shery: you are watching daybreak: asia.

haidi:'s where counting down to asia's major market open -- we are counting down to asia's major market open. president biden is hopeful for a deal. fed officials diverge on when to pause with two fed hawks pushing for additional rate hikes. japanese stocks opposed -- close to tying the closest win streak in four years. that is get a quick look at some of the data crossing the bloomberg when it comes to australia, we do have the judo make australia pmi numbers and the flash pmi's are unchanged at it comes to manufacturing at 48. i will suggest some expansion. the number when it comes to the composite pmi coming in at 51.2 come weakening from 53 in the previous month. the services number is also seeing it weakening at 51.8

across the board. shery: we are getting the oppressor from kevin, let us listen in -- presser from kevin mccarthy, let us listen in. >> let us be clear, when you talk about raising revenue, if you look at the 50 year average of america how much money have we brought in by revenue? . be about 17% of gdp. right now we are bringing almost 20% of gdp in revenue. how many times has that happened in modern history? only twice, 1944 and in 2000. we are bringing in more money at a higher percentage than at any other time. why are we in such a problem? the expenditures, the amount of money government spends. a 50 year average government normally spends about 21% of gdp. after the democrats took over

they are over 24% of gdp. the problem is not revenue, the problem is spending. if you want to know where our differences are it is the same place. i simply believe like any household, like any business or any state government when you are this far out of whack you have to spend less than you spent last year. that is why we talk about that going back to where we spent five months ago. put it cap in there and grow the economy, -- put a cat in there article the economy and use covid funds who sat there for two years, save the money and grow the economy by cutting red tape and letting us build things again. how do we get people back into the workforce? we are only talking about work requirements for able-bodied people who have no dependents. should we borrow money from china to pay people who are

able-bodied with no dependents to sit on the couch? we have found every study, it takes people off the poverty roles and puts them into jobs. they're able to send their kids to college. is it a positive american family. >> do americans need to prepare for default? people are worried about what is happening to their jobs and savings. do americans need to get ready for that? >> the republicans have passed a bill that raised the debt ceiling that is sitting in the senate. he always have the ability to move that. >> how would you describe the tone of the conversation tonight between you and the president? >> the tone was better than any other time we have had discussions. i will have the chairman, up and talk a little bit about it as well. i felt there was productive because we both know, we have walked through this for a long

time, we are explaining differences and giving a give-and-take of what we think would be best for moving the country forward. we will have some philosophical differences. i felt it was productive in that manner than the matter we produced it. . we were able to really focus on the areas that are different. patrick has been in the meetings with the white house staff the whole time and i think the meetings you have had have been professional? >> we have had a variety of meetings at our level for the last wednesday and tuesday of the past week. much longer to get that ready. we have had tough meetings and difficult meetings, this meeting was productive. it told us a little more the details we need to get to a package that can pass congress. to hear the speaker out of the president air their views with one another, no acrimony, it was

productive to us getting a construct that can protect everyone's equities. >> are you confident that you can get a deal with enough time left to prevent americans from feeling the economic pain? >> i never wanted to be here. i do not like the idea that you governed by chaos. you governed by a deadline. all the way back in january i requested meetings with the president after i was the speaker only on this issue. we knew this was coming. february 1 we got that meeting and i sat with the president and i told him, we should work together to find what we can have comment ground -- where we can have common ground to curb our spending so we stopped doing this. and the president it is only two things. we will not raise taxes and we will not pass a clean debt ceiling. for 97 days he said he would not be with me. the republicans, we passed a

bill that raised the debt ceiling and saved his money and put us on a trajectory we can go to balance. this was long before the secretary told us the deadline was june 1. do not want to govern that weight. unfortunately denying our ability to meet what is in the situation. i believe we can still get there. i have watched us are for, he knows where we are and we have had greater explanation of that she had to be at g7 where our staff was a meeting, we can explain where some positions are that they have come a better explanation for both sides. >> how long should these spending caps last? >> when you look at spending caps and think about what we passed in limit, save, grow, each year we have government growing by 1%, that was an idea

by joe manchin. when we look at -- if you get elected to congress we decide just in a household if you make a hundred dollars a week you decide your priorities where you spend that money. that is what we would do when we get these spending caps. the topline dollar figure of how much we will spend. since the democrats went into power they have increased almost $6 trillion and brought us inflation and brought us these challenges. the president's budget wants to spend more money than we spent at the height of covid. we should not do that. it is easy for us to spend less than we spent last year or this year. on in washington is that difficult. -- only in washington is that difficult. >> our defense costs on the table? >> the president was at g7 talking about the fear and the challenge of what china is doing. we watched ukraine and we have watched the amount of weaponry

we had to provide you ukraine -- to provide ukraine. defense should not be on the table. it is a responsibility. i'm a person who believes in limited government. it is a responsibility of those to make sure that we have the defense of this nation. >> does the president agree to make a concession for the speaker? >> we are nine days out is that something you are looking at? >> to waive -- i will not waive the three day rule. you have it for a reason. you lend your voice to your elected officials. you want to make sure that they have their voice. if you want to move a bill such as this and it passed under speaker pelosi and they would move trillions of dollars in aid and nobody could make the bill. i will not be afraid of what the agreement comes in at the end. i would sit that bill down and i would give everybody 72 hours so

everybody knows what they are voting on. >> is there a dropdead date where you need to have an deal in order to get you through the house? >> i felt looking back we should have already be here and as i told you i had never wanted to be here, all of my actions from the day i became speaker was to ensure we were not here. we went 97 days of people said they were not talk to us. we went more than hundred days who said you could not negotiate on this. we are finally at that point, had we started this in february we could have been done long before -- >> would it be tomorrow? >> we instructed mchenry and others and in the white house to come back together based upon our discussions in the room and try to find where we can get to common ground. >> he was talking about loopholes and people who make up $200,000 a year, you are telling me that new revenue is off the table? >> are you here earlier?

i do not want to repeat myself, in the 50 years of how much money government has brought in, we normally bring in 17% of gdp. we are bringing in more, 19 44 and 2000 how we ever bought in this higher percentage. it is more money than ever before. if i were in my household were are brought in more money than ever before but i owed more money than i make in my entire year? i do not think it is a revenue problem, it is a spending problem, it is the same thing with government. for 50 years would normally only spent 21% of gdp. the democrats took over they raised that up to more than 24%. . it is going to 25. if you do not tackle the problems that have created you are never going to solve it. the answer to your question that asked earlier is no, we are not looking at revenues and if you think you put some type of taxes

it would only hurt our economy for one and secondly we are already in a challenge where they raise so much inflation based upon their spending would be a stupid thing to do. you need to tackle the real problem. i've always tried to explain to me a test ceiling is providing your child a credit card. they hit the limit and year after year all you did was raise the limit. you did nothing about their spending, all of a sudden you more on the credit card than you make the entire year. our debt we owe more than the size of our economy by 20%. should you just raise the debt limit again? is it so arcane to say that we should look at where we are spending if we are spending higher than we do in 50 years? should you be arcane that we pull money back that we appropriated during covid but was not spending? is it odd to show that in our history when we have work requirements that we hope more people get jobs and that helps social security and medicare because more people are paying

in? is it odd we should be energy independent so we lower the price of energy which helps lower inflation? it makes us less dependent on china? i do not think we are in a weird place here. it is odd only in washington do you have to fight so hard to make this a reality. that is what we are talking about. >> can you say with confidence that you trust president biden and the democrats? >> i think they want to make a deal. while we have watched time and time again every deal that they want to make only met that they wanted to make a deal about spending more money. at the time of spending and spending more money in america and government is wrong. as taxpayers, you should say the same thing. it does not matter if you are republican or democrat, is coming out of your pocket. every new child that was born today just got a $94,000 bill. they are one day old. i think that is wrong. we are failing.

