haidi: you are watching

"daybreak: asia." coming to you live from new york, sydney, and hong kong. treasury secretary janet yellen reiterates the u.s. could run out of cash as june 1. she warns it country is already paying a price for its failure to raise the debt limit. investors await clarity on whether u.s. lawmakers can reach a breakthrough deal to avoid default. and insights into the economic recovery, lou economics warning that the devil will be in the details. annabelle: certainly those headlines encompassing some of the risks to investors are unknowns that are on the horizon. monthly activity due from china and the pboc decision to inject long term liquidity, to provide

the economy with a much-needed boost. gains at the open here but broadly we are looking at trading a little bit weaker with the debt ceiling impasse dragon on in the u.s., something investors are watching closely. what is standing out to us today in the session are the gains we've been seeing for japanese stocks. the topics within a whisper of reaching a 30 year high. this is a level we have not seen for the benchmark since japan's bubble economy burst more than three decades ago. this chart also showing that outperformance we've seen for japanese equities are systems in the u.s. and some including those that goldman sachs saying that fundamental vacation for structural changes is what is justifying a bullish stance on this benchmark. of course the performance so far is better than we have seen in the u.s.. shery: not a lot of movement

after the s&p 500 also rose today but in a very tight range. debt ceiling negotiations between present button and congressional leaders and not to mention the stocks were under pressure on signs of economic weakness. new york manufacturing numbers plunging the most since 2020. two fed officials signaling they favored pausing rate increases. treasuries did manage to fall, climbing -- the 10-year yield climbing to about three point 5%. oil prices rebounding a little, we heard from sources that the u.s. plans to buy about 3 billion barrels of sour crude for the strategic oil reserve. let's delve into fed comments because i remain cautious while deciding on the need to write -- hike rates again or pause for now. kathleen hays is here with more on the federal reserve. we have three fed officials

speaking today. did we get a little bit of a mixed sh? kathleen: it is mixed, because i don't think any of them is 100% sure exactly what they are going to decide at the next meeting in june. every day getting closer, just like that debt ceiling limit. he said if he had to vote today he would probably just sit tight and see what happens next. he also did say that he does not see any rate cuts until well into 2024, although he cannot rule anything out at a time when everything is still so uncertain. >> in today's environment, where there is so much uncertainty in the economy, i don't think we can rule out anything. if i had to have about right now i would probably vote to hold, but as you noted, we have the

jobs number, jobs report will come out. there's a lot more information we will have as to what is going on. kathleen: it doesn't sound like a guy who has ruled out rate hikes all together. what everyone is focused on at the fed is inflation. it has improved a bet -- a bit. the headline is down to 5.5%, moving in the right direction. the core well below 5% for the first time in several years. of course it is still well above the 2% target, more than double the 2% target. neel kashkari also emphasized how much more it is than the target, more than double, etc. . that's why he is leaning toward the rate hike, but even he doesn't sound 100% convinced yet. let's listen. >> we have more work to do on

our into try to bring inflation back down and most importantly, we should not be fooled by a few months of positive data. we still are well in excess of our 2% inflation target and we need to finish the job. kathleen: the relatively new president of the chicago fed said it was a close call in that meeting. now it so much going on with the banks and the economy and inflation, he thinks it's time to sit back and watch and see how the impact of 500 basis points of rate hikes a year are affecting the economy. he thinks the fed needs to be extra mindful of previous hikes and finally, tom barkan saying he sees no barriers to rate hikes. he was asked about financial stability and instability and he

said he thinks he is watching inflation, if it is too high, the fed will have to do more. he seems to have not made up his mind but will not be deterred by the banks at least at this point. haidi: kathleen hays there with the latest from the fed. investors are in wait and see mode ahead of another round of debt talks. meanwhile janet yellen is reiterating her morning to lawmakers -- her morning that the standoff is already costly to investors. what do you make of the lack of volatility, is it complacency that we are seeing? is it the boy who cried wolf? we've all been here multiple times before when it comes to the debt ceiling. >> it's really a question of history.

traders have had many years when we've had trade deficit talks go to the 11th hour and yet something has been resolved. putting on the defensive bets has not really worked for a very long time. you have to go back more than a decade before there were any clear moves. what you're likely to see is that if the talks really fail and the u.s. treasury has to start paring back on some of its payments, you will probably see a very quick reaction in a few specific cases. you will see the inversion in the treasure curve get deeper and the dollar will likely selloff and it will be bad news for u.s. equities as well. but a lot of traders will hold back. they won't want to do too much in advance because they will expect politicians to get together at the last minute and make a concrete deal. but as everyone has been saying and janet yellen specifically, it's dangerous to go this far. at the same time, there's no big payoff for traders who get in

advance of these because it probably means they put on hedges which cost them money. so they will be waiting to see what the outcome is and be ready to jump on any directional moves that happen. shery: is the only certainty at this point more volatility? we are expecting the u.s. eventually to not default and get to some furtive deal on the debt ceiling. during the week leading up to it and that 11th hour agreement, is there just more volatility to come? >> there will be some, certainly. there we some choppy trading, a few people who do get involved, but on the assumption that most people will be making that something gets done, and then it will go back to the fed. people will be looking much more closely at what happens with the next federal reserve.

