>> good morning. welcome to bloomberg daybreak australia.

>> we are cooking down to asia's major market open. >> u.s. stocks rise along with treasury yields. >> charles schwab executive said the firm can whether the u.s. banking turmoil even as deposits. >> taiwan is set to buy up missiles to help repel a potential chinese invasion. take a look at how futures are coming online, not a lot of movement right now. u.s. stocks pushing slightly higher, recent losses in the afternoon session, but investors still on the sidelines. we do have bank earnings and the possibility of further fed tightening.

we got the hawkish fed speak but also data showing u.s. factories expanded. mixed signals coming from the banking sector. clients retreating from their investment products, treasury yields higher, dollar higher, the crude was under pressure in the new york session. i was talking about the hawkish fed speak we got from thomas barkin, who wants to see evidence that pressprich is her easing. this comes as we get more hawkish fed speak. we had some signs with data last week of easing price pressures, but fed officials have stayed true to fighting inflation, especially given we are seeing the strength of the u.s. employment picture.

>> we saw the reaction across treasury yields on the ramped up fed rhetoric. after this big stretch of dollar declines hedge funds going in on the dollar for the first time in over a year after we have had this long run up greenback weakness. hedge funds betting this long stretch of declines is about to reverse after investors saw rate cuts. commentary backing some of the optimism. >> let's bring in emily. there is a lot for both bears and bulls to interpret in

different ways. >> the equity market has been relatively calm despite all of the warnings we have been hearing about a credit crunch and a fed that we do not really know the path forward for. the fed's monetary policy plan. we had the 17th straight day in the s&p 500 without a decline of at least 1%. it is the longest streak of time of this relative calm since july 2022. the last time this happened, the s&p 500 dropped 1.3% and then dropped another 2% a few days later. so history is no guarantee of future performance, but this calm cannot last much longer. >> is it a lonely place for

bulls? >> it is a lonely case for bulls. i interviewed up fund manager and the crowd was asked who here thinks the stock market will finish the year up 10% and he was one of the only people to raise his hand. it is because a lot of wall street is bearish. we have seen hedge funds go short. we have strategist talking about how there could be a credit crunch, or recession. yet, the bulls have been the right so far. we had a 6% gain in the last month and the s&p 500 but there was a lot of skepticism about this rally. with the vix at 17 and credit spreads tight, skeptical of this rally. so far, the bulls have been right, but there was a lot of fear that we could have further

weakness in the equity market, particularly with earnings season on the way. >> let's get more on one of those risks. charles schwab executive saying the firm can withstand the turmoil even as they pause stock buybacks. su keenan has been following the story. >> the collapse of three prominent banks, including silicon valley, really the reason that charles schwab is citing uncertainty. you can see its decision to pause those buybacks. charles schwab also stating it can withstand the turmoil. it wanted to put that message out there and despite the stresses, they posted first-quarter results that showed he kept the trust of

customers, up 12% from a year ago. x deposit did slide about 11% -- its deposit did slide about 11%. but check out state street, very different story. clients retreating from its investment products and outflows are not over. at one point the stock was down 18%. they are going forward and expect to make their 2023 share buyback. banks have been in focus for the past week and going into this week. in terms of what everyone is looking for, it is clues about how they were dealing with the banking turmoil. >> blackrock will begin to sell

banking securities. >> they were hired in april as an advisor to the fdic. they will help them get rid of close to $114 billion of assets. it highlights what is going on with these banks. they are kicking off with the mortgage-backed security sale tuesday and continue the process later in the week. it will be very interesting to see how the sales go. if we drop into some of the

stock charts, what we can see is a lebanon -- leveling out of the banks. regional banks performing one way, but we are seeing deposit start to return, so confidence in many ways beginning to come back into the area while the uncertainty still a question for the banks. back to you. >> su keenan there with the latest on the banking sector. we will continue to watch major earnings support this week from bank of america, goldman sachs and morgan stanley on the calendar. let's see what is moving the markets right now. what are you seeing? >> the big question is whether equities are really priced appropriately for the slow down. we are watching that vix sitting around the 17 level.

