominates the market. i think we will see other automakers and rideshare companies like google or left u --ber o -- uber or lyft, even if the technology provides -- proves to be successful. shery: next, bank of america says u.s. consumers holding up wealth. our conversation with a ceo is

next. this is bloomberg. ♪

shery: brian moynihan, bank of america ceo says inflation is rising but america is holding up

well. he spoke with david westin. >> this is a strong labor market. employers cannot get enough worker, which bodes well for employees getting more pay. we will see how it plays out but this is a different place to start from. >> a very strong labor market. what about the housing market? you were down a little bit in residential mortgages. as rates go up, i guess people are less likely to borrow money to buy a house. >> as rates go up the cost of the mortgage goes up. 1% is $2000 more per year. so this affects affordability. but people make a mistake

thinking this market is a major contributor to the economy. what drives the housing is construction. there is still a lot of demand and housing. there is a housing shortage in many areas. tens of thousands of units of workforce housing need to be built in charlotte, boston, and new york. that will hold up the housing market. it was growing fast pricewise. it will potentially slow down. it is growing three or four times the normal rate usually grows at. but everything ebbs and flows and that is what the fed will try cooling down with the rate hikes. >> you mentioned the issue of inflation on customers minds. how do you see that expressed in

economic activity? compressed immersion -- compressed margin ratios, for example. >> we are not seeing people buy less things less. because of shortages, they are willing to pay the price. so transaction volume has gone up 8%. the dollar volume is going up higher. the corporate world is making good profits. you see on corporate earnings. they are handling the shortages and inflation. it cannot go on forever that way. that is why the fed has to bring inflation back in line because that spiral is not healthy. but it takes rapid movement to move the price. haidi: shanghai cases and death

numbers are coming through for today. just about 18,005 hundred local cases for wednesday. eight new covid deaths reported -- 18,500 local cases for wednesday. eight new covid deaths reported. this is bloomberg. ♪

♪ ♪

♪ ♪ ♪ ♪ ♪ ♪ (announcer) enough with the calorie counting, carb cutting, diet fatigue, and stress. just taking one golo release capsule with three balanced meals a day has been clinically proven to repair metabolism, optimize insulin levels, and balance the hormones that make weight loss easy. release works with your body, not against it, so you can put dieting behind you and go live your life. head to golo.com now to join the over 2 million people who have found the right way to lose weight and get healthier with golo.

shery: way welcome -- welcome to daybreak: asia. haidi: asia's major markets have just open for trade. asian stocks are set for a steady start. treasury yields tumbling. inflation and geopolitics are clouding the outlook. korea prepares for a new government and central bank chief. a big interview from -- from

washington with sri lanka's finance chief, joining as ahead. shery: japanese markets are coming online. a little bit of upside for the nikkei and topics after seeing two sessions of gain. japanese yen continuing to weaken for a 14th time at a 15. the japanese government warning about the recent rapid pace of declines but we continue to see the weakness of the 20 year low against the u.s. dollar. less pressure on jgb yields because we are at the 2.5% level. boj conducting a bond buying operation after reaching the upper level of tolerance. treasury yields are falling but jgb yields also falling. we are watching korea with the

kospi gaining 4/10 of 1%. this as we continue seeing the korean won week against the u.s. dollar, and the three year yield hovering around the decade hyatt reached last week. less pressure when it comes to korean bond yields given that treasury yields are down. watching export and import numbers for the first 20 days of the month. year on year exports running 16.9%. imports, 25.5% risk -- rising. the deficit for the first 20 days of the month coming in at more than $5 billion. expert -- exports from the u.s. rising. china exports rising less than 2%. we will have more on south korea

with martin kaufman giving his outlook for the country after leadership change. we will have a new president in south korea and we will discuss this shortly. haidi: a lot to talk about including global inflation concerns, one thing we are seeing in this part of the world's wealth. australia is just coming online. sidney trading the highest since january 4 and a close to erasing the losses we had year to date. the 10 year yield rising slightly slower. we are starting to correct a little. sluggish trading in new zealand. the kiwi dollar on the back foot after first quarter inflation rising at the fastest pace in 32

years, still missing expectation slightly and causing weakness in the kiwi dollar against the greenback and aussie dollar as investors decide to reconsider. looking at u.s. futures, we had a volatile session, particularly in the tech space led by continued losses in netflix, concerns over subscriber losses. that is balanced by rudimentary gains in tesla. an all round beat when it comes to that number. s&p futures up 4/10 of 1%. more pickup in oil. it had been trading sideways between gains and losses. steady now.

