>> you're watching derek as you, do you live from new york, sydney and hong kong. >> captive down to the market opens in south korea and australia. >> the fed hints at a right height -- rate hike pause after its latest move with powell saying that data will be the driver. >> it will be an ongoing assessment, we will need data on that. as an assessment that would mean that we would reach that point where we think it is not possible to say that with confidence now. >> the ecb is expecting a downshift from 50 basis point hikes, as inflation stabilizes and credit conditions tighten. another regional bank is in trouble in the u.s., back west plunging after hours after -- and weighing its strategic options. >> this stresses that we see there, a drop of nearly 60% in after-hours is certainly casting

a shower -- shadow over the asian trading today. now we have the openings from sydney and so, and you can see them dropping .5% and .3% at the open. the read is that all of this hope that the banking stress have passed seems in vain. china we will be watching of course given that it is set to come online after an extensive break. we have seen strong spending over the golden week. but still weakness in the hong kong session. let's change over because the other big headline was that the fed rate decision, we did get that signal that we could see a pause, but it was not enough to lift investor sentiment. when you take a look at the bond space there is still that expectation we will see a cut towards the end of the year, at least in swaps. we did see a tumble into year yields. the euro, approaching its

year-to-date high here, given that the ecb is expected to continue hiking at least 35 basis points, bank of america still sticking to a low conviction, but for a basis -- bitcoin approaching that 50,000 mark -- 30,000 mark again. it has been bedded on as not only an inflation hedge but also a haven from financial stress. >> take a look at how u.s. futures are trading at the moment, we see the downside given that we had already wiped out gains in the regular session, the s&p 500, the one point gain, almost near recession lows and they were telling us really that potential pause is not enough given that a pivot was taken off the table by the chair. every sector on the s&p was in the red, the two year yields sinking to around that 380 level. it's still interesting, market

pricing effects a pivot in the coming months. oil in the asian session, look at that, below $67. and we are talking about double-digit losses when it comes to its year-to-date pricing. the fact that we got that opec plus surprise cut decision earlier this -- a month o ago. it is all about the after-hours session. look at how pac west is doing. plunging as bloomberg has learned that it is weighing a strategic option including a sale. we can actually discuss more of this and bring in matthew months. -- matthew months. we were talking to dennis lockhart and he was telling us that the fed might be caught as a deer in the headlights because they did not note that this pack west news was coming. how bad is the banking stress?

>> let's break it down for how bad it is for the banking question. it was in fairly good shape, it had good quarterly earnings and it had money and liquidity. and if you percent of its deposits are insured. what is happening now is that institutional investors have let -- fled the space and others have plowed in and know investors are going near them. it is important to note the three most problematic banks in the u.s. are signature, valley national, and october date, they have failed. they were the most problematic with the worst problems. everyone else is in decent shape. it's just that investor sentiment is brutal. >> confidence is not going to be held by the process of the sale, we saw how long it took with svb

and first republic and there was a sense that banks that might want to buy, they might get better value from the fdic. >> that is an unfortunate market dynamic that we have going on. it is important to understand that there are just really logistical hurdles to most bank transactions right now, it boils down to accounting. if you buy a bank, you have to markets as it's down to its current values. current values are low right now because interest rates were not. the point of all this is that if you wanted to buy pack west, which is a great franchise, you would have to take a big loss of front to make up those assets. that's just how it is with these yields. it's a hard pill to swallow. >> we have an idea of how this will unfold. first republic really took weeks for a resolution to come through

and even now we are not quite sure about the total cost of this failure. >> back west has not failed, and i am not -- pacwest has not failed, and they are trying to get out in front of it and get a solution, whether it is a wholesale or a capitalist -- capital raise other things. the bank is not failed and it hasn't been in danger of failing, but unfortunately the reports we put out that is accurate past a bad outlook. >> for more on that the decision, signaling that it could impose rate rises depending on the data, and ruling out rate cuts all in one meeting. our global economics and policy editor kathleen hayes is here with more. with the banking sector stresses it is no surprise that people are asking when are you going to cut. chair powell seemed to take that

off the table. >> cutting rates might not help the banks. damage has been done. they had bad decisions on their books. the question is more broadly if we see this turning into something more systemic which people don't expect, it's a painful and difficult process, one of the big risks is that it is going to lead to less lending because if you are worried about deposits or the state of your assets versus liabilities, the first thing you are going to do is pull back and powell mentioned tighter credit conditions, tighter lending conditions. there watching and he said it accounts for some of the rate hike but we don't know how much. we have to see how this unfolds. they did what they were expected to do, people set look if they don't hike, then they will think they're panicking but they have to do it, and they certainly went ahead and did it. they also took out my which of the statement that suggested that additional policy firming may be appropriate. that has been in their statement

for several months now. and at the same time, jay powell said well, koepka, do more, for sure we cannot say yet if policy is restricted. this is very important. >> is going to be an ongoing assessment, we need data to cumulate. -- it is going to be an ongoing assessment. we need data to accumulate on that. i think it is not possible to say anything with confidence out. -- now. >> he said in terms of what they are or not going to do, they are not ready to cut rates. in terms of pausing or signaling a pause, the labor market is tight and inflation is still high, demand has to soften. for now, it's a bit definition and hawkish. -- dovish and hawkish. it's all data dependent. >> what about the ecb, what are

strategists saying about how long and how high rates will need to stay? >> consensus is tilted more towards the hot stone seemed to have not quite the same support that they had, yes, inflation slowed, this was important, down to 5.6%, that is good news. the lending survey that came out on tuesday showed that lending has slowed down, so certainly there is an argument for a cookie five basis point hike instead of a 50 basis point hike. the question will be what more do they signal, we expect them to do another 25 basis point hike in june and will that be enough? what kind of concerns or optimism over reducing inflation will we hear from the next press conference, these are the questions we wait to hear because it seems to most people the hikes were baked in the cake. the question is what they will signal for the next meeting. >> kathleen hayes there.

let's take a look at what we are seeing across other asset classes across march -- markets. garfield reynolds is was -- with us, you take a look at oil and rates futures, is this a market are part of the market telling us they are questioning the fed? >> the feds are not questioning him, they are just telling him you're wrong. there is a recession. -- markets are not questioning it, they are just telling him he's wrong. there is a recession. it's for today, you have a hike, it is very clear that ray traders expect at least two or three rate cuts in the second half of this -- breaks traders expect two or three rate cuts. many people are saying that there will be a recession or something like it.

