good morning all come to daybreak australia. we are counting down to ages major market opens. >> the top stories this hour donald trump indicted for allegedly paying hush money to stormy daniels becoming the first former president and u.s. history to face criminal charges. >> tech propels u.s. stocks higher. the biden administration urges regulators to tighten rules for midsized banks. janet yellen warning deregulation may have been excessive. >> these events remind us of the need to complete unfinished business. to finalize reforms, consider whether deregulation may have gone too far.

>> u.s. futures muted after we saw the s&p 500 gaining ground. it was about real estate and tech leading the gains. we also had data showing the jobless claims rose for the first time in three weeks. we are watching labor markets strengthen to see what happens with the fed and the rate hike path. in the meantime, the treasury is mixed. the two year yield slightly higher but the 10 year headed toward 3.5. we await the pce deflator numbers coming out on friday. we have been watching central-bank decisions from around the world today. south africa surprisingly a jumbo rate hike. wti prices you did right now but we sought those gains at a two-week high.

this is not because of much trading, it was then but we had expert disruptions not to mention the overall bullishness in the market. annabelle: you mentioned the diversions from central banks. that is playing out in the currency space. the yen is steady but the euro earlier as much as .8% against the greenback. the inflation data told us the ecb will have to state hawkish. we have the flattening of fed rate policy coming through. what else is driving that is what we've been discussing particularly on wall street the optimism that the banking sector crisis is looking to be contained. this is the outlook for futures and asia. we didn't see that much of a readthrough yesterday from the

u.s. session into asian hours. alibaba, we understand it could be gearing up for an ipo and hong kong. broadly we do again focus on what is the risk of contagion from the banking crisis in the u.s. and also in europe. that is again another signal that starting to dissipate. in the last couple of hours, we got the central banks data tapping the fed repo facility and you can see that in the last week it dipped down to $55 billion. is very elevated you look at historical standards but it is a drop from the week prior. another indication to us that the fragility in the market is starting to ease somewhat. shery: our top story, donald

trump has been indicted in new york for directing hush money payments to a point star during his 2016 campaign. joe mathieu joins us from d.c.. we were expecting this to come out at some point. it finally has, but the historic significance of this moment is big. >> this is incredible. you need to let yourself understand the significance because as you pointed out, many people expected this. consider a former president of the united states running for reelection under indictment is quite remarkable. their questions on how this will be handled in terms of the actual process locally. will he be handcuffed?

finger printed of course. it is believed he will not do a perp walk as he was hoping to confer those photographs smiling at supporters potentially raising money. he has already been raising money, but i will remind everyone there are major cases here. one coming from the district attorney and jury -- four jet. -- georgia. then one investigating the mishandling of documents allegedly and the events of january 6. you put all of these together and donald trump could find himself running for president with multiple charges from multiple cases against him. this one we now know is in place. haidi: that's the other extraordinary part of this. these three cases all coming as he makes -- what is the legality

of that? is that affecting his support? >> it seems to be helping his support among his base of supporters. yesterday showed donald trump with a lead over ron desantis. he is not officially announce candidacy, but it is believed he will run. this could be a very different situation once we get into a general election if he is the nominee. debates begin this summer. this is going to be something that assuming he attends the debates is going to be featured widely by his opponents.

republicans in washington seem to be in lockstep on this. we have heard from a number of them who somehow see this as a witchhunt. that is the most common phrase we hear. even the young republican club issued a statement saying this is total war. if you thought we were in a toxic environment this morning, wait for what happens later today. >> tell us what is happening with this investigation. mr. trump himself has denied all wrongdoing. >> that's true. michael: donald trump's former fixer lawyer testified to that and. he says he gave her the money and donald trump reimbursed him with checks the trump organization. there could be more than just the testimony of michael: at hand. it's not clear what other evidence the manhattan district attorney has.

there is more to learn. this is the stormy daniels case. many republicans including jim, yesterday on balance of power spoke about it as a matter of fact. that he paid off a point star with hush money. those are still allegations to be clear and even michael cohen's lawyer told us a couple of days ago and indictment does not mean guilt. he will still have to go through the phases of the case and he could still beat this. as i mentioned, there are several other cases waiting for him as well. haidi: these charges even a conviction would not prevent him from continuing to run for the presidency or even serving as president. >> that's true he can run for

whatever he wants. in terms of holding office should he be convicted as you said, that gets to be a little bit more complicated but you can run for office from jail. it is been done before. it's not a very good look. at some point when we get beyond the initial stages of a partisan primary cycle, this is going to look and feel very different. that same poll still has joe biden two points above donald trump. this could change that quite a bit in favor of joe biden if they find themselves in another race. shery: breaking news with donald trump's indictment. let's get to first word headlines. bloomberg has learned that china's new vice premier will be overseeing all regulation of the $60 trillion financial sector. official sources say he has been given the task of shoring up the housing sector in the past five years.

those duties were split between vice premier's. one is known as a close confidant of xi jinping. the top decision-making body of the ccp has reviewed rules governing the personal disclosures of top officials. it is assigned that xi jinping is holding firm. the rules are significant to further enhancing the management and supervision of -- but it did not provide details about the changes made. the u.s. state department says it has requested access to an american journalist detained in russia on spying up -- accusations. the first u.s. reporter held there on spy charges since the cold war. russia says he was caught red-handed collecting state secrets.

the london metal exchange has proposed sweeping changes to its nickel operations as it moves to strengthen trading over last year short squeeze. plans include opening a new spot market in china. it follows a review into last year's crisis which saw prices more than triple in just over 24 hours forcing the lme to cancel contracts. those are your first word headlines. >> coming up, we will hear from pimco about why they see signs of sharp economic slowdown. this is bloomberg. ♪

shery: fed officials continue to

stress the need to slow inflation. let's get more with our editor kathleen hays. a lot of fed speak to digest today. >> it seems to me that one messages developing as it seems the banking crisis -- they're coalescing around the theme that banks are strong and we still have inflation fighting to do. susan collins spoke today, she said banks are strong but she is looking for more rate hikes. >> i currently anticipate some modest additional policy tightening then holding through the end of the year. i will be carefully watching a range of indicators including data on inflation, spending, labor markets, and financial conditions.

>> president collins made it clear three more 25 basis point rate hikes is what she sees this year. no cuts. she thinks tighter lending standards to offset the need for how many rate hikes there are going to be. the richmond fed representative said he can see inflation is still high but he is waiting to see the impact of the right height. speaking again today agreed inflation is still too high and it is too soon to engage the impact -- to gauge the impact of svb and more but he is confident it could lead to credit crunch in the economy. >> it's going to take us a while until we fully understand are there more losses out there. what is unclear right now is how much of this of the banking stresses of the past few weeks is leading to a sustained credit crunch which would then slowdown

the u.s. economy. >> kathleen hays. blackrock -- joins us now to talk about these expectations. it has been a wild ride. they did seem certain that the banking turmoil will tie the hands of the fed in terms of being able to fight inflation at the levels we have been seeing and doing. has that receded somewhat? do you see the peak rate of 6% as you did at the start of march? >> i would say a couple of things. the game has changed quite a bit. we suggested there was a reasonable chance that the fed could go to 6% because you had a dynamic where you had a successful economy that was operating at a strong level. things have evolved over the last two or three weeks and you have to assume that even the pressures in the banking system,

when you think about how do you solve the banking, the troubles in the banking system and an economy that is going to slow on the backside lending to real estate is going to slow, it's going to have a contractionary effect. i think you have to assume that the game has changed and the fed is going to be more moderate. are they going to try to do another hike? probably. certainly publicly they're going to describe business as usual but they're going to interpret the news. i think you have to assume there are some credit contraction, you have to assume you have an economy that was already moderating but they will have to go one more hike then pause for a while. haidi: it's not impossible for them to thread the needle, but it's going to be more nuanced. you don't see rate cuts because it's part of the old playbook? parks i think with the fed will

try to separate is how do we deal with the banking system and you've heard if it's secretary eleanor from the fed, we used our other tools. macro prudential regulation. by the way, the fed has put over $300 billion onto the balance sheet. flood the liquidity, make sure there is no funding dynamic that puts stress. they're going to use that, then use the rate to continue to fight inflation. at the end of the day, you have a dynamic where inflation as the economy slows, inflation will start to moderate and it will allow them to pause. staying on pause, we are at levels that are very restrictive. to stay at levels that will be 5.25 percent, that's a restrictive policy in an environment where the velocity of money because of credit contraction is going to bro. i think it all makes sense for them to slow it down and you are starting to see that communication change a bit from the fed while trying to express

his this as usual. >> how interest-rate sensitive is the economy right now as you get all of these tightening moves from the fed that my continue for a while? parks this to me is the most important point because this economy is not, people use the metaphor of this is just like this time but it's not. the u.s. economy is different than it used to be because you have a less interest sensitive economy. you think about what capital expenditure is spent on things like technology and ai, they are asset light. it's not part asset machinery factory. so what happens when the fed moves this quickly and aggressively come at the economy move aggressively. what happens now with today's economy is you try to slow down the interest sensitive parts of

the economy but other big drivers like technology, health care continue to move along well. when you get an economy that is operating at a reasonable pace. you look at the breakdown of hiring education health care, not interest sensitive. it is an intensely different dynamic and that's why you create real pressure on interest sensitive parts because the other parts don't move that way. shery: we are getting president donald trump now reacting to the indictment calling the new york indictment political persecution. we have seen the indictment being held in new york over hush money being paid to point start stormy daniels. donald trump now calling it political persecution. right now very closely watching

how this indictment will play out as we are now getting more headlines coming from the former president himself reacting to the new york criminal probe which is the first of several to result in charges at least until now. how much focus are you giving to not only what we are seeing in the financial markets but political risk. i'm also talking about potentially geopolitical tensions with china that are not getting better or the ongoing war in ukraine as well. >> when you think about portfolios, particularly in fixed income or a broad

portfolio allocation, you now have a chance to invest like treasury bills or commercial paper short end of the yield curve and get levels 5.5%. this is a pretty remarkable point in time. a lot of this is hard to predict in terms of where it goes from here. if you're in fixed income, you can build a portfolio that can get you almost 6% or higher than that without taking a lot of risk because we are in -- where the front end of the yield curve is. places like emerging markets are interesting. you can own equities then collect a lot of income in the front end of the yield curve that is not a sensitive to some of these dynamics. you can build a stable 6% return in an environment that is anything but stable. haidi: geographically which markets are you liking the moment? >> it's different if it is debt

or equity. from the debt side, i like the front end yields in the u.s.. in europe, some of the investment grade and credit products are interesting particularly for a dollar investor. in equities, asia is interesting. the growth in china is significant. we like the equities there and also in europe and the rest of the emerging markets. this year is a little different. we like parts of moving more international than in the prior few years. more equity international, more debt in the u.s.. shery: what is driving the equity international call? parks a big part of it is terrific growth coming in china. that will drive not just the chinese equity market but also parts of europe that are direct beneficiaries. that and emerging markets tend

to benefit from the growth paradigm. valuations in place is like europe and asia are more attractive than the u.s.. shery: thank you so much for coming on today. lots of news in the financial and political side of things as we continue to get the latest when it comes to president trump's indictment in new york over hush money paid to stormy daniels during the 2016 campaign. we just got his response, a statement coming from his office saying this is a political persecution and election interference at the highest level in history. that is according to trump saying the make america great again movement, he is referring to the movement saying that you remember just like i do russia russia russia, muller, ukraine.

this is his first statement as we are getting news and more details on the indictment. so far, we don't necessarily have the exact charges against the former president. haidi: what's immediately interesting as you take a look at the statement what we have heard the reaction from donald trump. we know these charges that we need to have more details, but the indictment itself was a long time coming so he would've had a long time to prepare for this. to prepare the statement. this builds into the narrative, the grievance driven campaign we have seen from the former president from the very beginning. the base could see him being persecuted and we could see more support for him as he gets toward the campaign to try to take the white house again. as we discussed with our correspondent earlier, the indictment charges ongoing charges even a conviction would not prevent him necessarily from

running for president or even potentially serving out the presidency. we continue to wait for more details but there is a sense that the tide could be changing when it comes to his republican support but certainly we have seen the support from his base to be very strong going into his election campaign. to hear that the former president indicted in new york for directing the hush money payments to stormy daniels during the 2016 election campaign. and a stark event that we are seeing today. shery: a former president running for election again in 2024 indicted. it really is and instruct development but we will have to see how this plays out given that we know mr. trump has decades avoided indictment. we'll have to see what charges

are being sent against him. take a look at how markets are trading at the moment because we have seen u.s. stocks gaining ground in the new york session. right now u.s. futures reacting to the political move. it is still early in the asian session. when of the nasdaq 100 has pushed further into bull market territory. this ahead of the preferred gauge of inflation. at data coming out on friday. haidi: let's take a look at how all of this is shaping out when it comes to asian markets.

>> you are watching daybreak

australia. a new york grand jury has voted to indict former president donald trump. this for his role in paying hush money to born start stormy daniels. federal indictment is set to be unsealed in the coming days and that will make trump the first former president to face criminal charges. he calls it political persecution and election interference at the highest level in history. federal agencies to index -- an act agencies including reinstating roles including liquidity requirements for banks with assets in enhanced stress testing. janet yellen warned that efforts to loosen tighter banking rules put in place past the 2008

financial crisis may have gone too far. she things it contributed to the recent turmoil among midsized banks and called for a return stronger oversight. >> these events remind us of the urgent need to complete unfinished business to finalize postcrisis reforms consider whether deregulation may have gone too far and repair the crack's in the regulatory perimeter that the recent shocks have revealed. >> the european commission president warned that the block should reduce risks in dealing with china rather than decoupling and despite u.s. pressure for a tougher position on china. she argued for input -- ensuring economic stability and open communication lines with beijing. >> i believe it is neither

viable nor in europe's interest to decouple from china. our relations are not black or white. our response cannot be either. this is why we need to focus on de-risk not couple. global news powered by more than 2700 journalists and analysts in over 120 countries. haidi: china's tech ipo appears to be on the move again. sources tell bloomberg best alibaba's logistics arm will seek a listing. stephen engle joins us out of hong kong. we got the feeling that the alibaba restructuring would kick off expectation that we would see a wave of new share sales. >> i think that announcement from alibaba earlier this week

that they are going to split into six units then the ceo and chairman essentially saying those individual units would be free to devise their own fundraising plans. it would be in essence a defective set of approvals from beijing that the ipo train could continue or could resume after a painful year over the last couple of years for tech ipos coming out of china and here at hong kong. this could signal the beginning of a wave of ipos after a defective moratorium on those listings. what we do know according to sources that of those six new divisions, perhaps the logistics arm would be the first one. perhaps by as early as the end of this year. it is a company valued at $20 billion but sources say this

company has not yet decided on the size of the offering, the timing will depend on market conditions but could come by the end of the year. it makes sense for it to be the first one of the six to list. revenue in the fourth quarter rose 27%. it directly operates 15 sorting centers across the world and partnerships with more than 500 logistics companies globally. at this moment in time, this could be one of the six units that could stand alone better and that is perhaps why it is going to be going ipo first. >> what about others? >> they have already filed for two divisions to list here in hong kong. timing will depend on market conditions. we don't how much they will try

to raise with these two units but sensually in the hong kong stock exchange filing, jd property covers 29 provincial level properties in hong kong. it basically manages industrial parks so that will be the first one as well as industrials it specializes in industrial product supply. we don't know the size of that listing other than the statement said that jd.com would likely hold more than 50% after the spinoffs of both of these divisions. you can see the momentum starting. jd.com is arrival in china. with the defective blessing from beijing for the new share sales could be at the beginning of a wave of such listings. >> stephen engle, thank you.

we have plenty more to come on daybreak australia. we will get you more details of president trump's indictment in new york. you're taking a look at live pictures of the das office. this as he is now facing indictment in new york for directing hush money payments to point star stormy daniels during his 2016 campaign. this, charges brought by the district attorney alvin bragg. we don't have details as of yet but we will bring you analysis of the details surrounding the former president. this is bloomberg. ♪

shery: we are watching for the pce core deflator number on friday. that would be the fed's preferred gauge of inflation. you can see the prices have been falling just not falling fast enough. this is the consumer price index. you see the pce deflator. we are watching this number closely because this is closely a wider range of goods and services than just cpi and it's what the fed uses in the economic projections and the expectation right now is for

core pce to be rising around 3% month-to-month or 4.7% year on year. haidi: it's a reminder that we need to look at back to basics with the data. we are hearing more more the consistent narrative from fed speakers that were needs to be done on the strains of the banking sector. we heard susan collins sank the system is sound and more timing is needed. that gives us an indication of the priority is still there to fight price pressures. shery: our next guest expects core pce to have risen .4% month on month in line with consensus. pimco senior u.s. vice president joining us now from new york. good to have you with us. we have been watching not only

core pce but also chair powell super court gauge which is core pce services excluding housing. the key question is how will it inform the fed? >> thank you for having me. you look at core pce, the measure the chair powell keeps mentioning across the whole variety of u.s. inflation measures, it looks like there has been progress inflation has moderated but it hasn't moderated enough for fed officials. core pce, the preferred measure click still coming in close to 5% significantly above their target. the measure, the message across these different measures is that it looks like inflation remains sticky, remains rod-based and that is what we are hearing and fed speak. officials still concerned about the difference between their target and where inflation is right now. >> we have heard calls they could expect a rate cut sometime this year given the banking

sector turmoil we have seen as well. what are your projections for where the fed goes? >> the stickiness of inflation versus the stress that we are seeing in the u.s. banking system and the potential ramifications is the key question. sticky inflation complicates the fed's job and makes it more difficult for them to react. the question in terms of whether the fed ultimately can cut rates this year or not comes down to the timing with which inflation ultimately starts to moderate toward their target. if we start to see progress sooner, that gives the fed more flexibility to react but if we continue to see the stickiness that we saw across inflation measures the first quarter this year that's going to make it more difficult this year and manipulate their ability to maneuver. >> the sentiment or at least the messages is that the banking system is strong.

as neel kashkari said, it typically takes a longer time than what we have given it for the strains to come through in the system. is there still a risk of a credit crunch that perhaps markets are starting to downplay? >> the question is really about the idea of a credit crunch. you don't necessarily need to see more stress or broader bank failures or something like that to still see tanks pullback on credit availability in light of what has happened. that is the key thing we watching an terms of the economic outlook for this year. does the recent stress that we have seen cause banks to become more cautious? to cause them to pull back on credit availability west mark the question for economic growth, we would argue that credit growth is fundamental and that's important to monitor beyond watching the stress of individual banks. haidi: before the banking stb

and everything that followed even before that situation rose, there were lots of questions about whether they should pause because is this the monetary policy leg? do we still need to work out why the data was coming in so strong? >> that's an important point if you take a step back earlier this year, the feds on surveys of what was going on with bank lending already suggested that banks were pulling back on credit availability even before all this happened. what we are seeing now and the potential risks the recent stress the pullback on credit availability does cause the economy to slow more. it's consistent with the idea that there's long and variable legs to monetary policy. if you look back at history, we found that over time on average you take six even a quarters for the gdp impacts of tightening cycle to become apparent. it's consistent with the idea that perhaps some of the stress

we have seen recently is falling on the heels, it's the early signs if you will that the fed tightening campaign over the last year is turning to work. shery: we are seeing more investors thinking that this recent financial eruption is creating the once in a decade bond buying opportunity. where does pimco stand? >> if you think about the repricing for investors over the last year that has fallen on the heels of the fed tightening campaign, certainly it has been painful over the past year. absolutely as you look forward as you look at how much bond yields have repriced, we have been saying bonds are back this is significantly different macroenvironment than what we saw immediately following the pandemic. >> what are your assumptions about where the u.s. dollar goes from here? >> it's a good question. the challenge in thinking about

the dollar outlook is what we have called the problem of the dollar smile if you will. more broadly, the fed potentially getting closer to the end of the tightening cycle would be consistent with perhaps the dollar continuing to show signs of peaking. then the challenge as well that if we were to see more significant weakness, if we were to see the credit conditions start crunch which is a risk case, we think that would be quite supportive of the dollar if we were to see a more significant risk off. it is smile challenge if you will that investors face. haidi: we appreciate your time. let's continue looking at the potential implications of the u.s. banking turmoil continuing to play out. there are investors seeing opportunities in bonds. annabelle: it's interesting they