germany has banned russian oil. gold sitting a little softer in the session. i next guest says markets are oversold -- our next guest says markets are oversold. it is hard to know when economists are split where monetary policy will head and the lingering impact of the pandemic and war in ukraine. how should investors position? >> there is still a lot of uncertainty and many things you mentioned are unlikely to be resolved short-term. our view is to be more cautious and diversify. we've been less focused on directional trade and more on relative value trade. haidi: gold is one of your

picks. we have seen the correlation between the dollar and gold. doesn't concern you? potentially we are seeing overbought territory for the dollar and how that could potentially play in. >> one of the most important reasons why we have gold is it is one of the few diversifiers. interest rates have backed up dramatically and so in an environment where the equity outlook is uncertain and rising bond prices, you will not get that diversification protection from fixed income so you have to look elsewhere. gold continues to demonstrate value as a diversifier against economic uncertainty. shery: we are getting the latest in china. gdp growth expected 3.9% from

4.3%, away from that 5.5% growth goal in beijing and they are not the only bank. others are cutting growth forecasts. what does that mean in the market side of things when at the same time they expect more fiscal and monetary support from beijing? >> china is delicate now. the lockdowns have damaged it considerably and we have trimmed our growth. on the back of china growth we think it hurts the emerging markets more broadly so we have been underweight to emerging markets. and china has tools at their disposal and assuming they can get past the lockdown commode you could see a sharp rebound likely we saw before. so do not count out china but it is likely to be lumpy in the next few months. shery: how will that translate to emerging markets?

commodity prices are surging because of the war in ukraine and other uncertainties. >> emerging markets are a mixed bag now. concerns about china is putting pressure on the complex which has a large allocation to china. covid is more dramatic for vaccination rates because they do not have the same kind of health system. winners and losers and oil. certain countries are oil producers in the complex who have been benefiting but on the balance we think the risk is too high and we preferred to take our exposure in the u.s.. shery: what about japan? the boj continuing to come in with buying operations. where does it position japanese

equities? they are cheap compared to other parts of the world. >> they may be cheap but uncertainty will way on japan as well. the supplied chocks -- the supply shocks, the manufacturing sector is being harmed by it. factor in weakness on top of it and it is hard to get excited about japan. there are some good companies but we are not overweight in that region. haidi: some love it, some hated. it's good to have you back. thank you. let's get to vonnie quinn. >> the biden expected to announce another 800 million dollars in support for ukraine to arm allies in an emergency as the imf calls on nations to set

aside billions for ukraine after russia invaded. >> the first priority is to make sure there is support to fill the financing gap in ukraine in the next few months. let me stress the 5 billion is to keep the economy functioning, not to meet the reconstruction needs that will be huge. >> russia [indiscernible] goldman sachs and jp morgan save the potential failure happened in april. russia could do for the default if it pays bondholders in dollars instead of rubles before the. ends -- before the period ends. and carlos dominguez says he is

preparing a fiscal consolidation plan for the new government in the philippines. >> we will have to watch exactly what other countries do but we do not want to be behind the eight ball. people in the philippines will want to follow their rising interest rates so we have to make sure we balance the need to grow, the need to fight inflation, and to preserve our capital. >> sri lanka is seeking urgent loans from several nations. and is providing assistance and they will speak to the chinese ambassador on thursday. sri lanka is also talking to

japan and other gulf countries as they look to raise funding for emergencies. 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. this is bloomberg. shery: we will have more on the outlook for sri lanka later and will be joined by the finance minister to find out what is next in the push for emergency imf funding. and martin kaufman joins us to give his outlook for south korea after the leadership change. this is bloomberg. ♪

>> i think we have a reasonable shot at 60% increase over last year. shery: elon musk speaking on tesla's earnings call. haidi: in asia we are seeing some moves when it comes to these names after companies site strong demand for their vehicles but warning about supply chain challenges and this snafu rising from the war in ukraine. we have seen av battery suppliers in japan, and

panasonic up just over 1%. shery: tesla gaining over 5% already. su keenan joins us now. anything interesting during the conference call? >> elon musk enticed investors with details about a robo taxi without a paddle or steering wheel. very bullish on production, saying they can come out with 1.5 million cars or more this year. the call was all about tesla, nothing else. they fought off supply chain headaches with some suppliers boosting prices by 30% and the heat across the board record profit, blowing past estimates.

