shery: we are counting down to

asia's major market opens. haidi: the top stories this hour, prime minister fu she she debt calls -- vowing to step up security. markets await key eco-data out of china as well as fed speakers later this week. and the pboc governor yi gone says there is a tilt towards market forces. shery: u.s. futures extending gains. extending gains from last week's gains as well. financials outperforming on jp morgan and citi leading the charge higher. earnings season here in the u.s. we could potentially see the worst results since the start of the pandemic. we are seeing equities trading in a narrow range. the nasdaq 100 underperforming last week. we have the rate sensitive tech giants under pressure.

treasury yields higher across the board. 10 year yield above the 351 level. traders really betting that perhaps we could see one more rate hike coming from the fed. where seeing oil prices holding steady after four weeks of gains already. we continue to see signs that perhaps we might see the supply market tightening for crude. haidi: take a look when it comes to the set up. of course energy, where the prices go from here will be a big area of focus. that will be through the perspective we will be taking when it comes to the china data. how much of that strength are we seeing in the reopening and recovery phase for the chinese economy. take a look at how we are tracking. we are about one hour away from trading. sydney futures looking like we will extend gains. watching for trade related stocks. winemakers should be in focus and potentially get the

expectations from the trade minister that china will lift those punitive actions on australian trade exports by the end of the year. that is fairly optimistic, but it should lend some optimism. kiwi stocks lower by about .4%. it should be an interesting element when it comes to the inflation reading later on and what the rbnz does. chicago nikkei futures looking like some modest gains as we get into the start of trading this week. shery: our top story in japan, fine -- prime minister fumio kishida has continued campaigning for his party after saturday's and -- attack with an explosive device. leaders gathering in japan ahead of a high-stakes summit. >> we will have more vip's from around the world during the g7 meetings. we must tighten our security to

maximum level to ensure the safety of the foreign dignitaries during their visit to japan. shery: for more or less bring in kana nishizawa and stephen engle. i can imagine a lot of uncertainty on the ground. what do we know at this point? kana: we are slowly starting to learn more about the suspect's background, the weapons he used. what we still do not know yet is his motive. he has said he plans to remain silent until he speaks to his lawyers. this obviously comes as a shock for people here, where the attack comes less than one year since former prime minister shinzo abe was assassinated. it immediately raises concern about the security ahead of the g7 summit next month and several key events leading up to it,

including we just had one that kicked off this weekend, the foreign ministers meeting. haidi: what is the potential impact on domestic politics, and potentially even complicating the timing for boj decisions? kana: this could have broader implications. there has been speculation that kishida may call a snap election in the coming months if the ldp wins big in the upcoming elections. his surprise visit to ukraine as well as improving ties with south korea has won him support, so he may want to take advantage of that. if he does call an election, that could add to uncertainties around when the boj will exit its ultra-loose monetary policy as they may come under pressure to keep markets more stable. how this all ties into the attack on saturday, one analyst has said the fact kishida

continued with his campaign after the attack would be taken positively by voters. on the other hand, some analysts have also warned about the potential risk depending on the motive of the suspect. after abe was assassinated, it highlighted ties between the ldp and the unification church. again, although we do not have any information yet on the motive of the suspect, that is one risk raised by analysts. shery: that must be a key security concern, especially as we have this g7 foreign ministers gathering in japan right now. stephen: i think this attack on prime minister kishida underscores the security element to these meetings that are coming from the g7. obviously the foreign ministers starting their gathering in the resort town yesterday. they will be going on today. also early next month you have the finance ministers, and also a week after that the leaders

summit of the g7 in hiroshima. it does underscore that security will be atop subject, not just because of ukraine and taiwan, but also now domestically. it is going to tighten things up at these meetings. obviously we are more than a year after the russian invasion of ukraine. we have had subsequently of course a meeting of minds, if you will, between xi jinping and vladimir putin in moscow. that will be on the agenda, as well of -- as well as of course the increased attention over taiwan. the pla just completed exercises around taiwan again, so there are those concerns again obviously as the g7 discussions obviously will be kinda focused on asia this time around as japan will play host to these g7 meetings. you are seeing antony blinken and others yesterday in the opening dinner of the g7 foreign ministers meetings. there is also potentially -- the word i have been hearing from

these meetings already is downplaying. everyone is downplaying concerns within the bloc, within the g7 that there might be some rifts on the policies towards china. you had french president emmanuel macron recently visiting beijing, talking about how the eu should not be caught in the middle of disputes with between taiwan and the u.s. that raised concerns that there are diverging opinions moving forward between the eu and u.s. source china. we also have the german foreign minister last week in beijing, and she essentially had more terse comments towards beijing, about any escalation in the taiwan straight could potentially be a horror scenario. so again, we had the eu foreign policy ahead -- head, downplaying there are any rifts within the eu, policy towards china. he's essentially saying policy is the same among the eu members. the wording might be different.

also we had antony blinken, before leaving for the g7, also downplaying concerns that the european members of the g7 potentially are concerned about the intelligence leak out of the united states. blinken essentially said he has no indication from members that there is this unity on that suss -- there is disunity on that subject. haidi: stephen engle with kana nishizawa on our top stories. the pboc governor said days of interventions are largely over. we do not often hear from him. he's -- it's interesting to hear what measures are taken or not when it comes to stability in the yuan. annabelle: that's right. we do rarely hear from yi gang on the global stage but he has been in washington the past week

for the imf and world bank meetings. saturday he spoke at the peterson institute. the headline is what you just said, really grabbing people's attention. is that the pboc has largely retreated from regular intervention in the yuan. is it freely convertible? no, that was not the casey gone was making. he said it is -- case egon was making. he did not provide a date from when it could happen. from yi gang's own perspective he said when you look at history, sooner or later it is the markets that win out in the forces of the currency in the end. shery: so what is currently the pboc's fundamental and basic policy for the chinese yuan? annabelle: it is essentially about increasing the ease-of-use, particularly for chinese households. yi gang, when he spoke at that's institute, shared his own

personal experience, being frustrated when he had to turn to a friend to help them exchange the yuan for foreign currencies. chinese households, he said they can exchange up to $50,000 a year into foreign currency. he said 99% of those households are not reaching that quota, so it is currently not a constraint. when he spoke about the u.s. china exchange rate, he said it is largely in equilibrium, no sudden or large capital flight. underscoring broadly in the speech beijing's resolve to increase the yuan's global presence. when you talk about on a global stage that you could also really point to what we heard from the u.s. treasury, and that has been continued criticisms towards china for its lack of transparency in how it manages its exchange rate. some interesting and rare comments we got from yi gang over the weekend. shery: annabelle joining us from hong kong and allete latest from the pboc. let's now get to vonnie quinn.

