good morning and welcome to daybreak australia. we are counting down to asia's major market open. >> good evening i'm shery ahn. u.s. stocks slide as treasury yields a surge with traders bracing for the possibility of more aggressive fed tightening. >> president biden boost aid to ukraine and vladimir putin says that russia has liberated

mariupol. >> big banks back elon musk's bid for twitter. this is a picture across wall street. we are seeing futures muted. it was a volatile session in new york. we saw gains of more than 1% at one point. tesla reporting record profits. airlines gained ground. international and corporate travel is coming back. then we had treasury yields surging and the nasdaq underperforming. we also had the dollar rebounding gaining ground again. wti rose and we have seen in the asian session approach $104 per barrel. the main story was in treasury yields with two year yield

leading the gains. at one point topping the 2.73 level which would be the high-end peak of the cycle. the 10 year yield also above the 2.90 level. we continue to see pressures on the global debt markets fueling the treasury route that continues after european debt saw big losses overnight. it didn't help that heard from chair powell blessing the have a point hike next month. data seems to support the idea that we have a strong economy especially from the labor market side of things. we have now seen jobless claims easing last week. >> we have reverberating across

the global landscape when it comes to sovereign yields as well. look at the global yield search as investors are not just trying to work out what the fed does but also the forward trajectory when it comes to the ecb. as well as what the rank of england does. you look at the u.s. ten-year, look at german bond yields. the two year yield rising for u.k. as well as the euro 10 year surging. look at how we are setting up this friday session. it's looking negative woman look at the start of equities trading in asia. new zealand is underway. sidney futures falling. that is the most since march 11 suggesting we will see a decline of 1% after a week of steady gains. that market on the cusp of raising is losses for the year. chicago nikkei futures looking

flat at the moment. always watch forward when it comes to the dollar yen. we are seeing more yen weakness, but still sitting well under the 1.29 level. >> i was talking earlier about how jay powell didn't just open the door to a 50 basis point hike in may, but he may have walked through it at this point. kathleen hays is here with more on this. what did we hear from chair powell today? >> he was speaking at an imf event along with christine lagarde the head of the ecb and other monetary officials. this was not a long speech. it was basically one long paragraph that signaled he is on board with the basis points. what's listen. >> it is appropriate in my view to move more quickly and i think there is something in the idea of front end loading whatever accommodation one thinks is

appropriate. that points in the direction of 50 basis points being on the table. we make these decisions at the meeting and we will make them meeting by meeting, but i think 50 basis points will be on the table for the may meeting. >> a lot of people are saying this is all but a done deal. we shouldn't be too surprised, because other fed officials saying it could be appropriate. even saying they are on board. the chair of the st. louis fed said more and more we should do it or they are hoping that they will do it. another issue is he talked about frontloading rate hikes, how that could be a good deal. how may times have we heard larry summers on bloomberg for months now saying the slower the fed goes, the faster they will have to catch up. when are opinion columnists -- one of our opinion columnists making the same argument.

officials don't like to surprise the markets. we had someone on our asia daybreak shows, i asked him about a rate hike and he said we could do it in march -- we cannot do it in march we haven't informed the markets. jay powell is sending a clear message, he would not have said this unless he was ready to go ahead and vote for 50 basis points and he figures he probably has everybody on board with it. haidi: kathleen hays, thank you. president biden is sending an additional $1.3 billion in weapons and eight to ukraine. the new round of support comes on top of the $2.4 billion already authorized and also as we see what a mayor krewson widening the war on the ground -- as we see vladimir putin widening the war on the ground. where do we see this money going at this crucial time?

