haidi: welcome to "daybreak australia", counting on to major market opens. shery: the top stories this hour. the u.s. and taiwan agreed to boost trade ties, the first steps in an initiative that faces opposition from beijing. haidi: this comes as president biden and other world leaders meet in japan. shery: alibaba was much anticipated breakup begins as it tries to -- revenue growth, it will explore ipo's for two units. stocks gained ground in new york, we are talking about the s&p 500 finishing at the highest level in nine months. we had hawkish fed comments coming from the dallas fed

president, talking about that perhaps a pause was not clear yet. it was the idea we could see more progress in debt negotiations that led to the optimism in the markets. the nasdaq 100 finishing at the highest level since april of last year. we have the 10 here, two year yield at the highest level in a month. more people think fed tightening is not over yet. we are seeing oil prices holding at $72 a barrel. we had seen a little bit of pressure on the previous session in new york given the hawkish fed comments. it was the pressure in chinese adrs that we were watching. take a look at the golden dragon nasdaq index. it was a third session of losses.

the big story was alibaba, sales growth was disappointed. a third consecutive quarter of a single digit revenue growth, that did not sit well with investors. we are watching what is happening in the ipo space for that company. haidi: high expectations after that split up plan. we will be watching chinese tech names. let's take a look at asian markets. we are seeing optimism on it comes to upside. we have been watching the fall we saw in the aussie dollar after the jobless rate growth. and the weakness we have seen in domestic activity data out of china, and thing up bets we will see the rba stay on hold. kiwi stocks look flat after the budget was the liver. chicago nikkei futures look like

they are taking a breather. tracking the usp, higher again, continued optimism when it comes to further earnings growth, low valuations from market reforms continuing to drive a japanese stocks to multi-decade highs. watching haven currencies in asia. we saw them falling after those fed comments about the pause not being set in stone. geopolitical tensions on the horizon as well. she seven leaders are set to increase pressure on russia with additional sanctions as they begin their summit. a senior biden administration official told us they reaffirm their commitment to supporting ukraine. our guest joins us live from hiroshima. let's talk about russia. some of these moves are expected today.

>> it looks as though, according to sources, there will be further sanctions unveiled by the g7 leaders on russia. i want to set the scene for today, which is day one of the g7 leaders summit, most of the leaders arrived last night. joe biden met with his japanese counterpart, they talk about russia, other challenges, including china. osha and the challenges posed by china will dominate toxic today -- russia and the challenges posed by china will dominate the talks today. geopolitical risks, whether it is russia's war in ukraine, or the challenges posed by china, and the rhetoric around taiwan. this g7 is held in russia -- is held in hiroshima. even though it is raining heavily, they will be going to the atomic bomb memorial and the

peace memorial park later today as a symbol of the dangers of nuclear war. that pivots to the pressure that they will continue to put on russia and its war in ukraine. i can run through key elements the g7 leaders will likely be pushing for today. they will cut off 70 entities from russia and other countries perceiving u.s. exports by adding them to the u.s. commerce department's blacklist. they will target 300 entities, vessels and aircraft for allegedly circumventing existing sanctions or financially facilitating russia's are in ukraine. this is something they talked about at the g7 finance ministers meeting, they will close loopholes that were found for sanctions evasion. we have other unilateral moves,

the u.k. will barton nickel imports from russia. -- bar nickel imports from russia. it could be the first step towards an outright ban, it is an extremely lucrative avenue for russia. many of the export of diamonds and other gems go through other countries like belgium. belgium has protested against our ban on russian jim exports because they say, those gems will transit through other countries. it is a sticky issue, another way of potentially cutting off a way for vladimir putin to fund the war in ukraine. shery: we are expecting to hear from president zaleski at one point, which in itself sends a message. our we expecting anything concrete on china -- are we

