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coming to you live from new york , sydney and >> hong kong. chuxing down to the major market opens. >> signs are giving the fed room to pause, but that that impasse remains a big concern for traders. stocks opened along with the dollar holding losses, and despite signs of easing price pressure. plus discussing a daunting mists of -- mix of risks in japan, including debt and financial instability. >> we are counting down to the open in sydney, seoul and tokyo, there is a lot for investors to consider, but front and center is the u.s. inflation report at the main takeaway is that we are below that 5% level just barely. the core inflation is so that 5.5 percent. in terms of what investors are saying, what the key takeaways is that it is too soon to say

that we are out of the woods at this point in time. so, some including td securities saying that we need for the reports out to say that inflation is truly decelerating, but traders are betting that the fog -- the fed will go on pause. we see bond yields retreating. with more original factors at play, including new zealand, makes messages coming through on the economy, but we are seeing prices taking high. home prices did retreat and the japanese yen is elevated at levels somewhat just below or at that 134 mark. it is something where if you look at the equities in the trade session, given that so far we are seeing a lot of gains coming through fort near 38 high earnings, but we are bracing for weakness. we have kiwi stocks online to the downside and china as well. and we also have inflation area -- dated do in the chicago

nikkei, but that downturn in pressures is intact on the mainland. >> a different pressure from what we are seeing in the u.s. where inflation remains elevated. take a look at how futures are looking at the moment, not doing much early in the asian session this afternoon, the s&p 500 saw modest gains but we had the nasdaq fishing at the highest since last year. yields were down, stick talks rally -- tech stocks rally, two year yield falling below 4% and those inflation numbers despite the fact that they remained elevated, as just mentioned, the year on year growth number was 5% -- below 5% for the first time in two years. that leads to speculation that we might end up seeing rate cuts from the federal reserve after all of this. take a look at oil prices, gaining ground in the asian session after they felt in the new york session. we had a buildup in u.s. stockpiles there and -- in that pressured market.

pressure on disney after sales and profit came in line with expectations, turn the page and you can see what does he is doing. they you go, it's down 5% there. -- there you go, it is down 5% there. investors perhaps disappointed that disney plus the lost subscribers for second quarter despite the fact other lines -- numbers were in estimate ranges. >> let's go back to key inflation drivers. in major driver for these markets, it seems like the u.s. started proceeding in april, and traders to see inflation risks fading. let's bring out our treasure -- treasury advisor. we have seen investors a few steps ahead of the fed. it already being vindicated -- are they being vindicated? >> you will see a lot of fed speakers booking bash -- pushing

back against what the market is saying. you have fed speakers for the next couple of weeks and they are not going to be happy that the derivative market is pricing for rate cuts before the end of the year. that just does not coincide with what you are seeing. inflation numbers are still too high. the readings yesterday will be encouraging in that there is no worsening of the situation but numbers are up 5% for inflation, way above target. they got themselves into a difficult position when they described inflation as being transitory before. they will not want to take any chances that they make a mistake again. they will want to hold short-term interest rates at a high-level as long as possible. unless there is some outside event which causes a sudden recession in the united states or a crisis of confidence in the financial sector, the fed will want to make sure that they beat inflation and they get it way down towards that 2% target. the idea of cutting rates before the end of the year is just a nonstarter.

the fed will want to push back and make sure that the market starts to reprice for something nearer to a mutual rates level. you will probably see fed speakers taking the opportunity to tell the market that you have got it wrong, we are not cutting rates for a long time yet. >> is the repricing in japan because of that pressure that we saw earlier in the bond market easing? >> what you are seeing is a normalization in that yield curve. prior to the new chief, you would see bumps in the curve, where you had yields higher, there was a lot of dislocation and speculation going on from traders that the yield curve control would be removed and that the whole curve could shift higher. that has kind of stabilized. early, what has happened is that people have been pushed out of the market. the bank of japan aggressively bought bonds and overall

transactions have collapsed. it is a very quite jgb market, there is no way a normal -- in no way a normal bond market. they used to be very actively traded, now it is quite. that's not a sign of success. you can't describe the bond market as being a well-functioning government bond market. all that has really happened is that speculators have been squeezed out for now. but they will start to come back if they get hints that the bank of japan is moving towards a change of policy, all of those people think yields will rise and come back. for the moment you have a standoff between the bank of japan and aggressive traders who think nothing will happen in the near term and probably for the bank -- from their point of view that -- they will be relieved to not be under immediate pressure. but the pressure will come back as soon as the data justifies the change. >> when it comes to market expectations and where the bank is that with the data, the gap seems even wider when it comes

to the bank of england. it's hard to imagine a positive and coming after this meeting even where inflation is at -- given where inflation is at. >> not just inflation. there were wage increases averaging 10% in the united kingdom. even that is way, way too high in terms of hoping to get inflation down. the bank of england will be well aware that wage pressures are still very strong and the ok, it is a tight labor market. that is not the kind of situation where the bank of england can suddenly say we can relax on trying to beat these inflation numbers and bring down interest rates. almost certainly, they will go ahead with a rate hike and they may even sound hawkish because if you look at it recently, a whole string of data has been beating, coming about forecast. it suggests that the economy is not going into recession and it is doing a lot better than people forecasted at the beginning of the year, partly why the pound is strong as well.

bank of england will want to dampen down any ideas that they are about to change policy and they may even leave the door will open for further rate hikes later in the air. it should be a lively meeting, and quite a lot of volatility once a decision is out. >> market cranfield there with all of the economic challenges facing the world right now. some of them, which will be really discussed in japan this week. central bank governors from the world's wealthiest nations gather in japan to discuss a growing list of issues. stephen engle joins us now. were stopping the agenda now -- what is topping the agenda now? >> mark laid out some of the issues the banks are facing, including the boe, and those central bankers are here in niigata in honshu ahead of these g7 meetings.

the financial ministers and central banks meeting and then leaders meeting at the end of the week in hiroshima. at the global economy -- and the global economy at the debt ceiling could overshadow this. with inflation still sticky in europe, some of these leaders will be addressing those concerns, christine lagarde will be here. she has said that the tightening there at the ecb is not over, even as the fed is likely on pause right now. even the rba resumed tightening after its pause, with the boe do the same thing as well? there are a lot of issues of sticky inflation even though the cpi in the u.s. didn't come down in april 2 4.9% year-over-year. but the financial system resiliency, given the collapse of the banks including svp will be front and center for many people, including janet yellen who will address the press later

this afternoon, when this g7 finance ministers and central bank meeting begins this afternoon at 2, 30 local time. she will likely give a press conference geithner to reassure fellow g7 numbers and economies. -- she will likely reassure fellow g7 members and economies. >> other financial ministers have been invited from non-seven countries isn't that true? >> it's a significant given that there are issues of friend shoring, about supply chain to the etsy, and china is not here, they are not a member of the g7, -- resiliency, and china is not here. they're not a member of the g7. you have member nations gathering here. they are also being represented -- members of the global south are being represented such as