>> president biden this morning in washington announced the $1.3 billion in aid and that will go to arms and economic aid. that includes millions of dollars for new tech drones. -- attack drones. he also met with the prime minister of ukraine thursday morning. the prime minister said that ukraine will need donations from imf. also president -- vitamin putin thursday claimed that russia had seized variable. -- mariupol that they refused to surrender. ukrainians are calling on russia to let in humanitarian aid for civilians. shery: what do we know about

where we stand on ukrainian refugees wanting to leave the country? >> president biden thursday morning announced a new pathway for ukrainians fleeing russian violence. they will be able to apply if they have family members in the u.s. or close relatives to apply for to come to the u.s. for a certain time. that was announced thursday morning. >> we have heard that francis issued an international arrest warrant for carlos ghosn. we are hearing the latest about the former chief executive of renaud and reese on -- nissan. this arrest warrant has been issued for him as well as for other individuals that they say are linked to an auto dealer in

oman alleging that they helped funnel millions of euros from renault. that is according to people speaking to the dow jones. this as we have seen the latest saga play out between him -- carlos ghosn who fled from japan on charges of financial wrongdoing in the country not to mention that he has moved to lebanon. we have been following the latest on carlos ghosn. we will get you more as we get more information on this. let's talk about banks that have showed up in force to back elon musk's bid for twitter. when elon musk meet his initial offer for twitter, some people scoffed. why don't people take it seriously and what about today's announcement changed people's

minds? >> you have to remember, this is a guy while wealthy, the world wealthiest, he has done some things and said some things on twitter that gave people pause. remember when he talked about taking tesla private and having funding secured. there were a lot of questions about whether he had funding secured at the time. he got into a lot of hot water with sec over. to this date, he still insists he had funding secured. there is another look at the number behind the initial bid for the company. a reference to weed. then, he gave a ted talk her he says i didn't know if it was going to go through. there are reasons to legitimately question whether elon musk had the juice behind the bid that he needed. today, he came out with a long list of global well-capitalized investment banks that are going

to provide debt funding to the tune of $26 billion. he put some letters behind that that gave people confidence that you need to take him seriously. there's another $21 billion that he's going to fund in equity which we can talk about. he put numbers and names behind this bid that gave people a lot of confidence that he is very serious about it. haidi: talk to me about the question over the equity commitment letter. it doesn't mean that he is going to do this, he is looking for alternatives? >> right, there is the $20 billion that is going to be funded in equity. where does that come from? our friends on the deals team have spoken to people who have said that there are parties who are willing to get behind the equity bid. we don't who they are.

i hope we will be breaking the news on bloomberg, so stay tuned. in addition to what elon musk has, a $9 billion state in twitter, he wants to fund $21 billion in equity. will that come from a private equity firm like apollo? will there be a high net worth individuals getting behind this? there are a lot of different ways he can find it. remember, he has a big stake in tesla. he owns spacex. does he use some of the equity in those businesses to help fund this? those are big unanswered questions that we will be trying to answer here on bloomberg. haidi: still a lot of unknowns. get you over to vonnie quinn. vonnie: thank you and good morning. russia has barred entry to mark zuckerberg and others in retaliation for u.s. sanctions

against top officials and business figures. it says the list also includes kamala harris as well as white house and state department officials. moscow band facebook and instagram last month calling them extremist. leaders from germany have asked french voters not to back marine le pen. all of schultz and others described her as a candidate who openly sides with those who attack freedom and democracy. they say the outcome would be a choice for all of europe. opposition leader's election campaign has been interrupted after he tested positive for covid-19. he will be isolating at home effectively putting him out of action less than two weeks into the campaign. the election is set for may 21. senior chinese officials have

pushed back on a set of recommendations for didi global. didi has been in communication about penalties. we understand the agency had aimed to punish the results in april but the government has asked for revisions after finding the proposed measures to lenient. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: the commonwealth bank of australia cuts its yen forecast. we will talk to a guest about that. first, quadratic capital management says the market believes the fed is going to raise rates faster than the economy can withstand. that's next. this is bloomberg. ♪

>> i would say 50 basis points will be on the table for the may meeting. the issue we are focused on is inflation and getting back down to 2%. >> our inflation is fueled by supply shock which calls for a particular type of response which brings together fiscal policies and monetary policy.

