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shery: you're watching "daybreak asia" from new york, sydney and hong kong. annabelle: counting down to market opens. haidi: asian stocks are said open lower after fresh anxiety over financial instability. the fed expected to deliver a 25 basis point increase and signal up cause. carl icahn's fortune tumbles after he was targeted by hindenburg research. gabriel yorio gives his outlook for the money and the peso. we have breaking news in terms of a gauge of how the australian economy is going. services numbers coming through the final april reading for the composite number, 50 re-,

than the previous number. the services component, final reading 3.7, higher than the reading. this will be out later on. we had a surprise rate hike from australian central bank yesterday. the ipa can't too long to bring inflation down. the unexpected presumption of tightening taking markets by surprise are seeing ricocheting effect of that. >> a lot of debate about whether this could force the fed and its meeting on wednesday or whether the rba is in cash and in ceeo syncretic -- and idiosyncratic

bank. in terms of the direction today, we can see futures for sydney are a drop. unsurprising with concerns against u.s. regional lenders. the three year yield is taking lower. investors debating what we are going to get from the fed we are focusing in on the currency space. aussie dollar flat, as is the kiwi we had jobs numbers coming through in the last in its. strong numbers, the unemployment change jumping pointing send -- .8%. a continuation of a tight labor market should be something that forces the central bank to continue hike.

the kiwi stocks are the ones trading online, the closed markets in this part of the world, could see lower volumes. china and japan are the ones to be watching. shery: we saw a different picture here in the u.s. with go data showing openings fell to the lowest level in two years, layoffs jumped to the highest since 2020. perhaps we are seeing a softening for labor demand. we are seeing the downside pressure on futures at the moment this is on the eve of the and hike decision. a day after the rescue first republic bank and the selloff on regional lenders. treasury yields down. falling as much as 21 faces points -- 21 basis points in

today's action still rising in the 25 aces point rate hike on wednesday. we could see a great cuts before they give is over. we continue to see the downside pressure in the asian session. it was all about regional lenders. pacific west, western alliance leading today's declines. concerns about where these smaller banks are headed. we are seeing concerns about credit tightening and aligned effect of monetary policy. haidi: that is the fear. get more on this u.s. regional bank run. from the outset it looks surprising, we had j.p. morgan

and the first republic deal. why are there worries? >> the weekend negotiations, had a sense of stability, alert stepping in. pat a sense that some of those concerns were taking a backseat. then into tuesday, and pronounced, big volatility within the day, not just at the end. where is the next to drop? there are existing issues that continue despite an agreement was reached over the evening the fdic and j.p. morgan for first republic. it is coming to the two main lenders that got hit. it is not particular to those banks. moves about the crisis of

confidence around the fdic not announcing anything about uninsured deposits. something investors had hoping for. that is what we are hearing from the community as well one of the many commenting his views, it doesn't illuminate his concerns. there is no backstop to stop the negative sentiment. shery: this has been going on since march, what can regulators store confident that restore confidence? >> they are working hard to try and bring back confidence into the area of the month, which is. the one thing i think investors are looking here is some kind of

on this idea of ensuring deposit losses. if they do make a move on uninsured losses and make a change, that will go some way to storing confident -- confidence. that is one thing you can .2. -- you can point to. going into the latter part of the second half of this year, things going on. by the fdic a change for would be open for. shery: given that the fed is expected to raise rates on wednesday, have concerns about what this means for credit

conditions as we get lagged effects. get kathleen hayes, are we expecting the fed to have those thoughts? >> if i was the fed, i would be looking at the decision hard we know regional banks are under pressure. people said blood in the water, they go after what they think are the weakest banks -- weakest links. they are expected to do the rate hike for the next 24 hours signal up cause. medium sized businesses are having to worry about their deposits. former vice chair at the federal reserve saying the fed changing on more rate hike and signal up cause, people will think you are

going to stop hiking rates at all. liz warren, sending a letter to paypal, saying you could mess up. i just have to chime in, if need rba's action is a surprising rate hike, after people were so sure, if it will make the fed free think anything, -- we think anything, -- go ahead and be hawkish, to be that as an example for us. should have one more rate hike and signal vent maybe banks are not over yet. maybe that is the direction of this week. >> we spoke to robert about that, the idea of credibility and the window of opportunity.

he didn't inc. the latter -- he didn't think the latter was something that it is. it could lead to policy errors. >> for key thing rob kaplan banks, -- he knows how investors and traders think. he thinks the fed should not hike, he thinks they should go on hold with a hawkish bonds. >> i would propose a hawkish pause. signaled we are in a tightening stance. i think the banking situation may be more serious than we understand. >> concerned there is more to this banking -- we need a word

between crisis and turmoil. they are going to be hurt i this, the big banks will be ok, lending to small and medium sized businesses is going to be vulnerable. you have made a big bank bigger, where does that smaller banks? so much more to come, the fed president saying take the pressure off for now. haidi: let's get you to vonnie quinn for the first word headlines. >> the fed's policies his is coming out, showing at employers in march as a layoffs jumped, indicating softening labor demand. the number of available positions decreased.

layoffs jumped to the highest level since 2020. the quit rate falling to the lowest. millions of chinese travelers have visited tourist hotspots over the labor day break. the transport ministry says millions of trips were made, nearly matching the pandemic level pakistan has logged the highest inflation rate in asia. it is driven by rising food and transport costs. the rate is expected to rise further after taxes have been raised to meet imf conditions. two warring generals in sudan that would put up cause on -- a pause on fighting.

the two sides work towards talk. several truces have not been implemented. yuen says the fighting has killed hundreds of people and displaced 100,000 people. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: still ahead, mexico's deputy finance minister joins us to discuss crude oil exports and the mexican peso. eight famed activist investor becomes the latest target of a short seller. what hindenburg research says about icahn. this is bloomberg. ♪

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>> we are probably not the regional banking since yet. >> we don't believe there is a systemic problem. >> we are seeing the best opportunity in rented credit. -- opportunity in credit. >> the friction will have an impact. >> there will be carnage in parts of the commercial real estate business. >> we are going to see an increased regulation of banks.

