haidi: good morning. shery: the u.s. takes aim at xi jinping promising to influence china's behavior by shaping the world around. haidi:haidi: a risk on mood on wall street. shery: broadcom steals one of the biggest tech deals in history with the acquisition of vmware.

u.s. futures under pressure after the s&p 500 extended gains. we have solid retail earnings and falling mortgage rates boosting sentiment. dollar general forecasting better performance later this year. we have two stocks soaring. what a relief from last week when we had walmart and target. treasuries mixed. the dollar consolidating around april lows. we continue to hold onto a little bit of gains. u.s. fuel stockpiles tightened so that helped prices. it's what was happening around chinese earnings boosting the broader market. the golden dragon index gaining more than 7%. the biggest day in over two weeks. alibaba gained 15%, the biggest day in over two months given that the revenue and profit also

beat estimates. a similar picture for baidu. haidi: could this be the turnaround for chinese tech? when it comes to the start of australian trading, the upside around 1% will make it to the cash trading session looking to reverse the previous sessions losses seven tents of 1%. in new zealand, we just got consumer confidence for the month of may missing expectations or worsening from the previous month. falling about 2.5%. we are also watching the aussie dollar sitting at $.71 u.s.. the dollar yen is also want to watch. it is holding unchanged the moment.

shery: we continue to watch geopolitical tensions. we could see the lifting of u.s. tariffs on china. today, antony blinken spoke at the speech which has been very much delayed. he got covid-19 at one point as well, but the comet did not disappoint. he was calling china the most serious threat to the international world order saying they are trying to reshape what we are seeing in the global environment and calling xi jinping's communist party repressive at home and aggressive abroad. these were direct and frank comments coming from the top diplomats in the u.s.. haidi: remarkable remarks that we heard. i wonder whether we see this perceived weakening when it comes to the chinese leadership given the difficult situation.

the battles on the domestic front and maintaining the covid zero strategy. now it seems like we have a disconnect between the two top leaders. xi jinping is pushing to keep the covid cases back down to zero and pushing for paralyzing economic lockdowns that is having a huge impact on financial hubs like shanghai and beijing. at the same time, a meeting with state owned business officials and top policymakers on wednesday pushing for them to meet the growth target. we know that the growth expectation falls day by day. there expectations that china will grow well slower than the united states this year. shery: let's get some analysis.

we saw the reaction. perhaps the caveat around the second or third quarter, we do have dividend payments and the yuan weakness continues. what does this tell you about growth fears being played out by investors? >> those growth fears are definitely being played out. you can see that in the you on. china may miss its growth target weighing on the tariffs. officials grappling with what to prioritize. do you prioritize the strict curves as the covid outbreak continues or do you prioritize economic growth? you are seeing a little bit of confusion which is what investors don't like. economists widely expect china to release their growth target of 5.5 percent and traders are

basing that in the next few months, we may see the chinese you want fall. we have interest-rate differential with the u.s. widening, the u.s. interest rates and pressure on china to ease monetary policy as we try to prop up economic growth. so far, policymakers in china have held back from intervening. they have opted for the daily fixing of the reduction in fx reserves. as you mentioned historically, where entering a time of the year where the yuan weakens because of the payments overseas. haidi: when it comes to the u.s. session, we continue to see

hopes of a fed pause but also again this rally on hopes that the u.s. consumer is pretty strong. >> it's interesting. the fed survey out last night said that longer-term u.s. consumers are confident that inflation will come down. the price pressures will ease. you also have mortgage payments, mortgage rates in the u.s. come down. all of that plus the earnings outlooks from walmart and some of those dollars. we did see the market, the broader rally. that comes after we had the dire earnings from target and walmart last week. it does look like the u.s. consumer is feeling -- is still in good shape. the economy remains resilient, but we have to be careful about getting ahead of ourselves. the fed is still tightening.