certainly there will not be the grocery outlet that powell was signaling because he has made it rosie outlet that powell was signaling before. the market is pricing in full rate cuts. and that was reinforced by crude oil, already crashing down this week, on the back of growing recession concerns, not only in the u.s., but in general. and then again we had asia during golden week, so this theme of liquidity out there. we still had a stunning drop in the open, we had crude oil heading for its first week since april 2020, so that tells you what the market is seeing as far as the outlook for demand goes. that's is the market is seeing inconsistent demand with what powell was saying. >> i was going to say. what a day to come back from the holidays. have the fed and making stress. are we going to see fireworks in

china at the open? >> that is certainly possible. china is always difficult to figure out because they have also had what looks like some fairly strong consumption data, over their own weeklong holiday or almost week long holiday. that is going to cost some optimism, then again, we went into the china holidays with those rather concerning pmi's, signaling that china sees a mixed outlet, and one of the things that is weighing on china is concerns that it is not getting the demand from external sources so it is more and more reliant on internal demand. now, is that demand going to be enough, if you think it is then human can maybe shrug off what has been going on. if you think it isn't, and a lot of people think that it may not be, you might face major concerns because if you think

the economy is set to slow down dramatically, if that makes it very hard to see a strong future for china, crude oil, certainly crashing signals that traders don't see a trunk -- strong outcome for china. >> garfield reynolds there. let's get you to vonnie quinn. >> the sec will require hedge funds to share investments on losses in real time. they have 72 hours or sooner to report trigger events. information will not be made in the shade with the public. they have to report positions and quarterly public findings. the ukrainian president is denied that his government used a drone to attack vladimir putin's residence at the clement -- criminal. the ukraine only fights in his territory, the president says, and that russia might be trying

to distract from its failures. social media video is showing an attempted assassination on the president, they claim, and president putin was not there at the time. a settlement could help avoid the spotlight of a class action trial due to begin in weeks, his source says the company has discussed figures that could reach $200 million in a huge gender discrimination's -- determination case. goldman sachs has denied the allegations. china has reported a certain travel and spending. the ministry of culture and tourism says trips over the five day. jump 70% from last year to two to 34 million. they exceeded the pre-pandemic level, rising 129%. the chinese economy is predicted to expand by 5.6% this year. 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 at this is

bloomberg. -- and this is wilbur. >> -- bloomberg. >> first, analysis on the fed outlet with university of maryland as policymakers walk a tightrope between sticky inflation and stress in the financial sector. this is bloomberg. ♪

>> demand will have to weaken and labor market conditions may have to soften to begin to see progress. in that world would not be appropriate for us to cover it. the system is sound. conditions have improved since march. stresses have been resolved, it is essential that the debt ceiling be raised in a timely

way. so the u.s. government can pay all of its bills when they are due. we would be in uncharted territory and the consequences would be highly uncertain and could be quite averse. the case of avoiding a recession is in my view more likely but it is possible we will have one. i hope it will be a mild recession. we are committed to returning inflation to a 2% objective. inflation is going to come down, not to quickly, it will take some time. -- so quickly. it will take some time. >> jerome powell on the fight against inflation. this professor thinks that this is all the bouncy -- balancing act. professor of economics at the university of maryland here. always great to have you with this, and it feels like lacrimal when it comes to regional banks and stresses that pop up. it also feels like the fed has

been caught off guard as to how systemic these issues are. do you think that this could change the outlook going forward? >> thank you so much for having me on the show. it's a pleasure to be here. i don't think that this is going to change the outlook in the future. assuming that these things happen one by one with the smaller regional banks. i don't think this will change anything because those things can change easily. what can change the outlook with the fed and rate cuts is a systemic crisis. an economy wide systemic banking crisis similar to the one in 2008. and i don't see any indication of that, that the fed will think -- is thinking this way. none of the systemic reports on

banks are telling us they are under stress. i don't think they are going to go down that road >> -- road. >> but they are going down the inflation fighting road, and jerome powell seemed to say a lot of things at once. height rakes, taking out language about assuming that you will height -- hike rates again, but not eliminating cuts because the labor market is to height -- tight and the labor market is too high. do they truly not know what they are going to do next? >> nobody knows really because again we heard a very determined fit in terms of the inflation five. inflation is now sticky, they realize that this is sticky inflation versus broken bank business, but sticking -- sticky inflation is more important because they don't think that

banks are broken economy wide. at the hike is needed and they did that and they don't want to tie their hands in terms of promising that's it, this is the last hike. they don't what to do that because they go know if they may or may not need another one and then they don't know if or how quickly the services sector inflation will come down. it's a difficult situation. >> is a possible, they set that we will get a recession, but say we get a sharp slow down a recession, and inflation is still high. is the fed board have to sit back and leave the funds rate where it is at an elevated level and let the economy work through this on its own? >> they did signal that. they did say they were going to pause but they are coming to the

end of the tightening cycle and removing that statement that there will be another one. i think that this is really about as he said, how did that position is. look, dave raised the interest rates five basis points in 40 months and unemployment is still 2.5%. there's still a lot of jobs for person looking -- per person looking. i don't see this going into a sharp recession in 2023. they do want this certain slowdown, and there is going to be this global process of lending, but if something happens to get, in areas like with a new shop like banking, then it leads to a hard and tough recession, then things might change. >> even if we don't have a sharp

recession just the fact that inflation is still high, and it's really hitting the most vulnerable in society right now and on top of that you have credit conditions tightening because of what is happening with banks, we like to think that the central bank is independent. how much more political pressure can they take when you have u.s. senators publishing letters at this point? >> there is a lot of confusion. let's be clear. the stress tests, the knot is bbs, j.p. morgan, bankamerica. these provide 65 and 70% -- 65-70% of commercial lending in the united states. so the notion that all small businesses, smes, these are the important backbone of society, is absolutely wrong. so the important banks who are providing most of the landing,

and small into crisis borrow from those as well. everything is good with them. it comes back to the credit demand, that has to go down, credit demand which means customer demand goes down, then slow businesses are going to reduce their credit demand in the economy is going to slowdown. right now there is no such thing as least some of businesses not assessing loans that are off the credit mark. >> thank you so much, professor of musculus -- economics at the city of maryland. -- university of maryland. we have more to come. this is numbered. -- bloomberg. ♪

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>> a quick check of the latest headlines is our. qualcomm shares fall after a downbeat forecast signaling demand remains sluggish.

up to $8.9 billion fell short of estimates. we demand has led to a depth in ships which are their main source of revenue. profits at the mep missed estimates. cash profit was over 4 billion aussie dollars, but the shares have underperformed overall and former national and 10%. much more to come here on different asia. this is bloomberg. -- daybreak asia. 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 for day and night streaming. more speed you need when you're work from homeing.

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>> what the fed was trying to do is we don't know if we will pause or not.