haidi: some of our guests at the milken institute global conference. joining us now is catherine, or been a lot of upheaval, the resurgence of years when it comes to u.s. banking sector and the path of policy tightening or causing. --pausing. >> investors should be cautious. we got that right last year, my recommendation was to be defensively condition in health care, utilities, those have been staples. they have places, i maintain that is for this year the markets are going to be

disappointed with prospects of cuts. the fed will hike 25 basis points, they will probably pause there. the thing that investors should carefully consider is if, in the case the u.s. does not a recession this year, and inflation is not hit the target, the fed cut or will the next move after a pause be a hike? there is a good chance that there is a hike, after we pause, inflation does not come towards 2%. i think that would take equity markets lower. shery: her views on where the

fed is headed. former treasury secretary larry summers says he is more concerned with the debt dealing then the u.s. banking sector. he spoke exclusively to bloomberg about the value of bank assets under increased interest rates. >> i think we are going to need some very careful thinking about marking inc. assets 2 -- marking bank assets -- in more real ways. there is some alarmism in the calculations you are describing. it is sufficiently recognizes that, hold a bond or a mortgage, up, the value of the mortgage goes down.

equally, if you have a deposit at a low interest rate, and you earn a spread, there is an asset there, when interest rates go up , the value of the asset of it is alarmist and wrong to focus on the first adjustment and not pay attention second adjustment. yes absolutely, we have not as careful in about interest rate increases as we should have been . it was amazing and unfortunate that fed stress testing did not put weight on interest rate scenarios in the way that it should have. that is a failure by the federal reserve system but i also think

the kind of analyses you are citing are probably overly alarmist with respect risks that are in the system. shery: you can get a roundup of all of these stories in today's edition of daybreak, available on. can customize settings only get the news that you care about. this is bloomberg. ♪

shery: carl icahn's investment

firm plunged in a record one. drop after convert research reported. su keenan is with us. we call this battle of the activists. >> this negative report is entitled icahn enterprises, the corporate leader throwing stones from his own glass house. one of his formal battle participants, rival ill ackman, tweeted about the karmic quality about this report. you are looking at the stock price which dropped dramatically as the report hit. it was a hit his personal fortune as well. this after hindenburg claimed that his company is overvalued. carl icahn, known for starting a

cash many a corporate brawl, is accused of a lack of transparency. the report says, you think icahn has native classic -- has made a classic state. a combination that rarely ends well. specifically, hindenburg, the activists short seller, is saying icahn enterprises value is inflated by 75% or more, raises questions about the size of dividend yields, and the way it has been financed. it says it has a ponzi economic structure. icahn hit back with his own criticisms, saying, stand by our public disclosures, strongly hedging our position to mitigate risk in markets we are living in

today. he calls the report i hindenburg research self-serving. haidi: it is the latest firm to take a hit from hindenburg area. >> there have been many targets from hindenburg. he tends to target a range of companies, from companies that are penny stocks now, and those owned by major billionaires. all these companies close lower on the day the report hit. stay tuned on this particular battle. haidi: more to come, i am sure,

su keenan with the latest. we will be speaking with mexico's deputy finance mr. -- minister, gabriel yorio. the outlook when it comes to the economy. this is bloomberg. ♪ bridgett is here. she has no clue that i'm here. she has no clue who's in the helmet. are you ready? -i'm ready! alright.

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resolve the debt crisis would be disastrous. we spoke that she picks -- spoke exclusively to incorporate about the risks his clients are most concerned about. >> most of our clients think that the market has it -- as it reasonably good job of pressing that in. what they are worried about is the nonrational things. that is what has happened over the last couple of years between ukraine and the pandemic. they look forward and they say can we expect a more rational world and what would look -- that look like in russia? they looked washington. what is going to happen with the debt crisis? always, the market has kind of assumed that 1159, that would be solved by reasonable people in washington. there are very different political makeups today than the was the last time we went through this. maybe that will be true. those are the kind of risks which are not pricing and our clients are really asking us to kind of game theory them

through. how much -- >> how much does the debt ceiling affect you if we end up falling off that cliff? >> it would be disastrous for me. we have never really had a government or a major world power, let alone the reserve currency, default on its debt. and so it is sort of unthinkable, and it would have huge implications for the liquidity in the economy. and we will have, of course, we are volatility as we get closer and closer to this deadline. we have this oddity that until the market starts to punish politicians for not coming to a solution they won't. we will need to go through a. of volatility even if we are to really get to a good place on the other site. -- time of volatility even if we get to a good place. >> we spoke to him at the milken

global conference. with get a look at the global markets. >> early hours here and we could see investors looking fairly fragile. when we take a look at what is happening in the fx space, moves have been back into safe haven currencies including yen. it is steady this morning but it was up as much as 9/10 of a set -- point zero nine cents against the greenback. we are watching expectations around central bank moves including from the rba because it did strengthen the aussie dollar after the session. unsurprisingly, rates climbed by 25 basis points. the key we is strengthening this morning against the greenback and that was after we had strong employment figures come through and that tells us perhaps the rbn will need to stay hawkish. we had that jolt showing,

layoffs jumping in march and also vacancies at employers fell by but the expected. there has been's office coming through. in terms of what to expect on change, we will be testing that bearish stance on the dollar from wall street. there is a lot of risk events on the horizon, not least the fed decision later but also factors in these concerns around recession at the u.s. debt ceiling standoff. morgan stanley and goldman sachs have been looking at how the dollar has fared during other periods when there have been a lot of negotiations which have taken that debt limit standoff to the brink and actually when you take a look at 2011 we saw the dollar was up nearly 1.8% during this. but goldman sachs says the most consistent predictions during this sort of. work for cyclical currencies, including the canadian dollar and the peso. >> let's talk about the peso.

