>> you are watching "bloomberg daybreak: asia" from sydney and hong kong. >> we are counting down to the market opens. >> the stories, president biden

investment curbs, beijing, markets. loretta mester signaling support for rate hike urging prudence. spacex's rocket explodes, potentially complicating elon musk's goal to transport humans to the -- >> we go to the independent review of the rba. the latest australian pmi numbers as we watch for that slow down after the spring rate hikes. pmi composites for april 52.2 is a huge improvement from the previous reading of 48.5. manufacturing pmi at 48.1 is showing a deterioration. when it comes to services, april

preliminary services pmi at a strong 52.6, bouncing back from contractionary territory. we are seeing that inconsistent picture where manufacturing industrial strength is where we are feeling that weakness. we are seeing a business gauge in the u.s. underperforming, the philadelphia fed index falling to the lowest level since 2021, u.s. data points today went sideways. u.s. stocks falling, bonds rising. the economic outlook not sitting well with the markets today. we had soft jobless numbers, jobless claims, not to mention home sales number falling more than expected, so treasury yields falling, the two year yield falling for the first time in six sessions. the 10 year yield at that level.

investors trying to gauge the business outlook from here. we had corporate earnings to digest and hawkish fed speak from the cleveland fed president coming through and oil in the new york session and in the asian session under pressure and wiping out most of the gains this year that we saw earlier after the announcement of opec plus for that surprise reduction in output. >> yeah, brent crude online at the top of the next hour. what we're hearing from fed officials in the upland fed president, he reiterated his call for one more rate hike but is talking about the impact of the banking stress and how that is tightening financial conditions. we see some of this is starting to do the fed's work for it. the estimates is how much that is replacing ed hikes going all the way out to 200 basis points.

-- rate hikes going all the way out to 200 basis points. if you change over now, in terms of what were expecting today in asia, ed follows the wall street session overnight, so looking for weakness ahead unsurprisingly range bound which does tell as investors continue to sit on the hard lines but another factor we are watching our the chip stocks what we had from the u.s. as well. >> president biden is said to be aiming to sign an executive order that would leaky investments by american businesses to china. treasury secretary janet yellen says washington is ready to accept the economic costs for national security and also appeals to beijing to cooperate when it comes to shared global concerns. janet yellen the united states will assert ourselves when our vital interests are at stake, but we do not seek to decouple our economy from china's economy

. a full separation of our economies would be disastrous for both the quantity and destabilizing for the rest of the world. >> let's bring in david ingle and enda curran, joining us. steve, let's start with you, what do we know in terms of these investment curbs? >> first off, janet yellen and enda curran will parse her words and the minute, but she is saying, the u.s. is not seeking a full-blown decoupling, but you could say these further restriction curbs by this executive order coming down the pike in the coming weeks likely from the biden administration would essentially be of further bifurcation of the global economy, a split between china/u.s. national security interests, and that is what sources are telling us about this executive order similar to janet yellen speech, these would

be on national security grounds to limit american companies ability to invest in key technology send companies in china that would pose national security threats to the united states, technologies like we already have export controls, semiconductors, advanced semiconductor equipment, but this would be companies in semiconductors, ai, and quantum computing to invest in chinese companies that were perhaps have u.s. management input, and that would obviously impact private equity, venture capital, and it is already being felt in those industries and investment chill, so again, biden could sign this executive order in the coming weeks leading up to the g7 summit in hiroshima, japan, and he is briefing g7 allies, getting them onboard, but

sources are also saying they don't expect their counterparts in the g7 to sign their own investment restrictions at this point, but again, the move is to get these investment curbs and this executive order going, maybe not a full-blown decoupling, but definitely a further evidence of a bar flirtation -- bifurcation. >> we got some indication of the biden administration thinking through janet yellen speech. what are the priorities in dealing with beijing? >> some hawkish remarks from janet yellen, making the point the u.s. is willing to take economic pain to protect its own national security. that was the central theme of her speech today. she pushed back against the suggestion china might overtake the u.s. in terms of economic size and it is wrong to count out the u.s., but there is an interpretation of her speech that said maybe she offered some all of branches -- all of

branches where they could cooperate, noting that decoupling would be disastrous for both economies and spoke about looking to travel to beijing when the time is right unsaid there are areas for cooperation around climate change in the likes, so that is keeping with the administration's line, but the overall takeaway was to make the point that the u.s. will take economic pain when it comes to protecting national security, and obviously china is in the crosshairs for that. >> in the meantime, we're watching the inflation fight, the cleveland fed president loretta mester adding to the chorus of support for another rate hike. take a listen to what she had to say. >> i anticipate monetary policy will move further into restrictive territory this year with the fed funds rate moving about 5% in the real feds funds rate in positive territory for some time. now, precisely how much higher the fed funds rate will need to

go from here and for help on policy will need to remain restrictive with depend on economic and financial develop and's. -- developments. >> we also heard from raphael bostic, not a voting member this year recorded the idea that tightening banking conditions are doing the fed job for them and sees a hike and then a pause. >> yeah, sorry, the interest rate debate here is critical at the moment. there is a lot of division over whether the fed should keep hiking rates and risk an outright recession or whether they should pause and let the interest rate hikes do their work, but as you played in those clips, people like loretta mester making the point inflation is high and they have to keep raising interest rates and the expectations are another 25 basis points in may, perhaps a pause.

we will get wage data at the end of next week that is almost important as inflation data because everybody's looking at what is happening with wage gains in the fed is looking at what is going on given how tight the labor market is, so i would have to say what seems to be front and central to the economic debate is up there with the decoupling story from china. >> we do have an alert when it comes to taiwan, deeply wrapped up in the u.s.-china deteriorating relations, taiwan said to be worried the u.s. rhetoric is harming its own business interests. we have heard that they are quietly urging the u.s. to calm the rhetoric when it comes to chip dangers, the threat china might invade taiwan, and wanting to cut its dependence on these supplies.