there are still concerns about a slowdown in growth. we do have china which is shadowing markets globally. shery: let's turn to the top geopolitical headlines. top marks -- tough remarks coming from antony blinken saying the u.s. will seek to influence china's behavior by shaping the world around beijing. commenting on xi jinping's performance as leader. >> rather than using its power to reinforce and revitalize the laws agreements principles institutions that enable the success so other countries can benefit also, aging is undermining them. -- beijing is undermining them. the chinese communist party has become more repressive at home and or aggressive abroad. shery: let's get more from our

senior reporter. very direct words coming from the top u.s. diplomat. what was the purpose of this? >> the purpose was to outline the u.s. policy toward china. this speech has been long-awaited. he was meant to deliver it earlier this month before joe biden went to asia. he came down with covid and had to delay it. the thing he is trying to do is balance a number of different priorities. they're trying to continue the trump era toughness on china bipartisan recognition that china is a major strategic competitor. at the same time, acknowledging that the world's two largest economies are incredibly interlinked. the u.s. needs china on climate change and a bunch of other

issues including the war in ukraine and support for russia. there's a bunch of things going on and it was a laundry list of the accomplishments so far. policies to rejuvenate america at home. he did not want to look like he was being soft on china at a time when tensions are high over human rights, taiwan, and another -- a number of other issues. that was unusually direct language we saw in his speech. haidi: is there a sense that washington is projecting a time of strength when we are seeing more perceived weakness from beijing? potentially teasing that the easing of tariffs may be used here? >> there is definitely the element of that. this was a strong, assertive

speech and there is generally a sense in washington that america has china a little bit on the back foot. in the early part of the pandemic, china was gleeful, gloating at its skillful handling of the pandemic. criticizing the u.s. for needless deaths and not handling the pandemic well. now, america has moved on. it is engaging with allies. it is reestablishing partnerships like the quad with india, japan, australia. going out and doing the type of lender -- legwork, the diplomacy as it was before the pandemic. if you remember before the pandemic, that was china doing that stuff. american diplomats were not seen

so widely in asia. trump was skipping summits in asia and beijing was there with the belt and road investing in countries and generally showing up having chinese business people show up to make investments. there is generally a sense now that with china throwing in with russia, there is a bit more division, more unity in the west and more momentum i think. haidi: it's interesting as you see the new australian government mirroring that approach in the region going out and doing that will medic legwork. that's get over to su keenan in new york. >> we start with australia which is promising aid and assistance to pacific nations with no strings attached. in what appears to be a veiled jab in china. the foreign minister vows

australia will remain a critical development partner for the region. it corresponds with an eight day trip. beijing reportedly seeking security and economic deals. the imf says it has made good progress. it is cautioning that any loan would need assurances that debt sustainability would be restored. sri lanka wants a bailout program in place by mid june. in pakistan, the government is raising vocal fuel prices to meet a key condition set by the imf for revising its bailout program. pakistan needs a $3 billion loan to keep its economy afloat and

to avoid default. japan is set to end a ban on overseas tourists that was created two years ago as part of the virus control program. beginning june 10, foreign travelers will be able to enter the country. japan will double its cap on overseas arrivals to 20,000 people per day. and it will allow international flights to land. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: broadcom has agreed to buy vmware for $61 billion as of the largest tech deals of all time. it will help broadcom rely less on ships. you broke the story a few days ago and we have some confirmation. >> we are hearing that this is going to be $61 billion deal

which is a nice premium for vmware but probably below where it would have been before the tech selloff. there is an interesting element even though it's announced, it's not a done deal. there is a component of the deal called go shop provision. vmware can solicit offers. a potential bidding war could erupt. haidi: in terms of what steps we might expect, what are your expectations? >> over the next 40 days, we will see if vmware is able to solicit any rival offers to broadcom. we will also see as we get closer to that time being over is regulators will start to take a hard look at this. it's going to be and jurisdictions around the world. some investors are roig about a china regulatory review that could be long and protracted. we can see this deal not close

for maybe a year. shery: how much sense does this deal make? >> broadcom loves doing deals. they are a deal machine. they have been looking for an elephant deal for a while. when they buy companies, they don't necessarily integrate them closely, they let them run on their own as franchises. this makes a lot of sense financially. there are customer overlaps, so i can sell more products to its customers. >> still ahead, we discuss whether a surprise -- from alibaba can calm fears of a covid induced economic slowdown in china and can it spur a turnaround for the internet sector? plus, an alternative investor is not calling the bottom just yet. this is bloomberg. ♪