we have seen incredible strength in recent days. we are talking about multi-month highs. a little bit of pressure in today's session but the highest in three months or so. we are seeing positive sentiment help fight exports hitting records for mexico, a sign that near shoring could be booming. more relocation and investment in mexico. joining us to discuss it now is the deputy finance minister of mexico. dippy ministry, it is great to have you here. you are very busy in new york talking to investors a little bit about sustainable investing efforts that you have been putting forth. >> thank you for having me here. we are here in new york and having the dialogue -- dialogue with investment spaces and investment funds. we are also here to present our sustainable model. we participated in the latin

american conference talking about the perspective for mexico and latin america but we want to to present the taxonomy on the recent irrelevance where -- we are doing in mexico in terms of sustainable financing, especially with climate change and social gaps in mexico. >> how much interest are you seeing from international investors, with the attention from corporations? >> there's a lot of attention and commitments from the investor base. once we present the taxonomy that will bring forth our sustainable bonds, especially the ones that we have issued in the u.s. dollar market, the european market and the local markets. but also, there is something new i mentioned on this on the taxonomy, that it is in line with the repeat taxonomy, the great taxonomy. and that would facilitate decisions for some firms that want to relocate for mexico, because they would be required to comply with those

requirements. so if they are aligned with the mexican taxonomy they would be in line with the european taxonomy and that would facilitate decisions in their country. >> we have seen mexico being a huge oil exporter in the global markets but the president to start feeding out these exports. do you expect when that will happen? >> there is a clear path and we need to continue consolidating investments on the refineries and when we can do this withdrawal from our oil exports. right now we are on track for finishing all the work related to the refinery, and what to do that we will be able to substitute gasoline parts and use mexican oil for all refineries. we don't have a specific date, -- >> i heard 20 23 but all prices -- oil prices are so high. >> 2023 year -- will be the year

when we are piloting the new refineries so there will be a transition, an orderly transition. but we are aiming to reduce the dependency from imported gasoline and also to take advantage of the oil crisis as well. >> how much support can we expect from the finance minister when it comes to safe paying debt amortization's -- say, paying debt amortization? >> we have been working for the past five years to reduce the royalty from 65% to 40% at we can hopefully do those actions in the following years. there is a strong commitment for the federal government, we would be there if we were facing potential challenges. we have been there in previous years provided capitalizations with joint liability transactions and we will continue to do that. >> that is a form of support are thinking of. >> there are several ways to do. i have learned with pandemics

there should be several measures, not only one. one could be a joint liability transaction, the other options could be managing royalty payments and other -- there are other options we can provide which it -- we have done. i guess the message is that we want to say is that we are committed with the situation and we are highly committed with them. this is a new stretch that has provided much of the support. >> the supplies from pemex is also blooming, we heard from halliburton as well, does the finance ministry have any support on this side of things? >> not directly with the suppliers. pemex have a working capital strategy and they have good management. they have good suppliers.

it is powerful -- a powerful outlook with pemex, especially as we try to give them resources to comply with their obligations. having said that, they have defaulted on their debt -- have not defaulted on their debt, and they are trying to grapple with their commitments. >> the government is also very busy because it has purchases from spain's largest company. do you have any clear ideas on the financing structure for these purchases? >> it's one that relies on a mix of equity and private debt. the mexican government is providing rich funding or rich loans on what i would call the first stage. eventually, we want to have a special purpose vehicle that can tap the local market or international markets. in that sense, this vehicle could take a mix of equity to

the markets and probably engage in some private debt issuances. i know there has been a lot of noise about whether this represents public debt for the mexican government. we are not using public debt to finance this transaction. we are using the role of the mexican government as an investor, to bridge the loan, and then we take it to the market. we want this to be a market instrument. >> is there any timeline? >> i cannot give much information because we are in negotiations with the firm, but we need to close this as soon as possible, and then there is probably going to be a 3-4 month. if the negotiations go well to take it to the market. >> we started this segment with the mexican peso strength, how long will that last? >> the mexican peso has performed well on the last month

and that is because of the remittances and also the macroeconomic fundamentals. i think that will remain the case for the rest of the year, and we don't foresee any more events of volatility, at least on the local market. we are subject to a lot of external events and vulnerability that might be moved -- moving it. we will be on watch. but we are foreseeing that the passover will remain as strong as it has been in the last two days. >> the beta finance minister -- deputy finance minister for mexico here, on his roadshow talking about mexico. let get to bonnie quinn. >> house democrats have crated a workaround for the debt ceiling. a placeholder bill could be amended to increase the debt limit. support would be needed from at

least five republicans to pass the house with the majority. it comes as the janet yellen warns the u.s. could risk a default as soon as june. -- janet yellen once the u.s. could risk default position. morgan stanley is investigating traits that may have violated secured his rules. the sec have been looking into how employees shared information on block trades. two bankers have been released related to the issue. kamala harris will meet with microsoft, open ai and anthropic to discuss generative ai. officials plan to tell the companies they have a responsibility to mitigate potential harm from technology. an invitation to thursday's meeting says that the administration is seeing a frank discussion. the work governing body is threatening to not broadcast fifa's women's world cup. italy, germany, france and the united kingdom and spain have a

set that is not acceptable, according to fifa. the sport is surging in popularity, but the time zone broadcast is worrying broadcasters. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn and this is bloomberg. >> an exclusive conversation with bill barr minerals, dan henderson is feeling optimistic about outcomes with that the. this is wennberg. ♪ -- bloomberg. ♪

>> one of the straley's top lithium minors ceased growing optimism after a flurry of bidding activity. speaking to us exclusively here from the core straley conference, pilbara minerals ceo down henderson says he expects prices to recover soon. >> in terms of engaging with our customers, there is a range of opinions from it could be a batter of weeks to maybe late in the calendar here. the truth is nobody really knows. we think the answer is somewhere in the middle. part -- was part of our quarterly guidance. and maybe sometime in the back cap of the calendar year.