officials believe the biden administration is going too far, according to quiet conversations and becton warnings that taiwanese officials have urged their american counterparts to tone down the rhetoric about the dangers of relying on chips made by taiwan semiconductor and were deeply unhappy with gina raimondo, the commerce secretary, who called that dependence on those chips untenable and unsafe. this is a developing story. let's get you to vonnie quinn with the first word headlines. bonnie: thank you. the pboc said it will ensure rates are appropriate. the head of the monetary policy department said risks need serious attention as china draws lessons from the recent u.s. banking turmoil and said inflation will pick up in the coming months as slowing consumer prices trigger worries about domestic demand. vonnie: china is planning to carry out military drills off its coast and in the south china sea, coming amid tensions with

taiwan and the u.s. a statement by chinese officials warned that major military activity near the port city until noon tuesday would occur. meanwhile, the u.s.-philippines are holding military exercises through next week. space x attempt to send it starship rocket into space ended in a blast after an engine failure forced it to blow up the lunch or shortly after liftoff. it was meant to show the vehicle could reach space and complete a partial orbit that earth. shortly after the explosion, elon musk tweeted the next test launch will take place in a few months. global news powered by a 2400 journalists and analysts in more than 100 20 countries. i am vonnie quinn. >> thanks. one bank is set to list. more coming up. we look closer into the failed starship launch and what it means for the mission to mars. this is bloomberg. ♪

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>> the fed has been focused on lowering inflation, which is absolutely essential if we want to support a growing economy and rising incomes. >> lowering inflation levels. our next guest says investors

should not become complacent about rising prices and should hold detection-inflected assets. joining us now is the -- great to have you with us. which do you have and which do avoid? >> that is a great question. some reaction from markets over the the recent past whenever inflation numbers surprise from the upside, the assets were sold like property equities and commodities, based on the assumption that central banks around the world would do everything needed to kill inflation by raising rates, but one part the discussion is missing. not only do central banks have to watch out for the recessionary risks, and in the u.s. there were negative economic pieces, numbers out

there, but most importantly what i am worried about are the budget deficits in the united states and that that picture -- debt picture. there is an article on bloomberg, the u.s. budget deficit widens, rises 63% over last year, and when you look at the interest costs, $384 billion, up 32%, and that is bound to rise with the interest rate. a lot of accompanists, greenspan and others -- a lot of economists greenspan and others, have been warning it will increase inflation down the run. we had report in august 19 -- from the federal reserve bank of chicago warning about the same thing i'm arising budget deficits potentially triggering

inflation and again you go around in circles, so i am afraid there might come a point when the fed can't fight it anymore and inflation really has got a big potential to rebound even the recently dropped back a bit. >> how cautious do you have to be with leverage in this environment? >> well, theoretically, if you really believe inflation goes through the roof going forward, theoretically leverage might be a good thing because any form of debt would get erased with negative interest rates. however, you might see other hiccups on the road, a lot of people are not aware of the budget deficits in major economies, you could see quite a pickup and volatility, so stay on the safe side, i really suggest to stay clear wherever possible of leverage, also not to be too focused are overconfident on any one particular thing or theme, particularly those very popular, which tend to be trading at high valuations, diversified,

non-leveraged, know your volatility and what you might do, but if you can tolerate some degree of volatility and if you invest in can spare money for the medium to longer term, i would hold good exposure to inflation through assets, because that is still one of the main risks you could see a potential rebound moving forward spirit you can't -- forward. >> you can't get more inflation proof than china at the moment. what is your exposure like? >> that is a good point. when you look at global valuations, equities also being in inflation-proof assets over time can typically pass on to rising input costs to consumers as long as it is in the market so we do think equities is an asset class over time can form part of this inflation protection for investors and portfolios. china should be part of diversified portfolios. obviously the last couple of years have not been great for a

variety of reasons, but a lot of those have fallen away with the government focusing in inflation low and really low in negative ppi, and i think there are some great opportunities. in fact, the gdp figures have been quite strong with some mixed months, but relatively strong in one of the strongest growth you have expected over the next couple of years. one minor additional small point on china is a lot of investors are also not aware that when you look at dual listed stocks in hong kong and on the mainland but they traded a roughly 28% discount in hong kong, so on top of the reasonable valuations, there is an additional discount, so historically not highly priced at all. >> what expectations do you have when it comes to currency risks for asia and emerging markets? >> well, one way to play or

manage currency risks is firstly by looking at base currency and not trying to be to clever and getting stopped out, so look at where 1i-22 retire, etc., and make sure you have exposure, so when you look at emerging-market investments in genera and if you see weakness in any particular currency, again, equities or companies, they can pass on the rising input costs,

and you have a degree of protection, so for china, i would not bet on the renminbi, but go through equities that have inflation and currency protection built in and you have the income in the currency but inflation protected. >> we appreciate your time. you can get a roundup of the stories in today's addition of daybreak, the friday addition as we head into the last trading day of the week with moreyou cae settings for the news and the industries and assets that matter to you. this is bloomberg. ♪

>> space x was forced to blow up

at starship rocket four minutes after liftoff after engines failed and the ship failed to separate from its booster. we have been tracking this story. never a dull moment. >> that's right. this is how space x does things. it might look like a disaster, but this was an important milestone and a big success before this test elon musk said not destroying the launchpad was his benchmark of success, that they managed to clear that. to give it some context of a we have seen the upper stage of this vehicle tested before but never stacked on top of its booster. it is nearly 400 feet, 100 20 meters tall, and the most powerful rocket built so it went pretty well considering what could go wrong. it launched and flew for four minutes, but then the two stages did not separate in the vehicle

began to spin out of control and space x was forced to blow it up. >> how soon can we expect space x to try again? >> well, they have plenty of buckets and plenty of engines. there is a production mind at its facility turning out these things on a regular basis. elon musk says they learned a lot from the tests in the plan is to be back and have another go within a few months, and this is what they saw with the development of the falcon nine rocket as well. loads of unscheduled explosions, spectacular failures but now it is a regular site to see rockets taking off and landing, so that is the goal for this vehicle as well, to revolutionize space travel and make these flights routine, regular, cheap, to get tons of payloads, so a lot of work ahead. some of the pictures seen after this launch, there was a crater under the lunch tower as well so

there might be some repair work to do and getting a rocket prepared for another go. >> here is a quick check of the latest business flash headlines. rakuten bank is set to start trading in tokyo following the largest ipo since 2018. the banking unit of rakuten bank raised $619 million shares were priced at just over ¥1400 each, the top of the offering range. u.s. the stewards -- listed shares of tsmc sword after it reaffirmed its spending target this year and said it is sticking with earlier plans to spend as much as $36 billion to upgrade and expand capacity. despite week i electronics demand, profit grew 2.1% in the first quarter, marking the slowest pace in almost four years. buzzfeed shares were down almost