brazil and singapore and south korea, so there is better relations of course across the sea of japan between japan and south korea. but inviting brazil, indonesia and india, they are trying to get a coalition, if you will, beyond just g7 in light of those supply chain issues with china, and it does not help the situation for china in g7 size when they are essentially giving support to moscow. -- in the eyes of the g7 when they are giving support to moscow. there is going to be efforts here behind the scenes to get india and brazil, maybe a more tricky situation, following the visit to asian, but to get those nations on board at the g7 meeting. >> stephen engle there. coming up on friday, an

exclusive interview with the u.s. treasury secretary janet yellen from the g7 finance ministers meeting in japan. that is at 3:30 p.m. if you are watching in hong kong. let's get to vonnie quinn with the headlines. >> president but it says it that default would drag the u.s. into recession and have devastating global repercussions. he is looking to wrap up pressure on republicans for a deal to raise the debt ceiling. his marks come a day after first talks made little headway. -- remarks, day after talks made little headway. >> the whole world is in trouble if we default. this is a manufactured crisis. there's no question about our ability to pay our bills. america has the strongest economy and we should be cutting spending and lowering the deficit without a crisis. in a responsible way. >> china has appointed a little-known official as its top financial regulator. he served as the vice governor of sichuan province and will now

receive a massive financial sector. some market watchers are expecting -- were expecting the role to go to someone with more seniority. >> icon plunged after disclosing a federal inquiry. attorneys are seeking for -- information on securities offerings and dividends among materials. the firm hit back against a report from hindenburg research which claimed the company had inflated evaluations for some assets. 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. >> still ahead, the center for strategic and international studies joins us to analyze the latest crackdown on foreign companies in beijing, more on that move later at this hour. first, cba gives us their currency outlook after the dollar slips to a three week low on u.s. inflation data. this is bloomberg.

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>> cpi is cooling. >> a sign of a little bit of disinflation. >> there making progress. >> not to declare victory number. >> this is still going to keep the fed focused on what they

need to do. >> they will take this as encouragement. >> they could justify a pause. i don't know how much of a different story five basis points makes at this point. >> that will keep rates at this level or a little bit higher. >> giving rates firm throughout the course of the year. >> until their confident inflation will get back to 2%. >> it's hard to think that they see anything here that will tell them they are on the path. >> this is just another drop in the ocean. >> some of our guests reacting to the api rating. the dollar lost after a three week low on expectations that the fed will pause its rate cycle. let's bring in joseph capurso, let's -- always was your to have you with us. we have the uncertainty over the debt ceiling discussion, so how

does that bode for the greenback? >> i think in the near term, the u.s. dollar is likely to get better. if the dollar could not stabilize, that is showing you that market participations want to tank the dollar down in the near term at least until the debt ceiling is down -- result. >> what will be more supported with dollar weakness in the coming weeks? >> i think dollar-yen is probably the one that has got more downside, partly because they again is such a haven currency, and also certainly because i think japan is slowly but surely getting ready to target policy for the first time in decades, that would be a watershed moment for financial markets. >> how long will that take,

because we saw that speculation earlier and that did not happen, and we are now stabilizing, right out the yen at the 134 level. -- now, the yen at that 134 level. >> i think they will be dealing with labor cash earnings for april, which comes out in three or four days before the june meeting. i think that is going to be the key data point in japan for this year. and the reason for that is the actual number is when you see the partial effects of the labor union business wage negotiations. their results are the strongest and 30 years, i think you see the data impact in the actual numbers. >> joseph, what are the drivers for the aussie dollar at the moment, obviously it will benefit from greenback weakness but is there a good story when

it comes to having -- how uneven the chinese recovery is? >> the chinese recovery has been very mixed and disappointing so far this year. there have been some signs over the weekend that perhaps the chinese authorities will start to respond to that, by allowing state owned enterprises to issue more bonds to increase investment and that investment, i think, could flow through into more demand metals, -- middle, and that could beat the turnaround in the aussie dollar. right now, the signs are pretty tentative. i want to see stronger evidence that they are picking up commodities out of china first. >> does that mean there is more downside when it comes to china dollars? >> i think that chinese can

probably -- chinese dollar can we get a bit further, and it's not that far away from the dollar china. i think the cpr -- cpi number will just reinforce the view that chinese domestic demand is still very shaky. but in australia we care much more about factory output and there will be some government policies for that from the chinese authorities. >> how much volatility are be setting up for in the second half of the year, because it seems to be -- there seems to be a dawning realization that up to this point that tightening cycle for most of these economies has been easy and consistent, do you expect a bit more uncertainty and market turmoil in this part of where we get to the cycle?

-- in the cycle. >> we are at the part when we just had to tighten, and we get to the uncertainty, where central banks, have they tightened enough, or too much, and that's not a great time for the debt ceiling to come up. currencies are quite low, along with other assets. what we have seen is that when the feds have cut the funds rate, it signals volatility lifting sharply. we think the fed is going to cut the funds rate at the -- at 2024, and that is quite some time away. >> head of international economics at cba, joseph capurso. you can get around with all of these stories that we will be discussing, get your addition of daybreak, dayb , through

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>> a quick check of the latest business flash headlines. united overseas bank will retain most citigroup stop after buying the consumer assets in malaysia, thailand, indonesia and vietnam. around 90% of citigroup's 5000 employees will transfer to you of being when the acquisition completes. -- you will be when the acquisition completes. it would merely doubled its retail clients to 9.3 million.

adani enterprises is considering selling stopped after being hit by a short seller attack. the company has yet to say how much money it intends to rate -- raise, but they are discussing plans. they saw a record losses in january after hindenburg research accused them of fraud. adani has repeatedly denied those claims. sources tell bloomberg that gic has emerged as a front runner to buy a stake in german industrial get that -- gas maker massar. it is expected to inject $2.1 billion for eight 20% stake. eq people's also shortlisted and remains interested in a deal. -- eq c was also shortlisted and remains interested in abo. >> take a look at at bonds, we saw the -- inflation moderating in april and we had a two year yield falling below 4%, the 10 year yield around 83 level come

with --, and we saw the kiwi yield losing ground. we have been watching the japanese jgb space as well, they have been trading and now arranges this week given that we are waiting for the u.s. cpi numbers. later we are going to get the current account and trade balance numbers so stick around for that. still to come, china accuses a global firm of leaking state secrets as it launches an anti-spy crackdown on foreign consulting companies, a closer look next with csis freemen share in china studies. this is blo

>> the fed making progress on the inflation front not on labor market and wage trend.