-- it may be sometime in the back half of the calendar year. >> is it more of the market pricing story or an aggregate started for china -- story for china? >> think the long-term -- i think the long-term demand is compelling and consensus supports that. the world is converted to lithium and electric vehicles and plenty more lithium. i think everybody is grappling with this pullback and how long will it last. from our perspective, it does indicate that it will be more short dated, but we are seeing in terms of demand is solid outside of china, but we will wait and see. there are quite a few factors influencing china's demands. we will see how that plays out. >> in terms of the broader macro environment, there is 76ers -- uncertainty.

with potentially even higher rates you are dealing with. does that impact investment opportunities and decisions? >> for our business, with the key investment decisions related to getting on with big growth pathway, -- on a big growth pathway, we have not held back on that, we have made those investment decisions and we are getting on those investments as quick as we can because we are in this incredible position, we are one of the largest operating assets globally and we can be expanded. despite this pullback, it is an incredible market, and we are poised to capitalize on that once we have got expended. we are not holding back. >> you talked about investment opportunities within the sector, as kind of a indicator of sentiment. when you look at the dynamic,

what does that tell you about optimism? >> i think it is a really strong point of evidence says that these groups looking to bid on lion town believe the long-term outlook. they have been walking the talk. they spoke to the necessity for lithium projects to come online. and here they are voting with their money. it's great to see. and i think it underscores the support for the long-term opposition for lithium -- adoption of the theme. >> it also depends on public policy as well. we have australia likely introducing fuel efficiency standards by the end of the year. do you think that it is too little too late, will encourage electrical take up -- will it encourage people vehicle take up? >> australia has a bit of a leg up compared to other leading countries. so it's good to see it moving in

the right direction. should more be done, i'm going to say yes. it supports lithium. we should also look at the other companies who have been aggressive and successful. i think australia would be well served to bring forward subsidy efforts and techniques. >> dan henderson speaking to us early, and you could catch up on past interviews with our interactive tv function, that stevie go, the quick book -- that is tv go. you can read the messages during our shows as well. it is at tv go. this is bloomberg. ♪

>> a quick check of the latest business/headlights. ford motor profit estimates posted a strong gain on vehicle pricing and increased sales volumes. first quarter revenue top $41 billion, leaving analysts and their $36 million forecast in the dust -- in the dust. tesla has raised prices for the second time in a month after several rounds of cuts earlier this year. the model three sedan and model

white suv gets $250 heights in the u.s. and 280 nine dollar increases in china. in april tesla posted its lowest quarterly profit margins in almost three years. >> this gift believes that the inflation reduction act can benefit tesla, he spoke about the future of ev's at the milken global conference. >> the ira was a landmark piece of legislation that was intended to give the charging infrastructure so that consumers can get over the notion of range anxiety. now, our ev has the longest range of any ea. 545 miles. you can charge into minutes. you still need the charges.

and to roll the charging infrastructure is a comfort topic for a consumer. now, the ira also helps the consumer by the car because these are expensive and we are in the transition still. the rebate is important to enable demand to get to a number that is scalable. >> particularly in this economy. there was also a lot of competition. tesla was one of the only games in town. i mean we have seen the slate of ev's out there. >> 10% of total cost in the united states, 90% ric ease. let's go to europe. europe is at 15%. there is no question demand will be there at the portable prices. there is room for everybody. we positioned at the lecture and, luxury, experience, performance. we have the most efficient ev out there today.

tesla beats everybody else. but we have to make it affordable. so we are just rolling out our suv. the total available market for acv are higher. but your point, to get conversion away from internal combustion engines you need to lower the price point which is what everybody is working on. tesla got there, and of course they have scale. everyone else is getting scale. >> you are trying to get that scout. a big part of that strategy is actually tied to your work in the middle east, shaklee south -- saudi arabia. i know they have been very accommodating building out the manufacturing facilities, but -- create an ee strategy. why are they doing this? >> old and new, that the first century definition. -- 20th century division. most governments problem for saying that there is a transition. our economy for us -- was more

than gas. in the 21st century, it way from diversified sources. i go to add value to my economy by using new technologies. i am going to build a supply chain to support electric vehicles. i'm going to build other sectors and use the cash i get from all the gas to diversify my economy away from my single dependency. >> speaking to remain bosket -- romain mosque at at that looking conference. we are setting up for the opening insole in a few minutes. this is bloomberg. -- in seo in a few minutes. this is bloomberg.

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>> this is tapered patient cap to adapt to the market open in south korea and australia after a risk session and wall street. we continued to see concerns about regional banks rising recession office potential june 1 u.s. to fall as well. -- default as well. >> this is a convergence of a number of factors and the lack catching up to monetary policy tightening, and thanks with -- rises in rates with banks. it's percolating everything at once. >> certainly a lot for investors to be considering this morning even though we have from markets in public days. we have the opening up south korea and australia upon us. japan is shot but that means no trading for treasuries in asia. in terms of the set up, we are

going to be waiting for the stocks to star tribune, but we are looking risk off, at least in futures. jp morgan has been giving out scenarios for the fed when it does move with rates later today, some say that if it heights and pauses we could see stocks in the u.s. bouncing 1%. the big question is the impact on the banking sector and that really showed in the u.s. session overnight with regional lenders slumping. the chaos pi is coming down on the downside, and the ko sda key -- the cossack index downside as well. that is a result of inflation numbers that came through, and building the case that that be ok could cut rates as soon as later this year. let's change to what we are seeing in australia at the start of trade. we continue to monitor the flow through from the rba decision to

rates hikes that were unexpected, only three out of nine economists predicted it. people are split on whether the fed will need to continue hiking with some spillover, but we had seen yields moving off of that decision, they are a little bit lower this morning, perhaps the reaction to what we saw in the treasury space overnight and keeping an eye on what we saw on the qb dollar this money, because there are strong employment figures coming through, which reminds us that the rba may need to stay hawkish. >> we saw some softening in labor with the amount of blood -- job openings falling to the lowest in two years. the risk of a potential recession and a credit crunch is still keeping people on edge, times are next guest. the director of investment strategy at ocp see bank wealth management, always great to have you with us. i had of the right decision and

boe, and not to mention in a few hours we have malaysia's decision as well, how do you position in this environment of uncertainty? >> well, i think, if you take it medium-term view of the markets we remain constructive, and relatively positive but in the short term as you highlighted early in the show, a whole slew of hits. fed policy, the debt ceiling, uncertainty about recession and economic output, and those things will create volatility in the markets. what we are telling our clients is that there are good reasons to reap cautious about the shortened outlook but not to lose sight of the medium-long-term. at some stage the fed will win the battle against inflation, then that will take place in 2024, and at that point if it turns more dovish, the markets could rally,. -- rally, but for now we stay

