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shery: you are watching daybreak asia live from new york, sydney and hong kong. annabelle: counting down to asia's major markel: top stories set for a week open as an ai rally loses steam. treasury yields are lower on hopes the debt deal will pass congress. in vdf becoming the first trillion dollar -- nvidia becoming the first trillion dollar chipmaker. lowe set to face a grilling as we wait for next week's rate decision in australia. in south korea, breaking news for you. industrial output for the month of april, industrial output falling 1.2%. that is more than we expected. we were anticipating a 2% contraction.

april industrial outfit falling 8.9% on the year and that was worse than expected. the year expectation was 7.8% contraction and at the april cyclical leading index also falling .2 points month on month. slightly weaker than expected data out of south korea there in terms of industrial out put. shery: take a look at how u.s. futures are trading early in the asian session, muted after a mixed finish in new york. we had a rally around artificial intelligence hype with nvidia at one point topping the $1 trillion in value. that did not last long, so we have energy companies weighing on the s&p 500. it finished around 4200 level. we continue to see wti prices below the $70 a barrel level. the fiscal markers showing ample supplies. treasury yields were down across

the board and this of course as we also had eco-data showing consumer confidence fell to a six month low. annabelle: in asia we are focused on events in the u.s., specifically around the debt deal in investors are waiting for that to be signed. we are expecting thinner trading volumes to come through in the session. we have futures setting up for weakness across the board. kiwi stocks are online. watching the japanese yen in particular because we have japan's top currency official warning that if the weakness persists action could be warranted. were seeing currency around its weakest against the greenback since november. we've got the boj governor set to speak in tokyo, but yen weakness has been something that's helping the japanese benchmark in particular. nikkei futures are muted at the open. the other big event if you change on out on the calendar is pmi data due from china. what we are expecting is further

weakness coming through in the factory and services sector. we have been monitoring the deteriorating economic backdrop in china and issues from external demand that has been slipping. this chart taking a look at the hs index. we saw it entering bear market territory in the prior session. it managed to close higher. what helped generally where the moves in the csi 300 and the prior session. more optimism around ai. so easy in particular but broadly not enough to entice investors back into the market. something where tracking throughout the session today. paul: for more on the latest, let's bring in bloomberg executive editor paul dobson. as we know, nvidia briefly crossed at trillion dollar market cap for -- before easing on in the u.s. in the afternoon in the u.s.. they said maybe it is time to

take profits. what is the outlook around the broader ai segment? paul: there is a lot of enthusiasm. this is one of the few bright spots in the market at the moment. nasdaq propelling gains in the u.s. and yesterday was a good example where there was advances in tech stock. that is where the opportunity is at the moment. is it too much, is it a frenzy, is it going into bubble territory? that is what investors are asking themselves. for nvidia this is based on the fact that it had strong earnings and a robust forecast, despite the share rally. so whether you believe the forecast will be realized, whether we will see enthusiasm in the aia is the wager.

if you think those opportunities are here and this is going to be a game changer, there is a lot of enthusiasm for that. there is reason to believe that gains at this level can be sustained. shery: we saw in treasury yields, those payable in early june as well, how much is the u.s. debt deal paying -- playing into the bond space? paul: lower treasury yields are a good thing for the tech industry. there's a lot of uncertainty in the broader macroenvironment. while the deal takes that big risk off the table, it introduces minor risks that we will see coming through for the rest of the year. one of which is slightly tighter as a result of the measures in the debt ceiling agreement. another more significant risk is the restocking of cash that the treasury will need to do which

will seem more bill sales, which will tighten liquidity in markets. maybe negative for equities as a result. should be something that keeps investors mindful of how much further the fed can go. that will be a benefit for the treasuries market. it is in balance at the moment because you may see the highest short-term interest rates for a while as they feed through the market. the longer term could weigh on the inflation outlook. paul: we did see a late rally for chinese equities. largely fueled by ai optimism. headwinds in china in the moment, aren't there? paul: yes, yes. a late rally in markets yesterday. golden dragon index was not offering much support. there is over chinese markets.

hs ci is close to a bear market and we've given up the gains for some of the other indexes already this year. that the tale of disappointment. going into the start of the year recovery trade would give a big lift and push valuations higher. it has not materialized. the sentiment is weak and that is the key. if they can turn around the sentiment and get consumer spending going again then maybe that will give us the lift we have been waiting for. shery: bloomberg's executive editor for asian markets, paul dobson. we will continue that conversation on ai with arc invest ceo cathie wood. as nvidia became the first chipmaker to cross the $1 trillion valuation mark she called it a check the box stock. u.s. house speaker kevin mccarthy says his job is secure

despite threats from republican hardliners over the deal with the white house. house committee rules boat will mark the first key test of support for the spending deal. let's bring in bloomberg's billy house in washington. billy, we know the timeline is tight right now. what are we expecting? billy: as you mentioned the house rules committee is in the middle of a process, getting ready to report the bill out probably. send it to the floor for a vote. there will be a 24 hour wait. we are looking for a house vote tomorrow night, between 8:00 and 8:30. both parties are scrambling for votes, trying to make sure they have enough to get past. paul: and billy, let's assume we get through those two stages. there is another hurdle yet as well. the senate where one objection could really throw a spanner in the works. billy: one senator could stall it for days through objections.

so there's conversations going on over there as at least one senator, mike lee had suggested that he does not like the bill. whether he will go through with any of those machinations or have co-conspirators, we will have to watch and see. paul: that is bloomberg's billy house in washington, watching the progress of the debt limit bill. let's take you live to pictures of reserve bank of austria governor phil lowe. he is testifying before a committee. a timely testimony because we have a reserve bank of australia meeting next week. we had 10 hikes in a row from the rba, a pause, then one more. cash rate 3.5%. we are really watching for some clues on where we might be headed next. we will have cpi numbers for the month of april in australia out in over a couple hours time as well. you can watch this testimony

from the rba governor on your bloomberg terminal, live go. let's get to su keenan for a check of the first word headlines. su: we begin with the u.s. which says one of its reconnaissance aircraft have what it describes as an unnecessarily aggressive encounter with the chinese under jet. washington says the plane was in international airspace over the south china sea when the chinese aircraft flew directly in front of it. the u.s. sought to cool tensions with secretary of state antony blinken stressing the need to improve ties. antony blinken: we are not looking for a cold war. i think there is a demand signal from the countries around the world, that china and the united states manage the relationship response will he. take every reasonable step to make sure that the competition that we are in does not veer into conflict. su: vladimir putin has demanded

stronger air defenses around moscow following the biggest drone attack on the capital since he ordered the invasion of ukraine. russia's defense ministry says eight drones were intercepted early on tuesday and blamed ukraine for the assault. moscow's attacks followed attacks on ukraine's p. --kyiv. and thailand's party led coalition is setting up a transition as it prepares to form the government. the leader said the eight party alliance will meet weekly until they formerly take power. this comes after the republic squabbled over the house speaker's post. they are the second-largest party in the coalition. and finally, theranos founder elizabeth holmes has reported to prison to start her 11 year sentence for defrauding investors.

