>> you are watching bloomberg daybreak: asia. >> we are counting down to asia's major market opens. >> jitters ahead of jay powell's congressional testimony. alibaba leads stocks on its surprise leadership shakeups. shareholders of southbank can win the i i -- ai race. >> let's take a look at where we stand ahead of jay powell's testimony to congress on wednesday. futures pointed lower. a down day in the united states. a lot of crosscurrents to

consider. a lot of warning this rally may be overdone. investors make an bullish bets on the s&p 500. it was down .0% -- .0 .7% of a 1%. the golden dragon index lower by four point 9%, the biggest drop since march. -- 4.9%, the biggest drop since march. bond futures looking to see a little bit more money flowing into them. a little bit of money flowing into bonds.

i want to point to a couple of individual stocks fedex was a disappointment. it used to be a bellwether for the economy. shipments were down. it gave a forecast that disappointed investors. the range was a couple of dollars wide. fedex fell about 7.5%. it did repair some of those losses. paypal was one of the winners. we will hear more later. annabelle: a question for investors is whether there is further moved to run. when you take a look at asia and consider the outperformance of certain benchmarks. korea, japan and taiwan in the mix. you take a look at what has been

happening with the stocks and deaths in the united states. you can see we are well above the 200 day moving average. the chip stocks are expensive. do investors want to keep piling in? we are looking ahead to the open for sydney, seoul and tokyo. concerns again that we are looking a little bit overextended and that there is not much more to buy into this. we are also watching what happens in china in the session today. details around stimulus still missing. investors not impressed by the size and magnitude of the rate cuts. you can add to that as well the surprise session that came

through yesterday. haidi: it did take investors by surprise. alibaba out-earning to familiar faces. -- turning to familiar faces. stephen engle in hong kong. this was a surprise when the news came through. as you look at this does it make sense? >> i hate this terminology, but time will tell. joseph tsai knows the alibaba business intimately. he was there in 1999, as was eddie wu who will be the new ceo. they were cofounders along with jack ma. jack ma was the face and the color of this company.

but he has been sidelined through the last three years of regulatory scrutiny and crackdown. it is interesting that they would bring joseph tsai, who was not into retirement. he has gone into other businesses. he is the owner of the brooklyn nets. he owns the new york liberty and the wnba. he owns a team in la crosse. he has also invested heavily into blockchain. he has lots of business acumen. he is well respected on wall street. that could be his calling card they as alibaba embarks on this restructuring into six units. they want these to be individual units. this is something that daniel zhang unveiled back in march. six individual units that will be able to raise their own capital and potentially list. that is where joseph tsai may be

able to come into play. the regulatory environment in china domestically has changed dramatically since joseph tsai was involved. joseph tsai might be the wall street face and eddie wu -- the pressure of that restructuring might lie on his shoulders. he is deep into the knowledge of alibaba and the payment systems and e-commerce, the bread-and-butter. he could perhaps take alibaba back to its core business which is e-commerce. they have not been able to unlock the value of pre-regulatory crackdown and they have had three consecutive quarters of single digit revenue growth. investors want better performance. vonnie: it will be interesting to see how much of a proxy china will be moving forward. >> absolutely.

that antimonopoly crackdown on alibaba open the door for other competitors. they have definitely lost share in a number of areas. they are not that dominant of a player like they used to be before 202020. that is the big challenge. how do you unlock value for shareholders during a completely changed regulatory environment, a suppressed consumer a story in china as they come out of covid zero. there are a lot of challenges for alibaba, that is why the stock remains depressed. this stock is down more than 70% since the 2020 hives. it is a big job for joseph tsai and eddie wu.

haidi: a lot to be done. thank you so much. vonnie: turning to geopolitics. china's premier is in germany in his first overseas trip. it is part of efforts to stabilize ties and it comes after antony blinken's tour in china this week. our reporter has more. >> a busy day for the chinese premier se embarked on his trip in germany. ending the day in bavaria. this was a meeting more about signal banned substance. it was really about restarting these talks begun during the angela merkel level. in order to get a dialogue going once again. the backdrop is very different from the angela merkel era. leaving many german companies

with huge exposure to china caught in the balance. i spoke to some of the ceos, including the catl ceo. >> there is no way around dialogue. the germans understand it is not always better or worse, it is just different. we need to leave -- live with these differences. i would say we are getting back to a normal relationship which would be good for all of us. >> all of the ceos watching carefully the signals from this meeting to make the decisions for years to come. vonnie: indian prime minister narendra modi is set to meet with president biden in washington. they will discuss ways to work closely on semiconductor production.

washington has restricted china's access to high-tech chips. prime minister modi planning to meet with u.s. business leaders. that includes elon musk. according to sources, he will host more than 20 high-profile individuals in new york. tesla and india last month revived talks on a possible factory following a year-long standoff over taxes and market access. haidi: we are watching the yen closely. worries about government intervention. how much further do we see declines for that again more broadly? >> there is relentless shorting

cure as soon as the trading day starts. one gauge to look at would be the deutsche bank measure. it basically closed at a record low on monday. it shows you how much relentless pressure there is an japan's currency because they have the diversion monetary policy story. [indiscernible] it is another issue that japanese officials have to deal with, stepping up assets to prop up the currency. we remember how painful it was last october when the yen fell against the dollar. despite all the doom and gloom, we have investors who have come

up to say the yen is looking cheap and is a great way to express the fact that the boj date could tighten monetary policy at any time. vonnie: what would trigger more intervention from japanese policy officials? >> mark wingfield has a fantastic post about this. he basically said watch out for the dollar again moves. -- yen moves. we saw that last year. that was the straw that broke the camels back in many aspects. officials came in to say this is not good enough, we need the yen to be propped up. we are heading into the third week of dollar yen rise in 2%.