volatile. all of the hits that we spoke about will continue to create volatility. volatility is a two-sided coin. it can also create opportunities but you have to be selective. >> and we have this congressional standoff on the debt ceiling and uncertainty about where the fed goes, how do you play that volatility? >> i think that you look to drip feeds in the markets and sharp pullbacks, so you know the debt ceiling debacle may weigh on the markets as we run up towards the deadline in early june, that would be a very significant pullback, and we might buy a bit more because historically the u.s. congress has eventually come to an agreement. it may come to the last minute, negotiations to get through there. but eventually they will see in

agreement because otherwise either party will pay a heavy price and -- at next year's election. it is a question of whether they suspend or increase it, if the cutback spending, but any sharp pub accepted present an opportunity. -- pullbacks present an opportunity. if -- >> most strategists were looking at a pause, and they received a shock. does that tell you something about the volatility to come? >> the rba surprises the market, and in the back of investors minds -- the minds of investors is whether the fed will do similarly. we know that with the recent bank problems in the u.s. and the selloff in banking stocks last night in the u.s. it is possible that the fed may hold its hands and the fed may not

signal a hike beyond what we saw tomorrow. i mean 25 basis points. then signal a pause. but they will keep an eye on inflation, it remains elevated, inflation numbers came in higher than expected at 4.9%, core inflation, that is where it tracks. unless those numbers come down significantly, it is hard to see the fed taking its foot off the pedal. it could be holding rates at this level for longer and then our view is perhaps breakouts may only take place in the first quarter of next year. let's cut -- let's see. all of this is based on information. at the fed is in a difficult position trying to fight inflation and making sure that it does not worsen the banking failures which could impact the economy badly. >> what are you watching here in asia, because there is a great deal of talk when it comes to

the resilience and robustness of the chinese rebound. if you take a look at the numbers there is a bifurcation between different parts of the economy, what are you optimistic about? >> we are optimistic generally about china. having said that, the chinese stock market had a good run since september of last year, it is taking a breather right now. the data is relatively mixed. i think china is slowly getting back on its feet. we think china is an exceptional case. we are positive on china. china will be the only major economy in the world that will post a stronger growth this year compared to last you. one of the few economies where inflation does not appear to be a problem at this juncture, which allows the central bank and the government to stimulate the economy if necessary. and consumer related place, infrastructure related place, companies that are leveraged onto clean energy, you know,

green technology, companies like this will benefit from china. i think the government is trying to stability domestic demand and leveraging the domestic economy will benefit including tourism. >> always rated chat with you. let's get a look at some of the early movers today. >> we have opened here in sydney and korea, japan is shot through the rest of the week but the tone is at risk, and you might think that is unsurprising even what happened on wall street. a lot of these financial was resurfacing especially with regional lenders, pac west falling to a record low, and western alliance deeply in negative territory down 15%. this is the state of play in early moments of trading. we are seeing these lenders here

dropping across the board. let's change on, because admits these concerns around the health of the u.s. financial decision, -- markets, we have seen assets, gold was flat, but it jumped by the most in more than a month, getting 1.7 percent above that $2000 an ounce level and likewise we are seeing gold miners this morning climbing in sydney. sherry. >> let's get to finally quit in with the headlines. bonnie. >> house democrats have come up with a workaround that could speed up the vote on the debt ceiling. it would force a floor vote on a placeholder bill which could be amended to increase the debt limit. support would be needed from five republicans in order to pass the house with the majority. it comes as the treasury chief warns the u.s. could risk of default as soon as june 1. two warring generals have agreed in principle to a seven-day

truce despite the weeks of fighting. the president broke at the cease-fire that would begin on thursday as the two sides were towards peace talks. several priestly mistresses have not been implemented -- previous truces have not been limited. 500,000 people have been displaced. pakistan has blocked the highest inflation rate against -- in asia. he was driven by rising food and transport costs and a weak groupie. it is expected to rise higher after rock -- taxes rising to meet a loan program. millions of chinese travelers have visited major hotspots across the labor day break. it is a normal holiday. for many workers after many years of to have restrictions and waves. more than 159 million trips were made in the first three days of a holiday, nearly matching pre-pandemic levels.

global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in over 120 countries. i have body quinn and this is bill burck. -- i am vonnie quinn and this is bloomberg. >> still to come, the chief economist of the book cory -- chief economist of the macquarie group rick devereaux with anna -- what the rate hike would signal for other central banks. also the latest when it comes to the selloff in general banks, first republic bank failing to restore investor confidence. this is bill burck. -- this is bloomberg. ♪ or filing returns. avalarahhh ahhh go. go air that actory. go sensors and software. go find leaks. go fix-em. emerson technology detects compressed air leaks to save manufacturers, like colgate,

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>> we are not through the regional banking crisis yet. >> we don't believe that this is a systemic problem. >> we see one of the best opportunities to try to -- in many years. >> 80% of lending comes from banks, 250 million below, it will have an impact. >> there will be carnage in certain parts of the commercial real estate business. >> we are now going to see an increased regulation of banks. >> guests of the milken conference reacting to the turmoil in banking sectors and renewed anxiety over financial stability sleeping wall street

-- sweeping wall street. would bring in kathleen hayes and adam. this is just a day after the rescue of first republic bank, so why the renewed worry? >> indeed, and just a day after those comments from jamie diamond after his bank acquired first republic, putting a bit of a dampener around the caution, the sense that he was a long negotiation which took place between the fbi and the -- j.p. morgan first republic, and radio was struck. and indeed, monday seemed to show in the stock prices that there was a sense of calm. but that gave away quite quickly on tuesday, and during the session we had volatility as well. really, it was not about pinning down in the particular news piece of information. what it was really down to was this overriding sense of that

lack of confidence and that is still there. the lack of confidence that the fdic are moving on uninsured deposit positions and which a lot of people have been looking for. just the fact that a lot of the systemic issues that have impacted regional banking in the u.s. over the last two or three months and indeed what has led to this and build up to this, a lot of those worries are still there, especially with the fragility of the u.s. economy currently heading into the latter part of this year. sure, these moves were of big magnitude, there was intraday volatility and big moves in the regional lenders, but this is continue -- this continues to be a far wider problem than people trying to pigeonhole it to one or two letters. this is across the board. >> kathleen, when it comes to the fed, could we see hints of second thoughts when it comes to a hike? >> certainly they have to be

looking at this it should because they know it is important. were it not for what has been happening for the past month and a half starting with svb and moving through to today, saying lenders get hit so hard even after first republic gets purchased by j.p. morgan, even so, the consensus is that they will do the hike. they advertised it and committed to it. the question had been whether or not they would signal a pause. now they are expected to do the pause and in a sense that might be another 25 basis point hike is more off the table when you look at what traders are pricing in right now. a former federal reserve vice chair said that the fed is going to hike but then they are going to signal a pause, taking the june hike off the table. since it is going to be tricky because as soon as they signal a pause then markets are going to say and of rate hikes, leading towards fed cuts.

