haidi: good morning welcome to daybreak australia. shery: good evening from

bloomberg world headquarters in new york. u.s. equities climb on the hopes of a breakthrough in debt talks. president biden saying he is confident negotiators can make a deal. >> i am confident we will get the agreement on the budget and america will not default. haidi: joe biden heads to japan as a standoff and washington continues. shery: tencent earnings missed estimates. u.s. futures unchanged at the open here in the asian session after the s&p 500 gained ground today. we saw a little bit more optimism that perhaps we could see a breakthrough in the debt talk in past. we heard from president biden even kevin mccarthy coming out and saying potentially a deal

this week was doable. we continue to watch what's going to happen on that front. in the meantime, we had banks rally because western alliance showed deposits were up. that shored up confidence in the banking sector. we had a little bit of pressure when it came to oil prices, they were slightly higher in the asian session, down again all to do with risk on sentiment being offset by the fact that we saw u.s. stockpiles seeing the biggest increase last week since january. concerns about global demand are out there still. haidi: a lot of concerns as to how this is complicated by the ongoing debt limit standoff. we did see more positive sentiment on the market side. does that mean we are getting closer? guest: both sides of the debate

are saying there is progress being made. we have big banking executives in town today making the point that a default must be avoided. it is pointing toward a consensus that we will not go over a cliff, but we don't have details yet on how the disagreement might come through. their issues like pulling back on spent a during the pandemic. also issues over social welfare for poor workers. president biden did say that he will keep in contact with speaker mccarthy and that is why there is optimism that maybe there will be meeting of minds in the days ahead. shery: meantime treasuries cash balances under pressure.

what are we expecting in terms of areas of compromise between the two sides? guest: there's no doubt the deadline was real and janet yellen came out again doubling down on the idea that the government will run out of money around june 1 and that is a critical moment for them to have a deal made. it's not clear where the agreement will come from. president biden is making remarks that he is getting along well with speaker mccarthy. but democrats will not want to see too many spending cuts. remember speaker mccarthy has a narrow majority, he has to keep them on board. there's clearly a lot of work to be done. nonetheless, president biden is cutting short a big trip deliberately to get back.

whether or not they kick it down the road remains to be seen. shery: the debt lock is overshadowing president biden's trip to asia which was intended to ensure the u.s. remains a reliable partner in the face of chinese assertiveness. stephen engle is here to discuss. what are we expecting at the g7 meeting? >> it was a truncated trip. he will only come here as part of the g7, then he will head back. then he will head to poplar new guinea meeting with the prime minister. that will not happen. the chinese president xi jinping

at aipac in november did meet with him. that is potentially a setback for the by the administration not going to port moresby. also not offering up a reciprocal state visit as he did to the leader of australia because joe biden will also be skipping a trip to the quad meeting in australia after pop one new guinea. he did get a state visit invitation. whether you like it or not, there is a global tussle going on for influence. perhaps you could bifurcate it between the united states and china. israel and these meetings where the g7 like-minded economies will probably agree on a lot of things when it comes to the war in ukraine and sanctions on russia and a three ukraine. there are issues that maybe

there is not total unity. getting other economies on board with the narrative from washington with china is a struggle for washington. that is why truncating the trip could undermine those efforts. haidi: that was stephen engle in hiroshima. let's get a look at how asian markets are shaping up. optimism when it comes to how close we are doing with the debt deal. sidney futures are up .6%. this as we continue to start seeing repositioning my comes to china exposure given that we have seen industrial production in repricing to commodities

names in australia. the aussie dollar is unchanged. the kiwi equity situation about .1% higher. this as we look into the kiwi budget today as well. also watching the dollar-yen. it feels a little more potentially like a risk on day given the s&p 500 up 1% on hopes of a breakthrough in washington. we also continue to watch chinese assets. tech earnings are in focus. tencent posting its fastest pace of revenue growth in a year. annabelle is taking a look through the numbers in hong kong. top line was a miss on estimates. the broader recovery patchy. it looks like that theme is applicable for the internet sector. annabelle: still continuing to