20% after the company said it will shut its news operation and reduce its workforce by 15%. its chief operating officer and revenue officer are leaving as part of the cutbacks. businesses news publisher insider is also cutting 10% of staff and the latest signs of retrenchment in the digital media business. plenty more to come on daybreak asia. stay with us. this is bloomberg. ♪

>> we do have breaking news out of japan, the consumer price

numbers for headline inflation in japan year on year growth of 3.2%, matching economists expectations for march and easing slightly from the previous month when they came in at growth of 3.3%. when you exclude fresh food and year on year, growth of 3.1%, slightly faster than economist expected of 3%, and matching the same level from the previous month of february, so if you exclude fresh food, which is the one the central bank is watching closely, core cpi 3.1 growth year on year for the month of march. now exclude fresh food and energy so core cpi is an acceleration of 3.8%, again faster than economists expected in this number is acceleration from the previous month of february. of course we were expecting these numbers to ease a little bit given the base effects, but we are seeing the core cpi

number pretty resilient at 3.1% growth and you have to exclude energy as well and you actually have acceleration of 3.8%. >> yeah, and this comes as speculators get ready to take on the bank of japan governor as he gears up for his first policy meeting next week. garfield reynolds joins is now. garf, we know he will likely take a conservative, slow approach when it comes to policy-setting and how he navigates this new role, so how do the markets play this? garfield: well, the markets are playing as they were before the change happened with strong expectations that there will be a shift and may be at this meeting, but perhaps that the door will be opened a crack towards a shift. we have this enduring inflation now, some rumblings from japanese politics and society,

the japanese are getting restive about how high inflation is him and also how low the yen is or has been. there was more yen weakness earlier in the week. anytime u.s. yields go up, the yen drops, so given all of that, it is understandable investors would rather sooner rather than later that the boj shifts, and an appreciation if they don't ship sooner and they wait, then they run into the potential of the u.s. will be heading into recession and u.s. yields will be coming down on the one hand, making it easier to move because there is less chance of yields taking off in japan, but on the other hand harder from an economic standpoint because there is that diffs inflationary in paul's, so do you -- disinflationary impulse, or do you have that scope in japan? >> so what is next?

what with the boj be looking at in order to make that decision at a time when they are not showing any times that budging? garfield: well, he has like that he could see the potential for a review of policy settings and how they are put together, so that will be a key part of it. due date initiate a review? what terms does that review have? the other thing to watch as what did they have to say about the outlook for the economy. if it shifts to seeing inflation going forward, then that would open the door. the worry was that there was a report and they did not say where they got the information from but there was a report that the boj was considering forecasting cpi at under 2%. that is when it made its decision. if that is the case, if they are looking at inflation coming back

below 2% over the medium to long-term, then that would argue strongly they won't be sifting policy -- shifting policy. if they're not shifting policy, then the challenges how does he see pushback. that is something governor kuroda was good at. ueda will face that test right from the get-go. >> garfield reynolds with the latest on the boj and what we can expect. staying with japan, rakuten bank makes its debut today as japan's biggest listings in softbank's more than $20 billion launch in 2018. for more on the story, let's go to hong kong. this is a revival of sorts for the local ipo market. >> that's right. we have not seen a share sale exceed ¥50 billion in japan this year, but it will be raising over ¥85 billion or $620 million

shares are priced today to sell at ¥1400 apiece. that is the top end of the range, but it is important to note the range was lowered during the offering process so at the outset of this actually the range was 1600 to ¥2000 per share, so it is a little less than what was initially anticipated and could be more like $880 million, but as you say, it is the biggest listing in tokyo in more than four years. >> shares are marketed at a tough time. >> exactly. this is the banking arm of the e-commerce giant rakuten and it went through this process when we were seeing issues with svb bank, credit suisse, so raising this much money is still going to be providing a massive cash influx for the parent. as we know rakuten has been saddled with losses trying to

build out its mobile phone arm and facing a lot of contempt is -- competition locally from amazon. that is also for its core e-commerce business as well. >> as you listed those challenges, will the listing be enough to plug the gap for rakuten? >> that is something bloomberg intelligence has been looking at closely in the basic readthrough is the proceeds will be a big help, but perhaps not enough and it could struggle to cover the cash bleed this year comes a bloomberg intelligence counting on ¥75 billion coming from the share sale and still thinks the company needs to raise ¥80 billion more to maintain an operating cash balance of around ¥1 billion, so on top of that you have the bonds outstanding, about $5.5 billion worth due over the next year and into 2025, or refinancing risks is

another issue emerging for the company. >> what sort of performance are we expecting then? >> when you take sort of history or other gods here, one is the japanese digital bank, and it actually had its ipo, you can see it if you bring the full screen, back in march, up 37% since the debut, so that perhaps gives us an indication of the appetite for banking shares in japan, but broadly when you look at ipo's and japan over the past 10 years, 42 companies have raised more than ¥50 billion in first timeshare sales and rose by an average of 7.3% in the first session, so we take that as a guide, hopefully, for investors in rakuten bank and they can expect a bit of a pop at the open. >> let's get you to vonnie quinn in new york for first word headlines. vonnie: thanks. president biden wants to limit

american business investments into key points of china's economy. he will sign an executive order focusing on chips, ai, and quantum computing. the administration has been debating the measure and plans to take action around the time of the g7 summit in japan. u.s. banks have increased emergency borrowing from the fed for the first time in five weeks , indicating financial stresses are lingering after bank collapses last month. there are close to $144 billion in loans outstanding to fenster touche and through april 19. it was $139.5 billion the previous week. the japanese prime minister said he is not planning for now to raise the sales tax rate to fund childcare and defense measures after earlier vowing to double spending on shaaban and families to reverse japan's declining birth rates.