you can blame both sides for this. that has got to stop and he has to end now. i do not want you to think of the end of the date the bill that we come up with is going to solve all of these problems. it will be a step to finally acknowledge our problem and put one step in the right direction. welcome back the next day and get the next step. haidi: did you find an agreement today? >> i think we both agree that we want to be able to come to an agreement. we agree on the areas that we note that there is disagreement on and i think it was productive and the professionalism under the honesty with one another, and the desire to try to find common ground. >> where did you leave work requirements? >> there's nothing agree to and everything is being talked about. >> has a republican say they will not accept anything less -- the republicans say they were not exiting think less than the bill.

>> we have to get something through the senate and the president to sign. the way that the founders designed this government, you have a house and a senate and normally if they both pass a bill you go to conference. they senators never did anything. chuck schumer never put a bill on the floor. if you are able to do that we would have been in a stronger position. we are carrying the weight and discussing that and i think at the end of the day you have to have compromise. >> when are you going to talk to the president? >> patrick and come back on this is what they will come back together and work through the night and we will see of the president and i -- we know the deadline. the president and i will talk every day to find a way to get this done. >> is there a chance of a short-term extension? >> it does not benefit anybody. a short-term extension, the country looks at it like we failed. that we cannot do the job we are supposed to do. a lot of people on the other looking back and wishing that they did not deny talking to one

another for those 97 days. , though i disagree with somebody we know we have to work together. we know you are the president and you are the senate and we are the house, we have different positions but if we talk together we can find a way to solve this problem. not talking put us in this problem. >> you talk about capping spending in 2022 and their proposals for six years with 1% spending increases out of the white house has talked about capping it in fiscal year 2023? >> we need to spend money -- less this year. he has been clear. we have a position and have passed it out of the house and the president for days and weeks and four months demanded we pass a product and we passed a product. we are here negotiating and he

sent his team to capitol hill to go negotiate this deal. get into all the details of it but no details resolved and it is not resolved until it is all resolved. there is productive conversations by the teams in the room and no one has to agree with anything until we have a finalized deal. we have good direction from the speaker and from the president. haidi: you are hearing from the gop negotiator speaking to the press. we also heard at length from the u.s. house speaker after the meeting with president biden on raising the debt ceiling. that deal is hard to say how much closer we are and positive things have been said, mccarthy says he believes they can be done and from this discussion president biden is being returned from his g-7 talks and he knows when they're at and he did not commit to saying that they will be further talks tomorrow or in the days to

come. certainly that they have disagreed on the areas that they are disagreeing on and still working towards coming to a deal. they have been instructed to come back together based on the discussions that took place today but did not say that it would be tomorrow. that talk was productive. short-term debt extension is not on the table. the house speaker saying that would be seen as a failure. the negotiators will continue to work through the night. they have good directions from the president and the need to compromise is being talked about, everything is being talked about that the meeting was productive, honest, in the right direction. that is all that we know with the update, joining us is the senior portfolio manager at ngf investment group. it seems there will be more negotiations to come. it is hard to say that meaningful progress was really

made. at least that we have been told just now. does this change the way you are investing? you are suggesting ways to look at i guess companies that would be agnostic to the outcome of this? >> i think we can believe the debt ceiling will ultimately get resolved without missing any payments. there will be continued posturing by both sides but at the end of the day it will be result last-minute somewhat similar to what happened in 2011. we focus on is the fact the stock market is pretty sanguine about all of this. in 2011 stocks dipped quite a bit before versus they have been pretty flat. look at credit full swap's, they pray city at about three or 4% chance of some sort of default which is by comparison half of what it was 10 years ago. it is not nothing when you

consider the fact that any sort of default would be extremely catastrophic for the markets. it would almost guarantee a recession. if you are familiar with probabilities a small probability is a bad outcome, it is still substantial. what we expect in the near term is heightened volatility and the best way for investors to position their portfolios when you see volatility is looking for companies that have visible recurring earnings, the tech sector is one place as you noted does seem to be a little bit independent of the macro situation. in volatile markets, dividend payers and growers tend to be a good way to mute that volatility. haidi: the problem is the lack of volatility, we do not see that in havens anymore. is there a state for the markets? >> it is a moving target. it probably will run up, the

final closing hours and minutes before you run into a deadline. pass both sides basely try to position themselves and balance, we have to appease our pace but we also have to make sure that we either get credit if this is resolved or if the other side gets blamed and it is not. both sides agree that any sort of missed payments whether it is on the treasury bonds or a veteran to federal government employees, it would be such -- so much a to that that police our base case i think the market's base case until proven otherwise is it will resolve itself. shery: we have been talking about the economic backdrop when it these debt talks are happening. at the same time we are hearing more hawkish comments coming from fed officials. i have to ask you, what are you seeing from the fed? fed officials coming out being a bit more hawkish today, days after chair powell signaled a

potential pause in june. how much is this about a divergence between officials and how they are going to vote? how much is it to just tame market exuberance? have the investors invested in this environment? >> a lot of it really is just trying to prepare the markets and manage expectations. there is a divergence between what been officials -- fed officials say and what the markets tend to expect and it makes me think of the old eight marks saying, who will you believe? -- the old saying of who will you believe? may all your own eyes? -- me or your own eyes? jay powell has been consistent in saying that the error they wanted to avoid is the stop article policy of the 1970's versus the markets suggesting i

1-3 rate cut. -- a 1-3 rate cut. what happens relative to what is priced in the only way the markets can be surprised and would be if the fed does not cut rates by the end of the year. investors should position their folios accordingly because if that is the case you may see higher interest rates that may be a negative two a longer duration financial instruments. shery: you expecting u.s. markets to be higher because we have a big debate ongoing right now where the permanent bears are calling for this to be a head fake when it comes to the recent rally we saw? you have the likes of bank of america upgrading the price target for the s&p 500. >> probably the best production would be markets continuing to crawl either flat to sideways or anything else slowing upward. we were not expect a big,

positive move because of the fact while a market move upward can come from two places either multiple expansion or earnings growth above what is currently expected. the s&p 500 is already trading it 18 times for earnings which is above the long-term average, it is hard to see that going up and with respect to earnings i think if you do, the one case you do have a recession people have been expecting for a long time, you were not necessarily think that earnings would be going up substantially from here. click to sideways markets are probably what investors see as to some degree you consolidate some of the changes that were made earlier this year. haidi: what you would like internationally if you are looking for exposure outside of the u.s.? japan has been going to gangbusters levels, there are exuberance about emerging markets too, what do you like?

