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haidi: a very good morning. i'm haidi in sydney. >> good evening from latin america, here in panama city i am shery and. our top stories this hour. shery: asian investors as sessions fall on land sleep dust on wall street as a premium is set or an election. latest polls suggesting private interest rates is battling to survive. the men they called mr. again it tells us the embattled japanese currency could climb to 150 to the dollar as the fed and doj diverge. a look at u.s. futures right now, we are seeing a little bit of gains of 1/10 of 1%. this of course after we saw u.s.

stocks really trading in a choppy section headed for a seventh weekly decline. s&p 500 firmly down in the last hour of trading. we continue to see of course a volatility after we saw one and a half trillion bonds wiped out in the previous session. or watching the treasury space, yields across the board were lower. talking about the 10 year yield going to 283 levels. weaker than forecast u.s. jobless claims. survey not helping. wti in the asian session reversing some of the gains that we saw here in new york. we have seen at that your sections actually see a little bit of gains for wti as equity markets parrot losses without is not holding right now. we have heard from sources that china is seeking to replenish strategic stock -- stockpiles to retain russian oil. haidi: at session at setting up asia for study. a bit of a muted start to

trading this friday. asian investors will be happy to get through this session without any major moves to the downside. we are seeing asian benchmark for equities a seven week slide, but the question is whether there is any conviction and sustainability in this recovery rally. sydney futures looking pretty good today. looking at the downside, trading in the next hour, so it is the last day of trading before australians headed to the polls. and history would tell us that regardless of who is the tour is over the weekend, we will probably see a couple of months, two or three months of steady gains when it comes to equities. we have seen eight out of our past 10 elections showing that the few months after that election, average returns have been positive. taking a look at the rest of the region, we are really seeing trading when it comes to new zealand, modest gains there. dollar-it yen starting to strengthen, yen under the 128 after the decline. we saw good gains when it comes

to risk currency like the aussie dollar is located the 10 year yield, we talked about treasury and falling or seeing that narrative. yes trillion bond session as well, 10-year dropping nine basis points, the three year dropping six basis points in the early part of this session. shery: haidi, we are continuing to see signs that perhaps the deepening market selloff may have entered a new phase, raising a possibly of a disruption in market functioning. for the latest and this crossover is can trigger garfield reynolds. and kathleen hays. our field, let me start with you, where is the selloff headed? are we going to see a fundamental shift in how markets function? garfield: i think we already have seen a fundamental shift in how markets unction and part of that is because the fed has had a fundamental shift in what it is doing. late last year, the fed was

talking very much about average inflation target and the idea that you want to see sustained inflation really get going on rate hikes. and so that sounds a good different world. now we've got the fed saying we are going to keep rates, even if stocks have a rough time. even if assets get damaged. in fact, there are already people who are thinking that part of what the fed is trying to do is to bring down some of those overinflated massive prices in order to help to cool demand, in order to get consumers to spend less. and therefore, do what they can, what the fed can to control inflation from the demand side. even as they acknowledge that there are severe supply shock concerns out there as well. wrapping that altogether, that is already a shift. and it is tough to argue that

there is not much chance for the bleeding to stop just yet. haslinda: it does not --haidi: seem like there is going to be one, but this is how it is supposed to work. financial conditions are supposed to tighten. kathleen: investors assume that if stocks fall hard enough and fast enough, the fed will do something. you have to keep the link clear between financial stability and financial instability. so far we are having quite a market decline. esther george, president of the federal reserve bank of kansas city acknowledge in an interview with cnbc it is been a rough week in stocks, but she is still culpable with that. she said what we are looking for is a transmission of our policy. in other words, interest rate hikes through markets understag and that tightening should be expected as one of the avenues through which tighter financial conditions will emerge. she wants a 50 basis point hike, she is not asking for anything

more aggressive. and remember, just two days ago, jay powell said tightening financial conditions quote is what we need. and if you look at the chart, if you would just pull it up really quick, i can show you that they are starting to tighten of it. this is a good sign to the fed. now, what would be a bad sign? you can see how they have been so green, no tightness at all. move onto the next chart, because that is corporate bond spreads. investor grade and high-yield bond spreads over treasury. as you can see, in times of distress if we move onto to this next chart, that when that widens out, when you start seeing that signal, you can see those spreads have started to widen, but that is march of 2020. when the bond market and the fed had to add liquidity. we are not there yet and that is another reason why people think that the fed is going to say let the stocks do what they are going to do. because we have to do what we must do. shery: given all of this, garfield, we have been talking

about the strength of the dollar. so much so that even yesterday we were discussing 1980. and then you have a day like today, where you have the dollar index seeing its worst day since march. what is going on? garfield: well, i am smiling because it seems like every time a positive call gets mentioned, that might be a good signal to sell the dollar, at least temporarily. because that usually tends to be what happens. you know, again, and partly that is because people are starting to fret about the dollar is getting way too strong for fundamentals to justify. speaking of fundamentals, in fact, what has gone on in the last couple of weeks is that the yield advantage, the 10 year treasuries offer over the developed market piers in particular, the average relative to the rest of the g7, has shrunk noticeably. it peaked, it shrank, that happened before the dollar came down, but now the dollar is coming down, so that yield advantage is sinking, which

again is concession returns going stronger about the u.s.. that is bringing the dollar down. haidi: kathleen, in the meantime, academic forecasts for china continue to fall like dominoes. at least that's are we expecting more from the pboc today? kathleen: medium-term lending facility rate cut, the lpr, the low dust loan prime rate is being fixed today and that is what we expect to see coming in lower. in fact, the one-year loan prime rate is seen down five basis points from the previous 15 last month. bloomberg economics think this could be more aggressive though. a 10 basis point reduction, while our investors are looking for the five-year prime loan rate to stay unchanged at 4.60. bloomberg economics is looking for a five basis point move and look, you see the economy getting worse and worse. we've seen the impact of the

lockdowns on shanghai and other cities. this is the pressure on the pboc to make the move and of course, they guided the banks. the banks actually lower the loan prime rate, but the pvc sends the signal as you know and that is what we're going to be waiting for today. haidi: bloomberg's garfield reynolds and kathleen hays. in austria, we'll be going to the polls on saturday with latest opinion putting labour party ahead of scott morrison's liberal coalition. the latest on the campaign, let's bring in chief. we got to the end of the six week campaign. what is new in the final hours? and how close is that cap now? >> the gap has been narrowing in the past weeks. ainslie: the labour party has a lead over the coalition but that has been narrowing. we heard the daily newspapers come out and endorse today.

