>> good morning, welcome to "daybreak australia", life to conference in sydney. shery: i'm shery ahn, this top stories this hour. trevor resort is a selloff in regional lenders fuels anxiety over financial ability. fed expected to deliver a 25 point rate increase, and signal a pause. corporate activists carl icahn's fortune tumbles by billions of dollars. take a look at have u.s. futures are coming online in the asian session under pressure after the essence 500 felt more than 1% in the regular session. this is on the eve of the fed rate decision, only a day after the rescue of first republic

bank. we have fresh ferns -- concerns about -- we have fresh concerns about the economy. the potential doing first u.s. government default, and the treasury yield tumbling after a broader selloff in treasuries we saw in the previous session. the dollar fell, oil fell the most january. we see it under pressure. today's session was marked by with what happened with regional lenders, the likes of pacific west, western alliance, regional faith index falling of the most since mid-march. we have seen people volatility for these lenders that were down or than percent, cap west down a lot.

the fourth lender failing on the weekend. jp morgan buying first republic. we are seeing the effect of investors seeking havens, walking to seeking. you mentioned the big moves in treasuries, gold prices jumping the most in a month, you saw havens is being put in the gold mining and yen. investors really are mired in worry about u.s. regional banks, go data pointing to a softening labor. approximately get bad timing, caps off tightening monetary lizzie and get credit tightening as well.

we continue to watch that. whether we see a stabilization, so much of this depends on the fed outlook. let's get more from kathleen hays. code the fed be having second thoughts about taking reince again this week? kathleen: we have heard about the resilient banking system in the u.s., former vice chair at the head spoke saying he thinks the fed will go ahead with the hike and signal a pause it will be tricky, how will they signal a pause without making markets think about rate cuts. traders have paired back there that's, last certain about the rate hike coming through on the second day of the meeting. doubting there will be a june rate hike. a couple of lawmakers saying to

the fed in a letter that they should be careful because bank failures make the economy vulnerable to in -- an overreaction by the fed. let's bring in grommet -- robert kaplan. he was at goldman sachs, vice chairman. you bring a lot of skill sets the table. at such a difficult time. think the fed should cause, why? >> one is, i think we are in early stages, not the late stages of this banking situation this -- there has been a significant change the prospects of small and ms. spinks. they provide of the lending to

small and midsize assistance. we have seen the first use of this which is asset liability mismatch. the credit issues are about start. that is what you are seeing reaction in the markets. the other issue, from a risk management point of view, it is more important to sustain the current rate for an extended. of time -- for an extended period of time. and risk having to cut again, that would be troubling. one more comment, if i were at the fed, i would call out that we a whole of government approach. you need physical restraint, look at other policies that are outside the fed. i would pause here. kathleen: right now you have a

rate hike on wednesday, 25 basis points. if inflation is still high, why not do one more what i cap all the done and signal that you are still hawkish when it comes to inflation, but you have an eye on the banking whatever you want to call it. robert: i prefer the hawkish pause, not raise, signaling we are in a tightening stance. the banking situation may be more serious than we understand. i would like to not regret not doing that months from now. kathleen: put on your fisa chair cap, if you were advising desk, what is the risk now? we know there are shorts out there, people are nervous, is the fundamental that could keep small and medium sized banking

turmoil problem going? robert: normally it's after we have been through a credit cycle, we haven't even started the credit cycle. had a asset liability mismatch issue, and bank equity has been marked down based on that. we have credit issues yet to come. we are at a different stage in the cycle and there are potential deposit instability down the road when credit issues start to unfold. we are in the second or third inning of this situation, the seventh inning. we just finished the first phase, there is a lot more to go. the credit phase is form serious. shery: you don't expect there might be the risk that if you pause at this level, you might

be forced to hike again, click we saw with australia. robert: there is a way to position this. let's say they raise and pause, or cause and signal. either way, the rhetoric needs to be the the fed stands ready to raise rates. all you are doing is raising a lot very quickly, we want to absorb some of it i think people understand that signal we are prepared more. haidi: your concerns about credit tightening, coming from a time when we saw numbers all, layoffs at a high. how concerning is this for the most vulnerable part of the american relation, especially when fewer things that a lot of people will be left out one inflation is this fast?