>> the emerging markets offer pretty good opportunities right here. what it all boils down to is valuation. right now, the global markets traded a discount to the united states and the emerging markets equities traded at a discount to global markets and when you look at that you run an adjusted basis and they are changing the most they have in years and obviously one reason for concern would be whether you have some sort of challenging fiscal situation. developing world countries actually do have their houses in a much better order than they were a decade ago and is an area we have fantastic demographics. the solid majority of young people aged 30 and younger in the world reside in the developing world. you have that ultimately you may even get the tailwind of the fact that although the reopening in china has not spurred massive growth there, you are seeing in

china which does tend to steer emerging markets equities headwinds shifting to becoming tailwinds. shery: i cover emerging markets that i was excited earlier in the year and then that fizzled out when we have this risk off sentiment building, what makes you think that this rally and optimism will actually be sustainable? >> one thing that might work in their favor is if you look there has been through the years, a lot of long-term secular cycles in respect to the correlation between what the dollar does and the emerging markets. we are finishing up a multiyear period where the dollar has been astronomical strength. that tends to be a challenging thing for the developing world. the u.s. hitting the end of their rate hike cycle we do

agree there is an opportunity for the dollar to weaken in the coming months and your and when you see that it often times brings in a sustained period of emerging markets growth. shery: good to have you with us. senior polio manager at nf james advancement group -- investment group. annabelle: taking a look at obesity the u.s. futures given that they did not move following the mccarthy president headline as you have been discussing as there is signs of progress. we have been checking the nasdaq and that is what is advancing and investors are saying that the impact or the focus on cost-cutting efficiencies has already been noted in the companies and that is why we are saying investors gravitate back into this sector. keeping an eye on other moves including the u.s. dollar we have seen the strengthening with the debate really playing out was when fed officials. we so need to hike --

something we need to hike and other say we can pause at the next meeting. take a look at how that is playing out and setting us up for asian trading in the session. we have seen futures pointing higher and new zealand, new caution playing through. a lot to be decided in the debt negotiations. yield differentials are very much in focus, the fed versus the boj. haidi: we will be watching that. plenty more to come on daybreak asia, this is bloomberg. ♪

♪ shery: japan's southbank group is selling a majority of its stake in fortress.

the transaction is expected to close in the fourth quarter of next year. subject to approvals. for more on this let's bring in peter elstrom from tokyo. what is prompting this sale? >> softbank bought fortress back in 2017. the idea was for them to be able to use the investment expertise as it deployed capital from the fund, the 100 billion dollar fund softbank had set up to invest in private companies. during u.s. regulatory review, they were not able to take full control over fortress, so they had to see day-to-day operations. they could not integrate the two sides of the business so they never accomplished what the bank had intended from the beginning. they ended up looking at the sale in part because that did not happen.

>> so what does this tell us about the scenario in the credit at the moment? where do we go from here? >> well, softbank has been repositioning itself in a number of different ways. and you know, they probably received most of their global attention because of this big push into venture capital investing over the past few years. now the company has backed off over the past few quarters. the founder has decided not to appear on earnings calls. he left that to his chief financial officer because he has not been able to do the investments he did in the past. he wants to focus on the ipo of the chip designer arm. now what we are reporting is it is looking at moving into private credit lending in particular. the company has been quite

careful with this cash, most recently, it has a heavy debt load. this would be an opportunity to be aggressive in terms of what it will deal with capital and earn a better return. >> bloomberg's peter elstrom in tokyo with the latest. let's get you to vonnie quinn with the first word headlines. >> thank you. the turkish president has won the support of a nationalist rival, boosting his bid to extend his rule. the third candidate has asked supporters to back them in the runoff. they were eliminated from the first round with 5% of voters backing candidacy. they led the vote but fell short of the 50% majority needed for a win. thailand's pro-democracy parties are getting ready to form the next government. they signed a pact that lays out their plans including charter amendments and reinstating cannabis in the list of

narcotics. they stop short of adding changes to the royal insult law, a move that will boost support for them to become prime minister. the head of latin america's top bank is steering clear of the u.s. china competition. the president says the lender is focused on integrating countries through infrastructure and power projects. his stance marks a difference from his predecessor who sought to counter china's influence. a panel overseeing the swap market has ruled the government brokered takeover of credit suisse does not constitute bankruptcy. the acquisition being called a bankruptcy would've triggered an insurance bailout. was related to the breakdown of credit suisse's bonds. global news, 24 hours a day. on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. haidi: indian prime minister

modi is in sydney for a two day visit when he will meet with the australian prime minister as well as business leaders. before that he will be attending an arena event in front of 20,000 indians. paul allen is at harris park, a home to the indiana diaspora in sydney. excitement has been building for the days leading up to the visit. paul: that's right, definitely a palpable sense of excitement. harris park is home to a portion of the expatriate community. half the people here are indian and there is a hope to officially name this little india. and a visit by the prime minister of india would advance that plan. this is nice scheduled stop but there is a possibility that the prime minister might pass by. what is on the agenda is the

arena event. not far from here is stadium has been booked, 20,000 members of the community are expected to attend. there are flights from melbourne and new zealand, people keen to see modi up close. this is become a trademark when he does foreign trips, to host large events for the indian diaspora. shery: what about the business of this trip? paul: there is business being conducted. he will be meeting with ceos and prominent australians but tomorrow he will have a bilateral meeting with the australian prime minister here in sydney. there will be the usual photo opportunity with the harbor as a backdrop. he will be meeting the governor general in opposition leader. the plan on the agenda would be to advance the free trade agreement between india and australia.