and that is going to be the problem because inflation stays high and they will have to keep the funds rate where it is. that is what people are betting anyway. elizabeth warren, a democratic senator from massachusetts, considered a progressive, although many others writing a letter to the tent today to jay powell say -- saying that bank failures make the economy over vulnerable to reaction from the fed. they wanted to pause and not do anything. clearly there is a lot of concern in washington and on wall street and even riding the subway's home at night when you hear people talking about the six train. -- talking on the six train. >> it really brings that home. we talked to robert kaplan and he thinks that there should be a hawkish pause at least. >> signal you're watching inflation and you are not done with rate hikes, but instead yes, a pause right now, it is

not clear just how deep and how bad, and what could be happening too small and medium banks that are not settled yet. here is what he told us earlier. >> i prefer what is called the hawkish pause, not a race but signaling that we are in a tightening sense because i think that the banking situation may well be more serious than we currently understand it. >> robert is concerned again that we don't know how far this will go. he does think this is not over to the extent that small and medium-sized banks will have totaled -- trouble lending and getting deposits and this will reverberate through the economy went j.p. morgan gets purchased -- went first republic gets purchased by j.p. morgan, excuse me, it ends that problem with first republic but there has been a lot of talk around this that j.p. morgan just got bigger but this does not necessarily

help regional banks and there is a question around that as well. >> adam, when it comes to what regulators could potentially do, are there any actions that can be taken to restore confidence? >> regulators have been working hard over the last few months, not just over the most recent few days of what happened with first republic, but just by j.p. morgan, the underlying confidence issue which kathleen was speaking to, which was so key for the economy are more probably is that deposits have failed, and whether they will be able to get their money back. that is the position that has not changed from the fdic. a lot of investors have been expecting and yearning for a change there from the fdic that does guarantee depositors will be bailed out if there is a more

systemic issue that was on from one bank to the next. but as of now, that position is still as it was last week and the week before. they are remaining firm and that speaks to the fact that you have got this ongoing problem here, but you don't have a change in that one key condition that might give people a lot more confidence so that depositors can feel safe and their money is to say. until that changes you will feel that confidence lingering in a very uncertain point. >> kathleen hayes and an ma -- adam hey there. the counterparts in depositors moving elsewhere, our opinion columnist has been writing in depth about this. we know that historically

chinese lenders have had different systemic risks in terms of bad loans and how that is being dealt with. but in the current environment, are we seeing chinese banks basically being able to hold onto deposits and clients better? >> what we have seen is that chinese banks have a lot of trouble, but the government has done a lot of crackdowns on the alternative products. also, with the wealth management products what we have seen is that china's government bond market is very volatile. what we saw late last year was that after the china reopening, the bond market got sold off. and then these wealth management products literally broke their back. their asset value went before one dollar. the chinese consumers realized that it is actually safer to put money with the banks even though

the banks only pay 1.5% interest rates. then basically breaking their back with the money market funds. the chinese banks, believe it or not, have less to worry about than banks. -- american banks. >> but investor -- it's an entirely different issue down there with offices being rated. >> what we have seen lately is that the chinese, a lot of foreign companies where raided by police in mainland china after the passing of an expensive anti-espionage law last week. and the broader take away is that for us journalists we don't have an hate to hide, but investors need to be more careful because they are facing

what you might call a terror that they might be rated by the local police. -- raided by the local police. >> is there anything foreign investors can do? >> i think foreign investors need to decide what they do with china. if you think you can't invest thousands of dollars away, if you have -- you might be at a natural disadvantage. people invested in china might need to open local offices. in hong kong we see that our access to mainland china's databases and the information is getting cut off. christ our bloomberg opinion columnist joining us from hong kong with the latest on the chinese financial sector, of course.

a very different world when it comes to the u.s. banking concerns. you can get a round up of all of the stories that you need to know to get your day going in today's edition of daybreak, limerick subscribers is also available on mobile or the bloomberg anywhere at. you can customize your settings to get the news and assets that you care about. this is bloomberg. ♪

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andy sees better times, in the latter months of 2023, echoing their rival. starbucks had strong performance in u.s. and china but that was not enough to satisfy investors following a 50% run-up in the stock price this year. comparable sales rose 11% in the first quarter, beating a forecast 7.3% gain. hit underscore -- it underscores the resilience of consumers buying things like open a lattes. we speak exclusively to the mccoury groups chief economists, and what the surprise hike in the rba mean

>> this is david asia.

we have a check on markets, 30 minutes into the session for korea and sydney. the mood is looking risk off. things to watch today, the financial stocks given the track that we saw on the u.s. session with a in regional lenders, and we are seeing the financial index here, because japan is shut for the rest of the week. it is lacking in line with the border benchmark. we are seeing a move into safe haven assets like the yen being bid in the prior session, and also bond yields in australia that you can see at the top. really attracting what we had in treasuries given that we don't -- cannot have that surprise hike on tuesday, signaling more moves could be coming. but eventually a drop in the commodity space like iron ore and crude under pressure. also signaling the recession.

in terms of futures, we have hong kong and taiwan open in the next hour, i did mention that japan is shut for a public holiday through friday, and other key markets are closed including japan and china and vietnam. >> austerely's efforts to bring down inflation in the spotlight once again. we had those pmi numbers recently, and the rba will be in focus today asthma. there will be indicators they will be watching closely on the back of that surprise 25 basis point rate hike on tuesday. let's bring the economics reporter swati pandy. let's talk about this. this might be -- interesting if you want to gauge the competence of the consumer. >> sales are really critical for a service economy, household consumption accounts for safety percent of their gdp.