so it's hard to see inflation going back to 2% with the market this type in this high. we will keep rates at this level and may be a little bit higher until they see that they are confident inflation will get back to 2%. >> that was bloomberg opinion columnists and former new york fed president on the fed's anti-inflation fight saying it would need more progress for policymakers to see in terms of labor market and around wages. this is the first chance traders are having an issue to react to the u.s. inflation print that came out of the headline takeaway is that we saw the key reading coming in a notch below 5%. still staying at 5.5% but off that we didn't see those move lower in treasury yields and a trade is leading into the expectation that the fed could start to cut rates as soon as september. so we are seeing bond yields trading at the front end of the curve. we are seeing more strength

going back into the japanese yen as a result of the yield differential between the fed on the boj around its highest in a month. likewise, because of that strength it's putting more pressure onto japanese equities, given that a stronger yen has the exporting names on the benchmark and we see a guiding for a weaker start even though we had strong numbers from earnings coming through. the expectation that we will see a policy pivot from the fed is something that officials will have the chance to speak about this week. we've got a number of fed speakers out over the coming days including neel kashkari, jim bullard, rafael bostick, john williams among them. huge lineup, really the opportunity for the fed, if they need to push back on this narrative that we will see, as i said, cuts as soon as september. >> of course casting a long shadow over investor sentiment is a lot of uncertainty when it comes to china. the government has launched a nationwide anti-espionage act on

consulting firms, accusing one of leaking state secrets and having ties with foreign intelligence agencies. let's discuss this with the friedman sharon china studies for strategic for international studies. always great to have you with us and we are all hoping that you can help us on what's going on and what the intended strategy is because from the outset, xi xiping on the government are trying to restore international confidence and domestic confidence in china as an investment destination following covid zero. how does this get them there? >> it doesn't, what has been a head scratching his there's makes messaging coming from beijing. part of this is there has been a shift over the last several years i have been slowly building but we've seen a burst through last fall of clearly a

rebalancing of growth and security. in finding that equilibrium will be difficult for beijing and think we see the moment where the security voices are dominating over the economic technocrats and it's leading to the set of actions, which as you say, has investors, has mncs really scratching their heads and is creating a great amount of anxiety at just the moment that folks were looking to get back into the market. >> -- shery: the changes when it comes to investing in doing business in china significantly if there is that gray area between what's collecting information, what's doing due diligence and what's potentially trading into the arena of spying or espionage. jude: i think the most pronounced discussion that i think i have been in is companies which thought they knew where the playspace was in thought, we are not an ict company so we don't have to worry about data crackdowns.

or we are not this type of firm, so we don't have to worry about it. once you start seeing beijing going after targets which you never would've conceived of, until you see them targeted, it blows up your risk calculation. that confirms we are in a consumer space for investors who thought they wereof investment playspace now thinking, what's next? shery: what does all of this tell us about president xi jinping's leadership in that centralized power that he's been working so far? jude: this is hard, we keep, hopefully waiting for the moment when economic rationality will harness xi jinping and we see a slowdown towards more state control, more national security layered over the policy environment. and i think we need to settle into the reality that xi xiping has been in power for 11 years. this is how he thinks about the

right balance between markets and security and i think everyone should expect that this sort of key focus on security is going to grow in tandem with beijing's concern about the broader geopolitical environment worsening. so as long as u.s.-china tensions remain acute, i would expect more actions like this coming out of this security apparatus of beijing. haidi: when it comes to the bigger picture you talked about the fact that he feels like he has a lot to achieve between now and 2035, is this part of the grantor plan, and is he playing more into his domestic audience and i guess the allies that he knows he has versus trying to now even pretend to appease international investors. quakes of course the answer, if you talk to our friends in beijing is that xi xiping is playing five dhs to our one d

checkers. the starting point is beijing's political system is incredibly -- is incredibly complicated. and while we like to think that xi jinping is moving chess pieces around, this is one of the moments, like we saw the summer of 2021 resource the sun search of rigell shuri activity in crackdowns on the tech sector, there are bureaucratic's elements in china who are taking advantage of the topline signals that xi jinping is signaling of. that opens up the floodgates for actors underneath xi xiping to interpret what he means by this. this is where it would be nice to think that xi jinping's work -- reading off of a playbook and has decided discreetly what we will go after. but we also have to understand that bureaucracies and bureaucratic actors are key parts of this drama. as much as xi jinping is setting the tone, he's not always in complete control.

this will get messy. big huge the rock receives. not to forget new bureaucracies created out of government restructurings means the even kill regulatory environment that investors and mncs could expect five to 10 years ago, those days are gone and it will be much more volatile moving forward. haidi: this beijing narrative of a multifaceted attempt development containment, are we likely to see what they could see as further evidence out of the g7 meeting this week and do we see further reaction from beijing as this continues? jude: beijing would point to you have the eu considering or adding several chinese companies and hong kong companies to an upcoming sanctions package over russia. you saw a recent g7 statement that includes language on taiwan, we are likely to see some sort of outbound investment screening mechanism emerge at

some point here from the united states, and of course we have liz truss, former prime minister liz truss is traveling to taiwan next week, so when beijing starts looking for containment, is going to find it. the narrative here is that these are necessary steps to push back against some of chinese more offensive international behavior, but this is the unfortunate logic we will be end, both sides, the united states and china think they are adopting defensive measures and this is how you get into classic security spirals. shery: freeman sharon china studies for center for strategic international studies, thank you for your time. let's get to vonnie quinn with the first word headlines. bonnie: u.s. federal prosecutors are reporting shortselling after the collapse of three regional banks. they are citing a source saying the banking turmoil is an area of interest for the justice department. president biden's council of

economic advisers said regulators are watching short sales of the banking industry but the situation is still under control. leading a financing facility of 200 million dollars for privet energy solar projects. this is svb's first syndicated loan since it was full -- sold to first citizens bancshares it was known as a climate bank. . --. energy says it's a commitment to solar financing. ubs bankers assessing credit suisse business flex concerns about portfolios, loans and high-growth's asian countries. concerns over lending relationships and markets including indonesia, vietnam, malaysia and india could lead to the assets being run off or sold. ubs is weighing options to address the issue after stepping into a rest credit suisse. both kinds declined to comment. bloomberg learned that officials are starting to accept interest rate hikes might be to continue in september. some policymakers from across the spectrum think to quarter

further point hikes may not be enough. that could mean a third move in september bringing the rate to 4%. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. haidi: microsoft will give us new insights into the ai's role in the workplace, the head of modern work joins us next. this is bloomberg. ♪

