haidi: good morning. we are counting down to the major market opens. shery: good evening. top stories. fed chair signals higher rates but at a moderate pace telling lawmakers two more hikes this year is a pretty good bet. haidi: u.s. stocks slide on that hawkish message. the yen at a seven month low amid signs of wider policy diversions. shery: the boe could be delivering a jumbo hike after a shock u.k. inflation number. the brazilian central bank kept interest rates steady. haidi: look at u.s. futures. not a lot of movement. this is after the s&p 500 lost ground for a third consecutive

session and fed chair's comments not helping sentiment. nasdaq underperforming. chipmakers week. it's not just the fed, it is crowded, bullish positioning. also some stretch valuations giving does rally a run for its money. we are seeing treasuries mixed. two-year yield high. we ended at the 3.71 level. crude prices under pressure in the asian session after rising in new york. signals of strengthening demand from asian buyers. we are watching brent at the open because futures rose above the 50-day moving average. that is coming online in about an hour. haidi: let's get more on her top

story with fed chair jerome powell flagging further rate hikes at a more moderate pace. shery: let's hear more from his testimony before congress. jerome powell: the process down to 2% has a long way to go in nearly all fomc participants expect it will be appropriate to raise interest rates further by the end of the year. shery: let's get the latest reaction with our bloomberg reporters. let me start with you, emily. what did we hear from chair powell that was so surprising? anything we could take away given that the message seems to have been hawkish for a long time anyways? emily: this is what he was hammering home bet higher rates are needed to combat inflation and again this message when he talked about two more rate hikes this year is a pretty good guess, that was already in the. plot -- dot so -- plot a wide

stocks fall? we were up so to see weakness is not surprising but i did ask a lot of sources you know what did he say here that could have caused this choppiness in the market? again, it was reiterating that hawkish message and he is just driving it home sick and that we are just not done yet with this tightening cycle. [typing] haidi: this does not help the weakness we are seeing in the yen. this is driving home the deeper policy divergence between the fed and the boj. >> yeah. absolutely. it is the key driver of the and direction over the past few

months the yield gap between the boj and fed and what is interesting was the direction of the dollar following the statement before congress and actually retreating against most of its g-peers but the yen stood out as the exception when we passed that 142 level. the question is when the yen yen is we could not only against the greenback but we are also talking on the trade-weighted basis against the euro, the british pound, is there need for intervention? we had jawboning from japanese government officials but to see something more concrete where the government actually steps in to defend the weakness in the japanese yen a lot of strategists markets traders are saying you have to get beyond 145 the level to watch before we see something a little bit more formal. rate the question is what happens to other central banks -- shery: the question is what happens with that the central bank given the policy diversions.

you were talking dollar-yen, but other currency pairs are seeing new records given this diversions. annabelle: absolutely. pound-yen is one of the most closely tracked crosses of the week and we have seen weakness in that currency and we have the boe with its rate decision on thursday and expecting from most economists and investors in the market is another raised by 25 basis points to four foot -- 4.75%. when you look at the big central banks there is talk about the fed and the ecb and the action would you take a look at the other g10 central banks a lot of these are still guiding\, switzerland, they will be watching those banks in the session i had to date and other central banks and focus perhaps more of the interesting ones in the emerging market space under course under you have the details on this one but it is turkey's central bank decision to us what the first central decision since president erdogan was elected -- reelected as

president and has replaced his entire economic teams of the tells us that again there could be a lot of tightening coming to turkey philippines indonesia and two other central bank's and a should they both expected to stay on hold. haidi: we have seen some traders timing the market well. we see these huge redemptions up at the nasdaq qqq just as it started falling. >> for all the traders missed out on the tech rally earlier to start the year, they now seem like they know how to play this technology market. we saw on the qqq etf have its biggest daily outflow in 2023 on friday as the fund started to fall, $3 billion out of that fund and traders continue to leave the fund and we saw another outflow of $1 billion tuesday another fund is down about 2% since friday some fund may it seems like at least some investors -- finally it seems

like at least some investors have time this trade. we know that we are attention rebalancing so perhaps there is a large fund unloading those technology shares that have rallied so much outperforming every other equity sector at least in the u.s. and there was a lot of options activity on friday when we had the triple witching on the opex, so perhaps some activity in the qqq a large trading vehicle that investors use of this flow could have had to do with that but regardless if there were investors who exited the fund, they have timed that well. haidi: emily in new york. annabelle in hong kong with the latest on the markets. uh in china has begun a fresh -- and chain -- china has got a fresh run inspections to determine how much local governments on a sign that authorities are taking concrete steps to tackle the key financial risks and sources say local officials will be pressed

to come clean about hidden debt as national leaders attempt to get a fuller picture of liabilities which we know have only built as a result of the cost of maintaining covid zero. but still ahead we get a closer look at the indian prime ministers u.s. visit and the center for strategic and international studies tells us how impact will be between nations and the permanent partnership at first, we hear why one market outlook is that the strength is here to stay. get more on that. this is bloomberg. ♪

jerome powell: inflation pressure continues to run high end the process of getting inflation backgrounded to present has a long way to go and we are very far from our inflation target of 2% and we are strongly committed getting inflation back down to 2% over time and nearly all fomc participants expected is appropriate to raise interest rates further by the end of the year and early in the process, speed was important but not important now and given how far we have come it made make sense to get rates higher at a more moderate pace. haidi: jerome powell speaking to lawmakers. rate our next guests thank that there is a risk the fed does not recognize it has done enough rate hiking over the past year. our chief investment officer joins us now and you heard the chair himself it seems higher for longer is the path they're willing to take. does this increase the

likelihood that a soft landing may not be also bought and what does that mean for the markets if this can also imply potential rate cuts to come? >> right. obviously those clips you put up with jerome powell sounded emphatic but i would point out that has been the case with jerome powell and friend for a long time now and they don't always the date it does not always come through and support what they think they would do. i mean i do strongly think that the highest rates are now in the rearview mirror and the fed will not raise again. they may not think that is now but their view may change and inflation has moderated and is moving in the right direction and economic growth is not too hot and the banks have tightened standards that is putting a break on the economy in money supply is declining and i think all of these together means the fed's estimate that another 50 basis points in tightening between now and the end of the year will not happen, and that thesis is that point of view

because more -- becomes more common that will support stocks are the rest of 2023. haidi: despite the narrow breadth and valuation concerns and all that what sectors do you see more potential in? >> the rally needs to broaden out domestically. there is no doubt about that. the majority of stocks in the s&p 500 have that and as you pointed out they have been underperforming the overall index. that is not uncommon at the start of a bull market rally. it does generally signal that we could have relative underperformance for the biggest stocks relative to the rest of the market but that does not mean big stock price declines for those big tech names to some inversion to the meeting across the market and we are starting to see that in the past couple of weeks, the breath of the s&p 500 has certainly broadened out here domestically. haidi: when you look at the pullback we are seeing in tech,

do you think that for a longer-term investor this is a good time to get more exposure if you're still going to be long the ai trade for years to come? >> we are constructive. ok so there are a couple of parts of the question yeah so ai that is obviously pretty exciting thing and i do think -- [inaudible] -- is coming. we look at those in two buckets. the first is a high infrastructure cloud players like amazon, microsoft providing the large language model infrastructure um will continue to be strong and we think that can last. what that also points out though is the u.s. relative you know to all the other asset there so we do like big tech and ai and think the u.s. can be strong but we also like to point out to your viewers, don't miss out on what is going on internationally. there is much more going on in

international develop. most people are underexposed and that's a great way to get alpha in your portfolio while reducing risk. [typing] haidi: talk to me about international. where are you looking for diversification at this point? >> so yeah internationally we have folding rates in our view in the united states and what that means is that falling dollars so that points us to look internationally and when we look at that again emmett those things are some -- again, those are somewhat overlooked. we were just talking about the rally in the u.s. and how it has been narrow, if you look internationally, it has been broader, that equal weighted index is well up over 20% so that has a lot more legs, so we think broadly looking at developed countries in a broad basket um because it's hard to pick which country will outperform the best but those average international stock um

etf's in the developed markets will outpace and um in and move up and down at different times than the u.s. stock it -- and and move up and down at different times in the u.s. stock market does. bloombergradio.com. [inaudible] haidi: what are you doing and bond markets at the moment? you say locking in treasuries? >> yeah so what is going on with bonds? again we think the highest rates for the u.s. are in the rearview mirror sunblock in those treasury rates that have gotten so juicy recently that also an asset class doing quite well as high-end corporate bonds. we like that for better total return in the fixed income arena and many of those high-yield issues will not have to refinance over the next couple of years and their fundamentals are strong so they will be able to weather the debt service requirement going forward and it will be a benign outlook in the u.s. in terms of the economy so in fixed income, locked in what

you can end the treasury market but look more broadly for better total return in corporate bonds. rate do you look at sovereign bonds as well? interestingly this past couple of months we have seen a lot of gains when it comes to junk rated sovereign bonds. >> you bring up a really good point. we do less than that because it is a smaller part of what we focus on but yeah, we have got um high-yield corporate bonds i am speaking more specifically here in the u.s. for um bonds individual bonds and etf's in the u.s., less so internationally although there are opportunities there, we are just not as focused on those for our client at this point. rate one shery: of the reasons i shery: mentioned the spaces because we continue to see this the vergence and not just in monetary policy itself but expectations -- the vergence not just monetary policy itself but expectations will these economies will go faster than advanced economies, right? we talked about brazil holding steady in the bop expecting a

hike -- boe. expecting a hike. what do you expect around the world and where you could gain opportunity and exposure? >> you are bringing up something that has been overlooked a lot which is what is going on, it would be central banks in these other countries, in particular emerging countries really raised rates first as you pointed out brazil for example, and it will be thousand emerging-market countries that will probably be the first place that interest rates are cut. that typically means growth um faster growth and improvements in their bond prices. the way we play outside our borders is more on the equity side, so emerging markets looking for that growth opportunity that will be accelerated by the fact we are having interest rate cuts so yeah, there is a fixed income play but where you can get rewarded outside our in emerging markets is probably on the equity side, stock pickers came

as well as it diversification for emerging markets now. rate do you take into account currency fluctuations? >> we take into account currency fluctuations to the extent we have the view that the dollar will fall in has been falling and the reason is just as macro view that interest rates are declining relative to the rest of the world in the u.s. and for that and what that does is put pressure on the dollar and that improves opportunities outside our border and when it comes to specific currencies we are not making a call on any of those in particular but we do think a tailwind for a lot of the international developed as well as emerging market countries asset classes that are out there. [typing] haidi: we appreciate your time. you can get around of those stories. terminal subscribers can find bet on the terminal. you can customize the settings to get the news on the

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haidi: time is running out for the five people on board a submersible that went missing on a mission to explore the wreck of the titanic. paul allen joins us with the latest on the search in the underwater noises detected in the area on wednesday that gave you know a shot of hope but what do we know? paul: it is still a search and rescue mission and you have to remain optimistic and hopeful in those underwater noises were detected 19 hours ago, a banging noise detected by a canadian airplane involved in the search but acoustic analysis is underway and irving to be very difficult in the noises themselves cannot be identified

so a very slim hope there as well but the search area so huge, 5000 square miles, 13,000 square kilometers and four kilometers deep as well and when you consider the time factor, contactless and sunday one hour and 45 minutes into the mission, and best estimates are the people on board has 16 hours of preverbal air left. -- breathable air left. rate what concerns are being raised now -- shery: what concerns are being raised now? paul: all sorts of things are bubbling to the surface. one person said he was sacked for raising safety concerns and thought it posed an extreme danger to passengers. the same year there was a letter from a society warning about the approach by oceangate that could have catastrophic outcomes but even the company founder stockton rush on board that

submersible that has gone missing called safety and a 2022 podcast on "pure waste." there was another story from a german adventure who went on the voyage in 2021 who described it as a suicide mission and said there was loss of contact with the surface of that voyage as well and there were electrical problems. a bracket that was holding onto his stabilization tube was reattached with zip ties and he considers himself lucky to be alive. as for oceangate, no comments about its safety record so far. it haidi: is interesting because one of the stories talks about how this founder of the company which owns the missing submersible saying that safety is pure waste and if you want to just be safe don't get out of bed until getting -- get in your car and don't do anything he said in 2022 on a podcast on cbs. does this lead to bigger questions if there is any regulatory safety or oversight given that we know the sort of extreme you know exploration

they talk about the sea or spaces becoming more popular? paul: that is true. oceangate pushed back somewhat when it came to regulation and felt it did restrict development in this new area. interesting in terms of space there is a moratorium in place that prevents the faa regulating around tourist safety when it comes to space exploration at the moment and that is designed to encourage experimentation and push the boundaries, a similar scenario to what the aviation industry had way back in the early 1900s. that moratorium expires october 1 this year in terms of space exploration and we are talking about two different things here of course but it will be interesting to see what happens once that deadline lapses. haidi: paul allen joining us from sydney. rate here are some stories in the tech space.

shery: softbank's vision fund is preparing for another round of layoffs as soon as this week. a source has about 13% of the vision fund staff will be affected following a roughly 30% reduction last fiscal year. we were also told the headcount reduction will mostly occur in the u.s. and the investment unit had 349 people globally at the end of march. the u.s. federal trade commission is suing amazon alleging it duped consumers into signing up for his $139 a year prime membership service and also making it deliberately difficult to cancel and the ftc has recently targeted subscription cancellations proposing a rule in march that would require companies to make it as easy to cancel as it is to sign up. bitcoin has jumped 20% since blackrock's surprise fighting last week for a spot bitcoin etf in the u.s.. rival issuers have filed similar applications amid speculation that blackrock has key insights

to get the sec approval. the regulator has repeatedly rejected findings for a spot bitcoin etf siding progress. haidi: we have more to come here on "daybreak: australia." we continue to see a mixed picture when comes to the future of space after the s&p 500 lost ground for a third session and futures down a 10th of 1%. this is bloomberg. ♪

>> i agree that they should not

have to be burdened by the same requirements that large banks are and that they should be able to thrive in these committees without the burden of significant regulation. >> so as we think about capital requirements we are always or i will always be thinking about the trade-off between making things more resilient and sound and credit availability. jerome powell: with regulation we are learning we have to update our thinking around liquidity regulation which was based on a certain speed to bank runs which now looks to be outdated. really the liquidity regulation was not was not appropriate. we need to have stronger regulation around liquidity and uninsured deposits. haidi: fed officials speaking to u.s. lawmakers on bank regulations. christopher whalen joins us now from new york.

great to have you with us. we did not hear anything new necessarily from jerome powell but certainly hammering the point home we know that a lot of this is still data dependent. should this have moved the markets more or less do you think? christopher: he said a couple of things. jerome powell always does. he told us he is not in any hurry with respect to future rate hikes. in other words, it is not as urgent now as it was six months or nine months ago. the other thing is i think that walking back some of the rhetoric on banks and you heard him talking about liquidity management, so that's not about capital. it is about having banks think a little bit harder and better on what they -- four liquidity, and you look at silicon valley bank where ore than a third of banquets and mortgage backed securities during low interest rates -- that was a suicide mission, so that is where they will focus, which is good, but i

also think for jerome powell it is a fixation bike past chairman of protecting the independence of the fed and he sees getting inflation right in nicking up for some past missteps perhaps as a way to do that, so that is really what the narrative is about right now. haidi: you also said that chair powell should pivot the bond sales. what is the rationale there? >> well, pull up the yield curve on the bloomberg. [laughter] >> what you see is after short term when we get out two to three years, it is just dots down to the threes, and it evidences the fact that the fed on strains of dollars in paper particular in mortgage backed securities which went from an average life of two to three years and 2022 an average life of 12 to 15 years today. so that is what is wrong with the market and there are a

variety of reasons why the fed has not embraced sales. they are already losing $1 billion a day on the reserve accounts, so you know they are running a lot of pieces right now on the table and it is a complex balance sheet and i think jerome powell is being careful but i worry they are being overly cautious. i would tell the fed to new york to sell every time the market tightens, and it is tightening now was spreads at the six-month tightest we have seen so when you see that and remember, we are not doing that many mortgages this year in the u.s. it is a tough year for the mortgage industry. we would do may be 1.5 trillion new loans this year so there is a scarcity of paper in a funny way and i think the fed ought to take advantage of that and so and to strengthen at the very least they should hit the $35 billion a month cap which we are not hitting now. [crosstalk] that should be there mandate.

raterate we spoke with our viewers and we want to update it with the global look at yield curves are flashing recession signals most of the major economies of course. what happens with quantitative tightening globally once it starts biting? what happens to the markets? we heard a couple of weeks ago that bnp warned it could take a 10% hit the liquidity and that would translate to declining stocks as well. christopher: well in each central bank if you have a government tied to that central-bank that is running a deficit, as the government paper that the central bank purchased previously rolls off, the central bank has to almost immediately or the treasury, excuse me, has to reissue the debt was that that is the situation the u.s., every dollar paid off during covid for example is a deposit the disappears because treasury has to go out and refinance that piece of debt, and so an

investor buys it. same thing with the money market fund. a money market investor sells their fund shares and goes out and buys t-bills in a fiduciary deposit somewhere disappears, so if you look at the schedule, were talking about half $1 trillion rolling off the banking system between now and the end of the year in the u.s. and part of it it is mechanical which is the treasuries and the mortgage backed to the extent that they repay and they are paying slowly now, it does not impact banks as much and we are not having to go out and refinance that paper, and that is a big difference. haidi: what do you make of the narrative that there is so much cash sitting on the sidelines from just even retail investors who have not put that into the market that that could actually provide some buffer? christopher: well, i think that is right. if investors are given a choice and have tebow rates across 5%, a lot of caches going into them

in the reversed mortgage repos gave him an earning asset like a tebow, as that rolls off, they will buy t-bills and you will see some in stocks. i mean my banks are still well down from where they were six statements ago but you have had a pretty remarkable rally in recent weeks. i just am think there are much legs to it because ultimate we will give up value this year and you will see credit and you will see losses and securities, those very low coupon securities that banks on, and there are not many deals -- way to deal with them. when jerome powell was talking about better risk management, having mortgage backed securities at 2% is horribly volatile and you can't hedge it and a security cannot unsafely and yet it has a aaa rating. [laughter] in a zero risk weighting under -- so this is the world we are living in.

rate good to have you with those. let's stay with the fed and perhaps bring in a slightly different perspective. kkr's sing investors are being too cautious even though the macro headlines are daunting -- saying investors are being too cautious even though the macro headlines are daunting. where is kkr's sing opportunities now? annabelle: it is about how kkr is judging the outlook and they are being contrarian because are expecting two things, first u.s. growth will be stronger than expected and inflation likewise will be tamer so they say you need to position for assets that have collateral protections, saying look for things with steady cash flows, assets backed by aircraft leases, mortgages and also we had an interview with the chief macro strategist henry mcvey saying that investors should be boosting cash holdings and look for any opportunities that arise given that we have seen volatility

after the banking issues in the sector in the u.s. and the other central-bank moves as well. he says yes the macro headlines as you say are daunting and he says the most daunting he says in his 31 years in finance however he is saying we have seen the bottom now for u.s. stocks on a cyclical basis. haidi: what about emerging markets opportunities there? annabelle: if you take a look at this chart it is the outperformance we have seen on a pe faces relative to the nci emerging markets index on a cyclically adjusted basis and you concede that we have actually had that relative valuation of u.s. stocks that outperformance looking stretched now and it has started to ease somewhat so there are some investors in the market saying we are starting to see opportunities particularly when you have emerging stocks looking so cheap so there is for instance the quant fund out