>> i think we have seen the last rate hike in the consecutive rate hikes. i think there is a pause for validation. >> they have kept the door open there could be another rate hike next month and confirmed they are data dependent. >> the fed thinks it's process of getting inflation down to 2% will take longer than the market thinks. >> if they had paused, it would have created concern, so it would have been a worse case scenario. >> from the fed's perspective, we have not won the battle on inflation. it is still way too high. they don't want to give the market reason to tighten financial conditions. >> let's bring in foray look at the fx and rates side of it.

let's start with the dollar. the bearish stance towards the u.s. dollar is pronounced. the fed decision, debt ceiling standoff. they continued stress and the banking sector, pricing in a recession. what is that mean going forward for the greenback? >> at the moment, a benign pressure on the dollar. lower yields did not help. as u.s. yields coincide with the s&p amid worries about how this will play out in bank corp. is not helping either, because concerns about the banking division won't go away so there is pressure on the equities and you're seeing is safe haven flow into u.s. yields push lower which is not dollar-supportive. in the near term, what happens with the ecb if you look at the bloomberg dollar index, it represents 31% of it. if the ecb comes out hawkish

today, that is bullish for the and will weigh on the dollar. the risk is how does risk sentiment player. it could stabilize if u.s. equities per slower and it spreads across the globe and you may see some dollar stabilization because dollar tends to outperform in risk of scenarios, but at the moment, it is dollar downwards. >> you mentioned the ecb, we are seeing the euro at a one-month high manatt dimension the boe next week. how are the currency markets setting up? >> yeah, the u.s. is pushing higher against the dollar coming off its high yesterday so still above 110, but was higher. if the ecb comes out hawkish, the euro against the dollar

could test 111, and the pound is another key with u.k. inflation above 10% expectations the high compared to other countries, so how hawkish is the boe? if they are hawkish compared to the fed, that is dollar negative and hawkish for sterling, so near-term risks we think dollar weakness could continue in the near term. >> our fx and rates strategist with the latest on the fx trading after the fed in the head of the ecb and boe decisions as well. we are looking at emergency -- emergent market currencies higher. we saw that jump in the mexican peso to the highest since 2017. we just had the right decision from brazil, leaving the rate unchanged at a sixth straight hold, but we are watching the currency space and developing economies as we had the ring

git rising, resuming rate hikes after pausing in the previous session. our next guest says asian currencies are well-positioned positioned to weather risks. joining is now is our guest from the anz. we were thinking we were done with the rate hiking cycle, then we had malaysia, australia resuming rate hikes, so emerging-market currencies doing better against the dollar it given how they perform so far? >> it does. it is important to remember that central banks in this region are still hiking for the right reasons, not because they're pressured by the fed which was the case for some last year, but because effectively the domestic economies and demand is strong and they want to make sure they get on top of inflation, so

there hiking for the right reason because there is strength in the domestic economy, part of the story were seeing in asia. don't forget the potential ongoing headwind from the china reopening, which in my view is going to be very positive for asian currencies this year. >> yeah, we have china coming back from golden week holidays. how do position in the yuan given that the pboc is going in a different direction than most central banks out there? >> so, i am not expecting the pboc to change policy soon. i think they want to keep overall condition supportive and accommodative to ensure the recovery really continues to gather momentum. having said that, while they deal differential is in favor of the u.s., i am still bullish on the chinese yuan.

we are seeing inflows into the equity market and once we see some stabilization in foreign bond outflows in the trade surplus is still extremely strong in china, i think eventually we will start to see some positive movements in the chinese yuan. at the moment because the uninsured dollar deposit rates are higher, that is encouraging exporters to continue to keep most of their export proceeds in u.s. dollars, but if we see further downside to the u.s. dollar, which i believe we will start to see in the coming months now that the fed has paused i think that will convince the chinese exporters to convert increasingly more accumulated fx proceeds, another catalyst to push the yuan stronger, and that is why am recommending positioning long for the yuan. >> and you are bullish for other asian fx the could be the beneficiaries of the china coverage as well like the thai

baht? >> exactly. the thai baht stands out. they art reliant on tourism. we are starting to see chinese tours go to thailand. the thai tourism coverage is on track to meet and possibly exceed official forecasts and thailand's current account which had been in deficit because of the twin negative impacts of the pandemic and also soaring freight costs have completely turned around and thailand is now back to a current account surplus position so that puts the thai baht and a really good position and i'm expecting further appreciation for the thai baht. >> i like the question what is wrong with the won and are we think that depreciation trend going too far now? >> i believe so. it is the worst-performing asian currency this year.

this is despite the dollar being on the soft side and also overall i just get the feeling that investors are very, very negative on the korean won, partly because of recession fears in korea. korea has managed to avoid a technical recession and q1 gdp has posted positive growth. at the end of the day, the currency is the way down -- weighed down because korea runs a deficit but i believe that would turn around in the coming months. we have seen commodity prices coming off sharply, particularly oil, leading to a big reduction in south korea's imports. we have noticed a promising trend, while exports have been weak, semiconductor exports for two weeks in a row have started to pick up from so perhaps we have seen the bottom

for the semiconductor cycle, and if that trend picks up, then korea will be in a position to start returning to an overall goods trade surplus and historically, once that happens, that tends to see the korean won rally. >> always great to chat with you. the head of asia research at anz. let's look at commodities in particular, this chaotic selloff when it comes to crude markets really pricing in these fears of a global recession. >> yes. absolutely right. you get a 7% drop in wti at the open, overshadowed by the 60% drop, but still notable because even if we are seeing those losses pared down around 2%, yes , a reflection of recession fears in the market and this plan by opec-plus to regain control of pricing does not appear to be working yet. when you look at this chart here

, the moves in wti over the year were up 17% at this stage come about when you look at those losses with the flow on effective this is a lot of investors are simply choosing to stay on the sidelines. this chart takes a look at wti implied volatility that has spiked to the highest level in a month. yes, you need a degree of price swings so traders can make profits but still, many are staying out of the market completely now because of that risk that they could be completely burned. brent, when you look at open interests, that is at its lowest level since early march. we have seen a lot of markets closed this week, but certainly a contract we are watching, brent crude online at the top of the next hour. >> let's get you to vonnie quinn for first word headlines. vonnie: thank you. pack west tumbling after bloomberg reported the lender is waiting strategic options including a sale.

sources tell us the bank has been considering a breakup. pack west said last month that deposits said stabilize after withdrawals in march for stick to disrupt liquidity. president joe biden has picked philip jefferson for a promotion to vice chair of the fed. biden also nominate an economist to an open board position. the selections could be announced as soon as friday. if confirmed by the senate, he would be the central banks latina policymaker in its 109 year history. morgan stanley facing a lawsuit from an external recruiter who claims it is terminated against him because he is black. anthony fletcher's says the bank deprived him of commission and paid hims less and said job candidates were required to accept lesser roles than those they previously held. morgan stanley says the suit has no merit and is based on a fee dispute. saudi arabia is reportedly trying to offer leonel messi a

