shery: you are watching daybreak asia coming to you life from new york and sydney. annabelle: counting down to asia's major opens. >> really all committee participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year. heidi: the fed hits pause button update at dot plots sending a hawkish signal as jay powell warned that inflation risks to the upside. the dollar near a one month low. china holds urgent meetings for advise and reviving the economy with activity data setting to confirm a sluggish recovery. >> all the focus on the fed this morning with a data point that crossed the terminal, this was new zealand's economy falling into recession. we saw the gdp there contracting

.1% in the first quarter. an indication to us of the effect that the tightfitting we have been seeing the rbnz, one of the frontrunners in the tightening campaign globally, is having on the local economy. we are seeing the kiwi dollar tipping on the news coming through. we had seen it made over the last couple of days in anticipation. we saw the current account deficit narrowing and the first quarter as well, more than had been forecast. that was a supportive factor for the local currency, the kiwi dollar dropping down 2/10 of a percent. let's change on, a lot of focus on the fed in the session today. in terms of the market moves, we can expect it to see muted gains. a lack of uncertainty, a lot of tea leaves being read between will be heard from jay powell and what we are seeing in the dot plot, the reaction from the

fed keeping rates on pause. the boj and other central banks are focusing in. shery: take a look at u.s. futures, we did get the very hawkish statement from the fed, the projections. at the same time chair powell's presser seems to have portrayed more optimism when it comes to the inflation fight. there were a bit more open about future rate hikes. this really help to the markets when it came to recouping the buses after the fed decision. the s&p 500 did manage to end slightly higher and achieved the longest run since november 20 21. we are seeing nasdaq 100 futures gaining right now early in the asian session. watching treasury yields, the 2-year yield climb to the 469 level, 10-year down to the 378 level. crude rebounding and the asian session despite that in the new york session it dropped.

he saw an increase in u.s. crude stop -- stockpiles. let's bring in our global economics and policy editor kathleen hayes, and our chief north asian correspondent stephen engle. it was really all to do with the fed and trying to decipher what they meant with the statement, the dot plot and the presser. >> it was a lot, in the end it is all the same message. the fed did not hike after doing 10 rate hikes. the most aggressive series of rate hikes in history. they don't know when they are going to move again, but it is what they are looking for. jay powell said that nearly all of the fed officials are looking for at least one more take. in terms of headlines, we are still at 5-5.2 5%. if the vote was unanimous, people look at this, a lot of different things being said.

we don't know when we are going to move, but they have it unanimous. they got them all on board. two more rate hikes is the median view. nearly all are looking for one more. let's take a look at the dots. there was a big shift in the terminal rate, it was a move that had some 12 of the 18 members of the fomc changing their mind, moving their forecast up. i want to point out something. at the bottom you can see two people who did not move at all on their hikes. they want to hold it indefinitely. there are four who went up to one hike. and then in the middle, that is the two more hikes. then there are three people at the top, who want to be around 6%. but bottom line, let's look at how big this move was in terms of the shift from the march meeting when they last updated

their view of the economy and how many rate hikes are going to see your it for 2023, in the march meeting, they thought we would get to 5.25 percent, and that is what we got. and the june meeting, what a big difference, that is a 500 basis points about what a shift in three months. in 24 -- in 2024, they expect to cut not as much, they do not think inflation will be as good as it could have been. in terms of what jay powell said about this, he was willing to safe the meeting is live, but not willing to say much more. >> we did not make a decision about a july meeting, it came up in the meeting from time to time, the focus was on what to do today. i would say about july, the decision has not been made, and i do expect it will be a live meeting. >> let's take a look at the summary of economic projections. they change in a way to support the view, the forecast, what fed

officials are saying. we are going to have more hikes, we just don't know how many. the gdp forecast got raised, we also saw the inflation forecast for pce deflator on the core going to 3.9% from 3.6. that was a move in the wrong direction, we can all agree. they expect the labor market to get stronger. it will go up that rate, but not as much as they thought at the march meeting. the fed is in a tough position, a lot of people set -- a lot of people felt it was a disjointed message. heidi: what does it tell you that we saw u.s. stocks bouncing back? asian futures are in the green? >> i think there are two things, the strength of the ai driven

rally intake will hold every thing else pop. -- everything else up. it was the nasdaq leading the way, and that is offering support. the market kind of gets what the fed is trying to do. they are trying to get markets to price out those cuts for the rest of the year. they have had success in it finally. in it finally. the market has pushed back prices -- the market is now more or less giving up on the idea that there will be cuts before the end of this year. pushing those projections into q1 or q2, which is what the fed wants. it wants the market to do some of its work in terms of tightening policy for it in order to bring down the inflation and cool the jobs market. heidi: the next big hurdle when it comes to these markets is the data from china, we know it will continue painting the picture of weakening growth momentum.

the question is, what we see in response. >> and what kind of stimulus can happen. it is more than likely that we will get a further monetary move, rate cuts, short-term rates were cut on tuesday, the one year l -- mlf. monetary easing is underway. whether they can do fiscal stimulus, which xi jinping has held back on because of the risk that it poses to the economy, including the week balance sheets at the local government level, the week balance sheets at property companies all because of simultaneous crackdowns that we have seen over the last few years on major drivers of growth. whether it is the platform economy, the property sector, online giving, and overarching crackdown on coitus era. we have a very slow recovery, stymied by week confidence, it is proving to be very difficult

to reverse these trends. that is why we are hearing from multiple sources that local -- the central government have called a number of meetings, at least six, over the last several weeks with top economists, leaders of business, domestic as well as foreign, getting solicitations, ideas from the private sector on how to end this malaise in the chinese economy. they pressed those business dignitaries on ideas on ways to stimulate the economy, but restore confidence in the private sector among which has been absolutely damaged by those crackdowns. and also revive the real estate industry, which we got news yesterday, that there is a potential stimulus package thing is way through the organs of power, including a discussed state council level by tomorrow. it could give some support to the property sector. the problem is, this is at least

one of these meetings, to weeks ago, a lot of these participants expressed their concern and frustration at the ambiguity coming from the government on the timing and scope of the stimulus. as well as frustration on a lack of coordination between monetary and fiscal policy. at least the government is soliciting opinions. whether they heed the advice is yet to be seen. one credit analyst is telling bloomberg news, many business leaders and china are extremely scarred by those crackdowns and that is why there is weak confidence. the government is listening to see what type of policy actions will be put into place. shery: the pboc lowering the one-year lending rate. paul, as we are talking about the fomc, have the pboc, the ecb, the boj, what are you

watching in the markets for reaction? >> i think steven summed up the predicament for china nicely. the malaise and need to revive the confidence again. it is kind of in a funk. investors are putting more of their money abroad, where better to look then japan where the market has been flying high recently, setting those new 30 year highs. the boj sitting on its hand, not moving to tighten policy yet. no expectation in the market or among economists for a shift this month maybe we will move towards something coming down the line. at the moment, we are seeing chinese investors putting money into japanese ets, that tells you where the early to is right now. -- relative value is right now. heidi: it is a busy day of news

flow ahead. still ahead, we are getting analysis when it comes to the fed's path forward. john taylor gives us his reaction to the fed's latest leg which and what more he thinks the central bank can do. that conversation is next. coming up after that, google facing antitrust accusations in the eu which says the search is dominance to use -- this is bloomberg. ♪ get help reaching your goals with j.p. morgan wealth plan, a new tool in the chase mobile® app. use it to set and track your goals, big and small... and see how changes you make today... could help put them within reach. from your first big move to retiring poolside and the other goals along the way wealth plan can help get you there. j.p. morgan wealth management.

you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh did you know you can get someone to shop for you? with stitch fix, it couldn't be easier. i share my style, size and budget. and they shop just for me. my shopper sends me stuff i feel good in. i keep what works, and send back the rest. stitch fix.