-- rising about 2%. officials are definitely looking on a week to week structure. vonnie: thank you very much. still i had, -- still ahead, how antony blinken's visit to beijing changed sentiments. our interview with michael hart later this hour. but first, why big u.s. is showing stronger science of disinflation than europe or australia. this is bloomberg. ♪

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haidi: this is the pitcher as we set up for the start of major markets, and online in asia. we are set to open a little bit lower than the wake of losses in the u.s. sessions. those declines coming from investors feeling more cautious i had of jay powell's testimony in front of congress. we are seeing the demand for havens. the question still out as to whether we see that playing out for the japanese yen. futures looking soft across the board here. we are coming off 10 straight weeks of gains when it comes to the nikkei. it may be time for a bit of a breather. hong kong also want to watch. the leadership shakeup at alibaba is one of the stories we will be following as we get into trading.

we are seeing some gains for bonds in the early part of the asian session. our next guest says now is the time to lock in gains. catherine is a portfolio manager. are we getting long in the tooth and is it time to reassess? >> this is a good question because so many investors have been doing so well over the last three weeks and we have seen a spectacular rally in equities and i think people are nervous. there is a little bit of fomo. if you take a look at u.s. versus other regions, that makes people nervous because they know the fed is not done or at least they have started to telegraph

that they are not. haidi: which parts of the markets are you seeing where there would be further opportunities, even if they were attesting to expectations are structurally higher inflation? not just for the fed, but many of the central banks in the same boat. >> this is a good point. the thing we have been beating our hands about is that fixed-income short signals are strong. best suggests there is still room for rate hikes. i think most investors have ignored some of the potential opportunity there. there is also the fact that if you look across the globe there has been divergence in equity markets focused on tech. you start to see a recovery that

is happening in small-cap versus the nasdaq for example. some of these new themes are very interesting. we have been bearish on bonds which puts us alone in that fact. vonnie: it is treacherous waters out there. you wake up and you see housing data showing housing starts up 22%. >> that is the point. if inflation is strong and housing starts being strong tells us inflation is not dissipating as quickly as we would like. when inflation is sticky, it is painful for long-term cash flow. in the long term we will have to see a steeper yield curve. vonnie: what would you do in the

bond universe then? >> from a fixed income perspective, we have been seeing a signals. we have taken short positions in bonds for the last year and a half because rising rates creates potential opportunities on the short side. if we see more movement there, one thing investors may want to do is be cognizant of how much impact that may have if they are holding things that could be impacted by a steeper yield curve. tech looks good now but if rates go up they are also duration sensitive. think in a little bit about the potential of higher rates because that is not priced into the curve at this point. so real potential if we cease to care inflation. we saw that from the rba as well

yesterday. if inflation is sticky fixed-income is something to focus on. vonnie: thank you so much for joining us. that is catherine kaminski. you can get a roundup of the stories you need to know to get your day going. terminal subscribers go to dayb . it is also available on mobile and the bloomberg app. you can also customize your settings. this is bloomberg. ♪

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>> softbank founder says the company is in position to win the race to master ai due to its

tech investments. a seven month absence and suddenly he comes back and declares the company can still win. it was a dramatic declaration. what do we anticipate hearing today? >> i think the big thing we are looking for is one and if softbank will start making big bets again. they have been in hibernation for more than a year. deal flow is down to a pretense. -- pittance. this is a major issue for the entire start of the ecosystem. banks have been so cautious about funding companies. still has about $12 billion to deploy. start ups have been counting the months of how much operating funds they have left. it would mean a lot if tech

investors start investing again. we are looking to see how bullish he will be about this ai revolution. haidi: i guess the question is whether they go on the offense. so much of this has been the speculation after the conversation they had with sam altman. has anything concrete come out out of any of these talks? >> nothing concrete yet. he has been named drummond -- name dropping sam altman. he said they are in constant communication on how they can partner. but nothing concrete. there are a lot of ways that softbank's portfolio company

might be able to work with chatgpt applications in japan. he is ai's biggest fan and has been going on -- he is a big believer and has been promoting? he is an early investor in ai. a lot of his ai bets have been [indiscernible] but he is hopeful that some of them -- he said among the many failures there are number of bugs that will blossom fairly soon. the question is whether they will blossom soon enough. this is a company that has been bleeding money, billions in tech

start up almost at the peak and they have been bleeding for five straight quarters, losses. he will be talking to the converter today. many of the people attending our long time softbank investors. haidi: it is never a dull moment. we will be watching that closely. a preview of some of the things we have been watching. coming up, antony blinken's visit when i was his age, we had to be inside to watch live sports. but with xfinity, we get the fastest mobile service and can stream down the street or around the block. hey, can you be less sister, more car?

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>> wait to see the dollar

extending gains for a third straight day ahead of congressional testimony from jay powell which takes place later in the day. we see a little bit of stabilization when it comes to the u.s. dollar after those gains overnight and a bit of a bounceback for the aussie dollar after it lacked given the commodities selloff. there are concerns of not so in -- a minute stimulus from china and how the economy has flagged. we have seen weakness across the board of the commodities complex which plays into the risk prophecy of the aussie dollar. watching dollar china closely as well as the hong kong dollar. have that one month rate climbing to the highest since 2007, with expectations that we see that being pared back in july when it comes to banks borrowing from each other. just searching for some of those emerging markets and currencies

lacking in particular as we seek higher treasury yields granting strength to the dollar. watching the dollar yen, weakness has been compounded even as we see some of these haven flows going towards treasuries and other haven assets. but in terms of the set up for broad equity markets there is a sentiment and we have heard it from a couple of guests today that now it is time to take profit and there is a lot of uncertainty for the outlook out there. >> absolutely, and i'm glad you went through that because this chart puts the currency into the context of stocks as well because we have the aussie and the yen here. we saw a run-up and the aussie-get is a risk sentiment barometer and we have seen this turning south because the aussie is more of a risk and the yen is a haven play as this retreat

that we are seeing coming through in the last couple of sessions tells us just what kind of appetite is coming through from investors and how wary they are and perhaps the rally that we see over the quarter could be about to turn and dissipate because there has been perhaps too much optimism given the underfed -- underlying fundamentals such as recession and inflation is elevated and central banks continue to look to as high q rates. let's look at what else are watching in the session. this is one of the most attractive stories on the terminal, mark mobius has given another interview laying out his investment thesis. if you had a million dollars, where would you put it. he says india is his topic. taking a look at the moves we see from the sensex over the next few months, he says that what is driving that is that india has a lot of young population which means more workers in the market, more

economic prospects when you compare that to the narrative for china which is that focus on an aging population as well. he is buying into taiwan, korea is the third allocation, but certainly geopolitics is another focus point for him as well. >> our next guest says that the secretary of state's visit shows a clear commitment from both sides to continue to high-level engagement. michael hart joins us now from beijing. tell us about what you guys learned from the secretary of state, you got into the room yourselves for about 45 minutes? >> from our point of view, the meetings that secretary blinken had in beijing could not have been better. there was speculation that he would have met the foreign secretary and he met multiple other officials. he had three of three possible meanings and the last one was a

big signal to the business community and the chinese community that american business was welcome in china. that was really important. one of the other things to us that was a significant was that we did sit down with the business community and that was important, because secretary of state don't always meet with the business community but business is top of mind for blinken. >> there is confusion given the difficulties we have seen for the business community and china operating. and the types of things that you say the secretary said. how do make those to fit together? >> it's a big question. one of the big challenges has been covert and covid zero because china had the largest restrictions on business and movement. we were pleased coming out of covid that we could do business again. and then this spring there have been rates on u.s. companies, foreign companies which concerned us very much. every year we do a survey of

companies and they told us for the past three years in a row their number one pain point was u.s. china relations. so if we get those stabilized we will hopefully have a positive effect on companies. it is important to say number one we want business to be stable and number two to make sure to keep pressing the chinese on our behalf to make sure that this is a stable playing field. >> there has been a lot of policy uncertainty when it comes to the risk and cost of doing business. just one of those things would be how do you do due diligence as a company or a researcher without crossing the redline -- red line. did we get more clarity on that? >> this is something that sec. blinken did raise and we raise it on a regular basis so the chamber of commerce says to every chinese entity that will

listen that if you want fbi you have to let companies do due diligence. it has been a lot of consideration lately about all data being national security data. we have raised concerns about what sort of data is national security and you do have to allow you diligence companies to come and do do children's on partners, potential m&a to do supply chain due diligence and this is where companies got into trouble. we continue to ask for clarity on why these companies are investigated and what it means. and it was good to have secretary blinken here to press that message home. >> there is a conversation around de-risking versus decoupling. we have been having these debates about f riendshoring. do you see evidence of that de-risking for diversifying for

businesses for new longer committed to china and the long-term -- who are new -- no longer committed? >> it was at its largest to weigh trade ever recently and certainly the two companies -- countries are combined. we think companies want to do the relationship and when we ask -- ask them if china is their number one investment destination or in your top three it was the first time on record that the majority of companies said china was not the destination for foreign investment, not their number one destination. certainly companies are saying that they are looking at de-risking supply chains. the number of companies who say they're going to stay here is still the majority, 70% are not looking to move their supply chains outright of china -- outside of china.

but particularly over the last few years, we think that the air supply chains may want to de-risk. >> we see these visits but we also see china telling the u.s. to stop meddling in internal affairs, particularly when it comes to comments about taiwan. how concerned argued that there will be some kind of china movement on taiwan in the very near future? >> on the ground it does not look like an likely possibility, but you can never write that off. one of the things that sec. lincoln says, secretary yellen has said, is that the world needs to understand that so much trade goes to the taiwan strait, half of container ships go through there. and the majority of high-tech chips come out of taiwan. any disruption in the taiwan strait would be bad for u.s. business and bad for u.s. china trade and bad for global trade. it is a very serious issue. it is important that the two

sides are talking and any conversation is a good conversation and secretary lincoln had three very high-level meetings with really good signals for the business community in china. >> michael hart, great to have you with us. with beijing's ties to the west, mattea's house in rock says dialogue is -- matteas huttenrauch says that dialogue is super important in an interview with us. >> dialogue is symptom -- super important. we have to get back to the table. i lived a lot in asia and with the germans and i understand it is not better or worse just different. if this is the fundamental basis for talks which are taking place today that i would say maybe we can get back to a normal

relationship which would be good. >> what were the flavors of the discussions today? >> i was not involved at all, i learned that they are trying to get back to normal relationship. >> and there is still optimism in europe for the response to the inflation reduction act. what is your opinion the best solution for that ecosystem? >> not only subsidization, because it sometimes puts the market into a wrong dynamic. i think it is more the people, the right workforce which is important, the innovative culture, and good surroundings. and one of the surroundings we are looking at is to get an ecological energy because you need a lot of energy and that needs to be ecological otherwise you shift the problem further

down the way. >> he was talking to are all overcooked. stay on the ev space, tesla added $44 billion worth of market value on news that a manufacturer trip -- adopt their charging standard. giving drivers access to thousands of superchargers. tesla is becoming the industry standard with ford and gm already on board. >> coming up, france joins the u.s. and canada in the titanic tour submarine. missing in the atlantic. we have an update next, this is bloomberg. ♪

>> this is a complex search and we are working around the clock to bring all available assets and expertise to bear as quickly as possible in an effort to solve this very complex problem. to date, those search efforts have not yielded any results. >> the u.s. coast guard on the search-and-rescue efforts for the missing titan submersible, u.s. authorities say the missing sub is fewer than 35 -- has fewer than 35 hours of oxygen left. we have been following the story. garamond, there is an armada of

ships and also the equipment looking for them. do they know where it is? >> they don't have a clear estimate. they have narrowed down the search area to about, say, a 900 mile stretch outside, 900 miles east of cape cod and they have got u.s. coast guard, canadian coast guard, the french are sending a ship with a remote vehicle that should get there around tomorrow at 8:00 local time. have everybody looking and one of the things that makes this the most complex or more complex than other situations is that they are looking above water and really deep down into the surface. both of those together make it really tough to find out where exactly the submersible is. >> garamond, i am -- guillermo, a steep fare was paid for this, this sort of extreme tourism, being this down -- keep of the sea, is the regulation around

this and has it prompted conversation around whether there should be? >> that has definitely been conversation in terms of regulation, right now it is something that is relatively new. i don't think that is something that has been discussed much today. i think in terms of the discussions right now it is on search-and-rescue. those are the priorities right now and then i guess auxiliary conversation will return back to the regulation topic, presumably as soon as they have any updates on the whereabouts. so. >> we will continue to track those subelements as they become available. our reporter there with the latest on that search-and-rescue mission. >> you can hear more from the days big newsmakers and get in-depth analysis from the daybreak team broadcasting live to us here in hong kong. on bloomberg rate of plus or bloombergradio.com. much more ahead. this is bloomberg. ♪