$400 million contract to move to the saudi arabian beak. he is currently playing for psg, but was suspended this week for traveling to saudi arabia without permission. the fine exceeds the one cristiano ronaldo received. global news powered by more than 2700 journalists and unless and more than 120 countries. i am vonnie quinn. this is bloomberg. >> franklin templeton says the u.s. banking system has been stunned by the pace of rate hikes. our interview with jenny johnson is next. this is bloomberg. ♪

>> we are watching fx.

we had a bearish set up when it comes how wall street was approaching dollar weakness in the mood from the fed, expectations of a pause seeing further downside, debt ceiling standoff, recession scenarios are the perils we are facing when it comes to dollar volatility as well. watching the other currencies, the hong kong dollar in focus as we had that defense of the currency peg, buying hong kong dollars in raising that base rate, as we see post every fed decision in lockstep with the fed tightening as it hits if that final move to 5.5% from 5.25%, to of course protect the dollar peg to the greenback. the other pair were watching, not just begin-dollar, this haven demand continuing, but watching the moves in australian -yen, wiping out gains from

those decisions. that is trading as a macro hedge. shery: we are getting the statement from the bank of korea reacting to the fed rate decision sink they are closely monitoring markets as a volatility could increase. the gap between the fed stamps and market expectation continues according to the bok. earlier we were talking about how we have seen that incredible weakness in the korean won, while we are seeing decelerating inflation, both with the case for rate cuts are watching that space closely. and south korea, samsung could be facing its first-ever labor strike is the company and trade unions remain deadlocked over wages. what is happening? >> sure.

on tuesday, the union and management had a conversation, pretty long conversation about the salary hike but they failed to reach an agreement, so that union will vote on whether to go on a strike. if they decide to do so, it will be the first ever for a samsung union to do so since it was established in the 1960's, so basically, several representatives of employees and some management had some talks on the salary hikes, and they basically agreed on a 4.1% hike this year, but the unions said actually management needs to talk to them, not just to a few representatives of employees, said the union is basically demand 6%, including bonuses.

haidi: it's not just a matter of salary raises. what else are they asking for? >> like i said, the union say that management needs to talk to them, not just talking to representatives of the employees. so, what the management company is trying to do is ignore the union and going back to their old tradition of so-called union-free tradition. they say samsung should not do that because -- he actually apologized for not having a paper union at the time. he said he will make sure the company is not -- bloombergradio.com haidi: -- joining us out of seoul, korea with these union issues and

samsung. tune into bloomberg radio to hear more from the newsmakers and get in-depth analysis from the daybreak team broadcasting live in our studios in hong kong and you can let us on the radio app plus or bloomberg.com. plenty more ahead. this is bloomberg. ♪ what will you do? will you make something better? create something new? our dell technologies advisors can provide you with the tools and expertise you need to bring out the innovator in you.

haidi: a quick check of the business flash headlines. the hsbc chairman held discussions with key shareholders in recent weeks, as it pushes back against calls to restructure from its biggest investor. it has been urging the bank to split its operations. several funds have pledged to back hsbc. tsmc and talks with partners to spend $11 billion to build a chip fabrication plant in germany. sources say the plant will include state subsidies. the eu wants to double its share of global semiconductor production by 2030. estee lauder shares fell following a down beat forecast, expecting sales to slide as much is 12% for the fiscal year ending in june, cutting its forecast for the third time in six months.

the ceo said the slower than expected return to travel shopping in asia is causing significantly greater headwinds than expected. pwc has told at 65,000 employed to expect bonuses and raises this year, while also asking them to pare back remote work. they want 50% of staff to return to working with colleagues. it moved to a hybrid work schedule, but said many teams are falling short of guidelines. shery: look at the markets now. we are seeing u.s. futures continue to be under pressure down .4% as we continue to see regional lenders in the u.s. reeling from that potential contagion with pac west bank, waving -- weighing strategic options including a sale, and after the s&p 500 wiped out again that almost 1% in the

session to finish near record lows, chairman for their own powell signaling a pause from the federal reserve, but not necessarily a pivot and rate cuts, yet. kiwi stocks down .2%. we saw the kiwi dollar yields also rising in the previous session with first quarter unemployment data beating estimates, perhaps signaling the rbnz will deal with wage inflation and cement a hike. we saw what happened with the rba having to resume those hikes. we had australian stocks under pressure. futures at the moment pointing to the downside. haidi: we have been urging what the rates markets have been saying in terms of how they feel about the projections coming from fed chair jay powell and the fomc. there is a discrepancy, a gap

between expectations and pricing in fears of a u.s. recession or recessionary light conditions when you look at rates markets, but also increasing the commodity markets and crude markets. we are seeing bond traders seeing that surge and treasuries , led by intermediate and shorter-dated securities and were watching the action on the shorter end when it comes to australian and new zealand bonds. as you mentioned, this puts the rba into an interesting place about whether we see a pause. we talked about that window for hikes potentially closing. we are still waiting on the boe and ecb this week. shery: these are the stocks we will be watching when trade opens in korea shortly. chips and focus. the u.s. has given samsung and and sk hynix a one-way -- when

your waiver from export controls. kakao consolidated missing estimates. fortescue looking to buy copper and lithium lines in south america as part of its transition efforts. national australia bank profit fell short of analysts estimates. haidi: yeah, despite the first have been your record, right? we will look at the nuances when it comes to those numbers. we will ask ross mcewen about the results in the outlook, coming up. also, we will be speaking with shane elliott the ceo of anz. ♪ emerson automation software helps breakthrough medicines get to market at warp speed. go human go. go boldly. emerson.

