>> good morning and welcome.

annabelle: we are counting down to the major market opens. shery: good evening, i'm shery ahn. the top stories this hour. passage insight for president biden and speaker mccarthy's debt limit deal. paul: the fed hits it in june because. shery: bonds rise but the s&p 500 struggles to hold onto gains. concerns over the global economy resurface. the s&p 500 are racing most of its monthly gains, we had more tightening fears, the jolt of

job openings surging to over 10 million giving room for another rate hike by july. the u.s. debt ceiling negotiations are ongoing and the vote in the house happening in the next couple of hours. a lot of anxiety overall in the markets. treasury yields down, assessing the likely impact of the debt ceiling deal on future fed policy decisions as well, the dollar rose and that led to more pressure on crude prices which had been below the $70 a barrel value and the chinese value numbers did not help. although we got a little more optimism two federal reserve officials throwing concerned

that there will be another hike in two weeks. are we expecting a pause in june? >> there is a new term, and it's called the skip. when you pause, the implication is we're stopping because maybe we have done enough. at least that seems to be how fed officials are treating that term. skip means you don't hike and you open the door to hiking again once you know what the debt are telling you. >> a decision to hold it constant at a coming meeting should not be interpreted to mean we have reached the peak rate for this cycle. indeed, skipping a rate hike at a coming meeting would allow the

committee to see more data before making decisions about the extent of additional policy farming. kathleen: he did say inflation is too high but see some signs of august. particular core services are starting to decelerate, that gives some hope. patrick harker, similar remarks. that harper is the president of the federal reserve bank of philadelphia. same terminology. he is getting closer to saying we should skip, not because but skip. they don't want to slam on the brakes. job openings and labor turnovers are a big deal for the markets because they showed a search --

surge in job openings. when you see it going up to template one million in the second quarter, people are saying maybe that will push the hand of fed officials who say we can't pause or skip. june bets are about 70%, in fact the odds of a pause had been about 60. this is been quite a swing. the president of the boston fed said inflation is too high. another governor said prices are studying and says it has implication for the fed to lower inflation. not ready to pause.

they have to go quickly, they will grow jump into electric,. paul: devin hayes there. -- kathleen hays. the bipartisan debt limit deal has cleared a major hurdle in the house. president biden was optimistic ahead of the voting. we going to do with the debt ceiling. things are going as planned. i will be landing in colorado tonight in preparation for my commencement speech tomorrow. thank you very much. shery: the next guest says to prevent economic catastrophe.

thank you so much for your time today. this deal would restart federal student loan payments for some food assistance programs. what do you like about it? >> i like republicans were ready to head the economy to the side of the cliff and in exchange, they wanted to slash our budget with draconian cuts. they had serious rollbacks of budget for seniors, health care, children. we were able to avoid those cuts. we were able to make sure we have a continued health care

funding for toxic exposed veterans. expand -- it's not the bill democrats would have written, but thankfully joe biden is an experienced negotiator and we will able to get to a place. shery: overall when it comes to the broader economy, economist at bloomberg are saying and has the potential to make the coming recession deeper and longer. we're talking about the fed tightening. bottom line is it increases the headwinds while doing almost nothing to resolve severe physical challenges. will this hurt president biden? >> on think so. -- i don't think so with the obstacle has been.

democrats have them people over politics to make sure we had a clean increase to pay the bills, republicans and system untying cuts, including health care of veterans we promised to take care of. further cuts to student loans, health care and the security of our seniors. the contrast is going to be very clear. at the end of the day joe biden insured we would not crash our economy into a cliff. paul: there are still some big structural issues. the debt to gdp ratio keep rising. how long is it going to be before we see some responsible fiscal management? >> for starters, we can take the