robert: normally, at this stage, few worry about the unemployed. right now we are in a crisis of the employee. the problem out there, 50 million workers, who make $50 million are here -- 50 will -- $50 million a year -- which hasn't stopped. a substantial monetary easing, the low to moderate income families are paying the price. you need adjustment in the labor market. we have a shortage of workers for as far as the eye can see for $50,000 or less. you can tolerate loosening in the market. i and more worried about the family who is working but tells me they cannot make ends meet. that is widespread haidi: sherry

mentioned the credibility, it's an interest in one when it comes to the rba signaling. you think the global indo is tightening and that is where we saw the surprise move the rba? will the fed consider that as well? robert: i don't think there is a window on tightening. we have done so much, so fast, i think a pause, absorb and understand what is going on with the banking situation would be understood by the market if the language is set up properly, you will continue to's -- extend the window. i don't think the window is closing. i think that could push you into making an mistake. kathleen: does the federal reserve bear responsibility to what is happening spinks --

having to these banks? do they help lay the round work and 10 banks to get position they are in. robert: i would have eased off monetary policy a couple of years ago. i do think there is a problem with a lack of provision, once they knew they were in a hiking mode my was of the fed revise and make sure, there were outliers, that they caught it early so we wouldn't be going through this. kathleen: let's step back a step further. you left the fed in 2021 the new framework was being in ways, which said we are not going to raise rates until we are well above 2%, and maximum employment read is that a factor that set the stage for where we are now?

robert: i dissented on that guidance, i thought walking in to that guidance did not make sense. i wish that hadn't been done, that may have led the fed the more inclined buying bonds, later to raise rates. i have said many times, taking in the accelerator earlier would have made it so they didn't have to slam on the rate -- slam on the brakes right now. kathleen: what is the challenge right now? is there something that the government and the fed need to do? robert: there is the monetary policy, but we have a few other issues. more fiscal discipline, have a lot of spending in the line. the federal government is

working at cross purposes with the fed. energy policy, and the integration to the transition on the backs of low income families. there are actions outside the fed that are making for people who are making $50,000 a year or less. we feed a whole of government approach, not just the fed doing it alone. shery: we always talk to -- come back to debt ceiling issues. who knows where this is going. if we continue the standoff, what would be locations -- what would be the implications? robert: there is a real issue in here, as we sit here, haven't gone into a downturn the deficit is already 10% of gdp.

we have a legitimate issue about the need for scope street -- about the need for fiscal restraint. i don't think it's helping to make people worry about default. the discussion about controlling spending is very. 50 million felonies -- 50 million families that can't make rent, might welcome that debate. kathleen: in june, july, august, are we owing to where we are? are they done hiking rates? how will this play out? robert: getting 24% headline inflation -- getting to 4% headline inflation is doable. it will be sticking to do below that. that's going to affect services

inflation. this is going to be a two or three year battle. some people talk about this is like a fever, and if you raise rates high enough, you break them either, i think this is a running situation, you need a full of government approach. it will take a few years of a consistent fines. i would be worried about rates stable, understanding the fight will be longer. shery: really great to have you with us. we have 19 from the milken institute global conference, we will take a closer look to what to expect firm their outlook for luxury is. an exclusive conversation with the ceo of bill barr minerals,

you're what he is doing optimistic for the outlook for lithium production. this is bloomberg. ♪

>> first word headlines. the decision data shows a vacancy u.s. employers fell in march by more than four cops -- forecast. available positions decreased to 9.5 9 million. layoffs jumped the highest level since december 2020. millions of trainees from others have visited major cities across the five-day liberty break. it is the first normal quality. talk are many.

the transport ministry's says more than 109 million it's were made three main -- three days of the holiday. pakistan has logged the highest inflation rate in asia. consumer prices surged 36.4% from a year earlier. the raised taxes and fuel prices had to immediately imf conditions or loan program. two warring generals in sudan have agreed to a truce that would put a pause on what has been to fighting. the president brokered the proposed cease-fire that would again on thursday as the two sides work towards peace. several previous truces have not been implement in. the u.n. has says the fighting has killed hundreds of people. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over