shery: this is "bloomberg

daybreak: asia." we are continuing to market opens in australia and korea. for the day, we had another small rate hike basis points and potential pause signals but not necessarily signals for a pivot coming anytime soon. haidi: it remains to be seen, it does the extent of the banking stresses muddy the waters when it comes to the outlook for the fed and the broader economy? we are also awaiting ecb and boe into the market open. annabelle: a lot of central-bank action over these couple of days, that we have the opens of korea and australia, japan still shut for a public holiday, so no trading either for cash treasuries. a couple of stories focusing on today, the market reaction to the fed coming through, 25 basis point hike and possibly a pause, but jay powell during cold water

on expectations of a cut anytime soon, so that has dampened the enthusiasm for equity traders. so waiting to see live pricing for korea, recapping headlines of that cross after a meeting between finance minister and bok. essentially saying the gap between the fed's dance and market expectations continues and that they will be closely on a drain for further volatility, because that could be spiking. keeping an eye on the korean won, slightly stronger. it has been the worst performer in the asian fx space so far, something that could be helping it would be the numbers around the trade deficit. we saw foreign reserves growing over the course of april 2 $430 billion, up $600 million from the previous month. you can see the kospi coming online, .3 of 1% to the downside at the start of trade. let's change on to what we are

seeing in austria, because the other big story comes down to pac west down as much 60% in overnight trading saying it will be weighing strategic options. we are keeping an eye on the financial index closely. nab, one of the key stocks we are focusing on given that it had earnings out earlier, falling short of analyst's expectations. we have a meeting with the group ceo and keeping an eye on what is happening with brent crude. not quite the same magnitude of losses we saw for wti dropping more than 7%, but still a lot of concerns about the outlook for a recession feeding through what we are seeing in the financial sector. haidi: let's get more when it comes to the latest u.s. regional bank struggles to stay afloat. bloomberg has learned pacwest bancorp is weighing a range of strategic options, including a sale. su keenan joins us now. it was a report causing pac west

shares to plunge after hours taking regional banks with it. >> we talk about how a drop of share prices is not reflective of the bank's balance sheet, what is important is a bank's balance sheet depends upon the confidence of investors, and the confidence appears to be walking out the door. pacwest bancorp down as much as 60%, it has come off the low of the day or after hours trade, but check out what happened among other banks. they are all being drawn done with it, which shows there is a reignition on the concern that the regional bank crisis is not yet over. very important to point out pac west, which has lost 85% of its value since the beginning of march recently reported deposits had stabilized after the withdraws in march, and now this. bloomberg reporting the bank is

weighing a range of strategic options, putting a sale of two people close to the matter you say that the bank has been working with a financial advisor for some time now and also considering a breakup or a capital raise, and while it is open to a sale, the company has not yet started a formal auction process, and that is because the sources say an all right sale is being entered by the fact that there are not many potential buyers interested in the entire bank, which includes a community lender and other commercial and consumer lending businesses. the sources say a potential buyer would also have to potentially broke a big loss, marking down some of its loans. that report sending stocks lower in extended trade. it is a dark picture, big losses across the board for many regional banks. shery: with all of the

safeguards we thought we built in the banking sector after the global financial crisis, how did we get here? su: one of the things that happened when we saw the three california banks and one new york all fail or be bought up by rescuers, that turmoil caused a run on deposits for so many banks, and even though pac west said they had recently seen an inflow in early april, they have many of the same customers as silicon valley bank, so therefore many of the same problems. pac west led by ceo paul taylor has tried multiple times to try and reassure investors. it is stable with the bank saying on march 10 it'd taken steps to bolster itself. on march 22, deposited stabilized and in its recent earnings call that had seen a couple of depositors come back, but it put aside efforts to raise capital at the time saying it was not prudent under current

market conditions. it is an ugly story, and now there is concern about next steps and what this means for the regional banking sentiment going forward. back to you. shery: su keenan with the latest on the banking turmoil in u.s.. credit conditions, one of the data pieces the fed will be watching as they assess incoming information after they hiked their key rate again but signaled it could lead to a pause in the rate hikes. kathleen hays is here with the latest. a pause, but not a pivot. >> not even a for sure pause, but definitely the door wide open, and that is what is important. it is hard and jay powell said it is hard to assess how much credit conditions will tighten and how that will immediately affect the economy. as he and other fed officials

repeat this is a resilient ranking system and they're watching, they seem to be confident may be the worst is behind. there is a big focus on what are we doing next with interest rates, and it is clear they did 25 basis points today, it is also important the fomc took out wording on the effect of additional policy firming may be more appropriate. jay powell said yes, it is possible we will drop that. but he is also concerned the economy as not weekend that much -- weakened that much and is concerned policy is not as restrictive. >> it will be an ongoing assessment. we will need data to accumulate on that. not an assessment that means we think we have reached that point, and it is not possible to say that with confidence now. >> he completely ruled out rate cuts right now.

it is interesting markets are pressing in four rate cuts this year. we just heard from a professor of economics at the university of maryland who is known for her fed watching, and she says, no, the issues that are affecting the banks now, ms. much of assets and liabilities, pulling bonds to maturity versus cash available bonds, all of these things are not something that lower rates will solve the way that they did when it was a credit problem back in the great financial crisis, and i think that is a common view. what the fed will respond to may be is not how many problems remain in the banking system for small and medium-sized banks. maybe it is more of a question of how much tightening of credit conditions, lending of ba to businesses, what that will due to the economy, and that is what the fed will be watching closely in addition to inflation and the tight labor market. haidi: so many things to watch.

kathleen hays there. let's bring in our next guest who does expect to see a u.s. recession and disfavoring asian equities over the u.s. and europe. steve is a ceo at standard charter wealth management. let's start off with circumstances confounding the fed and the u.s. at the moment. take a look at rates pricing, crude pricing, markets are expecting a worse economic conditions than the fed is. does the banking term -- turmoil worsen the outlook? >> yes, even before we start regional banks coming under stress a month or two ago, we were arguing we will likely see a recession in the coming 12 months, and this comes down to indicators whether it is consumer confidence, business confidence, and the shape of the yield curve, which are all pointing toward a heightened risk of a recession to going forward. now that we have got regional

banks under significant stress and we seem to be going from one organization to another, until the authorities do something to stop the domino effect, i think continue to see that. that is obviously a concern from a credit lending perspective within the economy, and it just exacerbates the challenges already faced. we are not quite as aggressive on fed rate hikes this year. we are looking for two basis price cuts through the end of the year. the fed has already tightened too much, and that will lead to a poor economic outcome later this year. haidi: and it looks like u.s. exceptionalism when it comes to u.s. equities may have come to a halt as well. what are you backing in terms of asia and potentially emerging markets as preferential to develop markets at this point? >> so, obviously to develop

markets, the u.s. looks to be the epicenter of all of the challenges being faced by the global economy. at the reopening of the chinese economy is a big positive from of global growth perspective, as well as the domestic economy, but we also think that while a lot of people focus on the dollar saying risk off is good for the dollar, the epicenter is the u.s., that is not necessarily the case. if you look at the growth differentials between developed world and asia and the dollar outlook, it paints a picture for asian equity outperformance going forward. not just equity, but the bond space as well. that is where we are taking more risk. we have a tilt toward asia within that. shery: given what you were saying about the environment right now, especially that you would expect rate cuts a later this year, al barash are investors positions, and is