>> we understand the hardship that high inflation is causing, and we remain strongly committed to bringing deflation -- inflation backed onto our 2% goal. in light of how far we have come, today we decided to leave our policy interest rate unchanged. nearly all committee participants expected it will be appropriate to raise interest rates somewhat further by the end of the year. we have to get inflation down to 2% and we will, we just do not see that yet. at core inflation, over the past six months, you are just not seeing a lot of progress, not the kind of progress we want to see. i would say two things, a decision has been made, i do expect it will be a live meeting. it will be appropriate to cut rates at such times that

inflation is coming down significantly, we are talking about a couple years out. we do not go out of our way to surprise markets or the public. at the same time our main focus has to be get -- to be getting the policy right. shery: jerome powell on the central bank's decision to keep interest rates unchanged. john taylor, professor of economic at stanford university. let me start with your reaction to the feds pause. it was a pause, but the projections show the rates should get to 5.6% by year end. based on your own rule, are we getting closer to where we should be? guest: we have gotten closer. we started at 25 basis points, a little over five now. i do not understand the pause and a strong intention to move it out. but that is what they are going to do. it is important that the markets understand and take into account that it will be most likely

more. >> how do you respond to what people have said, if it they do with they were going to raise the rate, why did they not just do 25 basis points today? they say they need more information, what is going on? guest: that is the question. there is the taylor rule, which it says don't wait, just go ahead and do it. if it is appropriate, a little bit more, it does not make much sense to delay. unless they could not get agreement, i don't know. the people i know think it should have been further right now. heidi: they are not doing a good job of applying the taylor rule right now. do you think the policy risks are heightened by opting to wait? guest: it adds's uncertainty because people do look at the taylor rule, it has gotten a lot

of publicity. they were so fall -- far off. they have caught up eight large amount. but they are behind, and are a little bit behind there is a global aspect to this. very little discussion. and very little discussion on the 2% target. they are away above the 2% target. it is impaired to stick to that. there was very little discussion in the whole apparatus that we heard about. >> powell said repeatedly that inflation is too high, core inflation is not coming down, all of the risks are to the upside, and that he just seemed to be throwing in the towel. what should they be considering that they are not? guest: they should be considering inflation rate is still well above 2%. they should realize they have to do more, the models suggest to

do more. and think about it globally, there is a european central bank that seems behind, -- there is a lot going on. what we are seeing now is there should be more attention paid to the so-called rules or strategies. that is what is happening. shery: bloomberg west looking at new research from fed officials and economist. we sensed there was a shift happening at the fed when it comes to their view that wage gains are fueling inflation. do you see that? guest: i think it is part of the big picture. but we still have inflation, which is higher than the target. i have not seen any indication, except from outside the fed, that they want to raise the target. that is a good system. have to think about this globally, the surprises are not good. this is a but a surprise. -- a bit of a surprise.

that is a little bit of a stress point for the markets. shery: is that because when you are talking about 2% inflation target not being achieved or discussed as much during this press conference and the statement as well, could we get a sense that we are entering this new era of high inflation that could be also part of the calculation? guest: we hope not, for sure, this 2% is a very good focus on the central bank's eared to give up on that would be a mistake, i am worried that by delaying, they are going in that direction paired i have not heard anything about that from outside the fed. -- i should say, from inside the fed, from outside, it is being discussed. it is conceivable that is where we will go, i hope not. we have done well with the 2% target. >> it is interesting they raised one of the inflation forecasts

so much. it was the core pce, it is up to 3.9%. they keep saying that they expect inflation to come down, they will raise rates enough to get a restrictive rate. a real funds rate. that seems like it will be harder now. how high do you think the funds rates will go? is 6% enough? guest: it depends on the inflation rate. the inflation rate comes down, if it goes back to the 7%, we will have to do more. i am optimistic that the actions they have taken plus the actions they will take will get the rate to come down. we do not know for sure, i just mentioned the global situation is more difficult than the past. there is a risk, and that is why the markets are waiting to see. i think the idea of not now, later, does not add to certainty at all. >> it is interesting in itself

that we see markets brushing it off, u.s. stocks are doing well, asian stocks are in the green. i am wondering, when you take a look at the job market, pretty key components of inflation that remain stubbornly sticky, are there concerns that there will be structural elements to why inflation is not coming down faster? and that buying more time for themselves is not going to result -- yield results they want? guest: the inflation rate was much higher. it has come down. it is just like the model suggested. it will continue to come down, the fed has to be a little bit restrictive, more restrictive than they are. the question is will they view that, there is debate. there is a little bit of a monkey wrench and the situation, nobody expected he would be so adamant that it will come later,

not now. >> is a jay powell having a problem, or a challenge getting the consensus, the unanimous vote he got today? many people are saying his statement seemed to contradict himself, or the fed decision. that may be what this shows is that he had to find a compromise within the fomc, the hawks and the doves to get this done. what do you think? guest: it is a possibility, there is a difference of opinion, i know most of the members and have talked to them. i think there is a sense that we have to do more, some of them have talked about it quietly. this is maybe a way to get them on board for a cause, but we will get back to it. it could be. i do not know if that is what went on. it is an unusual situation, not now, later. that is unusual.

>> always a pleasure chatting with you. you can get around up of the stories you need to know to get your day going in today's addition of daybreak, terminal subscribers can get that at daybgo. the broad central bank calendar to come. china's data dump is today as well. you can always customize those settings, so you just get the news on industries and assets that matter most to you. this is bloomberg. ♪

>> we are seeing the asian and u.s. stock futures are climbing after the fed rate cause.