it is supply driven number one. it needs to be addressed in sequential flexible casual way. >> it is unsustainably hot, a very good labor market for workers. >> jay powell and ecb president christine lagarde. let's bring in our next guest who says the fed needs to broaden its focus. jay powell talking today about potential bigger rate hikes, faster tightening. what does the fed need to watch out for as well? >> the rates market has priced in these hikes. the hikes have been in the market for a while and it is doing nothing to stop the realized inflation we are seeing. christine lagarde had her finger on it in the previous could you just showed saying that it is

the supply side disruption causing it. more rate hikes are not going to bring more truck drivers or give us more chips with the chip crisis still have ports that are clogged up having ships go in and out. it's not just rate hikes that matter. the fed needs to address the $9 trillion balance sheet that is still outstanding. i think that will be a topic at the may meeting, but the money supply is part of the issue that they are just dancing around at the moment. rate hikes are not enough and rates market has priced in these hikes and is pricing in effect that the fed is going to hike to much and hurt growth. shery: how do you position given that we continue to see more correlation between asset classes? how do you diversify in this environment? >> investors need to be looking outside of the traditional

60/40. today was a good example, in the u.s. stocks market stocks and bonds were together. looking at other asset classes. don't want anything to be exactly the same. investors are looking at quadratics etf's, one etf had a positive performance today. it's not always going to make money, nothing is, but you want things that will be able to not be like everything else that you already have in your portfolio. especially in this turbulent time were we have been having monetary policy hikes potentially in the face of slowing growth, we have to be thinking about what's going to happen with balance sheet reduction and what impact is that going to bring to overall assets and asset allocation? >> you talk about the correlations, there is also a lot of weakening correlation happening. take a look at the yen. this shows extraordinary pace of

weakening that we have seen in the yen given that this time -- comes at a time of volatility with the war in ukraine, global growth slowing. is this mean yen is no longer a safe haven? is there a turning point for havens right now? >> calling anything a haven is a full's game. once everyone thinks something is a haven, it doesn't behave that way. it goes back to everybody needs to have diversifying assets. all investing involves risk. it's all what do you have against it and -- with the fed being as hawkish as they are especially relative to the rest of the world, it doesn't surprise me at all that the yen has been weakening. >> does arise in real yields or inflation protected yields mean that it's a game changer for

equity investors? >> potential he. when you look at real yields, that's the concept of saying where is inflation versus where is the fixed income return? the problem is realized inflation is so high, the ppi last week was 11.2 in the u.s.. everything has a negative real return. if you believe those inflation numbers are going to be sustainable. the rates market does not think they're going to be sustainable. the rates market thinks the fed is going to hike rates and that's going to stop inflation. i think that is wrong because i don't think the fed hiking rates is going to solve any of the supply side disruptions that we are experiencing as a result of the pandemic coupled with russia ukraine and the covid lockdowns going on around the world. >> great to have you with us. you can get around up of the

stories you need to know to get your day going in today's edition of daybreak. subscribers can get that. this is bloomberg. ♪

>> taking a look at the day ahead for australia and new zealand. we will be getting a production report from mineral resources for the third quarter. the abu dhabi investment authority is said to be among investors led by kkr seeking to buy ramsey health care. >> here's a quick check of the latest business flash headlines. gucci sales and growth this

estimates in the first quarter as long ounce in china weighed on the performance. sales which generated over half of the revenue for the time rose 13%. analysts predicted a gain of 19%. this follows strong results from lvmh last week. the world's biggest of ev batteries has posted a profit that beat estimates and announced plans to send $2 billion -- spend $2 billion on factory in china. net income 2021 more than doubled. it scrapped its business and warned of surging raw materials costs. disney is set to lose some of its parks in florida with the state legislature threatening to strip the self-governing privileges. it will end and arrangement that

has allowed disney to govern its own municipal functions for more than 50 years. taking a look at disney trading in the after hours sessions, we are not seeing that much movement at the moment. we are still watching twitter because elon musk is saying that his financial institutions are providing 25.5 billion dollars in debt financing for the potential bid. he will spend the coming days vetting possible investors interested in backing the deal. we have been watching didi. it's fate has been stuck in limbo. pushing back on the proposed punishments from china cybersecurity regulators. the remedy was seen as too lenient and we are hearing and announcement the they will be delisting from american exchanges. they have not applied to move to another exchange.