perhaps not enough fear reflected so far. in asia today, i will come down to the more subdued trading. the futures landscape not expecting any sort of major moves. investors preferring instead to sit on the headlines -- sidelines. a lot of keep fed speak is coming up and that will give us more certainty around the outlook for rates. the big driver today in asia will come down to the monthly activity data coming from china now. you can add to that gdp for the first quarter as well. it is expected to come at the 4% level. but a huge range of what we can expect here. you can see in the chart, that is sitting at a 17 year high and it speaks to the strength of some of the members that have

come through here, particularly the exports picture. is this a broader trend developing? too hard to tell. we are only one quarter into china starting to reopen its economy. >> let's get over to vonnie quinn. >> taiwan is said to be buying as many as 400 u.s.-made antiship missiles intended to repel a potential invasion from china. a contract for boeing to produce is on taiwan's behalf. the deal will deliver harpoon missiles as china continues to hold military drills around taiwan. g7 diplomats have presented a united front on china days after french leader emmanuel macron visited beijing. they sent clear signals that

weapons deliveries to china would be unacceptable. a u.s. court has denied a bid i terraform labs and its founder doug quan to block regulators from requesting documents. it is not clear what records are being sought, terraform was based the bear. the u.s. is suing terraform for offering and selling unregistered securities. she was arrested last month. apple sales in india have said to have the almost $6 billion in the month of march as tim cook arrives to open its first local stores. revenue in india grew by nearly 50%. apple will launch its first store is locally in mumbai and new delhi this week. reuters is reporting it will leave on wednesday.

spacex has delayed the plan tesla lunch of its massive rocket system. he blames the pressurization issue that emerged in the minutes before scheduled left off. elon musk confirmed the issue on twitter. the next launch come on wednesday at the earliest. 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. >> still ahead, analysis from hepburn international. coming up next, the president of the aiv joins us on the show. this is bloomberg. ♪

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strong dollar are hurting the economies of developing nations. our next guest is jin liqun from aiib. such a treat to see you in person finally. >> thank you. nice to see you. >> you talk about how their needs to be a coordinated system. what are the biggest challenges? >> i think there has been coordination. what is important for us to understand now is the time for working in closer collaboration because of the climate change threat. >> you are coming back from the imf talks. one of the main topics of

discussion was the debt issue of these poor nations. what are you seeing in terms of coordination to solve the major debt problems? >> that has been a big issue for quite a number of low income countries. i think there could be different approaches to dealing with these debt problems. for instance, debtors and creditors can work them out. institutions should provide new, fresh money to the highly indebted countries so that they can continue to grow. on the one hand, a debt reduction is important. g20 members on -- are working on this.

providing new money to low income countries so that they can sustain the economy is important. >> what about existing restructuring talks? >> as far as debt restructuring is concerned, certainly it is an arrangement between the creditors and debtors. they work in close cooperation with the government's and it is important for them to understand what are the biggest issues facing these countries and in what way we can come to their help at this particular moment. >> do you think multilateral institutions should be directly involved in these debt restructuring? >> their job over these decades

has been to provide financing to the developing countries. this is very important so the sustained ability. they have preferred status and they enjoy the status so that they can raise funds in the capital market at the lowest possible cost. this is in direct benefit to the countries. it is important for mdb's to play a positive role and to protect their preferred credit status so that the borrowers can continue to have low-cost funding through the multilateral institutions. >> one of the banks mandates is

original collaborations and partnerships. has that become more difficult given the geopolitical environment? >> i think you see the banks all share the basic mandate to promoting broad-based, economic social development. they also finance infrastructure development. the asian infrastructure investment bank is focused on infrastructure and other productive sectors. we have a complementary role to play. we have always enjoyed cooperation, cofinancing projects with the world bank. but because of the clear and