expecting anything concrete on china? stephen: it will be the backdrop of every discussion. russia and china are not part of the g7. we have lots of talk, the u.s. ambassador to japan, who will be on bloomberg tv later this week, he was using terminology about economic coercion being waged by china to solve diplomatic disputes. using trade policy to put pressure on diplomatic disputes. china put out a paper calling it coercive diplomacy, from the united states, that is harming the world. john kirby, the u.s. national security spokesperson, he spoke with amory last night on bloomberg television. he said biden and the g7 leaders

will spend time discussing china. you are going to see, quote, although leaders speak with one voice about the challenges china poses in the indo-pacific and around the world. it is the end of the week, but just the beginning here. shery: a very busy week ahead at the g7. we will bring you more insights and analysis from a summit throughout the day on bloomberg tv. catch these conversations in the coming hours. we are watching earnings. alibaba has shared more details on how it plans to split into six units. this as the company posted another quarter of single digit revenue growth. that's bring in annabel for more details from the results. beginning with its cloud arm, what do we know? annabelle: this is the key focus coming into the earnings call, how will they lay out its intentions to split into six

different units. the first phase is splitting off the cloud business. it is a significant step, it has been one of alibaba's fastest-growing businesses. in the latest earnings, we saw the first ever cloud revenue drop. that can be a signal of how important it is to bring on new strategic investors to revive its growth. the company says that being a standalone business could one day pass alibaba in size. others are concerned it is at a disadvantage given that beijing is increasingly preferring for data to be stored on those types of servers instead. what is next? it will be the grocery chain, fresh hippo. it will be its logistics arm after that, which will be in 18

months. shows were down, investors were not impressed. annabelle: we saw a drop of 6% at one point. it doesn't bode well for when it comes online. there have been different reactions coming through from analysts, one consistent area that is highlighted is the slow growth coming through in its e-commerce arm. we saw over 208,000,000,001 -- 208 billion yuan. it is a signal of how slow the chinese consumer has been to come back, even though i have been a lot of optimism. it doesn't bode well for the ipo's of the logistics arm and

the grocery chain, given that they do come into that revenue pool. there are concerns as to what further catalysts would be for these businesses once they are listed. haidi: let's get you over to vonnie quinn with the first word headlines. >> the u.s. and taiwan have a to boost trade ties under an initiative announced last year. the agreement will streamline customs, reduce wait times for trucks and buses, and include -- improve regulation. it is not a formal free-trade permit, but is part of a rotor drive to deepen ties. u.s. house weaker kevin mccarthy and senate majority leader chuck schumer are making plans for a bipartisan deal to avoid u.s. debt default. mccarthy says negotiators may reach an agreement as soon as this weekend. schumer says the senate would take up the legislation after

house passage for your he has alerted senators they may be called back to washington to vote next week. fed officials are sounding increasingly split over whether to raise or pause interest rate hikes. while at one governor made the case for patients, the dallas fed chief says she is not ready to pause. she floated the idea of skipping to july. mexico central bank has lowered its inflation forecast for the end of 2053, it seems that the inflation rate at 4.7% in the fourth quarter. the central bank has halted its steepest ever series of rate increases. it promised to keep rates stable for an extended. . -- for an extended period. they are plenty to search the home of former prime minister imran khan. a government official claims he

is sheltering thousands of people thought to be involved in last week's unrest. officials say they do not plan to arrest him again after the islamabad high court moved to rules it illegal. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. haidi: more from the g7 summit and hiroshima. coming up next, top lawmakers are making a plan to vote on a bipartisan deal on the debt ceiling. we are taking a look at market sentiment, wealth wise financial will be joining us. this is bloomberg. ♪ what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday.

