shery: welcome to daybreak asia. we are counting down to asia's major market opens. haidi: top stories this hour, china condemns the taiwanese presidents meeting with the house speaker but kevin mccarthy tells bloomberg beijing cannot dictate the u.s. talks to putative asian markets are set as weak u.s. data supports cuts for treasuries. gold is rallying. credit suisse executives are learning that their accrued furnaces -- bonuses will be cut. shery: we had seen a mixed session with the dow higher but the nasdaq 100 is underperforming even in the early asian session. this comes as we get weaker than expected u.s. jobs and services data leading to concerns of potentially seeing an economic recession in the u.s.. really markets having this sound off with the federal reserve on where the fed takes rates from

here. the treasury rally continued with two year yield volatility being ramped up. we're talking about falling 18 basis points, the 10 year yield is also the lowest level this year. one and a half percentage points lower than the three-month yield which historically would proceed and economic recession. take a look at crude prices extending declines in the asian session. it was not only economic concerns, but we also have u.s. stockpiles falling less than expected last week. haidi: take a look at the tepid set up. in asia, we are going into for a lot of these markets and extended weekend. we are seeing sydney at futures looking weak at the moment. a second straight day of losses. financial stability review from the rba, looking for hands to the reasoning behind the currents trajectory for policymaking, particularly after the pause. kiwi stocks are looking weak.

chicago futures pointed to the downside. futures contact -- futures looking weaker as well. they are resuming after the market close. watching for weakness in chinese tech names after the golden dragon index of u.s. listed tiny -- chinese shares listed at 3%. we are seeing the potential for a strong downdraft in prices when the market opens. take a look at the fx space where we are seeing that flee to safety. the gauge when it comes to the u.s. dollar was creeping up in the overnight session but we are seeing strength when it comes to yen dollar. we are seeing strength being held in the aussie dollar at this point, trading at 67. shery: we were watching politics here in the u.s. as well. house speaker kevin mccarthy has stressed the importance of ties between washington and taipei following his meeting with taiwanese president.

carthy says the u.s. must continue arms sales to taiwan, plus strengthen economic cooperation, particularly on trade and technology. bloomberg spoke with the house speaker after that meeting. >> what china needs to understand is they cannot dictate who a speaker of the house can meet with. for the same moment that macron sitting down with president xi jinping, i think that's great. i would sit down with him. shery: let's go to cindy wang. a historic meeting happening on u.s. soil. what were the key takeaways? cindy: a few hours ago, here in southern california, taiwanese president met up with u.s. house speaker kevin mccarthy. that is a historical meeting because this is the first time in four decades that the taiwan and the u.s. cut ties. if that a taiwanese president was able to meet up with the house speaker. that is the third highest

ranking government official on u.s. soil. so this is a big deal. mccarthy this morning outside of the ronald reagan presidential library before they had indoors to a closed-door meeting. they joined mccarthy and a group of bipartisan lawmakers, 17 or 18 of them. so they had a closed-door meeting with the president and her delegation for about one hour and they talked about various issues, including the security, cooperation and trade and the economic ties between the u.s. and taiwan. after the meeting, both mccarthy and tai had remarks to the press. the president was saying that kevin mccarthy -- she thanked mccarthy for his bipartisan congressional leadership.

then she continued by saying there is no secret, the peace and democracy are facing unprecedented challenges. she said she reiterated during a meeting with congressional leaders that taiwan's commitment to defending the peaceful status quo, where the people of time one continue to strive in a free and open society and mccarthy, speaker mccarthy said the bond between u.s. and taiwan today has never been stronger. it's been so strong, it is probably the strongest at any point in his lifetime. and he said that the president is a great champion of that bond. and the friendship between the u.s. and taiwan are really crucial to world peace and democracy. haidi: bloomberg's breaking news editor sydney wang -- cindy wang. beijing has responded to the mccarthy meeting sing the taiwan meeting is an unprofitable redline.

greater china senior executive editor john joins us from beijing and so far we've heard from the foreign ministry and the defense ministry showing their displeasure. john: that's what we have heard so far in terms of rhetoric. we also obviously solved the aircraft battle group approach taiwanese waters in the southeast of taiwan. that was another sign of beijing's displeasure at this meeting. as cindy mentioned, it is important to point out that although this is the first meeting that the taiwanese president has had with the speaker of the house on u.s. soil in more than four decades, it would be the second time in about half a year that the u.s. speaker of the house has met the taiwanese president. obviously, nancy pelosi traveled to taiwan to do that. much more provocative meeting. there was an attempt by the tsai administration to de-escalate the situation, asking speaker mccarthy not to visit taiwan ahead of presidential elections

happening next year. to try to avoid this sort of reaction from beijing. we saw when pelosi visited, we saw essentially a live action rehearsal for surrounding the island with ships. shery: no wonder we have seen a biden administration trying to play down this visit. so john, what can we expect on washington and beijing relations now? john: the two sides when it comes to beijing and washington are going to try to work past this. we are waiting for a call between president biden and president xi jinping. there was thinking that there was no way that president xi jinping was going to do that call as long as tsai was on american soil. as tsai heads back to taiwan that opens the door for the call to happen. we have seen some u.s. state department officials are ahead of the undersecretary -- assistant undersecretary for china traveling to beijing and saying hi recently so there is movement at a lower level.

there is going to be an attempt to try to get past this most recent meeting. shery: bloomberg's greater china senior executive editor jean-luc joining us from beijing. markets we're are watching very closely, a gauge of strength in the u.s. services sector losing steam in march and what could be a red flag for the economy. our global economics and policy editor kathleen hays is here with the latest. given the importance of the services sector, how significant is this? kathleen: significant because it has been above 50 on this survey. 50 above expansion, below 50, contraction. it's gotten closer to the midline which is why people are watching it more closely than ever, including the federal reserve. let's look at what the numbers did. on the headline services, nearly four points, that is a large drop in one month. 55 point one to 51.2. new orders were down 10 points from 62 and changed to 52 in march.