consumption looks to have held up, february was a week or month and economists are expecting march to be weaker as well, just 0.2 percent growth is expected, if, however, the number is strong, it will vindicate the rba's decision to raise interest rates yesterday, because they are seeing signs of economies going along with the house prices going up, employment growth still strong, unemployment hovering near a 50 year low, and the consumption, if real estate data is strong as well, it will vindicate their stance to tighten further. >> that was a surprise rate hike that we saw. we were not expecting that, even in discussions this week. what is the expected path forward? >> market pricing was for

dominant rates at 3.6%. when they've hike yesterday to 3.85 really show -- show for markets, we saw a search in bond markets and the australian dollar, and now we are expecting 4.1%, one more rate hike. i think one of the big reasons when the rba official was speaking yesterday, he was trying to tell the world that we want to engineer a soft landing in the economy but we also watch to bring inflation down, and that is a narrow path that he has repeatedly said they are walking. so, they are very very aware of the fact that they want to move cautiously and they want to maintain the employment gains so that they don't want to be excessively aggressive or --

like the federal reserve. markets are pressing one more rate hike from here, and that is it. but i think the rba will continue to juggle and keep the tightening and keep telling everybody they are serious about their inflation target. >> economics reporter swati pandy there with the latest. the rba is really unexpected to most decision to raise rates filled bigger bets by other central bank -- banks, including the federal reserve. here from them mccoury group at this conference, great to have you with this, the question was really wide. 7% is nowhere near the target and on the other hand, i think it was referred to as recession relate. is that the idea that the room to tighten the window is closing

because robert kaplan hit back on that and said there is not a window and central banks should not be looking at it that way if there is. >> the problem with where we are at is that the first part of the monetary tightening cycle is easy. you are low and you have to get back to neutral. that was most of last year and you are now in a much for difficult position and it takes judgment. and all the rba set last month was that we would stop and look around at what the data is saying. and in my view the data unambiguously suggests that inflation is still too high and the governor said it would take too long to come down. i think they did the right thing. >> did they communicate that well, because that is the other part of the credibility issue. >> what is interesting is that there is an individuated in the global markets -- indigent sense in the market. a lot of markets have slowed down, and because australia paused there was a perception that they were more devilish, and when you look at what they have said, it is clear that they

were pausing and accessing income information. i think between those two meetings, unemployment group -- through strongly. it is not surprising that they landed there. the difficult thing was that the market was pricing something else and everybody else find that. the economists did the market pricing and decided it was unlikely they would go against that. i think that was a surprise to them. they did what they needed to do, and as we look forward we will be looking at the data and they will do more. >> robert kaplan talked about his preference for the fed is a hawkish hold. does that work? do you think that they can be comfortable communicating their intentions to take inflation, the fight against inflation seriously? >> i think now that we are tight and monetary policy is tighter there is a lag. the infamous long variable legs. but what central banks seem to do is watch the data. because, again, a lot of people

make up this very -- make out that this is precise. it's not. there's a lot of judgment. the idea of pre-communicating was sensible when you knew you had to go from low to high. now that you are high you need to slow down and watch the data. i think the fed will deliver another hike. what happens at the meeting after that will depend completely on the data. if the data comes in strong, and if inflation stays sticky then we have more hikes to come. but if inflation does come down as they hope it well that they might watch a bit longer. it really depends on how the economy operates. >> and central banking is an art and not a science, as you say. it's also a blunt instrument. the shock to supply and demand were unusual. does that complicate that in terms of whether there is really a question as to whether we will be able to get down to the inflation target? >> there is. this is a very difficult situation. inflation is too high, arguably,

they took too long to reckon that. now they are doing exactly what they need to do. in terms of fine tuning to help slow down and helping unemployment to melt a little bit and which is to go up and a place to go back to target, that is hard to pull off. that is why we have been talking about recession in the north atlantic, not because they made a mistake, but because it is difficult to calibrate it to the degree that you would need to in order to land. >> the recovery china has been pretty bifurcated. do you look at that and think it will turn into a self-sustaining cycle and will that be the thing that saves economies, including australia from the worst scenario? >> china is not what is in the world this time. it's not 2010. and part of the reason they are not witnessing the work is that they overstimulated in 2010. they recognize that they made a mistake and simulated too much and blew up dead. they are being much more cautious. in terms of the chinese reopening, it is happening very

much like the reopening in the west in that you had a very depressed services sector and when you reopened the services sector kick so you had a strong sector activity or growth coming from a low level. but for the rest of the world, one of the big things of course is what happened with manufacturing output. and exports are going to be weak because demand is falling. my guess is that you remain quite bifurcated in that you have a strong recovering service sector and that will continue this year. gdp growth will be strong this year because you are coming from a low base. but in terms of manufacturing which flows into commodity processes, my guess is it will be quite soft. we think prices will fall. >> we are, more globally, seeing this refocusing of do we get that convergence of credit tightening at the same time the golden variable lacked catching up, is that a shock that markets have not priced in before and everything that is going on is

still shaky over banks, is that something to take in mind? >> if you look at the markets, the yield curve suggests a recession, but that is our essential scenario. the equity market it does not. it is pressing very close to what has actually happened with the economy so far in my view. that means to be that -- is that if the recession does arrive equities will fall. the problem that central banks have is that with inflation is high end wage growth this strong, i think you need to push down on appointment to get inflation back up to where the target is. so you almost need to generate mild recession. they will try very hard to make it a slowdown, but the nuance between the two is very small. in my view you need unemployment higher and i think we will get there. it's just what is the mechanism and the road to get there. >> and there is a political element to be able to do that in a smooth way and we are coming up to budget time here in

australia. can the budget fix some of these phone abilities and what would you say is the biggest thing that the economy needs going forward? >> the first point is that it seems like a difficult job for central bankers. we have seen the governor getting a lot of unfair treatment for the media, that always happens at this stage. it is a tough gig and we should recognize that. in terms of the budget, i am convinced that the government understood the magnitude of the challenge. need to make sure that they are not moving against monetary policy. he cannot have a world where monetary policy is tightening in fiscal policy is easy. that suggests to me that finalists -- policy is working and the outlook is good. i think in australia we will have a slowdown and the real debate is whether that turns into a recession. >> what are we missing, what is 2023 going to bring to us? >> i think it is a slow burn. i think monetary conditions are

tight. i have been telling it the reverse fed put. for the past 40 years, it seems like every types of the bad happens the fed will bail them out or central banks will bail them out. it's almost the reverse of the moment in that you made the economy to slow, and to get the economy to slow you need to tighten under conditions. if the economy turns out to be more resilient than i am expecting at the moment the central banks will have to deliver more timing to cause that slow. the timing is uncertain and particularly in australia given that we have a lot of fixed-rate mortgages rolling off, the time he is uncertain. the outcome is clear, it is just about how long it takes? >> rick deverall, and the mccoury group advisory conference. we have a lot more commitment had at the conference and we will be speaking to industry leaders, including these two

leaders. that coming up at these times on the screen. we also see the latest target but the short seller hindenburg. next, how they lock horns. this is bloomberg. ♪