he says discussions regarding funding are ongoing. montenegro prosecutors have filed an indictment for do kwon and his associate, accusing him of forgery. an official says authorities are seeking to extend their detention. both the u.s. and south korea are seeking his extradition from montenegro over fraud charges. global news powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. >> blackstone fell as dealmaking slowed due to interest rates and bank failures. but jay gray says it has created a golden moment for credit. >> i think there is a real opportunity and we are in discussions today with regional banks to partner with them. they have very valuable relationships with borrowers

across the country. we have long-term capital was so in consumer financing, small and medium business financing, particular the asset-backed area we think there is a real opportunity to deploy more capital, and it is one of the strengths of the alternatives business. this used to be about private equity, real estate private equity, but what we do today is much broader, and i think the private credit area is that a golden moment, because we do see tightening, and yet, we have this large pool of capital to deploy him and so i think you will see us become much more active. >> i am curious about your thoughts on rates and inflation. you heard your peers say already that may be the market is not prepared for that eventuality of higher rates and you have said also that maybe cuts this year are also not on the horizon, so what is the think that the market is not seeing here about the direction of travel?

jonathan: well, i would say on the inflation front, i will give you a bit of optimism, we see inflation moving into the rearview mirror. i say that because across our portfolio, the statistics are really encouraging our procurement managers at portfolio companies are saying inflation in terms of input costs were up only 2% in shipping because have come back to 2019 levels, even wages which were up 7% in our portfolio six month ago are now 5.6%, and the availability of workers has gotten a lot better for our portfolio companies, and if you look at the cpi number, last month it was 5%, but if you exclude shelter, a lagging indicator, it was up just 3.4% said that is the good news. i think the more challenging news to your question on rates is the fed will want to make

sure this inflation really gets down, so i think the idea that they will pivot is a mistake. i think they are much more likely to pause, hold rates at an elevated level and continue to see the economy decelerate. now when you add in what we have been talking about with regional banks, that will create further tightening. >> we have more to come on daybreak asia. this is bloomberg. ♪

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>> the u.s. supreme court extended a temporary hold on restrictions imposed by a federal judge in texas on a widely used abortion pill. joining us to discuss the implications of this ongoing case is an associate professor at tulane university. great to have you with us. what are your expectations in terms of the next step, and this is obscene just a temporary extension. where do week -- this is obviously just a temporary extension. where do we go from here? >> most straightforwardly, this would have implications on other federal agency rulings. it could affect everything from immunizations, vaccines, to

other drugs not related to abortion, so it would be incredibly sweeping and even capture other agencies, including the epa, so it undermines confidence in the authority of these agencies. >> what is the best case scenario here? we have talked about the wide-ranging implications, but it feels like the political appetite is going in one direction on this issue. >> yeah, in the short term, the best scenario is to kick this back to the states, so if we think of dobbs as not being a cynical decision according to the terms of dobbs, this is the abortion issue, so incendiary was so complicated, so devices -- divisive, that it should be up to individual states to legislate abortion, so if we take the supreme court at its word, it should go back to the states and it should not be up to a federal judge to interfere with federal policy like the fda

approval of mifepristone. looking longer-term, if democrats want to preserve abortion access, they need to pass a federal amendment guaranteeing the right to abortion as a constitutional right. >> if this ruling goes in another direction, what would that mean for antiabortion activists to target broader ranges of social, personal life, including birth control? >> yeah, indeed, so what is interesting about the federal judge's ruling and the way the fifth circuit approach this ruling is they both invoked an act, which is during site is a relic of the 19th century, federal legislation passed in 1873 that prohibited people from sending -- through the mail.

it has never technically been struck. we thought it had gone away piecemeal, ending with griswold in the decision in 1963 by the supreme court that legalized birth control, but again, it never officially went away and the fact that it is back in the ether again suggests that courts may invoke this to prohibit sending it to patients, but also potentially birth control through the mail. some historians and other scholars are looking at the movement, the fight against abortion, as not necessary that distinct from the fight against gender-affirming care, from the fight to ban books, that these are part of a larger story trying to codify very strict gender rules, and trying to ensure that women return to being mothers and shying away from the professional capacities.

>> what are the broader implications when it comes to society, especially politically vulnerable people? >> yeah, so the effects of this have already begun to hit the poorest people first. because the united states is geographically so vast and we are divided in this perfect upside down "t" with the south and midwest opposed to abortion. if you live in those regions, the closest place to get a legal abortion is a 12 to 24 hour drive or four flight. and for people working minimum wage jobs, this simply is not possible, so already we are seeing a way in which the very poorest and most vulnerable and those who live in rural areas are already being disproportionately affected, and decades worth of research

suggests that when states make their abortion laws more difficult or onerous to obtain, the rate of maternal mortality increases, so scholars will be keeping close tabs on maternal mortality rates in these deep red states in the coming years. >> thank you so much for your time today. we do have an alert on the bloomberg. we are hearing from the philadelphia fed president and remarks in the text of his speech to be discussed in philadelphia today saying some additional tightening may be needed in the fed is holding policy restrictive and sees modest growth this year with u.s. gdp a bit below 1%. he is also saying that for the extent that the bank stress fallout is still unclear. of course this comes on top of more fed speak, from the likes of the cleveland fed president loretta mester in the atlanta fed president bostic talking

about potentially doing more to rein inflation. these to tune into bloomberg radio to hear more from newsmakers and get analysis from the daybreak team broadcast live from our studio in hong kong, listen to the app, bloombergradio.com. plenty more ahead. stay with us. ♪

>> a quick check of the latest business flash headlines. american express set aside more money to cover souring loans, a move that weighed on first quarter profit and provision for loan losses totaled $1.1 billion in the period in the ceo said customers remain resilient amid inflation and slowing growth. u.s. shares of tsmc soared after the company reaffirmed its capital spending target this year and says it is sticking with plans to spend as much as 36 billion dollars to upgrade and expand capacity despite weak electronics demand. profit grew 2.1% in the first quarter, the slowest pace in almost four years. >> one way governments are moving to fund environmental conservation its with so-called debt-nature swaps. here is a look and why some

groups remain skeptical. >> is a world braces for worsening effects of climate change, nations are being battered twice. 34 of 59 developing economies most vulnerable to climate change are also at high risk of fiscal crises. >> countries are either in default or facing those numbers, which means they don't have access to capital markets. >> entered the debt for nature swap. >> basically what debt for nature swaps do is involve debt restructuring, and in return for this is a countries agreed to invest in different nature and conservation initiatives. >> we are trying to make it as possible. >> with the recently completed swaps, the largest is $360 million. prior to the deal, there debt level approach 130% of gdp. >> we had the opportunity to refinance their entire commercial indebtedness, so as a result of the government relies