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shery: softbank's vision fund may reporter smaller quarterly loss or breakeven when it announces earnings later thursday. that's thanks to a global rebound in tech stocks. for more on the upcoming results let's bring in our bloomberg technology reporter. i do wonder how long this might last, given the gloomier economic outlook. >> that's a great question. there is a lot of skepticism surrounding how good softbank earnings could be going forward, and we actually have tiller code good or bad the fourth quarter results would have been in, and if you're looking at the results will look pretty dismal, even

how bad the performance was early in fiscal year, and going forward, like you said, everything hinges on how the global stock markets will perform, which a lot of people are not sure about going forward. >> we hear that softbank's mobile unit is joining the race to join chat cheap etn japanese. how bullish is the project? they seem extremely positive on this. >> there's not a lot of detail, we just got the news yesterday during the earnings conference buys softbank, which is the unit of softbank group, and this mobile unit ceo who kind of announced sewer q&a that they are working on japanese searches -- japanese versions of chat

gpt. they don't have a target or specific plan surrounding this or have yet to reveal them. so it still at a curious stage how ambitious they are about this project, but definitely worth watching going forward. haidi: our bloomberg technology reporter joining us from tokyo. google has unveiled an experiment away to search the internet using artificial intelligence to give more conversational results. the king of search says the new chatbots is now available for much of the world for its cloud computing clients, google is launching ai powered features that help with coding, image generation and speech processing. the services were unveiled during the conference in california. this ceo says google was at an exciting inflection point. the company is seeking to compete with microsoft, which is using technology from start up open ai and its own search

product, being. shery: we have microsoft's latest spotlights in evolving perceptions of artificial intelligence in the workplace after surveying over 31,000 respondents. joining us now to discuss the future of work is the head of modern work at microsoft. great to have you with us. so when employees think about ai, do they think about lifting the burden, unleashing creativity, or is it something like, am i going to lose my job? >> the answer is both, it turns out their positivity outweighs their fears. those are some of the findings from our recent report we published yesterday. 31,000 people across 31 countries we survey to understand how they felt. first off, the number that caught my attention, 64% of people telling us that they just don't have the time or energy to get there jobs done. we look at asia pac specifically

that number jumped up to 72%. there's something going on. we asked how they felt about ai, 49% said i'm afraid it will take my job. but when we asked them if they would use it at work, 70% worldwide said they would offload as much as they could in the workplace because they felt like they were such a burden outward. shery: how much is ai being incorporated in america's workplace right now? jerry: it's early days. we introduce a brand-new product called microsoft cope product so we have 20 customers using it today. we announce we are expanding to additional 600 customers so we are excited to have it used more broadly, but it's early days. i can say for my own usage, this is a product that once you get your hands on it, you don't want to give it back. it helps you summarize emails, right emails, summarize long documents. it makes meetings a totally different experience. so if there is a set of capabilities that once you get a

taste of it you realize it will change the way you do your work. haidi: there so much excitement when it comes to ai, you have to see how concentrated investors are and in the chinese market. what are the pitfalls and where d.c. weaknesses that need to be worked on before we see mainstream reliable consistent application? jared: that's a great question. these large language models, the world came to know them first last november with a chat gpt. these language models are incredible answering questions across a broad domain. when it comes to answering business questions about business results i can help you get your job done, the general-purpose models are good enough. what we see companies do, including with what we do with our products, we ground the language models with additional company data. take your data, your emails, calendar, financial data and send it to the large language

models and let them reason across. in those circumstances it does quite well. when we introduce it in march we did help people understand that it still makes mistakes. i like to think of it as an assistant that's incredibly knowledgeable. it's going across a large body of information that you can't trust at 100%. you have to check the answers it gives you. haidi: i know you have gone from one point of view, but given how any players there are, talking about softbank coming with its version, a myriad of players, how much consolidation do you see? jared: the moment is an interesting moment because it's let a thousand flowers bloom. everybody is talking about ai. ultimately over time our senses that ewers are going -- users are going to gravitate to the use of ai called copilots. they aggregate the greatest

amount of information. it's tiresome going from one copilot to another and know which one to asked the question. ultimately we think it comes down to user choice and our senses that users will go to those that have a broad view of business. that's what we hope to do with capturing emails, calendars, and then being able to integrate business systems, we hope we can give users access to a large enough amount of data that they get some really useful answers. shery: head of modern work on microsoft with his views on what we've been talking about, artificial intelligence in the workplace. we are awaiting japanese data at this point, the japanese yen right now consolidating that 134 level. we have seen trading in narrow wages's given we expected the cpi numbers. we are getting the current and outnumbers in its current account surplus, 2.2 trillion --

¥2.278 trillion. this is a little bit smaller for the month of march about what economists had expected, still bigger than the previous month. we had come back from a deficit from earlier in the year given that we had seen hefty returns with securities investments and that's helping ease the concerns about weakening japan's purchasing power, so we have the current account surplus coming in at $2.278 trillion -- two point eight ¥7 trillion. and we are getting the summary of opinions as well. shery: we are watching this as to where the bank of japan could head from here. this is the summary of opinions from the monetary policy meeting

held at the end of april. really talking through some of the expectations when it comes to economic growth being picked up despite the factors of high commodity prices, looking at the outlook, referring to the high price increases and they see business investment to continue and strengthen developments as being important on the way forward. one starting the risk from premature adjustment being greater. loosing consistency in the expectation that the new government would be taking a softly approach when it comes to consistency, saying that it's necessary to take type to analyze, assess and review any comprehensive changes when it comes to monetary policy. so they are still kind of pushing this idea of being data dependent, of course taking the time when it comes to the review. shery: more on the tray jeff --

deficit of ¥454.4 billion. it's coming broadly in line with expectations, the deficit a little bit smaller than the previous month, but again, japan's march trade deficit coming in at 400 before -- 454 billion yen. not to mention external demand weakening now only for japan but other countries across asia as well. this is bloomberg. ♪

shery: here's a quick check of the latest headlines. brookfield asset management raise $19 billion in new funds as it looks to the middle east and asia to fuel its growth. this ceo and president told shareholders set about 40% of the money raised in the past year comes from those regions. the company aims to more than double fee bearing assets under management to $1 trillion in five years. reporting first-quarter losses that were better than expected, revenue came in roughly in line with estimates, the ev maker reaffirmed its plans to build 50,000 vehicles in 2023, doubling last year's output.

they have been trying to cut costs as he ramps up production and targets -- by next year, disney shares fell after reporting a drop in subscribers to the streaming service and predicting a bigger loss that quarter. disney says the loss from streaming will increase by $100 million this time because of shifting marketing cause. the direct to consumer segment suffered a loss of $659 million in the second quarter. the market opens in sydney, seoul and tokyo are next. this is bloomberg. ♪

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shery: this is "daybreak asia" we are counting down to the asia's major market open. a reaction in the southern debt market given treasury yields were under pressure. potential fed rate cuts to come this year on the u.s. cpi print. haidi: we get uncertainty of investors in china and more central-bank action to come with the bank of england. there are bets there that this could be the last hike before we get a time of pausing. what are we watching when it comes to the market open? annabelle: there's really a lot for investors to be considering at the start of today's trading. we have the opens of japan, south korea and show you apart us. trading for cash treasuries. watching the front end of the curve because we see the drop in the two-year yield with bond traders really leaning into the expectation that the fed is going to go on pause as soon month. in terms of the direction we do

see that unchanged, but also eyeing closely what we see in japan at the start of trade, given that earnings season is underway but also just had the summary of opinions from the boj meeting in april and one of the headlines really coming out of this is at least one boj meeting things the 2% inflation target is inside. this is the line in the sand for the boj to start to shift any of its policy settings. we are still seeing japanese yen strengthening somewhat against the greenback, we are at the highest level now in around two weeks. that is something that really could weigh on the nikkei 225. earnings today are the to watch. we will keep an ion panasonic after is for your earnings beat estimates from analysts. in terms of what else we are watching today, keeping an eye on south korean trade numbers in particular. we just had those coming at us. the may 1 to 10 day exports, that was a drop of 10.1% on the year.