>> inflation is trending higher and is higher than inflation rates throughout the year. >> we had a perfect storm. >> we're going to have more conflict, more inflation. >> inflation causes domestic

political conflict. >> raising rates is not going to solve the problem. it's not going to create more food. it's going to make it more difficult. >> the critical thing for us is not to see second round effects happening, not to see the broadening things increasing and prices. to make sure the medium-term inflation expectations remain anchored. shery: our next guest says she is not calling a market bottom just yet. let's bring in icapital representative. we have seen the narrative of perhaps the fed moderation being supportive. are there any cheap ways to position for a rally this time or next? >> yes and that's what investors should be looking for, smart ways to position for a relief rally but now betting on all the money on it and not betting it's

went to continue. we may see a little bit more stability because we have repriced the stock so much already. if the fed does pause after the next 50 basis points than another or so, that gets us back to the rate that dominated pre-covid. there was a multiple and that's where we are roughly today. that's why the stocks are finding some stability here. i think it's ok for investors to step in and i would say the options market has been an interesting way to step in. if investors are still concerned that may be of further downdraft and this is not the market bottom, one thing you could do is pick your top stock and i would say look to technology, oversold semiconductors and software to create that list than sell some put options. on many of the stocks, the

volatility is still quite elevated. you can monetize that by collecting the options premium and if you get put into the stock at a lowest price, that's ok because at least you are buying it at lower levels. another quick way are would tell you is for the broader market, i don't know how much this move higher is going to go because i don't think the fundamentals truly justify it near term. if you look at a call spread strategy, you buy one call and you sell another one with a high strike price, that is one other way to play it. shery: you don't think the overall level is going to go higher? what are your expectations for year end? >> i think the markets are still somewhat constrained. if you do the fair value map, you look at the 16 point five times multiple and you apply it to $235 worth of next 12 months earnings, that gets you to a level of 3900 on the s&p.

a few things we need to go right in order for us to move higher from the current levels. either the multiples would need to expand which i don't know why they would in an environment where the fed is raising rates or the second thing is the economic growth would need to rebound and the 235 would need to rise. the markets over the course of the next year or two are poised for an upside but in the next three to six months, it's going to be a constrained market environment. haidi: we been looking at an index and i will bring up the chart now. it rose to the highest in 14 months. if you look at that buying sentiment, is this a reasonable gauge to see whether we could see more resilience in the upside? what indicators would you look at to see if there's more conviction in any subsequent rebounds? >> i think the broad

participation is something to look at. what i would really want to see is more investors step in. one of reasons why we have not been able to have a market rally that holds is because hedge funds have been on a buying strike. they have not been stepping into by these oversold names. you have retail investors that got burned from buying the dip so instead of buying qqq, they are looking at shorting those nasdaq names. that is been the sentiment. there's been a lot of cash that has been raised by neutral funds. we would need to see the investors all three of those groups start to step in more broadly and not the on the buyer strike. the valuation which is been

aligned positioning which has been taken down quite a bit. i think everybody is looking for the catalyst. maybe it is moderation, but preferably would need to be on the other side of this growth slowdown. on the other side of the peak inflation. haidi: great to have you with us. plenty more to come. this is bloomberg.

haidi: looking at the day ahead. retail sales data is due in about three hours. where also watching the ongoing election result.