the majority of goods traded between the country are tariff free but there is an eagerness to get the deal finalized as soon as possible. on the agenda, advancing the things discussed at the quad meeting on the sidelines of the g7, certainly from australia's perspective, keen to engage more and more as a trade partner. india is the fifth largest trading partner for australia, china is the first. after australia's experiences with china's trade strikes there is an eagerness to diversify and grow with other trading partners, and yet is key to that. shery: that was paul allen from sydney. up ahead of the market opens in australia in less than half an hour. let's turn to annabelle for a check of how we are setting up. annabelle: 20 minutes from the open in japan, korea and australia but focusing on u.s. futures, given that we had the maccarthy press conference concluding and signs of progress

in the debt negotiations in the u.s.. we were in a wait mode ahead of that, reflected in thinner trading volumes, well-off the 20 day averages. after the discussions we have seen a lift coming through into futures, watching what's happening in the nasdaq, given it has been advancing. we saw it leaning the gains in the session. people are gravitating toward this sector given that there has been a focus on improving the company fundamentals of big cap names rather. let's change on because it is setting us up for positive optimism across the trading day. the key market in asia continues to be japan. even though we have seen it advancing for the past eight sessions, nikkei futures online in singapore. gains of 7/10 of a percent on the open. this chat indicating what an

outperformance we've seen from the nikkei. that compares to the advance of 15% versus what we've seen for the asia-pacific index and you can see that looking to losses across this year. plenty more to come on daybreak asia. this is bloomberg. ♪

shery: g7 leaders in hiroshima underscore the need to do risk supply chains by reducing dependence on china and decreasing climate finance for partner companies. they also stressed the roles of carbon capture and nuclear energy. bloomberg asian-pacific head ali joins us to discuss the summit. how much progress did we make in the leaders conversation and any notable takeaways? >> on the positive front, about a quarter dealt with climate change. the downside is most of it is rehashed. most notably, commitments to and support for researching --

reducing emissions by 42% by 2030, relative to 2019 levels. these goals are important for keeping this pathway alive. having said that, there was explicit support for natural gas . this is problematic as it contradicts what i mentioned earlier. natural gas acts as a transition fuel only if it is replacing fossil fuels. on its own, it will still continue adding to emissions. shery: give us a scorecard. how are g7 partners performing on the net zero transition and the policies they are enacting? >> there has been members of g7

and decarbonization policies. the u.s. position has improved. japan, canada, france -- in particular japan, decarbonization sectors. within japan, they've reached a predominantly the car but i system by 2035. -- d carbonized system by 2035. the g7 partners, india, indonesia, these are countries that lack policies, in particular these countries still provide subsidies for fossil fuel usage. they do not have strong -- in place.

they have a relatively weak in mission reduction goals. this is one area that they are trying to incentivize these countries to set ambitious targets, by providing financial support through bilateral mechanisms and transition partnerships. shery: what are you watching out for next in order to gauge progress? >> following the money is most important. the investment goal will be the clear winner of the g7 by meeting its goals. on this front, the first notable deadline is in august. for indonesia it's august 17. there is an initial investment plan deadline for the $20 million check promise to the countries. if the g7, indonesia and private partners reach an agreement by then, that would be a positive sign. shery: bloomberg head of aipac

research there. let's discuss the outcome of the g7 summit when it comes to the climate front with our next guest. and also find out how developing economies in asia could potentially benefit from wealthier nations pushing for net zero. joining us is energy system lead at the climate work center. good to have you with us. give us your take away from the g7 summit and how much progress you think has been made? >> pleasure to be here. yeah, i guess very few people would deny now that climate change is real and global leadership on climate change and clean energy is really on the major agenda at the leadership forum, including the g7, g20. of course, there is a big koosh for clean energy and -- push for clean energy and countries have aligned themselves behind the

economies and net zero goals with nine out of 10 countries announced a net zero target. so it is not surprising. asean is one of the most susceptible regions in the world. climate risks and they face potentially 11% hit to gdp by the end of century. so this certainly create a sense of urgency for the region to transit to clean energy economy and follow what leaders call tackling climate change. shery: always the issue with developing economies is funding, right? you have to follow the money. so with all of these investments by wealthier nations, what are some of the benefits that these developing economies -- as you mentioned asean, could see? >> yes, so for these southeast

asian countries, the clean energy transition really present a huge opportunity for less-developed countries to utilize the clean energy investment option to achieve the socioeconomic environmental goals and sustainable development goals. so yeah, financing is definitely a huge challenge in the region right now for the clean energy transition. and building green economy. so a massive investments. i think they estimated there will be 6 trillion u.s. dollars needed by 2050 to achieve net zero goals in the region. so it is a big commitment from all the countries and also international efforts to actually channel those investment needed into the region to help them to transition to a clean energy

economy. >> will transition goals be met by the pace of adoption we are seeing now in financing? >> yes. to modernize the economies, creating green jobs and employment, improve public health and cleaner environment. and improve the fiscal positions, i think these are all great benefits for the energy transition for this investment as well. so that includes building clean energy infrastructure assets, bringing new technology, more efficient products and solutions, modernize infrastructure, developing manufacturing bases and become a part of global and regional energy supply chain, i think that is a big task for the region. because billions of dollars investments needed. and whether the region can

capture that benefit within themselves is a huge challenge right now. haidi: i think that is the problem, right? whether the infrastructure can be scaled up in enough time to be able to sustain the energy transition goals. >> yes, absolutely. and so there are a few things that the region can do certainly , leveraging their own natural strength i guess for some countries that -- who their energy renewal services. for example they have great hydroelectricity experts to neighboring countries, to vietnam, cambodia, thailand. for other countries that have the great manufacturing base and

technology base, for example singapore can leverage their r&d strength and help the region, neighboring countries, to build their supply chain and manufacturing facilities and in exchange, for cheaper and lower costs, clean energy products and electricity. yes, critical minerals of course is another big challenge. this only needs to have a collaborative actions among the countries in the region to tackle the supply chain problem as well. while realizing it as a huge opportunity for the region. there are many ways that countries can help to develop clean energy economy. however they need a collaborative approach among the countries. haidi: green energy lead at

climate workcenter. tune into bloomberg radio to hear more from the leaders and get in-depth analysis from the team in hong kong. you can listen on radio plus on bloombergradio.com. more ahead. this is bloomberg. ♪ did you know you can get someone to shop for you? stitch fix really gets me and what i need. even better? they save me a trip to the mall. it's easy: i share my style, size and budget. and they do the shopping for me. stitch fix sends me things that fit and make me feel like a more stylish version of myself. i keep what works, and send back the rest. no subscription required. no commitment. just my style. stitch fix.

haidi: we are hearing from u.s. house speaker kevin mccarthy as well as the gop debt limit negotiator, patrick mchenry. house speaker mccarthy is saying if he does not meet with president biden tomorrow, one would assume that they would be meeting every day until a deal gets done. he can see where the framework can be but of course even though they thought that today's meeting was more productive, we have not seen a deal yet the debt limit negotiator for the republicans says they did not sense of alignment between the president and the u.s. house speaker. a lack of urgency is being perceived by talks, but no deal. more optimism when it comes to u.s. equity futures just edging up as the debt ceiling talks continue. let's get a quick check of the

latest business flash headlines. abba dobby wealth fund --abu d abi fun fortress will be owned while they will hold a 30% equity interest. softbank is working on plans to become a lender in private credit. first citizens has sued for raiding employees from silicon valley bank as first citizens was taking over the failed lender pleaded the complaint accuses them of portraying -- coaching 42 bankers and using trade information. a spokesperson declined to comment on the lawsuit. i $2.6 billion -- a 2.6 billion dollar plan to sell assets to

shore up liquidity. the buyer kennedy-wilson is purchasing the group of 74 loans for two point $4 billion. i w all future funding obligations of about 2.7 billion dollars. shery: we are just minutes away from the opening in japan. it can be another exciting session. of course, take a look at how japanese equities have performed compared to broader asia, the nikkei 225, topics and multi-decade highs. the earnings season has been pretty good for japanese equities, of course on top of attractive valuations. the fact is the firms are forecasting a rise in operating profits in the year that ends next year of 6%. remember, usually japanese firms are conservative, so the market as optimistic about what is to come. haidi: i was reading the piece saying that japan has had its best times since your last

which shocked me because i remember the walkman. but really, the disk man right? it goes to the excitement over corporate governance reforms and it almost seems like consensus from analysts and strategists at japan equities is where you want to be at the moment. the u.s. and china are both grappling with rising economic headwind. we will continue to watch for where the rally goes next. also coming up next, exclusive conversation with ceo matsumoto expecting gains in japan. this is bloomberg. ♪ ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪

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♪ shery: this is "daybreak: asia we are counting down to asia's major market opens.

a mixed finish in new york. we are waiting to see if we consistent momentum in asian trading. of course, nobody wanting to take a big move as debt ceiling negotiations continue in the u.s.. another high-level meeting, but no deal yet. haidi: sounds like it might continue for a while yet. house speaker mccarthy just speaking in the last few minutes or so, saying he anticipated will be meeting with the president probably every day until a deal gets done, calling the talks productive, but no agreement yet. belle,, what are we watching in the open? annabelle: investors are focused on productivity and optimism. we had seen u.s. futures pushing higher. the open in japan, south korea and australia and the start of trading now. getting a lot of mixed messages coming through from the fed. more details on that in a

moment. but as you said, optimism that we could see some progress with the data talks in washington is something that will be looked to very favorably by traders in this part of the world. kicking off with japan, we are seeing the nikkei 225 climbing zero point 6% at the open. that would be its ninth straight day of gains, matching its longest win streak in four years. we also just got something crossing the terminal now. but in saying that he and mccarthy have agreed that a default is off the table. saying the only way forward is a bipartisan deal. other lines coming through as biden continues to speak, including alongside mccarthy, who also struck an optimistic tone. moves coming through in the japanese yen -- it continues to traded defensively. rate differentials also very much in focus for the currency given what we are hearing.

more hawkish commentary from the ecb also. let's change to south korea. we have the kospi coming online. may consumer confidence rose to 98, up from 95.1 in the month prior. household expectations of the next 12 months have fallen to 3.5%, something else that the bok will be watching closely. in terms of the outlook, we see the kospi as well tracking those gains. nasdaq futures had seen an advance in the prior session. and the korean won, we are now trading passed a one-month high for the currency. it is down to that level of optimism, through from fred speakers and the outlook for writz. it really is a very public debate playing out with the likes of james bullard and neel kashkari pushing for additional hikes, whilst on the other side you have the likes of mary daly

saying that there could be a need for a pause in june. monetary policy does operate with a lag. we will watch very closely for biden. shery: we are seeing u.s. futures continuing to trend higher, up 0.3% as we get that latest commentary from president biden on the white house statement, saying that they have reiterated that default is off the table. they are now saying that the only way to move forward is in good faith, towards a bipartisan agreement. of course, this is on the white house statement on budget negotiations. again, that meeting between president biden and congressional leaders. let's get more analysis with breaking news managing editor derek wallbank. we heard from house speaker kevin mccarthy that it was a productive meeting, but still no deal. what can we gauge from the tone of these latest negotiations?

derek: in this case, saying that things were productive and that negotiators will continue, it has to be read as good news because the alternative would be really bad, is basically what you're looking at right now. we are in a period of time where it is urgent to reach a deal. the clock is ticking. remember, even if the u.s. government's x-date is as early as june 1, and there have been estimates that it could be a week later, but regardless of where the actual x-date happens to fall, the x-date for a deal is earlier than that. why? because it takes congress time to pass legislation. it will take time to draft it and to pass it through the house. there is a three rule, actually 48 hours and one minute, that kevin mccarthy says he will not waive, that gives lawmakers time to read the bill, that it goes

to the senate where it takes time, another 3-5 day window. it takes time to get things done. the onus is on them to pass things now. weekend votes are possible if they were to get a deal. so you are looking right now, as we are entering the put up or shut up moments for this negotiation, you do have to, and lack of actual agreement terms, and an old washington tourism, "nothing is agreed until everything is agreed," even though they have some parts, they haven't gotten to all. in the absence of detail, you look to sentiment. the word was "productive." that is what markets are responding to. that is where we sit right now. haidi: i think, perhaps to some of the rig sentiment -- risk sentiment in u.s. futures was

the comment that defense spending is not on the chopping block, right? derek: yes. that is an interesting one because they are officially defense primes publicly traded. but at the same point, it does make actually coming to a deal on spending maybe a little bit harder, because if all of the cuts have to be absorbed by nondefense discretionary spending, that is a smaller part of the overall federal spending picture. it is also loaded with thanks democrats actually quite like. remember, they control the senate so any future spending deal has to work them in as well. and i don't want to say this flippantly, but that is also a problem for another day in a way. the present problem now is the debt limit. washington is very adept at solving one problem whether kicking another one down the road for a future day.

the day is late september, so maybe that is a problem for future us, but the problem for current us is to not default on the u.s. debt and through markets into a tailspin that would result. so far, i think what you are hearing and ambiguously from all the debt limit and default should be off the table. haidi: breaking news managing editor derek wallbank with the latest on the talks as they moved to continue. let's look at the markets with mliv strategist mark cranfield. seems like these markets, if you look at the uptick in u.s. futures, they are more sensitive to the upside that they are to wanting to punish lawmakers for continuing to extend this uncertainty. mark: it is really what derek just said there, the key for traders is, all they wanted to eat here was that there would be no default. as soon as you tell them that that will not happen and they can go back to focusing on

things that actually drive markets on a day-to-day basis. right now those things are a massive short position in s&p futures from hedge funds. that needs to be squeezed out. and the fact that the fed is sounding hawkish. so it is back to fundamentals like central banks, difference in interest rates between the u.s. and the rest of the world and what is hoping to drive the major companies in the s&p and the nasdaq futures, that is what traders care about. we have heard so far from the talks in washington that they can get back to doing their own job and mostly ignore the political noise in the background. we have been hearing in the past couple of days that fed speakers are split. some want more hikes and some are going for a pause. but even if they pause and don't hike rates in june, it sounds like it will be a hawkish pause anywhere in that will mean relative strength for the u.s. dollar, probably slightly higher deals in the treasury as well.