there a risk for a melt up trade at the moment? >> i think that is what we have been seeing. this would be the most predictive recession certainly in my career. economist by training are typically bad at predicting recessions, right? so this has been very foretold if we do see the recession, a lot of people have been focused on it, and that has been reflected in positioning and risk assets. we have seen since october of last year equities do pretty well, and that has continued this year. the consensus has been we are going to see a recession that is bad for risk assets. we have seen that in positioning data particularly as of late. in the short term, you have got those risks of sale in may. our the last two days of trading assigned that will come back or will it be positioning that wins

out? from our side, in the next few weeks positioning may we not -- may win out, but we have been favoring that melt up. shery: china's reopening and how that will help equity markets in asia, where are we at that point? there are still some people who are cautious about chinese equities and going into the chinese market, because policy signals have not necessarily been clear. we are coming back from golden week holidays. are we going to see fireworks? >> i think obviously we saw at the end of last year that people were talking about china being univestable. from our perspective we do not believe that is the case. policy directives have generally been supportive. there has been toing and froing that has unsettled investors.

from a macro's -- macro perspective it has been very supportive. policy easing measures we have seen should help the economy really do pretty well this year, 5.5% growth, but also on the regulatory side, that is where investors are probably getting more nervous, saying we saw in the education sector for instance, are we going to see her like that? it has made it more challenging to analyze by the geopolitical landscape. there will be a greater focus on domestic applicants. we believe that will be a positive for the stock market development over time, but obviously the greater clarity and consistency we have on the regulatory side, the better it will be for the stock market. haidi: always great to chat with you, steve price. let's get you a look at early

movers, and we will start with the asian lenders. annabelle: we are 15 minutes down to the session for sydney and seoul, and it has stocks dragging down the broader benchmark. when you look at the names that we have in austria and korea, is after pac west done more than 50% after hours after saying it will be weighing strategic options including a breakup, capital raising or a sale. other regional lenders weakened, but nab is a particular software focusing on. this is the best first year profit -- have your profit on record but still short of the average analysts' estimate. just shy of what analysts had been expecting there. we will have an exclusive interview the group ceo in the hours ahead, but let's change up

now because another group of stocks we are focusing in on is the energy sector. brent crude dropping at the open. wti down as much as 7% at the start of trade, now up around the 2% mark, but we are seeing these energy starts -- stocks likewise moving lower. shery: let's get over to vonnie quinn. vonnie: ukrainian president is denied that his government used a drone to attack vladimir putin's residence in the online. zelenskyy says ukraine only fights in its territory, adding moscow must be trying to distract from its battlefield failures. unverified video that shows what russia is calling an attempt on the life of the president, which it blames on ukraine. moscow says putin was not at the agreement at the time. the fcc will require big headphones to share information on major investment losses. they will have 72 hours or as

soon as possible the regulator is calling trader events. it appears such information will not be of the -- immediately shared the investing but. until now funds only had to report positions in quarterly earnings filings. china as reported a surge in travel and spending over the labor day holidays. domestic trips over the five day. vanke 70% from last year to 274 million. torres and spending also exceeded pre-pandemic levels rising nearly 129%. economists predict the chinese economy will expand by 5.6% this year. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. haidi: we are joined by a former senior manager at the fed's open market desk for more analysis on the central bank's signals on rates. coming up we take a look to the ecb's upcoming rate call.

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haidi: let's look at how futures in europe are putting up at the moment, this as we --

shery: we are looking at asian markets before we turn to european futures because the cause because down, the asx 200 are down and kiwi stocks are down, not surprising given the risk off sentiment we have felt in the u.s. trading session, and not surprising, financials some of the biggest losers alongside energy as well. haidi: yeah, let's take a look at european stocks given that we are setting up for post-fed reaction and pre-ecb reaction. we have not releasing the moves of the central banks and expectations being the biggest drivers when it comes to european as a performance, and more hawkish ecb stance pushing european rates higher and the dovish fed pushing them the word. futures looking muted at the moment even as we saw european stocks rebounding from the steepest decline we saw in five weeks, investors trying to

assess a slate of corporate earnings as well as looking at the fed policy decision. dax futures down by half of 1%. there is further bearishness when it comes to the greenback after the fed announcement. we will be watching when it comes to energy stocks as well, it will continue the side given oil prices continue to fall apart. shery: let's delve into what we can expect from the ecb widely expected to hike its key rate. the big question, whether it downshifts to 25 basis points or sticks with a more aggressive move. kathleen hays is back with more of this, and we are keeping you really busy on so many policy decisions. in want to expecting out of your? kathleen: the european central bank is a big one, and they are expected to hike their key rate. they were late to the rate hiking game a couple of years ago. they did not move to zero off of

a negative rate for a long time, but they have done a lot to catch up. they have that key rate of 3%. expected to raise it to 3.25%. the hawks have not been making as much noise, i have not been squawking as loudly. eurozone core inflation went down 10%. the other thing watch very closely on tuesday was the quarterly bank lending survey from the european central bank itself, and it does show bank lending is starting to contract. if you have inflation behaving better, bank lending looking like it is starting to cool off a bit, and of course this is something to federal reserve will be watching closely in the weeks to come as it heads to his june meeting. they european central bank, the hawks had the lead for a couple of meetings. now it looks like a move to .25%

increase. some optimism said by the head of the italian central bank in the last week, where he is saying so far there is no wage price spiral, there are not a lot of agents acting irresponsibly, and that is a good move. it looks like they are going to be hawkish and the extent that they are still hiking rates, but even though the inflation rate is improving, it is still very high, that they are going to go ahead with a hike. when we look at the reserve bank of australia, everyone is convinced they were going to stop raising rates. now it has come down a little bit. it was not enough for phil lowe, and presumably it will not be enough for christine lagarde and her team to stop hiking rates, but they can take their time. which means in june probably another 25 basis point i, and some people say depending upon

the data may be another one after that, and important meeting and one that does look quite suspenseful. shery: really, it is getting exciting, because even overnight we had a malaysia hiking and surprising to the upside after australia, so we are watching this one closely with kathleen hays. so many stories to keep track of this morning, and we have much more coming up, so go to today's edition of daybreak. bloomberg subscribers go to dayb, also available in the blue more -- bloomberg anywhere app. customize your settings so you only get news on the assets you care about. this is bloomberg. ♪ is being diagnosed with cancer. >> [ voice breaking ] being a parent of a child who is diagnosed with cancer [sniffles] is a parent's worst nightmare.

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demand for mobile devices will remain sluggish. third quarter revenue may reach up to $8.9 billion, following -- all in below estimates. weak demand has set up to a buildup in handset chips, which is qualcomm's main source of revenue. nab -- cash profit was just under $4 billion aussie. shares have underperformed in the past year, falling over 10% and continuing to fall today. we will be speaking exclusively to nab ceo at

shery: we are getting pmi numbers out of singapore, the global singapore pmi the month of april coming in at 55.3,

which is stronger than the previous month when it came in it 52.6. we are firmly in expansion territory. in hong kong, you might, 52.4 actually easing from the previous month. vietnam numbers for manufacturing you might in contraction territory, 46 point seven and actually easing from the previous month, so we are seeing manufacturing numbers, factory numbers out of asia still weak at the moment, singapore leads in firmly expansionary territory at 55.3. let's turn to belle. annabelle: the big question with those pmi readings coming through is how much of a lift to economies in north and south east asia from the reopening story in china? so far the signals have been uneven.

strong spending figures over the golden week holiday, but concerns because we had official manufacturing gauge coming in and showing that to be into contraction territory. and terms of what we can expect at the open, because mainland stocks coming back online, it is not looking too good with the outlook given what we saw in the hong kong session, 81 20% decline. broadly in the session to focus is very much coming down to two different stories. per se, what is happening in the financial index, bank stocks leading losses so far given pac west, the sum after hours and concern stresses in the financial sector could squeeze lending and in turn trigger a recession, and the expectation that we could see cuts from the fed later this year, that is something bond traders are still pushing back on, powell saying it will not happen. we are seeing a retreat ending of space, currencies looking better, particularly korean won

sending out today, and recession fears coming back into commodity link currencies. aussie dollar weaker, and wti, and crude, iron ore all under pressure, so there is concern around the worsening macro backdrop. shery: let's talk about the worsening backdrop, because fed jay powell in did this could be the last rate increase, but stopped short of declaring victory. this is of course in the battle against rapid price increases but also the worsening economic backdrop. with us now is a director in economic management at columbia university. she previously worked at the u.s. treasury's office for financial research and at the new york fed as well. always great to have you with us. >> thank you. shery: after we got the fed decision we also heard about the latest regional lender to really be suffering from fear of contagion.

what will it take for the fed to be able to not only pause actually cut rates at some point? >> so, you know, how contagious can this be? it can be contagious. there is no question about it. it already has been. i have to say that the three banks that have failed so far were kind of outliers even compared to pac west. in terms of their clientele, concentration, and how many uninsured deposits, all of those things, but the problem is no matter what is this going to be a very tough time for mid and small sized banks? absolutely, because depositors not to mention the equity markets are going to be questioning them left, right, and center, so will be banks losing money on long-term securities? absolutely. will there be consolidation?

that is almost for sure. the question of whether that will be orderly or more disorderly, and the more disorderly it will be, the more contagious it is, and that is the point it starts to look much more like systemic risk. more than it has so far, and you have a real credit financial stability problem. the outlook for the macroeconomy is much worse. shery: is it because of the fact that the banks will stop lending as much? they lend to small and medium-size businesses and make up a big part of the u.s. economy in terms of dynamics and drivers. is that going to be the slow down, so rate hikes will upset that or is there some set in which you have to cut rates? you just had a guest saying this is not to thousand eight, this is not the great financial crisis and rate hikes will not have these banks. what do you see? >> i disagree about the credit problem. the nonfinancial business sector

has blundered up in many countries. real estate is highly leveraged, so i actually think there is a credit problem. whenever rates go up a lot, it is not to thousand 7, 2008, i completely agree with that. it is much closer to the recessions and dynamics of the 1970's and late 1980's, and there is no question that is very painful for banking institutions and other types of financial institutions are too like activities. the question is how --? kathleen: bill dudley is critical of the fed, former president of the new york fed where you used to work too. >> i think the fed broadly missed the fact that the interest rate risk they created by the very tight monetary policy, that they created by doing quantitative easing, that

they created part of this mess in the banking system that arose when they add to take monetary policy by 5% in over one year. kathleen: does bill dudley have a point? >> the fact that they had to go so quickly after a 10 year, 15 year period of basically incredibly low stable interest rates was small increases and decreases at a time, where the banking industry are prepared? absolutely. however, let me add to what bill said is i think this was, and the fed said so itself, a massive failure of bank supervision. frankly, at least particularly for the three banks, most particularly where we have the most information for svb. they flunked banking 101. liquidity risk management was terrible, i they essentially were not forced to fix it.

haidi: does that mean there is a credibility issue in terms of the failures of not just regulation but also supervision that we should take with a grain of salt when it comes to the forecasting that is made by central bankers about what lies ahead when it comes to the banking turmoil? >> i think so, and to be frank i thought chair powell intimated that pretty clearly. he said there is a massive amount of uncertainty about how much more credit tightening is needed not just to higher rates to the banking turmoil, and if it is much worse, then it is not just a problem that can be fixed with lender's last resort, etc. it will affect the macroeconomy, so it will end up having to affect monetary policy. kathleen: on monetary policy, is

the fed done hiking rates? do you think they will have to keep going? >> i think it is incredibly dependent on the credit market turmoil. if credit markets and liquid and financial markets really disappears, the outlook for the macroeconomy is completely different from what they have right now. inflation is different, and of course there monetary policy will have to be different. if they can get through this with tighter credit conditions so it slows down the economy, not that financing baking will not be messy, it will be messy, but that is a story of the 80's and 90's bluntly in terms of what happened when they raise rates. then if they are done, that is very dependent on the behavior of the labor market. those are two really different scenarios, i realize, and i think one of the reasons that they are being so cautious is

that they know which of those two things will be true. haidi: it is great to have you with us, patricia musser -- mosser. also kathleen hays there. let's get you over to vonnie quinn. vonnie: back west has tumbled impose market trading after bloomberg reported u.s. regional lenders weighing a range of strategic options including a sale. sources tell us the bank has been considering a breakup or capital raise. that west said last month deposits has stabilized after a rush of withdrawals in march forced it to shore up liquidity. goldman sachs is said to be racing to settle one of wall street's biggest gender discrimination cases. a settlement could have avoided the spotlight. a source has the company as discussed figures that may reach 200 million dollars. the suit accuses wall street of discriminating against pay, allegations has denied.

morgan stanley is facing a suit from a recruiter who said it does permit against her because he is black. anthony says the company deprived him of commissions and played him less than non-black candidates. morgan stanley says the suit has no merit and is based on a fee dispute. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. shery: investors investors in china prepared to jump back into the fray after a five day break. we will have more of what to watch ahead. this is bloomberg. ♪

haidi: we are counting down to the reopening of markets in mainland china coming back from five days off for the labor day holiday. let's get more on what investors will be watching and should be expecting. our chief china markets correspondent joins us in hong kong and our north asian correspondent stephen engle. sophia, what are we likely to see when trading begins given the downside in hong kong in the past couple of sessions? >> it is looking like a pretty muted open onshore.