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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. >> a couple of corporate stories we are watching this hour, fedex trailing after giving a 2020 for profit outlook low x dictations. a drop in package demand is upsetting ceo -- the ceos 4 billion cost cutting plan as consumers shift spending towards

entertainment and services. analysts were told that the u.s. headcount fell by 29,000 jobs in the past year. kkr has agreed to buy as much as 44 billion dollars of buy now pay later receipts from paypal. it allows accounts managed to buy loans originating in europe. paypal expects the transaction to generate -- generate billions of dollars in proceeds and allow them to make more purchases this year. millions of dollars in migratory fines for ubs because of rk goes. u.k. authorities could impose a penalty of up to $128 million. ubs which took over credit suisse has inherited its former rivals entire litigation portfolio.

raytheon says that strong aircraft demand shows that growth in the industry is real. gregory hayes spoke to bloomberg at the paris air show. >> probably end of next year. i would say. airbus, we try to stay in lockstep with airbus in terms of their production. they have many challenges besides engines. they have a number of shortages out there, but we work very closely, literally day-to-day with them in terms of making sure that they have engines when they need them. >> there is a huge amount of demands -- demand. is that demand sustainable, and are we seeing some of these representing overall demand in order to secure delivery slots somewhere down the road? >> indigo is a great example. 500 aircraft and on top of that they already have in order, those will not be delivered until 2030-2035.

right now, if you want a new a-320, you could talk to airbus and say they will give it to you in 2030. i am sure part of this is securing the production slots for the next decade. but growth is real. we are selling -- still seeing 4.5% growth year after year. airbus come out with a study and said that 44,000 new aircraft in the next 24 years and half of today's fleet gets retired. if you do the math that means you will double the size of the fleet in 20 years. that's a lot of aircraft. >> you bring up indigo. indigo is a good example of what people are talking about when it comes to these companies. it is a troubled environment. did that put you behind in terms of the competition supply engines or do think by the time we get to delivery of those aircraft the advantage you will have will come through and this

is a non-issue? >> the issues we are having today is the same as the competition in these very harsh operating in moments like the middle east and china you have any particulate emissions and with the increase operating -- increased operating temperatures we see problems with deterioration in turbine blades because all of these particles it sucked into the turbine and close of the cooling holes. we will fix that with the advantage engine and put more cooling and solve this. advantage comes into service late 2024-early-2025. when we come to 2030 that should be hot -- behind us. i would make two points. we know how to fix the problems that we have out there. 75% of our operators are not seeing these issues. if you are in india or china or

the middle east, they are sending a lot of plants and the is an issue. -- that is an issue. we cannot get engines to the shop fast enough. because of parts. we are averaging 70-80 engines a month coming into our shops. typically it takes us about three months and 90 days to get the turbine back out and today that is about 150 days. those two months means that there are 150 engines or so which are not out there in the fleet and plans are not flying. we have to's evolve -- solved the supply chain issues in the shops. >> you talk about the issue of heat. the was a time when rolls-royce had an engine on planes. they walked away good on that. any chance you could think about

advising the hot calls back? we talk to everybody in the industry that said the engines that came out of that were fantastic. >> that particular sin, it was phenomenal. still going. 6000 engines out there. one third of them have not even had first shot visits. it works, it is going to be a great franchise for those years. the idea of partnering with roles certainly has an appeal. the investments necessary for the next generation are going to be so large that you're going to have to have partners. >> that was the rtx ceo gregory hayes and we have breaking news when it comes to the bank of japan meeting minutes and this has been the major driver when it comes to the sustained weakness that we see in the yen. the bayeux jay said that they must support the wage momentum

-- that boj said that they must support the wage momentum, and they want to keep it with that efficient go. the revision has been made much bigger broadly speaking, we are talking about the importance of continuing monetary policy. we did see that unanimous agreement by the monetary policy committee in that decision which was, of course, followed by governor -- the governors press conference about keeping their yield targets and rates on hold as well as retaining guilt curve control policies. it tracks with so much of what we have seen and heard from the governor saying that it is possible that a big change could lead to policy change, but that caution is very much ahead. an outlier with its altar easy policy and we do see that really continuing to push weakness in the end is one-way bet.

-- again as a one-way bet. >> knew the end of the session, dollar yen is about a 10th of a percent weaker -- .07%, we talked with carson about the 1.45% mark as being a mark in the sand for traders. in terms of other currencies you don't see a huge amount of movement but we will see if that changes start the session. wait on the dollar index, and bitcoin was one of the only assets to move higher in the domestic session and it is continuing those gains now up .07 percent. wisdom tree has now filed for a slot etf and there is a new exchange open as well. the market opens in sydney, seoul and tokyo. this is bloomberg. ♪ a beach house, a treehouse, ♪ ♪ honestly i don't care ♪ find the perfect vacation rental for you booking.com,

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>> lots of testing, lots of thinking about what could go wrong, lots of research, you know, when i was an art historian, that was in the old days before the internet, where you sit in the stacks and you pull one thing from the bibliography and you put all of these things together. i feel like i do that in my due diligence.