it's a mixed picture for the s&p because we are seeing major companies, particularly in the tech space, outperforming. but overall we have to squeeze out those people who were betting that something will go wrong. that will take a bit higher in the short-term. shery: so what do you make of this divergence in the fed speak these days? is it a disagreement about where the fed funds rate should go this year, or is it more trying to rein in market expectations? mark: it's a bit of both. for one thing, they are desperate to try and take out the pricing for rate cuts in the market, that is the one thing they can all agree on, the way the derivative market is pricing in for rate cuts by the end of the year is not great. based on the current levels on inflation, the state and employment situation, none of that justifies the fed taking about lowering rates in the near

term. something would have to change drastically in the next couple of months to get the fed even considering rate cuts. they want to get the fed out of that sentiment and they will continue to work on that right through the june meeting. of course in the background, they do have some concerns about the credit situation in the u.s. , particularly the commercial real estate sector. but that is something that will take quite a long time to really play out, to see whether or not it has a damper on the effect of consumer spending. in the meantime, they want to convince traders, it is a bad idea to start thinking about rate cuts. shery: bloomberg's mliv strategist mark cranfield there. let's get to vonnie quinn in new york with the first would headlines. vonnie: turkish president red chips tire erdogan has won the support of a nationalist rival, boosting his bid for reelection. . he asked his supporters back one

on sundays runoff. he was eliminated in the first round with just 5% of voters backing his candidacy. thailand's pro-democracy parties are getting ready to form the next government. they signed a pact that lays out their ambitious plans, including charter amendments and reinstating cannabis on the list of narcotics, but they stop short of changes to the royal insult law, a move that may boost support for the limjaroenrat to become prime minister. the new head of latin america's top development bank is trying to steer clear of the u.s.-china petition. inter-american development bank president says the back is focus on integrating the region's countries through infrastructure projects. it is different from his predecessor, who sought to counter china's growing influence. global news, powered by more than 2700 journalists and

analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: alright, let's look at the movers in the early part of the session. belle. annabelle: a couple of things we watching. softbank was a little bit under pressure, now trading flat. that we are 11 minutes into the day's trading in tokyo. this stock in focus, because the abu dhabi sovereign wealth fund mubadala, and fortress investment group have agreed to purchase 90% of the equity that softbank held in the u.s. asset manager portrays. mubadala will take a 70% stake while fortress management will take the remainder. fortress will be continuing to operate as an independent investment manager after the deal closes. the exact terms and the size of the deal have not disclosed yet. softbank now trading flat.

another stock we are watching today is qantas. we just got a trading update from the carrier. it's again under pressure, bucking the broader trade we are seeing for the asx 200. essentially the company is seeing strong travel demand, the completion of its cost-cutting program as well, will drive profit growth for this year and they are expecting full-year year underlying profit before tax to rise to 2.4 8 billion aussie dollars, that statement coming through on tuesday. domestic capacity will be above pre-covid levels by the end of the second half of the year, haidi. haidi: our next guest expects even more gains on japanese equities. monex group ceo oki matsumoto joins us from japan. this is bloomberg. ♪

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haidi: first 15 minutes or so of cash trading as we get into this

tuesday session, bit of optimism is passing through, particularly when it comes to u.s. equities as we hear of these productive later talks on the debt ceiling. we are getting green shoots from korean stocks. a quarter of 8% gain when it comes to australian talks. potential strength when it comes to the aussie-kiwi given the trajectory of the rbnz ad. one more rate hike this week. we have seen qa positive's dominating that narrative. so much focus remains on japanese equities. consensus that japan, stop market is where you need to be given the economic and policy headwinds facing the u.s. and china as we continue to push these multi year highs. shery: yeah. let's turn to japan's largest online broker -- third largest online broker. they see this year adding

another 10% as low valuations lure buyers. joining us now is monex group ceo oki matsumoto from the clsa forum in tokyo. thank you so much for your time today. of course, there is so much exuberance about japanese equities. what makes this rally different from past peaks that fizzled out? oki: if you look at japan, the government and the policy are very stable. not like in the states. the new boj governor is providing a very stable environment, not like the former governor kuroda, who did not like surprises. kishida has been executing lots of strong economic push

policies, like restarting the the nuclear grant, beefing up the defense budget. executing those kinds of things. and you saw that warren buffett came to many japanese companies trading shares, and he made a lot of profit. also these days, with the opening, many people realized that jeff elise inflation situation -- and the japanese inflation situation is quite controlled. if that is the case, for equity and also for the real estate market, if you calculate return for the japanese menace inflation, the return is pretty good compared to somewhere like the united states. so there are many various, different reasons why japanese stocks are strong these days. in addition to that, a very

strong push of corporate governance reform. an companies trading below a pbr of 1 have to come up with a concrete plan to fix it. so there are those kind of wishes from the reform side as well, and everything came together and that is what is changing the japanese equity market right now. shery: can you imagine anything that would derail this rally? what are the biggest risks? oki: well, if this rally depends on single or two factors, there is a risk. but as i said, there are multiple factors so it is actually less risky this time. if anything happens to keisha's

cabinet, and if people see some instability -- fumio kishida's cabinet and if people see some instability in fumio kishida's power, that could cause a problem, i think. haidi: what are your expectations of forecasts as to where the nikkei 225 will be by the end of the year? oki: well, the pbr thing, any companies below pbr 1 have to fix it. if you calculate all the companies whose shares are trading below price-to-book ratio of 1, if those shares were fixed to trade at par to the book, then the nikkei would be trading just less than ¥40,000. so this is just mathematics. but i think there is 20% or 30%

room for the japanese equity market to go up. haidi: one of the factors that i think have historically suppressed gains in japan has been corporate governance, right, and shareholder activism as well. what role do you see from activist shareholders in being able to propel more progress when it comes to corporate japan, because i know you also run an activist fund. oki: well, you know, the activist used to be really bad news for japanese corporate executives, not only corporate executives, but also japanese society. people didn't like activists. but these days, things are really changing. those activists are, how do you say, somehow adapted to improve

their perception, so that they are now saying reasonable things to issuers. and then issuers, because of corporate governance pressure, they are pushing outside directors. their obligation is that they need to listen to the outside investors and shareholders. they listen to activists and then they provide feedback to management. so japanese companies are getting more and more open to activists. there are many cases, and they are seeing more favorably -- they are seen much more favorably than before. so activists i think are getting

quite an interesting role in the japanese equity market. shery: haidi alluded to your activist fund, a couple of months ago you talked about it growing 15 times in the next three years or so. how is that going? oki: well, that is kind of my wish too. [laughs] but given the potential of this activism in the japanese capital market, not only do we show the performance of the fund to investors, but also, if we can show some concrete examples whereby activism changed japanese corporates and turned into better results for japanese consumers or japanese employees, or japanese tax agents, that is good for japan. if we just show that kind of

concrete results that activism is not only just raising the share price, but also, it is good for japanese society, if we can do that, then we have much more support from this kind of activity and we can group the font size that much quicker. haidi: are you planning shareholder proposal for any company or sector, and which areas would you be targeting? oki: we are not particularly focused on any particular industry. rather, we tend to be more, how to say, interested in the ceo. if the ceo, the top management, do not want to change the company, it takes lots of energy for us to change him. but if they are thinking about they need to change, they should change, but they are looking for

some kind of timing to do, then we can just push them as a catalyst and then those changes will happen quicker. and then return part-time to be better. so we tend to focus more on the ceos who, if he or she wants to change the company, rather than just the industry. haidi: so great to have you with us, oki matsumoto, chairman and ceo at monex group. much more to come here on "daybreak: asia."