this over the company's unreliable blood testing technology. federal court last year convicted her of wire fraud and conspiracy and she lost her final appeal last month. 39-year-old is being held in a minimum security prison near houston. 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 su keenan. this is bloomberg. shery: and it still ahead, a look into wall street's push to expand in china. analysis from the conference boards china center for economics and business. up next, milford management's take on how to ride out the market volatility caused by tighter financial conditions. this is bloomberg. ♪

♪ >> i believe you need to bring inflation down by bringing demand down. i want people to be convinced demand is coming down and that will bring inflation down. paul: richmond fed president, there on u.s. inflation. positioning long in terms of staples, health care, infrastructure. preferring cash or credit is a better place to wait. joining us now is william,

portfolio manager at milford asset management. tell us more about your positioning. william: really patience is the keyword at the moment. we are keeping a cautious position on equities. until recently we were along with inequities and defensive stocks were a stable. utilities, health care. now that the market is moving into those companies there seems to be -- owning credit without interest rate duration, given that credit markets are pricing in more of a risk premium then equity markets broadly are means that we prefer to be on the credit side. over equities, which are not pricing in much of a risk of a severe recession or downturn at all. really at the moment, it is being patient and waiting for a big opportunity to arise over

there in the coming months. paul: if you're talking about big opportunities let me give you exhibit a, the ai tech rally at the moment. there is a wide agreement that this is looking frothy at the moment. are you involved in this and how selective do you need to be? william: we have various companies that are on the trade whether that is amazon or google or lab research making equipment. these are stocks that have benefited. we do not believe it is a bubble. it is not saying much, it's pretty clear. the question is can bubbles go on another 18 months? we've seen that these stocks go up multiple times, is the bubble going to burst tomorrow? we don't really want to take a big beat either way on this one.

we do not think it is the time because it can make a painful environment over the coming year or two if the bubble keeps going. and on the flipside, we do not want to be loading because it is certainly getting frothy. of course, like all good bubbles, this is build on something real. there is no doubt that this will change the world, change a lot of the earnings of certain companies. it is just that markets price these benefits very quickly. shery: what happens once we get a u.s. debt deal and we get more debt issuance from treasury? what will the liquidity picture look like and what are the risks related to that? william: you are touching on the key thing which is the markets understanding of overall liquidity, which is what we mean, it is the monetary pace in financial markets. it has improved substantially

over the last 12 months. we get a feel that the treasury is about to issue more deeds, increased issuance over the next couple of months should embolden the federal reserve from under $100 million to upwards of $600 billion. it's almost like doing half $1 trillion of tightening. i half $1 trillion that could be pulled out of financial markets. it is a significant headwind to liquidity. the markets bottom total last year, a lot of the rallying strength of mark this is because there's been nearly $2 trillion of global liquidity into the financial system since. the selling increase will represent the peak of short-term liquidity. it will test markets. can they maintain these levels when liquidity has been drawn rather than added to the system?

shery: on top of that we have a patchy recovery in china. we have seen the pressure when it comes to west texas intermediate below the $70 a barrel level. do you look at the commodity space at all? is this an opportunity or more pressure going forward? william: we are often looking at commodities in china, the mining companies, energy companies that we own. china trade is disappointed. their growth has resulted in commodities whether it is iron ore or copper drawing down. low exposure to the middles but we are starting to get to the point now where negativity is being priced into commodities quite significantly, particularly into copper. the reason we highlight copper is it will be one of the first

metals that investors want to buy when recessions begin. the global economy goes into recession later this year, once those begin angst start to be contrary and they start to say what do i want coming out of the recession. given the structural benefits over the rest of the decade, copper minors, whether it is tech resources over in canada, they are representing good value now. paul: all right, william, portfolio manager at milford asset management, thank you for joining us. up next in the next hour, we are going to have more on ai with arc invest ceo cathie wood as nvidia became the first chipmaker to cross the $1 trillion valuation mark. shery: we will be asking her about how she is getting exposure to the ai rally, given that she eliminated that

exposure to nvidia. you can get around up of all of these stories that you need to know to get your day going in today's edition of daybreak. terminal subscribers go to dayb . available on mobile at the bloomberg and your app. this is bloomberg. ♪

♪ paul: u.s. house minority leader says democrats will make sure house speaker kevin mccarthy holds up his end of the deal. they spoke with bloomberg on balance of power. >> support the biden administration's resolution in that it will extend the debt ceiling for an additional two years. and avoid the country being in this kind of hostage taking situation for the rest of this congress. that is a good thing. the other important thing that was brought up as a result of bidens leadership is very important democratic priorities

were protected. social security, medicaid protected. veterans protected. and the american people are protected from the type of extreme cuts that the republicans were trying to jam down the throats of the country as a result of the hostage taking situation that has been underway for the last several months. >> it sounds like you are a yes when the bill comes forward, that's when you're going to vote. how many democratic colleagues do expect to vote yes alongside you. >> we are in the process of engagement. three hours of virtual meetings with the administration, three hours of virtual meetings underway today and the administration will have a meeting tomorrow in person at the house where members of the administration will be able to talk to members of the democratic caucus. it has been a cooperative and

communicative experience over the last few days. the more important question that everyone should be asking in terms of what is going to happen on the floor of the house of representatives is how many votes will republicans produce? this is an agreement that at their insistence they negotiated with the administration and it is our full and complete expectation that they are going to produce at least 150 votes. we as democrats are going to make sure that we do not default on our nation's debt. america should always pay our bills but it is important for republicans to keep the promises that they have made. no one seriously believes 95% of house republicans are going to support this agreement. that is a number that i believe had been floated in the public domain, but it is reasonable to expect that they will produce 150 votes on thursday. shery: house minority leader hakeem jeffries.

here is a quick check of the latest business flash headlines. goldman sachs is said to be considering another round of job cuts as the dealmaking business remains slow. sources say the third round of cuts will affect less than 250 people and will include the firm's more senior employees. fidelity says twitter is worth just one third of what elon musk paid for the social media platform. fidelity it marked down the value of its equity stake in the company. it is unclear how fidelity arrived at its new valuation. we do have plenty more to come on daybreak asia, including the latest from the reserve bank of australia governor speaking to lawmakers, saying the rba will do whatever is necessary to b hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician.

i was 424 pounds, and my doctor was recommending weight loss surgery. to avoid the surgery, i had to make a change. so i decided to go with golo and it's changed my life. when i first started golo and taking release, my cravings, they went away. and i was so surprised. you feel that your body is working and functioning the way it should be and you feel energized. golo has improved my life in so many ways. i'm able to stand and actually make dinner. i'm able to clean my house. i'm able to do just simple tasks that a lot of people call simple, but when you're extremely heavy they're not so simple. golo is real and when you take release and follow the plan, it works.