100 and $80 million of savings -- $180 million of savings, now they are on the journey to protecting 30% of their ocean. >> not everybody is happy with these deals in the greenpeace and other ngos have called for a rejection of the swaps and analysts are not so sanguine on the blue bonds. >> it is successful and that it opens that line of credit for nature and represents nature in these discussions, however, were talking high transaction costs. everybody is winning, but not as much as you might think because it is so expensive. >> these concerns have not deterred market players will be deals and works for multiple countries, and investors snapping up the bonds as a way to show esg commitments, meaning they will continue to be a tool to combat climate change. >> until the world decides to undertake massive debt forgiveness on a planetary scale , we deal with the here and now

and don't want the great to be the enemy of the good. >> all right, well, the market opens in sydney, seoul, korea, tokyo almost upon us. we aren't looking at a challenged session on this friday in asia not much of a lead with tech stocks declining and some indicators looking more worrisome. of course, investors continue to trudge through corporate earnings and yet more fed speak. loretta mester really urging for prudence, but saying further work needs to be done when it comes to fighting inflation. the market opens our next. this is bloomberg. ♪ -- the market opens are next. this is bloomberg. ♪

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>> we are cutting down to asia's major market opens after a down day for u.s. equities in the new york trading sessions, the final day of trading in the asian session. haidi: really trying to work out what that path forward is and raphael bostic he says he sees one more hike and then a potential pause for the fed. looking through corporate earnings and dealing with two political developments. further boosts from the u.s. [indiscernible] creating more tensions with beijing. annabelle: a lot for investors to get through this morning. we have the opens of japan, south korea, and australia and the start of trading for forecasted treasuries. we are watching the two year yield closely. it ticked higher than the

previous session and fed officials speaking, bostick saying he is one and done on rate hikes and loretta mester says the fed is close to the end of the tightening cycle but that is the focus for us and also the yield differential for japan because inflation data just out and the march cpi coming in .1% above consensus and the poor reading also taking higher, two percentage points not as closely tracked but still shows inflation is accelerating. will it likely change the calculus for the boj when they meet? next? the first decision as governor. not likely but the japanese yen strengthening somewhat and trade starting to position for some sort of policy shift. the big debut will be bank

shares not trading yet but this is set to be japan's biggest ipo since 2018 and the company marketing shares are on the 1400 yen range and they are not trading yet but this is raising $620 million for the company. it has a lot of cash bleeding issues. let's look at korea. trade numbers came through for the first 20 days of the month. exports were better rather than 11% drop. japan rather korea is a global bellwethers of these numbers are watched closely. imports saw a contraction of 11.8% on the year. prior reading was 5.7% contraction.

korean won trading around the five month low and still looking weak against the greenback. australia, asx 200 futures gearing for a long sigh down 3% and the open watching the oil market with brent crude coming on line. all the gains stemming from the opec-plus surprise cut and signs of a global slow down and compound that with a bearish technical correction insight. shery: aiden, let's start with japan because the strong inflation being felt across the space with the 10 year yield pushing towards the half percent cap with the boj. how will this sit with the central bank next week? >> they will have to figure out

how to back away from yield curve control. they will still want to lift yields slowly but it will not have the runaway jgb market. what happened in the u.k. market is to freshen their mindset will be controlled. the interesting is what the overall japanese investors do if the 10 year yield gets around 1%, considering how much hedge costs are, will they bring capital back on shore and invest in their own bond market more heavily and sell treasuries on the back of it? still very expensive to hedge on a relative basis. shery: what will that mean for the broader global markets? >> it would be great right now. the tension is inflation wherever you look is still sticky so the slowdown has to be larger than the market expects right now to get the market to

move away from the core sticky inflation seen that is still running through all bond markets and driving a lot of commodity outlooks as well. so at the moment it still looks like slowdown but not a big enough slowdown to break the sticky inflation theme. haidi: the opposition of inflationary pressure, looking at china, what is compelling in the chinese market? on the equity side we are seeing a buildup of momentum. >> definitely. retailer coming back into the asian share market. everything is following the trend of ai. retail getting interested in the seems that broadens out and you can see the number of accounts starting to open up inside h-shares's. it will probably be slower.

global capital still reluctant to put money on shore in the china market. concerns around geopolitical risk. it is an off benchmark that for them so they will sit and wait and be late to the party. there is still a ton of credit being pushed into the economy. not in the real economy yet, stuck in financial markets but it will send a boost to the domestic, corporate's, and households. a starting to borrow again so a key turning point in lending month numbers was seen recently. haidi: when you look at the risks facing the emerging markets space, what are you assuming about the direction of the greenback? >> this has been a huge theme

where the greenback will disappear and be replaced by the renminbi but i think there is still a long time to go. risks are going down in asia pac. the thing they've been worried about is food and energy security but it is being redirected into asia so we notice the volatility of our cpi going down across the region and food and energy securities are getting safer so governors -- governments will be a lot more confident and want to buy more assets in the asia pacific region, contrasted to other emerging markets were risks seem to go higher and higher going forward. haidi: what are you buying to hedge against geopolitical risks? >> that is always a tough one and probabilities are quite low and it is hard to work out the timing at the moment but if you are thinking about a portfolio and what is happening in the macro environment and looking for hedges for inflation, you

probably still want to be involved in things like gold in particular. playing in the bond markets for the currency markets. so in particular if the yen starts to strengthen again and we start getting yield curve control online in a japanese style, maybe the yen becomes a safe haze of -- safe haven asset again in your portfolio and we think it will be a nice gauge against core inflation measures again at the same time as well. haidi: aiden, always great to chat with you. vonnie quinn has the first word headlines from new york. vonnie: loretta mester signaling support for another interest rate hike but fled to the need to watch the recent stress in the banking sector. she says the fed is closer to the end than the beginning of the tightening cycle. >> i anticipate monetary policy