the one message that is coming through is that pushing back against the idea of rate cuts this year, the fed seem pretty convinced there is no reason for them to be lowering rates this year, even if they pause at the next meeting, they want to hold rates high for a long period of time. that is more important to the market, unless we get a complete shock and the u.s. looks like is about to go into default. nobody wants to put that bet on, it is just too far out. whatever the fed speakers had to say of the next you days probably weighs more than anything that comes out of the discussion of the fiscal that ceiling. haidi: mark cranfield there. vonnie: thailand's biggest pro-democracy parties have agreed to join in a coalition that would give them the clear majority in the lower house. the party chief says he extended

invitations to five parties to form the next government. he won backing from the party that finished second. turkey will hold a runoff election with president erdogan falling just sort of -- short of securing just enough votes. the run-up to be held on may 28 is the first to be held under the current electoral system and suggest a more divided electorate that in 2018 when erdogan won in the first round. the pboc has managed to keep monetary policy appropriate and interest rate levels reasonable. debate intensifies over whether china's economy needs more support. inflation in china may gradually rebound in the second half. the u.s. is preparing to buy up

to 3 million barrels of sour crude oil to refill his petroleum reserve. the country's emergency stockpile is at the lowest level since 1983. deliveries into the emergency government reserves are planned for august with awards to be announced in june. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. shery: still ahead, alibaba in the first quarter. details coming up. first, capital markets joins us to analyze three of the dollar amid ongoing debt ceiling negotiations. more on that outlook, next. this is bloomberg. ♪ exemption certificates or filing returns. avalarahhh

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>> we've already seen some pricing stress around short-term bills, treasury bills and the like. a little bit of change in the sovereign credit spreads but if we were to go over the x date, i think you would see breakdowns all through the market. shery: the dollar wavering ahead

of the u.s. debt ceiling negotiations between president biden and congressional leaders. we are now hearing from the white house that they will take place at 3:00 p.m. tuesday local time. of course they were delayed from last week, but our next guest is here. jeremy, good to have you with us. not many were positioned for that sort of strength, has the fate of the greenback changed? and how does the uncertainty over the debt ceiling negotiations factor in? >> undoubtedly the debt ceiling negotiations are dominating the market in the current environment. i think it just adds to the broad range of uncertainties which sinner around the fed. you just highlighted a couple of key fed speakers in today's

session and during the course of this week. that's another additional risk variable for the markets to consider. there is good reason for investors to remain relatively defensive. in the shorter term, that provides little relief for the dollar but there are still some question about the dollar trajectory. so it's very much the case that dollar rallies will be relatively short-lived and most likely be sold into in terms against some of those safer haven currencies. innocence that provides some resilience for interest to buy dips. shery: what about the japanese yen, is it back as essay pepin trade now? >> the yen is an interesting context. the boj is in a different sphere to global markets but it does feel as if japanese investors are keeping a little more of their money on shore.

i think that will play into that broader recovery narrative. there is a bias for many investors are analysts that the and should be stronger and we would anticipate that as well. so would expect for a year in target to be somewhere in the mid one 20's. in the shorter term, if were to see the risk of that being tested or run over, they we may well find that spreads are providing a little more support. we do see interest in terms of moving back toward safe havens including the yen. haidi: do see much of an upside risk or tailwind for the aussie dollar if we do see more benefit from the chinese rebound? >> there certainly some value to be had in terms of the aussie recovery narrative. there will be bumpy episodes in terms of the chinese recovery narrative. it was never going to be a

linear recovery in terms of the rebound but there are signs that we see the chinese consumer still a little reticent to spend aggressively due to ongoing uncertainties, but the recovery narrative which will probably be amplified by further monetary policy supported the time will play into the aussie backdrop so we would expect the aussie to remain reasonably well supported, albeit it does tend to underperform in periods of uncertainty. i think you have to be mindful that in the shorter term it is susceptible to haidi: we've been watching the election in turkey quite keenly. it's a pretty good example of how a big part of the market was wrongfooted by the geopolitical expectations. is it a reminder that some of these trades and turn bad very

quickly in the current environment of uncertainty? >> undoubtedly. i think what we found is that investors have periodically looked at emerging-market currencies and taken some fairly definitive views. geopolitical dynamics can change quite dramatically. beyond the turkish lira which has been in focus the last few sessions as well as the south african rand. geopolitical risk can create significant degrees of uncertainty and volatility so that can create some sizable and significant market reactions, neck and that can catch investors offsides. as a macro analyst you look for fundamental dynamics and key fundamental variables in terms of road, inflation rate differentials, etc. the geopolitical risk overlay that and you have to be mindful of those on a long-term basis. shery: that has an impact on

commodities, especially when it comes to energy pricing. there any commodity currencies you're keeping a close eye on that you find interesting? >> the broader recovery narrative is also being challenged over the course of the last few weeks and months. the plug trajectory -- growth trajectory is on a downward trend. in the context of the norwegian krone which has been under pressure, to say that the currency is undervalued, perhaps it is not be necessarily discounted. and in the context of our own home market in terms of the canadian dollar, we should not overplay impact of energy price headwinds and dynamics in terms of the canadian dollar's performance because it isn't is heavily correlated as many in

the market might've assumed in past cycles. so there can be scope for broader incidents there. despite the global slowdown risks over the last weeks or months, there conceal be some value to be had in terms of some of the commodity currencies and going back to the aussie as well. we also have to be mindful that they are susceptible to short-term risk dynamics. shery: great to have your views on the trajectory of different currency pairs. you can get around up all the stories we've been talking about today, also available on mobile on the bloomberg app. you can customize your settings so you only get the news on the assets that you care about. this is bloomberg. ♪