♪ annabelle: you're watching

daybreak asia. i'm annabelle with the check of markets. 30 minutes away from the openings in tokyo and sydney and you can see we are a mixture. caution ahead of the opens as well. a few factors playing into that. firstly we saw that nvidia bounced in the prior session on wall street, briefly entering the $1 trillion club. very exclusive, only five members. still investors are assessing whether this mania around ai stocks can continue. we are also approaching the deadline for the debt deal to be signed and ahead of that we can expect also thinner trading volumes in the session. a bit of wait and see. contracts for australia, new zealand online. tracking the open that we see for japan stocks in singapore. the contract looking weaker. watching the moves in the japanese currency. more on that with kathleen in a moment but we are hovering around the 140 level. let's change on because in the

session, one other key market we are watching will be china. we have been seeing the shares index entering bear market territory but what is interesting in the prior session as we saw the csi 300 reversing a drop of as much as 1.2% to end flat. it hit this key resistance level that has become a line of support. the 200 day moving average, we moved off that in early january. in the prior session yesterday, something else we are tracking. it will be important that we get pmi data later and we are expecting further weakness coming through in the factory and services sector. something to focus on. central banks in action as well with the rba down. paul: we've got rba governor phil lowe speaking right now to australia's senate economics committee. concerns grow that the central banks inflation fight is fueling the risk of recession.

our global economics and policy editor kathleen hays this year. the governor has been speaking for 30 minutes. what are the key takeaways? >> he is fighting inflation, worried about inflation and he said they will do whatever it takes to bring it down. it's interesting that the questioning -- i might've expected something more hostile. the opening remarks when it comes to the economy and inflation, what are you doing, what you watching closely? he's focusing on labor cost, unit labor cost and saying it is ok for people to get higher wages as long as productivity grows. if you have workers and they produce more output and you have to pay them more, you are fine. if productivity is low, that is when this is a problem. he things more has to be done on that front. he does say you cannot get to to have percent inflation if you got unit labor costs to 4%. that's what they're doing now. he talks about policy being in restrictive territory. rba is in a data dependent mode

on rate moves, so we will put a lot of focus -- he did not say this but everyone is putting focus on inflation. the rba as well. we are going to get the latest cpi numbers later about a couple of hours from now and it is edging higher, six point 3% year-over-year on the bloomberg consensus effort, 6.2. bloomberg economics think that will hold said here. -- cold study or. as testimony wears on we will get more questions on that. shery: governor ueda is expected to speak in less than one hours time. at a bank of japan conference. what are we expecting him to say at a time where the yen is weak against the u.s. dollar? >> if there is an opportunity and someone asks him, we hope we will get something. boj conferences are only so open and he is giving introductory remarks. if this is the bank of japan's annual international policy conference. and there's all kinds of central

bankers probably from around the world. we've seen some names. we don't know everyone there but the yen is at the lowest level since november and we had a big meeting yesterday of the ministry of finance, financial services agency and bank of japan. the chief currency official in japan in his role noted that this is the first time they are meeting since governor ueda took over the boj. he is putting the focus on ueda, has first policy meeting was in april. they will take appropriate responses if necessary and again as you know, it is rate hikes from the fed that are expected. another thing putting pressure on the yen. we know that ueda said he's not ready to do anything on monetary policies. he says inflation is sustainably at 2%. he may not give anything but opening remarks.

not everything is open to the press so you may not here. if he does he will not answer the markets by talking about tweaking yield curve control or even mentioning it. that is what is expected. shery: which is why investors are focused on the divergence. kathleen hays, global economics and policy editor here with the latest on what to expect from the boj. let's get to su keenan with the first word headlines. >> we start with you are how frequent kevin mccarthy -- house speaker kevin mccarthy. over the deal with the white house over default. the house freedom caucus chairman scott perry says the debt limit deal fails to deliver and another lawmaker says he will trigger a former process to remove the speaker. in upcoming house rules committee will mark the key test of support for the spending deal. >> speaker mccarthy had a mandate from the american people. negotiated with a powerful

negotiation position of a unified republican party. not just in the house but in the house and the senate, to hold the line for the bill that we passed. this deal that we have heard about fails to deliver on all of it. >> china's president has told officials to accelerate efforts to modernize security defenses. state media say xi jinping told a committee the complexity of security issues has increased. she said the government needs an early warning system for risks. he says officials needed to properly handle his concerns. and taiwan's de facto ambassador to the u.s. says the lack of a double taxation treaty is unfair and discouraging investment from taiwanese semi conductor firms. kim added that taiwan is the only top 10 trading partner of the u.s. that does not have an

agreement that prevents double taxation. if the comments come as the u.s. seeks to dramatically boost domestic production of advanced semi conductors. 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 su keenan. this is bloomberg. shery: south korea is aiming to join the big leagues of the developed market club but while this may burnish asia's fourth largest economy as a power player, it could turn into a cautionary tale about the pitfalls of moving out of emerging markets. asian stocks reporter joins us from korea. the north focus on emerging markets and every time i see south korea, it feels odd. what are the risks of seoul korea getting rid of its classification and graduating to the developed market space. >> good morning.

what we found out from more than a dozen fund managers and analysts from around the world is there is a bigger risk of foreign out flows and having foreign inflows. if south korea gets an upgrade from msci. now that is because south korea accounts for a huge part of the benchmark. it is the fourth largest member after china, taiwan and india and it accounts for about 12% of the index. that is a pretty big part of the index. if it goes to the index which is now consisting of 23 countries, it could pick one or 2% of the index. and that means a lot of managers will have to sell stocks in south korea and maybe add one stock which is likely to be samsung electronics.

that will not be great news for south korea. shery: what is the criteria that msci is using to continue classifying them as em? >> msci uses three big criteria. whether a country belongs to the em oe dm list. one is economic development and the second one is the size and liquidity of the stock trading market which is met by south korea. however it is market accessibility that korea has not met. msci published in june that it will update its annual classification review this june. they pointed out that south korea has accessibility issues for foreign investors. they heighten accessibility is for foreign investors. that includes measures or investors have to go through.