prices fell from 65 to 59, so unemployment slowing to. this indexes remained above 50 however the big move down is what people are wondering about. this happens as we got a reading on private jobs, showing that the adp report, that number came in at about less than half of what people expected. so that raises questions about the jobs report on friday. in terms of putting this in another context, let's put it in a bigger context, that is what we're doing. ism services have come down to above 50. ism manufacturing down below 50. this survey goes back to the 1940's. it is the most long-standing purchasing menacing survey -- managing survey on the planet. what does this mean for services? delivered economics thinks that the recession could start in july. investors speaking on bloomberg television put it all together.

she said rate hikes are still needed. let's listen. >> were going to have to go higher from where we are a little bit more and then hold there. in order to make sure inflation is on a sustainable down path to 2%. kathleen: the federal reserve meets again in early may. there is a lot more data coming, economic water to go under the bridge. this is what people are wondering about. haidi: global economics and policy editor kathleen hays. let's get you to vonnie quinn with the first word headlines. >> thank you. the international monetary morning geopolitical fragmentation driven by tensions between the u.s. and china risks damaging the global economy. global output to fall by 2% long-term. if foreign direct investment and capital is channeled towards aligned blocks. a fragmented world is likely to be a poorer one in one of its loudest warnings since the pandemic.

japan's trade minister says g7 members concur that natural gas is necessary as a transition energy source but they disagree on how long that might be. a minister told bloomberg that he believes gas will be required for 10 to 15 years. he says nuclear power will remain in the energy mix for japan. >> while introducing as much renewable energy as possible, japan will accelerate the operation of nuclear power plants under the premise of safety while also securing the supply of lng. we will make contributions to the world. japan being the largest lng consuming country, we would like to hold the annual producer consumer dialogue at some point. >> saudi arabia has raised oil prices for asian customers days after opec-plus announced a production cut. saudi aramco height -- hiked oil

for the third consecutive month. it's a surprise for traders who had been expecting a reduction of 43% a barrel before the cut was announced. swiss government is canceling or cutting outstanding bonuses of credit suisse executive. board members will have outstanding payments to the end of 2022 scrapped. top managers one and two levels below will have bonuses reduced by 50% and 25%. the steps will affect 1000 employees. 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: coming up, a closer look at markets with ig, who thinks rising geopolitical risks will be reprised with u.s. china tensions the biggest issue for some time. more next. this is bloomberg. ♪ this all-new ariya is an elegant ev.

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haidi: take a look at the risk of set off as we get into what is for a lot of these markets the last trading day of the week. we had these holiday volumes given that we are going into for australia and new zealand the long weekend. east sydney futures off by a second straight session, looking soft. kiwi stocks are not doing much

at the moment either. for australia, watching out for the financial stability review to get more of a gleam into the policymaking direction from the rba. chicago nikkei futures, contrast are looking week. s&p futures for the u.s. are also down by a 10th of 1%. we saw a risk off sentiment in the u.s. session, bonds flying, gold playing as well as the yen rallying as well on increased recession fears. not to mention geopolitical overlay appeared our next guest says even if markets remain calm, tensions between china, taiwan and the u.s. will be the biggest elephant in the room for asian markets for a long time. they join us now from melbourne and received the rhetoric from beijing, the saber rattling as well and just the overall displeasure in terms of the response to president tsai's visit. is this a new normal and how do investors navigate around the risks them? >> good morning and thank you.

i think that definitely no one is happy to call this normal. this is what we have experienced. you can see the tension between the taiwan and china and the u.s.. it is getting worse and worse, you can say that. they are trying to push harder and harder. in terms of how the market will respond, i think the instability will be the first consequence the market will feel looking back to what happened in the markets last august. we are seeing all asian markets related to the taiwan market in particular, they are up by more than 2%. china and hong kong build a percent on the date. in the longer-term point of view, i think what i can foresee is the decoupling in some of the sectors. chips technology. it's likely to see that that

will accelerate. haidi: so which are the areas that you will be looking at a little bit more closely? and i guess which are the ones to avoid, for example asia tech? hebe: yes, i think asia tech will be on top of these. we've seen the chip industry, we have not heard the data. japan is getting a new agreement with the u.s. and china is putting all the effort they can to develop their own chips. so they are trying technology independence. there will be decoupling on top of that. apart from that, we have seen that both of the parties have advanced technology, ai and other areas that have been seeing competition between two superpowers. both of them which i think will definitely will be the industry affected quite severely by this tension. shery: we have a few rate

decisions this week across asia. we are headed toward the indian central-bank decision but already, we are coming off a surprise, the rba which helped. not surprising given the divergence, we have seen it the aussie and kiwi around the lowest levels since december. are we going to see more unpredictability when it comes to central banking as well? hebe: yes, definitely. for example, what was happening in the central bank as you mentioned, moving in a different direction. i would say that we have to be -- it is a time to say goodbye to the phase that we are seeing central bankers move in lockstep. what that means for the market is that it will be getting more and more difficult to protect when and how much the central bank will move next. in terms of only the investor point of view, i think the reason for this unpredictably is because every country individually has their own challenge to face.

inflation will come down and another year's time and between now and then, unwanted surprises will occur. now and then, we just need to foresee more and more uncertainty that will be impacting the whole financial market broadly. shery: the market seems to be speculating that in the u.s. the federal reserve may have to turn the best given services numbers and jobs numbers that we got today. what are you expecting to see for the friday payrolls number and how that will have applications for the fed? hebe: i think first of all, for my view, i can clearly see u.s. job market is cooling. very strong evidence, one is from yesterday's new job opening. another very convincing evidence for me is that you can see the company that announced the job cut has been expanded from the

tech sector. now you see the real tail sector -- the retail sector. they announced a new redundancy, so what i can see is the job market is cooling. based on that, i think it is less likely to deliver an upside surprise like what it did in the previous two months. if that is the case, meaning that the new number, the actual number really is below the 200 point hike that we will likely clear the last hurdle to place the market and that is what i can foresee is going to happen for tomorrow. shery: hebe chen alwaysn have more to come on daybreak asia. stay with us. this is bloomberg. ♪