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shery: a fame short seller loaded up on shares of u.s. regional banks amid the tarp in the sector. giving us a peek into their portfolios, there is a lot of attention. >> he is buying regional banks and also because he's very bullish on china. he was featured in a popular film, the big short, about the financial crisis back in 2008. he predicted that happened -- collapse of the housing crisis and made billions as a result. so now we makes a bet on anything banking or tech, a lot of focus. what is fascinating is during

covid zero when it looked like a lot of other investors were moving away from alibaba and jd.com, he was slowly dying and doubling down. his jd.com stake tripled and his alibaba stake has double. combined they are about 20% of his portfolio. the other big call everyone is focused on is that he has been buying shares of the regional lenders, all the regular suspects. this is interesting because it looks like he bought first republic right before the takeover. it is not clear what the positions are as of this date. we always talk -- talk about 13 ss being a snapshot of what they had at the end of the quarter. so it will be interesting to see what is reflected in the next quarter. the vote of confidence coming on the asian tech stocks as many other hedge funds sold millions

in the same. so again, bullish on china tech and buying the banks when everyone was fleeing. haidi: so much exuberance over ai. were now hearing about billionaire traders that are also bullish. >> subject to different rules, yes, it looks like they're all in on ai and some of the big names that have emerged are microsoft and nvidia, benefiting in a big way because chips are used in a lot of and products in that stock up 90% year to date. we will get to that chart in just a minute. kathy woods etf has risen and fallen and risen again as tech has boomed early in 2022.

it looks like a are heading that way as well. haidi: coming up next, deloitte's chief china economist tells us about better-than-expected first-quarter growth. this is bloomberg. ♪

haidi: the atlanta fed president has favored putting rates on

hold right now. he told us policymakers are making headway in the fight against inflation. >> when i think about the trajectory of inflation, i think that we made really good progress on it. you think about where the economy was and where inflation was last summer compared where it is today, we've seen really positive things happening at the 9%-10% levels. it is two times what our target is, so there still a ways to go. i do think we've seen some of the froth really come out of the inflation measure. one of the measures i try to keep track of is the number of goods in the basket, showing inflation above 5%. right now in the latest report that is less than half now in

that range. at one point he was 70%-80%. that is a positive sign. we are starting to see her policies really work. >> do you rollout anymore additional rate increases? >> in today's environment where there is so much uncertainty in the days economy, i don't think we can rule out anything. we have been restrictive territory for 6-8 months. that's about the time you expect to see our policy start to bind on the economy. businesses tell me they're starting to feel that bind, and that is a really positive thing. we've had surprise after surprise over the last few years and most of them have been to the negative when it comes to getting closer to our inflation target so on want to keep that on the table for sure. right now i'm feeling like let's see how our restrictive policy is working and that will give me a sense of what our next move

needs to be. >> you have two more reports before the next meeting. what are you thinking now for the june meeting? >> if i had to have a vote right now i would probably vote to hold. we've got two more inflation readings, a jobs report has to come out. there's a lot more information we are going to have us to what is going on. shery: raphael bostic speaking exclusively to us at the atlanta fed conference. we are 30 minutes away from major market opens. what are you seeing? vonnie: -- annabelle: this chart showing one that could be the case because one index dipping back below zero and that tells us the reams are coming in worse than expected.

the fed still says that for the work is needed to rein in inflation. what we are hearing from fed officials must the ongoing debt negotiations in the u.s. is setting us up for some muted trading. u.s. features fairly flat, about a half-hour from opens in sydney, saul, in tokyo. australia also pointing to a flat start. japan is the market to watch. nikkei futures just coming online in singapore and the topix within a whisker of reaching three decade high. roman sex among those saying all this optimism around the topics is justified given the improving economic backdrop and the expectation for structural changes. it is a bit of wait and see and it comes down to what we are getting out of china later this morning because we have the

monthly activity data that a still. this chart taking look at what we are expecting. and for industrial output, you see the expectation that we will see a big bounce. but our bloomberg economics team saying the devil is really going to be in the details because you have to put base effects into consideration and you compare it to where we were at this point last year, shanghai was in lockdown we were just discussing the omicron variant, which seems crazy now. haidi: it feels like such a long time ago, and thank goodness for that. let's get some analysis now with the chief china economist at deloitte joins us out of hong kong. always great to have you with us. give us some of that context when it comes to the numbers we are looking at today. does it mask or weakness in the bifurcation we see in this

recovery so far? >> i think the numbers appear to be very mixed. with strong travel and consumption activity a few weeks ago, but at the same time the housing market remains relatively quiet. the trade number and export is strong and import relatively weak. what we are looking at today is whether we see some reduced acceleration of housing investment, i think that is key. haidi: should the pboc have offered more monetary support and easing right now? they have not given out very much despite retaining that they want to stay appropriate and see moderate support for the economy. should they have already done something by now? >> i think they will do that.

we have seen a lot of evidence suggesting the rate being reduced by major banks, and also just increasing the view that the housing market needs more support. public developers have seen tremendous improvement in terms of financing conditions, but it takes much more to ramp up housing investment. earlier in the program he talked about inflation in the u.s., we know there is no inflation threat in china. i would said the pboc should cut interest rates. i also think the r&b scan rate can be adjusted further depending on monetary potency.

shery: what do you mean by that, the chinese yuan? >> the japanese yen keeps weakening and the u.s. dollar is a high-yield currency. i think china could feel more relaxed. shery: so you think they are ok with the level of the yuan? >> i think they are ok. i don't think seven is a major psychological threshold. shery: what is it mean, the fact they did move on the one-year medium-term lending facility but they injected funds? what are they trying to achieve here? >> what they are trying to achieve is to ease financing burdens faced by developers.

the bigger goal is for consumers to take on more leverage. i also think -- there is no downside for doing that, if the inflation number is barely above zero, there is a lot of slack in the labor market. but at the same time, i understand my policymakers have been very cautious, because in the past, there was always a tendency to crank up the old economy, when economic activities were slowing, so i understand that. this year has been the most targeted, so i understand why they are not in a hurry to do that. haidi: what are your clients asking you about the broader investing environment? we have signs of increased lamp downs that are not particularly friendly to foreign investors

when there is a blurred line between due diligence and market data potentially state secrets and espionage. has that become more of a concern? what do you think they're trying to do their? >> i think people are asking the question of whether economic growth remains the most important objective. i also think given geopolitical tensions, sometimes it is difficult to define economic activities related to security. what we have seen some positive signs over the weekend between china and the u.s.. i think their positive signals and i hope at some point we can clearly define economic activities. only a tiny portion of economic activities has to do with the security. that is true for both china and

the u.s. haidi: the other be risk is deflation. there are definitely deflationary forces at play when it comes to corporate earnings. is that a big concern? >> i think that concern is overblown. asia has been through a downward spiral. the asian financial crisis from 1997-2003. that was mainly caused by severe asset price correction. earlier we talked about the housing market is weak. but i don't think housing prices in major china cities would come down. in fact, part of the china first tier cities prices are rising. i think deflation risk is overblown.

the risk is for the government to have large fiscal stimulus as china did in 2008. the manufacturing structure in china is skewed to the downstream industry to essentially push out commodity and energy prices. that is not in china's best interest. shery: thank you so much for joining us today. with the preview of the chinese economy and those activity numbers we are expecting later today. let's get to vonnie quinn with the first ford headlines. vonnie: treasury secretary janet yellen says the u.s. is already paying a price for its failure to raise the debt limit. she cited calls for securities maturity in early june. she reiterated her warning that her department could run out of cash as soon as june 1. how speaker kevin mccarthy says they are nowhere near a deal on the debt ceiling.

the philippine central bank governor has signaled a potential pause in one of the most aggressive tightening cycles in the region. he says key rates may be unchanged on thursday if officials see a permanent downtrend in inflation. the country cpi slowed for a third straight month in april. elon musk was issued a subpoena by the u.s. virgin islands in its lawsuit accusing debbie morgan of knowingly benefiting from jeffrey epstein's sex trafficking. the territory said it had reason to believe epstein attempted to involve j.p. morgan. fortis reportedly planning to cut more than 1300 jobs in china as its sales decline in the world's biggest car market. ford's sales l below a half million units in a part -- for the first time in a decade in 2022 as consumers increasingly embrace ev's. they're working with partners to

reduce costs in all areas. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: much more to come here on "daybreak: asia." this is bloomberg. ♪ conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent.

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haidi: g7 finance ministers and central bank governors proposed a plan focusing on clean energy that will be open to other nations, building on high-level guidance issued back in april. in terms of what we heard at this meeting, didn't manage to turn the policy guidance which was very high-level into a blueprint for tangible action? >> if you consider a new acronym , turning april policy guidance into an action under the guise of the partnership for rise, as

-- what they announced over the weekend was that rise will include multilateral entities such as the world bank group. also looking at including members of g20 countries such as india, indonesia, as well as south korea. we are expected to see more details on this during the leader summit taking place later this week. the partnership for rise itself has said they are looking at launching at the latest by the end of the year. although we like great detailed information about the partnership. shery: why is the g7 so focused on supply chains when it comes to decarbonization? >> if you look at supply chains for solar, batteries, wind turbines, china is in a place of

dominance in the supply chains. there are two factors concern, essentially they don't want us to become a situation similar to what happened with europe and russia's fossil fuel supplies. the other side of it is. -- beyond geopolitical tension, it's never good to over rely on supplies from this one country. as we saw in the automotive sector with the chip shortage over the last couple of years, ensuring a diverse supply chain is best. haidi: can we see a situation where the g7 eliminates dependence on china, because obviously this is the elephant in the room, but this is what the focus is really on. >> in the short-term, it is unlikely. g7 policy have to be careful not to hastily try to actually reduce their dependence on

china, because china's supply chains right now are the most economic. any hasty lowering of dependence on china would increase costs and slow down decarbonization to g7 economies. china built its dominance over time. it invested heavily but establish strong links both with upstream suppliers and downstream markets all around the world. obviously initiatives such as the u.s. inflation reduction act , we're seeing $60 billion in investment as a result of the ira. having said that, consistency is very important. in the case of the u.s., we are seeing some republicans propose gutting the ira as part of the debt ceiling negotiations.

we need to remember that is not just about providing incentives for building out manufacturing plants. we also need to build plants and operate and training that workforce takes time and investment as well. this is an area or china has done is consistently over a long period of time. shery: thanks for the latest from the g7 talks. sure to tune into bloomberg radio to hear more from the days big newsmakers. it in-depth analysis from the date -- from the bloomberg team broadcasting live from the studio. plenty more had. stay with us. ♪

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haidi: a quick check of the latest business flash headlines. burry loaded up on regional banks, shoring up his hedge fund. he snapped up shares of first republic before it was bought by j.p. morgan. it also bought shares in pac west, western alliance and others.

alibaba's e-commerce division is planning to make big investments in shopping app. it will focus on content creation to bring more users onto the platform and launch ai powered tools for merchants. alibaba's restructuring has produced six entities able to raise funds and list independently. shery: japan's biggest banks are predicting the highs profits in years but a cautious outlook is holding them back from returning surplus capital to shareholders. let's bring our asia finance editor. given the banking turmoil we have seen elsewhere in the u.s. and europe and elsewhere as well, does this make sense? >> absolutely. the forecast for the three biggest banks for record profit for mitsubishi ufj, and others

projecting the highest profit on the year. they are confident they can whether these economic headwinds going forward just not confident enough that they're willing to dole out buybacks at this point. that's because according to some, the anxiety in the global system and the stress on the u.s. banks, have a tricky task ahead of them, japanese banks in particular. they are from higher interest rates, they have been lending more around the world and their margins have been improving, but at the same time they are sitting on immense paper losses on foreign bond portfolios. about $18 billion worth in unrealized losses. they have very sticky deposits, a lot of liquidity, but they are sitting on paper losses and