it's really something for both the bears in the bulls in this decision, perhaps a soft press conference following a very hawkish adjustment to the dot plot. we saw treasuries tumbling that curve flattening after the hold from the fed watching their reaction when it comes to the australian and new zealand 10 year yields as well. watching now as we head into the bank of japan decision on friday, that 10-year yelled being the one to watch as we can see the yen holding pretty steady. the boj expected to keep policy firmly on hold with no adjustment to why cc at least for now. that inflation picture has also been heating up. still ahead, the eu charges google with abusing its ad tech tolerance. we get the latest on that story. this is bloomberg. ♪

haidi: morgan stanley's chief u.s. equity strategist this morning of more pain ahead despite using inflation. mike wilson also told us companies may continue to real from what he calls an earnings recession. >> our view is that inflation will come down and while that potentially is good for bonds, it won't be good for stocks because that's where the earnings power has been coming from. this is our boom bust thesis. the reason we were so bullish in 2020 and 2021 is because we expected inflation profit boom but now when inflation comes down you are have ever session. alan is looking for a pause today. she's not looking for anywhere hikes the rest of this year, bug next year. >> 20 looking at in terms of client responses, having havingh

back against the bearishness you are expect rain? >> a feel like on the fundamental side our earnings call has been spot on. a year ago to remind listeners we were calling for an earnings recession and we were dismissed. now we are in wind. the only differences we are saying it will desist. but the session is over and we will see every acceleration and that's what it's forecasting. >> you are saying you got it right if you strip out the big tech snake -- tech names and that there was a recession and lower valuations of shares and you are saying it will continue, not talking about the headline level of the s&p as much as these particular stocks fighting against the broadening out of the ai rally, is that correct? >> technology stocks had the biggest earning recession. their earnings were down significantly in the fourth quarter, that's why they sold off sharply in the fourth quarter. they had an earnings recession in the past year on the presumption is, that's over and it will re-accelerate. we think that including tech the

recession think that including e recession will persist. it will get worse before it actually improves next year. >> if it's that in our economy or moving under 3% of inflation, david rosenberg in that campus well, i'm thinking of the partial differentials to get to the wilson earning call to get to 3900 or whatever on spx. that's all at the revenue line. is the core of your call with your security analyst that revenue growth will disappoint? >> last year their earnings recession was a cost issue. big tech companies over invested thinking that pandemic boom would continue at the same pace and it did not. that was a problem for consumer discretionary as well as financial companies and companies out over invested. now what we see is a topline disappointment. maybe not a recession but the forecast is 0% gdp. that feels like a recession

because pricing will evaporate. there's this economy between goods inflation and services inflation. goods is back to the 2% level and will go deflationary, that's your revenue growth. quakes do you participate in the market or is cash a comfortable place to be? >> both. >> that's a strategy. >> one hand and the other hand. i take my economist at. it offers you a great risk of adjuster return, we are over great -- overweight cash, but we are underweight our normal allocation. shery: morgan stanley's chief u.s. equity strategists. we are less than half an hour away from the market opens in japan, south korea and australia. how are we setting up? annabelle: that's the big question, how investors will react to the fed sticking or staying on pause.

a lot of mixed signals coming through from what we saw on the dot plots versus what came through in the guidance. how investors will interpret that is the big question. broadly the readthrough from strategist as we can expect a level of resilience and that was reflected this morning in futures, kiwi stocks gaining here at the open. u.s. futures staying fairly flat this morning but we saw the upward roof -- upward momentum in the price. .1% overall. that is the longest win streak we have seen in about 18 months. take a look at what we see in the fx space because again we are trading fairly flat, but investors say we can expect a level of resilience. wells fargo is one that was spoken to and they say that markets are going to be a little bit confused between what came through on the dot plot. jay powell's commentary. until we get further clarification coming through, it

expects asian effects to trade sideways. the kiwi dollar is one of the standouts moving to the downside this morning, that is after we had that first quarter gdp coming through, a contraction of .1% on the quarter, confirming that the country has entered into a recession. very much central-bank related given we saw that aggressive tightening campaign from the rbn said in one of the front runners on the international stage in that respect. >> european union church google with abusing its dominance to crush competition. bloomberg su keenan joins us with the latest and this could actually mean that google's business could be split apart. su: potentially could mean a breakup of a very lucrative ad business in google, but the good news is that eu probes can take years to effectuate and so that is an important factor, alphabets google has been in the

eyes of google before but it's using its ad tech dominance to crush the competition. according to the eu's competition commissioner. the alphabet unit used its own exchanges program over its rivals to their detriment and bolstered their own on the ad tech supply chain. they are issuing what's called an antitrust charge sheet. what this means is a potentially paves the way for fines of up to 10% of global sales, but also the permissions preliminary review is that the only means of possibly resolving these competition concerns as to forcing -- force a breakup of the ad business. again, that is a possibility. if you look at google's history, it has been through three different potential cases in the eu before, resulting in fines of

well over 8 billion, and these had little effect on google share price, which has risen dramatically since 2017 when the first of these cases by the eu was brought. in the latest session shares were down as much as one is 1.9%, but they paired almost all those losses by the close to close. investors seem to be taking this e.u. issue in stride. haidi: what happens next? su: the commission invited google to appear at a hearing in brussels to present its counterargument against the commission's preliminary view. it also says it remains committed to creating value for the publishers and advertising partners and its focus of the eu they felt was very narrow. it's important to point out that the eu's case is part of a bigger campaign against u.s.

tech companies. with the eu really wants to do is come up with a comprehensive list of rules for ai, for online technology and privacy and this is part of that effort. we should also point out they are targeting online advertising, which is south of its -- alphabets most lucrative business grading 80% of total revenue last year which adds to 225 billion. so stay tuned. but investors at this point appear to be shrugging it off. haidi: bloomberg's su keenan with the latest. let's look at the latest with crypto. a second south korean platform as the suspended customer deposits or withdrawals. there's market volatility and customer confusion caused by the investment platform. implementing similar measures one day earlier. on tuesday they pause deposits and withdrawals until further notice while citing a certain issue with one of its partner.

they have not disclose any relationship and its announcements. much more to come here on "daybreak asia". this is bloomberg. ♪ j.p. morgan wealth management knows it's easy to get lost in investment research. get help with j.p morgan personal advisors. hey, david! ready to get started? work with advisors who create a plan with you, and help you find the right investments. so great getting to know you, let's take a look at your new investment plan. ok, great! this should have you moving in the right direction. thanks jen. get ongoing advice; and manage your investments in the chase mobile app.

when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh shery: we are about 20 minutes

away from the open in japan, south korea and still a with futures pointing higher. futures up 3/10 of 1% in this as we had the aussie continuing to strengthen against the u.s. dollar. kiwi stocks also pointing higher about a quarter of a percent. this after we got the news that new zealand's economy contracted in the first quarter, confirming a technical recession. nikkei futures also higher, we have seen the japanese yen steady near that six month low against the u.s. dollar as we head towards a very important decision in the country. >> very important for perhaps no fireworks. boj is expected to keep the fireworks on hold. all meetings from here on our live given the strengthen underlying retention. great to check with you again, as always.

and, yes, inflation has been picking up but there are core components lagging when it comes to softer demand and weaker wage growth despite the spring wage negotiation. what other timing for the boj having the confidence to tweak policy? >> thanks very much for having me on. i think when it comes to the bank of japan, their biggest priority is to flexible eyes curve control. they've set a height -- higher hurdle for policy tightening. i think to include raising the short-term interest rates. yield curve control is just a bigger animal together. the stronger underlying inflation, the more easy the policy is. if you are fixing nominal rates at a certain level, real interest rates will go lower.