>> integration of our businesses

is expected to take three to four years, excluding a full wind down of the credit suisse investment banks portfolio. we expect the transactions to generate an annual run rate cost reduction of more than eight in u.s. dollars by 2027. haidi: ubs chairman on the complex integration of credit suisse. as that merger unfolds, the swiss government is about to cancel out or cut the outstanding bonuses of top credit suisse executives. let's get the latest from our finance reporter in sydney. these bonuses were just temporary as of last month, but looking more permanent now. >> this bank has failed in the performance is in no way living up to the pay packets. that it has bestowed on its staff. if you look at the top tears, we know government is either have slowing or having pay, so

bonuses will be canceled. one level down, pay will be cut by 50%. the next level down, cut by 25%. it is not a surprise when you consider that bonus pools at this bank have been 1000 times profits. over the past 12 years. that is just -- profits were just 35 million francs, so it is not a surprise for governments now doing this. shery: what about junior employees? will they be infected -- affected? nabila: junior employees were spared somewhat in that they were allowed to get cash bonuses up until last year. and they have already been paid out. but remember that the stock prices plunged so much that the pool for deferred payments has shrunk by more than 2 billion francs. shery: what were the key points? nabila: ubs chairman worked very

hard to say that this deal with credit suisse, even though it was forced on them, will be significantly financially beneficial. but there will be a lot of pain before that, so he talked about the integration taking many -- three to four years and that is not even including the winding down of the investment bank. they spoke of great certainty too, until the deal is and we are not expecting that to be until the end of the year. interestingly though, the credit suisse brand will still continue to exist for the foreseeable future. shery: and what did we get from outgoing ceo ralph hammers? nabila: ralph said that he offered to actually step aside for sergio because the integration is going to be such a great challenge. and that he was happy to do so. kelleher thanked him and gave him swiss telik use -- swiss delicacies. shery: bloomberg's finance reporter. if you get a roundup of all of

the stories we have been discussing. today's edition of daybreak is on your function dayb . terminal subscribers can access the mobile and the bloomberg app. customize your settings so you only get the news on the industries and assets that you care about. this is bloomberg. ♪ when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets.

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>> looking at the set up as we

head into for a lot of these markets illustrating session of the week. including the likes of sidney going into the easter long weekend. a second day of sessions when it comes to city futures trading down point one of 1%. while the gains when it comes to trading in kiwi stocks. we are seeing contracts in japan indicated lower as well. geopolitical tensions as well as softer data and renewed precision fears. we are seeing strengthening in the yen, gold, and treasuries, although we are seeing the aussie dollar holding onto a little bit of strength this morning. this depicts -- as the steepest: fighting cycle of purchase it and -- more with our chief rates correspondence garfield reynolds. is this political pressure at play when it comes to the rba, because we did see the surprise move from the rbnz?

>> i am sure there is political pressure in new zealand as well about the idea that the hawkish interest rate policy will drive the economy into a recession. that is not something they want. it has more to do with the different character of the two central banks and the way they are approaching things and the jobs market. on the different tone of character, the rbnz has a prior record of being one of the initiators of inflation targeting as a central bank, and it has got a record of all the moves to the upside and downside when it thinks that is necessary. the rba is far more cautious in tone. it like to think it is taking a more holistic approach. governor little -- lowe has put a lot of stress on the idea that

he wants to keep employment high and to push the envelope as to how high implement can stay. he has some encouragement, because australian wage growth is much lower than new zealand's. that is the key point. lowe is seeing we are not seeing a wage price spiral. we can take our time with getting inflation back down to where we wanted to go, and as long as it keeps moving back down we can stop and assess where we are going. for the rbnz they see inflation is too high and employment is higher than is sustainable over the long term. you have got to risk a recession. the rbnz is forecasting a recession, whereas the rba is forecasting a couple of years of weak growth. shery: markets in the u.s. trying to figure out where the federal reserve will go when it comes to rate hikes. what can we expect from payroll data and how that will

contribute to the narrative we are seeing with treasury yields plunging again in that standoff against the fed? >> we had a drumbeat of weak data this week coming out of the u.s.. with jobless claims, job cuts, and now with the private sector jobs report from adp coming out overnight, and finally services pmi. the survey of how the services industry is doing also coming in weaker than expected. with all of that as a backdrop, even a really strong payrolls report might be seen as something of a lagging indicator, and more of the sort of thing if the fed response to this rather than the rest of the data and goes on in hikes, they risk a policy error that will

make even slow down even worse that will potentially cement a recession for the u.s., and quite possibly a tough one. that is why we saw 10 year yields hit fresh lows, we have seen the yield curve stay fairly resolutely inverted, and in particular we are seeing markets pricing for rate cuts within 18 months, quite steep once. i am not sure how much one payroll print can move that needle, although we have got all of the possibility in the world in terms of volatility seeing if for some reason they are putting it out on a date when almost nothing else is going on. easter friday, which is not a full holiday in the u.s., because the bond market is open, so it can respond to these payroll reports. shery: garfield reynolds, our chief correspondent for asia with the macro picture right now. at those economic concerns are

leading to pressure on will prices and that pause to this year's gizzarelli after the surprise opec+ output cut. saudi arabia hiking will prices in asia. price she's seen by bloomberg indicated aramco raised white crude by $.30 a barrel. for more, let us bring in su keenan in new york. su: we know this is coming as a surprise to asia customers. first of all, there was the big surprise when opec+ announced a cut nobody saw coming, and a lot of asian customers -- asia is the biggest market for opec+ oil, they were expecting a price cut of $.40 a barrel, and now they are getting an increase. raising by about $.30 a barrel. this shows according to the analysts we have spoken to that despite production cuts, saudi

arabia announced because they are the biggest of the producers , and they had one of the biggest cuts. they are still expecting strong asian demand. what we also know is the producers maintaining prices for customers in northwest europe and mediterranean. aramco sells most of its crew to asia mostly under long-term contracts. the saudi's pricing decision is often followed by other gulf producers such as iraq and kuwait, so this could have a domino effect in raising the prices. let's check price action, because as mentioned the biggest rally of the year that we saw monday, west texas shooting up and climbing higher on tuesday. it still above the $80 mark but falling back just a bit in asian trading. we have seen brent move toward the $85 mark, but because we had

u.s. inventory data in the u.s., crude stockpiles fell 3.7 one million last week, less than expected. there is concern about demand in the u.s. other economic data showing softer business activity, so there is a view in the short-term we could have the rally in west texas cap to bit. brent a different story. analysts say it is likely to outperform in the short term as asian demand remains robust and opec+ cuts impacting the global benchmark. oil up 20% since its lows in march due to the swoon we saw prices take because of the banking turmoil. the upward trend still in place. haidi: su keenan there. let's get you to vonnie quinn. vonnie: australia's indigenous affairs minister has warned the country apology as global reputation is at a risk ahead of

a historic national vote on including first nations people in the constitution. the upcoming referendum seeks to give a political voice to aboriginal people. it's really a opposition party says it will campaign against the move. the indigenous affairs minister says a no vote would reflect terribly on the country. french president emmanuel macron meets with china positives xi jinping after making it clear he opposes moves to decouple from the's second-biggest economy. macron says china can play a big role in ukraine. he is visiting china with easy president ursula von der leyen. taiwan says it spotted a chinese aircraft carrier in at southeastern water additive time on president's meeting with house speaker kevin mccarthy. it's as a detective 14 chinese military aircraft and three navy vessels in areas near the island. it was seen as an early sign as well beijing says our resident

measures. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. and this is bloomberg. haidi: china has warned the taiwan issue is an unprofitable redline after the island's president met the u.s. house speaker in california. kevin mccarthy told us more about why he hosted her despite warnings from beijing. >> you also have to think, we are at the reagan library. reagan produced the six assurances. this is exactly what we should be doing. if we want to make sure we foster democracy and peace and make sure we do not get into any type of conflict, people need to sit down. what china needs to understand is they cannot dictate who a speaker of the house can meet with be they faux or friend. i would sit down with president xi.

>> [indiscernible] beijing? >> i would gladly. i think it is important. one of the things americans have front upon is we have never spoken with one voice when it comes to china. when i became speaker, we created the select committee that had 146 a democrats vote for it. you have watched democrats and republicans here together. that would foster a stronger relationship with china, because china would understand where our boundaries are. they will not worry about one party saying something. you washing congress this year, our only movement when we spoke about china, 100% of members voted for that resolution. >> it is the one area of bipartisanship i would say. >> i think we are getting more of it. 83% of every bill that passes has been bipartisan. >> i went to ask what type of support there would be if there

were to be an invasion, if beijing were to invade. you talked about arms sales that need to get there quicker. what would that mean? >> this is a hypothetical question it we would never want to get to. how do we make sure the question never comes to reality? what you would learn from ukraine itself, if we are looking back on ukraine in 2015 when i went to that white house to advocate, you want them not to be able to come in, and that is the same think we are talking now. in the six assurances we provided that we would continue to fund weapons to taiwan. what we should do is speed up that process so they can defend themselves so you do not have conflict. you do not have war. we build greater technology from sciences to health with them. i think that fosters a safer world. we continue to advocate at the reagan library, democracy, freedom, peace, and that is what

taiwan has. >> when it comes ukraine though there are some in your caucus were wavering, and they do not want to send the support. where do you think those votes would be when it came to sending that kind of support to taipei. >> in ukraine we want to find path that we could win. what is happening in america today, it looks like 1936. china, north korea, iran coming together as an axis of power. as americans you want to foster that nothing comes to an element of what we watch in the past that history has taught us. i think in our party, you would find that we would fund so ukraine can win. that would probably deter any action in taiwan, but what we can learn from the actions of ukraine, do not wait until conflict happens. be able to sell the weapons now so there is never conflict. shery: u.s. house speaker kevin

mccarthy with annmarie hordern. analyst expect samsung to be headed for its lowest profit since the global financial crisis. daiwa securities joins us with a preview of first quarter results. this is bloomberg. ♪

shery: sent song is good to report first quarter results on friday, and analysts expect operating profit to decline. let's bring in our next guest to is a buy rating on the stock with a target price of 80,000 won. sk kim is a director and analyst. we are at around 60,000. what gives you optimism we will see a higher stock price on samsung when we are facing those headwinds in the memory cycle? >> yeah, actually we are seeing weaker demand situation, and also we expect recurve earnings in q1 and q2. clearly now we did an adjustment the supply to meet the mismatch supply and demand balance.

in the perspective with respect to share price for memory makers, we have hit the bottom and second quarter -- in the second quarter, but given the strong balance sheet, the opportunity will widen the gap when the market rebounds. shery: what will you be watching out for the results this week to give you more confidence on your target price? >> i think now we see much weaker demand, and also sizable losses from inventory valuation. they write down from inventory. i expect record lossmaking.

samsung is still maintaining their memory production, but i also think we will also consider a production cut. that will drive positive sentiment. haidi: clearly so much of the recovery relies on the production side, but what do you see from the demand side? is there much momentum coming from the china recovery? >> actually demand is weaker than expected, and also you mentioned about the china recovery. the chinese mobile maker are getting relatively lower, so we can expect restocking demand

from china's mobile from second quarter. however, the key demand driver is server, but we fear ongoing investor adjustments, which will likely continue even in the second half of this year. we are more cautious about the demand, so that is what we expect more adjustment in production, supply side. haidi: historically, it it has been a big strategy for samsung to keep spending during these hard times and these cycles to grab more competitive market share. how much of a meaningful change do you expect this time around? >> actually, the strategy remains. this time as we are seeing

significant declines in demand. this time, micron also guided for more than 50% capex cut. it leaders will cut capex significantly. this will lead to the widening gap, especially the technology gap with its peers. because samsung has more capacity, market share, there are also record sizable losses in the near term. shery: in the long term, when it comes to the government, the south korean government push right now in order to build up their advanced industries including semiconductors and

areas that send some focuses on, how positive is this for the company? >> the new government is quite productive with respect to the semi conductor industry. the new k-chips, the tax credit [indiscernible] so i think we expect some benefit from tax saving and also some long term new complex. that is positive, because now makers have a production issue in china because of the u.s. chips act, and also samsung is

[indiscernible] in the u.s. it seems like there is noise with condition to the u.s. government. this will be positive for the company long-term growth in terms of securing the equipment space and also the new foundry complex in the long-term. haidi: sk kim. japan's trade minister says the government will increase financial support for a chipmaker as it works to develop cutting edge semiconductors. someone said he has high hopes for production in japan. >> the government is ready to continue and beef up financial support. the company needs to spend

trillions of yen to develop the semiconductor chips. >> regarding the timing of export controls, you have repeatedly said you do not have a specific country in mind, china made a remark that seemed to restrain japan. is there anything you would like to say? >> a move is not a ban, but strict export controls prevent military appropriation, and these controls apply to all regions and are not meant to target any one country. we will be looking at any possible danger across the board. >> what do you think about the excessive reaction by china? >> if a country moves to retaliate, the government will make appropriate responses according to the international rules. shery: japan's economy and trading industry there. plenty more to come on "day

break." this is bloomberg. ♪

shery: there is a check of the latest business flash headlines. bank of america is encouraging some of its bankers to take on new roles focusing on smaller deals great mmo seen by bloomberg urged staff to apply for positions and its emerging growth and regional coverage team which currently has more than 100 employees and 22

cities. at the company expects smaller clients to help boost investment banking fees. tiger global gained more than 7% in the first quarter thanks to a rally in technology shares. it was of 5% in march alone, helping the firm to erase losses from last year. four of the firm's biggest stock holdings jumped 20% to the three months of december led by meta, which was 76%. the market opens in sydney, seoul, and tokyo are next. this is bloomberg. ♪

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shery: this is "bloomberg

daybreak: asia." we are counting down to major asian market opens and perhaps a challenging session for today given the risk off session we saw here in the u.s. we have weaker than expected jobs numbers, services numbers really spooking the markets, and treasury yields slumping ahead of the payrolls numbers on friday. haidi: add to that they geopolitical, we have her displeasure being expressed by china's foreign ministry as well as the defense ministry in reaction to tsai's visit to the u.s. shery: we sought safe haven demand ramp-up in today's session. the japanese yen stronger against the u.s. dollar. it was an outperformer among g10 currencies. the dollar starting to see strength this week for the first time. we are awaiting the nikkei and topics to come online.

the nikkei is coming off the worst day in about two weeks or so, already a stronger japanese yen challenging the equities space. we are headed toward the 130 level against the u.s. dollar and 10 year jgb come close to the cap by the boj of .5 of 1%. we saw the treasury rally perhaps taking heat from the jgb space. take a look at what the korean equity market is doing right now, because we have the kospi rallying in the previous session, we are talking the highest level since august of last year, but that is not holding in today's session. we are seeing downside for the kospi and kosdaq, and the korean won weakening against the u.s. dollar past the 1300 level. haidi: let's look at how we are opening up in sydney and we are going into the easter long weekend for a lot of these markets.

volumes are looking for and as it is going into today's session. we saw futures looking weak and pretty weak start to trade in sydney. also watching australian, new zealand bonds as you saw treasuries flying along with gold. class a cave are back in demand. aussie dollar on the back foot trading at 67.17. we continue to watch a central banks in this part of the world. rba is out with its financial stability review. we will be getting hints with regard to the future policy trajectory there. watching divergence between the rba and rbnz and differences in approaches we have seen in their fights to quell inflation adding to interest when it comes to trading in the aussie dollar and kiwi dollar. taking a look at the energy market as we see weakness on

these recession fears when it comes to brent crude, up .2 of 1%. we are seeing the biggest rally with oil taking a pause, u.s. stockpiles failing to quell these concerns about overall lower demand amidst recession fears. shery: let's bring in our next guest who expects not surprising a couple of pimply quarters for global equities, with returns improving by the end of the year. with us now is a chief global strategist. good to have you with us. with all of these uncertainties we just spelled out, what will be driving equity returns that you expect toward the end of 2023? >> well, a lot of it will be fed cutting, which we do expect 50 basis points in the fourth quarter. i think that will be a big factor, and long bond yields

will probably fall further. we are also going into a recession in the states this year, and that will surprise some investors on the positive side. shery: would you come here to the u.s. to really take cover during those pumping quarters? where do use stay invested in this environment? >> well, we do think it is going to be a rocky few quarters for global equities, not showing much returns in the end but it probably quite a lot of volatility in the meantime. for the next quarter, for this quarter we expected the u.s. to outperform, but by the end of the year we expect japan to be the top performer from present levels. haidi: where in japan would you be looking to position? >> we do not make speculative

calls, but with the yen strengthening a bit you might not want to be too oriented toward the export sectors, but i will say by the time we will around to the new year, the tech sector probably will be looking a lot better than it has been recently. it is pretty ugly out there, as you know. haidi: how much faith should we put in the china recovery hope? >> well, we have been a positive on the recovery, but we thought that it would hit headwinds, and certainly is doing so it now to some degree and of psychology. it is interesting to see the steel price is falling again, so there might be some indication that infrastructure demand or building new homes as opposed to

selling the ones have already built or have built -- half built, some weakness could be happening in the sectors. we are not expecting tremendous fireworks from here, but we do expect a solid year rebounding from a low last year. we are up 4%, almost 5% for gdp this year. it could slow quite markedly by the second half of this year. most of the acceleration will be in the first half. shery: does that see -- does that mean we will not see that contributing to inflationary pressures with the surprise cup by opec+? >> yes, it does, and it is interesting this very large jump in oil prices is not spurring other commodity prices upward. grain is flat, copper is actually down.

a lot of that has to do with inflationary psychology being quite low right now, especially after those ism numbers, and overnight we had a negative surprise for the services ism in the states. even though europe is looking quite nicely, and china is doing pretty well, inflationary concerns still seem to be out there. this was more of a supply shock instead of a demand surge for oil pushing up the price. haidi: great to have you with us. let's get you to vonnie quinn with the first word headlines. vonnie: japan's trade minister says the government will be for financial support for a chipmaker. he told bloomberg he has high hopes for the company to mass-produce cutting edge semiconductors in japan. the tokyo-based chipmaker was established as here with me --

with the goal of making advanced tips locally by 2025. >> the government is ready to continue and beef up financial support. the company needs to spend trillions of yen to develop the cutting edge semiconductor chip. vonnie: china is urging the wto to heighten oversight of the u.s., japan and netherlands over export curves on chipmaking. the wto delegate raised the issue at recent meetings. it says the target argued that three country's actions were potentially in violation of wto rules. the imf's warning geopolitical fragmentation driven by tensions between the u.s. and china risks damaging the global economy. it says global output credible 2% if either capital is only channel toward aligned locks -- blocs. in one of its largest warnings since the pandemic. this was government is said to

cancel or cut the outstanding bonuses of top executives. board members will have all outstanding payments described. managers will have their bonuses reduced by 50% and 25%. this will affect around 1000 credit suisse employees. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn, and this is bloomberg. . shery: risk assets selling off early in the asian session. we will have more on the markets when we come back. plenty more ahead on "daybreak." this is bloomberg. ♪

shery: it is early in the session in asia right now, but we are seeing australian stocks unchanged, trying to hold onto gains, well kiwi stocks are getting .3 of 1% despite the

fact we saw the outsized hike, which surprised markets by the rbnz of 50 basis points. we are looking at the nikkei and kospi, both japanese and korean markets under pressure. the nikkei extending declines after the worst day in two weeks already as we see the japanese yen strength in, the korean won deep in. avon demand risk off sentiment really being felt across markets. geopolitical tension is adding to the anxiety across asia right now. try not the taiwan issue is an impossible redline hours after the island must be as president met the house speaker. kevin mccarthy told us more about why he hosted her despite warnings from beijing of resolute measures in response. >> when you think about the three communicates, you also have to think here we are at the reagan library. reagan produced the six

assurances. this is exactly what we should be doing. if we want to make sure we foster democracy and peace to make sure we do not get into any type of conflict, people need to sit down. what china needs to understand is they cannot dictate who is speaker of the house can meet with be they faux or friend. at the same minute emmanuel macron is sitting down with president xi. i would gladly sit down with president xi. i have been there three times. i think it is important we meet together, and one of the things americans have frowned upon is that we have never spoken with one voice when it comes to china. when i became speaker, we created the select committee that had 146 democrats vote for it. you have watched democrats and republicans here together. that would foster a stronger relationship with china, because china would understand where our boundaries are. you have watched in congress

this year are only movement when we spoke about china, 100% of members of congress voted for that resolution. >> it is the one area of bipartisanship. >> 83% of every bill we have passed has been bipartisan. >> i went to ask what type of support there would be if there was to be an invasion? if beijing were to invade, you talked about arms sales that need to get there quicker. what would that mean like militarily or would you send american lives? >> this is a hypothetical question we would never want to get to. we make sure that question never comes to reality? what you would learn from ukraine itself or it in 2015 when i went to the white house to advocate with president biden, you want to determine, you want them not to come in. in the six assurances, we provided that we would continue to fund weapons to taiwan.

what we should do is speed up that process so they can defend themselves so you do not have conflict. you do not have war. you communicate with one another . we build greater technology from sciences to health with them. that fosters a safer world. we continue to advocate at the reagan library. democracy, freedom, peace, and that is what taiwan has a. >> when it comes to ukraine, there were some in your party that are wavering. where do you think those votes would be if it came to sending that type of support to taipei. >> what we are finding in your brain is we want to see a path that we can win. when we are watching what happens in america today, it looks like 1936. china, russia, north korea, iran coming together like an excess of power. as americans you want to foster that nothing comes to an element of what we watched in the past

that history has taught us. i think in our party, you would find that we would fund so ukraine would win. that would probably deter any action in taiwan, but what we can learn from the actions in ukraine, do not wait until conflict happens. so the weapons now so there is never conflict. haidi: usl speaker kevin mccarthy speaking with annmarie hordern. beijing as responded swiftly to the meeting saying the taiwan issue is an impossible line. our senior executive editor joins us now from beijing. we have heard from not just the foreign ministry but the defense ministry and some saber rattling too. >> there has been a bit of rhetoric out this morning from beijing. i would say it has been relatively muted. if you think back to when nancy

pelosi visited taiwan, there were missiles, warships encircling taiwan. their response was much more aggressive than what we have had so far. in this context, you have to remember we have the french president in beijing expected to meet with xi jinping, and we recently had a visit by the former taiwanese president to china trying to establish a better context for improving relations. in that regard, it does look like beijing is trying to take a more measured approach going out trying to have a charm offensive if you will. shery: what can we expect from the macron-xi meeting? >> there will be a lot of discussion of ukraine. resident micron says he sees china having a role. he would like to push for peace there. he did warn any supply of weapons to russia would be a

redline for the eu and that china should not do that. we are expecting them to me today. the president of the eu commission is also here with president macron, and tomorrow they will be going to wenzhou, and unusual trip for two presidents to be meeting outside of beijing. haidi: the last three years have been painful for china in a myriad ways, but of course the international reputational damage has been pretty intense. is there a sense that beijing is trying to make efforts to turn that around? >> beijing is obviously taking steps to try and turn that around, if for no other reason than to try and prevent american efforts to isolated diplomatically. we have had issues when it comes to semiconductors, japan and the netherlands have signed on to

help limit china's access to semiconductor technology. beijing is trying to show the rest of the world it is not a bad actor on the global stage. it is not a country that deserves to be isolated. that is important for xi to do as he tries to maintain space for china to be able to trade, it is best and to get other countries to help it with issues such as taiwan. shery: john liu joining us from beijing. get all of the stories you need to know to get your day going in today's edition of every. bloomberg subscribers go to dayb and also available in the bloomberg app. customize your settings so you only get the news on the assets that you care about. this is bloomberg. ♪

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>> integration of our business is expected to take 3 to 4 years excluding the full why don't of the credit suisse nontobacco portfolio. we expect the transaction to generate annual run rate cost reduction of more than $8 billion u.s. by 2027. haidi: that was the dubious chairman on the complex integration of credit suisse. as that merger unfolds, but this was government is about to cancel or cut outstanding bonuses of top credit suisse executives. that is the latest from bloomberg's finance editor. this is temporary as of last month, but what has been decided and who be most impacted? >> perhaps unsurprising, but bad news to those people who remain at the company, and that will be difficult about when you are cutting bonuses is how will you retain the good staff that you

need? at the executive level, all of the bonuses are through the end of last year will be completely cut and one rung below that will be a 50% or 25% cut. very meaningful changes. if you were sitting there as a staff member uncertain about what the user is going to look like, at least you know the magnitude of the cuts. to my earlier point about being able to retain staff, this is quite a key issue. we have seen lots of people leave credit suisse. i think the difficulty now is how you keep wrapped up those good people that you need in those key positions? clearly those are quite meaningful cuts for people. shery: we heard from the ubs chairman as well. what did we gauge through his tone, and did he succeed in a reassuring investors understandably concerned about integrating the two firms?

>> you heard there in the clip of some of those key points he was outlining, the tone was very much trying to offset the challenge that is ahead, which he put a timeline of 3 to 4 years on that may be too long for people. there may be members of staff who might be -- on how long it will take. it is a colossal task to bring together two institutions of the size with their global footprint , but the key quote from him is that there is a huge amount of risk in integrating these businesses. he is not overstating that. it is very clear to all of the senior management now involved in this long process that this will take a long time, and just how hard a task that is. they have to remain confident. they are confident they can

navigate these challenges ahead. he wanted to paint a picture to visit investor base, and also to his staff that it is time to knuckle down. shery: adam haigh, and of course we have european futures opening at the moment, and you can see a bit of a mixed picture. we have seen pressure on european stocks already in the previous session given concerns about the global economy. we have those defensive sectors such as utilities, telecom, health care really outperforming, and perhaps not surprising tech shares under pressure. this is ahead of friday payroll numbers in the u.s. we may see more investors sitting on the sidelines as we just got more jobs numbers, services numbers in the u.s. that were weaker than expected. haidi: let's get a check of the latest business flash headlines.

western alliance says its deposits have shrunk less than estimated and that money was flowing back into the bank. it says deposits were down 11% in the first quarter, balances have increased, cutting this year's decline to 9%. the disclosure is concerns about a statement that updated the bank's financial status without including the deposit figure. bank of america is encouraging some of its workers to take on new roles focusing on smaller deals. it urged staff to apply for positions in its emerging growth and regional coverage team which currently has more than 100 employees and 22 cities. the company expects smaller clients to continue boosting banking fees. tiger global gained more than 7% in the first quarter thanks to a rally in tech shares. it was up 5% in march alone helping a race record losses from last year. four of the firm's biggest stock holdings jumped 22% led by meta.

plenty more to come here on "bloomberg daybreak: asia." this is bloomberg. ♪

yvonne: we are getting a pmi numbers out of hong kong, slight

easing to 53.5. we are still in expansion territory, and this is perhaps not surprising that we are seeing the number ease. we have seen china's manufacturing activity unexpectedly easing for the month of march trick is leading to some dark clouds against asia's factory gauges. take a look at what markets doi. a little bit of a mixed picture. we have seen downside pressure when it comes to japanese and korean stocks. you can see the risk off sentiment played out in the currency space with the japanese yen strengthening against the u.s. dollar. the korean won is sliding at the

moment. a weaker than expected equal data in the united states. >> so much attention on the fed given these increasing recession and. the cleveland fed president told us exclusively that market expectations of four rate cuts by next january looks unlikely. >> is certainly is not my policy path. i think we will have to go a little bit higher than where we are and hold there for some time in order to make sure inflation is on the path to 2%.

that does not mean we will continue to raise rates until inflation gets back to 2%. we will be recalibrating. it will same -- take some time to get inflation back down. i think we will make appreciable progress this year and continue to make progress next year and hit 2% in 2025. >> what is your trajectory for inflation? >> i am about at 3% at the end of this year. continued progress next year and 2% by 2025. it is imperative we continue to make progress and continue on this path. we will be judicious about it. we are not going to throw the

baby out with the bathwater. we will make sure we make good judgments along the way, but it is crucial we get inflation back down in a timely way to 2%. >> the fed tightens until something breaks is the old adage. >> i am hoping we do not tighten until something breaks. i do not think that is the strategy i would like to follow. we have to calibrate our policy in the correct way. we have made a lot of progress in terms of when we started raising rates. we were at zero and we have come a long way. we are making congress -- progress on getting where we need to get to. we need to go a little further but we are well on the way. and then we hold for a while.

yes, we can recalibrate our policy if the economy evolves differently than we are anticipating and that is the nature monetary policymaking. if the economy evolves differently than what you anticipated, you might have to adjust your policy path and you need to be open to that, especially in a situation like this where there is uncertainty. there was high uncertainty before the tension in the banking system. that has added more uncertainty. you have to be willing to take in more information and look at it and reassess if need be. yvonne: cleveland fed president loretta mester speaking to bloomberg. the gauge of strength in the

u.s. services sector could perhaps be a red flag for the economy. kathleen hays joins me here. >> the service sector is a very important part of the u.s. economy. that is where we just push inflation higher. the fed is hoping to see some slow down and demand and wages and inflation. down to 51.2. what caught people's attention, that is nearly a four point decline. orders went from 52 to 62.

a lot of things in here saying is there something going on? besides that, the private jobs survey called people's attention. it is only private jobs and it was 145. that number does not fully track the government report. it tends to join -- show the direction, but it is not like you can say number what number what will happen there. still seeing some more rate hiking being needed. two other numbers so deceleration? stocks did not decline that much in the u.s.. the ads right now of a recession are at about 97% that it will

start in july. haidi: we are seeing gains in bonds before therapy meets thursday. -- the rba meets thursday. >> inflation is coming down, but before we show you those numbers, you can see it is pretty much unanimous that is what we will get today. core inflation a sticky. let's move on to the inflation chart. there is a 2-6% range for inflation for the reserve bank of india. bloomberg economics says they

think there are reasons why they will actually decide to pause and one of them is the stronger currency and another one is rising costs for manufacturing is expected to slow that part of the economy down. haidi: kathleen hays there. let's bring in our next guest. mitul kotecha from the toronto dominion bank. great to have you with us. bloomberg economics going against consensus saying we can see a pause today. you are going further ahead. why do you see policy easing by the time we get to the end of the year? >> we do think inflation is

still sticky as was mentioned earlier and still above the rpi's target rate. it is likely they will need to nudge and lower. global economic conditions are weakening and it will be hard for india to escape that. with inflation likely to drop to about 5.1%, that will give they are b.i. plenty of room -- the reserve bank of india plenty of room. as the economy slows, and may need rate cuts further down the line. we are more aggressive than what the market is person in.