play out as well. so revenue up 11%. that was driven by healthy gains and also the fintech space. at the end of last year, this is when china started to end the long-standing freeze they had on mobile and tencent profited from that quarter. one of its biggest gaming titles had new highs for gross receipts . these are the positives for tencent in their latest earnings. you mentioned the earnings miss and that was driven partly down to weakness in ad sales which missed forecasts. that was the topic raised on the earnings call. tencent says broadly the sector is in recovery. it did growth online ad business by 17% but as you say, it is uneven. verticals like fast-moving consumer goods, e-commerce is

seeing a rebound. wechat with the latest -- pig contributor and that took in half of the ad revenue overall. shery: how is it planning to spur growth in this environment? annabelle: it comes down to a artificial intelligence partially. this was a key topic in the call. tencent says it's planning to expand or integrate the text capabilities across the business units. what's interesting to know is that tencent's president is joining a lot of other tech executives including the head of open ai and calling for further regulation in the space. the company has appeared to lack find its domestic rivals in this space. but still it is calling the

technology a growth multiplier and that's important because tencent is facing specific challenges particularly when it comes to identifying the next big gaming hit in china. haidi: with those numbers out, is that alibaba going to be an more focus of the split up? annabelle: yes what we are listening for later is the split up plan that will be the key focus. our bloomberg intelligence team put out a note saying that could lead the company to prioritize profit over revenue gains across the six operating units. morgan stanley as well looking at potential dividend boost by that. saying more cash could be released amid the british -- restructuring. analysts among barclays expecting revenues in line with

estimates. chat gpt will also be a focus. it has received a lot of interest and it has boosted managements confidence in attracting a large portion of the domestic market. another key earning we are watching later today. shery: let's get over to su keenan in new york with first word headlines. >> we start with xi jinping, he will seek to deepen china's influence in asia at a summit on thursday. it will assemble leaders of kazakhstan, kyrgyzstan, and others. trade ties regional security concerns and russia's war with ukraine will likely dominate talks. meeting unfolds as g7 leaders meet in japan this week. the indian prime minister is pushing through with his australia visit next week.

this despite the last-minute cancellation of the city quad summit. he is expected to hold bilateral talks with his australian counterpart and meetings with the business community. the visit is seen to eight us joy is bid to strengthen ties with india amid tensions between the u.s. and china. pakistan's former premier says that police have surrounded his house to potentially arrest him. he was given a 24-hour deadline to hand over -- at his residence who were accused of attacking military facilities. his arrest last week sparked clashes between his backers and security forces. he was granted bail. a panel says the write-down of credit suisse additional tier one notes will not trigger an insurance payout. the committee took the view that it was junior to the board's --

bonds in the swap. they have been holding talks for how to boost interest after the fallout. global news powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. haidi: coming up next, hearing from a cio about why she refers to remain cautious when it comes to u.s. equities. this is bloomberg. ♪

>> what they should focus on is the interest of americans. why do we want a default? it makes no sense. we shouldn't default, because is going to create a lot of issues and repercussions that we don't fully understand or know fully

about. there is no reason to go down that road. haidi: that was the ceo and chairman of avenue capital management. our next guest says it's likely the u.s. government will kick the can down the road on the debt ceiling triggering a relief rally, but she is remaining cautious on u.s. equities. the cio of zuma wealth joins us from malibu, california. a lot of economists are worried that this time the stakes are higher because of the state of the economy and where interest rates are. are you not interested in taking in a recovery rebound if there is one? what would be the trigger to increase allocation in u.s. equities for you? guest: just parsing up that question. obviously, the debt ceiling is

taking a lot of attention now here in the u.s. probably around the world. i'm not necessarily saying that we know they are going to kick the can down the road so to speak when it comes to the debt ceiling debate. we are not a washington insider. we're just saying we are not want to take a position one way or the other. that said, we will have relief rallies like today when we do have good news as we are getting closer to june 1 and it sounds like perhaps the debt ceiling will not trigger some sort of default for the united states which is not something i think is recommended for anybody. >> where do you see good diversifiers at this point if u.s. equities are something you are watching but not necessarily wholeheartedly embracing right now? guest: we are cautious on u.s. equities, but we are at the end of the hiking cycle for interest rates.

optimism will absolutely come back to the united states and to u.s. stocks. in the meantime, we are about to be in a recession in 2023. although indicators suggest that's going to happen. the real question is is it going to be deep? shallow? rolling? we are in the camp that it will probably be shallow and rolling. the bear market for stocks is probably over for the u.s.. when we sharpen our pencils and look at what could happen in the next six months, we will likely see a weaker dollar. for the past 10-15 years, most americans have been underweight and international stocks and we want to raise the flag that you need to make sure you have exposure to international as well as u.s. stocks if not and an overweight position relative to the u.s.. shery: even with the debt talks,

we are seeing flows and hedges toward alternatives to the dollar. where in international markets are you liking this weak dollar theme? guest: we really like international developed outside of the u.s.. that captures everything from asia-pacific to europe. you can easily invest in an etf like vanguards develop markets etf. there's a technical rally going on in international developed so you are already missing if you don't have enough, but it's not too late because woman look at the fundamentals, they are very strong. higher dividend yield for international developed stocks. a faster earnings growth, lower pe. all of that adds up to good places to make sure you have good exposure in our portfolios because very likely, at least in the u.s. perhaps not more

globally where you are but in the u.s., most investors are underweight in the international developed asset class. shery: when it comes to the u.s. equity space, we have seen a narrow rally toward u.s. tech stocks. is that it that you can make at that point? guest: large tech stocks are part of that theme of a weaker dollar. it is weaker because the fed is probably at the end of the hiking cycle. if anything, they might cut rates this year. we think there's a higher probability than a lot of people think that translates into a weaker dollar. also large tech names. because they derive a lot of their profits overseas. i think that's part of the theme of a weaker dollar and that's in part what's driving the tech stocks gains we have seen most recently. shery: a potential recession, credit stress, the banking

turmoil. when it comes to developing economies, is there anything you could invest? we have heard calls about bond investors liking em bonds. guest: that's really interesting, we haven't touched on bonds at all. something we've had zero exposure to an 2022 so last year with any flavor of bonds. we are changing our tune on that. we're not quite dipping into em bonds right now however i do think you can push out on the risk scale for u.s. corporate bonds. that's where we are seeing a technical rally this year. not quite in em at this juncture although from a standpoint it does make sense a weaker dollar should translate into that being a benefit but we are just not saying that from a technical standpoint.

shery: good to have you back, thank you. we'll have more big guests coming from the conference in hong kong. the topics from some of the professional investors who have been sharing their ideas of the event. you can catch those conversations on bloomberg tv and hours ahead. this is bloomberg. ♪ if your business kept on employees through the pandemic,

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>> there is a saying bears and bulls make money, pigs get slaughtered. you will never time the exact time to get in and out of the market. >> that was the franklin templeton president and ceo. a risk on session in washington today.

there was optimism that perhaps we could see some sort of resolution when it comes to the debt ceiling and past. president biden expressing confidence there will be no default. thanks gain ground. western alliance reporting growth in deposits. u.s. futures not doing much at this point but the 10 year yield, yields across the curve gained ground. the dollar the highest level since march on that optimism over the debt ceiling especially with speaker mccarthy now saying reaching an agreement this week was doable. haidi: we continue to watch that as the main driver. let's get a quick check of the latest headlines. tencent sales show the most growth in over a year.

the plans to integrate artificial intelligence now likely to be a focus for investors. sony group plans to buyback around 2% -- up to 2% of its shares over the next 12 months. the firm says it will spend as much as $1.5 billion. sony had warned of headwinds ahead from a slump in global consumer spending. share buybacks in spain -- target says earnings this quarter will be no more than $1.70 per share. it expects robust sales in essential products while demand for discretionary goods will soften. coming up next, g7 leaders gather in japan to find unified response to what they call

chinese economic coercion. we will take a look at what to expect. this is bloomberg. ♪

>> you are watching daybreak australia. president biden has expressed confidence that negotiators would reach an agreement to avoid a default.

that is even as lawmakers criticized his decision to travel to japan for the g7 summit. biden and congressional leaders have agreed to a narrower round of talks with hopes of reaching a deal. he has shortened his trip to continue negotiations in washington next week. meanwhile, the founder of foxconn has appeared to rule out . he promised to do his best to help his opponent when the election and oust the current progressive government. india's top court has asked the markets regulator to close its investigation into hindenburg allegations against the adani group. they include corporate fraud and

violations of insider trading regulations. the sec board of india has sought an extension after submitting a tentative report last week. meanwhile a cochair of a group has died at age 87 in london. he was the eldest of the four brothers in charge of the mumbai based conglomerate. he had suffered from form of dementia. his daughters called him a visionary tighten with industry and business saying they will continue to uphold his legacy. global news powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: president biden taking heat after cutting short his asia trip for debt limit talks in washington.

say it undermines commitment to the region in the face of china's assertiveness. our next guest says people are having a hard time discerning beijing's true intentions. good to have you with us. the g7 leaders still want to send a message against china's economic coercion. what can we tell about the beijing readership right now about their intentions on the global stage? guest: we are certainly getting mixed signals at the moment. you have a roadshow in europe trying to send a message that china is ready to collaborate again on various levels of the relationship. you have even the premier and xi jinping giving speeches implying the economy is open again and people are welcome back to do business. meanwhile, a lot of difficult news happening on a daily basis

that sends another signal that it's harder to do business in china than ever before and china doesn't plan to back down off of some of the challenges or ways of doing things at the very least you could say throughout the southeast asia region and around the world. what you have is western leaders in the g7 in particular and also the multilateral groups that collaborate with the g7, the u.n., imf have a difficult needle to thread. they need to stand firm in the face of these challenges and find a way to respond individually and collectively. meanwhile, they need to find a way to put a floor under china world relations and find a way to improve them. everyone agrees they are rough right now. parks one of the conflicting messages has been the crackdown on former consulting firms.

is this because now they can afford to? we know from the reopening of china from covid zero, they wanted to show the world that they are open for business. now we now they are going to grow around the 5% target. are they feeling more emboldened to take harsher measures? >> i definitely do not think it's a response to the 5% growth target or any other specific growth target. the damage they risk doing to their international reputation as a place to do business and specifically to consulting and all the other business that consulting facilitates would be long-term or permanent whereas their current growth trajectory is at best shaky. even in the present tense let alone medium to long-term. i don't think they would make that trade. the so-called crackdown on consulting firms is misunderstood at the moment. the general direction of travel for any type of business in

china is definitely in a bad direction. that includes consulting firms. yet the crackdown that we are seeing i don't know if i personally see it as a crackdown. there are three cases that are really driving these headlines. the first was the u.s.-based investigations firm. the second was being and the third was cap vision. these three cases have less in common than meets the eye in my opinion. one is an investigations firm. they have always been getting in trouble in china. every few years there's a big case where a western invasive investigations firm goes down in china. it's usually for doing something they shouldn't have been doing. there's little officially being reported on what they were doing but an investigations firm getting in trouble in china is not new. another situation we know even less about. all we know is discussions took

place between police and employees that at least one of their offices. there has been no reporting of charges being pressed, people being detained or arrested or any other form of penalty. it's hard to say what that is. when i lived and worked in shanghai at a risk management and investigations consulting firm, a visit from the police could be a prophylactic measure taken to diffuse tensions, not necessarily bad. where there's smoke there's fire, so the fact that that thing is in the news it probably wasn't just -- and the third thing is cap vision. i was an executive there for close to four years. it is a chinese company first of all. it doesn't fit the narrative of a crackdown on foreign consulting firms. perhaps more importantly, none of the reporting on the cap vision situation seeks to debunk the allegations of the government that they were selling state secrets

specifically military once. you would get in trouble for that in any country unaware of. no one is saying they didn't do it. what's really going on? haidi: it sound like you are saying potentially this is less substantive and more symbolic. we know xi jinping has longer-term plans beyond five or 10 years. there's a bigger picture. is he trying to thread the needle to appease domestic audiences as well as abroad? guest: i think it's very important that you raised the term domestic audience. indeed, i think a lot of this is for the domestic audience. if you look at the cap vision case as a specific example, cap vision as a company did not have any formal charges pressed against it. the punishment seems to be reputational through the media coverage. furthermore, they mentioned foreign clients or buyers of sensitive information, but they don't name them. they certainly have not gotten

in any trouble in china. the only people in trouble in jail right now are the experts that work at state owned enterprises or government entities sold the secrets and violated the confidentiality agreements. i do believe a large part of this is tailored for the domestic audience. talking through it further, at the same time, there is a message being sent. the new law and a number of these things in a short time. you can't say the direction of travel is good. it is getting hundred to do business in china, but i don't think it's as simple as saying they're trying to cop -- crackdown on foreign businesses. haidi: these are consumer facing business is not in sensitive

areas looking to diversify outside of the chinese market because they are feeling insecure about the broader business environment. is that bifurcation when it comes to foreign interests and inevitability? guest: i don't know if the bifurcation of interest in foreign business is inevitable but another thing you have touched on is whatever -- whatever the chinese government's intentions are, there is another component which is how it is received. how it's being received in the global business community is with some forte of low panic. think they're allowed to do or not allowed to do in china. as anyone who has done any type of business knows, uncertainty makes it impossible to do much especially on a long-term basis. again, i don't know if there's message specifically being sent

to the foreign business community, but it is certainly a message being received. haidi: of course, president biden being forced cancel his trip despite the priority of reasserting the presence in the south pacific. how damaging is this and how much not glee but how much would beijing be welcoming this development? guest: you stand someone up for a date and they can't not remember it even if they say they forgive you. when you make decisions about where to be at any given point in time, you are implicitly making a prioritization decision that all parties involved can feel. biden leaving however understandable it may be definitely doesn't help the g7 unite around any particular course of action or message. whether that would be received

by beijing with any form of celebration i would challenge that. china knows that its future is inherently fundamentally intertwined with everyone else's. the g7 is trying to galvanize itself or action. and change how it engages with china. china would like to know where that is heading. again coming back to uncertainty, any longer time where china has to wait and see how the g7 plays its cards creates uncertainty for how beijing plays its cards. i don't think they would welcome any slowing down of what the g7 is working on. i think they would like to find out what the next card in the deck is. shery: good to have you with us. we have more to come on daybreak australia. this is bloomberg. ♪

we see a lot of value buried in the financials because everybody hates them and they're not all the same, not everybody is the same. there is our largest exposure invested in india. india as an economy is

benefiting from a lot of geopolitical shifts that we see. >> if you look at the fundamentals, i think the move downwards recently is fundamental and if we could buy copper equities at more of a discount, that's great thing for us going forward. >> the china reopening play is not just about mining stocks, but it's about trade. it's about japan, the whole of asia. >> the recovery that everyone was expecting, the exponential recovery i don't think that's coming. but slowly getting there. shery: key voices from the conference in hong kong. one guest is seeing opportunities -- opportunities in the education center. he says they offer attractive

valuations and comply with government policy. the overlook investments founder is making the case for state owned power. he says it stands out a good corporate governance with a stable model and good margins. he calls it china's climate change which it. haidi: we will be digging deeper into those calls when it comes to china education and recovery. bank of america seeing a handful of tail risk strategies almost too cheap to pass up. they say derivatives tied to these assets went to a low probability of a crisis happening. from budget talks in the u.s. to new zealand where the finance minister is expected to hand

down a no-frills budget in a little over four hours. spending constrained by inflation and a slowing economy. it is an election year in new zealand. it's a difficult time to make a budget right now. >> we had the reserve bank of new zealand warning that any big spending that's going to push up inflation, that's going to mean more rate rises. and it's dealing with the aftermath. we're going to have it all revealed in a few hours when the lockup ends. we have had a few leaks ahead of time. finance minister says he has found $4 billion in savings. we are expecting spending to strengthen infrastructure and

ephesus expected to stand out for some time. return to surplus not expected until 2026. we have the rbnz meeting next week. there may be a little more tightening in the pipeline. shery: the next few hours we will also be getting jobs numbers for april out of australia. what are we seeing in the labor market? >> slowing growth expected in the labor market. we are anticipating 20,000 full-time jobs have been added in the month of april. that's a reasonable slowdown from what we saw in march. the unemployment rate might know of to 3.6% and the reserve bank of australia has been watching this as well saying as the economy slows, the unemployment rate is expected to take up. migration into us to you has been growing.

that is all setting up conditions for a little bit of listening and the labor market. we have to keep some perspective. the unemployment rate still hovering around 50 year low. haidi: also tuning to bloomberg radio, you can hear daily news from the biggest newsmakers. we are broadcasting live from that studio in hong kong. more ahead, this is bloomberg. ♪

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six would be out in that window. shery: the japanese prime minister is hosting the g7 summit in his hometown. he is now juggling his aspirations of a world with no nuclear arms with security challenges from china, russia, as well as korea. for many people, there is only one true path, a world without new the -- nuclear weapons. >> 92-year-old remembers the exact moment an atomic bomb was dropped on hiroshima in 1945. >> right when i covered my eyes and ducked down, i thought it was the end of the world. it was an incredibly enormous explosion. it felt as though my intestines were being ripped out of my body. the ground below me erupted and just vanished in a white flash.

>> as prime minister, he host the summit in his hometown, he juggles with security challenges. after decades of progress in reducing nuclear strong piles, experts are closely watching the renewed threat triggered by the war in ukraine. the u.s. has brought more assets capable of launching nuclear strikes to the region over the past year. looking to sports forces in guam which include bombers. >> certainly comparing to the past, the situation is tense. i have to say it will be more tense if we are not going to act now. >> the professor says the key would be to hold conversations

with potential adversaries. >> without reducing the risk, probably we have to keep competing with each other or arms races. i don't think that would be productive pathway for any country in the world. >> the international community may be at a historic crossroads. for the people of hiroshima, or only one true path. a world without nuclear weapons. >> today we face geopolitical tensions, government says deterrence is the best policy for national security. shouldn't we creta world where we don't rely on nuclear weapons? now is the time to consider how we can achieve that. >> at this summit, i want leaders to seriously figure out a path toward nuclear abolition. don't just vaguely say we will consider it. that is my hope.

haidi: let's take a look at this trading session. cautious optimism when it comes to prospects of getting closer to the u.s. debt ceiling feeding through when it comes to sentiment. we are seeing not much of a change with the aussie dollar sitting steady at $.66. we have been watching the dollar extending those gains at an underperformance when it comes to the yen against broader peers. a bit of a reversal with the safe haven flows we have seen into haven currencies like the yen and -- the kiwi dollar softer as we are expecting the deliver of the budget from the prime minister later today. it will be a difficult budget to strike a balance given the

cost-of-living crisis, higher rates, and the looming recession. the dollar yen holding steady. watching trading when it comes to the chinese yuan as well. also a mixed outlook with the economic recovery. we are seeing pressure of the prospect of rate cuts from the pboc in play. that's it for daybreak australia. daybreak asia is next. this is bloomberg. ♪

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>> welcome to "bloomberg daybreak asia," we are cutting down to the major