imports weaker down 5.7%, but certainly that does tell us that the trade backdrop is deteriorating. chinese export data pointing to that deteriorating export picture, weaker demand in overseas shipments is declining year on year. certainly recessionary fears are front and center for investors and a lot just choosing simply to stay on the sidelines and wait for opportunities that will come in the months ahead. really being reflected as we see trading volumes in the early moments off the 20 day moving averages. let's change to australia because the asx 200 is coming online in one stock we are watching at the start of trade is or kim agreeing to merge with its australia arrival, rather u.s. rival in that stock is up around 13%. we will have more details in just a moment. 10 year yield in australia taking a little bit lower. watching what happens with rent crude, given that traders are very much focused on the demand

signals that are coming out of the market. haidi: let's bring in our next guest who says that data is reinforcing the resilience when it comes to earnings and economic conditions. george is the head of research at code-2 asset management. always good to have you with us. obviously we are still through the thick of it when it comes to earnings at this point. are you more optimistic that perhaps other pockets of the markets that are pricing in right -- rate cuts as we get into the end of the year? george: good morning, cautiously optimistic through this cycle trying to look through the correction that's ahead of us in the slow down. and just aggregate earnings in the u.s. consistently better than expected. obviously sharp slowdowns versus the corresponding time last year . but there's a resilience incur for earnings and a resilience in the economic data in the week by week data profile that central banks are looking at and we are looking at.

we try to be predictive of 2024 earnings and credit conditions. sympathetic with putting in rate cuts because inflation is doing the right thing, it's a little bit sticky in the core component and very difficult to get to the 3% level anytime soon. sympathetic to people trying to put in rate cuts as they try to say in evidence they are looking through the data worsening the second half of the year and they see the sharp slowdown. for that to happen to release our pleat -- sharply slowdown in the private sector, which is after watch it and be data-dependent. again, pricing credit conditions and 24, we see a rough patch, but not as bad as some people have been flagging for three months. haidi: would you take a look at the markets that might see a bit more support when it comes to economic momentum, is australia one of them? we had the return to surplus, albeit it might be a fleeting one. the chinese to china, is it

going to end up -- the ties to china, is it going to end up being favorable for australian assets? george: the number one china partners china. it's very important for us. the energy company ellen j material metals has been in the limelight. remember southeast asia will benefit from doing business with china or the trade wars into southeast asia. there's beneficiaries there in diversification, but australia will be the -- first status. it's the state government that has a debt issue to be resolved and that would downgrade some of those last year. but at the federal level, very reasonable, banks are in very good shape and they protect their interest margins versus america. it's difficult to make the case of your global fund -- run minister -- fund manager and the

sovereigns in a good situation in the moment from the china perspective. shery: staying with china we have a tech earning starting a jd.com and then alibaba. that's been a sector that's really been pressuring the chart on the bloomberg. banks, you talked about in australia a different picture in china that have rallied recently, but i think the issue with investing in china still remains regulatory uncertainty. is there anything you like about market? george: very difficult to be investing exposure into china for many different reasons. therefore, we are pragmatic, we rally closer to usn they are aligned to that. exporters and producers into china, lng, bulk commodities and metals. that's how we have been planning it, even with funds heavily in -- involved with china over 20

years. very difficult to make the case. china needs to attract capital and in size and the jacket ahead. not going about it in the right way just yet, and that's why we plan derivatives in europe in exporters and importers. there's lots of opportunity but have to be short-term. there is a divergence in investment attitude toward long-duration investments into mainland china and how do you play that? the european economy has been the link so far but people are taking profit from that trade in recent weeks. shery: china is an economy were regional debt is an issue that you been talking about in australia. it's not just about china, is a. once we get inflation under control, how much distress could we see in the developing economies on the fiscal side of things?

george: this time next year the language will be emerging-market debt distress at record levels and then provincial. china will find its own methodology in its own way. cutting rates because they have an inflation problem. they are getting over one of the biggest property bubbles and they need to work through the different municipals and mainland china and resolve that. it will be difficult, but everyone will have that same problem. next year emerging economies, southeast asia were -- protected from revenues but there's a dispersion across the different continent that china has to resolve that, as with everybody else. pressure on emerging government debt and the world bank imf will be stepping in for assistance as we come out of this expense we pad over the past three years and inflation at an increasing rate behind us. issuers of debt, inflation help you.

it's very difficult relative to our high inflation volume relative the last two years. shery: good to have you back, head of research at k2 asset management. thank you. of course, we are in earnings season across japan. what are you seeing moving in the markets right now? annabelle: just under 10 minutes into the session for the nikkei 225 and we are under a little bit of pressure. there are a few stocks on the upside. one is panasonic. the company releases for your income. they see operating income coming in at ¥430 billion in the estimate was for 382.08. clearly a much stronger forecast coming through from the company. that's are climbing near the 5% mark. as you said, we are focused on what's happening with japan. the mobile unit said it was

building a japanese version of chat gpt so they used to stocks benefiting from the ai place in the space in japan. softbank says that the unit was set up in march, about a thousand people are working on this to build out their own version of open ai artificial intelligence chat technology. some analysts are really putting two -- it's been one of the key stocks trading in japan. financial stocks are in focus. this is after the u.s. inflation. we did not see bond yields tracking lower in the u.s. reside 10 year yield in a two-year yelled that we see asian financial stocks mostly moving to the downside. we see more shooters in the just traders into the barn market leading into the expectations that the fed is causing a hiking cycle and that could be a negative for lenders. let's change on because m&a activity is underway in the

lithium space, this is the story about the aussie lithium minor that agreed to merge with its u.s. rival. this deal would create $10.6 billion producer. this is about sector consolidation with batteries used in electric vehicles. they will combine in a so-called merger of equals and that will establish a new company that will have its primary sharing in the u.s. that start sharing in the open of sydney. shery: let's get to vonnie quinn in new york with the first word headlines. vonnie: president biden set a debt would drag the u.s. into a recession and have devastating repercussions. he's looking to have a deal to raise the debt ceiling. his remarks come one day after his first round of talks made there'll headway towards a new agreement. president biden: if we default on our debt, the whole world is in trouble, this is a manufacturing crisis, there's no

question about america's ability to pay its bills, we should be cutting spending and lowering the deficit without a need this crisis. in a responsible way. vonnie: china has appointed a government official is the top government official. he was starting as the vice governor of the province and he will oversee the six you enjoy your dollar financial sector. market watchers were expecting the road or go to someone with more seniority. the investment firm plunged after exposing inquiry into the practices. u.s. attorneys are seeking information on governance, security offerings and dividends. the firm hit back in detail for the first time against the report from the short seller. a claim the company inflated valuations for some assets. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. shery: coming up, disney shares drop in extended trade as a forecasts wider losses in the

streaming businesses quarter. more on those results just ahead. g7 finance ministers gathered to tackle the biggest challenges facing the global economy. we will discuss what's on the agenda, next. this is bloomberg. ♪ guests check in, then check out their phones - for financial insights from merrill. this gentleman? he's learning how carbon-neutral investments could energize his portfolio. and with advice from their merrill advisor, they've decided that the future is women-led startups. she's got a million followers, but she's following trends in next-gen tech. personalized advice so impressive, your money never stops working for you, with merrill. a bank of america company.