they sold more high market vehicles and cut costs and added to their war chest. the company seemed to navigate inflation well but it was clearly on executives minds. they played on the earnings call for more people to get involved in lithium mining, which they said is a major upcoming bottleneck. the stock chart shows it is still the most valuable automaker out there but shares are down for the year. no mention of bidding for twitter. it was all about tesla on the call. haidi: he also gave commentary about the impact of the shanghai shut down and what he sees as

ongoing supply chain >> challenges. he gave out a shout out to factory workers. he noted it is back producing at fairly high levels. so are other china suppliers so he does not see it as a major issue. in fact they will be relying heavily on shanghai and new plants in austin and berlin as they expand. if we can pull a rabbit out of a hat, that is his quote, he expects to make up the last production in the back half of the year. they expect supply chain issues to continue for the rest of the year but as you heard from his comment, they expect production growth to be at 50% from every year here on out and possibly at 60% this year over last.

haidi: su keenan with the latest on tesla. next, the u.s. defense secretary held a rare call with his counterpart in china to discuss the war in ukraine. this is bloomberg. ♪

shery: futures in europe are opening and we see upside and extending gains we saw in the european session. solid earnings intact, construction, and banks rallying in the session. metal prices lost ground. we are watching what happens with russian one year bonds.

uncertainty hanging over european markets. russia on course for the first time defaulting in more than a century after paying on -- in rubles was seen as a nonpayment. russia could still over a default if they pay bondholders in dollars by the end of may 4. haidi: to get more on this, what does this ruling potentially mean for russia? >> the interesting thing is the ruling does not directly impact the bondholders, the investors who are owed the payments. it just impacts [inaudible] it gives bondholders ammunition and weight to the argument that

russia has defaulted. if they default, they tried to pay their interest payments but because of u.s. sanctions, they were not allowed to process the payments. russia paid in rubles which is not allowed and on that basis, russia has been found in potential default. paying in a different currency is not allowed. but it will not be actually declared to be in default until may 4. shery: so what is russia doing to defer -- to avert the default? >> banks under order from u.s.

treasury have to reject russia's efforts to pay interest payments so russia is considering using the central bank of russia instead of a european bank. but you cannot just switch banks without getting approval from budget -- from a majority of the debt creditors, which takes times that they do not have. shery: all of these rules for russia because of their invasion of ukraine. a rare call from chiefs in china and the u.s. to touch on some issues. stephen engle, how significant was the call? >> very.

the u.s. continues putting pressure on beijing not to aid russia's war on ukraine. on the military side, lloyd austin meeting with his chinese counterpart. even in a phone call, that is a positive development possibly for both sides to show their position on the matter and from a chinese readout, chinese officials have confirmed they spoke about ukraine and the chinese statement essentially said the u.s. was urged to refrain from using ukraine to smear china. that's a quote. he also urged the stoppage of military provocations at sea.

i would imagine that the u.s. has similar stipulations, no aid to ukraine from china. these are tenuous times geopolitically and any phone call between that top defense chiefs from those nations are important but we do not know what the end result was. haidi: xi jinping is expected to give the opening keynote speech. the country is still under lockdown. what do we expect? >> i have been to so many forums. 17 in a row before the pandemic and i was not able to go. this is often when he gives that keynote speech, it will be a virtual video link to the speech. when he is the keynote speaker

who usually has something to announce. this is a platform in china to be delivered to foreign businesses so my guess is he will give some sort of message about china still being open to foreign businesses, despite lockdowns that affects so much of china including shanghai. he is likely to make that appeal. whether it holds weight at a time when people are questioning their commitment to investing in china, it's a difficult time. he could also potentially say nothing. chinese officials have used this potentially to reaffirm old talking points. we just have to see when he starts. if he mentions ukraine, that will be a plus. haidi: next, the imf chief for

korea as they prepare for a new government and central bank chief. that is just ahead. this is bloomberg. ♪ at xfinity, we live and work in the same neighborhood as you. we're always working to keep you connected to what you love. and now, we're working to bring you the next generation of wifi. it's ultra-fast. faster than a gig. supersonic wifi. only from xfinity. it can power hundreds of devices with three times the bandwidth. so your growing wifi needs will be met. supersonic wifi only from us... xfinity.

shery: the imf has downgraded korea's gdp growth for crest from 3% -- forecast from 3% to 2.5%. kathleen hays is standing by with our next guest. >> with us is martin kaufman, mission chief at the imf, taking time out from his scheduled to join us in our studio in washington, d.c.

welcome. in many things that are a threat to the global economy, korea is the fourth largest exporter in the world. how big of an issue is the slow down for their growth in the next few months? >> it is certainly at risk and we think given that china is such an important part of korea, we monitor how it will impact korea carefully. but it's not the only risk and if you look at korea's exports, they been dynamic. they have not slow down, they are buoyant and economic activity in korea has been resilient.