they have largely gone toward morrison, suggesting that he does deserve another term. there's been a few endorsements of anthony, saying he has not made a compelling case to sort of switch governments so it will be interesting to see what the election says tomorrow. shery: what happens if we do not get a clear-cut outcome here? ainslie: yeah, i mean, one thing we have had is a lot of people voting early this time around. early in person votes. paper votes may not be counted for weeks to come, so we may end up with no decision on saturday. we could have to wait for those ballots to come in in drips and drops, but we've got the independent movement which are climate focused independent candidates who hope to be taking some seats off the current government. so there could be some negotiating with those and the other minor parties in the weeks

to follow as well if neither of the major parties secure the clear majority. haidi: for more insight on the australian a and race. you can download the podcast hosted by paul allen along with georgina mckay. the latest addition is available wherever you get your favorite podcast. let's get you to vonnie quinn who is in new york with our first word news. vonnie: president biden has offered to join nato. he met the finish prime minister at the white house today after they applied to become members. the u.s. supports nordic companies. they came from kurdish militias. >> this is about the future. it's about a revived nato with and conviction to defend ourrity shared values and lead the world. vonnie: china is seeking to return to cheap russian oil.

strengthening ties with moscow as europe six japan imports. beijing is in government level talks with russia to buy additional supplies without direct involvement from oil company. russian accrued prices have tumbled as buyers step away. canada has banned cte equipment from its 5g wireless networks over national concert he concerns. -- security concerns. gear from the chinese company will need to be removed by 2027. the latest decisions keep canada in line with similar bands in the united states and united kingdom. relations between ottawa and beijing have been worsening, especially after canada's arrest of the cfo in 2019. indonesia has lifted a ban on palm oil exports in a move that will bring relief to the market after the war in ukraine and choked off cortical supplies. president says shipments can resume on may 23. the ban was imposed on april 28 and one of the biggest acts of perfectionism -- protectionism

as russia's invasion of ukraine threatens to worsen global inflation. 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: still ahead, we will be joined by former sydney deputy mayor and federal politician cara phillips. for more, let's ring in elections and the rise of females in politics. next, 1870 nine advisors gives us his take on the market volatility and the fight to tame inflation. this is bloomberg.

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>> market valuation rating. >> we have a bubble that is now the flitting. >> what we are seeing in the markets is a rotation from growth stocks that were earning far in the future toward stocks that are much more value stocks. >> i do see a lot of opportunities out there, especially with higher investments. >> directional trade and more about relative value. >> everything on the fundamentals front seems very much intact. the 2022 estimates continue to rise. >> we have to wait a little bit to see what the fed is doing. >> everybody is afraid that they're going to get it wrong and the chances are that they will get it wrong. >> i do not think a recession is imminent. >> recession in early 2024. >> were talking about 2024, maybe later. >> we don't think a recession is going to happen in the next couple quarters. haidi: a week of trading amidst

those recession fears. uncertainties expected to the main a high and inflation fears. joining us is jim from 1879 advisors. here in asia, the seven week slide across a breadth of indicators, the conviction is just not there. what do you think this market needs to see before it can actually stage a turnaround? jim: i think what the market needs to see before a turnaround is more than anything else, a little bit more capitulation then we have seen so far. right now, i think the underlying strength of the economy is enough to carry us through. and we are not in the recession camp at least not heavily in the recession camp. maybe we are dipping a toe in, thinking there is a 30% chance of a recession this year, but we think the market is pricing in more of an 80% chance of recession.

what is favoring the market right now and i think supporting the market a little bit, is how dour investments and investor sentiment has become. that to us is a very strong indicator, but in and of itself, it is not enough to turn the markets around. i do think things are starting to build a bottom. and of course, with the economy, the underlying economy strong, we do not see a huge reason why things have to get a law more severe. -- a lot more severe. but we do think that we need to see a little bit more of a spike in volatility, maybe a little bit more margin calls. you know, the institutional investor has not yet really capitulated and until we see a little bit more volatility there, i think we are going to be range bound and we will continue to go sideways, maybe even a little bit more further

down before things turn around. haidi: where do you see a pockets of where things are looking more compelling? james: we love quality earnings. quality companies that are well-positioned, companies with a strong economic motor. companies that can pass on inflationary increases. companies that are going to have strong demand in any economy, but especially strong demand in a strong economy, which we expect we will start to see as things straightened themselves out in the summer. what we saw last week with a lot of retailers trying to move excess inventory and certainly having some pricing pressures, both from the competitor standpoint, but also because the lower end consumers are certainly feeling the squeeze more than anybody else, especially with high food costs and high energy costs. in fact, talking about turnaround, if we can see relief

in the ukraine situation and maybe some recovery in energy costs, then that could prove more -- could put more cash in consumers pockets. shery: are we going to see resilient consumers also elsewhere that is not the united states. we have seen consumers shares really leading the declines across the board in asia as well. james: in asia, they have their own problems with lockdowns in china. and not a lot of spending on materials or supplies or anything else for that matter. europe has a similar problem, especially with very high energy and food costs. this small benefit that they do have is that up to this point anyway, a very strong dollar has supported our purchase of exports and help support their currencies. more so in europe than in china, where the products are not coming out, but that does not

undermine our belief that both europe and china are probably well poised to have a recession this year. and certainly i do not think we have seen at the end of the slowdown in those markets. shery: when it comes to the u.s. though, there are more things that we are not going to see the recession as you say. they are a little bit more optimistic, but the rotation away from cyclicals is too fast, too strong. are you still getting into those spaces right now? james: we take a long-term perspective and we tend not to -- we tend not to swing our portfolios based on a macro effects. we try to keep macro out of our portfolio. again, going back to companies with strong cash flow, strong margins, strong competitive position, and away from cyclicals. we're not big fans of energy and that has been a huge play this

year. we are not huge fans of banks either, mostly because of the leverage game that they play. although even in a rising interest rate environment, they probably still have a little room. they have not been the favorites at all. we do like health care and we do like productivity enhancing technology. things like microsoft and microsoft as were especially as companies that seek to grapple with high employment costs and a very tight labor market. we think companies that can deliver productivity enhancing opportunities especially small businesses are very well poised right now. shery: jim, it was really good talking to you. vice chairman at 1879 advisors. you can get a roundup of all of the stories that you need to go to get your day going in today's addition of daybreak. terminal subscribers, go to davie go. you can customize your settings so you only get the news on

industries and assets that you care about. this is bloomberg. ♪

vonnie: a quick check of the latest business flash headlines. boeing and nasser have launched a capsule for a planned rendezvous for the international space station. to earlier failed attempts for a program that left spacex as the only american option for astronauts. the cruelest mission is due to meet -- reach the iss later on friday. boeing had a hundred $95 million in extra ordinary charges to cover delays. twitter executives have claimed that the deal to sell the company to elon musk is moving forward as planned. the company's top lawyer says there is no such thing as a deal being on hold and that twitter will not renegotiate the agreed price of $54 per share.

meanwhile, elon musk has been tweeting that he is spending less than 5% of his time on the twitter acquisition, adding it is not worth the time. reaching a tipping point for market maker and hedge funds as the city wrestles with rising crime. citadel securities said that we are getting to the point where things do not change, we are gone. the billionaire has long hinted growing frustrations at political leadership in illinois. haidi: let's get you a look at how markets are setting up as we head into this friday. asian markets are hoping for a muted session. and it does look like we are studying as we get into the start of trading. asian stocks more broadly looking set for a seven-week losing streak, but of course, the question is if there is

conviction within the recovery rally, given that we have u.s. equities in that choppy session. recession concerns still paramount. we are seeing chicago and nikkei futures looking slight at the moment and u.s. futures up by a 10th of 1%. australia also potentially looking to get a boost after this weekend's election. coming up next, after months, president biden makes his first trip to asia as the spotlight turns on washington's relationship with beijing. we get more on that trip next. this is bloomberg. ♪

haidi: with got japan at national cpi numbers crossing the bloomberg. it is a little bit of a beat when it comes to national pis and fresh food. coming up 2.1, slightly higher. that headline number, two and a half percent expectations more than doubling from 1.2% in march. shipping out fresh food and ever volatile energy cost, update tense of a percent again, but slightly better than expectations or faster than limit -- excitations. not surge really hitting the bank of japan's 2% target as last. but a lot of economist pointing out that this is due to statistical distortions, not the wage driven gains that the boj

is seeking. that is the reason we've seen the boj reluctant to change their easing policy path. these numbers are likely to deter the boj from maintaining extreme easing even as we see other global central banks on that tightening path. but when you take a look at the sales-tax hi, this is looking like the highest inflation rate at 2.1 percent year-over-year for core cpi, the highest inflation rate since 2008. that was again when commodity prices were going through that boom. it is likely that the jump we are seeing is being driven by firm rate stabilizing after the rate that we saw last year as well as upward pressure of surging energy costs and food costs likely to play there as well. certainly bloomberg economics acknowledging tuesday the 2% level. as cost pressures slide -- update i should say that should really side as well. take a look at dollar yen which

is on that strengthening path. the extended decline in the dollar over the past couple of sessions, chicago nikkei futures pointed slightly higher, but we did say the nikkei 225 is joining that global equities route this week as well. and also watching yields as we see yields falling across australian treasuries. shery: just as you mentioned, we talked about that. monetary policies from the boj and the rate differentials. now we are hearing a default 150 against the dollar, a level not seen since the 1990's. nicknamed mr. yen for his time influencing the currency of your he was speaking -- speaking excessively to our colleague yvonne. >> it is only effective when you

lead with the other party. but i do not think the united states will lead at this moment. you know, the development seems to be favorable to the u.s.. and intervention will not be approved by the united states. so i saying at this moment, it is very difficult. yvonne: let's go back to the late 1990's, when you were at the mls. it was the middle of the asian financial crisis. you had dollar yen north of 130. and that u.s. joined the boj it to buy yen at the time. what did you learn from that experience? >> including the united states in japan, you know, maybe six times or seven times a year they meet. so they knew each other quite well. so communication.

i was vice minister of finance. my counterpart in the united states was larry summers. and we contacted with each other quite often, particularly when something would happen in the market. yvonne: so barring any kind of coordinated intervention, do you see anything that the boj can do? they did not take the last meeting to try to adjust their yield curve control. but do you see in the near future are they going to have to address this? >> central bank is not that much worried about depreciation at this moment. this has happened because of the difference of the monetary policy of the two countries, so that, you know, the reason is very clear. it is not japan selling so i do not think that either the bank of japan or the government is worried about the current state of affairs. yvonne: when is the weaker yen

going to be a problem for the boj? at what level do you think it becomes intolerable? >> that is very difficult and it depends upon the case. it depends upon what sort of state of affairs of the japanese economy. but the market expects the yen to probably go to dollar 150. and you know, if it goes beyond 150, then i think bankers would be somewhat concerned. yvonne: so do you see it going to 150? how much lower do you think it can go? >> market expectation is at the end of the year it will go between 140 and 150. so. yvonne: you mentioned that they are not too worried about a weaker yen at this point.

do you think a weaker yen is good or bad for the japanese economy? >> well, it is not that good, but just a little. it is not a critical sort of situation. we could tolerate that. if it goes to 140, 150. yvonne: in terms of the boj hiking rates, is that -- when do you actually see that ever happening? >> well, it depends upon the conditions of the japanese investments at the moment. the deflation time is over and they expect it to increase. so there would be a time when the japanese economy gets a little bit overheated. and at that time, maybe toward the end of this year or early next year, bank of japan may raise interest rates. and i think we can expect the raising of interest sometime

next year throughout the summer. -- toward the summer. haidi: that was japanese finance minister eisuke. speaking of yen, or sing a bounce back when it comes to the dollar the moment could we saw the inflation number finally hitting an intact topping the bank of japan's 2% target level. but of course the pace is 2008 for core inflation including stripping out tax hikes which was a distortion. wage gain increases that the bank of japan will be looking for and meeting to see before they pull back on easing monetary policy. we've got a yen study enough touching those gains against oversee bonds markets and cautioning jgb's among a 20 year government debt auction. we did see the dollar yen falling to its lowest since april of 27 and we are set for a

second weekly decline amid the slight pullback were seeing in the u.s. dollar. let's get you to vonnie quinn with the first word headlines. vonnie: kansas city fed president says the stock market slump should not surprise investors given the current policy environments. he told cnbc the fed has warned it will increase rates to cool inflation. after a 50 basis point hike, jay powell has indicated he is on track for similar moves in july and june. u.s. treasury secretary janet yellen is -- the idea of central banks missing their inflation targets. she is in germany meant -- meeting central bankers. the u.s. has been aiming for 2% but the past two months, prices have been running at an annual rate of more than 8%. cut sri lankans debt rating to default. $78 million. it is the first sovereign debt default since sri lanka gained

independence in 1948. the central bank's warning inflation could accelerate to 40% in the coming months, worsening the ongoing economic meltdowns. hong kong newspaper says the country and city is considering a closed loop system for quarantine a free business travel with mainland china. no details were reported on how it would be implanted or when the chief executive elect john lee formally proposes it. it is a system used in the mainland and will require workers to be sealed off from families and the wider community. global news, 24 hours a day. on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. on vonnie quinn. this is bloomberg. shery? shery: president biden is set for his first presidential visit to asia friday. he arrives in south korea for strategic talks with the new president made threats of more missile tests out of north korea. for the latest let's bring in stephen engle's in hong kong.