vonnie: vladimir putin has praised ties between the militaries of russia and china during a meeting with a top official from beijing. the chinese defense minister's visit to moscow comes a month after president xi jinping's. state media says he also plans to meet with his russian counterpart and visit military institutions. china has become russia's biggest supporter since the invasion of ukraine. india says it could by russian crude near are past the g7 price cap of $60 a barrel if costs continue to rise due to supply cuts. the finance minister told bloomberg the priority is getting enough fuel for the population of 1.4 billion people. india imports about 80% of its crude and russia is now its top supplier head of a rack and saudi arabia. >> we have a large population. and we also therefore have to look at prices which are going to be affordable for us. otherwise, i will be ending up

paying far more than what i can afford. vonnie: thailand's main opposition party remains the top choice for voters ahead of next month's general election. the survey found he was backed by 47% of respondents. the prime minister and his party fell further behind. more than 60 parties have registered candidates for the election to the 500 seat of representatives. fears of a full-blown civil war are rising in sudan as a deadly battle continued for a second day. clashes that broke out saturday have killed at least 61 people. the rival forces are believed to have tens of thousands of fighters each in the capital alone. besides have been at odds over a proposal to integrate forces. global news powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn and this is bloomberg. haidi: still ahead, japanese drugmaker is cutting its

operating income guidance for the full year. it's newly appointed ceo joins us for a discussion on their business outlook. next, moody's tells us why they expect to grow year-over-year. analysis on the economy in just a moment. this is bloomberg. ♪

>> central banks have to own their mistakes and learn from their mistakes to continue to enjoy something that is very precious and very important for the system as a whole, which is the ability to make policy without having to go to powers. shery: taking a look at the week ahead, key economic data out of

china this week likely to show a pickup in growth after beijing dropped its covid zero rules. however, markets will be watching for signs of how solid or sustainable the recovery will be. early indicators have been mixed, while credit and export growth beat expectations last month. weak inflation suggests demand remains subdued. thank indonesia expected to keep interest rates unchanged for a third straight meeting on tuesday. the governor has previously said the central bank has done enough to tame inflation. in the u.s., the fed releases its beige book that outlines recent economic conditions by region. officials will be speaking this week ahead of the blackout period that precedes the may fomc meeting. haidi: joining us now is katrina ell, senior economist at moody's analytics. of course big data dump week when it comes to china.

is that really top of mind for you, and do you think we will be able to glean a better indication as to the strength and momentum we are seeing in the rebound? katrina: we are really looking forward to the china economic data release coming out this week. we will get readings for march quarter gdp as well as the sweet activity did as well. what we are watching for is the gdp print is really important. we are expecting that q on q gdp growth will come in at about 1.3%. that is a decent rebound from the december quarter print which was basically flat. if we are looking beneath the data, and i think it is really important we do look beneath the data, households are spending particularly on services. we have seen a rebound in business manufacturing services as well. but overall, the reopening euphoria that was triggered when china dropped its covid zero policy late last year, it is not

quite lived up to expectations. we are still seeing this underlying cautiousness from businesses and households as well when it comes to domestic demand in china. that is really reflected as well in the reflation figures. we are not seeing inflation driven domestically pick up meaningfully. haidi: is that a lot to do with the lack of security and uncertainty when it comes to the property sector? katrina: i think that the property market does play into it quite substantially. the property market is still that critically important driver of gdp. and we have really seen glacial improvements in the property market. but i think there are other factors at play as well. the local regulatory uncertainty, the opacity of policy when it comes to decisions affecting both households and businesses are curtailing some of that enthusiasm as well. in addition to that, we also

have the geopolitical uncertainties as well, which is creating some uncertainty for businesses that are operating with exposure to external conditions. shery: what is happening in china is not really going to bode well for the economies that depend heavily on trade. we get the no decks data exports out of singapore today, the expectation for the month of march is a contraction of almost 20% year on year. where are you going to see the biggest impact? katrina: yeah, that is a really good point. singapore is such a good bellwether for what is happening in asia pacific when it comes to export performance, but also a good bellwether for global trade as well. we have seen both export figures coming out of singapore be weak for quite some time. we are expecting around a 22% year on year contraction. so it is significant. what it is really telling us is the tech cycle globally is in a downswing after that sustained upswing.