were saying that this is a huge buying opportunity. that something we are hearing from the likes of investment management as well. that this is creating a huge opportunity if you can buy into the fear and there is room for spreads to heal. look at where we stand right now in the debt space. the high-grade financial bond spread, that is quite elevated. we are off the highs of 188 basis points. still around the 170 basis mark. where that stands in reaction or in line with the investment-grade bond index, you can see the elevation is still in place. typically these would trade more closely correlated. there's think this is the time to be buying into this space,

you will not see these sorts of opportunities outside of a global financial crisis. shery: we have this segment every day come up it it awesome when we have an investor coming out with a statement then we can have a morning recall segment. tell us about what is happening. annabelle: that is what he is doing. he is an investing celebrity. at the end of january, he told investors to sell. it did come ahead of the fed rate decision in february. since then, we have seen the s&p 500 seeing a big return of buying the dip investors. because of that he posted on twitter saying he was wrong to direct traders to sell ahead of the meeting given that we haven't seen or really he used a bloomberg chart showing the s&p

500 average return following a down day has been elevated this year. haidi: it's incredible how investors are having to admit that they made a misstep. two more to come, this is bloomberg. ♪

plunged 26% last year due to a slump in dealmaking and bank efforts to contain costs. how much was the bonus poll last year? >> we saw an abrupt change in fortunes from wall street and it's a clear sign of the slowdown that wall street is grappling with. last year the same data set showed the bonuses were at record high with wall street locked in a vicious bidding war. it's pretty bad news for bankers for him business is often -- bonus is often several times their annual salaries. >> is there any sign of things

improving or expecting to get worse from here? >> i don't think we expect deals to pick up particularly because we still have all of this uncertainty created by the potential for a looming recession and the regional banking crisis is just exacerbated that and we may see banks start the pullback on doing things like lending and providing credit and how this all feeds into the investment banking sector operations in general remains to be seen. one interesting point is from the data that was released today, we saw that hiring was up in the securities industry. even though banks and bankers are taking a hit for their bonuses, banks are still trying to hire and they have to beef up

their technology, compliance, risk and therefore to pay for that -- shery: a lot of these bankers have been told to return to the office. >> this is the time of year when you see the most frenetic activity in terms of bankers leaving. we can probably expect to see a lot of movement, hedge funds coming in and poaching a lot of the talent. i think bankers have already generally been back to work, back in the office for multiple days per week. in some cases businesses like trading 45 days a week. that kind of element of grind has been well established for a long time. given that bonuses have taken such a big hit, it is possibly

the time where they reassess and see if there are better offers elsewhere. haidi: let's get a quick check of the latest business flash headlines. tesla is said to be looking to build a battery plant in the u.s.. we are told it wants to pursue a similar deal with ford and see atl. wells fargo has agreed to pay a most $98 million in fines over allegations it violated u.s. sanctions rules. it provided a trade finance platform to a non-us bank engaged in $532 million of prohibited transactions. in addition, wells fargo agreed to pay $30 million to settle potential civil liability.

china's banks have posted profit gains. they likely top or met forecast. icbc with only major whose income fell short of estimates. shery: we continue to watch the latest development when it comes to the indictment of former president donald trump. we don't have details of the charges as of yet, but we know that it is to do with directing hush money payments to appoint start during his 2016 campaign. we are talking about a former president running for reelection in 2024, indicted. we know that perhaps this could be breathing more life into his campaign and the question is what happens next. charges and even a criminal conviction don't necessarily legally stop donald trump from running. haidi: i suppose the question is

the way that this is politically perceived as well. i will be speaking to our guests in the next hour about their views into how this plays into his campaign. this grievance driven narrative as something that he has really embraced and it is working well with his base supporters. whether or not that will translate into more support from republican party is the question and we will you watching that as well. we will be hearing -- one speaking on cnn saying donald trump will likely be arraigned earlier next week. as far as procedural, we will have to wait to see how it all plays out. daybreak: asia is next. ♪