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ahhhhhh >> cpi is cooling.

>> it's a sign of disinflation. >> making progress on inflation. >> inflation running close to 5%. >> this will still keep the fed focused. >> the fed will take this as encouragement. >> the balance of research towards hiking further. >> i don't know how much of a difference wednesday five basis points makes at this point. >> keep rates at this level. >> keep bricks -- rates firm. >> confident inflation will get back to 2%. >> it's hard to look at this number and think the fed will see anything until they are on the path to 2%. >> this is just another drop in the ocean. shery: our guests reacting to the april cpi readings. key inflation drivers in those numbers have begun receding in april. in fact, potentially giving the

fed room to pause rate hikes soon. let's bring in bloomberg economy editor, jill. so, markets are pricing in rate cuts this year. are we getting ahead of ourselves? what do we need to be watching out for in those numbers? jill: first of all, this inflation data, i think as you just heard, it's encouraging news at the very least. the year on year 4.9% is the first time it has been below 5% in two years. look at those month on month core headline gauges of 0.4% month on month. we still see some inflation pressure obviously though this is a bit of an encouragement with some cooling off. what the fed has said on multiple occasions is that they look out of -- at a variety of data points in terms of determining what their next rate strategy should be. we will get another cpi print on the first day of the fomc meeting in june.

we still need to look at what jobs data looks like when the next job report comes out next month. remember earlier this month it was running hotter than we would've expected, so all of that will factor into the decision so we've seen a signal from the fed saying potentially we are looking at a pause for the short-term, i think they have signaled that they wanted to be long-term, it seems like it's a bit away before we get it cut. haidi: a 12 rate hike expected from the bank of england, is a possible we could see signaling for a pause as wage data inflation remain so persistent. ? jill: it seems less likely. but markets are looking out for from that boe meeting later today is for any find that maybe they could potentially pause. quite a few economists are pricing in another additional hike from the boe once we get past today. i think as you said that inflation data, those price pressures in england are really,

really high. we will have to see whether we get any clues here, but it's not guaranteed they will fall on the side. shery: bloomberg economy editor in hong kong. finance ministers and central bank governors will be dealing with the topic of inflation with a slowdown of growth. these are some of the finance leaders from the world's wealthiest nations gathering in japan this week to discuss a growing list of issues. stephen engle is there and said the talks will take place, is certainly a pretty full agenda in terms of balancing these risks and issues. stephen: there's sony things to talk about in these next two days and the finance minister in the central bank is in effect. christine lagarde walked past here even though i hasn't started yet, it begins about 2:00 p.m. this afternoon, japan time.

she's already here walking into the convention center behind me, getting to work early. inflation in europe is a sticky issue even though we saw inflation come down a little bit as we just heard from that last segment in the united states, but inflation is still a stubborn, consistent element across the globe and it will be near the top of the agenda. but again financial system stability globally will be atop the agenda following those bank failures in the united states. one thing that could and probably will overshadow everything is the debt ceiling in the united states. janet yellen will be here, shall have a press conference later this afternoon, her message likely will be the u.s. financial system is sound despite all of these headwinds. we will have to see, but any default from the united states, as joe biden said, would be trouble for the world, janet yellen saying it would be catastrophic for the economies

and financial systems around the world if the u.s. defaults. so that could be and will be a dominant discussion point amongst the many -- the litany of issues to be discussed over the next couple of days. shery: how significant is it that japan had the finance ministers from select non-g7 countries? stephen: keep in mind china is not invited and is not part of the g7 but there are lots of issues about supply-chain resiliency. that's the code word for relying less on china for these develop like-minded economies and nations here at the g7. while the g20 has had trouble finding a consensus in its communique on a wide range of issues when it comes to russia and china and those issues on the war in ukraine. g7 is trying to show unity on condemning russia in the war in ukraine.

what matters is essentially xi jinping's support of moscow. nonsupport of the war, but support of vladimir putin and his regime in moscow. so it complicates matters. we've heard the term friend storing. janet yellen use it to get other like-minded economies. we know the g7 with japan is firmly in the united states camp. there's fraying at the edges with france and the like, but again, if you're inviting india, if you're inviting indonesia, if you're inviting brazil, which is a contentious issue with -- visiting in the last couple of weeks, and those confidence downplaying the u.s. dollar and wanting to engage more with china. you invite the global south to the meeting. the first time the finance ministers outside the g7 and invited him in a decade, it's important to build up for ensuring at a time when there is

consternation and division between the two biggest economies in the world. and debt relief or emerging market economies will be discussed. shery: bloomberg stephen engle joining us from japan. in fact, we do have an important conversation coming up from the g7 finance ministers meetings. on friday will have an exclusive interview with treasury secretary janet yellen. that's at 3:30 p.m. in hong kong. this is bloomberg. ♪ lila: before i was diagnosed, there was nothing really to worry about. and then when i was diagnosed, there was just such a big weight put on my shoulders. every night, i felt like maybe i won't wake up tomorrow. but there's no way that this is going to win. i'm winning. announcer: st jude children's research hospital works day after day to find cures and save

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wear to show your support. christen: i think it's the most worthwhile place to put your money when it comes to childhood cancer. lachaka: because it takes a heart for somebody to say that i'm willing to give to st. jude so that they can help save more lives. that's huge. damon: our giving to st. jude is right up there with our mortgage. that's the priority that we put on giving to st. jude. announcer: please call or go online right now. become a partner in hope today. shery: this need to get hit after reporting a drop in streaming subscribers. when it comes to the seals and profit numbers, they came in line with estimates, so why were

investors so disappointed? chris: a few things, number one is the overall subscriber account for disney + fell for the second quarter in a row and although this loss and the streaming business religious and anticipated, the company on the earnings call said they were expecting the losses to rise again in the current quarter. so that's reversing what had been trending downward. shery: we do see it as a transitional year, especially with the changes in leadership, what are we expecting for this turnaround planned and how do be expected to play out in the next six to 12 months? quex the big takeaway, and we saw this with paramount and warner bros., traditional tv companies are seeing a steep decline in their regular broadcast and cable tv businesses, and the streaming businesses are not yet of two

making up for that loss, so bob iger just came back in a role in november and made sweeping changes laying off 7000 employees, reorganizing the company to put creative executives back in charge, you talked about a number of initiatives today on the call. he's going to combine in the u.s., hulu and disney +, apps that have adult content and kids content in the same place, and he's pursuing a strategy where he raises the price of the ad free version of disney + and keeps a price of the ad supported one low so that they can sign up more people from the ad supported version where you can make more money. also reducing the amount of content spending to try to save money. shery: what's been the response on bob iger's cost-cutting plans and broader initiative to turn around bit -- disney? quex if you look at the response

of the stock, it's down, though i had been up since he rejoined, this is a difficult time as they transition to this new era of streaming, he's maintained the 2024 profitability for the direct to consumer business. fortunately they have the 3 -- theme parks going skyhigh, including shanghai. shery: chris palmeri there with us. china names a little-known local government official to oversee his 61 trillion dollar financial sector. we get the details in just a moment. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network, with no line activation fees or term contracts... saving you up to 75% a year.