we expect consumption to pick up because of the economy opening. so it is one part china and the slow down, but that is only one part. in terms of risk, china is a risk but what we are concerned about is stagflation pressure, even before the war in ukraine. if anything, that were abated those. at this stage, korea has proven resilient but inflation pressures have increased so it is something to monitor going forward for korea. kathleen: how about growth? your soon to be former colleague is potentially heading to be the next governor of the bank of korea which has been an aggressive rate hike or come in front of the pack of larger developed nations around the world. he told parliament in his recent hearings that bank of korea

should continue to go in the rate hike direction unless there is a problem for growth. do you see a problem for growth? >> korea has been resilient and inflation has gone up more. so at this stage, i think continuing with the normalization inquiry is appropriate because the inflation is a concern weird so i think normalization is still the main general task. obviously risks are high and monetary and fiscal policy will need to react to changes and i think korea has proven nimble throughout the pandemic and we are confident they can continue normalizing because they will

monitor closely what is going on with developments in the global markets. kathleen: inflation in korea is above target. what is the trajectory of inflation? do you think there's a chance they might do a 50 basis point hike as others have? >> inflation in korea, inflationary pressures are rising but more contains than in other economies. expectations are accurate, which helps a lot because it means the risk of a price wage spiral is lower and when supply shocks debate, it is easier to dis-insulate. in that sense korea is in a good place because they started early

and were really ahead of the curve and started in august doing 75 basis points and they are in a much better position than others so i think natural and steady has worked for them and i think it is comforting that they are ahead of the curve. >> and yet we have a new government and lots of times when you have new leadership, are you expecting any changes on that front when you analyze the economic policies coming from the incoming administration? >> i think what we have seen is that korea has been willing and able to move targeted support when necessary using supplementary and there is

discussion now of doing another supplementary [indiscernible] to assist sectors. so it's useful because if there is a need to react quickly, they are ready. it will be difficult to calibrate going forward the scale and scope of any additional targeted support, given the nature of the shocks they might face. and taking into account the macroeconomics of the nation. they might not need significant stimulus at this stage but they need to support certain affected sectors. so i think they are prepared and they should calibrate any support they do to the eventual need. haidi: this week korea lifted pretty much all covid-19 related pandemic measures. do you expect the relaxation of measures to contribute

meaningfully to economic growth? >> that's an excellent point. when you look at the growth projections, the downgrade of it is less than to -- less than the downgrade of -- before the war in ukraine the economy was doing very well. omicron was not a major headwind. we thought there was pent up demand associated with containment measures. now that they are lifting what we expect is to see a significant contribution of consumption to economic activity. consumption has been a laggard of growth in korea and we think korea will likely do better than

globally. investment has done well and consumption for growth. >> the new president wants to cut taxes and spends money to address housing shortages. is this prudent? >> korea has to tackle the fact that growth will be lower medium-term. they really need to battle structural reforms to enhance growth. so two things are important. korea is not starting from zero. the new deal is a good stepping stone to move in korea to be a more digital economy. it promotes investment in new sectors and aims to retrain the labor force. but there's also need to tackle

long-standing fragility in the economy. there are regulations and barriers to entering new markets for startups and if they plan to move ahead with the new deal, it's important those barriers and cost of doing business are reduced. the second is greater flexibility because that will facilitate the workers who have the new skills to move from stagnant sectors to more dynamic ones. so a whole package needs to be done. >> you have given us a good outline. martin kaufman, thank you so much, imf mission chief to korea. back to you. haidi: martin kaufman with kathleen hays. in the meantime, philippine

finance secretary says 6% growth for the next five years is needed to pay down the debt sponsored by covid. we spoke about the challenges facing the next administration after the elections next month. >> the biggest challenge for the next administration is to grow out of the debt incurred during the pandemic, which was natural because revenue went down because of the lockdowns and we had increased expenditures. we had to borrow more money. so the next administration will have to design policies and stick to very strict fiscal discipline to grow out of this debt burden. however, everything is in place in the philippines to achieve that. last year we achieved a growth of 5.7% and in the last quarter it was over 7.5% growth rate.

so we were well on our way to recovery, except now there is the ukraine crisis and that will weigh heavily on us. we are not combatants but we are affected by the increased prices of fuel and grain and this is among the things discussed today at the world bank and g20 meeting. in terms of paying -- >> in terms of paying back debt, you are on the right track and have the right intention. how long will it take to pay it back? >> some of our debt has a 40 year term. so we assume that in very favorable terms so we are not

worried about the repayment but we have to grow out of the debt, in other words, expand the economy by more than 6% per year over the next five or six years. kathleen: we all need to grow. a lot of countries have built-up debt. you are a member of the central bank's policy board. i do not want to ask you what you are going to do next. but it is reasonable to assume that any serious consideration of raising the key rate again for the rest of this year is off the table at this point? >> we will have to watch what other countries do, particularly the u.s. we do not want to be behind the eight ball.