will need to move somewhat further into restrict territory this year. fed rates moving above 5% and real hedge funds rates staying in positive territory. how much higher the rate will have to go from here and for how long policy will remain restricted depends on economic and financial developments. vonnie: pboc says they will ensure rates are appropriate to maintain stability of the banking sector and interest rate risks need serious attention as china draws lessons from recent u.s. banking tort moral. -- turmoil. canada's national police force is investigating a heist at pearson international airport. the mounted police say they are looking into a gold robbery worth more than $100 million. gold travels through pearson on

its way to customers around the world. spacex attempted to send the rocket into space and data in a blast. the launch it meant to show that the vehicle can reach space. shortly after, elon musk stated the next test launch will take place in a couple of months. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. i'm vonnie quinn. haidi: let's look at some of the movers. annabelle: asia and ship stocks we are just under 10 minutes in the session and semi conductors shares are broadly rising in korea and we opened with joe biden aiming to sign an executive order in the coming weeks limiting investments in parts of chinese economy by

american businesses so this follows a briefing the u.s. had with g7 partners on the investment curbs of high-tech industries and gets an endorsement next month even though other countries are not expected to announce similar restrictions at the same time but this is the picture of some of the lead ship names out there. korea at the start of trade, battery shares looking mostly lower here this morning but still we could see them trade actively throughout the decision because the government in seoul plans to invest $50 billion by the end of 2030 to deliver what would be the world's first solid the state batteries ahead of competitors in the ev race the state of play for some of these names one more quick mention we are waiting for rapid 10 bank the listing in japan and those shares are still not trading as of yet. shery: still ahead, what it

means for the global economy as india replaces china as the world's most populous nation. and the u.s. is said to be aiming to pose -- impose limits on american investments in key parts of chinese economy. details in a moment. this is bloomberg. ♪ seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. start a 30-day home trial today. terms apply.

>> the united states will assert ourselves when our vital interests are at stake, but we do not seek to decouple our economy from china's. the full separation of our economies would be disastrous for both countries. it would be destabilizing for the rest of the world. shery: janet yellen. biden set to be signing in order that would limit american key investments to parts of chinese businesses. washington is ready to accept the economic costs for national security. for more, stephen joins us from hong kong. what do we know about the executive order? >> the last line you mentioned is the common thread. the u.s. perhaps is willing to

sacrifice some economic growth for the sake of national security. that will be at the cornerstone of the executive order we are hearing the biden administration has been working on for years and could be signed in the next couple of weeks ahead of the g7 summit starting may 17 in hiroshima. it could be signed before then and in the meantime the biden administration has been trying to get support for the measures from g7 allies. at the same time sources say the allies might not come out with their own investment curbs on china at the g7 but the u.s. perhaps could make it they go into the summit. we hear that what it entails is the barring of some american investment in key chinese

companies that perhaps have american management whether it is quantum computing, semiconductors, the like. to some investments would be barred and others would need u.s. government approval. it is a new phase in the economic campaign against to china that is already seeing export controls and tariffs launched during the trump administration. essentially what the u.s. and biden administration wants to do is choke off critical funding and know how that could end up in the hands of the chinese military and pose a national security threat haidi:. janet yellen has strong words when it comes to the security threat but it was almost a balanced out with an olive branch. >> that's right. she used the word decoupling. it is not an all out decoupling.

her main thread was they would have to look after the interests of national security and perhaps that will take precedence over all out economic gain they have seen in the last few decades with china and mutual benefit the countries have received from coexisting but times have changed and you might want to say there is more of a bifurcation of priorities rather than a decoupling because she also said there are other areas where they have to still cooperate. the rest of the world looks to the u.s. and china have for leadership on climate change and other issues. where the frustration comes on both sides is that neither side is really talking now. the last time joe biden and xi jinping spoke was in november on the sidelines of the g20. that is the footage. since then we hear from u.s.

officials that china has rebuffed all effots by the u.s. for high-level engagement, diplomatically and militarily so this comes at a time where china is announcing more military exercises in the coming days off the east coast of china like it did on tuesday, as well as full military drills in the south china sea starting tonight until 8:00 p.m. sunday and this comes after the u.s. last sunday launch their biggest military exercise with the -- with the philippines. so you can see that the posturing is getting ahead of diplomacy. haidi: stephen engle their and you can get a roundup of the stories. plumes are some primers can go to db go in the bloomberg

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shery: shares of rocky 10 bank still untreated. for more let's go to hong kong. we are still awaiting trading to start. what performance can we expect today? annabelle: when you look at the spread we still have a way to go on matching. the number has been jumping

around a bit since tokyo open 20 minutes ago and and what we can expect from the performance there is a more recent guide amount another japanese bank had their own ipo back in march and now the stock has surged around the 37% so if that is an indication, when you look at history as well we have had 42 companies raise more than ¥50 billion in ipo's in japan in the last decade and they rose 7.3% on average so those are points because look to but quite a ways off of trying to see any sort of flat pricing for their shares. haidi: one of the expectations today? >> it will net a good windfall for the company because shares that priced at ¥1400 apiece is at the upper end of the range but it's important to note it was lowered throughout the process because initially they

were marketed around ¥1600 apiece so the amount being raised today is a little less than could have been considered initially but it is the biggest a listing we will have seen in tokyo in over four years and certainly will be an important one for the company given that it has a lot of concerns around cash and balance sheet. shery: is this a revival of the sort -- a revival of sorts for the local ipo market? annabelle: it does point to the biggest share seller we have seen. we have not had any companies so far raise more than ¥50 billion in japan this year so it is sizable and the biggest we have seen in tokyo since 2018 when we had around the $20 billion -- ¥20 billion share for softbank. this has been a time of

volatility for banks stops in general so it was difficult that it went through when it was trying to raise interest in the shares so the results will be a testament to that importantly as well it is a big one for the company given it has issues around its balance heat -- balance sheet. this company has faced a lot of issues around the buildout of their mobile phone business and from the rise of amazon the competitor in japan as well. shery: the question is if it will be enough to plug the gap. annabelle: sometimes -- something our team has been tracking. the readthrough is ipo proceeds will help but even though it still struggled to plug the gap so they are looking at proceeds from the ipo of around 75 billion yen and the company needs to raise 80 billion by the