that's enough to make the banks say let's hold off on buybacks right now and keep ample capital buffers and just see how the year pans out. we will just have to see, but it goes against the trend in the earnings season here in tokyo were other companies been doling out big buybacks. japanese banks are the outliers in that respect. haidi:? ? what about the bank of japan are there any expectations banks might benefit from policy normalization? >> unfortunately, the short answer to that is no. hopes were rising in december when the former governor widened the ban on the yield curve hoping it would lead to policy normalization. his successor has made it clear he will take it very slow and

cautious in the path toward policy normalization. even if the yield curve control was widened again are scrapped all together, that's not enough for banks. banks want to see the end of the negative interest rate policy. that's unlikely to happen anytime soon. haidi: our asia finance editor there in tokyo. coming up in that next hour, why the u.s. dollar and offshore remain central to their investment strategy. and why some investors are expecting rally in e.m. values. market opens are coming up next. this is bloomberg. ♪

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>> this is daybreak asia and we are counting down to the major market open. we continue to watch debt ceiling negotiations and perhaps fed speak that is a little more dovish but right now it is all about japanese markets. haidi: topix is nearing the milestone we have not seen in three decades and watching the domestic opportunity -- activity data dump out of china which might be as strong as it gets when it comes to coming off of low base but we are focusing on the next level for the topics. annabelle: 21 18. japanese, australian and korean equities coming online. at japan markets take a few moments to start showing live pricing so we will continue to so why we are expecting this.

we are beyond the 33 or at a 33 year high for the topics. -- topix. the bullish stance morgan stanley says is justified. -- goldman sachs says is justified. ongoing monetary easing at the boj. it needs to close beyond 21 18 to be at the 33 year high and in addition companies have been announcing solid earnings in japan and long-term investors are -- we will watch how they come online but essentially we saw the highest profit in years but a cautious outlook held them back from returning capital to shareholders. japanese yen is trading study.

-- steady. markets in the u.s. session were stuck in a tight range. investors are waiting for clarity with the u.s. debt negotiations and if lawmakers in washington that will be able to reach a deal to subvert default. because back is slightly outpacing the gains. future is now trading flat. we are watching the korean won. some of the world's biggest investors now betting on an em rally including fidelity and others but when it comes to the emfx rally -- let's look at how australia has come online because the rba may meeting minutes are due and clarity in

terms of what we can expect from the governor and his peers but also in the session today we will focus on if the chinese monthly activity data, is the expectation for a jump in retail sales but base effects coming into play given where we were this time last year in china which was the lockdown in shanghai but the top line this hour is japan's topix rising and on top or the highest close since 1990. haidi: our next guest is bullish on japan. joining us is chris weston and we see stop -- stock options looking for further gains. why are you encouraged in terms of direction and what opportunities are you seeing? >> there is not a huge amount of market at the moment exuding

this momentum so it is attractive from that perspective. a strong technique -- technical and fundamental case behind it. a lot of data has suggested significant inflows into future funds and there is tailwinds. the world is catching on to the situation. in april warren buffett went to tokyo and came back and said he was buying japanese stocks and the world picked up from that point. topics and capital going back to shareholders is very strong. dividends payout ratios are increasing. 14% higher than this time last year. boj for now but we expect a change is very positive and

earnings have been increasing so there is a lot working and i think pullbacks will be nicely supported in this market so we still like the case that is going on in japan. haidi: the renewed endorsement for warren -- from warren buffett, we see american investors jump -- dumping out of u.s. stocks and getting into japanese stocks instead. one of the fundamentals? are they sectors that you think will have more longevity? >> not so much a bottom-up stock picker. looking at the japanese economy a lot of conjecture has been about capability earning and

capital management initiatives have been strong and cash they have generated has been brought back to shareholders but the japanese economy is not growing to the same extent as some countries but it is on the rise when other countries are pulling back. we like the tourism story. it looks good at the moment. i think a lot of people have been focused on the story -- on the capex story. unlike the japanese market from a futures perspective and momentum looks good but we have seen the correlation between the topix and the chi -- nikkei. if you price the japanese markets in dollar terms we have

seen breakouts in all currency terms and that is positive from an index perspective and that is what i look for. shery: shery: financials did very well in earnings but resisting buybacks, giving the concerns of the banking sector instability in the u.s. and europe so do you think this will be an ongoing concern not only is a japanese banks and lenders but also for other regions? >> i am not close enough to understand if you are a shareholder would you be expecting that prudence. in europe you are still seeing buybacks and announced buybacks have been pretty strong but now is the time to keep some cash on the balance sheet and i think

that market would give you the level of christian but once we get through the worst of the crisis in the u.s. is over and we have seen people moving on maybe there will be an opportunity to get some cash back to shareholders but now if you can get away with keeping it on -- now is the time. shery: how closely are you following the debt negotiations? >> everyone has to be at the moment, whether you are in the u.s. and watching it politically or from a risk management perspective like me. we are watching the cash balances. there is $88 million of extraordinary measures. $139 billion on the tga we are watching the time table and [indiscernible]

june 2 through june 9 is the window where extraordinary measures will be drawn down. will they have to delay payments? that's what we are looking at. now we saw some stress in bills in maturities and yeah blowouts of 44 basis points and they continue to [indiscernible] but outside the traditional bills we are not necessarily seeing the stress come through. a lot of people are hedged and we see that in the s&p but out of that situation you are seeing gold volatility is very same green and -- sanguine and everyone is waiting for someone to act for the window when cash

balances will be low yeah we are obviously watching negotiations but we could see volatility move up in the market and heightens volatility in cash equities and that is what we are looking for so we have the check book we are looking for but we are getting to that point and when the market starts to move it could perpetuate volatility across markets what i will say is streets will be [indiscernible] in terms of dealer operations so we are waiting for the shoe to drop and to act as one but it is not right now. haidi: chris weston joining us. let's get to vonnie quinn with the headlines. vonnie: janet yellen says the u.s. is already paying a price for the failures to raise the debt limit.