coming up, we will hear what is behind a prediction for the yen and its g10 peers next. this is bloomberg. ♪

vonnie: jay powell says hike up 50 basis points is in play at the fomc meeting in may. he signals aggressive tightening to curb inflation toward 2% target. he spoke at an imf panel on thursday. vladimir putin says russian forces have seized mariupol.

more than 2000 ukrainian fighters remained holed up in the city. it is key to moscow's current strategy. volodymyr zelenskyy said the declaration is premature. the u.s. is sending ukraine another $1.3 billion in arms and economic aid. $800 million will go towards weapons. this is on top of the aid that was already authorized for the fiscal year. >> today, i am announcing another $800 million to augment ukraine's ability to fight in the east. this includes heavy artillery weapons, dozens of howitzers, and 144,000 rounds of ammunition to go with the howitzers. >> ukraine says rebuilding the country will cost $600 billion.

the world bank president told bloomberg that ending the war is crucial to the global economy. >> ukraine is part of the global production chain. the world needs that production. looking beyond that, there needs to be a clarity in the world about values, direction, the orientation of economies and also the necessity of peace. there is a huge world interest in having the war stop. vonnie: several banks are supporting elon musk's run to buy twitter. 25 billion dollars would come from debt in banks across wall street. this is according to a regulatory finding. morgan stanley has pledged to provide the biggest chunk, $5.5 billion.

global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: the japan cpi figures are coming up later. we are seeing price pressures build up in a country that has not seen any inflation in decades. the core cpi expected to come in at 8% year on year. it is still far away from the boj to percent inflation target. goldman sachs saying this might not be important anymore because the boj wants to continue with the framework and catalyst as change for monetary policy. even if it touches the 2% inflation target. household feelings of inflation are more important at this point. haidi: it doesn't really change the broader narrative when it comes to price pressures long-term japan. considering the demographic and

growth concerns. of course, we will watch out for that. take a look at what we are seeing when it comes to the fx side of things. whether we are seeing the dollar in overboard territory. a lot of analysts are saying it is beyond the failing volatility we are starting to see at the moment. this as we see the war in ukraine raging on. big geopolitical shifts and the slowing pace of growth as well as sharp pace of fed tightening that is expected. this is why we are seeing so much

pairings as well. take a look at the aussie, a little bit of weakness. dollar-yen always in focus as we continue to watch for signs of yen intervention and the currency sees its most volatile month since 2010. we continue to see that. look at the prospects for yen intervention. there are not a great deal of options available to japanese policymakers. we have seen some job earnings and global intervention warnings and suggestions of coordination. this is what we see when it comes to rapid weakness in the yen. where we have seen past points of intervention before. turning to us or more is ahead of -- at bank of australia. we have a little bit of respite when it comes to the fast moves to the downside for the yen. it feels like a call of 130 by 2023 is remarkably conservative given we are close to 130 earlier this week. >> monday morning it felt like we were going to get there by this afternoon.

signals coming from -- the fundamentals that are going to push up dollar-yen such as the diversion interest rate path between the u.s. and japan, that is still there. japan's current account shrinking with the u.s. commodity prices. we think that dollar-yen is going to get over 130. it looks like it's going to do that sooner rather than later. >> where are you at when it comes to the case for the dollar? >> we think in the short-term the next three or four month, the dollar can lift further. there are some reasons the weakening yen like you just went

through, but also the euro which is the major part of the dollar basket. things weighing on the euro organ to be the softening economy because of commodity prices and we're already seeing demand disruption happening in europe with various plants shutting down because they can't get access to the energy they need. i think those sorts of things are going to keep the dollar lifted. once we get into the second half of next year, i think the dollar will peak and start to come down. we have noticed over the long stretch of history that the u.s. dollar tends to fold when the fed is in a tightening cycle because a tighter u.s. monetary policy is a sign of u.s. economic strength.