in addition to that, iin additik they raise the risks that keeping the policy in place for too long in a time of rising inflation momentum could stoke further weakness in the end. i think the adjustment for yield curve control is a matter of time. as you said, we think every meeting is live. we think the boj would want to wait for more domestic inflation and wage data, but i would certainly not be surprised if they move this week. >> when you take a look at the pause through to cpi inflation when it comes to producer prices, are we looking at it erroneously from a linear point of view? >> something that was very interesting is that last month the bank of japan monetary affairs department, which is probably the most important department that advises the governor on monetary policy published a very interesting paper. they said that the cost increases, if they pass a certain threshold, could have a

nonlinear impact on cpi inflation and that explains why the boj policy board have had real struggles forecasting this uptick in duration in imported inflation. the most interesting conclusion of the paper is that they were saying, even more so than the effects of exchange rate depreciation and rising commodity costs, a rise in wages as the biggest nonlinear impact on cpi inflation. which is why at a time when we expect wages to accelerate, the bank of japan needs to consider the possibility of upside risks to the inflation forecast. shery: when can we expect the wage side to accelerate? because negotiations seem to be disappointing when they came to pass through to prices. >> the thing is that in terms of

macro wage data, it's lacking. there was disappointment with the april macro wage data because it showed minimal acceleration in wages, nothing like the 2% plus base away china that we are seeing. i think this will change in the next couple of months. it's not the case that every firm reflects salary increases in april. many firms don't reflect these pay hikes until july, so there will be time before the macro statistics improve. what's noted -- notable is that soft surveys, such as the regional economic surveys shows corporate's expressing a lot more optimism about wage hikes and on the consumer side we see an improvement in sentiment and expectations. i think this sentiment is starting and we will see that by the hard data. shery: since the april meeting we have japanese stocks a multi-decade high.

japanese yen falling to that 140 level. is this a consideration at all for the boj? >> i don't think the boj will proceed with normalization. but at the margin it makes it easier to pursue with cautious normalization process. one thing that makes it apprehensive is that they don't want to make changes and see the economy slow down. the stronger sentiment is it makes it easier for the boj to take that. what i think is an acceptable risk of moving forward. >> what your base case scenario for where the japanese yen goes from here? we saw incredible appreciation when he was about to take the helm but that just went nowhere.

>> is a house we>> is a house wa non-consensus on the yen. the overwhelming consensus is that the combination of a weaker u.s. economy and a more hawkish boj would result in yen appreciation. we kind of disagree despite the fact that we are hawkish on the outlook and expect the boj to adjust sooner than the consensus, we think the dollar yen still has upside, we are seeing third quarter, 140 three target, possible upside risks and the reason is because if you look at the flow side, there is billion selling pressures in the form of strong fbi outflows. in terms of the balance of payments, there has been an improvement for decline and energy costs but we think we aren't seeing that strong yen buying momentum that would result in a big appreciation. haidi: the divergence is one of the reasons we've seen a huge

rally. they doubled from the pandemic low. we are in a 10thwe are in a 10tk of gains and now strategists say there's further upside to come. with this potentially emerge as a risk that the boj needs to watch when they are moving policy around in the months to come? >> on the equity side, at the margin, it makes it easy for them to adjust policy. i don't think they have bubble concerns. i think the bigger worry for the boj, the overarching worry is around the outlook for the economies, particularly the united states, that is what has made them hesitate to make winnable adjustments -- minimal adjustments so icc. that's the variable i think they are looking for. if equities continue to sort through the stratosphere, and might become a conversation but at these levels in the car momentum at evaluations, i don't

think this is a big concern. shery: great to have you back, thank you. be sure to tune into bloomberg 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. plenty more ahead. stay with us. ♪ ♪ (upbeat music) ♪ ( ♪♪ ) ( ♪♪ )

( ♪♪ ) -awww. -awww. -nope. ( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel, and grow. constant contact. helping the small stand tall.

shery: breaking news out of japan, we are getting the export numbers for the month of may, year on year growth of .6% which is surprising to the upside. expectations from economists was a contraction so japan managing to grow their exports a little bit by .6% for the month of may year on year, imports a contraction of 9.9%. still, small contraction was expected, but a much bigger contraction than the previous month. so you can see the trade picture in japan still remaining pretty challenged. the trade deficit coming in at ¥1.37 trillion, slightly larger than what was anticipated. we are seeing the weakness in the global semiconductor, demand driving down exports in japan and that's what we see.

core machine orders, growth of 5.5% for the month of april and this is also surprising to the upside and it's actually rebounding from a contraction from the previous month. we are seeing a challenging and external picture for japan, but the economy is performing a little bit better than economists had expected. haidi: inflationary pressures are picking up in japan and we expect the boj to sit tight and continue anchoring global low rates. reports saying tokyo and seoul are continuing resuming a bilateral agreement. rear getting japan's industry index later on on thursday that jumped 1.7% month on month in march. watching great earnings. shery: artificial intelligence

making headlines again as some high-profile names way in on the risks and opportunities. black rocks ceo says ai has tremendous potential to boost productivity and may be the technology that can tamp down inflation. the boss saying that it could have what he calls very large outcomes for long-term investing and even transform margins across sectors. but still according to a new report by mckinsey, the booming ai will usher in disruption for educated workers. all swaths of educated activity from marketing to customer operations are said to become more embedded in software with potential benefits of as much as $4.4 trillion. wanting more artificial intelligence innovation in

france as the eu moves to restrict use of the technology. the french president has praise local talent in ai research touting tax reductions and incentives for startups in the field. it comes as the european parliament voted to limit ai use and ban public face scanning in the decision that would put lawmakers at odds with member countries. micron saying that europe should not start with regulation but highlighting the need from global cooperation. >> the worst scenario would be, a europe that would invest much less than the united states or china, not being able to create the great champions but a europe that would start with regulations. this scenario is possible. it's not the one we stand for and is not the one i will support. haidi: after every fed decision we have the announcement from the hong kong monetary authority, reflecting move or

lack of a move from the fed overnight. we always get that immediate reaction in the morning, given that the great moves in line for the benchmark to protect the local dollar to the greenback. we did see the base rate in hong kong increase to five and a half percent to a quarter of 1%. this is the communication dance as they continue for the fed. some stocks we open crypto related shares in focus after a second south korean crypto platform in two days suspended customer and withdrawals. toyota emerging from its biggest two-day gain in three years and keeping an eye on oil purchases as u.s. stockpiles as well stocs the fed is in focus. ♪

what do you get from the morgan stanley client experience? listening more than talking, and a personalized plan ♪ to guide you through a changing world. ♪ taany questions?dygh -yeah, i got one. how about the best network imaginable? let's invent that. that's what we do here. quick survey. who wants the internet to work, pretty much everywhere. and it needs to smooth, like super, super, super, super smooth. hey, should you be drinking that? -it's decaf. because we're busy women. we don't have time for lag or buffering. who doesn't want internet that helps a.i. do your homework even faster. come again. -sorry, what was that? introducing the next generation 10g network only from xfinity. the future starts now.

shery: this is "daybreak asia", we are counting down to asia's major market opens as we see reaction from the fed talk us -- hawkish pause. a little more optimistic on the inflation fight and perhaps leaving the door open for future rate hikes. haidi: the fed is the opening act, we still have the pboc, the ecb and the boj to round out the week. central bank is a dominant theme this week. annabelle: something happening over the space of 36 hours. a lot and focus for the boj. the key market watching this decision due tomorrow. we have the pboc with the mls guidance on the broader expectation is for that to be lowered but the open period of markets for japan, korea and australia. a start for cash treasuries coming online. we didn't see the move -- the

yield moving. just a small move five. flat at the open, but the focus is on what we will get from central banks broadly in the bank of japan is the next one that's why they expected to keep its policy settings in place. that's leading to weakness we continue to see in the japanese currency holding around that 140 level. some has been supportive for japanese stocks. we get more signals of strength coming into the japanese economy, rising six point 6%, the estimate had been for contraction. preferring to wait for more signals around the health of the outlook before making any sort of changes to the status quo. stocks rise coming online flat, but we have seen a huge run-up in the nikkei 225 and we have now doubled from the pandemic low. let's change onto other markets

we are keeping an eye on in korea just coming online at the start, we are seeing tech stocks in a particular focus with the tech heavy index outpacing the gains for the kospi at the start of trade. that is in line with what we saw for the u.s. session because the s&p 500 is still leaking out a modest gain in its longest win streak in about 18 months. bigger moves coming through into the tech stocks. we have the nasdaq closing up .7% and also at its highest level since april of 2022. in terms of the direction of the korean won, we are seeing it move a little bit firmer against the greenback. wells fargo is saying to expect asian currencies to trade in a sideways pattern until we get clarity on the outlook for the fed given the mixed messages coming through from wet jay powell signals in the pressure -- presser. let's change on because we have australia likewise coming online in the open for the asx 200 we

are seeing stocks trade flat but just some modest gains. here's what to expect for most of the session. in australia we have jobs numbers coming out in the next hour. employment report is likely to showing increase in jobs but not enough to keep up with the expanding poll of workers. employment report is likely to showing increase in jobskeepingi dollar, it is starting a pass on its early losses against the dollar. it did drop earlier given we saw the country entering its first recession in three years. >> the fed pausing rates unanimously and bringing in our global economics and policy editor. kathleen hays. given the statement of the dot plot but then chair powell seemed to soften the tone during the presser. kathleen: it did confuse some people and made them wonder what the messaging truly is. on many levels it's clear they

didn't hike the key rate. they left it at around five and a quarter percent, and that part was what everybody thought. good for jay powell, a group is divided between the hikers at the very top in the let's don't do anything at the bottom. we've got awe've got a unanimou, tumor hikes over this year and more hikes expected. in terms of what the signal is, if you look at the dot plots and see what's there, you can tell that this move now, you have 12 of 18 fed officials who are on board with two more rate hikes. at the top you have three if you could get up to 6%. the bottom, a couple that don't want to move, and then there's for down there. it's interesting the consensus because we didn't see from all things ahead of time that they were that close on a to hike

move. but look at this, this is really something. in march, the last time they updated their forecast on the economy and interest rate hikes, they thought at the end of the year the fed would be up five and a quarter percent, between five and five and a quarter, now they think it will get to 5.6%. what a move from terminal rate of 5.1 to its terminal rate of 5.6, that shift of view in just three months, they still see rate hikes next year, but in march they thought would get back down to four and a quarter, now they see it up 4.6, 4.7. jay powell talked about how they miss the inflation forecast. he said it would come down, it hasn't. all the risk to the upside, does that mean there will be a july hike that you talked about at this meeting? let's listen to what he said. >> the decision came up in the

meeting from time to time but the focus was on what to do today. i would say about july, it decision hasn't been made but i do expected to be a live meeting. kathleen: at this point it seems pretty clear that more hikes are coming but it will all depend on the data. that's another thing in fairness to chair powell he says, i can't tell you what we will do in july or in subsequent meetings, all i can tell you is we will mop -- we will watch the numbers. strikingly he talked about how strong the labor market still is, he talked about inflation still being too high. when you look at the core cpi it did come down a little bit year-over-year but not that much in on a monthly basis, it was flat. that's jay powell's concern, he has to see progress. maybe there's a financial instability concerned they aren't talking about.

but for whatever reason they pause, and they are ready to do more hikes. haidi: let's get more analysis on this as our fed policy is likely to see a short-term market correction. our ahead of the research at julius baer, great to have you with us and hopefully you can help us make sense of this. some of the developments around banks on the data had changed going into this meeting. does this heighten the risk of a mistake because if inflation pressures are as high as they say, should they have just typed? >> often there are conflicting messages within the federal reserve and i think there was a classic case in point. and when you think about the sequencing you have the actual decision on interest rates and then you have the statement and

then you have the q&a. maybe it's just human nature but we tend to latch onto the q&a more than anything else because it's the last thing we hear. there was a bit of a dichotomy between the dot plot, which you rightly described as being tighter, more hawkish than the march dot plot, but in his q&a jerome powell said something i thought was critical. i wrote it down. in terms of housing services inflation, we see new rents, new leases are coming in at low levels. any forecast that people are making about inflation coming down this year will contain a big dose of inflation from that source. you know as well as i that shelters are the third cpi on the basket. if you means what he says, that we will get disinflation and housing, that i can't see when

they meet in july, why they need to raise rates because there will be evidence we get to 2% inflation without the necessity for raising rates anymore than they are at today. haidi: what is it tell you that we've hardly see much of a reaction and we are seeing a muted reaction here in asia? >> may be because people are trying to put the pieces together and there is slightly conflicting messaging and in general it was a hawkish pause. i think the market is seeing through this in the market realizes the inflation trajectory is down on its own. so we will have more rate hikes even if the fed is telling us there's more rate hikes coming. but it has to digest and then i

just say, you introduce me mentioning i did expect a correction, we are up 3.6% so far in june. if you go back to whenever the s&p started, 1926 or something like that. the average was .7%. it is typically a positive month, but not 3.6. we should just rest a little bit over the next few weeks. haidi: we are getting conflicting -- shery: we are getting conflicting messages from the chinese economy. we are seeing more signals of wanting to support the economy, we could perhaps get the pboc lucie the policy but how much will that help when the confidence is not there to start spending ancestor borrowing and what are the implications of that for the markets? >> i think you actually answered

the question and asking you. even if they do stimulus, the sentiment on the ground is so deeply, deeply damaged and i hear this anecdotally from people who go to china and they come back and tell me that entrepreneurs feel their market shares being taken away from them by the state on enterprise. and to compensate for that they are having to cut salaries, cut staff and that feeds into very despondent kind of mood in the white color segment of society. the candle that burns twice as bright burns half as long and that's probably the chinese market. i can get a pop in a very nice pop. they could get it to go up 30% in the month, but it won't last long because the sentiment is so poor.

shery:shery: doesn't that mean t the state owned companies that are walking the line of what the government wants to see in terms of long-term growth are meaningful opportunities and are you invested in those names? >> we are not, but i wouldn't say you are wrong and that because, absolutely, when in rome do as the romans and if they want the state owned enterprises to take over the economy, that's what will happen and they will gain more market share and they do have big dividends. is the kind of thing that we want to invest in. haidi: are you more convinced when it comes to the longevity and the fundamentals of the japan rally? >> yes. it's predicated on a bunch of things. a half a dozen things are going

right in japan but in the interest of japan there are three. there's genuine inflation for the first time sincethere's genr the first time since the early 1990's. we had a pop when they doubled the consumption tax, but it wasn't a real permanent inflation the way this one will be because even though the population was old when abby was prime minister, announced really old. we saw that in the fact that the wage negotiations were up over 2% in march, and i think that will be replicated next year so there's inflation but beyond that it's very clear that retail goods places are substantially higher than the actual inflation, imported inflation and so, companies are definitely raising their margins. that should mean returns and equities will go up and the last is returned should also go up because under the new ceo of the

japan exchange, there is a lot of pressure being brought to bear on companies who increase their payout ratios, which are half what they are in the u.s., and japanese companies are sitting on loads of cash, caches 20% of assets on listed company balance sheets. so they are starting to do that. honda motor had a $1.6 billion buyback they announced. so those are all reasons that i think the rally in japan has gety. haidi: always good to have you with us. head of asia research. let's get you back for a look at the movers. annabelle: just under 15 minutes in the session for seoul, sydney and tokyo. keeping an eye on sectors but kicking off with tech, we do see most of these moving higher. when you look at where we are so far in this session, tech is leading the gains for their

broader benchmark. that is after we had the nasdaq eking out a gain of .7% in the price sessions better than what we suffer for the overall s&p 500. let's change on that because other sectors and focus include energy, these names are moving a little bit to the downside this morning, that is after we had in the u.s. session, the s&p 500 energy index trailing the broader benchmark was after we saw a build up in u.s. crude inventory levels and that caused oil prices to drop in the session even though we see wti and brent crude trading fairly flat, a little bit higher in the early moments of the session, keeping with the commodities space, let's take a look at what's happening with zinc link stocks this morning. we are watching these two names in japan and they are fairly mixed, not huge gains, we have the shutdown of europe's largest zinc mine.

this is owned by a stockholm based company and it's a sign that supplies are reacting to a sharp deterioration in demand we see over the course of this year. >> as we head towards the china open in about an hour, still ahead, a preview of industrial productions and retail sales numbers who expects those numbers from china to be slightly lower than the consensus. plus, china holding urgent meetings with business leaders for advice on reviving the economy. we have the details, this is bloomberg. ♪

thanks to avalara, we can calculate 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 it's easy to get lost in investment research. introducing j.p. morgan personal advisors. hey david. connect with an advisor to create your personalized plan. let's find the right investments for your goals okay, great. j.p. morgan wealth management.

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.

haidi: urgency is the word most associate were china's efforts to shore up its economy. chinese officials are soliciting advice from business leaders, even foreign ones on how to revitalize growth. stephen engle is in hong kong. tell us what the state of the china -- tell us about the state of the chinese economy. stephen: the recovery story is weak, and that is stymied by we confidence and also no solutions on how to reverse these trends. that's why, according to sources, the chinese top

leadership has summoned to business leaders economist, even some foreign business leaders to get their ideas on how to revitalize the economy, how to revitalize confidence, and also revive the key drivers of growth, including their real estate industry, those gathered called on the government to make urgent policy revisions adopt a more market oriented rather than plan led approach to growth. that will be a tall order because xi jinping put more communist party control over the levers of the economy rather than the state to have more discipline, obviously. also of course, xi xiping has been averse to flooding the system with lots of stimulus. for one, the local governments balance sheets our civilian the -- severely damaged by the three year long covid zero policies and the costs associated with

that. property sector, there balance sheets damaged by another crack down on the property sector, so where is the fiscal support going to come. it will be monetary easing, we had short-term rates cut by the pboc tuesday, today, we are likely to get the mlf cut which paves the way for next week. but is liquidity the issue or is it more confidence. at one meeting a couple of weeks ago, according to the sources, the consensus seems to be that there needs to be better coordination between monetary and fiscal stimulus and those attending shared pressing concerns over the ambiguity over the timing and form of any stimulus. we had a report from bloomberg yesterday saying the top leadership is mulling a stimulus package right now that could be discussed at the state council level as tomorrow. but again, confidence seems to

be the big issue in this one credit analyst told bloomberg, many business leaders and china are scarred by those simultaneous crackdowns over the last three years so confidence is the main game. shery: will we see the economic pressure reflected in the activity data today? stephen: i think it will show us the weakening confidence as it relates to the output in the data. we will have a guest coming up soon who thinks the numbers might come below the consensus in the consensus is not very good, industrial production which is factory outlook from a likely grew three and a half percent, it was 5.6% in april. fixed asset urban investment, that's real rate -- well --

railways and stimulating well -- railways and stimulating creek -- quick growth. that's four point 4%, the lowest since december of 2020, the main pillar the government wants to boost his consumption, retail sales in may at 13.7% down from 18.5% just one month before. shery: how are chief north asian correspondent stephen engle there. we are talking about china, the pboc, we already have the fed's rate decision with a pause. investors are still awaiting policy decisions from the ecb and the bank of japan. for more, let's bring in jill. it seems that this week's ecb rate hike it's pretty much expected, but are we going to get some signals that perhaps this could be near the end of the tightening cycle? >> yes, that's certainly what we are looking out for. this week's rate hike seems very well baked in. we are hearing from the governing council. that already seems like a done deal, but their schooling we are seeing in the economy that could inform future rate decisions and might signal a pause in into the

rate hike cycle. pause in into the rate hike cycle. it has been weakening quite significantly. we've seen cooling in core inflation. all of those factors play into what's likely going to signify that this is the last hike in the cycle. what we are also looking out from the ecb's staff economist today may put out new forecasts, both for gdp for this year as well as for inflation. there's a chance those forecasts could be revised downward and that would further cement the idea that we are done with this cycle after this week it's very much -- this week's very much expected hike. haidi: les moonves expected for the boj over the next few months will be quite interesting. >> definitely. i think that once the boj caps off this busy week, that we really won't see any major surprises.

negative rate policy is likely to stick around a bit but what we want to look out for for the bank of japan is any kind of signifying that we get on how inflation will look. i think you just heard from a guest a few minutes ago that these inflation pressures in japan are beginning to build. they will have an opportunity, the boj when they have their july meeting to talk a little bit more about whether they want to revisit inflation forecasts. so that i think will be a much more interesting meeting when it comes to how the boj is acknowledging price pressures. haidi: plenty more to come here on "daybreak asia", this is bloomberg. ♪ ( ♪♪ ) ( ♪♪ )

( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel, and grow. constant contact. helping the small stand tall.

and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com haidi: checking in on 10 year

with the fed. looking at the ecb. expectations are 25 basis point hikes in june and the focus will be the potential upcoming pause. we are seeing a downside when it comes to european stock futures at the moment. we did see a rise before the fed, son of -- some of the miners have been doing well on the expectations that more stimulus will be dealt with by chinese policymakers. we will watch to see if that carries through. dax futures up by the 10th of 1%. we are watching trading when it we ar(announcer)trading when it enough with the calorie counting, carb cutting, diet fatigue, and stress. just taking one golo release capsule with three balanced meals a day has been clinically proven to repair metabolism, optimize insulin levels, and balance the hormones that make weight loss easy.

release works with your body, not against it, so you can put dieting behind you and go live your life. head to golo.com now to join the over 2 million people who have found the right way to lose weight and get healthier with golo.

>> this is daybreak asia. a check on markets and we are 30 minutes into the session for sydney, solon tokyo. keeping an eye on what's happening on japan. we are seeing the nikkei 225 now trending flat with an earlier open to the downside. draw your attention to this chart because it takes a look at foreigner investor and japanese or investor interest in japanese. this data released on a releasey basis coming out of the last half hour showing that we've seen 11 straight weeks of inflows without spike in the chart and you can see it represents a weekly inflow of nearly $10 billion in the week ending june 9. that is far above almost double the four-week moving average for that. that's indicating to us how much foreigners are continuing to keep the interest in japanese stocks for a variety of factors, including the boj, which has been keeping easy policy settings in place. taking a look at the board of markets escape this morning, we are seeing stocks moving a

little bit higher this morning but fairly range bound expecting what we had in the u.s. session. a lot of investors passing through what it considered to be quite mixed signals after the fed decision. we saw the dots plots versus what we had from jay powell in the presser after he said nearly all fed officials expected it would be appropriate to raise interest rates further in 2023. in terms of what else we keep an eye on, treasury or bond yields, very flat and flat and the sesss morning. we are looking ahead to the next data point in this region and that will be china with its data dump later this morning. shery: we actually have the activity data dropping about 90 minutes on the numbers likely to show industrial outputs and retail sales all slowing down. of course we want to discuss all of this and joining us now is head of china economics who

thinks we are headed for another policy turning point in china. great to have you with us, so compared to what we seen in the past few months with policymakers changing their tune, given how economic growth is going in china, what sort of turnaround you expect and eventually, will this help because it seems confidence is very low rate now. >> yes, you are right, the confidence is pretty low among corporate and household. that's why at this stage policy is the game changer given the weakness in data last month, that's why think another turning point of the policy is imminent, which means that in the coming weeks we will see more announcements from the policymakers to ease policies to support the economy and policy

will turn more supportive compared to the last few months. shery: what is the biggest issue right now with the chinese economy, given that households and businesses are not really ready to spend, and how do you get there? >> i would say china is at a very early stage of cyclical recovery. usually you will see confidence with a very weak labor market and at this stage the economy has not had the organic growth, which means that the confidence is in the back loop, that's why at this stage policy has to play a more important role to drive the economy.

over the past few months, we see policy has tapered. that's why economists no they are a second and a quarter. we will see the policy. shery: given where the fed is going along with other economies, what will this divergence mean for chinese assets such as the chinese yuan? >> it really depends on how long the fed hiking cycle is going to be, and the fed will probably have another hike in july. and in the near term we have a continued hike that will put some pressure on china-related assets but for the fed if the hiking cycle is done, that will open the window for pboc to have more counts and we expected in

the key policy rate today and we expect another policy rate to cut and the third quarter this year from pboc to support the economy. haidi: are we headed towards an old playbook when it comes to stimulus? and it held pretty steady. >> i do think the economy needs more support because the confidence is low, but i don't expect the bazooka like stimulus. i think it will be pretty measured. i would say china policymakers tried to strike a balance between the level chain -- deleveraging and supporting gross. gross rupee pretty weak.

and it will remain about 20% and it will be more to gross. >> instrument by the point at which the broader economy is that, and this was something that policymakers are struggling with even pre-covid? >> i think that is structurally important, but at this stage the reason we see very high employment rate, very low inflation, it's not because structural reasons, it's because cyclical reasons. the main cyclical reason is that policy is less supporter from

second quarter. that's why we see the economic data from the past couple months, that's why at this moment, the high employment rate is more policy support. so that's mainly cyclical factor. haidi: how does the property sector play out when it comes to more relaxation they are expecting, you think that will be enough to make a meaningful difference? >> that's going to help. our view is that this year we will see an air shape on recovery in the property sector which means that things will stabilize from a very depressed level last year. but stabilization still helps because we see a pretty start -- sharp slowdown. i think at this stage we will see more policy easing in the

property sector tried to stabilize so things like the ratio, project restrictions. haidi: always good to have you with us. ahead of china economics. let's bring in our chief china markets correspondent. we've seen a pause from the fed, what he read in terms of these latest signals from beijing about what their policy support looks like, with their stimulus looks like and how effective it will be? >> as larry said, it's really the only game changer in town. let's see how the market reacts today because a 10 basis point cut from the pboc is over based markets. if we don't get that, that would be because super -- incredibly surprising. if we get more than that, that would see a reaction and markets.

the yuan is weaker. it did strengthen because of the fed pause in the fact that we will get a more hawkish fed going into the next two years, that will obviously put pressure on the chinese currency. there's also outflow concerns, pboc rarely cuts interest rates at the same time the fed is psyching. the fed pause does give it room to do that. as larry says, the confidence issue is very much the problem for policymakers. csi 300 is in a bear market. let's see if news of support and also really strong indications overnight from state media and from officials in beijing that they do want to encourage not only foreign investment, but also domestic consumption. let's see how it plays out a markets but sentiment is weak

and a lot weak and a lot more needs to be done to improve that. shery: there was the story and the bloomberg, does that mean perhaps we could see some chinese stocks that could be a little more supportive or given the sentiment concerns you are talking about is all downhill from here? >> i think it would be tricky to be bullish on the u.n.. not only do we have interest rate differentials with the u.s., which are only going to widen today are also in the next few months, but you also have outflow concerns. when we know that chinese investors are looking at ways to take their capital out of the country, they are investing more and u.s. foreign assets, using two popular channels. but how do you really get sentiments or animal spirits back into chinese assets. there needs to be -- we're are talking about negative feedback loop, there needs to be a reversal. so where you going to get that, it's all very data dependent and

there such a negative bias when it comes to chinese news or news out of china on the economy, that it will just take a lot of time and a lot of effort from policymakers in beijing to boost that. but increasing flows into the equity market will be the game changer to really get consumption back up. because those are really strong ties between what happens to the stock market and what happens to consumer confidence. so i would say that it's been almost clear from the past two weeks that policymakers do intend to create a positive feedback loop between the equity market, but between consumption and the market. shery: that was a preview as we head towards the china open. a big conversation coming up tomorrow, catch our exclusive interview with the jd veto ceo as we take a closer look at the