lack of transparency. south korea began to address these issues but it may not be enough. paul: right, so let's talk about timing. when will south korea become a dm according to the classifications? >> so some expect that could happen as soon as june when msci announces its market classification review at the end of june. it may place south korea on the watchlist. that is coming from goldman sachs. some bond managers said it is going to happen in the coming years. sometime in 2024 or 2025. the country has to be placed into the watchlist for one year before its final upgrade but a lot of fund managers do expect that to happen in the coming years. paul: asia stocks reporter there. still to come, elon musk visiting china for the first time since covid as american

businesses have an uneven recovery to exhume their expansion of the world's second-largest economy. analysis with the conference board coming up next. this is bloomberg. ♪ ption certificates or filing returns. avalarahhh ahhh ahhh ahhh 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. ♪ >> we are not looking for a new cold war, we are not looking to contain china. i think there is a demand signal

from countries around the world that china in the united states manage the relationship responsibly. that we take every reasonable step to make sure that the competition that we are in does not veer into conflict. paul: u.s. secretary of state antony blinken in sweden on the need for better u.s. china relations. washington's attempt to ease tensions with beijing, there is a push by corporate america to grow businesses despite on even recovery. elon musk to emphasize the importance of maintaining ties during his first visit since the pandemic. echoing sentiments of executives from apple and mercedes-benz. he spoke about the importance of china and how uncoupling from the country is an illusion. shery: we're gearing up for coverage of jp morgan's global china summit. the first event for an

international vendor since the exit of covid zero. morgan stanley had its own china summit in hong kong. joining us now as head of the chinese center for economics and business of the conference board. great to have you with us, alfredo. you have many conversations with ceos. tell us what you're hearing about how committed they remain to the china market? alfredo: thank you for having me. we just conducted a survey and one of the highlights is that ceos are more optimistic about the outlook of china because of the lifting of zero covid restrictions and the effect this has had on business conditions and economic conditions. there is an acknowledgment that the business landscape is turning challenging. the economic rebound is not as strong as it was expected in large part because demand, domestic demand, is not leading to that growth that china needs. there is regulatory disruption in higher compliance risk what is disrupting business is the

uncertainty generated by the volatile political environment and tensions between the u.s. and china. this is increasing the risk that companies will get caught in the crossfire of tit-for-tat regulatory and policy moves by both parties. still most ceos are telling me that they remain committed to the chinese market, even if they are talking about stopping investments. this is a cautious approach because of the uncertainty. they might be talking about supply chains increasing resilience, but the reality is china remains an opportunity because of share market size. this is why many ceos have told us they are expanding their in china for china investments and operations. shery: how are they hedging? alfredo: right, so part of the hedge is trying to shift some of the supply chains to other markets which are becoming important for the manufacturing and delivery of services. you have some in southeast asia.

some are shifting to latin america. but that does not mean that they are leaving the market. they are maintaining production in china because china is an important market for goods and services. so what we are seeing right now, i would say it's probably the start or the progression of a bifurcation of supply chains in the market. where some of supply chains are disrupted -- directed at satisfying the demand of china and others are directed at satisfying the demand of the world, excluding china. paul: you mentioned a moment of go the survey you did of ceos conducting business in china. obviously, an understanding that you cannot decouple, that is somewhat of an illusion. but there are risks that they identified. can you tell us about those? alfredo: right, so the most important risk is generated by geopolitical develop and's. there is a risk that companies get caught in the crossfire of regulatory moves by the u.s. or

china. we saw what happened with semi conductors and how this has impacted several companies. over the past weeks we have seen in media headlines what has happened to some professional service firms. due to investigators of their actions by chinese authorities. there's not a lot of information which is what is adding to uncertainty. it sends a mixed message when china is trying to attract foreign investment. this is bad optics against the geopolitical environment now. you know, it leads to the conclusion this is retaliatory. uncertainty is increasing. paul: so we've got equities slumping, prophets disappointing. the consumer not as strong as they might be. situations like this in the past we have anticipated big stimulus. what are you expecting?

alfredo: it's a very good question. certainly china top priority is to stabilize the economy. there have been conversations about china wanting to boost growth but in reality, their top priority is stabilizing the economy. one of the key things that is happening is when you see local government debt levels they are quite high. in a way this is constraining the ability for china to add on stimulus. so this is why the chinese government has decided it gdp growth target is 5%. an achievable target because last year there was such a low base. paul: alfredo, head of the china center for economics and business at the conference board. thank you for joining us. as we mentioned, jp morgan is hosting its annual global china summit in shanghai starting on wednesday. their first in person event since the start of the pandemic. we will be there with jamie

dimon. before that you can catch our other exclusive conversations from the summit including executives from fortescue's and lori l. hunting more to come on daybreak asia, this is bloomberg. ♪

5-hour energy. think of it as 5-second coffee. for when you wake up too late to make it. or you don't have time to wait in line for it. or you're just too busy for a coffee break. 5-hour energy. the 5-second coffee. ♪ shery: we have breaking news out of japan.

we are getting industrial production numbers for the month of april. contraction of .4% month on month, the estimate was for an advance of more than 1%. so that is much weaker than economists had expected. expectation was supply chain disruptions had healed and we would see improvement in the number but of course we continue to see slowdowns and overseas markets, external demand being weak. industrial output for april at a contraction of .4%. really not what economists had expected. when it comes to retail sales numbers, not very positive. we are talking about a contraction of .2% instead of a gain of half a percent as economists had expected for april. destocked -- despite the fact that the year on your number remain strong, growth of 5%.

japan's retail sales numbers are diverging, perhaps not surprising given that inflation has come in strong in japan. so we are seeing that consumption taking a hit. retail sales, month on month contraction of 1.2% for the month of april. paul: all right, let's get a quick check of the latest business flash headlines. nvidia's market valuation of fleetingly crossed the $1 trillion threshold after the chipmakers ai prospects vaulted it into an elite club of five american companies. alphabet, amazon, apple and microsoft are the only u.s. businesses to have trillion dollar valuations. fewer than 10 companies globally have achieved the distinction. mesa has secured investment from singapore's gic that values the industrial gas maker at $13 billion. financial terms were not disclosed. sources tell us gic is paying $2.1 billion for less than 25% stake.

they are using the proceeds to help by full control of a joint venture it runs with cvc capital partners. hewlett-packard enterprise shares fell in late trade with projected revenue for the current order fueling fears of slowing growth. hbe sees sales ended in july at up to 7.2 billion companies. the company trimmed its earnings for the fiscal year as it works through a pandemic era backlog. shery: right, bloomberg tv it is launching a new series called the new directions hosted by our chief international correspondent for southeast asia, haslinda. the first episode will focused on asean's tech ambitions and opportunities in the region amid u.s. china tensions. here is a preview. >> the regulations the americans put out last october tended to stop china getting access to advanced semi conductors.

>> whether it is decoupling or de-risking, it is about diversifying. >> semi conductors has become an indispensable part of our life. demand coming from iot and renewable energies is spectacular. >> you've got to look at the whole ecosystem and supply chain. that is potentially the greatest opportunity for asean. >> i don't think there's any regulations that can stop us from doing business. haslinda: how do you see this playing out and what would be the key issues? >> the u.s. and china could find a way of playing along, the future is bright. >> as long as school heads prevail, i think asean could see incredible value over the next 10 to 20 years. paul: new directions appears in the asia-pacific at 7:30 p.m. hong kong and thursday night at 9:30 p.m. in new york. all right, these are the stocks that we are going to be watching

when trade opens in korea, japan and australia at the top of the hour, less than five minutes away. asian chipmakers may see moves following news that nvidia's market valuation fleetingly crossed the trillion dollar threshold. we are going to be watching samsung, sk hynix, tokyo electron. plus keeping our eyes on asian defense stocks after north korea fired a projectile at the country -- that the country claims to be a space launch vehicle. the market opens in sydney and tokyo next. futures are looking mixed at the moment, setting up for a weaker open though in australia and japan as well. the market open in a moment. this is bloomberg. ♪