steve, the president will be in south korea and japan for five days per to what is on the agenda? stephen: there is lots obviously. geopolitical concerns as well as the economic framework that of course bidens administration has been working on to unveil. that will likely happen in japan or at some point during these five days that he will be in south korea and japan. there will be a quad meeting of course on a strategic level. a lot of this is going to be bidens attempt to show that asia-pacific is a priority. look, this is the first trip to asia that biden has made and it comes relatively late into his first term. 16 months ago he was elected. most presidents, at least the previous four presidents came to asia within the first nine or 10 months. all of them went to japan. the top strategic partner in this region. biden a little late to the party here in asia. but of course, extenuating circumstances. the pandemic, were in ukraine

and many domestic issues that have kept bidens attention elsewhere. but it does not mean that the biden administration is not focusing on the asia-pacific. north korea again is not anywhere near the upcoming back to the negotiating table on the nuclear front. there have been several. in fact there have been more missile tests already this year, twice as many then last year out of north korea. so that is a big issue. there is concern as well that there could be a potential, some sort of nuclear test in north korea around this time of bidens visit. that is obviously a concern. backdrop of course us well is going to be china and the cool relationship that there is still pervasive between china and the united states on the whole issue of taiwan. the cornerstone of this perhaps is this in do pacific economic framework, which the united states is going to be unveiling to the asian-pacific as critics in the united states say it does not go far enough.

it is not a tpp like agreement. it is going to focus on resilience, clean energy, decarbonization and infrastructure. something the united states say it needs to go further. haidi: we just mentioned taiwan briefly, but the yen this year sending that warning about a dangerous situation when it comes to how the u.s. deals with this. stephen: absolutely and that call between jake sullivan and the national to the white house and -- he is the top diplomat in china. essentially a state media read out from that phone call between those two gentlemen ahead of bidens visit to the asia-pacific. essentially said that the u.s. side insist on playing the taiwan card and goes further and further down the wrong road, it will certainly lead to a dangerous situation. of course biden is not going to china on this trip, but china will be the backdrop of almost every discussion. haidi: our chief north asian correspondent stephen engle there with a preview of that.

coming up next, we see the so-called growing influence of independence in australia's elections. well-funded women taking on male liberal candidates. in the country's wealthiest suburbs. we will be speaking with the former deputy lord mayor next. this is bloomberg.

>> we are seeing policy reform in this election. >> playing the long came with the country, focusing on the development of skills. also trying to track the right skills to complement our to mastic skills. >> back in this country, we are building enough homes for the population. >> we need to see labor being able to move freely. between states, which it is now, but also internationally. >> cost-of-living and cost of doing business are really the issues. >> this is in businesses, prohibiting them to grow and get out of their situation. >> shortage is the key constraint to economic growth for the country. >> the relationship between china and australia is to the extent that it probably has been will impact on china. >> australia is at the forefront of -- we have the opportunity to leave the world.

>> such great conditions, whether australians continue to be everything. >> migration. it is still migration. haidi: australian business leaders on key issues ahead of the federal election. politics have been dominated by a two-party system. but there is a new force and play the selection, the so-called teal independence. they are a community driven group of mainly female candidates with a climate action and reform agenda. our next guest shook up australian policies as an independent candidate in 2018. she joins us now. really great to have you with us. this feels like there is an even more seismic shift when you walk through the streets and talk to people now. do you think this cohort will have a traction to get it over the line? kerryn: you are very right about the teal independence or

so-called teal independence, because these campaigns are independent and they have a number of different campaign colors that they have chosen. but this really is the inspiring story of this election campaign. what we have seen is a response to the frustration with politics as usual. we are seeing campaigns that organically growing from communities and they are consultative, engaging, interested in issues of national and local importance. and inspiring people to get involved in politics, many of them for the first time or for the first time in a very long time. and there are at least 23 of these communities in the campaign. and several of them with a real chance of winning. haidi: climate and gender equality are two of the issues that the coalition government has really been heavily criticized over this time of governance. is it sort of any surprise to you than it that we see these strong women campaigning on these two issues?

kerryn: one is there is a frustration amongst women that we should be accorded to select gender parliament should be ignored. they have not progressed to the extent that women would have liked to of seen them progress. we do need to see action in parliament. there are other issues that are frustrating, things like affordable childcare, the gender pay gap and the separation gap. important, the future for our children and grandchildren. this is where young people are also very engaged in the outcome of this election, because they see their future dependent on issues like action on climate change. we have had policy paralysis on this issue for about a decade now. and the performance a cop 2016 most recently was embarrassing for a lot of australians who are looking to a figure focused economy that shape future focused economy, a health focused economy and future for our country and are not seeing

that. the other frustration that is being expressed is the refusal by the current liberal national coalition to introduce any integrity commission at a federal level. everyone of these independence has integrity as one of their top three issues that they want to progress if they are elected. shery: as an expert yourself, you mention health policy being issue. how highly has actually featured in this campaign especially when it comes to future policy out of the pandemic? kerryn: frustratingly, covid has not been enough of the focus in this campaign for my liking certainly, and i have been involved in public health can indication for many decades. i'm a general practitioner myself and the fallout over lack of action on covid particularly in the last six months in australia. currently, we have almost 400,000 active covid cases in

australia and it is one of our leading causes of death, so it should be a focus of the future government after the election tomorrow. we have seen some talk about covid this week with anthony saying that a summit on covid management will need to be a high priority. one of our force priorities. and i think that is going to be a very important move. we have also seen a move just today with the australian election commission having to introduce an expansion of the ability of people to vote by telephone if -- so that they can continue to isolate and not put other people at risk. haidi: what do you think is the one great contribution that the election of any of these independent candidates can bring to the political system into the political class in australia? kerryn: i think the really big contribution of the end up in a campaign movement is that it has engaged people who have not been politically engaged ever or for

a long time. it is also bringing in young people who are wanting to see a different way of doing politics. it is a real shakeup for the major parties to see that there is this really significant new force in the australian political scene. and several as i said have an opportunity to actually win in some of these traditionally conservative it's around the country. there are about 23 of these campaigns on the way and a lot of them are not in marginal things at all. they are in seats that are held by incumbents. by a very large majority. but they are known to change the landscape for the selection, but importantly, we're going to see fundamental shifts in the next three years when we see more of these independent campaigns popping up around the country. giving people in the communities representation and the ability to have their voice in the us trillion parliament. haidi: we really appreciate your

time. the former member for the sydney seats of wentworth. you can get more insights into the selection of race. the download bloomberg's podcast hosted by our own paul allen along with georgina mckay. that edition is available wherever you gator figure podcast. -- you get your figure podcast. shery: we do have breaking news. we are seeing that shanghai has found three new covid cases outside of quarantine. it is added it hundred 58 local covid-19 cases. this of course comes after a week of no community transmissions for shanghai. in the hopes that we would see it more sanctions of restrictions, but right now, we are seeing that shanghai has now registered three new community cases. plenty more to come on daybreak asia. this is bloomberg. ♪