so that is going to continue to hit those export facing tech manufacturers, korea, taiwan, malaysia, and of course singapore. shery: the latest central-bank to actually join the ranks of those that are seeing peak inflation. what are you expecting in terms of monetary policy decisions out of indonesia this week? katrina: indonesia is going to be one of those less interesting decisions. i think the governor has been quite transparent in flagging that. they are hoping that their tightening cycle is over. so we are expecting we will not see any action from banking indonesia this week. we hope is that inflation headline and core inflation will continue to trend lower in indonesia to allow the central bank to stay on the sidelines there. haidi: what will the cpi numbers out of japan do for the boj? katrina: we are expecting that inflation in japan will continue

to probably hold around where it is at the moment. what is helping in japan is the fact that you have government subsidies on energy, we also have global oil prices trending down as well. so that's supporting the more subdued kind of supply-side inflation picture. but when it comes to domestic demand, in japan it's picking up due to the removal of covid restrictions, allowing international services and tourism. that's helping. when it comes to domestic demand driven inflation, that is picking up. that said, that is not going to be enough to bring inflation back to where the bank of japan would ultimately like it to be once supply-side imported inflation pressures continue to trend down, as we expect they will. shery: katrina ell, senior economist at moody's analytics. great to have you with us. you can get a roundup of all the stories we have discussed. get your addition of daybreak at

dayb . terminal subscribers can access it. it's also available on the bloomberg anywhere app. you can customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪

haidi: australian treasurer jim chalmers plans to release an independent review of the central bank before the national budget in less than a month. he spoke with kathleen hays at the imf world bank meeting in washington. jim: i will be looking to release it hopefully in the next week or two. we have received the report from a really terrific panel. i think they have made some very

wise recommendations. i will confer with my cabinet colleagues and with the opposition and the parliament to try and get an element of bipartisanship around the reserve bank review. i think it is a good opportunity for australian and it central-bank to see what we can do better. so that is the spirit with which i will really set. kathleen: is this more than tweaks? is this some kind of shakeup? jim: in order for it to be worthwhile the recommendations need to be robust and meaningful, and they are. when i release it, whether it will be the next week or two, certainly before the budget on may 9, people will see the thought that has gone into it and the opportunity not to second-guess all the decisions taken in the recent past, but to try and work out, have we got the right processes and structures to make these important decisions. kathleen: what objective would you change? you want to have price stability and an economy that grows. would you change that? jim: obviously inflation

targeting is a really important role, and i would not expect there to be substantial changes there. nor would i expect there to be a winding back of the independence of the reserve bank, which is a key feature of our central bank in australia. but there are other meaningful changes which will be proposed and i look forward to perhaps coming back on the program and talking about them when they are out in the wild. kathleen: we will be glad to have you back. governor lowe has said he would like another term. have you made up your mind yet? jim: we have said both privately and publicly that in the normal course of events, an appointment which comes up in september would be considered closer to the middle of the year. we also want to get this reserve bank review out there and get it talked about and discussed and consulted on, because that is an important part of the future of the bank as well. shery: australian treasurer jim chalmers speaking with bloomberg's kathleen hays. here's a quick check of the latest headlines. merck will buy prometheus biosciences for about $10.8 billion.

the agreed price of $200 per share is a 75% premium to what prometheus closed on friday. merker is looking to bolster its research pipeline and strengthen its portfolio of autoimmune drugs. moderna and merck say adding their codeveloper cancer vaccine to the drug keeps more melanoma patients in remission than the immune therapy alone. it is their first detailed presentation of a key study into the therapy. merck and more during her now plan to-- next, we will look closer at how u.s. banking giants are reeling in windfalls from higher rates that when i was his age, we had to be inside to watch live sports. but with xfinity, we get the fastest mobile service and can stream down the street or around the block! hey, can you be less sister, more car? all right, let's get this over with. switch to xfinity mobile and get the best price for 2 lines of unlimited. just $30 a line per month.

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>> the short term greed is higher recessionary risk. and then inflation coming down. i think inflation will come down a little bit.

it could be stickier than people think and therefore the rate curve will have to go up more than people think. >> we think it is more likely the u.s. will enter a shadow recession later this year. right now the biggest unknown is the impact on terminal short-term u.s. interest rate and how the debt ceiling plays out. >> response continues to exceed expectations. over 100,000 loans since november. adoption and usage among our consumer customers continues to increase. 6% than a year ago. >> ceo's speaking on the state of the u.s. economies and those banks are reeling in windfalls.

another busy week for big bank earnings. bank of america, goldman sachs, and morgan stanley. adam, when we spoke about this on friday we were saying people are nervous about deposits. >> they were in the context is important because the broad consensus was people were withdrawing money and it turned out not being the case and we had the surprise bump in deposits at j.p. morgan, 2%. so that was an area that had an overstated negative and you saw a reaction in the share price. but the story around the fact that the net interest income numbers were significantly higher than people expected and that is driven broadly by what we have seen in rates, the big turn in the last year but this

idea that actually you will end up with the curve having to push slightly higher from here so that increases the recession risk in the u.s. but it also means an expectation of a higher rate going forward. so maybe you will get a story for the second half of the year where you have more carry through than people expected before. shery: how destructive have the earnings banned in the broader economy and could we get more indications about where said policy could go ahead? >> james fraser and jamie dimon were both singing the same tune in the sense that their expectations of recession have marginally increased. this is not something they expect to happen imminently and

it might happen through more severe and stubborn inflation, in which case he would have higher rate but then the comedown becomes more significant as the fed tries to balance with inflation coming off but then coming back and becoming more stubborn and that is the tricky landscape policymakers are trying to navigate and bank ceos on the others are trying to set up business for the areas that can do well over the next 12 months but the areas where they know there will be shocks and one of those areas is that you might have credit quality deteriorate in certain pockets but they are not seeing it widespread so for now it is not a story of impending negativity coming to the economy but further in the year and the second half of the

year it will be more acute than. shery: haidi: haidi: there could be -- there could be more pain >>. job cuts across the investment banking i'm not a new story. this has been a long readjustment for the economic slow down most cuts started in september of last year so for barclays it looks like around 100 -- 100 people and they are clearly continuing to readjust at the margin and expect a tougher year ahead and of course you see that in the activity numbers are still subdued and we heard from citigroup that fixed income did particularly well, how people have readjusted portfolios so some areas are