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shery: this is daybreak asia. we are counting down to asia's major market opens. after of mixed finished on wall street. we have the continued hype over anything ai related but at the same time and energy companies leading declines given oil fell below the $70 a barrel level. we are waiting for new progress on the debt deal in washington. paul: we had the ai enthusiasm propelling a rally in the asia-pacific markets on tuesday. we will see if that rolls into wednesday. what are we watching? annabelle: we are looking ahead to a weaker start to the trading day in asia. unsurprising given we did not have much of a lead in from the wall street session but the opens from japan, south korea and destroy our up on us, also the start of trading for cash treasuries. a lot of central banks in japan, the governor delivering remarks

in tokyo, the first address he has given in english since taking over the mantle. also hearing from the former imf chief economist at that event as well. this as we watch those moves in the japanese yen, trading close to the 140 level for the currency against the greenback. we hear the country's top currency official warning they could take action if needed. in the session you can see the nikkei 225 under pressure at the start of trade. that is as we see the debt limit deal facing its final test in congress to avert a default. we will have the house rules committee meeting soon to decide whether that debt limit will get a full vote. we have two republicans opposing it, but i house passage on wednesday is critical to getting approval in the senate. we are watching a change in korea, given we saw chipmakers advancing in the prior session. that is not translating into

today's trading. one of the key stocks in the intraday session on wall street, given we saw it briefly entering the $1 trillion club, a very exclusive one given it has five members. still we see nasdaq futures a bit higher. the kospi fairly flat. that is a wait and see mode ahead of the debt deal. we are watching the korean won in focus. strength coming back to the currency. industrial production numbers out contracting down nearly 9% on the year. the month on month figure looking a bit better. one weakness has been quite excessive this year. they are saying it should strengthen into that s -- into the second half. the australian central bank in focus. the rba governor delivering remarks and the headline coming from this so far is he is saying the central bank will be data-dependent when it comes to

the outlook for rates. also taking a look at how brent crude is trading. wti falling below that $70 mark. we are seeing a huge contraction at the open of 5% for oil. physical markets for crude signaling supplies way more than adequate to meet demand that is so far tepid. really it is that focus on central banks and the boj as well at this hour. shery: we are watching as that conference now starting at the bank of japan. we are expecting governor ueda to deliver remarks. this would be the international conference 2023 held at the central bank at a time that inflation is accelerating in japan. we have seen that really hitting consumption. retail sales a while ago showed a contraction of more than 1% month -- for the month of april. governor ueda taking the podium to speak now.

terminal subscribers can see more on live go. our next guest sees near-term challenges in asia-pacific markets but expects returns to improve moving forward. joining us is a chief asia pacific equities strategist at goldman sachs. great to have you with us. we saw those massive gains in japanese equities the past few weeks. what will drive equity markets higher in asia-pacific in the next few weeks? tim: starting with japan, which we are enthusiastic about and are gratified to see it performing well, along with other markets, korea and taiwan, the bigger story in japan, the theme we have been emphasizing is more of a bottom up than top down one. there has always been lots of focus on the potential change by the bank of japan and so forth. that inspired some flurry in the market previously. we think the narrative of japan has shifted to corporate change inspired and pushed by the tokyo

stock exchange to increase corporate profitability and shift the large portion of the market, about 50% trading below price, up to a level that is in the longer term getting consistent with u.s. and europe, higher returns and equity. i think that is one of the key drivers in japan. if i could just close, the other key demand supply dynamic is that foreigners since the abe bull market in mid-2015 have sold a net $200 billion u.s. of japanese stocks. they have only rebought about 5% to 7% of that. positioning is light. the potential energy from foreign investors coming back and japanese households shifting their large proportion of assets held in currency and in deposits, to the stock market it could be a powerful supply demand dynamic. that is why we continue to be

optimistic longer-term for japan stocks. shery: let's stay in northeast asia. the kospi has risen more than 20% from its september low. if we close around these levels that would mean we are in a bull market in south korea. give us your reaction to the strong performance. is there more upside to come? tim: i'm glad you asked because we have been very bullish on korea and i think we have been ahead of the pack on that. we don't get everything right, but korea is one area we have done a lot. the key investment piece was we are starting from suppressed levels of valuation. we expect at the market would look through the very poor earnings this year. some stocks would have very significant drawdowns to. earnings the market as a whole would have earnings decline over 30% this year. the key point is next year we are expecting significant recovery in the semi sector and more broadly. we expect korean earnings would be rising 7% next year, the

highest in the region. the market looks through the trough this year into recovery next year. we recently had 10 year lows in terms of foreign investor positioning. we feel it is a strong cocktail for the market to advance. the market has done strongly this year. this will inevitably be some digestion to those gains. given that we are still trading on reasonable valuations on price-to-book levels, we think there may be an incremental catalyst this month if msci decides to add korea to developed market status, all that could lead to further improvement in overall korean equity levels. paul: just want to press pause to update everybody on a story we've been following about an object launched from north korea. earlier nhk reported no korean object was seen reaching space. now we have a report from south korea that the projectile launched from north korea has fallen into the sea after an abnormal flight.

just want to get back to your thoughts on south korea. we are seeing an ai inspired rally across many markets at the moment. you are taking a closer look at big south korean names like samsung electronics. tim: great question. i just got back from the u.s., seeing investors there. this topic of how much has the ai theme incrementally helping korean stocks has come up several times. the clean answer is at the margin it is helping. there is a focus on the supply chains, which had blowout numbers recently. that has some linkage back to sk hynix and others in taiwan. clearly that ai theme is incremental positive for the tech heavy indices in both of those markets. sales as an ai basket, which we track, for korea specifically,

it's up about 35% year to date, having even had an early run and correction. 35% is comfortably ahead of the +20% korea had for the broader markets. the ai theme is playing in price action today. paul: even ai inspired rallies gave chinese stocks a bit of a boost after what has been a pretty average year for chinese equities. we got some important data coming out of china today. pmi's of course. we had number of disappointing data releases out of china so far this year. what is your calculation of a risk of a downside surprise with these pmi's? tim: another great question, paul. i think there is a ton of focus on the recent weak people data which overall came out well shy of market expectations and poor in terms of its absolute levels, broadly speaking.