there saying aqr capital management saying we will see emerging-market stocks outperforming u.s. stocks for the next decade or so, saying if you have emerging-market stocks looking their cheapest in 25 years and that alone is justification for buying opportunity but i do feel that it seems every year we come into the start of the year saying the same thing, emerging markets will be outperforming and we still have not seen it quite yet. rate yeah underperforming into -- shery: yeah underperforming into a six trade year but it seems a lot of that narrative hinges on the fact that some of the central banks and emerging markets have hiked rate so much faster than he fenced economy so perhaps they have more leeway and they might have rate cuts coming sooner. we are watching the brazil central-bank to date leaving its benchmark rate unchanged at 13.75%. reaffirming its commitment to meet their cpi target so there was a lot of expectation that perhaps we could see their

hawkish stance being diminished of little bit this time around. they did in fact downgrade their cpi forecast for 2023 to around 5% with that part estimate at 5.8%, but they are still saying they are holding the key rate for long and that is adequate. of course very different picture when it comes to brazil's backdrop with perhaps turkey where we are expecting a greatn. haidi: yeah that turkey decision is a bit of a wildcard in terms of what we can expect right? it could be really constrained by fiscal and political issues there, but wall street looking baffled as to what to expect but if we do get that rate hike from turkey it would be the first time in over two years and could mark the start of a gradual normalization and policy, and this is something investors global investors have been watching out for potentially with the kind of drama bright coming to a head when we get

this first interest-rate review for the first time since president erdogan went to reelection in may, but the other missing puzzle piece when it comes to this is the impact of china, traditionally really you know on emerging-market anchor and we see really the economy flailing in the absence of more meaningful stimulus and effective stingless too? right it is never dull when it comes to emerging markets but an exceptional week. shery: no wonder we saw the offshore top that level against the u.s. dollar. a lot of weakness versus the greenback but going back to what happened with the lira, look at currencies trading today pretty steady despite the fact we might see that interest rate hike that comes on the back of double-digit percentage losses for the past month or so and $200 billion spent by turkey in order to support the currency in the last 18 months, so the

expectation is perhaps the turkey has nowhere else to go but towards a more orthodox economic policy. look at the brazilian reality, we saw a rally this week of a -- currency, we saw arrived this week of 1%. i want to see how it opens tomorrow because the brazil central-bank did not drop the hawkishness that economists were expecting. take a look at the colombian peso as it managed to strengthen and rebound today. earlier in the session it was hit because of trade deficit numbers that narrowed less than expected but you have to put the colombian peso into context. it is the best performing emerging-market currency this year. the economy faces pressure from slowing external demand. i spoke exclusively with the finance minister and started by asking him about the risks ahead. >> we are also facing challenges here like the rest of the world we are being impacted by reduced

imports particularly of intermediate goods and durable consumer goods. our concern is to what extent we can replace them with the domestic production. that is what we are struggling with the issue of, industrialization. rate still, -- shery: still, the colombian peso has been strong this year. how has this been affecting your monetary policy? >> we have reached an exchange rate that has stabilized between 4100 and 4200 and have a reduction in the inflation rate and it is expected this means the benchmark rates will remain stable this month. currently the benchmark rate is above the rate but into or three months from now we will review and it may be appropriate to start lowering it because we aim to achieve the 9.2% inflation rate. rate we have -- shery: we have seen central banks in economies

that pause race but resumed hiking. is there a risk that could happen in columbia? >> it is indeed a risk which is why it is expected there will be no changes to the benchmark rate this month is the current benchmark rate is currently above the inflation rate. if inflation can tease to decrease it will pave the way for additional rate cuts. rate we have seen the fed and ecb -- shery: we have seen the fed and ecb and other central-bank sounding hawkish. how will higher interest rates for longer affect developing economies like columbia? >> more than what has happened externally, we are affected by the fact that the previous government froze fuel prices which limited our ability to lower inflation at the desired pace. while food and other goods are decreasing in price, fuel costs are rising and we need to ensure the increase in fuel prices does not negatively impact the overall inflation outlook. rate we have -- shery: we have

seen some of the reform efforts from the government spook investors. what is the risk on investment flows into local markets? >> the reform that most concerns investors as the pension reform. however the pension system already has two specific contexts. first there is a consensus that the arbitrage between those funds should be eliminated which means building a system with its base like that in the discussion revolves around determining the criteria for pensions in the current context. the threshold for pretensions is currently set at three minimum wages. the second topic is whether there will be a savings fund. yes, there will be one. it will be associated with it and there will be governance and administration that allows participation in the capital market, not only public debt but stocks and other securities. rate the -- shery: the political