she cited the rising borrowing costs for securities. she reiterated warning that they could run out of cash as soon as jim first. kevin mccarthy says they are nowhere near a deal on the debt ceiling. full ebay has signaled's -- felipe has said to be asked p if officials see a permanent downtrend in negotiation. elon musk was issued a subpoena by the u.s. virgin islands and accuses jp morgan of benefiting from jeffrey epstein attempting to refer musk to jp morgan and the judge has been asked to have alternative means to serve the subpoena peered forward is planning to cut 1300 jobs in

china. both sales in china fell below half a million units for the first time in a decade as an -- as consumers embrace electric vehicles. they are working with partners to reduce cost. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: let's look at japanese banks as we wait the move expected. annabelle: we are watching the lenders at the start of trading. thanks reported bump of profits but resisting buying back shares and some investors the market liking the degree of prudence

given banks are big holders in japan of u.s. tragedies so -- treasuries but let's change on because we are watching another company and there is reports of the share sale but the company had already slumped and if it goes through the share so it could be a 30% dilution and that it's a big negative because share price had been looking to stabilize above the level on cuts so it indicates it's a chance they are likely -- looking to sell the minority stake. i sigh the japanese drugmaker we are watching how the stock came

online and they say they are very confident of winning full approval from the u.s. for their alzheimer's drug and that would expand access to 10,000 patients across the u.s. and it's the first drug shown to slow the progress so investors clearly liking it. shery: alibaba says huge investments are coming for their shopping app as they try to bring more users onto the platform. details ahead. janet yellen warns the u.s. is already paying the price for the debt ceiling scandal. more on her warning to lawmakers next. this is bloomberg. ♪ or filing returns. avalarahhh

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haidi: janet yellen says the u.s. is already paying a price for the failure to raise the debt limit as the white house and lawmakers continue in the second week. let's bring in derek. are you getting a feeling when we hear about the negotiations

as we get into the mccarthy meeting tomorrow? >> it's interesting, the tonality difference between the two sides. the white house has been remarkably more positive on where things happen to be in negotiations. kevin mccarthy has said the talks are not making progress in the white house is talking about optimism. i get the sense and don't worry about the rhetoric. look at the framework. we have seen a narrowing. the idea there will be no negotiations in exchange for this is out the window because they are negotiating. there are questions about the framework. so you are starting to see some issues come into focus. you are seeing permitting rules and talk about the future spending level caps. there are some key division

points, especially over republicans wanted to put more work limits on entitlement programs and democrats don't want to so there are key differential points but if you take a step far back you can see a potential framework for something if people wanted to come to a deal. the problem will be afterwards coming to a deal that will satisfy both sides without establishing a narrative that one side caved which could prevent their elective representatives from their party voting for it because no one wants to vote for a deal that results in their side getting stumped. haidi: and it's a matter of time. shery: you have the date coming up in little over two weeks and reaffirmed by janet yellen that is june 1 when the government runs out of funds and then you have biden having to go to asian

-- to asia, will he even make it to that plane? >> yellen is talking early june. there is some flexibility in the timeline but there has been a real question about whether biden will get on a plane so i took it as reasonably good news that the white house came out yesterday and talked about the meetings biden is planning to have when he gets on the plane. so far, the signals are that he will get on the plane and go to the g7 in hiroshima and continue on to australia for a meeting. it is an important trip. criticism suggest biden shouldn't go but it is worth noting mccarthy himself went to israel earlier this month so there is maybe some gamesmanship here. but it looks like biden gets on the plane and if he does that is probably positive sign.

shery: it just adds more uncertainty to the economic outlook in the u.s. so not surprising a top federal reserve official remains constant -- cautious while deciding on the need to hike rates again or pause. kathleen hays is here. plenty to digest's today. kathleen: plenty to digest and maybe get an idea of how the different camps of thought are shaping up. bostic spoke with bloomberg earlier today and he said if he had to vote now he probably would vote to hold things steady. he sees no rate cuts until next year but admitted there is a lot of uncertainty and you probably

cannot rule out anything completely. >> no. in today's environment when there is so much uncertainty in the economy i don't think we can relate anything. if i had to vote right now i would probably vote to hold but as you noted we have inflation rates, the jobs report coming out, there is a lot more information we are going to have about what is going on. kathleen: he notes the numbers are still more than twice the 2% target. we also heard from the minneapolis fed and they think the work is not done and more is left to do so the inflation fight is not over. the president of chicago fed said he almost decided against the 25 basis point hike and when he thinks -- and he seems to be

saying he is tilting more toward a pause and tom bargains thinks there is no barrier to higher rates if needed, rate hikes if needed, not even the potential of financial instability. he said he did not think it would make that much difference and he is opening the door if necessary. haidi: and it is data dump day in china. what do we expect to see in terms of his fist persuades the pboc to finally be more generous with stimulus. kathleen: the last couple of days they have been stingy or than expected, especially after some inflation data last week on cpi and ppi. they did not cut the mls yet just yesterday.

they added more liquidity than expected in the open market operations and the pboc has pledged publicly appropriate stimulus ahead of these reports. base effects a year ago, lockdowns in china were cutting spending, production, manufacturing so now as the economy is open you expect to see strong numbers on a year-over-year basis with industrial products expected to rise 11% and retail sales, 22%. the investment is expected to be 5.7 up from 5.1 so some good numbers and may be a good

opportunity for the people's bank of china to say may be we need to give more stimulus. something to ponder. shery: kathleen hays with the big macro m -- macro economic stories of the day. plenty more to come. this is bloomberg. ♪

shery: michael burry loaded up on shares of regional lenders amid the turmoil finally showing his hedge fund up shares of first republic before it was bought by jp morgan and also bought shares in new york community bank science equity

folio with a market value of $107 million at the end of the first quarter. alibaba e-commerce will make huge investments in their shopping up with a focus on content creation to bring more users to the platform and launch ai powered tools for merchants. earlier the restructuring produced six new units able to raise funds and list independently. we will look at alibaba's plans on the e-commerce unit coming up. this is bloomberg. ♪ we moved out of the city so our little sophie could appreciate nature. but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go. i might've taken it a step too far. (chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams) let's pretend for a second that you didn't let down your entire family. what would that reality look like?