120 countries. this is bloomberg. annabelle: we are 90 minutes away from the open in seoul and sydney. see a picture of caution, initial stocks are the ones who watch. -- the ones to watch. bitcoin was flat this morning, up 4% of the price. it has benefited from the issues around first republic and other lenders. we are watching the debt space, a focus given that drop we had in treasuries, down as much as 20 basis owing. not as much as the kiwi two-year yield at the start of trade. that could be complicated

perhaps by the rba decision on tuesday. a big surprise to investors, economists had predicted the decision. the aussie dollar is sitting is morning, striving this are split on the 25 aces point make, if it has any ramifications for jay powell. some suggesting it is a big curve -- curveball. haidi: his book after policymakers presumed raising interest rates. >> we don't need to get inflation back to start target straightaway. nor can take to long. we are taking longer to get back to the inflation target, as the case in other countries, the

name the decision to do that because we think by going slower, we can preserve the gains in the labor market. haidi: watching the aftermath, in light of that decision, it was chaotic. we have senses as to what, whether the aussie dollar benefits, what it means for the broader outlook? >> consensus is that for now the aussie dollar should though because not only did the rba hike when it was expected to hold, it signals more heights we have switched hawkish. there is concern among some strategists that this move will

last until the next time the rba decides switch it bogus. the aussie dollar is expected climb, stocks are to underperform, bonds are likely to underperform. yields will drop to respond what happened in the u.s.. there was some feeling at the time yesterday that would signal more hawkishness abroad, that has been thrown into the skin by overnight action with u.s. banks. which means the fed may have gone too far with rate hikes. haidi: despite these concerns about the banking system u.s., how will a medic could it be if any of these advanced economies could decide to stop, and then they have to resume hikes.

does this virtual credibility of the rba? garfield: central bank has had hit to its ability, the way the rba caught off guard, it added to concerns about its credibility. the wider concern for central banks the potential for causing rate hikes to soon having to resume. they want to push back hard against the idea would rather cuts. they want to team inflation. they bias is towards hikes, even amid economic and banking system concerns. haidi: we have more to come here on "daybreak australia". this is bloomberg. ♪

shery: the aussie holding at 67 u.s. cents level. 25 basis points rate hike after pausing april. we have the dollar under pressure in today's session given the treasury yields dived, years yield falling 21 faces points in trading today. -- basis points in trading today. concerns still in the u.s. as we see the japanese yen at 136 level. our exclusive these days, our households depend on the internet more and more. families grow, houses get smarter, and our demands on the internet increase. that's why we just boosted speeds for over 20 million xfinity customers, on us. so you get more of the speed you need

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♪ haidi: carl icahn's company's

shares dropped, the activist firm disclosed it has taken a short position against icahn's firm. it joins us with the latest. >> this is a real turnaround. bill ackman, one of the targets of a well-known stop a couple of years ago with carl icahn on a is calling karma and saying the hindenburg recent report is a must look at that drop, shares at icahn down 20%. a loss of more than $10 million, -- $10 million, after hindenburg claimed the company is over. it is a big thing for a famed that -- activist himself hindenburg research says inc.

icahn, hasn't made a classic mistake of taking on too much leverage in the face of losses, a combination that rarely ends well. specifically at the highlights of the report, icahn enterprises value is inflated by 75% more, they are raising questions about the size court says it has used a ponzi economic structure. they are claiming money has been taken in from a new investors to pay out dividends to old investors. icahn hit back within hours, saying stand by our public disclosures, we believe strongly in hedging our visions to mitigate risk, especially in markets we are living in today. he is calling the report from this well-known short seller, self-serving, and denies all of

its claims. haidi: icahn industries is the latest on the long list to take hits from. su: the short seller has targeted a number of major companies, as well as billionaires, including gautum adani, jack dorsey's firm, a number of smaller companies that have become penny stocks. all of these targets took significant losses on the day that report was released, as well as larger losses in the days to follow. this will be a very interesting matter to play out as it is one activist investor against another. shery: let's get to the first

word news with vonnie quinn. >> u.s. house democrats have come up with a workaround that could feed of a vote on increasing the debt feeling. the move versus a floor vote on a bill that could be amended to increase the debt limit. support would be needed from five republicans in order past the house. it comes as the u.s. could risk default as soon as morgan stanley says it is in talks with authorities discuss trades that we have violated security rules. morgan stanley has let go to bankers in relation to the issue. u.s. vice president kamala harris will with ceos from microsoft, openai and anthropic to discuss generative ai. officials plan to tell the company have a response ability to mitigate potential harm.