$1.9 trillion tax cuts incurred under the trump administration that republicans refused to go near. those were responsible tax cuts that skewed to the wealthiest americans and we can start by making sure people who have the money to pay more taxes actually do that when we can start traveling down that path. republicans want to take care of the wealthiest americans rather than food individuals. hopefully democrats shamed them into doing both and avoiding a budget catastrophe both in terms of not raising the debt ceiling. paul: vote in congress not too

far away. >> let's largely up to republicans tonight. they captured the hostage. they should continue down we already saw a few years ago what happens if we even go near the debt ceiling. i don't think the senate is going to play with that, the timing is challenging but i think they will ultimately get it done. shery: is this a sign the compromise is possible in this divided environment or is it a

runoff bath one-off -- one-off? >> the jury is still out on how we can work together. this is not the type of compromise we should engage in. republicans held the united states hostage. they were dangerous but the way they play games. make sure we pay the bills and go through the normal appropriations process. we are about to start the process now. they could have been unparalleled. we will see. he doesn't have a lot of votes.

we shall see. paul: debbie wasserman schultz, thank you so much for joining us. let's get back to annabella. annabelle: the start of another trading month in asia. he restocked are little bit higher. recession wins at headwinds, more broadly as well, the strength of the tech rally. in asia, not to supportive for up asian equities.

the japanese yen in focus. stronger-than-expected jobs data and perhaps the fed has another reason to hide further. close to the 140 mark. it was dated the surprised to the downside, pmi from china. manufacturing activity slowing, service expansion schooling. that set off reactions including stocks, affects weakening, moves in the commodity space. generally, investors are not too happy, including citigroup says the chinese economy could be on the verge of a competent strap. shery: let's get to vonnie quinn. >> around 50 bankers are suing

switzerland's financial regulators. his spokesperson said it was based on 81 bonds. the court has received 230 appeals representing around. jp morgan cbo testified a former head of private banking could have according to a newly released transcript of the deposition and lawsuits. he also said the general counsel one have had the ultimate authority to cut ties with epstein. elon musk has met more officials on the second day of his trip to china. he met the minister for industry

and information technology. photos on social media show him visiting the ministry of commerce. global news powered by journalists and analysts. i am vonnie quinn, this is bloomberg. paul: more insights from the debt ceiling vote. first, pepper international shares the investment strategies. this is bloomberg. ♪

>> we have known for a long time there is a fiscal imbalance. it is a termite and the foundation issue. paul: the incoming ceo on the debt limit drama. the next guest says investors should expect a relief rally with big tech continuing to outperform. cal pepper, thanks for joining

us. we may get a relief rally. what are you expecting? >> folks are leery about what the politicians are going to do. i think we will see a relief rally. i think we will see a nice relief rally. fear levels go down and that will cause the rally to continue. we're looking forward to the end of this week, next week starting in the middle of next week. paul: do you see some of the fed

work for us? >> >> definitely. make no mistake about it, it's being driven by interest rates and what the central bankers are doing. by stomping on the brakes as hard, trying to droon. trying to slow the economies. their inpatient, they do not understand it takes a new months . that's how we are seeing the results we are seeing. they do not have to raise anymore, given a couple of months.

they do not like the word because, they're calling it skip. they've done enough damage and they need to assess what happening. shery: i keep hearing about the rally being driven by just a few names. how concerning is this? >> the reason the breath is narrow they can only raise prices so much because these are staples. stop the incessant raising, giving a pause or skip for a few months in order to let the rest of the market readjust and catch up to where we needed to be.

we do see commodity prices falling. we see supply chains better. for heaven sakes, leave them alone. you will see the breath of the market improving. having said that, i have been a bull on big tech. i think it will continue to do well. when we have the fear days, those are the days when the prices drop because we have something frightening happening. long-term, leaders stay leaders. that's the way the world is going. we're changing to a technology-driven society in every country around the world. shery: chinese assets have been disappointing after the reopening from covid zero and economic numbers are not living up to the hype. are you invested overseas? >> yes.