>> this is daybreak asia counting down to patients major market opens. -- asia's major market opens. testimony on the hill from jay powell coming up and soft tanks -- softbank's annual meeting with lots of geopolitical moves as well. plenty to be considering in terms of what is going to make the markets move today, haidi. >> so much of this is down to that risk aversion, the pullback that we saw before the fed share and onset -- fed chair, and we see more strategists considering whether this is a time to part from profits given the magnitude of uncertainty. >> something dropping on a positive note is that the exports numbers coming out of korea because we have the first 20 days trade data for june and we are not seeing exports rising

5.3% on the year. let's put that in perspective because this could really be the signal of bottoming out of exports, this is what a lot of investors and traders have been tracking, this figure here, because you compare that reading their of a jump of 5.3% to where we were in the prior month and that was a drop of 60.1%. a huge difference there. again, korea exports are a barometer of international trade. the nation sells items like chips and refined oil. this is a closely matched -- tracked metric. imports still on the decline at 11.2% on the year. let's talk about the market reaction today. we have but kospi coming online -- and the kospi coming online and we have the korean won weaker today, and a little bit more of trading with currency and eight positive tone in the

prior session even though we saw weakness in foreign equity outflows. bny mellon, one strategist, was looking for a surprise and that exports figure to the upside and we did not get that because the exports rising 5.8% on the so it could tell us about that weakness in global demand starting to moderate. let's change on, because we have some lines dropping out of the boj here, these meeting minutes coming through, it portably what we're hearing so far is that the boj, one member says that 2% inflation targets are coming into focus and does that mean we are about to see any sort of abrupt pivot away from policy settings, of course the boj has really stuck with its easy policy settings even under the new governor. no, that does not appear to be the case so far. we have another boj member saying that the bank should avoid any abrupt changes in rates. have seen that japanese yen

weaker against the greenback. really a key watch here cluster that one .42 percent level -- 1.42% level, we need to get closer to that level before receipt intervention from the government beyond jawboning and statements. we are coming online a little bit weaker for the nikkei 225, but a little bit unsurprising when you put it in the context, it was a weaker session on wall street overnight. let's take a look at the outlook for australia because we are focusing in on pure political tensions. good news at least because we have a new paul out saying that australians are viewing china more favorably as china forms ties between beijing and canberra. they are starting to see china as a economic partner. still questioning that health of the chinese economic recovery and feeding into that crisis at

the start of the day, trading weaker on that level. >> let's get you need to digest some of these headlines south korea and japan and china with our next guest who says china needs to urgently announce a broader strategy to restore consumer and business confidence. let's bring in grace tam, she is in hong kong. grace, we have plenty of new stores across asia, depend seems to be one of them, india has been an attractive place for investors for some time. yet you are still overweight to china when data seems to be softer and you see -- call for more and more detail for stigmas. what can they do and how fast? >> i think there is more expectations of more stimulus packages from china, and i actually think that there is an urgency if china is to do something to restore consumer

and business confidence, especially when we look at the household savings, even this year, china reopens, but we are still seeing this -- these savings increasing. although they actually stabilized that in recent weeks. i mean, that actually shows that there is a lack of confidence, especially from the consumer and also the business side and the money is not really going to the investment markets. i think they need to do much more to restore the confidence as well as we have been seeing like for example the youth unemployment continuing to hit a record high. also from the social stability standpoint, i do think that there are needs for china to do more to support the economy. >> is a -- is it a lack of

willingness or capability? there were things that china has been able to do that they did not. >> i think it is mostly confidence. i mean, given the pandemic, and the lack of confidence and especially in terms of the policy risks and things like that. i think china actually needs to probably give a more clear signal to everyone, including domestic consumers, that they are still looking for growth. i think that for now there are actually measures to support and economy, which seems to roll out very slowly and also very targeted measures. and i think what they need is probably to have something bigger and to convince everyone

that the measure is actually sufficient to revive the recovery momentum. yeah. >> in the meantime, before we get those more convincing seamless measures, do you see the continuation of what has been kind of the trend of trade which is coming out of china and putting money into japan? if we see a bit of a correction in japan, which is typically overboard, do we see that as an opportunity to build positions? >> i think especially in the short-term with the japanese markets already having gone up sharply and for not it looks technically overboard it is vulnerable for consolidations. and for us this is actually more healthy uptrends. but in the initial term we might see, especially if we are going to see some more stimulus measures from china and also

easing geopolitical tensions. we may see in terms of relative performance china could have a chance to outperform versus japan in the near term. but this actually has to get the assumption that china announces something that investors actually expected, yet. as she has. -- yes. >> how much complacency isn't -- is in markets at the moment, where are the vulnerabilities and how do you position at this point when there are a lot of expensive evaluations out there, and broader uncertainty? ? -- >> i think right now we are at low levels and it seems to me that there is some complacency

in the market, especially on the soft landing u.s. economic scenario. and of course that we keep continuing to see a lot of economic data from the u.s. actually surprising to the upside. so. that is pushing everybody to think about the u.s. is going to achieve a soft landing. and we can still see upcoming data especially in terms of the worries about sticky inflation. i think for now especially for the fed rate, markets actually pricing one more hike in july. but if a lot of data like the labor market -- like -- labor market has, if the inflation of the u.s. it points to sticky inflation and the need for the fed to raise more, i think that this scenario is actually not really pricing yet.

so i think that could actually trigger more volatility in the market. >> you definitely prefer investment grade bonds over the less stable bond types. what do you do in terms of your bond portion of your portfolio? >> we actually prefer investment grade bonds versus high-yield because the high-yield bonds are very tight. and for investment grade, recently we have been seeing a bounce in short-term yields and longer term. we think that this is a good entry point for investment grade bonds, especially to lock in the more protracted deals and even thinking about extended duration to locate and more attractive yield. given so, the recession, in the

u.s., our best case scenario is that even though it may delay into next year, still we think investment grade bonds is actually important, diversification tools in portfolios to actually produce the overall volatility of the portfolio. -- reduce the overall volatility of the portfolio. >> think you so much for joining us from hong kong. -- thank you so much for joining us from hong kong. let's go to annabelle from hong kong and get those movers. annabelle. >> just 10 minutes into the session for sydney, saul and tokyo, and at the start of the day you're watching these trading companies closely because we had seen that big run-up to new in the prior session, berkshire hathaway planning to boost its stake in japan -- in japan to 8.5% just

over that level and saying that it could climb to 9.9%. today in the session we see them looking little bit more muted with some falling to the downside as well. unsurprising, given that when you put into context we have seen a big run-up. jeffries has put out a note saying that the stake that buffett holds in these trading companies could be raised above 10% even if they do maintain what seems to be a robust relationship. let's get other sectors in focus, we have trading underway at the start of the day and watching these chemical makers who are sliding here. this follows what happened in germany overnight, we saw the major german chemical maker -- a major german chemical maker cutting its stocks by 10%. you can see that. that was its biggest drop since 2010 and they were warning about the outlook for the company

which does not bode fell -- well for chemical makers because it is a recession trend. we see these names as well at the start of the day. finally, something that has been moving to the outside is bitcoin because we are at the 20,000 level and bitcoin has been range bound but there have been a few supportive factors coming into the market. one of those is blackrock applying for a spot bitcoin etf which could be approved by the sec, other ones that we have seen, another major crypto exchange being launched and backed by citadel, a for the supportive factor, -- a further supportive factor. but there is still a lot of uncertainty broadly in the session today. >> thank you for that. we will continue to monitor all of those movers. still ahead, we talk fx strategy with our guest, putting the aussie pair in retreat. alibaba brings back to of the

longest-serving lieutenants of jack ma to deliver a turnaround plan. details and analysis next. this is bloomberg. ♪