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annabelle: this is "daybreak asia". check on markets, 30 minutes

into the session for seoul, sydney and tokyo. so far the set up its looking mix. trading volumes lower for some markets and really investors with a lack of clarity. we did have that inflation data coming in overnight in the u.s. and we saw the headline reading just ticking below the 5% level with the core one of the five .5% mark. so a lack of insurgency as weather inflation or disinflation trends are really starting to take effect. in terms of how we are setting up an equity, quite mixed here, japanese stocks are one of the underperformers in the session, but you can also see here the yen strength is coming back in. again, it is really that differential between the boj in the fed. we just have the april minute meetings telling us that boj officials think that 2% target is in sight for inflation, but still there is that need for further easing. commodities likewise trading a little lower in bond yields just

shacking the news that we had an treasuries overnight because investors are really still leaning in and the debt space to the expectation that the fed could posit soon as next month. but let's change now because when you look at the debt space, what's really interesting and the moves we are seeing in chinese government bonds, we have seen the 10 year yield now on track for a ten-year side. this is a couple of different factors playing into it. chinese inflation data is doing the next hour. that will set the tone for further monetary policy support from the pboc. on top of that we have a report from reuters essentially saying that china has asked for a state owned bank to cut deposit rates on some products is that something that's playing out into the yields. haidi: a lot of things playing out when it comes to the eye -- outlook of china. also, this development, beijing has picked a official name as

its top regulator. the $61 trillion finance sector and let's bring in bloomberg's lulu chen in hong kong. tell us surprising this was in there were some of the other contenders that were perhaps more high-profile and more experience in the upper echelons. grexit does come out with the price and market watchers because there are many other people who had more seniority and those people were strong contenders, front runners, including the chairman of the civic group. he does have banking experience and was a former banker. now you can elevated to take on serious duties as they oversee the national financial supervision and management bureau, and they will be regulating the bank. shery: a former banker and

somebody that worked in regional governments, that government closer, what is that mean for potentially what needs to be focused on as a regulator? >> he was the vice governor of the province so he has the local experience of working on the ground. a lot of the positions like this involve working with businesses and local power players. i think the new position, part of it is to straddle that, navigate that balance between regulating and making sure the financial risks are controlled versus making sure that it does not fall out of innovation and completely scare off investors. the past three years we experience quiet a turbulent time with the regulatory changes. so i think it is a balancing act going forward. shery: that share of the u.s.

public company accounting oversight board that says significant deficiencies are being found in its audits of firms in hong kong and china, eric williams told us exclusively that investors are now better protected following these views. >> we have two firms, one in china and one in hong kong and we expected for engagements with this -- which is companies in each of the audit firms. we did find significant deficiencies similar to the types of deficiencies we found in inspections for other audit firms that have been inspected for the very first time. on what we've seen in many incidences is improvement over years. what we do know about this is that these firms that we inspected covered 40% of the u.s. market share of companies that were audited by china and

hong kong firms. by the end of this year we will have inspected the audit firms that cover 99% market share. so we looked at the most significant companies that were audited by these china and hong kong-based firms. >> if i'm a u.s. investor and i'm investors and some of these companies that are u.s. listed, should i sell them? are you guys going to take them off the exchange? when will i know that? >> what we have under the foreign companies accountable act is a responsibility to inspect and investigate completely. and then we put out these reports. we shine a light on what we found so that investors have information in order to make investing decisions, and also to put pressure on the firms to improve. our job is not -- as to whether or not these companies can be listed, but it really is to give investors important information and to provide transparency,

which is what we are doing in the reports. tom: how did the process -- >> how to the process work, did you have to fight any of the details included in the audits? it's meant to be an open book look at what's happening, was at that? last year we entered into an agreement with the prc and under it we needed to inspect and investigate completely. we needed to choose the engagements in the firms that we inspect, we need to have access to all the workpapers in the personnel, and we also needed to be able to conduct our investigations without interference. and we were able to do that. we were tough, we were firm and we obtain the information that we need and did have complete access. and if the prc instructs us in anyway and our investigations or in our inspections going forward, the world will not hesitate to act immediately and

consider whether or not we need to make another determination with respect china and hong kong. shery: that was erica williams -- haidi: that was erica williams speaking to us. let's get to vonnie quinn. vonnie: bloomberg asserting that ecb officials are starting to accept that interest rate hikes may need to continue in september. our source says some policymakers from across the spectrum of the governing council thing to further quarter-point hikes may not be enough to tame consumer prices. that could mean a period move in september bringing the rate to 4%. svb will lead a financing facility of more than $200 million for privet energy solar projects. this is svb's first syndicated loan since it was sold to first citizens bank. the california-based lender was known as a climate bank before the collapse. privet energy says it reflects svb and the commitment to solar financing. u.s. lawmakers or santos has pleaded not guilty after being

arrested on fraud and money laundering charges. the congressman was released on a $500,000 bond and continues to face calls to resign. the federal indictment alleges theft of public funds and making false statements to the house of representatives. santos says he believes he's innocent and still wants to see the -- plans to seek reelection. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. shery: we do have more to come on daybreak asia stay with us. this is bloomberg. ♪

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shery: softbank may swing to a quarterly profit when it reports later. our next guest has a whole call on the company. joining us now is the managing director and senior analyst at jefferies. always great to see you. what are you expecting today? >> thanks for having me. we are looking for, not so much on the p&l side, you are looking on the balance sheet side and the three things that investors are focusing on is how much of the cookie jar or alibaba steak is left. we think it's about zero percent to 3%. secondly, looking out what would this say about our -- which they

want to do and ipo later this year, could they dress up in an ai away? could there be any signs of buyback, which is the stock price, but stock is not in distress. they push the stock very high and up until last year stock was ¥7,000 and jeffries downgraded to sell and when it reached 53, 54 hundred and current levels as when we upgraded. right now and these levels there's not much to do. if it falls, it creates an opportunity for buyback. if it rises too fast it creates an opportunity to sell. shery: this is performance of this -- does the performance of this company concerning given the gloomy economic outlook out there? >> more than the gloomy outlook, the past year is not reflected