the administration is looking for a frank discussion with the corporate suffers world government -- governing body -- in five major european countries. viva says bids from protesters in italy, germany, ranz, the u.k. and spain are not acceptable. the popularity of the women's game is surging, but the time zone difference of the southern hemisphere is worrying some global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: mobility today is powered by ev's, we discussed the outlook from the milken institute global conference in beverly hills. this is bloomberg. ♪ automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns?

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shery: larry summers says he is concerned with the debt ceiling then the turmoil in the u.s. banking sector. spoke to bloomberg about the value of bank access -- asset. >> we are going to need to do careful thinking about marking

inc. assets -- marking inc. access in more real ways. but there is some alarmism in the calculations you were describing. it insufficiently recognizes that, if you hold a bond or mortgage, and the interest goes up, the value of the mortgage is down. but equally, if you are having a deposit, and it is as a low interest rate, and you are going to on a spread, there is an asset there. when interest rates go up, the value of that asset of. -- the value of that asset goes up. it is wrong to focus on the first adjustment not to the second adjustment.

absolutely, we have not been as careful in about interest rate increases as we should have been. it was unfortunate that fed stress testing did not put weight on rate scenarios in the way that it should have. that is an important failure by the federal reserve system. i also think that the kind of analyses that you are citing are overly alarmist with respect the risks that are in the system. haidi: larry summers speaking bloomberg. the fed is expected to hike by 25 basis points and signal it because.

let's talk about how traders are preparing this. jp morgan has laid out different scenarios. annabelle: you can see behind me, all the race -- all the way from elf rate cut, to hiking. there were probabilities of events happening. what is most likely is that we will see a hike cause leader today. -- a hike ending because later today. it coat up as high as 1%. the second most likely scenario from j.p. morgan risk of the fed hiking and continuing signal further move for funds rate on the way to the upside u.s. stocks are lower by as much as 1.25%. the wildcard is u.s. banking

sector stress, jp morgan says that is what is not known yet. we have not seen enough signs that the fed would cause. -- would cause -- wouldpause. this has been a big talking point at milken institute global conference. how much of the banking sector stressed is doing the fed's work for it read some say it could be tightening as much as 100 basis points. it is around 825 basis point hike that is being done. we have heard this from the eo, he has spoke about what else we can expect, to come.

>> we are just starting on the implications of the banking crisis. we are now going to see an increased regulation of banks, and a focus on regional banks. we are going to see the result of that being a pullback in credit, will help nonbank lenders. we will see more bank consolidation. that will ripple through the economy. it should slow aggregate demand shery: it is continuing in los angeles, let's to the event now. >> standing by right now with andrew, the ceo at dow, the chairman of saudi aramco.

you just got off your panel just. it was about the future of mobility future that everyone seems to think will be dominated dielectric, alternative vehicles. andrew: the world of the 21st century, at and will be electrons. we are electrifying world, the source of the electrons is the big issue on transition. if you say my on the board, i am seeing the transition on the two ends. from the molecules of oil and gas, moving to the electron, to get us. not just cvs. -- not just evs.. romaine: you are on the board of

a company that makes the vehicles. there has been discussion about the infrastructure needed. you need a place to charge them. andrew: the ira has the intention to get charging infrastructure so that consumers can get over the notion of range anxiety. our car can charge 300 miles in 22 minutes. we overcome that a little, but you still need chargers. to roll out the infrastructure is a comfort topic for a consumer. the ira has helped the consumer by a car. they are expensive, the rebate is important to enable demand to

get to a number that is scalable. romaine: particularly where there is a lot of competition, a few years ago tesla was the only game in town. where does lucid fit into that? andrew: we have 90% that are ice s. europe is at 15%. there is no question demand will be there at affordable as is. we have positioned at the luxury and. -- at the luxury and. we have to make it affordable. we are rolling out our suv. to get conversion away from internal combustion engines, to lower the price point, just what