by extension, global economic strength. that tends to be negative for the dollar. >> what about chinese economic st we continue to weigh down. i think we have a september 2021 low against the u.s. dollar. what is the trajectory for the you want? what is changed? >> we asked is it a safe haven currency? certainly in the last few weeks, that is not the case. the chinese yuan is weakening because of self conflicted -- self-inflicted wounds. they are aiming for a zero covid outcome. we know from everywhere else in the world even in countries like australia and new zealand, you cannot get zero covid.

they are going for that. the economy is down because of their restrictions, but we do not think the restrictions are going to last another six or seven months. i think the virus will spread, but the economy will rebound strongly. we could be seeing a replay of companies -- countries like america where you get a lot of stimulus then that leads to a pickup in inflation. >> where do you see the chinese you want, what is the level? we have on the other side a strong trade surplus not to mention capital flows. could these be reversed if we continue to see the weakness in the country? >> if the market gets in their idea that the pboc wants the currency to weaken significantly, you could get a repeat of 2015 or 2016 we have a

lot of weakness and it took a big rundown of the chinese authorities reserves to stabilize. i don't think we are going to get there. i think the pboc has learned their lesson. we are still bullish about -- but that's more of a case for later this year and into next year. >> it was good having you on. coming up next, chinese officials are pushing back on a set of proposed punishments for the company didi. this is bloomberg. ♪

>> one of the things for individual investors to think about is in a volatile market like this, do i want to sit on the sidelines and just hold cash? with inflation, i think that is risky. owning hard assets that you have conviction in makes sense. what you are seeing is an expression of that high conviction. >> it's time for morning calls. strategist at j.p. morgan chase thinking about consensus earning

estimates for the s&p 500. they are overly pep ash pessimistic for the first quarter. they see companies delivering a surprise of 4% to 5% of what they call better than fears margins. at goldman sachs, a review of u.s. crepe -- credit markets is not signal a recession is coming. a senior analyst says absolute levels of investment grade and high-yield markets are not at all close to recession levels though she expects widening of spreads through year-end. haidi: this is aggressive selloff across sovereign bonds. look at how the pass-through is being played out in australia and new zealand. a big move when it comes to the three year and 10 year. we see broad rise in bond yields

globally. we saw a selloff and treasuries focusing on the short end of the curve. the five-year rising to hit above 3%. we saw 530 narrowing to below five basis points. we are looking at traders pricing in confidently 50 basis point rate hikes at each of the next three meetings. we heard from jay powell as well saying that he sees. in the argument for front loading increases and 50 basis point hike will be on the table for may. we are seeing the oversized reaction and bond markets carry through to the asian session. let's take a look when it comes to what we are watching for the production numbers from australia. minerals still seeing gold output. copper output in line with

expectations when it comes to expectations, we have seen iron ore producers falling short of output expectations. oz minerals continuing to develop its pipeline projects to expand outputs and being seen as well-positioned to continue benefiting very strong copper prices. >> base metals continue to rally. the fate of didi global is also in focus as they stay in the boat. senior chinese officials have rejected a set of opposed penalties on the company stemming from a lengthy cybersecurity investigation. do we know at this point why beijing is not pleased? >> the sources are telling bloomberg news that the senior government officials are not pleased or essentially say that the proposed fines or penalties which don't know what they are,

they have been negotiated and essentially proposed by the cybersecurity regulator. they have been meeting with didi since last june when didi had the surprise ipo. i say surprise because they went ahead with the ipo in new york despite the warnings and urging of the government not to proceed with the ipo on perhaps data security and national security issues. they went ahead with that then suddenly, 80 was put on cybersecurity -- didi was put on cybersecurity review. now culminating in what was essentially the regulators proposal to senior government officials on what type of penalties didi would face. would it be a fine? a breakup of services and the