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haidi: further decline when it comes to consumer confidence in

australia. a contraction of 7.9%. the index for the month sitting at 79 two that reverses the gain of over 9% from april and brings the index down to 79. we saw the deterioration when it comes to current conditions. family finances down 10% month on month. critically the expectations when it comes to the economy the one your number contraction of -- one year number contraction and five-year numbers not looking optimistic as well. we will watch that for implications of the rba and how it continues weighing into sales and consumer sentiment numbers.

a strong showing in sunday's elections for thailand's democratic party's linking up to clean up the house. what is the path forward for the coalition? >> it is early days. what they have to do is try to get enough numbers to push through a prime minister candidate accepted by the parliament and that includes 250 appointed senators so they are not necessarily going to vote for the prime minister candidate of this coalition party so it is still very early days. we could see a lot of jockeying and a change in the scenario as it goes ahead. right now they have five parties they are trying to bring

together and that means a lot of jockeying for position so we still need to see what will happen with the senate and if they will go along with the popular vote and that is not certain. shery: and it was a very popular vote. a turnout of more than 75%. a record. does that increase and strengthen the mandate of the pro-democracy parties? >> it does but it doesn't mean anything to the establishment because they are so used to having their own way and controlling the whole environment so again, it remains to be seen what the establishment figures do, whether they say it is time to compromise, people want change, let's not go back to the conflict we had every time we have had a popularly elected party, the last election had a

popular party that was not able to form of government so it sparks conflicts last time and there were street battles and it was violent so that is the risk. if the conservatives say times are changing, let's make compromise, let's accept that people have voted for change and listen to the voices, we can move forward as the party is named and see some changes coming forward in thailand. it remains to be seen. it is very early. shery: thank you for joining us from bangkok. breaking news. the ftc will soon to block angie and steel to buyer horizon therapeutics.

we saw aftermarket trading plunge in the double digits and reports this would be happening that ftc preparing a lawsuit to block the sale of the company that would have amounted to about $28 million we are now hearing that might not be happening with that lawsuit from the ftc. annabelle: -- vonnie: turkey will hold an election after president erdogan failed to win the first round. it suggests a more divided electorate than in 2018. the u.s. is ready to buy up oil to refill their reserves.

the stockpile is at the lowest level since 1983. deliveries in the emergency government reserves are set for august with awards in june. the pboc has pledged to keep stimulus reasonable. monetary policy report the central bank said inflation in china was mild and might rebound in the second half. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: let's check the markets. annabelle: over 30 minutes into the session and japan is front and center because we saw coming online surpassing the high it hit in september 2021 and the topix now pushing past the level

and that takes us to highs and levels we have not seen since august 1990 now there is a few different factors that drove the rally this year, first has been the return of foreign investors, we know warren buffett has been a high profile investor and we saw globally a $22 billion worth of nation stock and futures being brought up in april by overseas investors and then the other side is around the door -- governance were forms, expectations, the boj could change course on policy settings so these are all positive for the topix but what is interesting is when you look at what we are seeing in terms of bets on the topix and japanese stocks and you can see the ratio for the nikkei has been declining even as you have seen

the price gaining statements the benchmark they are in blue and what they shows us is the rising bullishness in the market even though we see technical signs at least that the rally is starting to look overheated and securities has been comparing this to what we see in the u.s. and it is a story that japanese or american investors rather are selling u.s. stocks and buying japanese ones instead and this is a trend that perhaps there has for the gains are japanese stocks from here shery. shery: lenders predicted their biggest profits in years but held out on returning surface capital to shareholders. russell ward is here. why did they do not -- why did they do that? >> they are very bullish profit forecasts for three megabanks and a record profit for the fiscal year and [indiscernible]

the highest in eight years and that shows they are confident in the outlook but they are not confident enough to go ahead with buybacks at this stage. [indiscernible] cited concerns of the u.s. banking system global financial stresses and said they will reassess in six months and that is probably why stop is rising today. japanese banks are having to thread the needle with rising interest rates. they've been benefiting from rising rates, they have been massive global lenders and interest rates globally have been expanding but they are also massive holders of foreign bonds so they are sitting on large losses on foreign bonds to the

tune of $18 billion so there are risks and that is probably why banks are saying we will hold on to the capital for now and see how the situation pans out. haidi: today expect to get benefits from policy normalization at the boj? >> unfortunately no. the hopes have been dashed on that front since december when the previous governor of the boj widened the yield curve control and set up speculation the banks might benefit from higher interest rates getting a lending margin back in japan but really his replacement has signaled he will continue with these policies after using policies that even if he scrapped the control there is still the negative interest rate policy

and that is not going to budge anytime soon. haidi: russell ward in tokyo. we will watch alibaba when trading in hong kong gets started. they say they will make huge investments in their shopping app with focus on content creation. for detail let's bring in sarah jones looking into the story. what are they pledging in terms of this investment? >> the domestic e-commerce division says they will make huge investments into their main shopping up. this comes from the ceo of the commerce group one of the six independence units that spun off when the company announced major restructuring and she says they want to put money into expanding user banks, cutting costs for