>> chinese e-commerce giant alibaba is turning to familiar faces to guide the company through sweeping restructuring. the chairman and ceo has been replaced by two longtime jack ma lieutenants, and our chief north asia correspondent is in hong kong. one strategy is go back to the founders. we have seen that happen a lot in these global companies. what stands out to you in this shakeup? >> investors not please. the shares and adrs were down for an a half percent. at this stock has been a bit of a dog since that high in october

28 of 2020, just before that regulatory crackdown, antimonopoly measure from the chinese government beginning and clipping the wings of this once all-powerful e-commerce giant -- giant which was in many areas of business. coming to this beginning part of the year, we had the soon to chairman and ceo launching a very wide ranging restructuring to put this company into 16 units. they are all going to be able to fund raise independently and be able to go ipo and five of the six units could be active over the next 18 months. it leaves investors with the choice of do we want growth or profit or both but very few of those divisions are poised to provide that in the immediate or near term. with the exception, perhaps of the core bread and butter e-commerce division which produced about 67% of revenue. and that is going to be led by

eddie wu, it has been as the head of e-commerce and now he's going to be the ceo. to continue that going back to the bread and butter e-commerce could be a good strategy, but where does this continue, with this new ceo overseeing as the umbrella over these six units. now he is going to concentrate on the cloud only, and enter joseph tsai. he is a cofounder of this company, he was in the parliament -- apartment with jack ma and eddie wu when they founded the company. he does alibaba intimately. but the company and the economy in china have changed dramatically. especially over the last three years. how will he regulate -- navigate this revelatory environment which is clipped the wings and

stopped them to single digit profit growth. this high fire trying to find his way again. -- flyer trying to find his way again. >> just picking up on steve's last point, we want to bring in the chain, a senior research analyst. -- willow chen, a senior research analyst. we note that as david alluded to, they are bringing back the old management, the old guard when they need new growth drivers and restructuring. >> i think this new management change is definitely a surprise to the market. and i think it is a -- not as possible dove -- positive as other people think.

we need to see whether they can reboot the company and bring a new -- new growth drive to alibaba. i think the rationale behind it is that alibaba is trying to bring the old management back to the stage again as a coordinator. you see on their announcements saying that alibaba wants to better coordinate their six business lines. so bring in the cofounder and ceo back, you see that growth was slowing in recent quarters, i think the manager previously proved that he is already a great business leader and did a good job in the previous development of an e-commerce business. i think now alibaba needs him to focus more on the business in order to fuel the growth. i think that is the rationale.

>> it's fascinating to me that he has been better note -- better known as a proponent for blockchain currencies, which are still largely illegal in china. does this give you a hint as to where that focus might shift? >> i think as the management mentioned in the previous conference calls, that will be one of the focuses of the company. they have done a lot of work that focused on the new technology to moment. that could be one of the focuses of the company. as mentioned before, e-commerce is still a major part of the company. that is why i think alibaba is still focused on e-commerce first and you see eddie wu, who

is also in charge of the e-commerce unit of alibaba, to become the ceo of the company. while the second growth driver will be their other business. ai will be a focus, but in the short-term the majority of the business will still be the e-commerce business. >> we have been focusing on how these two men are known to wall street and popular in the u.s.. but what about china hong kong and the media, will they get on with regulators and be able to talk to authorities the way that they need to in order to business -- new business? >> in terms of the ipo and other previous e-commerce work, they have been doing a great job. and these two cofounders have been working hard on that.

in terms of communication with regulators i think it will still be a smooth process and i think they should be ok on that. >> and in terms of what could be new areas for the company, obviously there interesting daniel zhang even though he isn't going to be the ceo, they are entrusting him with the crown jewel. is there something he can find that has not been found to make that unit the growth generator that it needs to be? >> i think for the cloud businesses, the internet business has a, that is why we see from the previous, alibaba started to mention the growth of businesses outside of the internet sector, and this is kind of the space that they will try to export a bit to explore the growth and consolidate this

current advantage where there is an internet client. this should be a focus for them in the future. shares up 70% since 2021. thank you for joining us. plenty more to come on daybreak asia. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh

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day in bavaria for schultz and the chinese delegation this was a meeting much more about signal that substance. a few mou signed here and there but really about beginning the stocks started during the markel area at the highest level in order to get a dialogue going once again. the backdrop is very different from the markel area where the message of germany has been de-risking. but don't decouple. leaving many companies with huge exposure to china caught a bit in the balance. i spoke to some of the ceos at the business lobby event including vce atl -- the ce atl. >> dialogue is important, we have to get back to the table. i left a lot in asia and the germans understand that it is not always better or worse it is just different and you need to live with that. this is the fundamental for the talk which is taking place today and i would say that we are getting back to a normal relationship which would good

for all of us. >> all of the ceos watching carefully to make the decisions of the investments for the years to come. >> oliver crook in berlin there on the chinese premier's vision -- trip to german. and we see european futures opening up, and asian equities declining following loss on wall street. a lot of tension ahead of congressional testimony and concerns over a lack of stimulus from china. european stocks falling in the previous section and we see a lot of upside when it comes to futures and euro stoxx 50's futures strandings -- trading at