struggling post-covid recovery in china. 20 morehead. this is bloomberg. ♪ -- plenty morehead. this is bloomberg. ♪ or filing returns. avalarahhh ahhh get help reaching your goals with j.p. morgan wealth plan, a new tool in the chase mobile® app. use it to set and track your goals, big and small... and see how changes you make today... could help put them within reach. from your first big move to retiring poolside and the other goals along the way

wealth plan can help get you there. j.p. morgan wealth management. haidi: secretary of state antony blinken is traveling to beijing. as get more from our china

government reporter who joins us from hong kong. where the expectations from this trip? >> everybody is trying really hard to keep the expectations as low as possible, blinken, including the u.s. state department also trying to people don't expect too much from this going forward. but there's quite a lot at stake here, obviously. shery: as haidi mention, the most senior u.s. official to visit in five years and at a time when china u.s. relations seem to be at new lows. >> right. this was meant to happen months ago, but then we had the balloon incident, which set it back for a long time. but the key thing here is that there is a very narrow window of opportunity for both sides to actually sort of get a relationship back on track, and

that's because we have a u.s. election next year, we have taiwanese elections early next year as well. so there's a lot of factors coming into play that would make discussions between the two sides more and more difficult coming forward. i think there's a recognition by both sides that really need to move quickly. so while at the one hand they are really trying to control expectations, and there's a lot of posturing going on in the days leading up to the meeting, so we had a tune down statement after tithing the u.s. and telling them to show more respect. in the lead up to this, there's a lot of posturing going on, but i think it's very clear the stakes are quite high, the window of opportunity to improve ties is very narrow. there's also a very real threat. we aren't really talking about improving ties in the abstract, i think a lot of people are very

conscience -- conscious of the fact there has been a lot of tension, especially with the taiwan strait. and also the aircraft coming into very close contact. there isn't really an efficient and effective way for the two sides to communicate around such incidents, which means that as these incidents increase, the possibility for conflict because very real. so i think that's a major deliverable in terms of this meeting, can we get a situation whereby these types of conflicts -- can we manage effectively going forward? shery: colin murphy joining us from hong kong. of course, as we head towards the china market open, this is how we are trading in asia right now, we are seeing gains in the likes of real estate information, tech industrials as well, health care and energy stocks are falling at the moment. this as we see oil prices slightly rebounding -- rebounding but they fell in the new york session given supplies

hearing the u.s. most markets across asia have turned positive, even the nikkei staying higher by a 10th of 1% and at the highest since the 1990's. we saw those export numbers rising instead of contracting for the month of may. kiwi stocks are also gaining ground despite the fact that the economy fell into technical recession. this is bloomberg. ♪ we are also what -- haidi: we are also watching the latest developments where ubs is planning to retain a few hundred of credit suisse private bankers in asia bringing its total to more than 1200 and the few areas that was spared. the move is said to be driven by the global wealth chief, to chief, to where they will continue to generate lucrative clients.

ubs is ending its relationship with the asset management for the process is underway. they will offer prime broking services but have been inactive relationship for a number of years. it slumped 37% before its closure as clients rushed for the exit with sexual assault allegations against the founder. citigroup cfo says the firm's recent job cuts will cause expenses declined by as much as $400 million this quarter. the bank laid off 1600 employees in the second quarter, mostly in -- affecting trading divisions. city had set aside 5000 staffers so far in 2023. shery: former south bend ceo is targeting half a billion dollars for his new latin america focused vc fund bicycle capital. the firm says it has amassed 440

million in commitment so far. 440 million in commitment so far. he told us more about that latin american landscape. >> there are so many latin american founders who come to harvard and then they go back and rather than become -- for the united states they take the knowledge back to latin america and most of the stories you see so far, a lot of those founders were u.s. educated, then they go back to live in america without entrepreneurial mindset. and that has given life to a booming entrepreneur system in sao paulo, mexico city and columbia because now there are huge stories of success. you have one of the best food delivery companies in the planet. you have new bank that immigrated to still in the one that makes money on the worn -- the one that is worth tens of billions of dollars. now you have the multibillion-dollar marketplace that continues to grow. so today there's enough stories

of success that have created entrepreneurial ecosystems that are starting a new company. so i think what we started at softbank was we took latin america from one and a half billion a year to close to $16 billion a year of investment among other funds, and that gave rights to a booming entrepreneurial system. i think latin america deserves a fund that is going to be focused only in latin america and not the traditional tourist capital and then they train when things aren't that good. >> i want to focus on my career in latin america. >> you want to focus on not just latin america founders but diverse founders. how much will we are in an environment where interest rates are gara -- going higher and people are wanting to put money into trident tested founders, how are you still able to focus

on a minority founder? >> the interesting thing about founders who are underrepresented is they have the grit to succeed, they have it overlooked. they are the perfect solution for this moment in time. they don't come from the typical mold and they had to struggle from where they are. we think they are unfairly overlooked so it's not about the macro for us, it's about the micro and the people best suited to navigate moments like this in the people and places who look like they are overlooked, and if you back those folks, we believe you can make a lot of money. haidi: bicycle capital managing partners speaking to bloomberg's caroline hyde. more to come on daybreak asia. this is bloomberg. ♪ 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.

shery: the economic forum is a two day global investment conference in this year the event is gathering international finance leaders in hong kong. yvonne man is there for us. it what are the big themes this year? yvonne: certainly the perfect time to really host a conference like this, talking alternative investments, as you said, and we will talk to a lot of guess about a slew of timing topics, given this whole big week of event risk in the fed that we just gone through.

these are the pboc, ecb coming up. we are talking crypto regulation. and we have angelina from stratford finance. you may have known her as the former coo of the sfc. and we want to talk about the whole regulatory regime that hong kong just started this month when it comes to crypto trading. asia-pacificasia-pacific ceo, yy remember him, talking about this rates environment, what's it mean for hedge funds and how you navigate this volatility. also, brian roberts from the hong kong exchange. we are live at the exchange, and they are just about to roll out this new program of hong kong dollar ram and be dual counter model. there's a choice between using renminbi to trade and settle securities here in hong kong. certainly a very interesting look ahead and talking all things property, no more than the property chair. haidi: bloomberg markets yvonne

man joining us live from the greenwich economic forum. this is a picture of cross asia waking up to a more confounding fed decision. we did have the pause as expected, but the dot plot projections surprisingly hawkish and then perhaps a bit of a softer press conference there. but, the bottom line is that nearly all officials are expecting some further fed hikes. sources treadingsources treadins point and we are waiting for domestic activity data out of china, that's expected to further the slow down. we are seeing some on the upside particularly when it comes to japan up by of 1%. australia also -- and kiwi stocks are higher despite the recession. ♪ at the counter or on the go, save 20% with the lowest transaction fees and keep more of what you make.

it can happen to the people who teach us

and rescue us, the people on our team and in our family. it can happen to the people who serve us and the people who served. the people we work late with and stay out late with. it can even happen to the person in the mirror. opioid use disorder is a disease that can happen to any of us. it's possible recovery can happen to any of us, too. 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.

♪ david: this is uh my kitchen table. and it is also my filing system. over much of the past three decades, av