what has happened in the past five days, not just globally sentiment as weakened, we had the fed hike yesterday and turmoil in the banking center, but internet with the manufacturing report that showed a surprise contraction in april that was really negative to sentiment despite the good data when it comes to holiday travel and spending. we also had another property developer default. that shock the market. even though that is a small property developer when it comes to sales, it is the first one since october, the first publicly listed property developer to default according to liquidity pressures and a very important part of china's economy and also confidence. yes, we are seeing consumers spend more, but we are not seeing that translate into confidence in the market. hong kong's stock market was weaker yesterday, and we are running out of catalysts.

the politburo it said domestic demand was weak even though the momentum is producing. if the market rises today, i would be really surprised. shery: especially since we are seeing signs of increased pressure on foreign investors. restrictions on the access to some corporate data, what do we know about this? >> it is difficult getting accurate information out of china. if you are not in china, it is difficult already to be a china correspondent, a china analyst, asset manager and the like. you need to be in china to get the real pulse of what is happening there and get access to real-time data, unless of course you subscribe to a number of different information services. there are others. what we are hearing from sources is that these companies that provide information to a number

of chinese corporates, whether it is a stock holdings, affiliates, possible risk is use -- issues, information on hundreds of millions of companies and executives and the like. they pay for the service if they are outside of china, but we are hearing from sources they have been cut off from access since about last month. this is a bloomberg opinion columnist's comment who had a great comment on the bloomberg terminal. it is essentially what i am saying. locals probably can circumvent these new regulations. they can probably get a lot of this data, if you were outside of china because it is being cut off, national security risks, data security risks or what, it is much more difficult. in china there are great if not like markets for just about everything, including financial

data. there are other risks aside from not being in the know, and that is potentially espionage. the chinese government last month passed a new espionage law that essentially widens the parameters. other elements to be considered to be espionage, and that adds to an extra risk of foreigners doing business in china. even the american chamber of commerce president essentially saying our clients are spooked. who will be the next bain? other u.s. consultancies in china, according to local media in china, they have had authorities essentially visit them. a euphemism for being treated. there are added risks to foreigners doing business, which was always risky in the first place. haidi: now we are releasing a play out when it comes to the

weak recovery in foreign investment, right? there are a lot of scrutiny -- there is a lot of scrutiny from foreign firms already in china. >> on the face of things, this would to fight with the chinese leadership is saying, whether it is xi jinping or the new premier that china is open for business. we want to attract foreign investments, etc., but this is obviously adding a lot more hesitancy if you will about investment plans going into china, especially if there are potential espionage risks going forward. shery: in the fx space, china has been working hard to boost the use of the you want -- yuan internationally. at one the implications of that? >> i really interesting time. that push has always been there especially in the aftermath of

the global financial crisis, but it really russia's invasion of ukraine added urgency to that, and also fed tightening drawing attention to how much the global financial system is dependent on the dollar. what is interesting, if you will, the russian experiment in increasing the use of the yuan is looking to be successful for china, and increasing cross-border payment usage of the currency. china as really been pushing the usage of its own currency when it comes to commercial deals with countries like russia, because russia has no alternative. it has been shut out of the swiss payment system, but also brazil, france, and even countries and deals that have absolutely nothing to do with china, so this interesting development here. yes, when it comes to international cross-border payments, the u.s. dollar and euro still reigned supreme,

within china actually the currency has surpassed the u.s. dollar as the most use currency or cross-border payments. so really looking at the progress since 2019, it is stark how much of that is accelerated and really push of what is happened to russia being cut out from the global financial system has been adding to that. more countries looking at whether they need to diversify and whether it is important to have alternatives to the u.s. dollar if you are vulnerable to u.s. sanctions. we are seeing that push likely to accelerate that. the yuan is not a freely convertible currency and is unlikely to be so any soon. beijing is cautious when it comes to controlling the amount of capital that can flow out of the country, it even though it is facilitating the amount of capital that can come in, so

capital controls are very much still there and will remain so. the yuan is likely -- unlikely to be freely flooded. the question is is it a good store of value if you cannot converted as freely as the u.s. dollar, euro? that will be a hindrance to making it a real challenger to the u.s. dollar anytime soon. shery: sofia and stephen with the latest on china after the golden week holiday. we have breaking news according to the wall street journal, apollo global is nearing a deal to buy arconic. according to people speaking to the wall street journal, the deal is sent to value arconic at $30 per share or roughly $3 billion. arconic reports its results on thursday. this is the apollo group nearing

a deal to buy arconic, they are pittsburgh-based. they were separated from nl aluminum maker -- an alumina maker. the apollo led group could be nearing a deal to buy arconic for around $3 billion. be sure to tune into bloomberg radio to hear more from the newsmakers. broadcasting live from our studio in hong kong. listen in the app or on bloomberg radio.com. stay with us. ♪

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shery: here is a check of the latest business flash headlines. bloomberg has learned hsbc chairman mark tucker held discussions with key shareholders in recent weeks as it pushes back against calls from its biggest hit to restructure. mainland insurance has been urging the bank to spin off asian operations. a source has investors have pledged to back hsbc and friday's agm. the company is said to be in talks with partners to spend as much is 11 pagan dollars to build a chip fabrication plant germany. sources say the venture between tsmc and a technology company

will include pay subsidies. the eu wants to double insured of global semiconductor production by 2030. estee lauder shares fell the most on the record following a downbeat forecast area the company expects annual sales to slide as much as 12% for the fiscal year ending in june, cutting its forecast for the third time in six months. the ceo says slower than expected return to travel, shopping in asia is causing significantly greater headwinds than expected. haidi: some of the stocks ahead of the market opening and hong kong and china watching the likes of trouble players socks in china, the surge in domestic travel and spending over the labor day holiday. budweiser aipac first quarter reports beat analyst estimates. energy producers our focus as crude continues to tumble,

demand data adding to recession concerns. it is these global recession concerns when it comes to potential rate cuts were major central banks including the rba dominating the trading session today. we are seeing downside when it comes to australian shares, even the best first half profit on record, nab could not get the stock to be higher in a date we are expecting for the weakness and potential contagion in fact -- affect when it comes to u.s. banking terminal. pricing and terms of where it will be by the end of the year, looking like rate cuts. that is it for "bloomberg daybreak: asia." our markets coverage continues next. this is bloomberg. ♪ guests check in, then check out their phones - for financial insights from merrill.

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david: this is, uh, my kitchen table, and it is also my filing system. over much of the past three decades, i've been an investor.