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>> if you don't take care of the nation's debt, if you allow the united states to default, virtually nothing else matters in terms of what you are trying to do around the world. haidi: john kirby of the u.s. national security council on the debt ceiling talks. our next get -- guest says the market will temporarily rally. are you positioning for a deal to be done before the exit date -- x date?

loreen: there is a lot of nervousness from investors, a lot of money in money market sitting on the sideline. people are nervous on the debt ceiling issue, there is a lot of -- a lot at stake. nobody want that to happen. the way we are positioning for this is being defensive, not ignoring the situation. but the reality is we know it is going to be resolved. with size are going to come together, they will resolve the debt ceiling issue, the debt ceiling will end up being raised, we will be able to move on. it might be at the last moment. in the meantime, there are opportunities to look at. we actually are favoring fixed income during this time of heading into a recession over equity. haidi: we have had a couple of

interesting elements from the fed. the tightening and credit conditions caused the signal for a possible pause. we continue to hear from fed speakers who are not sure as to whether the conditions we are seeing now warrant the pause. how are you investing around the uncertainty around monetary policy? loreen: what we do know is we are close to the end of fed rate. whether there is one more or no more, we are close to the end. we are already going out on her duration, given that fact. if we have another rate hike, it is probably 25 basis points and then a pause. shery: how crowded are defensive traits right now. i hear from people that they are

positioning defensively, are the safer corners of the market more expensive now? loreen: that's a good question. when we look at the s&p 500 earnings yield, and we compare that to the 10 year treasury, that spread is extremely tight. normally, it is a healthier spread of 2.5%. right now the spread is a .5%. when you look at a trade, it is more favorable to look at fixed income than equities. within equities, there are areas to be selective in. there are areas of opportunity. in the longer term, lots of opportunities in equities. i will say the favorability is definitely on fixed income. if you are saying that is defensive, that is not a bad

place to be. shery: what happens once we get to a deal and we get treasury issuance on top of corporate issuance, is there enough demand? loreen: what we will see eventually is that they yields will go down. just like we will see on money markets. i talk to clients who say, what about the 5% money market, and compare that to what we can get in the markets. what we will see eventually is that all of those yields will come down. like you said, looking at what the demand will be. over time, as inflation starts to go down, as we see the fed pausing, and lowering rates, the rates will come down. for now it is a good opportunity to be looking at the higher yield instruments, and over time, knowing that we will have

to shift once again. shery: the debt ceiling drama is leading to a narrative about more scrutiny on the dominance of the u.s. dollar. where is that going? loreen: there is concern about the u.s. dollar remaining as that reserve currency. that is one of the important reasons why this debt ceiling issue needs to be taken care of and hopefully not at the last hour. not giving the possibility that we are coming to the 11th hour, that we are taking care of business. lawmakers want that to happen sooner than later, the white house wants that to happen. it sounds like the negotiations are positive. i think we will have an answer sooner than later. shery: thank you, wealth wise financial ceo. we are keeping an eye on central-bank policy. don't miss our interview with

the philippine central-bank governor. you can get around -- eight roundup of all the stories you need in this addition of daybreak. this is bloomberg. ♪ fabulous surroundings... but everyone's looking at their phones for financial insights from merrill. is he hailing a ride to the concert hall? no. he's making sure his portfolio and retirement plans work in harmony. they want to adopt a child and build a new home. so they're talking numbers with their merrill adviser. she's not researching her next role. she's learning how to handle market ups and downs without the drama. personalized advice so impressive your money never stops working for you with merrill. a bank of america company. he snores like an angry rhino yoyou've never heardps working an angry rhinoerrill. baby i hear one every night... every night.

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shery: a quick check of the latest business flash headlines. disney is closing a luxury hotel in walt disney world in florida amid a high-profile fight with governor ron desantis. it is also dropping plans to relocate 2000 california employees to a new corporate campus it was building in the state. the former ceos pet project will

shut down at the end of september. walmart has lifted its annual profit forecast after reporting and earnings beat in the first quarter and expects adjusted earnings for the fiscal year of up to $6.20 per share. walmart cfo says the company is keeping a cautious view on u.s. consumers. it notes that sales weekend in march and april. haidi: asian markets shaping up as we get into friday. we are seeing an upside when it comes to us trillion futures. we see -- two australian futures. aussie dollar following -- falling following the move in unemployment. we see the impact of the dollar

index advancing for a third day, the longest streak for the greenback in more than a month watching kiwi stocks, we have leveled out, unchanged after the delivery of the budget. ek futures up by .1%. -- then ek futures up 1%. the nikkei is just 3/10 away from a 2021 high. we are watching -- as the level in focus. watching u.s. futures at the moment, higher as stocks climbed on the regular session. we had seen hawkish fed rhetoric coming from the dallas president, saying the case for a pause next month is not clear. signs of progress on the debt ceiling negotiations, the s&p 500 is at a nine month high.