haidi: we are tracking the fallout of the global supply chain crunch. these are the top stories today. following europe's plan to been imports to be in oil, beijing is in discussions with moscow to buy additional supply. that would be used to fill china's strategic petroleum reserve and talks are being conducted at a government level. indonesia, the world's biggest shipper of edible oils is

lifting a ban on palm oil exports on may 23. the move will bring relief on the global market after the war in ukraine it choked optical supplies. ports took a hit in april with indicators of possible -- in singapore and hong kong remaining below average is and inbound containers are at their lowest this year as a ships pile up waiting to doctored bloomberg terminal users can read more about those stories in our newsletter supply lines. haidi: as you mentioned earlier, shanghai finding cases outside of quarantine could we're just getting the numbers out of beijing. 62 local covid cases for thursday. we are seeing over all trending down but of course these restrictions mostly are in place. we do have the opening in sydney and tokyo upon us. this is bloomberg. ♪

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♪ shery: welcome to daybreak asia, live from bloomberg's gateway, latin america pen a. -- panama city, i'm shery ahn pretty haidi: i'm haidi stroud-watts. our top stories this hour, markets open at the chelsea u.s. session overshadowed by darkening outlooks. inflation jumping to the highest since 2015. president biden heading for asia with taiwan and russia's war in ukraine set to dominate. plus, australia is set for an election. the latest polls suggesting scott morrison's conservative coalition is battling to survive. shery: take a look at the open in japan right now, we are seeing a little bit of green with the nikkei up to tens of 1%. extending three sessions of

gains. we are seeing sentiment recovering in the asian session, with u.s. futures gaining ground as u.s. stocks had a very choppy trading and we actually saw them fall in the last hour of trading. we're seeing the japanese yen also muted right now. 127 level now. remember, we got the april cpi numbers coming in at 2.1% growth. you're on year, hitting that boj inflation target. expectation of gains up 2% for those core inflation numbers. they have been the highest since 2015. of course, the boj continues with its ultra easy monetary policy. the 10 continues to trade lower towards that. take a look at what korea is doing. a little bit of a rebound from that day we saw for the kospi, the worst day in over a week. gains of seven times of 1% and even the korean won right now at that 1266 level. this of course after it led the dropping of asian -- currencies

good we continue to see concerns about growth. even the finance minister coming out and saying the grave inflation situation may continue for a while. haidi: take a look at the set up as we get the last trading session before australians headed to the polls on saturday. this is what we are seeing here in sydney. opening up in just the first minutes of that session. of about 3/10 of a percent trade we are seeing strong gains of straight out of the gate for the likes of materials and a bit of a recovery interestingly and consumer discretionary and stable stocks that were battered in the previous session. we are expecting if history is any guide that eight out of the past 10 elections have yielded three months of gains or us trillion equities. following the election. voters or investors will get some benefits regardless of who wins. also watching the bond markets, we are seeing that mirroring affect again. australian tenure as well as three year yields falling on the

back of what we are told with treasuries. the aussie dollar and other asian currencies looking to get a bit of a boost from the weakening greenback situation. s&p futures extending gains about four times of a percent higher than at nasdaq futures also putting in a good session at this point. the treasury yield will continue to watch, coming off of the strength of the rally previously. also taking a look at oil as we continue to see accrued heading for a fourth weekly gain. again product demand, the biggest driver here as we get into the summer driving season. it is going to be a narrow weekly gain. that optimism for demand has been eclipsed by concerns about rising interest rates. the economic slowdown in the prospect of recession top of mind at the moment. >> this macro economic background, really difficult to tell where the markets are headed with gyrations that we continue to see, despite this,

our next guest says that she is not making major changes in her portfolio. and ev makers, let's bring in chief asia portfolio good to have you with the spirit are these more long-term calls and where would you go for these assets? >> these of the structural factors that we like in the long-term. health care as you know has been a traditional area. but we see a lot of growth ahead in the biotech space. this is across the region in japan automakers will continue to invest despite macroeconomic environment. so again, this is across the boj could we see china, korea japan

accelerate in all of these areas. shery: when it comes to china though, despite the low valuations you don't necessarily find the environment. and you still see opportunities. >> when it comes to china, it has been a challenging environment. but we are seeing valuations at reasonable levels now. we know the policy headwinds, the impact of policy headwinds that that has happened. but going forward, we do feel that there will be policy support, valuations are also supported, so we will remain collective. we are not going to be too underweight china going forward. >> if you take a look at various indicators, tracking what we are seeing in price moves, in terms

of valuations, asian equities, we are set to swap the second week losing streak, but for example, it does not show much conviction in at strength of the past move. you would not be able to call this a kind of bullish break above and does that really suggested that we are going to see a lot of choppy trading. until we get some better indication of where the inflation and recessional risks fall. >> yes, so, when you look back here to date, i think towards the end of last year, the fed tightening has already been talked about. a lot of it has been absorbed into the market. but what has happened is that the year to date events in

ukraine and the shutdown in china has exacerbated those inflationary pressures. i think those issues are now being priced in. i would like to think the volatility will succumb somewhat going forward. again, people will be looking at peak inflation indicators. to -- for volatility to come down. haidi: in the meantime though, where do you find these pockets of opportunity where of course valuations for china for example that sherry was talk about are looking pretty compelling? we still see quality earnings and we have seen them being derated year to date. this is where we are doing a lot of in-depth analysis. for our experience investing in japan tells us that even if economic growth is low, growth

in vesting does not necessarily underperform. so we are shifting our focus to -- rather than looking for strong topline growth, we are focusing on quality earnings trades. haidi: asia equities portfolio manager at j.p. morgan asset management, always appreciate your time with us. let's get you to vonnie quinn with the first word headlines. vonnie: thank you. president biden has offered support for finland and sweden's bids to join nato. he met the finish president and swedish premise are at the white house at after they applied to broker agreement with turkey which opposes bids over claims they back militias. >> this is about the future. it is about a revived nato that has the tools and resources, the clarity and conviction to defend our shared values and lead to the world. vonnie: china is seeking to replenish strategic reserves as chief russian oil is

strengthening energy ties with moscow as europe works to ban imports. sources tell us beijing is in government level talks with russia to buy supplies with little direct involvement from oil supplies. russian supply prices have tumbled as buyers avoid being swept up in financial sanctions. indonesia has lifted a ban on palm oil exports in a move that would bring relief to the global market after the war in ukraine choked off critical supplies. president says shipments can resume from may 23. indonesia's ban was imposed in one of the biggest acts of protectionism since russia's invasion of ukraine is starting to worsen global envision. vice finance minister says the yen could drop to levels lasting in 1990 on japan's deepening monetary diversions. the manna known as mr. yang told us until the gap narrows, the yen is likely to remain under pressure against the dollar. it's the g10's worst performer

over the past three months. >> the market expects the yen dollar to globally go to dollar 150. and you know, if it goes beyond 150, then i think the bank would be somewhat concerned. still ahead, china is adamant about a zero covid policy, but the portions are avoiding another shanghai type locked down that's key to making -- meeting economic goals. global stocks slump and not stopping the fed from going ahead with half-point hike. more from the latest, next. this is bloomberg. ♪

>> the market is -- >> this is an evaluation re-rating. >> it is now deflating. >> what we are seeing in the markets is a rotation from growth stocks and earnings are very high in the future toward stocks that are much more -- stocks. >> we see more opportunities out there. >> about the directional trade and directional value. >> everything on the fundamental front seems intact. 2022 estimates continue to rise. >> we have to wait a little bit to see if what the fed is doing is the right thing. >> everybody's afraid they will do it wrong and chances are, they will do it wrong. >> the session of late 2023-2024. >> we are talking about slang

24, maybe later. >> we don't think arrest session will happen in the next couple of quarters. haidi: some of our guests there with the economy. take a look at this chart showing the cost to ensure corporate bonds are rising in the u.s., europe and asia. let's go to our correspondent for asia garfield reynolds. what is the story about backing credits just tell you about the border market sentiment? >> it's another indicator of how markets are get in beating -- beaten down by the -- until inflation is controlled. there have been plenty of comments from speakers highlighting their willingness to deliver to a variety of markets because if they are

focused on inflation. their calculation is that there's a chance that they would be able to do enough if they frontload hikes to cool the economy sufficient to bring inflation down without causing a hard landing where the economy contracts. they don't see a recession in the next couple of quarters, and, to be honest, the bond market doesn't really see the recession coming in the next couple of quarters. it's more worried about late 2023 at this stage. that's when you see some of the futures curves inverting for euro dollars in signaling that there is the potential that the fed will be coming late by then. so the longer term view is a lot cloudier. shery: and it seems that the

stock markets are now also starting to price and all of this risk. we are seeing their charts on the bloomberg showing the longest weekly moving streak in decades. are we seeing a fundamental shift in the structure of the markets right now? >> in many ways, this is a drawdown that has been brewing for a long time, and many people, including myself were a bit surprised we didn't get a drawdown earlier because once the fed and other central banks signaled that they were going to remove some of the massive stimulus that had been deployed to combat the pandemic, you have to question whether equities in particular, also bonds and other asset classes, could stay as high as they were, but on a nominal and valuation basis relative to historic norms, so

it was kind of a case the longer they stayed up, the higher they could afford and equities stayed up. and that was a long time, so now the fall has been understandably tough, and it looks like it could get tougher. then again, the latest action we are seeing where things look a little bit more stable, maybe there is a bond to be found here, at least temporarily. and depending on where inflation goes from here and just how tough the fed feels a has to be in response. shery: bloomberg's chief rates corresponded for asia. in other -- in other top federal reserve officials that april black and the stock market is hoping to pull back inflation. kathleen hays joins us. the kansas city fed president echoing which are jay powell has to say. what exactly were her comments?

kathleen: esther george said when asked about, look at the stock market, we just showed that chart about how severe the drop in stocks is, and she said as she answer the question in the cnbc interview, it has been a rough week for stocks, but the federal reserve will stay on its path. i got a quote for you. i think what we are looking for is the transmission of our policy to markets understanding. there's understanding of what we are doing and that tightening should be expected, what we are seeing in stocks is one of the avenues for which tighter financial conditions will emerge. this is exactly what jay powell talked about, he said tightening financial conditions is what we need, quote unquote, look at this chart, they are starting the titan. financial conditions have been in the green, they have been very loose anything of the last couple of years, a lot of skeptics of the stock market rally were saying the fed is

driving this with all of its liquidity. they are getting ready to pull away and you can see markets reacting, but the fed is fine. what they are not going to find is credit market stress and destruction. look what happened that big spike in from the right of that chart. that was around march of 2020. remember when the bond market was seizing up in the fed had to come in and do extraordinary measures, we are far from that. we see the amount of credit stress is still pretty much in the range. in terms of the stock market, even though has come down a lot, if you look at the outside gains, double digits for three years in a row and the federal reserve standpoint, as long as this doesn't need to credit market stress and financial instability, they are probably going to sit back and let the stock market selloff as that must and they are likely to keep hiking rates as they make it clear that they must do.

haidi: increasing signals of distress from china's economy. lots of forecasts are being cast. are we expecting a response from policymakers in the lpr? kathleen: we certainly are. in fact, that is the lending rate that most bank loans, this one-year rate are based on. it's a very important rate, as you could see looking at the green light, it hasn't been changed in a while, but it looks like it's expected to get down to about 3.65%, that's the bloomberg consensus down from 3.70 although bloomberg economics will do a full 10 basis points. that will have an impression on the market. not quite as important for investors in terms of what they are focused on, but the consensus says no change, bloomberg economics thinks it will come down five basis points. even though the pboc, people think china passed on the medium

lending facility rate lowering it recently, they are expected to do that in the next few days and bring it into alignment. lockdowns and shanghai, china's economy is hurting and investors are thinking there's nothing else they could do except finally give it some more stimulus. haidi: our global and economic policy editor kathleen hays. investors feeling the jitters in europe given the dire economic projection for the continent. take a look at how futures and europe are opening for the friday session. stock 50 futures are looking because it of. 7/10 of a percent higher. downside when it comes to msci europe. he saw the previous session pretty negative, extending those declines alongside that sharp selloff we saw in u.s. equities. all of this continuing to fuel concerns about economic slowdown. we have seen the attempt to stage a slowdown for european equities and each time it has been short-lived even with valuations looking compelling at

the moment. a new bloomberg survey when it comes to strategists being surveyed by bloomberg on the stocks euros 600 index. they say negative returns for europe. they see 2.5% lower ending the year for the stoxx europe 600 index with a lot of reference since -- references to just how the macro backdrop and energy market is. you could get a round up of the stories you need to know to get your day going in today's edition of daybreak. you can get that at dayb on your terminal and on bloomberg and the bloomberg anywhere app. you could customize those settings so you get the industries in the assets that matter to you. this is bloomberg. ♪