climate in columbia has affected investor sentiment. will there be more stability? >> the idea is indeed for the government to regain a parliamentary aligns to continue implement in various reforms and make progress. the president has always stated that he came to bring about real change not just cosmetic changes. what we need to do is identify where those proposals then and engage in public discussion. after all the reforms are approved by congress. [typing] haidi: wehaidi: are getting some breaking news when it comes to new zealand's economy and trade numbers and imports. this is denominated in new zealand dollars. $6.95 billion, higher than the prior reading, which has also been revised more or less marginally the same. exports in kiwi dollars for may just shy of $7 billion, a little

higher than what we saw in the previous month of april of 6.8 billion. the trade surplus started to narrow, this we sold the new zealand economy tipping back in two recession which is part of an extended contraction in economic growth expected that bloomberg economics sees lasting three to 2023 and implications of course what we see from the government fiscal measures as well as the rbnz guiding through the expected recession but with these trade numbers i should also mention that the prime minister of new zealand will be taking a delegation to china later on this month to try to fortify that key trading relationship. well coming up next, speaking of diplomatic visits, narendra modi is pitching india's potential to america. we will discuss that next. this is bloomberg. ♪

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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: the risk after president biden called xi jinping a dictator and china says it was a confrontation violation of his political dignity as joe biden was speaking at a fundraiser about the alleged chinese spy balloon incident earlier this year when he made the off-the-cuff remark.

secretary of state antony blinken had just left beijing the day before after a trip aimed at resetting relations that drew praise from both presidents. rate india's prime minister narendra modi is in washington today shery: -- india's prime minister narendra modi is in watching today as washington is being new delhi as a crucial economic partner in the endo pacific. spring and the deputy director and senior fellow at the center for strategic and international studies. great to have you with us. how does this visit by prime minister modi reflect the importance the bite and a ministration is putting on india? >> well it is a bilateral engagement that will be heavily weighted toward security, economic ties, interest, and expanded cooperation in emerging technologies. india is a heavyweight in the end of pacific on a and the pacific is clearly the region of focus and it is a great

counterweight to china so this in that context is really important. rate and yet shery: -- and yet it's not without its challenges right? we have seen and his reluctance to condemn russia's invasion of ukraine. what are some of the thorny issues between these two partners? >> of course there are anti-trade impediments with russia and china, sorry, russia and ukraine, um, but this visit is meant to be a state visit, so i suspect that there will be limited discussions on thorny issues but what the u.s. once from the visit is relaxation of anti-trade impediments and further articulation of clean energy and carbon reduction programs and to secure more u.s. defense sales. on india's part, it is looking for a new program to excel by

transfer of defense technologies to indian defense companies than there is -- then there is of course how the u.s. can support india during security challenges with china in the region. there will perhaps be more programs to accelerate u.s.-india higher education cooperation as well. haidi: how do you see this as seizing the opportunity, reversing the trend in globalization, the near shoring in the broader establishment of supply chains beyond china, is this an indication india is trying to seize the opportunity to benefit from that now? >> absolutely. now they are very can -- keen to expand cooperation. that has come up in several discussions. uh one area to look out for is you know cooperation on critical

minerals and india is open to it and so is the u.s., so and they are committed to working together you know in achieving their ambitious climate and energy targets, so the strengthening of supply chains on critical minerals is key to that. haidi: the deputy director and senior fellow at the center for strategic and international studies joining us there. more ahead. this is bloomberg. ♪

haidi: let's take a look at asian markets. we have a holiday session given that hong kong and china are closed for the dragon boat festival but we still have chinese futures trading in singapore so watching out for that as we still see that absence of stimulus weighing on sentiment and a hawkish reiteration of remarks from your own -- jerome powell. sidney futures down attempt -- up 10 -- attempt up 1% in the aussie dollar holding steady after the u.s. dollar slid after a three-day gain and of course continued weakness in begin is a story to watch. this is bloomberg. ♪

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