everyone is working on. tesla got there, they have ale. -- they have scale. romaine: a big part of that strategy, is that tied your work with saudi arabia? they have been building out manufacturing facilities. why are they doing this? andrew: the point about old and new. that is a 20th century finishing. the saudi government is saying there is a transition. most of our income in the 20th century was from oil and gas. in the 21st century it will be diversified sources. i have to add value to my economy by using my human capital and new technologies. i will build a battery supply chain. other sectors, use the cash i

get from oil and gas diversified my economy from my single dependency. romaine: what is the role of fossil fuels in the ev world? andrew: we will have them, but we will lower emissions. we will be backing out of coal, liquids for power, we will use gas for power. we will make hydrogen and ammonia for power. then we won't have carbon. on the use side, we will have carbon capture and storage take carbon out of the methane with that we will get to a point where the carbon intensity will be increased in ev's and industrial use. my company is working on reducing the carbon foot of

making chemicals, steel, cement a month he for, -- some men's, paper. low to zero. romaine: you are involved in a lot of things. in australia there are the olympics coming up in 10 years. talk to us about a batch process, you still have 10 years get there. planning an event like this, it might as well be around the corner. andrew: it is now nine. the planning to put on the greatest show on earth is an honor for an australian came from that lays, and i have been asked to help my country. sydney was spectacular.

in this city, we are benchmarking tell a, -- benchmarking l.a.. augmented reality, anticipation five spectators yonder the physical, put on games that has done and excitement is -- those nine years will be gone in a flash. romaine: really appreciate you taking the time with us. heading of the olympic committee for the 2032 games. haidi: lucid motors, ordered member in los angeles. you have data when it comes to an update on the kiwi job

market, the job change has seen an 8/10 of 1% gain, faster than expectation. the unemployment rate going lower, free .4%. -- 3.4%. higher than expectations. dublin from the previous meeting. participation rate holding steady, and uptick of 72%. we are seeing gauges of 1% when it comes to private wages. we are seeing a jump, the reaction on it comes to the kiwi dollar, arise -- the rise with wage growth and taking down the unemployment rate. we have seen labor supply beginning to recover.

it has been interesting mix of rise supply and falling demand. we have not seen the climb in on appointment rate in 2023. how does this way into where trajectory going forward? let's take a look at the day ahead for new zealand and australia. these are the stories we will be watching. we are expecting borrowers to fall behind on mortgage payments. the governor is due to speak. the rba delivering 25 basis rate point think yesterday. this is bloomberg. ♪

shery: of quick check of the latest business lash headlines. mcdonald's has hit back at byron allen avenue made accusations in an interview with bloomberg. he is suing mcfarland for alleged racial discrimination, the company says, engaged in a tasteless of campaign against mcdonald's.

this behavior is not new for him. they refused to be chorused by a tail that ignores its long-standing helping generational wealth for underrepresented communities. amd shares fell as it struggles to bounceback a severe slowdown. the second largest maker of computer processors expects avenue $5.3 billion, the average estimate was $5.5 million. starbucks posted sales on strong performances in the u.s. and china, not enough to satisfy investors following the 50% run-up in the stock rise. sales rose 11% in the first quarter, beating a forecast. the reserves best results underscore paying higher prices

for discretionary items. ford motor profit estimates posting a strong gain on higher vehicle rising and sales volume. first quarter revenue top order million dollars, even analysts $36 billion forecast in the dust. ford says it expects continued headwinds maintained its full year forecast. >> the market opens for the australian rocket, strategists continue to pass through divided surprised rate hike and what it means. 67 u.s. cents is where we are trading at the moment, sydney you choose softer. we still have major central bank decisions ahead of us. they will have major repercussions for sentiment.

keeping stocks down. -- kiwi stocks down. surprisingly resilient unemployment numbers as well as a boost with wage growth. coming up, mexico's deputy finance minister is with us giving his outlook for the economy and the peso. that is it for "daybreak australia", daybreak asia is next. this is bloomberg. ♪ the first time your sales reached 100k with godaddy

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