if you raise interest rates, people in the philippines will want to follow those rates. so we have to make sure we balance the need to grow and fight inflation and preserve our capital. kathleen: you recently called for other nations to join together to deal with the issues spurred by ukraine. that suggests that you think this will last for some time. >> i am afraid that is what it is looking like. i will have discussions with my counterparts in the different asian countries and see what we can do together. i have also started discussions with the world bank. they came together well in the financing of vaccines for the pandemic. i said, this is another opportunity for you to work together with the finance minister to see what kind of

rescue packages can be done, particularly for the less developed countries. haidi: up next, sri lanka's finance minister joins us for the latest on the country's economic crisis and the request for emergency funding from the imf. this is bloomberg. ♪

>> high inflation is clouding outlook. price pressure as strong. u.s. treasury secretary janet yellen and other finance ministers walked out of the g20 meeting after russian officials began speaking. others turned off their cameras that when russian officials joined virtually. members of parliament will vote

if boris johnson will have to answer questions regarding party gate. 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. this is bloomberg. haidi: sri lanka is reaching out to nations for financial credit as a comprehensive package of aid from the imf may require six months. let's get to washington where kathleen hays is with our next guest. kathleen: with us is sri lanka's finance minister. we are so glad you could join us. you were in meetings in washington today. the world kind of wants to know, where do you stands now in your talks with creditors? what groups have been formed,

who will lead restructuring talks? what is the response so far? >> thank you for having me. the talks have been centered around restructuring and debt. imf requires debt restructuring. creditors have reached out. this is early, just announced a week ago and now we are in the process of appointing leaguer -- legal advisors. kathleen: so many different people attend. finance ministers are potential bilateral agreements you can make. are you having those kinds of discussions? do you have any idea who you

might be speaking with? >> i have already spoken to the indian finance minister. we had a good discussion. i met treasury officials from the u.s. and others from the state department of the u.s. and we look forward to meeting other colleagues. kathleen: in terms of steps the government needs to take, a lot of people talk about maybe going in another direction, taking steps of austerity. are there any plans to increase a tax or restore other taxes you got rid of because people are saying, if you do not plan to raise revenue, how will you get this going, and present plans that show you are sustainable when it comes to restructuring

and paying back debt? >> we need to sequence this properly because three lichens have been under pressure because of depreciation and their currency that has resulted in inflation so we need to be careful about sequence. [indiscernible] we are working on sequencing. there is a desire to do that and we will do it. haidi: how do you plan to convey confidence to creditors and bondholders?

you talk about is sequence of events. where do they fall into that? can you give us an update? >> we are early days. we explained in the communiqué what forced us to do it and that we will treat them fairly and in a transparent manner. some have reached out and we've started talking to them. we are in the process of establishing specific communication channels for them. but we cannot do those things until and unless we appoint the financial and legal advisors. we will probably have them in the next 20 days and once that happens, we will have a proper, transparent, and rational mechanism in place. shery: what does that mean for the timeline of talks with other parties like china and the world

bank and so forth? >> world bank we have already started discussions with them. [indiscernible] india, japan, china, we need to talk to them and reach a consensus. we are confident they will look at it favorably so that sri lanka can come out of their current economic crisis as soon as possible so then it is easy for us to pay them back. kathleen: china is potentially a big player in your restructuring and raising the money you need to get through this. how is that going?

are you speaking to particular chinese banks? >> at this point we are talking to the state and china had been a close ally of sri lanka for a long time. history of for 70 years so we will discuss with them and in -- and we are in the process of discussing cash infusion into the system with them so we are confident we can reach a consensus. kathleen: you are so far speaking with china's government, or some of the banks? >> basically with the chinese government and with their support and direction, we are speaking a -- we are speaking with agencies that include some of those banks. kathleen: thank you so much. back to you. shery: plenty more to come on

daybreak asia. this is bloomberg. ♪

shery: we continue to watch concerns of global growth forecasts getting slashed. china has cut bears for the year

two 3.9%. -- cut theirs for the year to 3.9%. haidi: ongoing concerns about the lockdowns in shanghai, supply chain and destruction weighing. this is bloomberg. ♪

shery: -- david: this is my kitchen table and also my filing system. over much of the past three decades i have been an investor. the highest calling of mankind was climate equity. then i started interviewing crude i watched your interview. i have