>> this is daybreak issue, i am

vonnie quinn with the headlines. new data shows vacancies at u.s. employers felt by more than forecasted as layoffs jumped. the number of available positions decreased for a third straight month to 9.9 5 million from nearly 10 million in february. layoffs jumped to the highest levels since december 2020 with rates falling to the lowest in 22 years. morgan stanley is in talks with regulators over how certain employees shared or used information on the pending block trades. morgan stanley has let go to bankers in relation to the issue. kamala harris will meet with ceos from alphabet, microsoft, open ai and others to discuss generative ai. officials plan to tell the companies they have a responsibility to mitigate potential harm from the technology. an invitation to thursday's meeting seen by bloomberg says the administration is seeking a

frank discussion with leaders. south korea's world governing body is touching not to televise women survives markup in five major european guppies. the hosts are australia new inland -- to seal bidders are not acceptable, according to fifa. the popularity of women's games are searching, but the time difference is worrying to some broadcasters. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in over 120 countries. i am bonnie quinn and this is bloomberg. >> punished the most on record after a negative report from hindenburg -- icon plunged $10 billion after a short by hindenburg. we have two well-known activist investors going to head -- head-to-head. >> this is one of the most followed bloomberg stories at the start. bill ackman tweeted out that

they hindenburg report has a comical quality to it, he called it must-read material, it is titled icon enterprises, the corporate reader throwing stones from his own glass house. check out the stock price. you saw it immediately crater, closing down close to 20%. that is a record try, a loss of more than 10 billion dollars, two ican's fortune -- to icahn. he's known for many a corporate brawl, and they hindenburg report says that a legend on wall street has made a classic mistake of taking on too much leverage in the face of distant losses, a combination that rarely ends well. and you are looking at highlights from that report, specifically the activist short-sellers saying they are value inflamed by 75% or more,

there are questions about the size of its dividend yields, and the way it has been financed recently, and the report says that the enterprise uses quote unquote ponzi like economic structures. taking money from new investors to pay old investors. the ceo hit back with his own criticisms saying quote, weep stand by our public disclosures and we believe strongly in hedging -- we stand by our public disclosures and we believe wrongly in our positions. he calls the hindenburg report self-serving meaning that it caused the stock to drop and that is what hindenburg profits from. >> he is the latest billionaire to take a hit from hindenburg. >> there have been others as well, it is a short selling firm that makes money taking short

positions against the companies it targets. many of its target firms have since become heavy stops at the empires owned by billionaires that it has gone after have taken big hits to market cap. hindenburg has previously and most recently targeted an indian billionaire as well as jack dorsey, icahn becomes the latest target, more than -- owning more than 80% of icahn. a personal hit their, and the shares have plunged since the report was released. these targets have lost even more money in the days and weeks to follow. stay tuned. >> seeking in there with the latest. morehead, this is bloomberg -- sue keenan with the latest. more ahead. this is bloomberg. ♪ )

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>> one of australia's top lithium miners she's going optimism for the sector after a flurry of bidding activity for a certain of lithium. he spoke with us exclusively, dan henderson also told us he expects lithium prices to recover after the recent pullback. >> in terms of engaging with our customers, there is a range of opinions from it could be a

matter of weeks to maybe late in the calendar year, the truth is that nobody really knows. we think that the answer is somewhere in the middle. it's part of our quarterly guidance. last week we got it maybe sometime in the back half of the calendar year. had this -- there are indicators that are positive to support that. >> is more of the micro -- macro pricing story as with china? >> i think the long-term demand looks really compelling and the consensus seems to support that, the world is converted to lithium and ev spent more lithium supply. i think everyone is grappling with what this short-term pullback, what is behind it and how long it lasts, from our perspective it has indicated to be more short dated. in terms of demand it is solid

outside of china. but we will wait and see, there are quite a few factors putting china's demand. we will wait and watch and see how that plays out. >> in terms of the macro environment, obviously there is uncertainty over the economic demand story, and higher rates and even more hikes. does that impact investment story -- opportunities and decisions? >> for our decisions, we think mostly about the growth pathway, organic growth expansion. and we have not held back on that. we made those investment decisions and we are continuing those expansions because we are in an equitable position as one of the most look -- one of the largest operating assets operating globally, and we can expand into a critical market to capitalize on that.

once we have gotten expanded. we will call back. >> you talk about investment opportunities within the sector as kind of a leading indicator of sediment rise. when you take a look at the line of town dynamic, what does that tell you about optimism? >> is a strong point of evidence which says that these groups are looking to bid on liontown believe in the other. full credit to the ceo walking the talk. they spoke to the necessity of all lithium projects to come online here is, they are, putting with their money. it is great to see, and it maybe just underscores the support for the long-term opposition for lithium. -- position for lithium. >> it also depends on public policy as well. we have foster the introducing efficiency standards by the end of the year. do you think it is too little

too late, will the encouraged ev take-up, what will you want to see? >> great to see more support coming for elective vehicles and australia has been a lacquered compared to some -- laggard compared to some others. i'm going to say yes, there should be more because it supports electric vehicles and lithium. i think the place to look is at some of the other countries who have been progressive and successful. australia will be well served to copy some of those subsidy messages and techniques. >> dan henderson they're joining us, that is it for day vacation. can -- coverage continues ahead of the china open. this is number. -- bloomberg. ♪

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