merchants, adjustments to the platform commission on fees that merchants would pay and ai tools they will provide to drive growth for merchants and content creation. livestreaming, short form videos, personalized stories. shery: how much of a boost is this? >> what we know is they are contending with the environment where jd.com just announced that subsidy program in mark -- in march, bytedance is making major inroads so alibaba is trying to gear up to boost their bread-and-butter business. the ceo said this would allow them to seek independent fundraising so it is really that

they want to continue to invest and allow them to flourish in a competitive environment with other online retailers. haidi: are we looking for more details when it comes to the reporting on thursday? what he watching? -- what are you watching? >> how restructuring is playing out and any hints as to which individual units. colleagues have reported the fresh hippo and the logistics arm are preparing for public listings in hong kong and that the international e-commerce division is in the early stages of looking at the u.s. so we will look at any signs as to how

china's post-pandemic economic recovery is playing out. shery: sarah with the latest. coming up, emerging economies seeing inflation adjustments turning positive. we will discuss with brendan mckenna next. this is bloomberg. ♪ sales tax with avalara, you don't have to worry about things like changing tax rates, exemption certificates or filing returns. avalarahhh ahhh ahhh ahhh

shery: the u.s. dollar this week giving up some games from last week. at some of the world's biggest investors now expect em currencies to outperform the dell development market peers. more rates turning positive as the average inflation rate eases . let's discuss with ruth carson and brandon mcdonagh -- make -- brendan mckenna. is this about real yield? ruth: it is. the hunt for the real yields so big names are basically betting

the risking emerging market still have juice in them on the currency side, bond aside -- bond side. it's important to remember a lot of the nation's from chile to mexico and some in asia has taken on inflation much sooner so there is still demand for commodities coming out of china. shery: how much does it have to do with bargain-hunting at this point? brendan: that's a big component of this. it is attracting foreign investors and not just currency looking for foreign investment but it's also equities and a component of valuations being

attractive across the asset class. shery: are you looking at emerging market currencies strengthening against the u.s. dollar? what are your best bets? >> we are forecasting emerging-market currencies strength but within that we are looking for them to outperform relative to peers and a subsector we are looking at latin america to outperform and this goes back to attractive valuation and real interest rates and we are looking at country specific developments were may local politics are improving so it's external factors and also idiosyncratic developments. haidi: what about the yuan as an anchor? is the potential for more of a drag? >> i think there is potential

for a bit of a drag coming out of china. we are starting to see the economic rebound start to mature and maybe some rebound is not as strong as maybe we would have initially liked so maybe the em asia rally is losing steam but if we are forecasting broad dollar depreciation it is something that could at least support the chinese one and emerging market asian currencies more broadly but we expect em asia to albert -- underperform as the steam from the china rebound starts to fade a little bit. haidi: ruth, what do you see as the top em currency picks in terms of what is being treated by funds? >> absolutely. it is very much still commodity

driven. in latin america a lot of funds are bullish for the chilean peso and mexican peso. in asia it's about the indian rupee. these currencies were clobbered last year when the dollar skyrocketed to record highs but they have been on a tear this year and u.s. dollar is on the wane and the commodity story continues. shery: brandon, you talked about the idiosyncratic risks. the turkish lira is a different story but wells fargo was thinking one would maintain office. >> it is still the probable case now, probability of retaining is probably higher now that the

first round of voting is completed but yes that was are based case and we forecast a depreciation is a result of him remaining in office but after the runoff election it will start to mid -- materialize and could push the lira to all-time highs against the u.s. dollar. shery: we expect emergency measures in argentina. what is happening? >> a combination of argentina not being able to get out of its own way. they have fiscal related problems and an inflation problem and that forces the central bank to raise interest rates aggressively. the problem with argentina's political and we will have an election next year -- this year but because the central bank has run out of fx reserves and credibility is lost it will probably be devalued postelection so the argentine peso will probably outperform --

underperform in the emerging markets and at an all-time low against the u.s. dollar. shery: brendan and ruth, great to have you. users can get more on the stories. em go is your function. this is bloomberg. ♪ s bold new thinking. ♪♪ partnering to unlock new ideas, to create new legacies, to transform a company, industry, economy, generation. because grit and vision working in lockstep puts you on the path to your full potential. old school grit. new world ideas. morgan stanley.

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haidi: a political look at the headlines. a board room shakeup at an rg. a letter said the company has underperformed because of a number of operational and strategic mistakes. they want new independent directors and energy says they welcome all shareholders. japan's biggest banks refraining from share buybacks despite addicting the highest profit in years. this is due to the gloomy global outlook. [indiscernible] saying they will hold back on any buybacks until the first half results and the trend from other japanese companies cross this season. microsoft take over from

activision has a one year approval. the eu says analysis shows the deal will not hurt competition. the deal hinges on microsoft's legal challenges to the ftc and cma. shery: across markets in asia we are following japanese nikkei up 44 -- for the fourth consecutive session, especially in the topix. we would touch fresh 30 year highs. the kospi is also gaining ground, 6/10 of 1% after it fell to 81 month low. we saw the risk off sentiment -- fell to a one month low. the asx 200 on kiwi stocks a

little bit down. haidi: and it is those rivals and the uncertainty after the u.s. recession risk and uncertainty out of china and recovery risk and this is playing out when it comes to broader commodities. oil, we see crude edging a little higher at the moment. u.s. looking at crude for strategic reserves. we are seeing gain when it comes to crude markets at the moment but that is coming ahead of the data dump out of china and we are watching iron ore which is seeing gains for a second day as prices in china show signs of strengthening. this is bloomberg. ♪

david: good morn