end of the year to maintain the operating cash balance and bonds are due in the next few years so refinancing will be another issue we will probably be talking about in detail in the coming months. haidi: annabelle in hong kong. gladstone's profits fell. earnings fell 36%. 1.2 $5 billion. 97 cents a share. on the upside the president and ceo sees a golden moment for private credit. >> we are in discussions today with a number of regional banks to partner with them. i think the private credit area is at a golden moment because we see tightening and yet we have this large poll of capital to deploy so i think you will see

us become much more act of. haidi: american express set aside more money to move the weight on first quarter profits. the ceo says customers remained resilience amid a higher inflation and slowing economic growth. buzzfeed shares were down almost 20% after the company says they will shut their news operation and reduce their workforce by 15%. publish -- publisher insider is also cutting 20% of their staff. shery: downside pressure for broader markets with the nikkei now reversing gains from the previous session and we have more strength in the japanese yen edging higher on the odds of a potential policy shift next week although we are expecting most watchers now saying the boj

will hold policy at his first meeting for the central bank [indiscernible] under but the cost be down for a second consecutive session probably and pressure on material and consumer discretionary despite the fact that tech and consumers stated -- staples are gaining ground. asx 200 down in copper prices are falling on other materials, raw materials declines pressuring australian assets. quibi stocks are unchanged. this is bloomberg. -- kiwi stocks are unchanged. this is bloomberg. ♪ i screwed up. mhm. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work.

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shery: breaking news at of

japan. pi my number composite coming in. this is a preliminary number for april. the previous -- a's offering -- a softening from previous months. to six months of contraction territory under the 50 threshold but still a little improvement from the previous months. services still remaining strong, 54.9. the eighth consecutive month we are in expansionary territory in japan for services pmi, not surprising given data has been soft across asia but services has been doing well given the reopening from the covid pandemic. haidi: tony's officials have been quietly urging american counterparts to turn down

rhetoric when it comes to the dangers of relying on ships as tensions between washington and beijing continue to grow. cindy wong joins us. why is taipei unhappy about the war of words we hear from the u.s. and what conversations have taken place? >> taipei officials believe the biden administration is going too far in terms of warnings. recently we have heard all kinds of warnings from the u.s. including timelines, 2025 could be the time taiwan could possibly face and vision from china. these warnings are making taiwan officials uneasy. they are particularly unhappy about the u.s. -- they are

uneasy when the republican lawmaker visited taipei and said in the trip that the taiwan supply chain industry is strategic and vulnerable to invasion and that we do not have much time and urging the u.s. to push out and move all industry supply chains to the u.s. so these kinds of warning are taking on new urgency because some investors really listen to the warnings. like warren buffett, berkshire hathaway cut over 80% of tsmc holdings last year and that hit that share price performance of tsmc so taiwan is afraid these types of warnings will stall investment and that is why they have told u.s. counterparts to

tone down the rhetoric about the risk of invasion for taiwan. shery: it's interesting because you could say taiwan is a victim of its own success. you are seeing bipartisan support for the taipei government. what do officials actually want? >> that's very true. i think the u.s. has a different opinion about many things but one thing bipartisan lawmakers agree on is the issue regarding taiwan. taipei government in one way is a victim of itself because we have secured bipartisan support from washington but needs to attract the diplomatic and military support from the u.s. and other western countries to help taiwan deter a possible invasion china but on the other hand having governments mean there are warnings that code scare off investments so taipei

officials have hope the u.s. can make a balancing act between two things. one that we could diversify the supply chain to have more manufacturing centers in different parts of the world but on the other hand also want the u.s. to focus and efficiency part of the chip supply chain, it could have focused manufacturing in some parts of the world like taiwan so that we could have more efficient chips supply rather than just divers buying everything else at the same time the government and taiwan needs to face our company -- our common presidential election in january and right now is facing acquisitions from the opposition party -- facing accusations from the opposition party. shery: let's get to vonnie quinn. vonnie: u.s. treasury secretary

says washington is ready to accept economic cost to protect national security. but yellen says they are seeking fair healthy competition with beijing. janet yellen: national security is of paramount importance in a relationship with china. even though the policies might have economic impact, they are driven by straightforward national security considerations and we will not compromise on these concerns, even when they force trade-offs with our economic interests. vonnie: the japanese prime minister says he is not planning for now to raise the child care tax raise. -- tax rate. his government is also looking to boosted military spending.

montenegrin prosecutors filed an indictment for a lab cofounder and the cfo, accusing them of forging documents and entered the country illegally and were trying to fly to do pie. -- fly to dubai. he's being charged with fraud. lawyers for alec baldwin the charges he was facing over the shooting on rest will be dropped. he had pleaded not guilty in the death of the cinematographer. alec baldwin had practiced a scene on the film and he drew and fired a weapon. charges against the films armorer are still pending. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: steve barnett is warning

trade fragmentation could cut global output by 7%. we spoke with him earlier about the outlook. >> we know the world dividing can be extremely costly. in an adverse scenario it is easy to see global output reduced by a 7% from trade fragmentation. that is the equivalent of moving japan and germany from the global market and that is just trade. these are outcomes we want to avoid. shery: -- haidi: there are so many facets to the chinese recovery story and we see short-term lifts when it comes to consumers and demand for services and obviously some weak

spots but are you looking more at the longer term challenges already in play before the pandemic? the demographics? what reforms should be prioritized? >> short-term and long-term, boost consumption over time. the numbers were good. two thirds of growth in the first quarter. a rebound in consumption. but it points to the long-term challenge. consumption in china is one of the fastest growing consumer markets in the world of the last 20 years but consumption as a share of gdp is among the lowest in the world so finding ways to boost consumption over time will drive growth and the other key is finding the kind of market reforms to unleased -- unleash the productivity growth.