benefiting but clearly across the board there are adjustments that need to be made whether they need to trim staff around the edges and redeploy as we get further into the slow down. shery: it is still early in asian sessions on u.s. futures are slightly higher. annabelle: focus on u.s. bank earnings setting the tone for the reporting season and debate whether this will mark the bottom for profits and equities could continue to rally but modest gains for u.s. futures. sydney and tokyo are half an hour away from the open and both going high but new zealand and the red so a mixed picture in the session that is emerging. there are things to focus on. inflation expectations. more fed officials will speak in the days ahead and i'll call for further tightening but in asia,

the focus will be the data we get. gdp numbers are due tomorrow. we expect an expansion of 3.9% in the first quarter, below china's your target of 5% growth but the readthrough of the numbers we have had still looked uneven. great credit expansion numbers, solid exports but more worrying signs in the consumer and producer prices and that shows the softer demand we see in the economy but more data said for the weekend was the property prices that came through. we saw a month on month prices rise for a second consecutive month and now what that tells us is perhaps this is the start of a broader trend but if you look year on year, we are still seeing prices lower so haidi it is just another signal to us that stocks and bonds are likely

to stay range bound in china because we are still looking for clarity on the outlook. haidi: let's go to new york with vonnie quinn. >> ecb president says she does not see the u.s. defaulting on debt. she said she is confident the u.s. won't let that happen as it would negative impact globally. the binding administration is locked at an impasse with the republicans about spending cuts. olaf scholz says indonesia will join a new climate group established by the g7 created last year to coordinate global rules on matters and avoid trade disputes. olaf scholz said indonesia will receive billions of dollars for rich -- from rich nations to accelerate the shift away from fossil fuels.

australia's government is optimistic that exports from germany could be lifted by the end of the year. trade minister don farrell said it could mean the barley dispute could be resolved in months, not years. spacex will launch a massive rocket starship monday and it will be a critical milestone in the ambitions. they use -- nasa also plans to use the same spacecraft to return to the moon. 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. this is bloomberg. shery: colombia's finance ministers says inflation in his country p in march after soaring above 13%. pressures are easing for producers and the country's

poorest households. >> let me say that i think we are pretty sure the 13% inflation is a peak. food price inflation is already declining and it is because of some services, in particular the [indiscernible] [inaudible] there are many other positive things [inaudible] increasing 7%. the first one digit inflation we have had in several months. if there is a borrowing [inaudible] they have declined substantially. yesterday they -- the 2024 bond

for columbia was 10.5%. so the trend is quantitative. some banks also offered to reduce the interest rate for small loans. >> colombia peso has been strong. >> i think october of last year the picture was based on the wrong expectations. but the correction has taken place, particularly in the last month or so, and now we are more like what we expected. shery: what are your

expectations for oil prices yvonne: >> -- >> i think we expected to remain high this year but more with the [indiscernible] [inaudible] medium-term it will be a declining price. [indiscernible] special tax for oil producers. the highest this year but declined in the next year because of the potential of falling prices. haidi: up next, live with the ceo of astellas pharma. what comes next for the company. this is bloomberg. ♪

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haidi: it is time for japan ahead on daybreak asia. some security companies might move after the prime minister was targeted by an explosive

device when he was in japan. geopolitical challenges posed by china are high on the agenda. credit suisse risky bond wipe out. japanese markets opening at the top of the next hour and this is what we are watching when it comes to dollar-yen. the dollar has been trading range bound and a bit mixed in the space in the early part of the sydney trade is so watching for any big moves. shery: japanese drugmaker astellas pharma operates in more than 70 countries. they have cut operating income guidance for the year but

analysts are positive with city last week joining the consensus and raising the rating. thank you for your time today. give us some background driving your forecast for performance this year. >> thank you. we are in a very important year because we are expecting a few launches of our stretches of global brands and we are trying to keep sustainable growth during the strategic plan, the five-year midterm plan for 2021 through 2025. haidi: what are your main goals as part of your tenure? >> a great question.

we are expecting to grow our global brand and trying to increase the profit margin for the operation and if those are achieved we are confident we can achieve the market cap target we set. haidi: tell me about your china strategy, especially about supply chain diversification. the executive arrest has complicated matters. can you give us an update on the situation and if it affects your strategy? >> the supply has been complicated and so in terms of biologics stuff we are manufacturing, we have globally distributed on the supply chain

so we are trying to make alternative sourcing so that our product is a life-saving product so we cannot suspend the supply so we are trying to diversify the supply chain to have sustainable supply. shery: especially given the detention of an employee of yours in china. does that concern you about the market? >> i think as a company we place the highest priority on the safety of the detained employee and have been working very closely with the japanese ministry of foreign affairs. our thoughts are with him but unfortunately, the information is [indiscernible] at this time. but the fact is not change our mission. we believe in supplying our

products to our patients in china. shery: you were just appointed ceo. it must be a challenging time. what do you hope to achieve during your tenure? >> as i mentioned, we have the five-year plan so my most important mission is to really deliver so help the company to become cutting-edge value driven innovator. in order to do that, innovation is our lifeline so we need to cultivate the corporate culture of taking an intelligent risk and demonstrating leadership and collaboration to become the leader of the industry.

haidi: last year was challenging for a lot of japanese corporate's because of the exchange rate. does that impact your business and how do you try to hedge risks? >> the weekly yen improves our operation because more than 80% of our revenue comes from outside japan so we have a very global chip -- global supply chain so a stronger dollar means more revenue on the basis of the yen as a reporting currencies so the 2022 performance was kind of going beyond our expectations.