i think expectations have come down for pmi today so they are expected to be below 50. we had a slight lead indicator in terms of one subset, a more advanced targeted pmi which came out for emerging industries. that was slightly better. our sense is it will be weak in absolute terms but will not disappoint those reduced expectations. if it does, then it will reinforce the narrative that cyclically the recovery in china is on much weaker footing, and combined with the general lease in the u.s., combined with recent feedback that there is a great deal of skepticism about the longer-term outlook for china, that suggests investor appetite for china in the near term will be subdued. that certainly explains why the market has been week. it has fallen 20% from its january's height. -- its january highs. it has been lagging the better

performing stories in north asia. paul: absolutely it has been a fairly lengthy reopening. we have geopolitical pressures as well, although at the same time a number of business leaders saying it is unthinkable for the china and u.s. markets to uncouple in any way. from your view, putting money to work, is china investable right now? tim: we think yes. you need to be much more specific and targeted in how you are investing in the market. the overarching theme we ascribe to, or subscribe to, is you want to invest in what government policy is in favor of. that is the mantra for investing in china. there are two areas we are focused on, one is the sop theme which has clear support from the government. we have a targeted list of what we call quality sop's, ones that benefit from overall government

policies, but also have empirical he improving returns on equity, where management is aligned with government interest and attractive valuations. additionally we think the whole theme of the hard technology vertical, which harmonizes with the theme of china trying to increase its technology self-sufficiency, is something we would also subscribe to. along with the new energy theme which is also clearly enforced in china, these are some areas we think makes sense and certainly have long-term structural support in the market, given the market has been under pressure recently, valuations come down significantly. we think the risk reward is pretty attractive. shery: timothy moe at goldman sachs, always great to have you with us. we are watching the comments made by the bank of japan of and are ueda as he delivers remarks at the central bank of tokyo.

he says it is vital to examine price trends. we have seen japan's inflation accelerate in recent months and really surpassing that 2% inflation target from the boj. we have even seen the retail april sales numbers that came out a few moments ago, now contracting and really hitting consumption. we are seeing prices accelerating. ueda now speaking at the bank of japan at its international conference 2023, saying that it is vital to analyze various data and examine price trends. this as we continue to expect any latest hints when it comes to japan and its monetary policy. we have seen the latest data also show that the economic improvement in japan remains strong with the unemployment rate falling for the first time in three months. governor ueda saying it is tough to deny the possibility that we

are in a new normal. paul: just want to get you across a scoop on the bloomberg terminal. vedanta's foxconn bid for india's chip funding assistance is said to be declined. the venture applied for assistance to make 28 nanometer chips that would be worth billions of dollars but the government apparently saying that application has not met the criteria. this will really slow things down for the chip venture in terms of establishing india's first major chipmaking operation. that news on the bloomberg terminal, the vedanta foxconn bid for india chip funding will be projected. you can read more about that on your bloomberg. still to come, jp morgan china's ceo will join us exclusively from the bank's global summit in shanghai. up next though, he briefly joins

the exclusive trillion dollar club thanks to the ai boom. we will discuss that next with ark investment founder and ceo cathie wood. 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.

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shery: market valuation for nvidia quickly touched the $1 trillion threshold as the ai prospect vaulted into an elite club of five american companies, alphabet, amazon and microsoft are the only other businesses to have trillion dollar valuations. nvidia soares shared when it gave an ai fueled sales forecast that shattered wall street estimates estimates. . cathie wood, whose ark

innovation fund cut nvidia in january, warns the chip industry's boom bust cycles pose risks. for more, let's go to bi's etf analyst. what are you seeing in those etf's that are actually doing well? rebecca: let's set the landscape first. in terms of cathie wood specifically, she has had nvidia in all her funds since inception. what many may not realize is she bought nvidia when it was less than five dollars. i believe she bought it in 2014 when most of her funds were launched. it was trading around $4.6. at some point you need to take profit, whether it is $50 or $200. nvidia accounts for the top four best stock in her flagship fund. from inception until now, nvidia

accounted for 15% in return. it has done really well in her fund. she had it in before anyone knew what nvidia was in 2014. a lot of people that says she is missing out, she bought it way earlier than anyone expected. with that, i would like to introduce cathie wood, ceo, cio of ark investment. thank you so much for joining us live from florida. as an active manager we love to hear your thoughts on anything in particular that you do to buy and sell your stocks. in this case, nvidia, you had it on very early. i don't think you missed out on it. cathie: rebecca, i want to thank you so much for setting the record straight. you and eric as well know that we have owned nvidia since inception. some of our funds still own it. it is number seven.

in japan we have three funds that own it, our metaverse fund, our mobility as a service fund, and our global digitalization fund. we still own it. you know from our etf's we have taken profits. this stock has gone from five dollars when we first bought it to $400. there is a lot of good news discounted in this stock. we still think it will do well over time. however, there is a new group of stocks that are going to benefit from the foundation that nvidia has laid. nvidia is a hardware stock. sure it has some software, but the history of hardware and software is the bigger beneficiary over time is going to be software. in our view, for every dollar of hardware that nvidia cells, software -- sells, software

providers will generate eight dollars in revenue. we are looking to the software providers who are actually right now where nvidia was when we first bought it. nvidia was in the $5 billion to $10 billion range. now it is $1 trillion, as you said. but we have software opportunities like ui path and the robotics process automation space, in the genomic space, te ledoc, we have companies that are because of artificial intelligence are going to develop new businesses that we think are going to thrive. right now they are in that $10 billion to $12 billion range that was in place when we first bought nvidia. we are really happy that investors who own benchmarks

like the nasdaq and qqq still own nvidia. they own it in some portfolios, but we are onto the next thing. rebecca: as one of the leaders in the ai space, a lot of people look to you to see where the future is going in the next five, 20 years. in our research we predicted ai etf's would reach roughly $35 billion in 2030. do you have any thoughts around this? we currently have roughly 70 etf's that have artificial intelligence, ai robotics in it, but where do you see the market going? cathie: we think this is a very large market. we believe right now the hardware side of it is probably in the $30 billion to $40 billion range. so multiply that by eight. we see the software side going

to eight times that. but between now and 2030 we think artificial intelligence is going to add more value than any of our other technology platforms. in fact, it is going to catalyze them. we talk about tesla all the time. it actually is the biggest artificial intelligence play we believe right now in our for folios. it is the largest position in our flagship portfolio. why is this? because autonomous taxi platforms we believe globally will deliver by 2030 $8 trillion to $10 trillion in revenue, from almost zero right now. think about that. $8 trillion to $10 trillion in revenue is almost half the size of the u.s. economy. we think that is a global a thomas taxi platform opportunity that we think is going to submit

to natural geographic monopolies. tesla certainly in the u.s., and perhaps elsewhere. you will be surprised at seeing who is going to -- many people think it is just hardware and software stocks widely advertised, but tesla many people think is an auto stock. we don't. we think it is much more than that. we think it is one of the biggest ai opportunities. shery: udo think the valuation for tesla is too high right now. -- you don't think the valuation for tesla right now is too high. cathie: tesla is roughly at $200. we believe in five years, 2027, it will be a $2000 stock if our research is correct. importantly, autonomous technology takes it there. if we are not right on autonomous, we still think that tesla meets our 15% compound annual rate of return hurdle

requirement, which means it would be at least a $400 stock just because of the massive shift toward electric vehicles during the next five years. shery: we know that elon musk has been meeting with the top leadership in china. what do you make of that visit and how important is this market? cathie: elon has always said he has been so impressed by the political leaders in china. he goes into the cities and the mayors of cities very often are engineers and they know exactly what he's talking about. i think he thinks china is very fertile ground to become an exporter of tesla vehicles, as it already is. that is very high-end exports which china wants. of course it wants ev's to proliferate in china, but it has its flagship byd and many other