we do see a cut by december this year. haidi: we are seeing gains when it comes to the currency as well as bonds. what are you lacking when it comes to the indian market at the moment given that trajectory you see for the monetary policy environment? >> i think there will be room for bond market gains and ultimately there is a supply concern. if growth loses momentum, and death will still be one of the fastest growing emerging markets the months ahead. i think there may be some scope for yields to move lower, especially as we have seen a dramatic decline in u.s. treasury yields. i think the rupee will probably underperform relative to its

peers. in the near term, it looks like a very big level on the top side. i think we will stay in a little bit of a range in the near term. with the rate hike today likely to help the rupee on its path. it is still a relatively good trade for many investors. it could help the rupee going forward. equity markets in india are still benefiting from domestic mutual fund flows, a lot of that continues to be recycled into equities. haidi: where else do you see the effects carry -- fx carry out? >> i think the korean won is not

a carry trade. but we do like korean won. it has a very high beta to u.s. treasury yields. as u.s. yields move lower, korean won would be one of the more beneficial currencies in that environment. at the moment it is be a restraint because we are in a dividend outflow period. we still look for more games in the next few weeks and months. -- gains in the next few weeks and months. we may need to see a bit more of a pause or perhaps a little bit more of the weakness to jump back in. it looks like a very interesting

carry trade in this region over the next few weeks and months. yvonne: i have been pretty surprised when it comes to the resilience of broader em's. where do you think they are headed now and is this just a matter of valuations just because of how much they sold out last year or other fundamental pockets of strength? >> that is a good question. last year, emerging markets sold off drastically. we saw that with cheaper valuations and weaker sentiment. i think that benefits them this year because it has been underappreciated and that is offering resilience. i think we will cem generally do

well this year. i think lower u.s. dollar and treasury yields will help. with the fed now pricing for fed term on happen the decrease so sharply, i does vote very well. in terms of regionally, we have had high real rights in latin america. a lot of flows into the mexican peso. hungry has benefited from its carry. we think more broadly going forward emerging markets will benefit from the factors i mentioned earlier. >> how much will the support come from china itself? what could be the next drivers? >> i am not particularly bullish

on china's impact on global emerging markets. i think china is surprising on the upside. we have seen the q1 data coming in pretty robust. that said, we still do not think the longevity of this rally in the chinese economy will be sustained. our forecast is 5.3% china growth gdp this year. for the rest of the world it will be more about tourism and that is really helping asia. but i do not think we will see china being a source for the global economy and in i do not think we will see huge stimulus coming through in china. there were still concerns about leverage. china will help, but i do not think it will be the savior for the global economy this time around. >> mitul kotecha, always great to have your insights.

coming up next, japan's trade minister tells us how the governor plans to boost investment in local semiconductor production. this is bloomberg. ♪ you can't buy great conversations, or excuses to unplug. you can't buy possibilities, and you can't buy moments that matter. but you can invest in them. at t. rowe price we believe your investments should work harder for the future you imagine. and that's where our strategic investing approach can help. t. rowe price, invest with confidence. >> this is daybreak asia.

u.s. house speaker kevin

mccarthy has pledged to continue support for taiwan. following the meeting with president tsai ing-wen, he says the u.s. should keep selling military hardware to taiwan. >> china needs to understand they cannot dictate who the speaker of the house can meet with. >> taiwan says a spot aircraft carrier in its waters. the defense ministry says it detected 14 chinese military aircraft in areas near the island. it was seen as an early sign of what beijing described as resolute measures. french president emmanuel macron meets with president xi jinping

thursday. speaking in beijing, he said china can play a major role in ukraine by pushing for peace. they underscored a message of european unity. australia has warned the country's global reputation is at risk. the upcoming referendum seeks to give a political voice to aboriginal people. the indigenous affairs minister says i know vote reflects terribly in the country. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. >> japan's trade minister says the government will increase the support for semiconductors. yasutoshi nishimura says he has

high hopes for the production of chips in japan. >> the government is ready to beef up support. the company needs to spend trillions of yen. >> regarding the tightening over export controls for semiconductors, you said you do not have a specific country in mind, but china made a remark. is there anything you would like to say? >> the move is not abandon, but export controls prevent military expropriation. it is not meant to target any one country. we will look at any possible danger across the board. >> what do you think about the excessive reaction by china? >> if a country moves to

retaliate, the government will make appropriate responses according to the international rules. >> japan's economy trade minister yasutoshi nishimura speaking with bloomberg. if you missed any part of that conversation, you can go to the bloomberg function tv . you can also watch us live. this is bloomberg. ♪

>> a quick check of the headlines. amazon is partnering with india to stream movies and tv shows. it is introducing a special feature to provide books from the broadcasted ministries publications. india is a key growth market. macau casinos have been forced to close of thousands of hotel rooms due to a labor shortage. some five-star hotels have less than half of the rooms available while another available has about 1/5 of its rooms out of commission. >> we are watching the kiwi dollar closely after jumped to

the highest level since mid february. it is pressure under the u.s. dollar at the moment. the japanese yen very strongly against the dollar, extending those gains among g10 peers. this is as we are seeing japanese stocks also extending those losses after the worst day in two weeks. and this really makes you think about the diversions when it comes to central banks because you can see the aussie kiwi holding steady, but after falling to the lowest level since december, the governor did come out that they might need to further tighten and the decision to keep rates unchanged does not imply an and to the tightening.

markets of course already reacting to the decision not to move at this time. >> we are watching the geopolitical issues as we see heightened tensions over tsai ing-wen's visit to the united states. china going to the wto to ask it to intervene when it comes to the chips issue. we are getting samsung numbers out tomorrow. they are expected to be ugly. looking for further downside when it comes to the sector. that is it for bloomberg daybreak asia.

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