china's medium-term growth will be driven by ability to find market enhancing forms that produce productivity. haidi: can the middle income trap be avoided? are we getting to a point where a structurally slower growth will be the new normal for china and how does policy deal with that? >> as the economy gets richer, it managed the slow down, we had a decade of 10% growth and now growth rates this year we expect 5.2 and slowing to 3.5%. but it is still growing faster than the world and they can still see gains in living standards in china but it is difficult as an economy gets richer it gets harder. the first boost of growth really took workers from the farm and put them in factories.

a real at -- reallocation of labor can drive growth. but then it is getting more productive within sectors, not moving resources between sectors but within the industry's, using the resources better. shery: what do you see in the jobs market in china because wage growth does not seem to be catching up to pre-pandemic levels so far? >> overall employment in china held up well during the pandemic but one we see is 16 to 24-year-olds, a sharp rise in unemployment. unemployment ratio around 18% and even china's workforce overall is declining. in the cohort of young people is growing in the next few years so the challenge will be continuing to find jobs for the young people in china. shery: steve barnett.

next, the u.n. says india has overtaken china as the world's most populous nation. we will discuss what this means for the global economy. this is bloomberg. ♪

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the start of trading across major markets this morning. nikkei holding above water as there has been not much of an inspiring lead over wall street overnight. it declining in tech. where does the pause, also getting through a slew of corporate earnings and eco-data with the u.s. suggesting we could finally see a gap between what we see in the lack of monetary policy start to close. nikkei flat. monetary policy setting meeting forecast later this -- next weekend the key inflation rate outpacing expectations and steep declines trading in south korea and australian stocks are down 4/10 of 1%. shery: india has overtaken china is the world's most populous nation and adds urgency for the

prime minister to create jobs for the millions of. let's discuss with the managing partner of the data strategic advisory firm and author of the future is asian. always great to have you with us . let's talk about the future and broader implications of this population shifts. when you look at the world economy does it look more indian than chinese? >> it does. but the latent potential has to be actualized. there is a big lag. first the headline number, india's population is now over one .4 billion and china is showing signs of shrinking. the key difference is not the aggregate size it's the median age. india's population median age is more than a decade younger than

china's so china has a lower population, close to 700 million people below the median age. but the headroom in the tailwinds are with india because it is younger. you have to think about labor productivity issues in the country because it is already a services dominated economy in terms of quality jobs and share of gdp. urbanization. india is urbanizing rapidly. it is digitizing. the potential of human capital as they are but productivity is much lower than china or other countries so it has a lot of room to pick up. shery: when the chinese foreign

minister was asked, he would was talking about quality not quantity. what do we see now in terms of talent in india that could catch up to the potential we saw from china? >> there is a global piece to it and then domestic. domestically low level productivity and inadequate educational system. we are talking about the world's most populous country. i used to say that every problem in china is the largest problem in human history but now i guess that applies to india. everything has to be done to scale. infrastructure, digit station -- digitalization, financial economy and education to train the young population. we do see big global scale innovative platforms moving into the vocational space but the

bricks and mortar educational system is inadequate for the size of the country. sophisticated economies have economic master planning where you think about where the labor force is and what skills could be and what the educational system needs to do to train people for the workers coming down the pipeline for which investment is coming in and you know investment is coming to india you have to plan seven years ahead and that is not a process india has undertaken yet and that is why there is concerns about jobless growth and productivity gap, skills gap. and globally, it is the diaspora. indians are everywhere. haidi: talking about the gap for china and india you were talking about pushing limits of productivity. we see india invest in

infrastructure, education, health care. the idea of intellectual productivity, how do you achieve that for a country like india? >> that is where india outperforms. but it is a small segment of the population labor force. the i.t. sector, depending on how you estimate the first order versus second order, demographics, it is several million people. that is not very large given the population size so the economy is unequal and india is not a middle income country in the way china is becoming. they are still a developing country. median income is far far lower than china's. so very substantial climb still needed in terms of incomes. where the jobs and wages will come from is the question. the i.t. sector pays very well but industry jobs do not pay that much and agriculture, very

little and india's population is still largely rural so with the case of india as with china a generation ago, they have to think about the geography, there are the people, what sectors, what wages. a very divergent picture overall. there is not one india. but fundamental investments, a lot of economists to make a stark distinction between fixed capital formation on one hand and services, quality on the other. that is unfair. you have to look at the mobility that is created and the quality of life created and unlocked by the kinds of infrastructure investments china has been making for 40 years and india is now starting to make, look at india's physical outlays. so much going towards basics.

trains, roads, hospitals. india needs to do those things and that is a platform. it becomes a platform for the services sector to continue to grow and thrive the way it generally is in india but again it is a matter of scaling. haidi: which political system gives rise to quicker better quality economic growth? there is the element of faster policy making and execution for china. >> and there is one more layer to the question. you spoke about speed and quality but it is also scale and size so india has to be broken up into those dimensions and of course india has become more top-down banning control but it is a highly federalized system. india has 30 independent state so it is trying to do things in

a more centralized way like china. it's a matter of sequencing of reforms and economic initiatives versus frappe -- fragmented nature of the political system. and he trying to overcome fragmentation to be more like china -- india is trying to overcome fragmentation to become more like india in a way. although many would say the political system is becoming more authoritarian but it is fundamentally still a democratic system and the correct answer to your question depends -- speed, china delivers but it could be considered an outlier and we have to remember that quality is something that is not objective. and india is doing some things right but a lot of things to slow. t --oo too slow.

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

haidi: tensions between washington and beijing continue to simmer.

sophia is taking a look and there are probably obvious players that will be in the? crosshairs. what are you watching? >> we are watching chipmaking sector onshore, smic is the key one. but this is just the latest in a string of measures the biden administration planning and this one has been considered for two years. first there was the trade war under trump and then restrictions on exports to key chinese technologies and now it is about capital flows. this would limit potential new investments, not existing investments, but a lot of private equity and venture capital firms in the u.s. have been pulling out of china because of the geopolitical risk that has ramped up recently.

so we are watching those and i would say that because in china, beijing has been channeling investments and release state support into these key technologies, what has happened is these national champions have been doing quite well so the chip sector onshore is one of the best-performing ones in the past week. shery: today we have more coverage as we look ahead to the start of the trade in hong kong, shanghai, and shenzhen. standby. this is bloomberg. ♪

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