we are watching what is happening with the retailers like walmart. we are seeing the u.s. consumer spending binge taking a hold during the pandemic and breaking down now. the discretionary spending slump that started last year, delivering a new blow to walmart, home depot and target. walmart warning that recent sales were at their strongest at february but weekend in march and april. coming up, and in-depth look at the most pressing policy recommendations for g7 leaders. we speak to the official think tank for the g7.

shery: with fed officials seeming more divided than ever

ore continuing rate hikes or pausing, another possibility is being discussed. a skip. kathleen hays is here with the latest. is the fed getting nuanced? >> it seems that way, you have to have another kind of decision to make. let's start with a fed board governor, philip jefferson who spoke to they. he is leaning towards the pause. inflation is still too high, he says, but he thinks maybe it is time to take a break. >> history shows that monetary policy works in variable lags and your is not long enough to -- a year is not long enough for demand to feel the full effects of higher interest rates. >> he singled out the fact that the fed more time to assess the impact of tighter lending

standards at banks, pulling back on credit, businesses not being able to get loans. look what jim bullard said, known as being a policy hawk. he says disinflation is moving slower, then he would have liked. he is calling for more rate hikes as insurance against inflation. he says, our main risk is that inflation doesn't go down, or even turns around and goes higher, as it did in the 1970's, which led to more hiking and another recession. they thought by 1982 a done hiking rates, inflation went up, they had to do more and caused the 1984 recession. a deep and long one. the president of the dallas fed spoke yesterday and says the case for the pause is not clear. she says tighter credit conditions are due to the fed just hikes. she is not concerned about the

banking side. she added, the data in the coming weeks could show that it is appropriate to skip a meeting. as of today, we are not there yet. she has not committed hawkish leor done officially. she is leaning towards the hawkish side. the president of the atlanta fed, he was moderating a panel and set up pause could be a skip, or it could be a hold. no one has explained it yet, is that just coincidence they are saying this? a skip would be, where they come out of the meeting, they don't do anything, they somehow say we are so uncertain, they are not sure of the impact of banking turmoil. so we are -- i guess that means we are potentially in right

hiking mode. and we are not saying we are holding, we are going to wait to get more information. they sound like me, i have a hard time making my mind up about anything. it will be interesting to see if we hear the word skip from other fed officials. haidi: sticky is a new transitory, skip is the new pause. let's get you over to vonnie quinn. >> the philippine central-bank will keep rates unchanged in their next 2-3 meetings in with the governor calls a prudent pause. he says it will allow time to assess the impact of the most aggressive monetary tightening in decades. the central bank held the key rate at 6.25%.

the top u.s. bank regulators are bowing to act quickly on rules to count down on executive pay rise bonuses. the rules were mandated by the 2010 dodd frank act to discourage executives from taking risks that lead to the 2008 meltdown. according to a new study, the world can keep global warming for -- warming the below two degrees. only meeting 2030 goals is not sufficient to keep a warming well below two degrees. the study shows a pledges made since 2020 have moved the needle on climate action. a billionaire investor, sam zell, has died. he founded equity residential

and build a portfolio that included radio stations, drugstores, parking lots and mattress makers. he made out losing which are -- into bankruptcy. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: the first day of the seat -- of the g7 summa is underway. global leaders will tackle challenges from arriving up pressure on russia to reaffirming their commitment to nuclear alliteration, as well as standing up to china. a busy agenda for the g7 summit and g seven euros. -- and g7 leaders. stephen: today is day one, when the leaders get together and tour the atomic bomb dome park.

and russia and china, will be on the agenda of discussions, even though those two nations are not part of the g7. let's get into a preview with our guest, it is tetsushi sonobe , the asian development bank institute dean. for the think seven, the think tank for the g7, you are the rotating head of that this year. the presidency in pan. what would you like to see from the adbi perspective. >> thank you. what we want to see is the global g7 leaders show their solidarity to protect the

rule-based international order, peace, and more support for the global south. stephen: how significant is it that the g7 is inviting leaders from the global south to help reach the development goals in emerging areas. we are talking india, brazil, indonesia, vietnam is also represented here. can their voices be heard at a time when geopolitics, the were in ukraine, -- the war in ukraine, and difficulties with china, will the voice of the global south be heard? >> yes, listening to the voices must be very important for the g7 leaders to be sure about the appropriate pace of de-risking

of the global supply chain. shery: with so many of those countries in debt distress, does there need to be a conversation about a new role for the international monetary fund? >> yes. exactly. the global international architecture must have a revamp, so that more and more talks among leaders, and listening to the global south voices. shery: usually when we have these conversations between advanced economies and developing economies, the concerns coming from emerging economies is that developed, rich nations are not doing

enough. whether it is supporting their more vulnerable economies, or fighting climate change. what more can rich nations do? >> there are a lot of things. solving the crisis could be fast. climate change mitigation -- the application of science and technology is -- will hold the key. those things should be nicely blended with money itself. >> we know that parallel to the g7 talks, xi jinping is hosting

a central asian summit in xi'an. we have vladimir putin holding an african summit in july. there are seems to be a lot of and dependent bodies coming up with solutions, but not enough inter-body dialogue. how do you suggest there be a facilitator to get these bodies to be in lockstep to reach development goals? >> it is obvious that the world would benefit from -- will not be very useful or good for the people. there must be more communication

among groups. it may be difficult to have a useful dialogue. maybe, indirectly, there must be communication. any threat to diplomacy cannot play at all. >> you use the term a de-risking, not decoupling. it what does that mean and how do you begin the process? >> de-risking is security issues, military things, so goods can be used for a purpose. the risk must be reduced.

>> will new sanctions work to defund the war in ukraine? >> that is why more effort for the communication is needed. nobody wants to see a trade war, or any war. greater efforts to find the appropriate to give-and-take, de-risking, rather than decoupling, it must be solved. stephen: we will be discussing it all weekend in hiroshima. thank you so much for your time. we will be here all day, it is raining outside, we will be here at to the international media center in hiroshima. shery: all of those updates

coming from a very busy g7 summit. we will speak with center for american progress as the g7 summit gets underway. later in the day, we have the u.s. and master to japan rahm emanuel joining us live from hiroshima. stick around. this is bloomberg. ♪

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haidi: new zealand trade data crossing into bloomberg now, a day after we have the budget yang handed down. a precarious situation when it comes to the kiwi economy at the moment. imports in kiwi dollars for the month of april come in at $6.38 billion, slowing from the 7.8 billion dollars in the prior month. experts come in six point $8 billion, accelerating. the 12 month year to date deficit coming in at 6.8 billion kiwi dollars. we heard more from the finance minister yesterday about a potential increase in government spending that is part of the budget to strike the balance. given a slowing economy and cost of living pressures.

when it comes to australia, we know the property market here is key and try to household wealth. chinese buyers are set to return to the property market in australia, feeling of rebound in prices. is this tied into the ability of chinese travelers to come to australia? >> that is one factor, interest in australian repartee has dried up in the pandemic, and the trade strikes. chinese tourists and students were discouraged from coming. that is being rolled back now, australia is the number one destination for chinese property buyers. juwai iqi sees interest in the first quarter of 120 7% on the last quarter of 2022.