i advised people to have a portion of the portfolio overseas. it tends to be a stronger percentage, perhaps 15%, 20%. with china, keep in mind it's a centrally controlled economy so if things are not working the way they want it to, i am sure the chinese will make adjustments. again, we need to be patient. we have to give them a few more months. there was a run-up in anticipation that they would burst out of the gate at the highest level and that's unrealistic. it was not like that on our side of the world. give it a few more months. let's see how the chinese market is doing in the fall. we will have a better sense. shery: always good to have you with us.

carol pepper from pepper international. you can get a round up in today's edition of daybreak. terminal subscribers can customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪

paul: quick check of the latest business flash headlines. the nvidia ceo is said to be heading to china. a source says companies on the itinerary including tencent. the first trip in years will come with the u.s. trying to curb beijing's access.

sean diddy combs is suing his partner. he is accusing the british multinational of racism and undermining the joint venture. he alleges they were not pushing for a marketing -- he says they pay lip service to diversity. up next, latest on the u.s. debt deal with the house vote set happen here. mark molinaro joins us to explain why he supports advancing the bill through congress. this is bloomberg. ♪

vonnie: you were watching "bloomberg daybreak: australia."

iran is based on monitoring and equipping up corporation with international inspectors even as its engineers at a just because uranium. the iaea report finds iran is less likely to face a censure when diplomats convene in june to discuss its nuclear program. the organization's inspectors have raised concerns in march over the presence of uranium particles in which to 84% purity. pakistan says it plans to import up to 35% of its oil needs from russia and what it calls a good price. the ministers as at the move will help lower prices for local consumers. he says two ships carrying 50,000 tons of russian per each are said to arrive in pakistan in the next 10 days. the philippine congress has approved the first sovereign wealth fund. it only needs to be signed into law by the president who widely push for the measure. at the finance secretary enters the fund will be able to generate returns for economic growth. some critics say this is

ill-timed and the swift passage has political undertones. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. shery: we are waiting for voting to begin on the u.s. debt ceiling deal. our next guest says the bipartisan agreement makes a story to federal spending driving inflation and he supports advancing to go through congress. republican congressman molinaro joins us now. thank you for your time. it has been a very interesting to see this growing divide within the republican party. how would you assess speaker mccarthy's leadership through this deal? and do you expect this to actually boost his standing among your colleagues? >> is important to remember that whether then by default or design americans elected a bipartisan government. republicans have a slim majority in one house and one branch.

the fiscal responsibility act has garnered opposition on either end, but good government, republicans like myself armed if the speaker with the ability to negotiate with the president and deliver a deal that will combat inflation, drive down federal spending, bring about work and welfare reform along with economic development opportunities. this is a good win for america in moves the ball down the court for not only our agenda but holding washington responsible and respecting taxpayers. shery: fiscal responsibility, but at the same time our economists on bloomberg based on the assumptions that with a two year spending cap, the ratio of public jet -- debt to gdp would grow from 97% last year to 170% by 2023. almost nothing to resolve the severe physical challenges the u.s. faces. what would you say to this? >> a lot of it is in our

control. we reduce the deficit with this bill, we slow spending. remember at the president proposed significant spending increases, significant tax increases, which would continue to accelerate inflation and drive-up american debt, and the house has within its capacity to control appropriations. the next step is to build on this success, holding washington, the federal government and congress accountable. paul: we have heard from a number of large investors as well, the blackrock ceo saying all of these debt ceiling dramas have weakened investor confidence and tell investors view the u.s.. someone called the deficits termites of the system. considering concessions extracted by republicans, was it really worth all of the drama of pushing the uso close to

default? >> we have allowed for massive federal spending, which is driven massive inflation that hurts small businesses, large businesses, families and farms across this country, but the adoption of this fiscal responsibility act will help us get through the end of next year without having to redress the debt ceiling while at the same time internally and i think very importantly, congress will be able to restrict future spending. i do not want any more drama than anyone else in the american economy, but at the end of the day we have got to slow the rate of spending, we have to make reforms of the american economy. we have to help people get back to work and success and independence, and again, small majority, one house, one branch and a bipartisan government. this was a necessary exercise to hold washington accountable and demand washington it respects is taxpayers and those people creating wealth and economic opportunity across the country. paul: even the existence of the