like? according to services, senior officials beyond the regulators are not pleased. they think it is too lenient. >> we know that didi investors will vote next month. where does that leave them if hong kong ipo is also suspended? >> last week, we heard that didi had not proposed a listing on another exchange. that has been put on hold. while we already knew that beijing is forcing didi to delist from the united states. that process has been going on. there will be a vote on may 23 and shareholders, if the couple of founders if they exercise their voting rights, it's a foregone conclusion. some investors like fidelity, blackrock, softbank, a number of them have stayed silent through

this delisting at least publicly. some investors could be forced to sell because their mandates don't allow them to hold unlisted shares. once the didi shares in the united states are delisting, they will likely go to the over-the-counter market. the so-called pink sheets market where less desirable companies, penny stocks are listed. some of these big investors would not necessarily be able to hold that so they would have to sell. softbank, they accumulated huge stakes in this company upwards of 20%. at one time, their stake was worth $16 billion. it is worth less than $2 billion now. they would be allowed hold onto penny stocks, but what a big fall from grace. we don't know the outcome that is going to be the final solution. shery: you will keep us updated on what happens with that stock. plenty more ahead, this is

bloomberg. ♪

>> we are sitting on the cusp of the greatest transition we have had since the industrial resolute -- revolution. >> climate agenda was one of the

key pillars of president biden's election campaign. his advisor tells me that the administration is doubling down even in the middle of an energy crunch. >> we are in an extraordinary time in terms of the energy markets. real supply constraint driven by what's happening in europe. that is pain that people are feeling at the pump into the president is taking bold action. he's released one billion barrels per day. -- one million barrels per day from the strategic reserve. he is trying to bend the curve on the near term challenge the folks faced. at the same time, at the same exact time we are celebrating on clean energy. we are accelerating on making technologies like electric

vehicles more affordable and accessible. parks what about the concrete steps the administration is taking like the bill back at her act that -- the build back better act. the same time, you have senators like joe manchin who wants provisions about increasing domestic fossil fuel production. it what do you do with that? >> the great news is the administration's firing on all cylinders on the transformation. there are 100,000 charging stations in the country right now. half of them were installed last year. the president secured money for 500,000 charging stations. we are seeing ev demand at record levels. last year, almost one million vehicles deployed into the market. when the congress to take action to make it even more affordable and accessible for folks to be able to take advantage of the technology. one of those things is tax

credits for hydrogen vehicles. for other zero emission vehicles like electric. we have to hasten their delivery to the marketplace. >> where are we in this negotiations? >> we are having conversations with a number of members on capitol hill to see where we can use the budget to be a partner in people's lives and helping fight the rising costs associated with inflation. to help boost our energy security. if we pass the credits that the president has called for, we can reduce our oil demand by 2 million barrels per day. it is a conversation we are having and we are eager to lean into the opportunity. >> where are we in the goal of reaching net zero emissions by 2050? >> the way we think about net zero by 2050 is the economy is a complex place. if we break it down into sectors, if we break it down into the different use cases

that are driving emissions into the air then have strategy for each single piece, for example on the transportation side, light-duty vehicles, cars and trucks, we have standards that are propelling more and more efficiency and we are making tremendous progress toward the president's goal. >> as we commemorate earth day, we are hearing from prominent investors calling out wall street's esg efforts as hypocrisy. this becomes one of the main themes that we talk about every time is the climate focus conversation. the idea of brainwashing and how much what we are seeing from corporations is just the idea of trying to avoid reputational damage. carl icahn saying wall street

needs to change. he has put his money where his mouth is. he is saying that he won't participate in the russian southwest gas review saying that he will not be a bidder because of the idea that it doesn't fit with his investment in those. key investors are coming out talking about this very important topic. parks he may have a point. he is talking about investors subjectively selecting some of the environmental issues that they want to focus on. we will continue watching how the esg drive gains traction drought the market and global economies. coming up, thornburg investment management is reducing their alibaba holdings. more market strategies from them

coming up. we will look at economic inequality in the light of slowing global growth and covid-19. this is bloomberg. ♪

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>> good morning i am haidi in sydney we are counting down to asia's major market opens. welcome to "bloomberg's daybreak: asia." our top story, japan's inflation can top 1% for the first time since 2018.