they see more numbers coming into china and the second half. chinese buyers are immune to the 11 rate rises we have had in australia. shery: we know that housing affordability is an enduring problem in australia, how much worse will this make things? >> it is not going to help, but this is one factor among many which is pushing property prices higher in australia. lack of supply is a problem, population growth is another issue. once border restrictions were removed, migration to australia increased dramatic. domestic buyers are enthusiastic about properties because of the way the tax laws are structured. the pace of the rebound has caught policy makers by surprise. the 11 rate rises did slowdown growth. but that was coming off a

nosebleed territory for property prices, now we are seeing things up. we had data out from bloomberg intelligence this morning, prices typically stagnate before taking off again in the next. of -- in the next period of performance. haidi: tune into bloomberg radio to hear more from the days newsmakers and get in-depth analysis from the daybreak team, broadcasting live from our studio in hong kong. much more ahead. this is bloomberg. ♪

shery: the high-profile battle between disney and florida's governor has intensified. disney is now closing a luxury hotel at disney world and dropping plans to relocate 2000 california employees to a new corporate campus it was building in the state. su keenan has more on this. this was a major space themed resort that cost close to $5,000 for two nights. su: a minimum of $4800 for a

couple nights, paradise for star wars nerds. it was a hit in that property, it was called star wars galactic star cruises. it was a pet project from the former ceo, it will shut down at the end of september. it takes guests on a tuesday imaginary cruise in a spaceship, the hotel closure and the canceled plans to bring in staff to a new corporate campus in the state, seen as disney pulling back on a one million-dollar investment and payback to the florida governor. they have canceled plans to move forward. they don't mention the fight with ron desantis, who is changing the oversight and benefits to the parks because disney was vocal about a proposed law. do you know who speaks about the conflict? the ceo, bob iger, let's hear

what he has to say. >> this is about one thing and one thing only, that is retaliating against us for taking a position about pending legislation. we believed that -- i was taking that position, we were merely exercising our right to free speech. does the state want us to invest more, employ more people and pay more taxes, or not? su: disney has raised questions about whether it will proceed with plans to invest $17 billion in the state over the next decade and create 13,000 new jobs. the proposed legislation is what is being called the don't say gay law. it was about teaching children under related issues, the bill proposed that this not happen. disney believing it is a free speech issue, their right to voice opinion on the law. haidi: where do we go from here? su: some are saying this could

impact u.s. presidential election. ron desantis is widely expected to announce a race for the presidency in the next few days. this announcement, the timing of it by disney, seen as a very calculated and very much a payback. the disney ceo has accused officials of being antibusiness and anti-free speech. you have the mayor of orlando saying, you don't want to take on the house of mouse. the mayor or for a window saying to santos may be gone in four years, but disney will be in florida forever. presidential candidate donald trump also weighing in, singing to santos has gotten caught in a mouse trap. being critical of desantis in many ways, but in particular on this issue. many believe this will be a develop that will be closely

watched, politically and otherwise. haidi: alibaba will explore ipos for its logistics and grocery arms. this marks the beginning of the first phase of a much anticipated breakup which intends to revive the slowing revenue growth. for three quarters in a row, alibaba has posted single-digit revenue growth. meituan will launch a sister app on thursday. the firm says it's delivery service will serve the heart of hong kong. it is looking to move beyond its home or get where it already dominates. applied materials expects sales to drop as it grapples with a

memory chip slump. the company said the fiscal third quarter sales will be 6.15 billion dollars, compared with six mifi put -- compared with $6.5 billion the previous year. that is it for "daybreak australia", daybreak asia is next. a little bit more confusion when it comes to fed speak, so watching out for any trading impact when it comes to the u.s. and taiwan agreeing on a trade initiative. also watching a lot of the asian tech names, including china tech after the big moves in the golden dragon index. a mixed open ahead. this is bloomberg. ♪ emerson's plantweb digital ecosystem is the brain for smarter, safer and more sustainable performance. go plant go. go boldly. emerson.

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