debt ceiling makes getting a deal done quite difficult, but the seeds of the next drama are sewn within this deal itself. as you mentioned, this avoids another debate until january 1, 2025. that is seven weeks after the next presidential election. what could possibly go wrong? >> let's get through the next presidential election. the house of representatives has within his capacity, we drove down federal spending for this year, we have a 1% growth cap. we have capacity through appropriations to make more advancements to restrict edible spending, to confront inflation, to provide real economic opportunity. let's allow the next president, next presidential election to creep up on us. this is one more important step in creating accountability. shery: the understanding is there is confidence by congressional leaders to get this done, but i do wonder how

important is a margin of passage in the sense that will there be safety in numbers for republicans, and you need more votes to agree on this debt deal in order to go forward and actually progress in other agenda items as well? >> this gives us an opportunity to build. this is an opportunity for us to build on a foundation, but this is a bipartisan government that demanded a bipartisan agreement, and members like myself not only encouraged but we are of the speaker with the capacity to negotiate earnestly with the president a bipartisan solution. it will pass the house, and there will be a sufficient number of votes to continue to move the ball down the court so to speak so that we can build on the syntax -- success. republicans and bows are a broad spectrum of ideology, different regions, different grounds. you have folks on the farther left in for the right who oppose this particular agreement.

the mess middle, where most people live and work every day, the mess middle supports a bipartisan agreement. from here we have set the stage for future compromise and future negotiations to move important legislation aboard and confront the challenges facing americans. shery: what have you heard from your colleagues in the senate? we have heard from other republicans that they might be using every tool available to delayed this bill? >> we have a deal, the president negotiated that deal on behalf of the democratic majority both with the senate and his own administration at stake. i expect this will pass the senate, and there will be people who do not see it exactly the way that we do. they will offer up objections, but just as this move to the house we expect it will move through the senate and the president will sign this into law. paul: republican congressman molinaro, thank you so much for

joining us on a busy day in washington. the j.p. morgan chase ceo is optimistic about the westech deal. he exclusively told us the fed may raise rates a little bit more. >> in america, the financial system in america and the economy of america is the largest economy in the world is ever seen, the most innovative, the most growing, and the rest of the world relies on it, so we should not create any instability there. i wish one day we would get rid of the debt ceiling thing, but i understand it is a democracy, people have different opinions about what we should be doing and it is 1201 party to get the other party to the table. i am quite optimistic there and i applaud the fact that they sat down and got something done. >> what is your read on inflation on whether the fed will go beyond the pause and hike again? >> my simple view is that they are right to posit this point.

there has been a big increase, 500 basis points or so. take a pause, but i think it is possible they will have to raise a little more. inflation is sticky, which means rates may have to go up a little more. people should be prepared for that. this is a manager of manager of business -- this is a matter of manager own business. the other thing i would be prepared for is the volatility that might be created by quantitative tightening. we have never had quantitative easing, which we have had for the better part of 15 years, and now you will see quantitative tightening and i think the effects will be hard for them expect. hopefully we will get through all of that, and it will be ok. shery: the jp morgan ceo is speaking to us exclusively from the bank's global china summit in shanghai. we have more exclusive conversations coming up as the summit continues including the bank's chief asian equity strategist.

catch those interviews at the times on your screen. plenty more ahead. stay with us. ♪ he snores like an angry rhino you've never heard an angry rhino baby i hear one every night... every night. okay. i'll work on that. save 50% on the sleep number limited edition smart bed. plus, free home delivery when you add an adjustable base. only at sleep number.