companies. the other reason i think elon is there is it is maybe a bit of a peace mission. as i believe, as my friend and mentor our laugher believes, and as i think elon believes, we are all better if we are communicating and sharing technologies and making one another's economies better than they are now. i think it is that piece as well. rebecca: if we look at what is happened to nvidia from an etf perspective we see billions worth of inflows into semi conductor, artificial intelligence, everyone is piling in. in terms of ai etf's, the first type are etf's that track ai companies, like your funds. but there are also etf's that utilize ai in terms of strategy,

to tell them which funds to buy and sell. a lot of investors have been asking, from an ai perspective, how should they invest into it? if we look at the s&p 500 and nasdaq, a lot of the top six names are nvidia, microsoft, amazon, apple. should investors stay in ai or go with a standard generic nasdaq 100 index? cathie: we do think ai's will be very fertile ground. you do have to pick your spots. we are in a moment where you are seeing a lot of companies slap ai into their names. this is where active management is important. we think there will be very many successors, successful companies, but the most important ones we think are going to have visionary management, i mentioned tesla as

an example, ai and domain expertise, but perhaps the most important after those is large pools of high-quality data that no one else has. so proprietary data. we mentioned with tesla it has billions upon billions of miles of real-world driving data so that it is evolving a system that will help people get from point a to b in the quickest and safest way. that is important, the safest way possible. we can look into whether it is our genomics names with exact sciences and teledoc, genomics, they have data that no one else has. twilio has data that no one else has. zoom is going to be announcing

new products i think in early june, showcasing some of its ai products based on data. ui path again in the robotics process automation space, this is a company that is advising companies now with their own large language models, advising them, how do we make you more productive over time? with new business processes? we believe right now our estimate is that there are $32 trillion globally paid to knowledge workers. that is where we are going to see a lot of productivity gains. we may see displacement of some workers, but we actually believe that technology is a net job creator and those people will >> they expect that the ai space

will reach $7 trillion in economic growth. would like to know your thoughts on china, tax, can you share with us? guest: i have known for many years, i sat on a panel at the world economic forum in either 2017 or 2018, with the minister of innovation from china. china has had innovation as one of its priorities for a very long time. and we think that is the right thing to do. we know that common prosperity suggests to us two things. one, maybe profitability is not going to be as much rewarded in china. but the vast market in terms of tier two, tier three, and other

tier cities, will open up innovation and make many people's lives much better. what you give up in margin, you might get in a scale. we do think it is very important that companies understand, when they move into china, if they want that scale, opportunity, they will have to give up on margin in keeping with common prosperity. shery: do you expect technology and ai to evolve as fast in china as in the west? guest: i think this might be one reason elon musk and others are there. they do not want to shut the country down or want china to be isolated. the give-and-take has helped us for the last 20 to 25 years.

we are hoping that the restrictions do not impede innovation. i do not think that at the end of the day, that xi jinping's administration wants isolationism to limit innovation . my experience in china, and talking to people from china, is they want to encourage innovation, but they want to make sure that it presents access, gives access to as many people as possible. shery: for how long will the promise around tech, around ai, be able to offset the reality of higher interest rates and the pressure on the broader economy? guest: innovation solves problems, and ai will cause a

productivity boom. to the extent that companies, who are having to pay higher interest rates on their increasing debt, need to find ways to save costs. they are going to look for technology to help solve their problems. we think it will. we also think, this is really important, that ai is highly deflationary in the good sense. ai trading costs are dropping 70% per year. that is massive inflation taking place. it will cause a boom in activity associated with artificial intelligence. we believe that companies are going to adopt it, we think that chatgpt was the moment. we are thrilled that it happened. because finally people are looking at the promise of innovation instead of worried about companies investing in

innovation. we think this is going to be a win-win. if we are right on the deflationary ramifications of innovation, then interest rates are going to come down. which will be a double benefit for innovation-based strategies. shery: always good to have you with us. thank you so much for your time. guest: thank you for helping us set the story straight. thank you bloomberg. shery: we are watching the markets right now. we have been seeing semiconductors again ground. what are you seeing in the asian hours? paul: a little bit of a risk off sentiment. we do have some modest losses for samsung electronics, losing

ground. we have the nikkei off by 1.2%. both of those markets pretty much all the major sectors in negative territory. jp morgan's flagship mobile china summit begins on wednesday with more than 2600 blank -- bankers and clients over the next two days. it is the first major event held by a global bank in mainland china. let's bring in our chief north asia correspondent. >> my first guest in our exclusive coverage of this jp morgan global china summit is mark, good to see you. i am sorry we are not in person, it is ironic. this is the first time you are

holding this summit in china in person since 2019. the last time we were there in beijing, this time it is in shanghai. the business environment hasn't changed, it is more challenging. how do you size of the business landscape right now as you kick off this summit? guest: it is a long time coming up, but we are so glad. most of our clients are underground here, from across the world. from 37 different countries or regions, we have 2600 guests coming through here from the investment space and the corporate space. the total market capital will be 4.5 trillion u.s. dollars. we are also allying our private bank forum on -- and a separate one for payment.

starting tonight and continuing tomorrow, regarding new economy. we are holding three conferences at once to ensure the guests can have the backs -- the best access. we are very excited about this conference. steve: there is a lot of geopolitical noise out there right now. the white house likes to talk about de-risking, not decoupling. there are geopolitical risks shooting -- associated with taiwan. what are your clients, what is there number one question? guest: our number one question is what i worked kleins are most -- clients are most concerned with. what does the reopening mean for the economy, and what does it mean for the businesses? i am glad to report that i took

a trip to europe, across the 10 countries. most clients are focused on the opportunity here. for scale, it is unshakable, but you look at the countries major change in direction. since the five-year plan to move into a more productive high-end growth, quality growth, away from an input intensive growth. this is a massive change that until now, market participants are stretching -- scratching their heads. we can see that with that plan change, there will be less focuses on the old growth driver, like properties, the supply chain on buildings. but at the same time a massive focus on industry upgrades.

it is the same token, when we look at china's plan, and carbon neutral by 2060, these two factors are driving a massive industry change that will have massive reallocation of talent, capital, people and jobs. as you can see, job stability confidence is a big part of it. for us now, everyone is reassessing, how big is this shift, how long will it take and what does it mean for their businesses? if you ask businesses, they have very event viewpoints. the reality is the shift is much bigger and more impactful than people are currently pricing in. the focus is to look to the certainty in a. of uncertainty. certainty is the determination to upgrade industries in a much more green and productive environment. hence we have this conference.