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>> ken griffin says he's out of

step with many investors because he doesn't see a recession happening in the next couple of quarters. he told the structure conference in new york that key market themes are well-known right now. there -- differentiation is key. >> markets are a wash of opportunity and everything we invest. every day there is something to do. there is nothing to do today. it comes down to, and the business of research, it's about idea generation. it's about what differentiation do we have? , commodity, credit, equity that's different from consensus. when we have the differences, that's capital. >> is there something that you think is different? or part of the world? >> no, i don't, i think all the

different firms are contemporaries that we speak to to compare notes with. information flows pretty seamlessly across the market. so, the big debates are around the fed. but there's nothing in that debate that's like, i never thought about that. commodities was the other big debate, and in particular, where is u.s. going to go with energy policy? how fast will european bit away from the impacts of the war with ukraine? what does going green mean? in particular, now that we have seen some of the shortcomings of policies that were out of sync with reality and the devastating impact on consumers, the regulatory issues are coming back into play in a powerful way that's unsettling. that takes away from our industry. but if big things are knowing and the key question is how well

can you formulate your differentiated opinion from others? that's the key question. i think we are out of step with many people. we don't think a recession will happen in the next couple of quarters. we are not surprised by the equity market move, we see that outperforming, but a recession happening is a differentiated view. shery: ceo ken griffin speaking exclusively with francine lacqua. we are seeing some green across the board with the nikkei being led higher. my consumer discretionary stocks, this is one sector that took a hit in a previous session, but we are now seeing at rally, even despite the fact that we got april cpi numbers beating expectations with a gain of 2.1% year on year. still ahead we

>> going into the friday session for asia. continuing to see that product oman pushing oil high although the resilience is starting to get a concern about tighter monetary policy, the economic slowdown. all of this with financial markets is weak. we are seeing brent crude giving back some of those gains about 4/10 of a percent or 3/10 of a percent when it comes to wti as well as brent. we are on course for a fourth consecutive weekly gain that would make it the breast -- the best of run. also turning to grain as we get a warning from united nations, and grow intelligent saying the world only has 10 weeks worth of wheat consumption in the reserve, this warning saying global grain reserves are at the lowest since 2008. seeing week extending their

clients as a russia's record crop outlook is weighing there. we did see futures advancing for a second day, and the asian session, seeing a pullback. watching, oil futures, the sum -- slump we have seen in the commodity, losing a top producer in indonesia, lifting that ban on exports that pave the way for oil prices to some further as supply fueled and demand continues to languish. it's get you to vonnie quinn with the first word headlines. bonnie: janet yellen rejecting the idea of boosting inflation targets. the secretary is in germany meeting finance ministers and governors. the challenges to meet the established challenge -- targets. they have been aiming for 2% since prices were running at an annual rate of more than 8%. kansas city's fed president says

the stock market slump should not surprise investors, given the policy environment. the fed has repeatedly warned that it would keep raising rates to cool inflation after a 50 basis point rate hike. the secretary jay powell says the fed is on track for similar hikes for june and july. sri lanka has restricted to fall the company had payments on bonds worth $78 million. sri lanka gained independence from written in 1948. the central bank this morning it could accelerate 40%, worsening the ongoing economic meltdown. canada has banned huawei and cte equipment from its 5g wireless network over national security concerns. businesses will need to remove it by the end of 2027. the long awaited decision brings it in line with the u.s. and the u.k., relations between ottawa and beijing have been worsening

after the arrest of the cfo in 2018. hong kong newspapers saying the city is considering a closed loop system to quarantine free business travel with mainland china. no rules are when the chief executive elect would formally depose it. it has news and it requires workers to be sealed off from their families and the wider community. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. haidi: goldman sachs has cut its economic growth forecast by half a percent to 4% as the government doubles down on its covid zero policy, this is one of the economic indicators that they are watching that shows activity slumping around 11% in april -- april. financial conditions of titan further on credit growth, weaker equity performance. we will get that setting in just

under one hour. let's bring in the chief china economist to elaborate more on this call. this is one of the most bearish on the street right now, does it feel like we have seen a bottom at all? does that all end up in the air depending on whether we get more restrictions? >> the situation is uncertain, we have a consensus that was first put out for our outlook last november, back then the focus was on the property markets slow down, and that was driving our below consensus forecast, the latest cut is recognizing the damage done by omicron and the slow recovery that we have been seeing in may, and that second quarter that looks like the activity is much weaker than we had thought. in the third quarter, we are expecting sharp rebounds, if you are expecting the activity, we

do thank april was the weakest in terms of economic activity, but again, the uncertainties are significant, given we are dealing with omicron. >> the numbers suggest we have seen $5 trillion worth of stimulus from the government so far this time, it's actually less of what we saw back in 2020, about a third of the $17 trillion economy, how much of that is productive? you could go back to that playbook of infrastructure investment, but is construction happening? is there contribution to gdp only see covid restrictions taking place? >> covid restrictions are widespread and it is true, a lot of activities have to be put on hold, including what we saw in the data, everything declining, including infrastructure, same

thing with the property market, even though you can have the property policies, people are at home and can't really go out, there's no property transaction. but i do think this is at the core of the extent of the economic recovery. we just need to have operations under control and have mobility at a reasonable level to see the policymaking infrastructure or property to show off the inactivity. shery: what happens to the 5.5% growth target? >> i think when they got -- when the government made that target at the beginning of the year if they on the floor for changes. they did not say five-and-a-half, this at around five and a half. it's not a preset number.

after that it's one shock after another, idled the government anticipated to extend the damage to the economy from omicron, which exacerbate -- exacerbated the damage. anna had the implications for commodity prices and purchasing power in economic activity. and with all of these together, we don't think of five-and-a-half, we don't think it will be achievable with a reasonable assumptions there. so even with a very sharp rebound in the third quarter that we are potentially in, we are looking at the full year this year. >> at what point do we start worrying about social stability? we have heard policymakers talk about the importance of job creation. >> in china, i think there are two really important bottom

lines for the government. it labor market stability and on the labor market front we find data getting to the highest with the government release. this is what the premier has been talking about, stabilizing the labor market. again they go back to wyatt's increasing so much. that goes back to the covid situation, what does it mean to get covid under control? without the economic activity we talked about in labor market stresses hard to deal with that as you have lockdowns in covid restrictions. collects most of the indicators we are getting are sending strong signals to the pboc of the stronger measures.

we have the prime rate, but does this suggest we could see more action from the central bank? >> the central bank has been doing easing with three lending programs. the tricky part in the pboc is that the rest of the world has tightening policy rates. and for fear of outflows and their differentials, and potential volatility in the fx market, they are reluctant to cut policy rates and we have been doing the programs targeting logistics. they are easing. but i think the bottom line, we don't have enough demand. perhaps it won't generate enough demand. we saw that in april's credit data, which was a big disappointment despite the ample liquidity there's just not

enough. that's why we have the policy demand that is the key product to get the economy back on track. shery: good to have you back. it was really good catching up. coming up. we are one day away from the australian federal election. a look at the key issues facing voters in the australian economy next. this is bloomberg. ♪

haidi: take a look at the final trading session here in australia ahead of australians heading to the polls this saturday, it is a very strong set of gains seen across equity markets. we are seeing that rebound after a difficult few sessions of trading. interestingly, if you look at history, eight out of the past 10 elections, the three months after that regardless of who wins the election we see a nice bounce of the australian equity, we see every sector other than energy in the green at the moment, trite strong leadership being shown by materials and consumer discretionary stocks that really battered in the previous session. we also see sovereign bonds holding, steady yields in australia on both ends of the curve, measuring what we saw on the treasury market, the aussie dog -- dollar seeing strength on

the back of the greenback. heading to the polls on saturday, the latest opinions have the labour party narrowly ahead of the prime minister scott morrison's coalition. for the latest on the campaign, let's bring in the australian governor, you have been on the campaign trail for both major parties, what's the state of the race, whether we need to look out for? >> happy election eve to everyone out there, it has been six weeks but seems much longer than that, basically we are looking out all opinion polls, there has been a tightening in the last couple weeks that show a slim majority for the labor opposition. the note of caution and that, a caution echoed by not just labour party strategist, but liberal ones as well, is that the last election had a similar projection with a narrow labour party majority in scott morrison said he pulled out a miracle win as he described it, and all the

possibility of this could happen at the next election as well. >> you guys go to the polls on saturday, when will we have a final outcome? >> is a very good question. basically, if it is a clear result in they do win more than 76 seats needed to form a majority, we could have a result as early as 8:00, 9:00 p.m. night. if neither party wins the correct number of seats, that 76, and it's looking more like we will get a hung side where they have to negotiate and that could drag on for a very long time. last time we had a minority government it took weeks to work out who would be the prime minister. >> bloomberg with the latest on those elections now coming up in australia. staying on politics, president biden set for his first

presidential visit to asia on friday as he arrived in south korea for talks with the president amid threats of more missile test out of north korea. let's bring in our chief north asian correspondent stephen engle in hong kong. we are talking about five days to south korea and japan, what will we hear out of these talks? stephen: the biden administration is showing up there alliances in this part of the world, there will be a meeting in japan, that's australia, india, japan and the united states, but south korea is the first stop in north korea is a big concern, a very different relationship with north korea under the biden administration than the trump administration, trump met with kim jung-un three times in singapore as well as the dmz. we do not know if biden is going to go to the dmz on this trip, but we can almost surely guarantee the two, kim and biden will not be meeting much like trump did back in the latest

when i think was in 2019. [standby] the initiative that the biden administration is going to be unveiling at some point in the strip up to japan and south korea, called the indo pacific economic framework, many critics in the united states say does not go far enough, it is not necessarily a replacement of the transpacific partnership, wins the trump administration jumped out of, but it is a first stab of the biden administration's economic engagement with the asia-pacific that will focus on supply chain resilience, clean energy, decarbonization and infrastructure.

i just want to mention we are getting headlines coming across from air force one as it is flying to south korea right now, we understand jake sullivan, the national security advisor on air force one said he would not be surprised if joe biden and xi jinping do speak in the coming weeks. they have not spoken since march in the previous talk before that was in november of last year. sullivan also says joe biden and his trip to south korea will meet with hyundai motors ceo before he departs for japan to think their car companies new eb plan in the united states. jake sullivan, final headline, he has not seen evidence of china helping russia on those reports that china is buying russian oil. >> the issue of taiwan, is that going to come up because we've had a pretty stern warning from beijing. stephen: biden is not going to china on the strip, he will focus on south korea and japan,

but obviously with the quad meeting, taiwan will be a center point, but overall relations with china will be at the forefront. earlier this week we did get a stern warning from china's top diplomat who did speak with the national security advisor on the phone in the military for an affair had this readout, he said if the united states insist on playing the taiwan card and goes further and further down the wrong road, it will certainly lead to a dangerous situation. obviously they are not meeting face-to-face, but china will be at the backdrop of almost every discussion. >> coming up next, chinese hedge funds to sell amid portfolio losses that could make things worse for the market. details ahead, this is. -- this is bloomberg. ♪

shery: here's a quick check of the latest business headlines. twitter executives have told employees the $44 billion deal to sell the company to elon musk is moving forward as planned. the company's top lawyer says there is no such thing as a deal being on hold and that twitter will not renegotiate the price of $54 per share. meanwhile, must has tweeted that

he is spending less than 5% of his time on the twitter acquisition. posting the first quarterly revenue decline on record after beijing's strict covert containment policies and supply chain disruption. ending in march, the company reported sales just shy of $11 billion, helping the average analyst estimate. they lost market share to rival samsung in our bowl. sources say apple executive preview there next big event on the company's board amidst reality headset. it indicates that development of the fm stage, board members including a independent directors and ceo convene at least four times a year, we are told a version of the device was demonstrated during the latest gathering. hi to: china's trillion dog -- haidi: the turmoil is deepening

portfolio losses triggering for selling by managers. let's bring in the bureau chief with the story, what do we know, and what is this potentially tell us about the further risk ahead? >> happy friday, not so happy for a lot of the china hedge fund managers because they are being forced to sell their stocks in a highly volatile market. what we know is about 2003 hundred 50 hedge funds have fallen below the threshold that requires them to cut stock exposures by 50%, and many are heading below the level that requires liquidation, so that's close to historical hi, and it's problematic when the markets are as volatile as they are right now. shery: where do we see this going forward? it has been a reversal, could we see a rebound?

>> i think the sign that the regulators are taking notice is actually reaching out to some of the hedge funds and asking them to assess and to discuss their take on the situation. going forward remains to be seen because many hedge funds are selling at the same time. this could exacerbate the volatility in the market. it's an industrywide practice that we understand it is unusual in other parts of the world but it's meant to protect hedge fund investors from outside losses. it remains to be seen how this practice could be changed. shery: the latest so much happening across markets in china. some stocks we will be watching when markets in hong kong on the mainland opened in the next half-hour. hong kong benchmark stock index could add jd health and that

second its quarterly review. plus, watch as the eeev maker is about to make its market debut in singapore. and take a look at u.s. futures. >> we are seeing upside when it comes to those prices as we have seen the selloff in the last hour of trading across the u.s., but we are now seeing a balance of 4/10 of 1%. the future is higher, and we are now seeing the dollar gaining against the chinese yuan at the moment at that 673 level. haidi: coming up, we continue to look ahead to more moves from china, that decision coming through. economists expected a real be reduced by five to 10 basis points from 3.7%. they will be joining us for that on some analysis, plus fti

consulting says china's real estate financial sector problems have exposed developers overreliance on debt to fund their projects. that's up in just over a half an hour. that is it for "daybreak asia"'s . markets continue our we look at trading in hong kong, shanghai and shenzhen. do stay with us, bloomberg markets the china open is next. this is bloomberg. ♪

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