>> we are getting the japan pmi numbers we are watching the manufacturing one very closely because it is finally back in expansion territory for the month of may.

the preliminary number coming in at 50.8, and this is of course from 49.5 the previous month. we were in contraction territory for the past six months. now the composite still in expansion territory, and accelerating from the previous month of 54 .9 service is still strong in expansionary territory and better than the previous month of 50 six point three. the one to watch today in japan is the manufacturing number has turned positive to 50 -- 50.8 despite the fact that we continue to see that factor in weakness across asia. turning to bell for how we are trading early in the asian session. >> we are watching what's happening with the nikkei very closely given we are building into a ninth straight day of gains. if that holds it will be the longest winning streak we have seen for the japanese benchmark in four years. you can see here it is broadly

looking positive, a a lot of investors out there saying that yes even though there are signals perhaps the rally is looking overheated from a technical perspective, they do expect these gains to hold firm. it does come down to those economic fundamentals given that japan was the later one to emerge from covid-19 amongst the developed nations so there still is a ways to go. other factors are at play, we have been discussing the level of shareholder activism that is growing that focus on corporate reforms coming through and still dovish boj. let's change on and take a look at the wider market landscape because you can see here we are mostly moving to the upside in asia, only new zealand standing out a little under pressure here. that is as we see in the u.s. futures as well pointing higher given those signals of progress that are coming through on the debt negotiations in washington today. in terms of what else we are watching, what we have been seeing, mixed moves coming through for the currency but the

korean won standing out today climbing 6/10 of a percent today sitting at a month high against the greenback. a signal of that risk on tone feeding into markets today commodities are under a little bit of pressure, concerns feeding through particularly into iron ore and demand coming through from china. it concerns their about the outlook for the economy but we do see hong kong pointing to a higher start and saw that session reversing given there was at least on the geopolitical focus biden saying that tensions between washington and beijing should start to dissipate in the near future. that was something traders watched very closely in the session today but there are a lot of different factors to be watching. it moves in japan, debt ceiling progress, and we will hear from fed speak given there is mixed news on the outlook for rates. >> let's get you back to new york with vonnie quinn and our first word headlines. >> thank you to fed hawks see the need for more red hike --

rate hikes this year after jay powell signaled a june. jim bullard says he is backing to more increases while minneapolis fed president says a pause does not mean that tightening is over. there comments bolster the case that they might skip a move next month while keeping the door open for further hikes. president biden says he and house speaker kevin mccarthy had reductive talks and agree that the u.s. default is off the table. the two met at the white house for more than an hour have still not reached a deal, treasury secretary janet yellen warns it is highly likely her department will run out of cash in early june. mccarthy says he expects to speak daily with president biden until a deal is sealed. a panel overseeing the credit default swaps market that ruled -- has ruled that the government brokered to take over credit suisse does not credit -- constitute a bankruptcy event. securing acquisition of its smaller rival would have triggered an insurance payout for holders, the same panel last

week ruled against a similar question related to the write-down of credit suisse's bonds. global news powered by more than 2700 journalists and analysts in more than 120 countries this is bloomberg. >> the prime minister in sydney for a two day visit during which he will meet with australian prime minister as well as business leaders, before that he will be attending an arena event in front of 20,000 expatriate indians, paul allen is in harris park which is home to a large portion of the indian diaspora in sydney. there was a large optimism ahead of the strip, what is the atmosphere like now? >> the atmosphere here is one of excitement, the prime minister is not scheduled to visit this part of sydney but the hope is that he might and it would be trademark for him to pay an unscheduled visit and drop in on the indian diaspora.

this is the heart of the indian diaspora here in sydney, about half of the residents of harris park are of indian descent, a big scheduled event later in the day at an arena not far from here. 20,000 people are expected to attend the event and see and hear from him. members of the indian community from melbourne as far away as new zealand have come to attend that event and catch a glimpse of their prime minister. >> what about the business end of things? >> there will be a little bit of business for him later today he will be meeting some high profile ceos, have some one on ones with other prominent australians as well. the real action will happen tomorrow morning, there will be a bilateral meeting on sydney harbour, and he will meet the governor general as well and the key to that is advancing for free trade agreement.

that is mostly complete with the hope is that gets over the line by the end of 2023. most exports between them and australia are currently tariff free but there is still a little more work to do. finalizing some of the things that were discussed on the sidelines of the g7 and hiroshima, those will be discussed as well. and also from australia's perspective the intention here is to diversify the number of trading partners in the depth of those trade relationships as well in china is the biggest trading partner for australia, but as we have discovered with those trade strikes it is a vulnerability in something that the prime minister is keen to address by growing other relationships in india and one of the of -- obvious ones. >> paul allen there at harris park where there is speculation they will get a surprise visit from the indian prime minister. let's get more from the ceo at the australia india institute joining me here.

we appreciate your time. there is so much anticipation going into this trip and of course it comes as what could be seen as a new better chapter four bilateral relations. >> absolutely it is definitely a new chapter. i think the australia india relationship has come a long way in the last decade. if you go back to the times of the cold war we were on opposite sides of the cold war blocks and now once may have had a relationship of mistrust it is now a relationship of strong mutual trust. that is built upon from trade but also the geopolitics which is changing in the region and this is where our two countries to have so many common interests, shared values that bring us closer together. >> as we saw with the g7 talks over the weekend, the abbreviated meeting with president biden and they were able to do the australia leg of the trip, so much of that focus

is leading to her directly talking about beijing. when it comes to trade, economic interests, geostrategic interests, is there a lot of common ground with this visit and how does that bring that together? >> i think the fact that the prime minister, despite the core meeting being canceled here in sydney, he has still chosen to come to sydney speaks volumes about the australia india relationship. these are two countries that really are now converging in terms of geopolitics and trading relationships but are trading relationship really is not where it should be and i think that is what is going to be significant out of this visit. this of course is the second time prime minister modi has visited australia and we have had five australian ministers visit india this year alone. what we want to see, i think both countries want to see our trading relationship extended to

around the 100 billion mark. the way it is going to do that for australia, they really are looking at new markets and critical minerals. that is one of the new markets that australia has an abundance of and can provide to india to help india bring down its carbon emissions in the process. >> why did it take prime minister modi so long to visit again, the last time he was there was about a decade ago. how much has their relationship changed since? >> i think it was 2014 when he last visited australia, but that does not mean that both leaders have not met along the journey. at so many points now for this chinese india it relationship at various multilateral events, g7 is just one of those that just occurred, the quad and other the you nga, there are so many

moments that are two prime ministers do meat. i think that just shows you the fact that these bilateral connections that happen along the journey over the last decade have really made the cementing of this relationship today. that is because it is built on some common interests in our region and that is to countries that want to really see a free and open and inclusive indo pacific region. that abides by an international rules-based order. >> yet india has been criticized for not condemning russia strongly enough over the invasion of ukraine, how awkward will that conversation get? >> if you look at all quad members for example, india does take a position of nonalignment or multi-alignment when it comes to its foreign policy. i think both countries can

really articulate their differences here, i am sure -- i don't want to preempt the conversations that will occur between our two prime ministers that will be opportunities for both of those leaders to share their issues on a range of factors. it shows you that despite that, there is more in common in terms of australia and india than there are differences. in that's what really drives them closer together, trade and geopolitics. >> great to have you with us, lisa ceo at the australia india institute, more to come here on daybreak asia this is bloomberg. ♪

>> we are seeing gains almost across the board when it comes to msci asia pacific right now. health care, materials, industrials leading the gains, even energy up 3/10 of 1% as wti rebounds from today's session. this of course as the topix and the dk two to five are at a multi-decade high. we continue to watch the kospi

as well extending those gains we saw in the previous session, the asx 200 also up to tenths of 1%. >> thailand's pro-democracy party getting ready to form the next government, they have signed a pact that lays out a unified agenda and stop short of adding changes to the nation's royal insult law. bring us more details, and has been more than a week since the election so where are we at when it comes to the formation of government? >> good morning. yesterday the coalition of eight parties signed a pact to commit to forming a government together. the government formation seems to be taking shape a week after the election, however even as the coalition has 313 seats in the lower house which is a clear majority, they still need about 63 votes more from either

senators or other conservative parties in the lower house in order to endorse and move forward their parties leader as prime minister according to the constitution. we are looking at maybe july or august until the next government is formed after the election commission officially confirms the election results. within 60 days after the may 14 election. >> they are already looking at key agendas, as we saw on the coalition pact signed yesterday. i am curious why that proposal of the moral insult law was not included. >> that law's main policy proposal from the move forward party but it is an agenda that was struggling to divide the coalition because there were different views among the parties within the coalition itself, not to mention it was drawing opposition from senators as well as other conservative

parties. so leaving out the plan to propose the amendment to the royal insult law from the common agenda was seen as a strategic move to bolster support for their candidate as prime minister and the goal is to secure him first and then move forward, that it still will be proposed in parliament -- parliament for discussion no matter what lawmakers or parties end up in the parliament. the goal here is to get to power first and put aside the topic that had divided the coalition and was creating friction among senators. >> there were legal complaints being launched, does that potentially affect the formation of government, at least the timeline? >> right now there are a few complaints that have been launched with the election commission. first about his qualification as

a member of parliament because the lawyer that filed it alleged he had shares in a media company that would mean he violated election rules. of course he denied this allegation. the latest legal challenge was around the fact that move forward was proposing to amend the royal insult law which the lawyer who filed the complaint claimed was unconstitutional. right now, the election commission has not formally accepted those complaints to be forwarded to the constitutional court to be decided. as of now, there is really nothing to worry about yet. the legal complaints are stirring speculation that the government formation might be delayed but it still remains to be seen whether those cases will be accepted at all. >> bloomberg's there in bangkok

with the latest from thailand's election. be sure to tune into bloomberg later to hear more you can get in-depth analysis from our daybreak team broadcasting live in our studio in hong kong, you can listen in via the app radio plus or bloombergradio.com. more ahead, this is bloomberg. ♪

>> japanese lender is forging further into u.s. investment banking through a $550 million deal to buy green hell, usa president and ceo told bloomberg the deal is a win win for both parties. >> as we looked at our business in the americas, one of the areas we have been underweight is m&a. candidly the discussions with greenhill were relatively recent and i think the timing worked out well for them, i think they were looking at something that would be enhancing to their business and clients, it was on our radar screen for a while that we needed to have these capabilities. it just worked out. >> what about this idea that you could hire on top of this brand,

this is a brand that has existed since 2004 in public markets at the very least, it had an iconic brand in the past. do you think you can invest to gain share again when it comes to this boutique? >> i think so, i think this is one of those cases where one plus one equals more than two. in the u.s. alone we bank more than 1000 clients, we have a similar number in europe and in japan we banked 70% of all listed companies. i think what greenhill really don't have is they are purely advisory and restructuring, i think in this day and age offering a full array of solutions to clients, i think makes you more valuable to your clients. this is one where we think in places where we have had -- a strong relationship whether it be capital markets are derivatives or balance sheets, have not had an advisory piece and likewise if you talk to

greenhill, with scott will tell you is they advise on a lot of these transactions but there are other services that they have not been able to provide. i think it is a win win for both. >> give us a sense here as to exactly what your clients, your u.s. clients were asking for prior to this deal. is there something specific that they had been looking for in this environment? >> it's just been able to add value to clients, clients often come up asking you specifically -- we have several billion dollars of balance sheets in the americas and we service our clients not only with our balance sheet through solutions. we have debt capital markets for investment creative's as well as high-yield, we have equity capital markets, we have a very good derivatives platform both

in equity and debt, foreign exchange, when clients want to issue debt and hedge against higher interest rates we can do that for them. there is a whole host of products and services we provide for our clients, this is something else we can offer. and when you think about m&a, yes it has been a tough. -- period recently but that will change as well, these markets are in cycles and we look at this like the long haul. it is not timing its time and that is how we are viewing this. >> head of securities usa president and ceo speaking to us earlier, a quick check of business flash headlines jp morgan is set to gain an even bigger boost from rising interest rates thanks to its purchase of first republic bank. jp morgan has raised its guidance for the net interest income this year to 84 billion dollars from 81 billion, the lender also sees second-quarter revenue from trading and investment banking to each slump 15% from a year ago. first citizens has sued hbc for

rating dozens of employees from silicon valley bank as first citizens was taking over the failed lender. the complaint filed in a california federal court accuses them of poaching 42 bankers and using their confidential proprietary and trade secret information. a spokesman declined to comment on the lawsuit. >> take a look at how u.s. futures are trading, we are seeing some upside after a mixed finish here in new york. this was ahead of crucial debt negotiations, we finally got some word coming both from the white house as well as house speaker kevin mccarthy talking about productive talks. but not necessarily a deal on that debt ceiling as of yet. we already heard from treasury secretary yellen warning that it is highly likely her department would run out of sufficient cash in early june, so we have been watching these negotiations very closely which will continue in the days to come. we also had some more hawkish

fed commentary coming out today which really sent the dollar higher, also yields higher, and you can see right now in the asian session the two-year yields a little under pressure. but still trading above that for 30 level. that is it for daybreak asia but our markets coverage continues as we look ahead to the start of trading, hong kong and shenzhen stay tuned for bloomberg markets open, this is bloomberg. ♪

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>> good tuesday, morning