present danger of climate change, the banks should mobilize more resources, leveraging their capital to mobilize financial resources from the capital market. so the closer cooperation of all of these mdb's is more important than ever. i think we could have a heightened sense of that. we feel that. >> last time we spoke, you wanted to expand beyond asia. how much progress have you made? >> we have progress in sub-saharan africa. we are also starting to work in latin american countries. brazil is now very ambitious of working with asian infrastructure investment bank. the conductivity is important against the headwind of the

deglobalization. i think we need to work even harder to convince people that it is in the best interests of all of these economies to work together. >> not to mention going full circle, the high-end certain over where global economies are going. how do you keep the quality of your loan book high and how do you choose products that make sense? especially when you look at the belt and road initiative that is seeing more debt distress. how does aiib compare to other infrastructure products? >> the world has never really been free of uncertainty. you look back at the last two or three decades, you had the asian financial crisis, the subprime mortgage meltdown, and after the

pandemic the interest rates going up. the world is always fraught with challenges. when it comes to the world -- role of the development bank, we need to provide funding to the development countries to sustain economies during uncertain times. we look at the feasibility, we look at the long-term benefits which would accrue. even the world is a little bit rough, the mdb's role in providing infrastructure development over the long term is critical. i do not think we should be

distracted by all of those issues. focus on preparing high quality infrastructure projects. >> jin liqun, a treat to have you in person here in the new york studio. if you missed any part of this conversation, tv is your function. you can become part of the conversation by sending us instant messages. tv . this is bloomberg. ♪

>> hsbc's largest shareholder is expected to bat resolutions that will force it to provide regular updates on its business structure and restore dividends

to precode levels. hsbc and the chinese insurance group have been at odds with the bank repeatedly rejected and its calls to break up its business. samsung considered replacing google with being its search engine. a contract between alphabet and samsung and the company could stick with google. credit suisse had its kind spool $4.4 billion since it was acquired by ubs last month. this represents around 2.5% of the firm's assets under management. outflows have eased since march with the recent inflows suggesting the worst of the bleeding is over. let's take a look ahead on what we are watching out for in australia and new zealand.

the rba will release its rate decision following the decision to pause the rate hikes cycle. new zealand's asb bank is forecasting a bleaker than expected recession, including a 2% contraction in gdp by early 2024. much more to come on daybreak a stronger. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network, with no line activation fees or term contracts... saving you up to 75% a year. and it's only available

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daybreak australia. house speaker kevin mccarthy has told the wall street audience the house will vote to look the nation's borough limit, but not

without new curbs on spending. he accused president biden of refusing to negotiate in good faith. the united states has arrested two new york residents and charged 44 people over an electric campaign to harass. russia has sentenced a prominent critic of president vladimir putin to 25 years in prison. he was found guilty of treason and other charges after criticizing russia's invasion of ukraine. it is the harshest sentence handed down to an opposition activist. malaysia will reactivate an

agreement with goldman sachs. the prime minister says the settlement was rushed and raised many questions. the deal by the previous government asked goldman sachs to pay $2.5 billion. melbourne has quietly overtaken sydney as australia's most populous city --. melbourne was home to 4.8 8 million people, following the inclusion of the area milton. 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. >> let's get some morning calls. it is getting lonely up there

for equity bowls. >> the s&p 500 has been higher for five of the seven last weeks. but there was a lot of doubt of how long this can last. this tracks the daily returns of the benchmark. outflows as much as $285 million in a single session last week. that was a record. this one saw inflows of about the same amount as well. goldman sachs is seeing a lack of sponsorship for the recent

moves high that we have seen for u.s. stocks. the biggest outflows they have seen have been in mutual funds. it indicates the s&p 500 should actually be down about 3% from january 11, but it has been up about 5%. >> a lot of fed speak also do this week. >> a lot of different investors in the market are seeing different outcomes for the fed. if you take a look at this chart, that is the short-term interest rate futures. there price for cuts of 150 basis points from september 2023 until september of next year. we are getting different calls coming through, two are really pitted against each other, td securities and goldman sachs. goldman sachs thinks we will see

a less inverted steepness and met. td securities is saying the outlook is more negative and the fed will be forced to cut further. >> our next guest says one more quarter-point fed hike in may should do the job. but there should be another shoe to drop when it comes to loans. carl pepper joins me in the new york studio. banks are not really out of the woods yet. >> that is correct. i think it is good they have not completely collapsed, but there are mortgages now deeply underwater. a lot of the bank lenders that have real estate on their books

are now looking at problems. so the banks are not out of the woods just yet. >> this earnings season looks to be very challenging. can you find opportunities to buy the dip? >> yes. if you look out five years from now, things will look much better. look where there are holes in your portfolio. there are health care, luxury goods. there are a lot of bright spots. there is a lot of areas where you can make some money. there will be continued volatility until we know exactly how this plays out to on the financial side. >> luxury names have already outperformed this year. is there still value to be

having in these stocks? >> absolutely come out because china just reopened. this boom in luxury goods will still have legs. you cannot replace louis vuitton. i think there is still good value, but wait for the dip. there will be plenty of days where you can get into stocks like that and ride them for the next few years because they will continue to perform well. >> is that really on the less the city on that segment of the market versus mass market consumers and is that how you want to get exposure to the chinese consumer story? >> i think that consumers much more recession proof than anybody else. they like to travel and spend in their very brand conscious.

the average consumer will absolutely cut back, as we are seeing even in the united states. >> we had a story that check gpt can decode fed speak and predicts that moves. -- fed moves. >> the tech growth story is there for the rest of this generation. yes chat gpt will put a lot of us under business, but there will be another version of ai that can protect against that. at the end of the day, it is still a machine and it is not a human being. i am not completely convinced that ai is going to replace all

of the smart people on the street. i just do not see it. >> carole pepper, good to hear our jobs are safe at least for now. let's take a look at the set up when it comes to asia markets. this is a picture for australia. we had a pretty robust stream of games -- gains when it comes to equities. we saw in the u.s. session, stocks bouncing back. we are seeing a bit of weakness, an early decline of the trading session. the aussie dollar unchanged at the moment but we see potential for a comeback for the dollar. hedge funds are putting their money on the long stretch of weekly declines. kiwi stocks also on the downside

at the moment. geopolitical concerns are always at the forefront as well. taiwan is set to buy 400 harpoon missiles from the united states, completing a deal approved by congress. it is part of a package of weapons intended to repel a potential chinese invasion. for more, let's bring in stephen engle. this states back a few years. what is significant about this? >> it is interesting because according to some house members, there is about $19 billion in back log orders coming from taiwan for military hardware from the united states. this deal is about $1.7 billion. it was announced back in april, but it did not name taiwan is the purchaser. sources are telling us it was taiwan for 400 harpoon missiles.

they are mobile and land-based bracket systems rather than the ship-based systems which they previously bought. this is the first time they have balked at these versions. it is part of a broader plan to modernize the taiwanese defense capabilities and of course the united states to supply that weaponry. it will obviously anger china and it comes against the backdrop of more military drills being planned by china, in particular today, china's military announced it will have a quite large military exercise off of the country. china has been ramping up its military exercises given the tension with the united states. >> security a key concern.

what came out of the final day of the g7? >> there was some concern to find a message that their approach towards china. there was some concern that following emmanuel macron's week to beijing and his comments that the european union should not be caught in the middle, it raised some concerns, especially with the german side of the delegation, that perhaps there was some rifts forming on a unified approach. antony blinken, the u.s. secretary of state, try to dispel some of those concerns. he said the less they has only reinforced the convergence of use that we have on the approach

to the most important issues of the day. the tensions toward china are focal. there have been some concerns raised by his german counterpart for the french position, but at least the optics outwardly from the seven representatives there so that there is a consensus. -- show that there was a consensus. >> stephen engle there. coming up, with inflation easing around the world, some investors said the best place for bond buyers is in emerging markets. this is bloomberg. ♪

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did you know you can get someone to shop for you? with stitch fix, it couldn't be easier. i share my style, size and budget. and they shop just for me. my shopper sends me stuff i feel good in. i keep what works, and send back the rest. stitch fix. >> developing economies are not letting up in their fight against inflation, with bankers still needing proof that price pressures are easing. take a listen. >> their actions tightened global conditions and it leads

to a realignment of exchange rates, including south africa. we do not try to follow what the fed is doing. >> as long as we are sure our retraction is on track. it is too premature to be certain. >> with benchmark rates, a growing chorus of investors say the best place for bond buyers is in emerging markets. for more, let's bring in alvaro vivanco from natwest markets. also our bloomberg reporter.

i want to talk about where developing economies could go. some of them preempted the federal reserve move. could that now act as a windfall for some of the returns? >> yes, and it is what we were hearing that they were waiting for the right time to get into local currency bonds. they needed to see u.s. inflation coming down and the dollar getting weaker. we have seen that over the last weeks. so far this year, those local currency bonds has given investors more than 12%. so it has been working because central banks in latin america were more proactive than in the developed world. >> is periscope for offshore investors to add bonds and where do you see the bigger opportunities? >> yes, thank you.

i completely agree. i think em have done a fantastic job in terms of inflation credit. if you put them together with the fact that we are very close to the end of the hike cycle by the fed. the process has already started of a lot of offshore global investors coming to em, looking for those yields. the big debate with clients is whether this is a time to take profits from em or if this will continue. we think it is just the beginning. it is still at very low levels compared to where they were

before the pandemic. if you compare where the fundamental mix was that to now, i can make a strong case that emerging countries are stronger. they responded in a better way. they have been fighting inflation in an aggressive way and we expect the flow to continue. we need stability of the fed expectations. we think this will continue over the next few months. >> a key crux of this proposition is the sliding dollar. we have seen hedge funds piling back in to the dollar on the expectation that the declines will come to an end. what are the expectations when it comes to potentially a comeback for dollar on em? >> i think the correlations are

about to change. that is the debate. is it that slowing down u.s. economy will be supportive of the u.s. dollar or is it because people are coming back that inflow actually makes a difference? what we have done is look at the numbers, for instance mexico. you see huge remittances from the united states to mexico. and now that they had started to slow down a little bit, global investors have started by engel bonds in mexico -- have started buying bonds in mexico.

i think we are in a different position because of what happened to inflation, just because of will that central banks in em did. >> we have seen inflation coming down a little bit in emerging markets. >> we saw a report where they gauged em inflation and it is a 13 month low of 6%. that is almost as low as it is in the united states. >> where are the opportunities in terms of what we can expect from central banks shifting into easing territory. is it too soon to expect that? >> i think it is good news for

em investors, that things are calming down, inflation is turning. but that central banks are going to be cautious and they are not going to rush. they are not looking to preempt the fed. they have done a lot of the work , which has been extrthat creato buy bonds, have some exposure to the region as inflation continues come down. this is a nice combination. we would not want em central banks to be rushing to cut without releasing that inflation is turning.

>> alvaro vivanco come out really great to have you with us. terminal users can get more on this story. be sure to tune into bloombergradio to hear more from the day's big newsmakers. plenty more ahead. stay with us. this is bloomberg. ♪

>> we often have conversations about how we can potentially use chats gpt in our daily life. the latest tests have shown it can decode fed speak and predict stock moves. we have learned from this first wave of academic research into the capabilities in the world of finance. the hype of the past few months researchers say is justified. two new papers deciphered whether the fed speak was

hawkish short dovish. dashboard dovish. -- or dovish. they actually aced both of these tests. >> this is not necessarily completely new. we have seen a quants use these language models. just the fact that you do have open ai going through no nuance is a big deal. coming up, nuveen explain why they expect international markets to outperform the united states this year. plus, apple's expansion into india as the tech giant opens its first stores in mumbai. this is bloomberg. ♪

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