in the evaluations, not in the assets. everything else is publicly listed so you can actually track . the one big part is this fund. private books they are internally marking at that own and in we estimate they have marked it down by 22%. when their own book, which holds publicly listed stocks is down 55% since last year. so the markdowns are not there, and when these companies come to the market to raise money as it was last year 85%, that's when they marked down assets and that's a big risk. haidi: when you take a look at the numbers -- so much of it is really the broader macro environment, particularly in the light of the collapse of svb in

the broader turmoil that we continue to see. what are we likely to learn about the appetite for startups? >> again, you are spot on, it's a difficult market to raise money for startups, and that's something we have seen. what happened in early march with silicon valley bank also put more pressure on the start of the universe and the private companies. that's also the case not just in the u.s., but the other place where softbank has lots of assets. were tech stocks remain under pressure. so most of their assets and most of their exposure is in places which does not inspire much confidence. and then on top of that they have multiple levels of met -- leverage at multiple layers. haidi: i'm wondering does the foray that we've gone into ai

inspire confidence? >> the way softbank positioned the investment five years back was all talk about ai. and when we saw what that infested, some of the biggest ones being wework or uber, even the e-commerce place. in our view it's not ai. they call it ai but if you call them ai and google and amazon, everything from the beginning has been ai. the other part is armed, semiconductor site. they design, they sell licenses for semiconductor chips primarily for mobile phones. that's probably 90% of the business. that's not exactly ai. but, if you can find a way to spend, because remember, they were trying to sell this off to nvidia. nvidia, which has a big play in the ai space with the gb use, if they can spin it that way, it

could find some buyers. they own 100% between themselves. when they list this company, let's say 25%, they would still be holding 75%, 80%. that becomes an ongoing overhang as we have seen with many of the softbank investments. haidi: always great to have you with us, managing director and senior analyst at jefferies. earning screw in the first quarter thanks to a surgeon iphone sales. let's go to bloomberg cindy one who joins us in taipei. what are you watching when it comes to these numbers? >> in about six hours from now we are going to see the first quarter results, and it will give us some clues about a demand for the smartphone industry.

hon hai is the world's largest maker of apple devices and apple previously reported stronger-than-expected earnings held by the rebound of iphone sales, suggesting that the smartphone industry is beginning to see demand. in hon hai has reported its 1q revenue, growing almost 4%. analyst saying that the strong growth in revenue growth in a typically low season could be driven by the shipment of iphones there delayed by 2022. but the momentum could fade soon because hon hai already expected that its business could decrease in the second quarter on year-over-year, and the quarterly basis. so despite that hourly performance of iphone, the industry still struggles with weak demand as consumers brace for potential economic recession. for this afternoon it's on highs 1q results in analyst expects the net income could grow almost

1% year-over-year, and the revenue could have continued to grow due to popularity of chat ubt, it's computing progress -- buttocks may have remained weaker as a result of slugging pc demand, and its cross margin is likely under pressure due to the higher sales made of iphone assembly. shery: what message should we expect from the investor briefing later? >> the key thing at the investor briefing that starts at 3:00 p.m. this afternoon in taipei, would be any hon hai's comments on the eve of setbacks, ev ambition setbacks after 100 70 million u.s. dollar partnership with road town motor corporation fell apart after the taiwanese company threaten to withhold the funding. this incident highlights the challenges that hon hai faces as the soaring cost already and rated its gross margin.

this incident could delay the ambition, securing 5% of global eb market share of 2025 and it could reduce the rate at its ohio plant. so that certainly one thing investors will be keeping a close eye on this afternoon. haidi: what about smic? what are we watching out for? >> for smic it's more likely we will see bad news and good news, at least that's what investors had expected so far. mixed shares dropping over 7% in hong kong trading and dropping as 10% in trading. the witness and consumer electronic demand in this slow -- in china could have -- could report a steeper profit declined than its peers, and also underwhelming performance. so, for its 1q performance,

analyst expect poorer gross profit declining over 45% sequentially and its growth margin in the first quarter could drop to 20% from about 32% in the quarter earlier. that's really bad news for schmick -- for smic and they will keep a close eye on when the companies will bottom out and it would be keen to know it's 2023 production plan, and also the older pipeline for the 28 technology nodes going forward. shery: joining us from taipei with a couple of tech earnings we should be watching. we have more to come on daybreak. this is bloomberg. ♪ did you know you can get someone to shop for you? stitch fix really gets me and what i need. even better? they save me a trip to the mall. it's easy:

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( ♪♪ ) -awww. -awww. -awww. -nope. ( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel, and grow. constant contact. helping the small stand tall. haidi: bloomberg has learned the ubs bank has concerns about some of credit suisse loan portfolios and high-growth asian countries. this comes as they decide which assets to type. let's get more details from our asset reporter. kind of loans are being flagged in one what other concerns? >> credit risk when into a big way over these high-growth

economies. the former ceo, the idea was to really lend a lot of money to wealthy asian entrepreneurs, and sometimes they were excepting as collateral things like yachts and single stocks. so not the most arduous of setting processes, and that's what ubs is looking into his past procedures and where those loans stand at the moment. and we are talking about some of these loans that are distressed -- are in distressed territory right now. shery: what are we expecting to happen? >> the bank is talking about either letting these loans run off or selling it to private debt firms, distressed debt firms, firms that make money from these types of loans aired we've got this clean team of about 100 ubs experts on each side of credit suisse to try to

vet through their talent rosters and also client rosters and see what are the clients they should keep in not. we had the ceos say that they had differing views, ubs and credit suisse, when it comes to some of these clients. haidi: speaking of credit suisse and ubs, we are seeing credit suisse surge its hedge fun of identifying the potential trigger. including 463 diameter buying stocks on support of negative bonds. we are hearing this liquid corner of buying swaps as really serve back to the last. some making the case that they should be triggered. these funds have been ensuring there is subordinated funds with the idea that the controversial back down of the firm's 80 securities qualifies as a trigger for them. we are also hearing that the law firm is helping these efforts to make a case for a triggering event according to people familiar with the matter who

asked not to be identified, but describing these private talks that have been going on, and we are also hearing that traders at jp morgan have held discussions with clients over the possibility of a trigger. that's fueled some of the trading this week. according to other people that we've spoken to, and we did see them having their biggest increase since ubs agreed to buy credit suisse in that emergency weekend deal. so we continue to watch that but those spots have jumped about 85 basis points. that's an indication of a 22% chance that the bonds will default over the next five years. shery: let's stay with banks and get a check of the latest business flash headlines. united overseas bank will retain most city banks after buying the banks consumer assets. in malaysia, indonesia, thailand and vietnam, the bank says around 90% of cities 5000 employees in those countries will transfer to uob when the last leg of the acquisition

completes the $3.7 billion deal will nearly double the regional retail clients to 5.3 million. adani enterprises is considering selling stock months after being hit by a short seller attack. the company has yet to say how much money it intends to raise, but the board will meet on saturday to discuss the plan. stocks of the adani groups are record losses in january after hindenburg research accused him of fraud. they have repeatedly denied the claims. that's it from daybreak asia, the market opens in china are next. this is bloomberg. ♪

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