haidi: really great to have you with us and we appreciate your time. you can always see our past interviews on tv and dive into bloomberg functions and securities and become part of the conversation by sending us instant messages during our show . this is bloomberg. ♪

shery: 21 of the largest pharma deals in recent history. merck is buying prometheus for $10.8 billion. su keenan has the latest. the timing of this deal is important. >> it is. it's about patent protection. the drug china is about to lose it in a couple of years on the giant block buster drug and it has been looking for deals to give it an edge and bolster the pipeline and protect against such loss. the focus has landed on prometheus, a biotech firm with no current products but a promising portfolio in the immunology sector. merck will pay $200 per share in

cash for all prometheus outstanding shares, a 75% premium we are closed friday. according to the statement released by merck, we believe the acquisition will accelerate their growing presence in immunology, where he says there is substantial unmet patient need. there will be a lot of focus on prometheus stock which is expected to rocket higher, given the deal. it boosted in september and that had a lot to do with the promising results on the drug trial. it does not currently have any products on the market. haidi: this is not the first deal to be driven by expiring patents. >> it is called a patent cliff in the pharma industry. it is when patents are set to expire. this happens across the pharma industry in the next couple years until 2030 and according to bloomberg intelligence, we

have large u.s. drug companies aiming to lose more than 200 billion dollars in annual sales so the activity is really being driven by patent expirations. merck is the most exposed because the key account counts for billions in revenue and could start facing competition in 2028 and that is why they went after prometheus and agreed to by him ago biosciences last october and that was a biotech firm that develops treatments for blood cancer. so merck expects to complete his purchase in the third quarter and the stock is expected to move monday in the u.s. haidi: su keenan there. these the stocks we will be watching when trade opens in korea and japan shortly.

security companies might move after the prime minister was targeted by an explosive and an event in central japan. [indiscernible] board will convene on monday to discuss a takeover. and wealthy customers have lost on credit suisse. we are watching mitsubishi logistics. the market opens our next. this is bloomberg. ♪

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shery: we are counting down to

asia's major markets opens as we head toward a mix of the earnings season. expect the worst performance since the start of the pandemic. as we get export numbers at singapore, a very [indiscernible] economy. haidi: the question still remains on the said trajectory and the geopolitical overlay. china reopening, how much of a boost we are seeing in the numbers this week will be key. let's get you straight to the open. annabelle: certainly a lot of different headlines and things passing through to start the week. we have the open for japan, south korea, and australia and we are watching the two year yield closely because it rose to end the week. we saw a court u.s. retail sales declining less than forecast and the other part that played in

was the rising inflation expectations that came through in the latest survey with more fed officials saying there is a further case of tightening. the dollar looking mixed in early trade but flat against the japanese yen. inflation data from japan later this week will be key. the last national print before the boj makes their first policy decision under the new governor and in japan today we are watching for any market implications from a bomb attack targeting the prime minister this weekend. he has resumed his campaign. security is a sector to watch. in korea today we are watching the kospi closely. seeing it near a technical bull market but the line to watch is -- we are fractionally off. we might get closer today given

what we see in tech stocks. costs are fractionally higher but the nasdaq in the u.s. gaining over the past and a lot of concerns around rate sensitive names like microsoft and apple. bank of korea today we are watching for a note that will come out on the impact of china's reopening and in australia that's the big focus for age and investors this week. gdp data coming out tomorrow and the expectation is for growth to have risen 3.9% in the first quarter but still traders are looking for clarity on the health of the reopening on the mainland. elsewhere in australia with the focus on improving trade tensions between beijing and canberra and the trade minister in australia's government and for you saying he is optimistic the punitive trade sanctions imposed on a range of sectors will be lifted by years end and

meanwhile brent crude is holding the fourth weekly gain and a lot of concerns playing into the prices around the tightening outlook. shery: our next guest says the best place to be is the defensive sectors. where opportunities are. who could be the outperformer's that have not done very well in the last few months? >> it's a great question and i have been wondering why it has been the case that sectors like health care or staples or defensive technology have lagged a very narrow group of large cap tech names that have really contributed something close to 80% or 90% of the s&p 500

performance in the first quarter. our general view is that while perhaps technicals have favored momentum traders and volatility control strategies or risk parity strategies, buying more equities in some of these index giants, generally when we look over the horizon it is much more likely we are going to hit an economic recession in the u.s. over the next 12 months. when we look at quarterly earnings estimates, they look like hockey sticks. they are negative for two quarters and then turn strongly positive by q4, which we think is unlikely. shery: no wonder we are seeing

so much expectation depend on china. we expect first quarter gdp numbers this week. where in the reopening is there momentum for upside? >> we think while a lot of the first order impacts have already been well discovered by the market, in general there is going to be positive impacts on the chinese economy that have not yet translated into widespread economic activity. we certainly have seen the services pmi in china move up pretty dramatically but we are still seeing a little bit of a doldrums in manufacturing activity that could be picking up as well.

our general view on china is that also the incremental investor for that market is a domestic one and they actually have been under participating in this current rally that we have seen so far over the last six months and so with technicals in favor of china and valuations still attractive and the economic and earnings momentum still, there is a lot to like about this market, especially in contrast to develop markets like the u.s. or europe. haidi: is there is still a lot to like when it comes to the ai frenzy? when you get to a point where almost 10% of the turnover is in these names, do you worry it is

part of the market that has gotten ahead of itself? >> we do worry about that. i think it is a very cinematic way -- seem -- thematic way to invest at the moment and no one knows who the ultimate winners will be, the providers of the tools or the people who find the best applications for them. we also generally think that while some parts of the broad tech sector in china have been doing ok from a revenue and earnings perspective, we do worry that when we look at the reopening playbook for china in other markets like the u.s. 18 months ago, what we found is that tech was not the best place to be.

many of these were companies that fundamentally did well during the pandemic and we may see people play less games, perhaps order less online, and as some of the activity moves back into the brick-and-mortar economy, we actually per for non-tech related forms of consumer discretionary exposure. shery: what has been forgotten in china? haidi: you say the consumer goods demand story might prove to be disappointing so what are we missing that code to be good opportunity was? >> we think consumer demand will continue to grow. as more parts of the economy overall start hiring again. but i do think what has been a

little bit sidelines by people looking for recovery winners is that there are a broadest set of companies with long-term policy support in china and that would really include a lot of the beneficiaries of china's net zero policies and the reason why we like this group so much is because we not only thinks china wants to be a better actor from a carbon emissions perspective on the global stage but they also want to secure their own energy independence and when you put all of that together, there is actually a very strong case to be made for companies involved in the electric vehicle supply chain, and renewable energy, as well as in ways of

transforming china's grid. there is still a great deal of investment that china needs to make to basically replace all of the capex they have made over the last 30 years, to make it greener. and that will not only be a significant source of gdp growth and demand, but will also enable china to have global competitiveness through scale. haidi: let's get you to vonnie quinn with the headlines. >> the president of ecb says she does not see the u.s. defaulting on their debt. she says they are confident they won't let it happen as it would negatively impact globally. the biden administration is in an impasse with the republicans regarding spending cuts. india says they could buy

russian crude past the g7 price cap if costs continue to rise. the finance ministers says they are getting enough fuel to the population. india imports 80% of crude and russia is there top supplier ahead of iraq and saudi arabia. >> we have a large population and have to look at prices that will be affordable for us. otherwise we will end up paying for more than what we can afford. >> china's opposition party remains the top choice. [indiscernible] was backed by 47% of respondents. the prime minister's party fell behind. 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. this is bloomberg. shery: a mixed picture when it comes to early trading across asia. annabelle: we are 11 minutes into the session and trading bonds are fairly muted. no significant moves. we are focusing on security names in japan after the prime minister was the target of a bomb attack over the weekend. he says security will be stepped up and these are some names we are watching in early moments but another company we are focusing on is ciga and we understand the company is in talks to acquire the finland-based company of angry birds. discussions are underway. there is no certainty whether a deal will proceed but earlier sources told us the deal could

be confirmed as soon monday. rovio did not comment in their statement on the valuation of the company but the wall street journal earlier reported it would be worth $1.1 billion. investors are not liking this deal. haidi: i'm just wondering who still plays angry birds. [laughter] we will take a look at china's eco-data dump this weekend. domestic activity indicators. we will get a preview coming up but first the japanese prime minister continues campaigning for his party despite an explosive attack. the latest from tokyo, next. this is bloomberg. ♪

>> we will have more vips from around the world during the g7 meetings. we must tighten our security to a maximum level to ensure the safety of foreign dignitaries during their visit to japan. haidi: drive panic -- japan's prime minister talking about heightened security measures. he has continued campaigning for his party after saturday's attack, which he has denounced as unforgivable. what is the latest we know and how has it impacted the mood? >> we are still trying to find the motive for the attack. the suspect is in custody and police have not really said what is behind it.

he is busy campaigning for the elections. some seats are being contested, which is a real test for his leadership. if he does well in the election for parliament it will be an endorsement for him. a poll over the weekend showed a jump in support of 10 percentage points and his numbers are the strongest they have been since august. so there is a lot riding on what will come out of the elections and what will develop from the suspect and motive. when -- when former prime minister abe was assassinated last july, public sentiment really looked at the motive for the attack. the attacker said it was because of ruling parties ties to the church in this came back to hurt party so we will see what happens the next few days.

it will be crucial for the prime minister. shery: what about the overall impact on boj policy, given that if we see this election we could get more expectations that the boj leaves things unchanged? >> that is true. a bloomberg poll showed they are looking -- the boj is looking towards winding down the policy from june but if there is an election coming up at the time, the politics could be a real test for the new boj governor, whether he is looking at keeping the economy stable without any moves that would keep the market relatively unchanged ahead of the election, or if he is trying to show the independence is a new governor, that he is not tied to the political situation and goes along with a move that does not align with the political interest. so there is give-and-take going

on and what will come up with the boj. shery: we are watching what is happening in japan as we are also getting the g7 foreign ministers meeting in the country and u.s. china tensions likely topping the agenda. stephen engle us from hong kong with the latest. not supply -- not surprising that security will be a paramount issue. >> that is what makes the attack this weekend more interesting. we knew there would be external security issues top of the agenda and now they have the added issue of domestic security . keep in mind, they have the top diplomats meeting now. they had dinner last night and they are meeting today of the g7 nations but in a few weeks, may 11, at the finance ministers and then the leaders of the g7

nations will be in hiroshima and security will be a top issue. whether it is the war in ukraine, or obviously taiwan, because the issues in the asia-pacific will probably rise up the agenda as japan is the host nation of the g7. and there is also internal friction or speculation that there are some riffs forming in the g7 over the u.s. policy toward china. you saw that with emmanuel macron who visited beijing, essentially saying after the state visit to beijing and beating with xi jinping that the european union should not get in the middle of the dispute between china and the united states. so that has led to the g7 -- led to the eu foreign policy chief downplaying that there is a rift in the eu on policies toward china.

the verbiage might be different among different member nations but the overall aim is the same and there is unity. we also heard antony blinken downplaying some concern over the leak of highly classified u.s. information. whether that would cause of riffs in the partners in the g7 and also european nations. so far he says he has not heard those complaints. shery: stephen engle joining from hong kong. pboc governor says beijing has largely ended the intervention in foreign exchange market. speaking in the u.s. they say major currency moves are determined by market forces but the pboc reserves the right to step in. let's go to charlie. essentially not closing the door on further intervention in the future. what did he say? >> he made comments about the

policy during a visit to washington. he says [indiscernible] there is no timetable. it has been a sensitive subject in the u.s. has consistently criticized china for lack of transparency and last october the u.s. treasury said in the report criticized china for lack of disclosure so the message, it is hard to draw a conclusion but he says the current system has been working china and

pboc still reserves the right to intervene if needed. shery: we are watching the pboc because of policy stance. what to expect for the one-year lending rate? >> today there will be a medium term lending facility loan maturing today so we will see if pboc will roll it over. based on what we heard from economists the pboc is expected to offer a net injection but the interest rate will likely be kept unchanged. to 7.5%. the reason is pboc has just produced the amount reserved must be help by bank. it takes time to show impact on

the economy. based on what we heard from bloomberg economists the view is pboc still likely to cut the rate by 20 basis points later this year. the economy has been recovering after a bunch of policy taken to stimulate growth, however there are still signs of weakness and the property market demand remains uncertain and consumers are still wary of spending following three years of covid restrictions so there might be more room for spin -- for stimulus down the road so today may be that will be no change in interest rates but down the road there might be certain reduction . shery: charlie with the latest

on china and you can get more on those stories in today's edition of daybreak. bloomberg subscribers go to tv . you can customize your settings so you only get info on the news and assets you care about. this is bloomberg. ♪

haidi: merck is buying prometheus bioscience. the agreed price of $200 per share is a 75% premium to prometheus close on friday. merck is looking to strengthen their portfolio. they hope to secure this as the blockbuster cancer drug is going to lose patent protection in a

few years. they say the drug keeps more melanoma patients in remission. merck and moderna plan to test the combination. the other drug is already being used. more than 100 rules are being closed in a banking -- it will not be combined to a single country. this is the company's second round of layoffs. other banking giants have also trimmed staff.

haidi: trade numbers are coming out of singapore. less than expected on the year

and year. a contraction of. we expected over 19% for the fall. a slight improvement over the decline from february. the month on month number is a gain. electronics exports, a lot of components are volatile, including pharmaceuticals. electronics seeing a fall of 22.3%. slightly better than the previous month but in context with the broader slow down, certainly continues to not bode well for vulnerable economies like singapore. annabelle: korea is a front runner cutting rate.

market reaction coming through. singapore dollar trading weaker against the greenback. keeping policy settings unchanged friday. when you look at the market in asia we are half an hour into the session now for japan, korea, and australia and we are looking at currencies trading in a narrow range and bond yields tracking fractionally higher. in the equities picture, fairly flat today. a prevailing note of caution coming through in trading volumes because you can see the line tracking the projected trading volumes today. 16% lower than where we would be at this point in the session and there are a lot of unknowns coming out, in asia we have gdp figures coming tomorrow and it will be another signal whether

the recovery we see in china is on firmer footing because we have mixed views coming through. export numbers are solid but on the consumer and producer prices side it is looking subdued. we will be watching for calls on the need of further tightening. in the latest survey inflation expectations takes higher and a number of fed officials will speak in the coming days, including williams will the message. they will give more outlook for the rates incoming weeks and expectations we will see another basis -- basis hike of 25 points and we are in earnings season and financials on wall street are a particular focus for us. haidi: smaller -- three giant

u.s. banks kicked off the current earnings. let's listen about the state of the economy. >> higher recessionary risk and then inflation coming down so i think inflation will come down a little bit but it could be stickier than people think and the rate curve will have to go up a little. we believe it is more likely the u.s. will enter a shallow recession. it could assess -- it could create a more severe credit crunch but right now the biggest unknown is the impact on terminal short-term u.s. interest rate and how the debt ceiling plays out. >> customer response continues to exceed expectations and we have originally did over 100,000 loans since september. digital adoption and usage

increases. we added over 500,000 mobile active customers in the first quarter. haidi: let's bring in our finance editor. the issue of the changing rate environment has in fact -- has affected lenders in different ways but the big guys are doing well. >> they are. in friday people expected the deposits to come off a bit and it was a surprise you got an increase in deposits so clearly money is still flowing into lenders. some interesting numbers were a surprise to people. the extent to which interest rates are still feeding through the prophets. a little later in the year. it remains to be seen how it plays out. that is kind of what jane fraser

and jamie dimon alluded to. increased expectations for a recession later this year but in the short-term increases looking to translate to a good new story -- a good news story for the bank but the second half of the year is where the big test comes. i think there are a lot of adjustments around the edges as we get further into see how that plays out and all of the ceos we heard from are leaving a lot of that on the table as far as what needs to be done. shery: what are the takeaways for the fed policy and broader economy? >> in the immediate short-term it is still around another hike from the fed and potentially

more in the short-term but recessional risk having gone not and further cuts this year's so from a broad economic perspective it is kind of, they are trying to lay the framework for the banks being in a reasonably good situation that is benefiting from short-term dynamics. citigroup, seeing a big increase in the fixed income business which is down to a quarter that was characterized by such a huge swing in the rates markets, some volatile days that we had a great for traders who want to piggyback off the increased volatility and can make a lot of money but the short-term environment plays into the second half of the year were increased recession risks mean an altogether different scenario for the bank where there is net interest income that comes under significant pressure. the global economy is expected

to be increasing slowing at that point so there are a noble -- number of hurdles to come through but clearly a lot of these banks have done relatively well. >> geopolitical challenges posed by china are in focus as gs -- she seven foreign ministers meet in japan -- g7 foreign ministers meet in japan. olaf scholz says indonesia will join a new climate group created last year to coordinate global rules on climate matters and avoid trade disputes over green tariffs. indonesia will receive billions of dollars to accelerate shift

away from fossil fuels. vladimir putin has praised ties in the military between russia and china. they plan to me and visit military institutions. china has become russia's biggest supporters since russia invaded ukraine. nasa will test flight a rocket on monday. they plan to use the same spacecraft to return to the moon . starship will be the most powerful rocket ever built. shery: india says they hope their growth can surpass the imf recent prediction.

the rbi rate paul's is a wealth -- rate pause is a welcome move. >> we hope to have growth that is stronger than what the numbers of imf show. the factor that worries me is the possible decision in the [indiscernible] economy is because i see that the possibility -- kathleen: i would like to ask you about tech, bellwether, their revenue estimate fell far short of expected and they cite customers in key sectors like finance pulling back, delays in decision-making resulting in

lower revenue. they save the environment remains uncertain. is it a sign about global recession manifesting itself, certainly in this very important firm? >> not just the firm. manufacturing. the service sector is voicing concerns. their problems are because there is a lot of [indiscernible] where they are trying to redesign business models and focus on newer areas where the service sector can expand. so the impact to the reset is something the industry is having to [indiscernible] kathleen: central bank rate hikes. some more aggressive than others

but the reserve bank of india did not hike rates when they could have. is it warranted? >> there is a reasonable justification to pause now although along with pausing they have also given fairly hawkish observation of how inflation can behave itself so they are keeping a very close eye but it was a sense of relief through which the business leaders welcome to the pause of the central bank. i also think it is because if central banks stay where they are for their countries, if they are able to assist for themselves their own economies, plus or minus, and somewhat decouple themselves from the fed , i think countries can take a call which can help growth

momentum, which is required for each one of them, but of course it has to be based on the situation. kathleen: the aggressive rate by the fed, some say they started the inflation fight. >> i am not questioning the decision or aggressiveness of the fed. kathleen: fiscal target 5.9%. if privatization does not pick up steam, how will it be balancing your spending priorities? >> during covid we consciously had a very high deficit because we had to borrow [indiscernible] but we have been careful and the fiscal deficit has been aligned with the path that given so we are not exceeding it or reaching

it and we hope to continue that way. haidi: the finance minister of nds begin with kathleen hays. more to come. this is bloomberg. ♪

shery: it is a big week for

chinese markets with data headed our way. for more let's go to our china markets reporter. what are we watching out for? >> right. this is a big week for china data because we are going to have industry production retail sales tomorrow. this is the key thing investors have been waiting for to gauge the pace of chinese economies and consumption recovery. at how it has benefited and how it will affect the earnings of the e-commerce giant's and developers recovery so this is a thing to watch. the other thing i think people are waiting for is the first quarter earnings of other chinese companies. this morning we have seen

multi-preliminary sales beating analyst estimates a little bit but we are still yet to confirm the key trend of the earnings which is another thing to watch this week. haidi: how much of expectations have been priced in? >> right. i think investors have been a bit optimistic about chinese economic recovery. i think people were expecting them to do well but it is slightly better than people expected that down the road we will have banks and developers still yet to be seen but the sentiment when we talked to investors i think they are still being pretty much upbeat about the earnings trend. haidi: let's bring in our next guest who says the property

sector is still struggling. andrew collier is the managing director and joins us now. as we watch the strength behind the reopening, you point out it is some tried-and-true concerns about china that are at the top of your list like local government debt and bad asset quality. has it been slipped under the rug the last few years? >> exactly. the short-term data is relatively optimistic, a lot of european goods makers are doing quite well in china and then the actual activity, people are out of their houses. but unfortunately, and export data was ok for march but the recent data shows slowing. diesel consumption down 8% drop

in shipctivity so i'm concerned about the short-term data going in. the second part of the equation is the property sector and debt. you can fill margins with conceptions but unless you make structural changes which the government won't do, you will have a huge underlying problem that will push the economy down of slow property sales. so you are starting to see a strong the split between the rich in the bigger cities where property is doing ok and they are buying gucci handbags and then 60% of the market that will continue to struggle and that will be a real problem for the economy. haidi: then there is the geopolitical overlay. a lot of officials have gone on the china offensive.

do you think it has been successful or superficial in terms of how much confidence is restored regarding outside capital flow? >> super foolish -- superficial. the split up of alibaba into six different companies is a smart way to convince the world that the tech sector is back but basically nothing has changed deterrent -- internally. these will be small units with less power. there is no sign of allowing capital to flow to small business. it is still basically going to the state sector and state property developers are doing well so i admire the attempt to indulge in the charm offensive, but they are not attacking structural issues, they are basically saying they have changed the rules of the game

and this is the way we will run things and if you can deal with this, please join us, but in this very restricted world. and it will not affect the overall economic direction of the country. shery: how does it bode for foreign investors? >> if you are buying an alibaba spinoff company, you will be happy because it will probably do well. if you are doing short-term capital flows and the balancing rates, it should be ok. fbi is highly problematic because no one wants to commit to a country that has a rule of law that is declining. so the longer term structural engagement between china and the world remains difficult and a lot of western countries will steer clear. shery: the ppo seat -- the pboc governor talked about largely

ending intervention. >> i saw what he said and i was scratching my head because a lot of their currency intervention is through proxies so we never really had any confirmation when they were intervening and now they are saying he won't but they never declared when they would so i am mistrustful about whether his statement will be trail because if the currency starts struggling, they have to intervene, otherwise you do not have a closed capital and you have to maintain the renminbi at a certain rate so i am skeptical and i am not sure what tools he is referring to. haidi: you said you did not want to talk about ai. [laughter] but i want to get your thoughts on it given that at the start of april we saw it flow into the stocks at something like 10% turnover.

it is just an extraordinary statistics we have come to accept from china. is there any crabbed -- any credibility in the rally or is it just another case of the great big ball of chinese capital rolling from one thing to another? >> the high-tech area is favored by the government. xi jinping likes it. and that is significant. it's great for investors because there will be opportunities. you have a country with an ability to marshal huge amounts of data from consumption, which is how alibaba and other companies have done well so there will be opportunities. from a macro economic point of view it is a blip that will not alter the underlying dynamics. shery: andrew collier, always good to have you with us. plenty more to come. this is bloomberg. ♪

haidi: some stocks we are watching ahead of the open in hong kong and china. ant group has signed an agreement to deepen the partnership with twin city.

a jump 97% on year. the construction engine is in the spotlight with companies reporting earnings today. coming up, key economic data out this week. and why had total international is cautiously optimistic about chinese equity in the second quarter. our market coverage will continue and we will look at the start of open in hong kong, shanghai. market open is next. this is bloomberg. ♪ place with a partner that always puts you first. (we did it) start today at godaddy.com

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>> good monday morning from hong kong.

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