mmmm, your morning coffee hot delicious comforting. but by the third or fourth cup, your stomach might not feel so good. if that sounds like you replace your afternoon cup with 5-hour energy. it's perfect for when you're feeling coffeed-out. coffee in the morning... 5-hour energy after. your stomach will thank you. discover 5-hour energy. ♪♪ >> a decision to hold our policy rate constant at a coming meeting should not be interpreted to mean that we have

reached the peak rate for the cycle. indeed, skipping a rate hike in coming meeting would allow the committee to see more data before making decisions about the extent of additional policy firming. >> we are getting close to a point where we can sit for a little bit in terms of policy. i do not know if we are exactly there yet, but i am in the cap increasingly coming into this meeting of thinking that we really should skip, not pause, i do not like the word pause. but skip an increase. >> while we expect more events will eventually be reflected in new data as new leases make their way into the calculations, recently the residential real estate market appears to be rebounding with home prices leveling out, which has implications for our fight to lower inflation. paul: a number of members of the

fed there and their views on the future hiking path. let's stick with the outlook for rates and bring in annabelle. blackrock says the fed would have a ways to go. annabelle: that is what we have been hearing from the ceo who has been speaking at a conference. the big take away from his speech are the views he shared around the help of the u.s. economy, because he says it could manage to avoid a recession even if it does see a contraction. it is likely to be modest. the flip of that is he also sees as pressure staying elevated for some time. cpi in the range of 4% to 5% because of the lingering effects of the u.s. government stimulus program, he also shared when he sees is this having an effect on the fed. >> i think inflation is too strong, too sticky, and the fed is not finished. i think they have 2 to 4 more

tightenings,, will be close to 225 or one more 75. shery: australia's central bank may not be done with hikes either. annabelle: if you take them latest property data that came through as a guide here, this chart showing the numbers from court logic -- core logic, and what we saw in the month of may it was a the board. the bar in orange is the month on month of 1.8%. nationwide, an advance of 1.4%. when you combine that with a inflation dated the came out yesterday that was harder than expected for april, it tells us the rba may still have a ways to go. that is being reflected in money markets, because we have seen traders pressing out any chance of a further height from the rba, and they are now saying he could get a 25 basis point move

to the upside by august. core logic has been talking about what has been driving that house appreciation, and the main takeaway is supply is limited and that is driving this fear of missing out in the australian property market. paul, perhaps you can share some insights. paul: supply are very tight in australia, and rising rents as well pushing more tenants into the idea of buying provided they can afford it. the next rba meeting is tuesday of next week in australia. be sure to turn into bloomberg radio to hear more from the day's biggest newsmakers and get in-depth analysis from the daybreak team not broadcasting live from our studio in hong kong. listen to be at the app, radio plus or bloombergradio.com. plenty more ahead. stay with us. ♪

the first time your sales reached 100k with godaddy was also the first time your profits left you speechless.

at the counter or on the go, save 20% with the lowest transaction fees and keep more of what you make. start saving today at godaddy.com paul: hewlett-packard enterprises artificial intelligence continues to drive sales for the company. the revenue forecast for the quarter fell short of estimates but the ceo told us exclusively they are seeing increased customer interest in ai. >> we see a significant uptick

in ai and very strong demand in intelligent edge. intelligent edge had a spectacular performance, 56% year-over-year revenue growth with a stellar margin, and ai continued to be a driving force. in fact, this quarter alone we booked an incremental $100 million just from large a ideals. >> you are breaking out ai revenue effectively as a separate item on the income statement. there was growth there. how does that fold in to the other units with regard to intelligent edge as well as some of the other computing revenue? is that another component of that? >> we sell ai as a part of our portfolio, as a part of intelligent edge, but i am talking about here traditional ai models both on inference, when it comes to some aspect of

compute, but in the core training models, and that is where the vast majority of bookings are coming through, where customers need large supercomputers with thousands of gpu's to run and train these ai models like large language models. just in q2 we gained a significant number of customers, including a large cloud provider, which allowed us to book this $100 million you will see in court is to come. >> help years is the competition for customers who are looking for greater exposure to ai or ai components? >> everybody wants to be in the ai space right now, but you have to have a normal set of capabilities. hp has been in the ai space for a long time. we have been delivering supercomputers all over the world both in the traditional enterprise space to run simulations and modeling's all the way to large government