>> you are watching daybreak australia. antony blinken has taken a at xi jinping during a speech laying out the administration's approach toward china. he called beijing the most serious long-term channel -- challenge to international order. he also accused xi jinping of actively undermining the international system. >> rather than using its power to reinforce and revitalize the laws, principles, institutions that enable success so other countries can benefit, beijing is undermining them. under president xi jinping, the ruling chinese communist party has become more repressive at home and more aggressive abroad. >> china and russia vetoed u.n.

resolution sponsored by the united states for tough new sanctions on north korea for its recent missile launches. it is the first serious division on north korea sanctions among the five permanent members. president vladimir putin says he is willing to facilitate grain and fertilizer exports, but only if sanctions are lifted. he did not specify if he was talking about russian exports or ones from ukraine. the u.n. is accused russia of waging war on global food security. u.k. will impose a windfall tax on oil and gas companies to ease the cost of living for poorest residents. it will be used to pay for

one-time grants of $820 to around 8 million low income households. bp says it will renew its investment plans -- review its investment plans for the country. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪ haidi: joining us now is paul allen. >> she has not even been the job a week and she is thrust into the middle of geopolitical contest with china in the south pacific. it off she rushes to fiji to deliver a speech. she says australia will support sustainable growth and development. >> australia will be a partner

that doesn't come with strings attached. nor imposing sustainable -- unsustainable financial burdens. we will not erode priorities or institutions. we believe in transparency. we believe in true partnerships. >> she didn't mention china by name, but a clear reference to what is known as debt trap diplomacy. the minister acknowledged that previous governments have been weak on climate and disrespectful to pacific island nations but this is a new government, things are to change. shery: the minister's visit is happening as china's foreign minister is on his own tour of pacific nations. >> the chinese foreign minister arrived in the solomon islands

yesterday with a delegation of 20 colleagues. china and the solomon islands have recently signed a security agreement which has still not been made available. it is understood china is seeking up to 10 more similar agreements with island pacific nations. the media association of the solomon islands is calling for a boycott of the conference because only select media have been invited to attend and the minister will take just one question from the chinese state broadcaster. the australian foreign minister had a dig of that as well when she was visiting fiji. she said she took multiple questions and she hopes media and fiji get an opportunity to do the same when the chinese minister visits there.

shery: the rio tinto ceo is cautiously optimistic on china and sees beijing accelerating infrastructure investment to meet growth targets as it looks to counteract the impact of covid. he spoke to bloomberg on the final day of the world economic forum. >> china has always been very good at focusing if they're doing a business, they are thinking about the supply chain. maybe we in the west have sometimes relied too much on the market. what i have seen is governments and big companies are much more focusing on how can we ensure that we have a reliable supply chain. that should come as no surprise when you have as much disruptions. >> a lot of investors want to know about china and how you see it developing over the next couple of quarters. >> there is no doubt that the fight against covid in china has had an impact short-term on the chinese economy. china is determined and seems

very convinced that they will be able to meet their growth targets and they are accelerating their infrastructure investment. that's good for iron ore demands. i remain cops -- cautiously optimistic. >> things are not booming and they shouldn't be because it's difficult world. it's difficult to get the supply chains to work. with all the disruptions, it's probably good that the world is not booming, but i see a decent demand. haidi: that was the rio tinto ceo. coming up, a deep dive into alibaba's earnings. this is bloomberg. ♪

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shery: time now for morning calls. morgan stanley says hedging costs are getting too expensive across major asset classes. investors should position for a peak in price swings. top targets include the canadian dollar credit markets.

citigroup saying it's time to buy the dip in emerging markets. a trade looks appealing as valuations come down after the recent global strut -- global selloff. stata just say there bear market checklist is only six of 18 red flags. haidi: china is now second to last in bloomberg's covid resilience rankings which lists the best and worst place to be during the pandemic. the cdc may stop collecting data from hospitals of suspected covid cases. our managing editor joins us now. there's a number of factors that you would imagine contributed to china falling down these rankings. >> we look at 10 data points. they all fit into the covid resilience score and what it's

the best place and worst place to be in the covid pandemic when it comes to everyday life, business. we are looking at community mobility, access to vaccines, and cases. we have seen these outbreaks flaring in china. they aren't huge, but they are leading to quite a lot of restrictions, lockdowns. one in shanghai we are gradually easing out of. across the board, you are seeing a lot of restriction as china refuses to move on from the pandemic. >> quite a different story in the u.s. with the cdc planning to stop reporting suspected cases of covid. what do we know? >> they are shifting into this sort of permanent crouch when it comes to covid. living on will -- alongside of a disease that's going to be with us going forward. they're reflecting that in the way they calculate and look at the data stopping calculating suspected cases. we have seen definitely a drop

overall in many countries and reporting of covid cases. that's as rapid tests become more widespread. people aren't recording that they have had covid. still, outbreaks are flaring because of the omicron and its subvariant that they keep coming into play. >> it's interesting and australia even though it is become a most a nonissue for headlines, you are seeing a pretty high number of deaths and cases and we are going into winter as well. >> >> it's interesting with that ranking, we have seen quite a lot of places have said early on in the pandemic with the border curbs, close to economies, keeping covid out, they are now living alongside it. we have had high almost universal vaccination rates. they're starting to see covid rip through the populations almost for the first time which

is leading to lower levels of death then we saw early on in the pandemic, but there are deaths and a lot of cases particularly australia, new zealand, even singapore to some extent. places that are seeing their first real unbridled waves of covid this year. shery: shares of alibaba and baidu soared in new york after both companies defied china's covid lockdowns and slowing economy by posting better than expected revenue gains. spring and stephen engle from hong kong. let's start with alibaba, how big of a beat was it? >> it wasn't much of a beat. so much bad news has been baked into alibaba, the stock has been down almost 30% this year. it has been on a bit of a freefall since the reagan tory action began -- since the regulatory action began in 2020.

as you rightfully said, the shares soared nearly 15% so that's a good omen for the stock here in hong kong trading later today. revenue still was the second consecutive quarter of sub 10% growth at 9% revenue gain. the consensus estimate was for 7.1%. at 9% revenue gain, that is the slowest pace on record for this company. yes, it was good and it was a welcome respite for investors in these tech stocks like alibaba. alibaba being a bit of a proxy for the internet economy in china. showing some resilience to the lockdowns, the slowing economy, the supply chain pain and the regulatory overhang that we have had since the autumn of 2020. yes, it was good news but the bad news if you want to say bad

news, alibaba refrained from giving its current fiscal year outlook as it usually does. let's read the quote from the ceo. he explained it exactly. he said there have been significantly affected by the covid wave that began in mid-march and considering the risks and uncertainties arising from covid-19 which we are not able to control and are difficult for us to protect, we believe it is prudent at this time not to give financial guidance. whether this result gives a floor to the shares or whether they go back into selling down the road in the next couple of days, that zigzag is a pattern we have seen from the tech stocks. haidi: what about i.t. and the implications for baidu in terms of growth strategy? >> baidu did outperform, but

it's revenue gain was also quite limited. it was a 1% gain. it was a surprise. there has been some cost-cutting there. ai has been driving. they have been shifting away from more of the consumer side of the business to longer-term investments in artificial intelligence. cloud computing and autonomous dart -- autonomous driving gains offset a week advertising sales climate in china. the net loss also widened because of one time loss from long-term investments. it was a similar story at alibaba. it also had a net loss because of investment decline. on alibaba and the affiliate, it saw profit in chapter in the quarter through december. there reporting schedule lags by a month. this was the calendar fourth quarter through december. we have to have another quarter to play catch-up with aunt alibaba.

the affiliate of baidu, it saw its first quarterly profit since it went ipo in new york in 2018 i believe. haidi: that was stephen engle with a rap of chinese tech. let's look at how sovereign bond markets are trading. u.s. treasuries are headed for a third straight week of weekly gains. we will be watching for how this plays out when it comes to the australian and new zealand sessions. looking at the pictures in new zealand, we had more of a reaction to the consumer confidence number contracting 2.5% month on month and falling from the previous month. we are seeing a picture when it comes to the australian 10 year yield. as we await the start of trading for broader markets. the aussie dollar is sitting

just shy of $.71 u.s.. stay tuned on bloomberg radio. we are broadcasting live from our studio in hong kong where you can listen in. much more ahead, this is bloomberg. ♪

>> last you weeks, exactly the kind of risks we have been talking about for quite some time. a collapse in the value of the stablecoin. the stablecoin moving off its one-for-one value because of lack of transparency. shery: she was speaking on the collapse of stablecoins. we have bitcoin gaining. ether is below the crucial threshold of $2000. we continue to see the fallout of the terra collapse with bitcoin acting as a safe haven. we have heard the guggenheim cio talking about bitcoin falling to $8,000. what a turnaround from the $400,000 call in 2020.

haidi: let's get a quick check of the latest business flash headlines. broadcom has agreed to buy vmware for $61 billion turning the chipmaker into a bigger force in the software space in my the largest technology deals of all time. the transaction represents a 44% premium to vmware's valuation before may 20. apple is planning to keep iphone production flat and 2022 with a challenging year ahead. sources say the company is asking suppliers to assemble 220 million iphones. that's around the same as last year. the industry has had a difficult start with production estimates down across the board. car technology firm is said to be going public and spac deal that is said to be the biggest

chinese listing in the u.s. since didi. the automotive tech firm is backed by a billionaire and will merge with -- acquisitions. shery: he is right about china where he sees the covid policy as unsustainable although he also says many parts of the world are too complacent over covid-19. he speaks with francine lacqua at the world economic forum in davos. >> in many parts of the world we are still complacent. bargaining their boosters. there's a lot of fatigue -- people are getting their boosters. we are developing the second-generation booster now. that will have the old virus as

well. it is important, what i worry about especially people of high risk not getting there booster in the fall than in the fall or winter getting covid having very note -- very little or no antibodies left. >> there is the development of a vaccine, the gold standard would be to stop the transmission. it's not that i don't get a sick but it completely stops it. or is it to tell your people that the vaccines are safe? >> a lot of people have not been vaccinated with any vaccine. then you have people who thought the vaccine would protect you against transmission and disease forever. it was not a prophecy that was correct from a scientific standpoint. with time as the virus slows down its mutation, because it's not going to evolve in and

infinite weight, we will see longer and longer protection. the current vaccine against alpha and delta does very well. but it was because of omicron that the disease progressed. >> do you combine it with flu? >> yes, people at high risk, we will need an annual booster. it's going to be in a quick injection. but the winter, combining the vaccines of fluid covid together , to get one shot early in the fall, you have a nice winter. >> this is for western countries. there are large parts of the rest of the world that have a zero covid policy. how is that going to evolve and how difficult is it to can -- convince emerging market countries that the vaccine is safe? >> the emerging countries have

done a great job advancing the technology. they have great scientists and doctors and vaccinating their people. it depends on some countries, some not so well vaccinated. i am worried about china and the current policy. i think it is unsustainable because the virus only becomes more infectious. what was amazing management of a virus in 2020 is a liability now and the only way out is high efficacy vaccines. haidi: that was the modernity for executive. we are seeing some moves potentially pressure to the downside as we see the collapse in metal for a third straight session in london. watching out for commodities currencies like the aussie dollar holding just under seven one cents against the u.s.. little change for the dollar euro.

that rally could potentially top out at 1.08 area. watching dollar-yen as well. we had the governors saying rate increases by the fed won't necessarily cause the yen to we can. it has been a stable pair. we are watching the dollar yuan given the downside for the chinese economy. shery: u.s. futures are not doing much at this point after some risk on sentiment in the new york session, we had solid retail earnings, falling mortgage rates that help sentiment. coming up in the next hour, plenty with the world bank representative who is also indonesia's foreign minister of trade about the covid 19 pandemic and the impact on education.

this is bloomberg. ♪