>> we do have westpac and

leading the index crossing the bloomberg there. we see that month for the month of may here contracting to 0.27% rating if -- after a flat rating in the last month. this is a gauge released by westpac and the mellon institute showing growth at a contraction of 1.1 percent. some of the major contributions if you recall when it comes to this broader economic index include how the stock market has been performing, u.s. industrial commodities prices, that is one of the big ones and we see that continue to decline out of china. at the hole in -- and the withholding of stimulus measures could create a bit of a turnaround when it comes to commodities exports out of australia, the yield spread and monthly hours worked as well as

some other components that really make up the westpac leading index which is a broad gauge of growth for australia over the next 6-9 months. we continue to see that really showing a bit more of a slow down of course all of this is feeding through what the arpa can do next. watching the aussie dollar as well, which did see some weakness in the previous session and we have seen more of a turnaround now as weak are getting into the asian training day. sticking with fx, our next guest says the u.s. dollar could move higher, especially if this data shows that usa to any remains strong and we could see more fed hikes. let's bring in the head of fx research at her firm, we see this divergent see when it comes to outlooks, rates and inflation expectations driving more weakness in the end.

>> i think in the short-term we do expect yen momentum to continue, touching that mid-140 level. i think that is really low, and investors are taking advantage of the trade that we seek, the terminal rates in the u.k., europe continue to move higher and that differential continues to widen in favor of or out-of-favor of the and in the near term. we to expect at some point that we will see some sort of strengthening and narrowing of differentials, that is probably an end of your story. -- year story. >> in terms of the aussie dollar does this hinge on whether we see turnarounds in commodities? >> we are trading that -- have been trading in this range for the longest time, i think there has been a lack of conviction. we did see them reach that 68 degrees mark -- 68 marked last

week on the back of positive china news which we have not seen as of yet. we did have that meeting which came out with no news is good news on the fiscal front. he has been underwhelming. we need to see a little bit more news out of china to see that positive reassessment in the aussie dollar and kiwi dollar to drive it higher. we do have the rba which we think will continue to raise rates and terminal on the back of a strong labor market which would be balancing the aussie towards the upside towards the levere. -- end of the year. >> what is going to happen to the dollar when we hear the fed chair, is he going to rerate hawkish comments and smooth the market? >> think he will.

i think people try to sort of remain hawkish, we already had one rate hike pricing and if we see continued improvement in the pmi's this week, we have seen starts coming out very strong, we sort of have this indication that the fed may have to do more and there is upset risk to our expectation of the rate hikes, one rate hike in july, and more ahead depending on the data that we see. >> we have not seen those hikes make massive effects on the u.s. dollar, right. it has been stunning actually, we have seen plenty of effects and -- in the rates markets and not quite on the u.s. dollar. is there going to be one? >> i think it is interesting. at the earlier part of the hiking cycle we saw fx being sensitive to the rates market. the sensitivity of interest rate

expectations or yield movements has decreased and there has been a diminishing trend. i think now, as most central banks reached the -- reach the end of their hiking cycle, the currency will be driven more by rules differentials rather than the rate cycle because markets have to expect a much higher terminal rate than many of the other economies but that is not really reflecting. i think that is a good story there. >> are we entering an era when the possibility of intervention becomes something we need to watch out for particularly pertaining to if we get to levels of the yen which would be seen to warrant that intervention? >> with the yen last year we saw intervention the first time around at 41, 46 or so. but despite that intervention,

you can argue how effective that was, because we have to push that out there after we have to wait to see whether the boj steps in for the dollar yen to move from that 1-41 to that 142 mark. we need to see the difference between them and the u.s. to widen and that will be dependent on the data at the pmi's, and powell's testimony as well. i think that could be eight key driver and we need to wait to see whether the boj will step in. >> give us your favorite pair over the next quarter or so. >> i think with currencies, looking at a convicted new on the dollar rising in the short-term. we think the dollar will strengthen little bit. we just need to see how the dollar behaves post rate hikes

and one year into a pause or one year into the rate hike cycle we feel a weaker dollar will probably continue into 2024. relative to the other major currencies. >> thank you so much for your time. the head of the fx research at ainslie mag. that's have a look at how markets are moving out across asia and annabelle droulers is following those markets. >> taking a look at one currency pair in particular, the u.s. dollar versus the korean won because we have those trade numbers coming out at the top of the hour, green shoots coming from the data exports. more details on at -- that ahead. looking at where we go ahead, we see the outlook of the dollar is looking for a further softness into the second half as we see u.s. inflation start pullback and we approach the end of the fed tightening cycle.

hsbc, among those saying that the korean won will gain in the second half of this year, just how much, their expectation as they see it is at $12.40 per year, and down by 2024. we will be watching quite closely. the one is a barometer for us of risk appetite. >> thank you for that. let's bring in bloomberg korea economist. let's go back to that data we got just a few minutes ago. how do you read the data, good news? >> yes actually. headlines, with the first 20 days of a show of surprising positive 5% increases and a daily shift on average through the first 20 days, that is fairly positive. actually, we need to see how the

data will play out doing the month because during the last 10 days, data shows that high volatility but so far it shows that week have creative exports positive for the first time. >> does not meaningfully change the growth outlook for this year -- that meaningful change the growth outlook for this year? >> we need to see, because the exports in korea seem to have turned around in the first quarter and in the second quarter, they seem to be getting more traction. but if you see the external environment, especially the major trading partners like china and the u.s., actually, the economic situation is very favorable.

especially china is already cinched to run out of steam. with its recovery. while the u.s. because of the higher interest rates, will seem to kick in so that it will lower the growth so that it is a very high uncertainty on how it will they to a positive impact of the economic outlook. so far since -- it's good. >> what about a weakening growth outlook, with that lead the bank of korea to cut rates -- warned that lead the bank of korea to cut rates? >> possibly, probably but not so much, i think, because that --

the bank of korea sent a clear message after the last meeting that their priority is that they are rain inflation. and inflation -- and reining in inflation. and inflation is much higher than the 2% target. so the bank of korea will focus on inflation stabilization. and so, actually, if that weakening growth outlook can lead to change in the bank of korea's policy, it can have a negative impact on the inflation and if you can lift some inflation preferred -- pressure, it could change policy. but so far i don't think it can change a lot. my view is that the bank of korea will hold its policy rate

throughout the year. >> are bloomberg korea economist joining us. come out, the world's biggest battery maker facing a labor shortage as it seeks to ramp up production. eight interview with ctls europe ceo is next. this is bloomberg. ♪ how can you sleep on such a firm setting? gab, mine is almost the same as yours.

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>> let's get a check of markets across asia as they come online and continue to open, the nikkei up 1/10 of -- .01%, got minutes from the bank of japan back in the market but so is the weaker yen. that continue to impact markets at the open, trading, not much

changed versus the u.s. dollar but weaker by less than 1/10 of 1%. -- .01%. the kospi is down .4%. we saw prices rising 4.3% month over month. plenty of information out of south korea, core inflation really continuing to be a little bit of a problem for the bank of korea. and then the ctx down .2 -- .02 percent and new zealand is unchanged. in terms of other assets we are watching we will be watching very soft commodities trading in the last day, two days. on a lack of detail on stimulus from china and soft data out of china which does not bode well for demand for commodities. >> of course, we are watching china for a variety of reasons,

after antony blinken's successful visit we could qualify that is that, but also more stimulus. we are watching see ato, this is of course the battery manufacturer, the world's biggest in fact saying that the labor shortage in germany makes ramping up production of european battery plants a challenge. we spoke to the europe ceo saying that dialogue is important to improve ties between china and germany. this comes as the prime minister meets the premier of china. >> i think that there is no way around dialogue, dialogue is super important to get back to the table. i wish sometimes, and the a lot asia, -- i looked a lot in asia, and germans understand that it is not worse it is different. this is a fundamental portion of

the talks that we are taking today, and that could be good for all of us. >> were you involved in discussions yesterday or today and but where the flavors of those discussions -- what were the flavors of those discussions? ? >> i was not involved, but we heard that everybody has the same interest to get back to a normal relationship. >> and there is optimism for a response to the inflation reduction act as a market leader in cell technology, what can you do to nurture that ecosystem they want to bring to europe? >> i don't think it is only subsidization, because subsidization sometimes puts the market into a wrong dynamic. i think it is what you said. it is more the people, which is very important. an innovative culture and good surroundings. at one of the surroundings we are looking at is to get ecological energy because we

need a lot of energy and that needs to be ecological otherwise we shift the problem away. >> that was the see atl ceo talking to oliver kurt. tesla added $44 billion in market value on the news that a rival if you maker will adopt they are charging standard. this will give drivers access to more than 12,000 tesla superchargers across the united states and canada for next year. tesla's network is becoming the industry standard in north america with ford and gm already on board. and be sure to tune in to bloomberg radio, you are going to hear more from today's big newsmakers and get in-depth analysis from the daybreak team. that they are, broadcasting live from our studio and hong kong. you can listen by the outcome a radio plus or bloombergradio.com. demar ahead, stay with us. this is bloomberg. -- plenty more ahead.

same with us. this is bloomberg. ♪

>> corporate stories we are watching this hour, fedex fact in late trading after giving a profit outlook below expectations. it shopping package demand offsetting the ceos for billion-dollar cost-cutting plan. this comes as consumers should

spending away from fedex. the u.s. headcount fell by 29,000 jobs in the past year. kkr has agreed to buy as $43 billion of buying out a later loan receivables from paypal. as part of a loan commitment which allows private credit funds and accounts managed by kkr to buy loans for by paypal in france germany italy spain and the u.k.. it will trend like -- generate one point $8 billion in proceeds allowing it -- paypal to do more repurchases. ubs is facing rick and finds over credit suisse. the fines over archegos may be as fought -- high as 300 and million dollars. reagan tory buddies could create fines of $183 million. ubs has inherited their entire litigation portfolio. >> jp morgan might be making

layoffs in asia, telling them that there could be 20 investment banking jobs on the chopping board. let's get some more details. we see continued pressure when it comes to investment banking teams, not just in general. >> this example does seem to be affecting junior level ranks and that seems clear at j.p. morgan. 20 is not huge, but incrementally it is part of an ongoing process that many investment banks are facing. having to shriek down teams in specific areas, especially because of the headwinds facing the industry and that are growing. the decline that we have seen in m&a transactions, declining as the transactional volume, it just means they met -- need less people to handle this. it speaks to a far tougher climate as we go into the second half of this year and no signs of a recovering their in terms of some of these businesses coming back. but if we do come out with

activity growing again there are some areas that these businesses will look slim in. it is another example of banks wanting to slim down in these areas so that they are fit for purpose going into a slow economic environment. >> you have thought particularly if you are at junior level that banks would want to retain talent. as that indicate eggs have no at -- banks have no confidence? >> indeed. at the junior level ranks, generally they would be cheaper for me salary and overall compensation cost. but i think it does mean that there is a large degree of caution around how the economy and the areas of these banking businesses and how that plays out in the second half of this year, there is a lot of debate around what the level of interest rates will be, whether the fed will have to continue on its hiking path or if it will

have to make another couple of moves and then move into an aggressive cutting cycle. of course, banks cannot wait for those things to play out. they have to get ahead of that and that is what we have seen for the best part of 12 months now where a lot of these moves started in the second half of last year and across wall street investment banks wanted to scale down in particular areas that were going to be hit and firms showed no signs of improvement just yet. >> thanks for that. that is our finance editor adam haigh on those job cuts. south korea is -- softbank is up 3.75 percent, it's going to be an interesting day today, and its ceo disappeared for seven months, but he came back roaring with plenty of ambition for the company, and absolutely no sign of him backing down or going on the defensive.

>> a months long silence being broken up and even with the woes facing vision fund, when he speaks the market listens. we have seen if the biggest tech investor would ever go on the offensive again and that is really the question, the theme coming out of this. will they go on the offensive because they have taken that defensive posture for so long as we have seen that debt laden loss showing the parent company really struggling through. this is based on focus when it comes to prospects for arms that have been looking up as a result of all of the enthusiasm over generative ai. that is one event we are looking for to. but that is it for daybreak asia. coverage continues ahead at the start of trading in hong kong and china. this is bloomberg. ♪

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