it is aligning new energy, electric vehicle, biomedicine and the new side of the economy. i do see a lot of potential pessimism, people are confused looking at the macro figures. the official growth target was at 5%. the usual sense is a top-down charge, and everybody bottoms up to fulfill the demand. but i think it tells a story, you have to choose. it is not for everything. steve: you painted an optimistic tone for the domestic recovery in china, which has been slow because of the consumer that hasn't been coming back in full force as some had predicted when covid zero words relax. the outbound investment scenario is going abroad, what are the chinese clients, who have seen

dealmaking across border out of china pretty much dried up last year? we are looking at chinese companies announcing $44 billion in cross-border deals lester, the lowest since 2005. you see an interest in picking up cross-border deals or will it be more for a while? guest: you look at the new energy sector, china's wind power, water, solar power and nuclear power. electric vehicles, china is taking charge in some areas, like batteries. when you look at the traditional exports, manufacturing, cell phones, electronic devices, i have to say it is slowing down somewhat. but it is also a broad phenomena across the supply chain. it is not just a unique china

phenomenon. it could be a general slowing of demand and durable words -- goods. the reopening has a lot more focus on consumption. over here we all know it is very difficult to book trips and restaurants, it is getting more crowded. it is a dispersed type of growth. focus on consumption with mobility, international has a some way to go. we look at numbers, it was 30% by march, now it is more like 60%. we think it is on the way to resume, but there is some way to go. the domestic industry is selecting. when i look at the client portfolio, for the clients we interact the most with, they are expecting an up year. that goes with how we assess our own businesses. we go the way our clients need

us to be. for global and local clients, i do see a change in the consumption pattern. to latin america, to europe, those are really intensifying. steve: where are you going to get the best revenue and where will you get the profitability? for the first time in a long time, you have full ownership of the mutual fund venture earlier this year, your securities unit got 100% ownership, the futures unit in 2020. you are fully licensed up. when are you going to get that full ownership. the question shifts to when are you going to break even? securities did better than most banks last year. but it is a different environment this year. guest: island name a few examples. you are totally right, we have the full licenses.

we are pretty objective and a heightened risk scenario. we will adjust our portfolio subject to the cycle. we have seen a lot of cycles, we navigated it well. we look at the risk perimeter and then we scale. you can absolutely see, it is china, but not just a china phenomenon. are seeing a contraction of the ipo volumes out there. at the same time there is still a healthy volume on shore. if you look at some part of asia, there is still volume. it will be a longer journey then we would wish to build up scale. we are progressing well. if we look at cross-border, that remains a theme. when we look at competitive edges, us versus local and

foreign competitors, we feel strongly that we have the best global platform around the world to serve our clients. that is phenomenal. going the cross-border is the differentiator. steve: the question is, is it, given the circumstances, overinvestment that has been made by j.p. morgan, and where will the cost cutting come from? we know all the big banks are embarking on multiple rounds of job cuts. sources have told us that 30 investment bankers in the greater china area were cut by j.p. morgan, another round could be coming. where are you tightening the belt? guest: i think it is at general healthy approach to upgrade. it is a process that everyone does in all businesses. when you look at the situation, there is a clear wallet adjustment and equity capital

markets and investment markets. when you look at the cyclical elements of china, industries, shifts, our steady growth in headcount, revenue, active clients are still here. when i met clients in europe, it still pointed to growth. i have to admit that there is a potential sampling bias. but it is true that with banking in the top echelon, they are still seeing this as a critical market and are still focusing revenue growth. we hope to continue this. we are expecting growth this year. that will be a rebalancing into these corridors, commercial banking, and in markets. i think we are seeing growth, i hope it continues. even on a down cycle, we will

see -- we will find a way to navigate it. we are always vigilant on looking where he can make capital. steve: j.p. morgan china ceo, we will pepper your other bosses on a similar question coming up in our exclusive coverage of the j.p. morgan global china summit. shery: we are watching out for those conversations coming from shanghai. we'll be there live at j.p. morgan apac ceo, and exec it if from fortescue and rosewood hotel group also join us. this is bloomberg. ♪

paul: the yen has rebounded from a six month low after the nations top currency officials said it would take action if needed to. some talk about intervention, are we going to see any action? david: i would not expect any in

the near term. they have alluded to the key person, who is the minister of finance, a top fx guy in japan. he said there is no specific levels, he is more concerned about the volatility. and excessive moves. what defines an excessive move is debatable. but history has said, a large one-sided move. the dollar yen at the moment, even if it goes high, without warrant and excessive move? they do tend to bring out the one-sided move. at the moment, they are saying it appears nothing is warranted. that could change if dollar-yen was higher. shery: how much volatility are we seeing in those currencies

that are highly related to what happens in china? because we saw the pressure on the aussie dollar given the concerns over china. are expecting emi numbers this morning. -- pmi numbers this morning. david: aussie is one to watch out for, but also the aussie cpi as well. you already had the rba governor saying, whether we raise rates are not will be data-dependent. it will have a big impact on that. markets are only pricing the probability of a rate hike at the next meeting. if the cpi came in hot, that may be higher. if the china data comes in we, the aussie dollar would come into pressure. it is one currency to keep an eye on this morning. shery: be sure to turn him into

limerick radio to hear more from the days big newsmakers, get in-depth analysis from the daybreak team, broadcasting live from our studio in hong kong, listen through the app or bloomberg radio.com. plenty more ahead, stay with us. ♪ ( ♪♪ ) woah. ( ♪♪ ) ( ♪♪ ) ( ♪♪ ) ( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel, and grow. constant contact. helping the small stand tall.

sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh shery: we have really seen the

impact of the sputtering recovery across china in all different asset classes, especially in the commodity space, as this really rebound has not been as pronounced as people had expected. we are going to get more clues about the recovery from pmi numbers coming out in just about 30 minutes or so. we are talking about manufacturing pmi numbers, continuing to show contraction. we are talking about a second month of the manufacturing numbers being in contraction. this is after falling into 49.2 the previous month. we are expecting the services recovery to slow down a little bit. but still below those numbers that we saw in the weakest month. even with the robust spending expected during the labor day holidays.

paul: we saw china steel output dropping, setting us up for a disappointing read. some of the more unusual commodities we don't recover, are showing bearish signs. china produces half of the world plateglass, we have class futures down put percent in the past month. we have a more obscure item, like styrene, they are contracting as well. it might be possibility of a downside surprise when we get the pmi numbers. let's get a check of the latest business flash headlines. sources telling bloomberg that india's government is poised to deny funding for the chip venture between -- the venture applied for assistance to make chips but it is not making fight -- criteria so by the government. on musk has told china's foreign minister that the interest of

china and the u.s. are intertwined echoing recent remarks from the bosses of apple and mercedes-benz. sources say musk is also expected to visit tesla's shanghai factory and potentially eat the new vermeer. -- new premier. we will be live from the j.p. morgan global china summit with an interview with jamie dimon. all of that coming up on your screen. that is it from "daybreak asia". ♪

>> it wasn't quality stocks doing well, it wasn't safe stocks doing well, it was a stocks, or lamb or stocks. that is a tough environment.