institutions, like the department of energy where last year we deployed the largest supercomputer, which has 40,000 gpu's. this quarter we started the deployment of our rollout, which is another excess scale system which will probably deliver twice the performance. we have unique ip in the interconnect to be able to connect a number of gpu's at scale. we have ip in the software to present this as a assistant and we have the services expertise. we believe we have the right to play and win with unique scaling capabilities. shery: the hewlett-packard enterprises ceo speaking exclusively to romaine bostick. here is a quick check of the latest business flash headlines. indonesia says a commodities giant and umicore are among investors punches been $9 million building a battery

supply chain. investments will include a 20 gigawatts hour battery plant as indonesia aims to become a major hub for producing batteries and dvds. other investors include u.k. company and division and an indonesian miner. hsbc is looking to expand into a fast debt market so far dominated by credit suisse. the bank says it is in talks with partners to structure new debt for nature swaps in countries where it has a presence. it's global esd chief says hsbc remains cautious on scalability and cost. tesla is planning to give an early glimpse to its revamped model 3 sit and -- sedan. sources tell us the first cars coming off the line on thursday our prototypes and will be slightly longer and sportier than the earlier version.

tesla is facing pressure to refresh its product line in china, the second-biggest market after the u.s. shares of lucid group falling sharply in trading is the company reportedly eyes raising fresh capital. sources: bloomberg the ev makers is raising $3 billion with the majority of the money coming from the saudi public investment fund, the kingdom's main sovereign wealth fund is lucid's largest holder. paul: we will be speaking to the u.k. trade commissioner for the asia-pacific natalie black as a trade deal with australia and new zealand comes into force on may 31. let's take a look at asian markets right now, what to expect when we get the open at the top of the next hour. futures in australia looking soft, off by .2 of 1%.

aussie dollar holding just above the $.65 u.s. level ahead of the rba meeting. nikkei futures largely unchanged, the nikkei pretty much the start of asian equities. had an off day declining 1.4%, futures little changed. we are seeing modest gains in new zealand right now just to the tune of .2 of 1%. the yen, not a lot of change, just below the 140 level we saw on wednesday, and we did get the warning from policymakers in japan that if the yen weakens any further, intervention could be back on the cards. shery: take a look at you is futures trading at the moment, not a lot of movement after we sought u.s. stocks taking a hit in the newark session. s&p 500 a raising most of its gains in may, up about .3 1% but

still below the 4200 level. we saw the hit after u.s. job openings numbers surged to 10 million, and we have more speculation from investors that we could see another fed rate hike by july. we have some officials hinting at a potential pause in june, but that was not enough, and the fact that the rally in big tech also took a breather, really pressure to markets. we have regional banks falling and treasury yields down for a second session. the dollar gaining ground, that really pressured wti prices, oil continues to be pressured in the asian session below $70 per barrel level. the strength in the dollar, we are talking about the best month in three, really was boosted than the stronger-than-expected u.s. job openings numbers, and

that is having an impact on other currency trades as well. paul: it gives the fed more room to move should they wish to consider another rate increase, although a number of fed speakers talking about a pause, a jump, a skip. we are seeing a live shot in washington d.c. as we await for the vote of the debt limit deal. it is getting very close now, 218 votes needed to pass. it is going to be interesting to see how many of them vote for this deal. that is it for "bloomberg daybreak: australia." "daybreak: asia" is up next. this is bloomberg. ♪

fabulous surroundings... but everyone's looking at their phones for financial insights from merrill. is he hailing a ride to the concert hall? no. he's making sure his portfolio and retirement plans work in harmony. they want to adopt a child and build a new home. so they're talking numbers with their merrill adviser. she's not researching her next role. she's learning how to handle market ups and downs without the drama. personalized advice so impressive your money never stops working for you with merrill. a bank of america company. you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh

♪ shery: