♪ shery: coming to you live from new york, sydney and hong kong.

asian stocks set for a mixed start as central banks when they are not done with tightening. bank of england delivering a jumbo hike. jay powell sticking with his messaging. treasury secretary janet yellen tells bloomberg she sees a lower u.s. recession risk. consumer -- india's premise addresses congress after sealing deals, but facing questions about his human rights record. >> when it comes to pmi numbers for australia, the judo bank composite the preliminary number coming at 50.5%. softening, but still marginally above the level that separates contraction from expansion. june manufacturing seeing weakness, marginal improvement.

still in contracting territory. still holding above 50%, but a significant slowdown from what we saw in the previous reading. the aussie dollar has seen weakness, selling against both the greenback and the kiwi dollar from leveraged funds. this, as we hear from socgen. if we want to see the aussie dollar above $.70, they need to see significant more hawkish rba. lots of questions over what that looks like, given we are expecting the july decision on who is the next rba governor. a lot of other names in the mix. we could see aussie bonds move on that decision. shery: we know what a hawkish fed looks like. today, we heard from chair powell. emphasizing the need to reach that esca percent inflation target and perhaps we could see one or two more rate hikes this

year. that did not sit well with investors in the market. it was mixed sentiment session today. u.s. futures barely moving above the asian session. s&p 500 managing to gain ground, but low conviction when it comes to this year's rally. we had data we had to digest that helps the case for the fed a little bit in the sense of the labor market, it seems to be cooling. jobless claims numbers seem to be cooling, which was at a high level at 2021. existing home sales barely rising in may. not surprising, mortar rates are really high. treasury yields climbed again today given a hawkishness coming out not only from the fed global central banks. the boe rate decision, its norwegian counterpart accelerating tightening. the 10 year yield close to the 380 level and we continue to see pressure on oil.

haidi: we are watching bond yields closely. annabelle: given the move higher we had in treasuries, we are watching what is happening in the kiwi two year yield. the direction is being led by what is coming through from central banks not only hawkish message we got from jay powell this week, but indeed today, before congress, but we are seeing other central banks in focus in switzerland and norway. we are watching what is happening with currency crosses against the japanese yen this morning because we have the swiss franc against the japanese yen trading at a record high. equities looking to be weaker. what could shift the needle for the boj? that is a focus point. later this hour, we will get inflation data. international numbers, expectations are we will see a softening for the month prior. we had a bit of a jump in the

april cpi numbers, but bloomberg economics saying that could be a blip. broadly, they say it continue softening through the year. that does not give the boj reason to pivot away from policy settings. haidi: let's get more on central banks from fed chair jay powell. sticking to the script on the second day of his testimony to congress, saying again the u.s. may need a couple more rate hikes before the year's end. chair powell: it only makes sense to move at a careful pace. we don't want to do more than we have to come a but overwhelmingly, we do believe there are more rate hikes coming. we want to make them at a pace we see incoming information so we make good decisions. haidi: let's bring in from washington -- that point -- the interview with janet yellen

saying that slowdown in consumer spending may be the price to pay and maybe what we need to see next. >> both janet yellen and jerome powell seem to be true believers that the u.s. can pull off a soft landing. that they canendqa get inflation down. at the moment, jerome powell in those two days said they are still willing to push up rates because the economy is holding up well. consumers are doing ok, so he said as a result if they need to and if the dow suggests, they may raise rates one or two times. a direct message for him in terms of what it is going. the treasure teeth -- so far, the economy seems to be shipping rate hikes reasonably well and she herself has now down the chances of recession. >> we continue to see more hikes

being echoed by european counterparts like the bank of england. not surprising, we are seeing this reaction in the global rates market. enda: the bottom line is that inflation has come off sharply. most economies, advanced economies, but the core prices are where the price -- the pace. enda: the message from the u.k. today, from norway and the ecb last week, the big debate of course is all about are these central banks only storing up bigger triples for their economies by pushing up mortgage costs? is that really? that may bring down inflation, but what will it mean for the rest of the economy? the dilemma is that central banks have no other tool. they say inflation is still too high. but for now, the message for

more recent days is that the rate hike from the past couple of years is not yet over. haidi: nowhere near when it comes to the u.k., it seems. given the move from the boe. it is interesting, you've got elevated inflation, soaring interest rates and potentially much more to come from the boe, yet consumer confidence is the strongest in one and a half years. enda: the bank of england has made the point that the economy is running hot. obviously, that could be contested by some. the end result is that the bank of england have obviously lost control. they are behind the curve on inflation. in terms of the advanced economies, it is well out of sync in terms of the direction everyone else is going. their reaction function is to push interest rates. in the u.k., a particular pain point because so many mortgages are floating-rate. means by the time you get home

from work, your mortgage rate will have gone up significantly. there are warnings floating around that the u.k. is heading for recession this year. other advanced economies seem to be getting inflation down somewhat, but they face similar warnings that the higher rates go, the harder chance of a soft landing. shery: there's more on central banks later. the philippines kept its key rates steady on easing price pressures. you can hear from the governor himself. felipe met dalia joins us at 9:10 a.m. hong kong time. indian prime minister narendra modi has addressed a joint session of the u.s. congress after sealing a series of defense and commercial deals. president biden says it is a boost for u.s. manufacturing. pres. biden: with this visit, india affirms more than $2

billion in new investments in manufacturing in solar in colorado, steel in ohio and optic fiber in south carolina and much more. further proof that america manufacturing is back. shery: let's bring in john hardy. give us the details about the goodies these two leaders took home and what that means for their relationship. jahnke >> it has been a celebration in washington. over the modi visit. the deals concern defense, semiconductors, space, those industries. with the goal of bringing the two countries closer together as they seek to form, what the

united states would like, an alliance against china and its assertive, aggressive moves in the pacific. haidi: you touched upon the naysayers and there was a group of progressive democrats who boycotted the joint congressional session. what was their criticism? modi appeared to be quite surprised at some of the charges being leveled at him. >> this was a rarer encounter with reporters. journalists were allowed to ask just about anything. the criticism centers around human rights. cracking down on critics in the media. religious tolerance. outside the white house, there were a number of protesters with

some pretty sophisticated protest vehicles. these vans with videos of modi on them. it must have been quite expensive, i would imagine. in congress, alexandria ocasio-cortez and other democrats simply didn't show up for the address. and they voiced their objections. i will say, he got quite an ovation, as he addressed the two houses. >> this relationship with india is so important for the biden administration because it could also act as a push back against china's influence in asia. we know that relationship has not been helped by off-the-cuff remarks by president biden recently, calling xi jinping a dictator. he had a chance to explain

today. what did he say? >> he said there wasn't going to affect the relationship. of course, he certainly hopes that. of course, last weekend before he made these remarks, secretary of state antony blinken was in beijing with xi, with the goal of improving, somewhat, the relationship between china and the u.s.. or at least, not make it worse. the dictator reference was something the chinese did not like. but, they also didn't like the suggestion by biden that xi didn't know about the balloon that traversed the u.s. this year. and that he didn't know what was going on in his own government. that is not summing mr. xi and those around him did not want to hear.

haidi: for more conversations around india, electronics and information technology -- joins us for an exclusive interview at 9:00 a.m. mumbai time. still this hour, they think crypto is entering a new cycle. more on their outlook a little later. up next, mizuho bank ignited by chinese stimulus bets. this is bloomberg. ♪

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don't get inflation back to target, it goes on for much longer. none of us want that. haidi: thomas horton and bank of england governor on the need for further rate hikes. the boe coming through with a jumbo sized move. really, challenges for central bankers as some of these central banks enter the final stages, as it were, of the inflation fight. bonds trading in australia and new zealand, we could see a lift towards new bonds, at least an advance as we get weeks before the rba leadership decision. jim schall mers is expected to make that decision. whether -- gets a new term or we see a new person. that could trigger a more dovish

posture from monetary policy. particularly as -- has come into so much criticism for the number of rate hikes he has pushed through. we can also see that one month option volatility when it comes to the aussie dollar seeing a bit of a hike. watching the aussie at the moment, little bit of weakness when it comes to the selling of the aussie versus the kiwi and the greenback. socgen saying we need to see more hawkishness from the reserve bank if the aussie is going to trade above $.70 u.s. let's bring in vishnu varathan. another frenetic week when it comes to central banks. of course, leading the pack is the fed to come a really pushing from the messaging we have heard before from jay powell. do you think markets are finally starting to understand the magnitude of potentially how challenging this last part of the rate height -- rate hike cycle might be?

>> certainly. apart from what fed policy has already been reiterating, it is not just the reinforcement factor, but putting numbers behind bit -- behind it via the dot plot. the evidence around the fed and other central banks, including ecb's actions and the bank of england and all the rest, including the bank of canada, suggest that yes, there could be a lot more momentum left in the hawkish cycle. markets may have discounted that. i think when it comes to exactly what targets are betting on, it may just be a case of shifting up bets. instead of betting on rate cuts in the second half of this year, they perhaps will backloaded it to the second half of 2024 on the bets that the higher you go, the higher it falls. so, higher chances of hard landing. shery: does this make the divergent stories, whether it be japan or the boj or pboc,

perhaps more compelling? >> it surely brings that into much sharper contrast. one has to then dig deeper to see with the asset market reaction to that is. further, i think china is in a different place, trying to do something outside -- something else. the question it begs is, what that means for the remainder as well as whether or not china can do enough to buffer. for the boj, it has not notched up hawkishness. it is not quite the same extreme as pboc, but ultimately these can have different effects. in the case of china, because of the stress of -- assets, it could ignite outflow risks in the region. whereas the boj, counterintuitively because of the cheaper yen, may fuel

cheaper trades. they actually support. we are not exactly clear on the effects of it, but certainly the divergence will become clearer and the reality is that when we come closer to hitting peak rates and hot lending risks, the argument is that divergence should be greater. shery: let's talk about china and's exuberance we have been hearing from investors about perhaps this china stimulus coming. given the uncertainty we have faced with the chinese economy interns of regulatory crackdowns , is this a little misguided? >> it is, for many reasons. our short memories tell us that china can get back to credit stimulus. we already have concerns about financial stability. [indiscernible]

because of the regulatory uncertainty, and certainly not being done with the property market, including my interests so far in properties speculation, they probably can't ignite anymore to an extent where -- gets them into high-growth multipliers. that is the other issue. let's not then get to the geopolitics of it. all of this together suggest that maybe the hopes of something that can ignite, and lift off those hopes, they are overblown. what china is trying to do is condition, and maybe get comfortably above 5% to ensure that growth does not slight to a point that further erodes confidence. haidi: are animal spirits justified in japan? we are getting cpi numbers today. could we see reversal from the boj as inflation continues to accelerate?

>> that is a good question. i think there are two aspects to this. inflation re-accelerating would certainly increase the dilemma. to intensify the dilemma, and to the end channels as well, but for the boj i think the thing that they want to really -- is see whether inflation is demand driven or whether just a passing shock. the boj is very car tense and that for -- cognizant that perhaps they cannot -- the current form and shape. there also cognizant of the fact that, and are circumspect at, removing those easing measures in a way that is mis-comprehended as hawkishness at the wrong point of the site. so then in the top position, they might why the yield curve guidance and remove negative rates but they are not going to go into hawkish year in an unchallenged way.

>> vishnu varathan on, mizuho bank. here's a quick check of the latest developments on the corporate front. bloomberg has learned to u.s. authorities have launched an investigation into the ad nonny group. the office has sent increase to investors to find out what they were not told by the indian conglomerate. there is a similar inquiry underway, adding to scrutiny of the adani group following denials of short-sellers accusations of fraud. citigroup has begun telling managers to let staff know they will face consequences if they do not comply with policies for office attendant spared a source has told bloomberg that it targets employees with specific at expand absences. the vast majority of staff are following the rules for hybrid work from home arrangements. this is bloomberg. ♪

>> the u.s. coast guard coast guard says the crewmembers aboard the titan submersible have died from catastrophic implosion. that is after a remotely operated vehicle found debris off the bow of the titanic wreck the group had set out to ask or. >> in consultation with experts from within the unified command, the dupree is consistent with catastrophic loss of the pressure chamber. upon this determination, we immediately notified the families. on behalf of the united states coast guard and to be entire unified command, i offer my

deepest condolences to the families. haidi: the u.s. coast guard says unified command will continue searching the seafloor for information to determine the cause of the implosion. more to come. this is bloomberg. ♪

♪ shery: we are getting the inflation numbers out of japan for the month of may. the core price inflation, excluding fresh fruit, growth of 3.2%.

easing from the previous month of april when we psycho unexpected acceleration, but also higher than economists expected. this leads to the headline figure, growth year on year of inflation of 3.2 percent for the month of may. again, easing from the previous month in line with estimates for excluding food and energy. court -- surprisingly, when it comes the core-core, we are talking acceleration from the previous month, come again higher than economists had expected. this is very important on how the boj will make its case for holding stimulus in place. we have seen core prices decelerate from the previous month. will that lead them to continue the argument that they need more durable demand led inflation? again, core inflation of the ration of 3.2%.

this will be the fourth consecutive month where the core remains above 30%. a weaker japanese yen does not help the picture for price pressures in japan. annabelle: absolutely. japanese companies are likely to push past higher costs on to consumers. for the boj, really looking for sustained inflation. when you look or listen to what we are here from economists, including our team saying by the end of the year, the inflation picture will be largely different in japan. they are seeing 1.7% by the fourth quarter. this is the state of play for japanese crosses we are watching. given we have seen the hawkish narrative coming through further bank of england. the fed this week as well as g10 p in switzerland. we are seeing policy divergence very much in focus for the session today. let's train john because we have

seen the japanese yen getting weaker, the big story has been the strength we have seen in bitcoin. we had $30,000 earlier this week. essentially what led to that, one of the reasons was this flurry of filings we are seeing led by blackrock, the world's largest asset manager, for a spot bitcoin etf. blackrock does know something that others don't. that is one of the key questions. because that trading activity, bitcoin up or than 20% since that filing. we saw the rsi trading into overboard territory. this morning, bitcoin sitting around the key $30,000 level. shery: let's see. our next guest says the space is cyclical and is entering a new bull cycle. matt hogan, bitwise asset management.

how much of a positive sign is it that we are seeing prices still supported, despite growing really tory scrutiny? matt: i think it is a massively positive sign. prices have actually been rising since last november after the ftx debacle. this has been climbing a wall of worry. now we have blackrock plenty it's -- putting its flag and the ground and same bitcoin matters. it is an ad said -- it is an asset that owner should own for 10 years. i call it the mainstream era of crypto and we have come into a multiyear bull market that is just getting started now. haidi: are you expecting to see more companies eying a public debut? matt: absolutely. there is a pent up pipeline of interested companies. crypto infrastructure companies are going to see material results as bitcoin and other crypto assets rise for i expect

the ipo pipeline to open up. broadly, crypto equities have outperformed crypto asset prices. our index of crypto equities is up more than 100% this year. absolutely will see more debuts. we will see this industry grow by leaps and bounds. heidegger clearly, the risk-reward scenario remains a one-way bet, even if that story is going to be bumpy? matt: absolutely. we expect it's to be bumpy. i didn't mean to suggest we would go straight up. there's probably negative regulatory news. there's probably issues with may be smaller custodians or other service providers that will have challenges in the market ahead, but what we heard from blackrock is that major institutional investors want access to this market. that is why they are launching a spot bitcoin etf and that is why they plan launch one.

if you see institutional money in this space, there's only 21 million bitcoin. they are not producing more than that. there is going to be a rush to get into the space. volatility, perhaps significant volatility short-term, but the long-term outlook is exceptionally strong. >> window we have regulatory certainty? matt: [laughter] i think we are going to see not only a binary switch. one day we do not have one day certainty come next day we do. we are seeing evolving regulation around the world. countries like europe, switzerland and the u.k. are in the lead. they have robust regulatory systems to define what crypto assets are and how we protect investor assets for the u.s. are behind. we are going to see incremental progress, regulation on

stablecoin, clear definitions. one day we will wake up and this will plea fully mainstream. this will happen in the next two years and that is part of -- that is part of the mainstream crypto arab do not expect it to be overnight. it will be an evolution, not a revolution but it is already happening. >> we have already seen regulatory changes. in fits and bursts. what happens historically when you see regulators jumping and trying to clean up the industry? matt: i love that question. crypto is a cyclical asset. it has three big years and one pullback year. those pullbacks are often driven by regulators step again. in 2014 they shut down silk road . it felt like a huge setback for crypto but it was a massive rally because a push to more mainstream. the same is true 2018, they shut down ico's which were fraudulent. that cleared out the riffraff

and set the stage for real applications of crypto like d5 and stablecoin. every time the regulators step in people think this is the end of crypt though. actually, what happens is the reverse. every regulatory step forward create the new building block on which the next bull market can rise. >> always great to have you with us matt hogan. the bloomberg technology summit is underway in san francisco. not surprisingly, ai dominating discussions for let's me back ed ludlow. what have been the highlights? ed: the common acknowledgment that there needs to be some kind of global regulation when it comes to aai. we know that. sam altman was the headline speaker during the event and he made a very clear point. he feels there needs to be a technology threshold.

the biggish -- regulators should go after those. but, we are still a long way from that. having listen to what he explained as the pathway forward for ai development. >> we are on an exponential curve, and a relatively steep one. human intuition is really bad. given we all have the weakness. we have to push ourselves to say, ok, gpt for, how sure are we that gpt nine well? if it might be, even if there is a small percentage chance, that deserves care. ed: sam altman and others acknowledging this existential threat that it seems to be years in the future. what thing that interested me, i number of panelists saying we don't know what's going on in china. we know they are working on aai come up we have an incomplete picture of where they have got

to. >> you have been talking to big names, anything that stood out to you? ed: what is interesting as we are so obsessed with nvidia and gp use, large language models that can do crazy things, but what about the basics? i spoke to -- who basically said by this time next year, we will be able to run powerful models on our mobile phones in airplane mode. loads of sources are so skipped go about that my but he did demonstrate how we could work on a demo on stage. there was interest around that. he sees massive opportunity in china. think about how important the qualcomm market is in china in the android space. i asked, how are things in beijing? he set up business is normal. they are not seeing any sign they can't develop forward in technology for that smartphone market and that domestic market

in china. shery: obviously, the future of san francisco. ed: this summit has rekindled the debate around san francisco. mayor london breed said this is a global city pair whether you acknowledgment, you are up in our business. the whole world is talking about us. the political problems. the mayor said, stop doing that. if you want to have a business here, stop fronting a band investing in this city, they are going to take the policy side. it was an interesting exchange with the room. mayor breed had pushback from attendees. she did a show of hands and the results were surprising. i would recommend ever globalists to check out bloomberg.com because put the focus back on san francisco as

supposedly the global leader in tech. >> ed ludlow. if you missed any part of that conversation and you want to watch us live, bloomberg technology summit is ongoing right there. you will also find a big diary entry coming up today and later this week as some of the events he may have missed earlier. up next, msci keeps south korea on its list of emerging markets and its classification update. a look at what could propel the nations with coveted developed market status up next. this is bloomberg. ♪ fabulous surroundings... but everyone's looking at their phones for financial insights from merrill. is he hailing a ride to the concert hall?

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no subscription required. no commitment. just my style. stitch fix. ♪ >> breaking news my cafe -- cafe pacific -- they are now saying that they will be returning to profit. the cash flow has continued to improve. haidi: it looks like japanese equities, just a big upsurge in interest, it looks like we might be taking a breather. the nikkei looking set to snap the 10 week winning streak.

33,706 is the closing price from last friday to watch. that's get ahead of the open and what to expect. even as we look and may be taking time out from this continued rally, goldman has raised japan stock target. are we going to see more targets raised? >> good morning. i think that is the question every analyst is asking at the moment. the nikkei's rally has been faster than almost anybody has thought. earlier this year, the nikkei had risen about 33,000, which is almost the most bullish in the market forecast for the year. privately, analysts say they are thinking about whether they need to raise their forecast for it seems likely -- forecast.

it seems likely we will see more upgrades in the coming months. shery: we shouldn't be worried, given the huge rally we have seen already? >> that is an important board. a lot of market players are little bit concerned about the rally getting too far too fast. if we look at seasonal factors, we are expecting the selling from japanese pension funds because of the need for rebalancing, especially after the almost 20% rise in the nikkei, the rebalancing selling from pension funds are likely to be big. some estimate about -- at least. it is going to have an impact in the short-term. we're also going to see etf managers who need to sell their

holdings to pay dividends to their investors in early july. that is another thing to be concerned. near term, a lot of market players think that the nikkei is likely to go through a little bit of a correction. but on the other hand, other longer-term investors think that will be very nice opportunities to buy on dips. haidi: there will be special focus on japanese housing, boast holding a gm's and investors will be quizzing them about the specifics about how they plan to collaborate with warm buffet. this chart shows cup of the streak we have seen for a number of these stocks, rabin e holdings today have surged since april since we have seen those traveling to japan to strengthen ties with the number of these commodities and energy conglomerates.

what would you want to be hearing at these agm's that could solidify the fundamentals for this rally? >> first of all, one thing i could say is that mr. buffett is unlikely to be there in person. if he is, they would need bigger space for the meeting. there has been a lot of attention on what they are doing in the future, especially with in terms of the relation to strategy relations with berkshire hathaway. one thing to look out is whether any of those trading firms are willing to consider even higher stakes because mr. warren buffett has said, at this point, he is not willing to raise issues stake beyond 10%. but if there is any indication

that there's is a chance of higher stakes, that could be a boost. it could trigger another boost. shery: msci has kept south korea in its list of emerging markets. its annual review again denied the nations bid for a developed market status. let's bring in uganda you. this is for to much expected, but what exactly did msci say that the south korean leaders need to do to be elevated? >> good morning. msci said keeping south korea in the emerging market benchmark is expect, and the decision was seen as the most important even as south korea is considered of develop market by other providers. msci has the largest share in the index business, so this announcement was closely watched.

msci has a long statement on what south korea has to do in the future, but also has paid close attention to what south korea has been doing so far. it did acknowledge that the korean government has been announcing reform measures including expanding the english-language disclosure for their firms, expand leading currency trading hours -- expanding currency trading hours. but it also set the company needs to see how this measure is implemented and how these measures will be received by the market participants. it is going to take time for nfci to go through the process, which it does before it makes decisions on market reclassification. haidi: what are the major sticking points? >> the major sticking points are the currency trading hours. all of the developed markets had their currency traded for 24

hours. however, south korean you want is traded during south korean business hours and the government has said it will start expanded traded debt trading hours to london hours. we will have to see what other markets see msci . >> the other sticking point is that the restriction of exchange data for the financial product, which has not been addressed by the south korean government, this restriction is imposed either korean exchange and remains to be seen whether the korean exchanges going to make any changes under the restriction of the use of its exchange data. shery: what are the odds south korea could join the msci developed latest? would that be good news?

we talked about how that could pressure korean assets. >> it is going to take some time, but some investors say it is just a matter of time that south korea will join the developed market. it first needs to be on the dm watchlist before it finally gets upgraded. that process may take some time because msci wants to wait and see how the government's reform measures are implemented, then be assessed by international investors before it launches measures. even a gets the upgrade, we have heard from a lot of investors saying south korea may see foreign investors outflows and inflows because it accounts for such a huge part of the em benchmark and it is going to be a small fish in a big pond if it joins the dm benchmark. shery: tune into bloomberg radio

to hear more from today's big newsmakers and getting analysis from the daybreak team, broadcasting live from our studio in hong kong. plenty more ahead. ♪ (upbeat music) ♪ ( ♪♪ ) woah. ( ♪♪ ) ( ♪♪ ) ( ♪♪ )

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haidi: we are headed towards the opens in korea. japanese trading held mitsubishi set to be creating a joint venture to create green hydrogen products in europe. companies reporting earnings today, watch that. >> -- demand from china's property market. makers of aircraft components and tech knowledge he could be moving after bowing's biggest supplier ended production. continuing to mott -- continuing to watch crypto stocks. bitcoin hovering. of course, we have been watching inflation pressures in japan. we saw the cpi data outpace some expectations by economists. we are talking about prices excluding fresh fruit, which would be core cpi, gaining 3.2%.

decelerating from the previous month, but still higher than economists had expected. when it came to the court core cpi, excluding not only fresh food, but energy, that came in at the highest in 42 years. a weak japanese yen makes price pressures even more pronounced, making imports more expensive. coming up, we discussed all of this with -- and investment strategy and job cuts in the banking industry. this is bloomberg. ♪

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>> this is daybreak: asia. we are counting down to asia's major market opens after a low

session on wall street. we as seeing major sentiments around the road, we saw global yields jumping. still a pretty strong picture when it comes to inflation in japan. it looks like when it comes to japanese equities we could be snapping that. japan very much and focus. are we likely to see anything from these policy settings? the open is upon us in japan and australia, korea. also, cash treasuries. it is really about those moves we saw in the prime session, given that we are seeing this hawkish rhetoric being reinforced by global central bank.

central banks in switzerland, norway and focus. in terms of directions for the stocks, we were expecting a little bit of weakness coming into the session. we could see a trading at that 143 level. investors saying we don't respect to see any sort of intervention coming through from japanese officials until we get to that one for five level. that is the key want to be watching here. let's take a look at what is happening in korea. given we also see the cost be here looking a little bit stronger at the start of trade. firstly, we had that, see our review coming out. they elected to keep korea on the emerging markets list. we could have seen it upgraded

to become a developed market. we had an assessment and analysis. that move was unlikely. a big day. a market reaction can be expected. we are washing the korean won. we have seen that korean weakness, the currency week is really coming through. i stand on. we are watching the moves and australia at the open air. we have the asx 200 sitting fairly flat. private pmi readings here. it was 51.6 in that time prior. we see brent crude fairly flat as we are trading underway. we do have oil headed for a very steep weekly loss. >> with rates getting closer, the peak levels, bonds will be

playing a more effective role, edging equities. senior strategist, great to have you with us. how important is it to be more diversified than ever? >> last year, it was really dominated by inflation surprised and responded to change and a monetary policy outlook. going forward, even if there are some tweaks, additional hikes for instance some central banks, we still think we are pretty close to peak rates here. usually bonds perform pretty well. that is been the case for the u.s. and other countries. we think inflation continues to fall. we think for the overall portfolio, our bonds ability to hedge equity market performance will come through and improve. that is the way we think the hedging ability should be an

important factor for a diversified portfolio going forward. diversification will likely perform better compared to last year. >> are we expecting? we are not really expecting that the bs move bride. we are seeing even the house central banks have turned even more hawkish than originally participating. >> for sure. the guidance is changing a bit in light of recent that speeches. other central banks are beginning to change their stance a little bit. s&p is one example. the reserve bank of australia. that might have some impact on the bond market for a very short time. but we are paying attention to his the of long-term yields behaving slightly differently for short-term rates because we are probably close to late cycle conditions.

with the monetary policy stance, it is slightly more hawkish. we think it is quiet likely that we enter into the late psychodynamic and for that reason, we think long-term yields will be more anchored. we are not looking at a 400 basis point hike your. it is basically one of two adjustments needed to bring the market expectations in line with what the central banks want. that is different. >> you have a long position for the end despite the bell as weakness we continue to see. what do you see changing that short of intervention at some point? just giving -- given the widening diversion and the boj and the fed? >> it is a difficult story. as you know at the start of the year, there was a big reversal in the market narrative.

that story is getting a new challenge. japan's fundamentals are pretty strong right now. they will continue to strengthen due to improvement and tourism for the remainder of the year. inflation has been outperforming the market expectations for a while now. it is above the bank of japan's target. when you reach that level of discomfort for the central bank where the cabinet or inflation numbers or the weakness in the end, the most effective measure is to actually change the control and we think that is still not great for market expectations. that could stabilize the currency and start pushing it the other way. the currency is very cheap. it is more likely that the currency strengthens a bit against the dollar and the bank of japan's policy changes will

likely be a contributor to that. >> you are short in the yuan. you see further weakness there. do you see imminent stimulus measures being announced? >> they will be additional stimulus measures targeting the real estate sector. the fundament a for china is that the economy is relying almost entirely on real gdp. they are not using that cushion in inflation. it makes sense for the authorities and at the same time, trying to combine that measure with some gestures on the household leveraging and also may be long-term reforms. that is still a possibility in our view. but for sure, there would have to keep monetary policy easing

for a while. for that reason, we still remain negative. >> yesterday, you're talking to the club you finance minister and he was telling us that the economy could see a rate cut by december as part of the central bank. how important is it to be exposed to some of these outside of china for the possibility that we could be seeing those rate cuts soon? quote from an international perspective, countries in latin america will probably offer a value. especially for the fixed income allocation. this is an area we are paying close attention to. we are relatively constructive

on these global fixed income markets for sure. >> the classification review when it comes to south korea like it is being pushed back. when do you think that every will actually happen? >> the reclassification will be -- there will be a high likelihood of that happening. i want to give shadow to the bloomberg team reporting on this. going back to that issue, this did not lead to any change. this is consistent with that. the government had made some gestures of shortselling. the effective time for that reform is still pushed back to the end of the year. the likely watchlist inclusion will be 2024.

if that is true, the actual reclassification will be between 25 or 2026. if you look at other emerging-market stories that have seen upgrades, -- that is the timeline expectation. >> always good to have you with us. let's get you to annabelle for a look at some of the movers. what are you watching? >> we are staying on tennis into the session for korea and australia. that is interesting. essentially we are taking a look at different names here in australia. we have been really monitoring

those audits coming in. this is for the 737. now we know it could actually have hit a snag because the biggest supply has suspended production. this is spirit air says to. they were presented with a four-year contract proposal. their leadership was awarded by that. that is the play for some of these here. let's change on. we had been really monitoring that move. we were trading very close to it right now. there was just so much interest and enthusiasm, particularly after blackrock. >> can we bring back heidi? i love that.

>> go ahead. details later this hour plus deutsche bank says it expects better trading results in the second half. our exclusive interview just ahead. this is bloomberg. ♪

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>> it is working families that suffer the most directly from high inflation and it is for the benefit of this country on a sustained basis. >> this is difficult. i do understand that.

then it goes on for much longer. >> you are listening to fed chair chair powell. the central bankers meant to concerns of those pressures remaining undefeated. this is a new phase of monetary constriction. more on how that is weighing on markets. let's bring in david finnerty. we already saw the reaction when it came to all of the hawkishness we got from central banks on the rate space with global yields just jumping. >> yes, exactly. they are in a hawkish mode at the moment. they did 50 basis points. we thought there was a chance of it. the bank is going up just 5%.

not that long ago. central interest banks -- banquets will peak. the currencies base is basically bad for the yen. one central bank that is not trying to change his policy at the moment. >> we heard from janet yellen speaking to us a little bit about the lowered recession risks, the need for lower spending to come down to contain inflation. they are sticking to this idea that the u.s. can stick a soft landing. >> that is certainly the hope. that is what everybody would like. in reality, if that is the case, it is very doubtful. it has been inverted for next month, it will be a year.

the markets say the session -- as far as the market is concerned, it is not a matter of if, it is a matter of when it will happen. how do the central banks react to that? they say we have to tame inflation or does that mean they came in earlier than expected? >> you mentioned the yen and the boj going on all these global central banks, reaching new record lows again several committees. does this mean more pressure for the japanese currency? when can we see policy makers coming in? question we could see them coming and now on a trade -weighted business.

this was against the swiss franc. sort of a record low. it is not just the dollar is weak against. it is weak against other currencies. if you go back to the last year, everyone tends to focus on the dollar-yen. last year was the 145 area. that is an area people are looking at for now. but on the trade-weighted basis, you could make an argument the yen is weaker than it was last year. we will get more on monetary policy later. they join us exclusively to bree -- debrief their decision to hold on rates. that is coming up at 10 past nine if you're watching this morning on hong kong.

this after european stocks posted the longest losing run of the year. more hawkish signals. really surprising markets with that bigger than expected jumbo rate increase. the only further if he is of recession. that is a little negative at the moment. we are watching that very much when it comes to how long this communication of more hawkishness is required on the uncertainty. >> we actually heard from the deutsche bank ceo saying he expects trading results to improve in the second half. this as we are speaking exclusively to bloomberg, the bank is the momentum in the fixed income business.

>> we have a very strong corporate bank. therefore we can confer for this year. we see q2 2023, revenue point of view. overall i would say this bank is faring well. the strategy is paying off with regards to the investment bank. we have always said that we have a record year. we had an extraordinary the strong year. i still think that in q1 and q2 we have done well but the overall market is a bit weaker. but i do believe with some uncertainties, the debt ceiling going away in the u.s., there is still a complex situation for the best.

for us, as a strategy of deutsche bank -- and i'm with a very strong dcm business, what we really wanted to achieve is we have put a lot of investments into that. >> just to wrap this part of the conversation up, it is going to be an operating environment for the fed business that is likely to be less good than last year. q2 may or may not be something you can see uncertainty in. on balance, they are likely to be slightly better. >> that is what i would savor the coming months and weeks. q2 was also a particular quarter

that we had in the u.s.. we can already see in june there is momentum in the business. i am overall quiet comfortable. i think it was a slight recovery and q2 and q4. >> they were speaking is little -- is lucidly to bloomberg's guy johnson there. plenty more to come on daybreak asia. this is bloomberg. is it not

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>> if about ai, it is really accelerating computing. when we see what you can do with those large language models, if you think about the history of computing, it starts in the cloud and then it gets skilled in the edge. that is what happens with cpus. the largest computing platform ever developed is the smartphone right now. what is good about the smartphone is it is a device that is with you all the time. if ai becomes pervasive which we believe it will become pervasive, especially when you look about how those large

models are very natural, you can converse with them, that will happen at the edge. if ai will get scale, you will see a running on qualcomm. and into other machines. >> the future is to democratize access to edge -- democratize access to generated actuals. quick for anybody that has been on the forefront of computing, qualcomm probably used to be well known as a communication company but if you look at what we do right now, it is more of a connected processor company that

communication. as those models started to become very popular, they will be running at the edge and i expect ai becomes an option on qualcomm right now. i will give you an example. i saw something adam said in the prior conversation. if you try to guess who are the winners and losers on the internet, it will probably be a very while guests. this generated ai opportunity is huge. we don't know yet all of the different applications that are going to come up. we are seeing that just within the past six months it is a revolution the number of companies that have come forward with these cases. let's take a look at trading across asia this friday. just a reminder, we have the

mainland china markets still closed for the holidays. we will be able to get that ministry on a weekly basis. those trading houses while the number of them. investors will want to know more given how much the stocks have run up as part of this rally. elsewhere around the region, a little bit software on that classification. more we moved out of the city so our little sophie could appreciate nature. but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go. i might've taken it a step too far. (chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams) let's pretend for a second that you didn't let down your entire family. what would that reality look like? well i guess i would've gotten us xfinity... and we'd have a better view.

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>> we have breaking pmi numbers out of japan.

this is easing from the previous month. manufacturing numbers back into expansion. still an expansion territory. the number that catches my eye is manufacturing. this seems to be the trend around the region. this is in contraction territory, heidi. >> we are also watching the indian prime minister's visit to the u.s..

president biden says it is a boost for u.s. manufacturing. >> with this visit, indian firms are nothing more than $2 billion in new investments and manufacturing solar in colorado, still in ohio and much more. further proof that america's manufacturing is back. >> more details with our bloomberg government editor. how does the u.s. view india as a security and economic partner in the context of china? >> the u.s. and india are trying to forge close relations with the u.s.. it is looking at india as a partner when it comes to china's service in the indo pacific region.

they are looking at china plus military strength in the region. the u.s. is looking to develop supply chains for you materials such as semiconductors. for india, it is trying to develop its tech industry and modi went to the u.s. looking for deals, trying to see manufacturing there. it serves a purpose for the u.s. and india on security and economic fronts. >> of course, there are still some there were. especially nds stance when it comes to the invasion of ukraine. >> exactly. the u.s. has been pressing india for some time to get up over the global sanctions regime on russia. at the same time, india has been one of the biggest importers of russian oil. this provided some cash for the

kremlin as it goes about its work in ukraine. it made it a little bit difficult for the u.s. to get global consensus and global corporations to impose economic punishments on the government for its full-scale invasion of its neighbor. >> one of the things the u.s. has been trying to press is the human rights issue. modi's government has come under criticism for advancing what many people call a pro-hindu nationalism. the u.s. has traded very lightly on the subject because it does not want to spoil the economic and security ties. it came up briefly during the meeting and even when modi gave a very rare press conference, something hardly ever done, when

he spoke with biden, this is one subject they talked on. it is an area of conflict but also something that has been put on the back burner a little bit to advance more pressing issues vis-a-vis china. >> for more on modi's u.s. trip, electronics and information technology representatives will join us for india focus. you are watching in mumbai. at the same press conference with president modi, president biden template the impact of his description as a dictator. >> we had an incident that caused some confusion you might say. secretary blinken had a great

trip to china. i expect to be meeting with president xi sometime in the future. i don't think it has had any real consequence. clicked let's get you back to the market. bond deals are a slim focus. >> absolutely. he really comes down to the central bank policy diversions. it is a question when you look at the g10 space, it is the boe, the fed, other central banks versus the ecb and what is happening with the boj. still, that rationale needed to stimulate the economy. a lot of times we question whether that rationale would stay intact. we had that inflation data coming out over the last hour or so. essentially what we saw was that cpi stayed above the bank of japan's target. yes, we saw a headline inflation's but was that corporate and they continued to

surge when you strip down energy, fresh food. that is the highest rating we have seen since 1981. is this going to be something that really forces the boj to continue or consider pivoting away? in terms of the market reaction to that, we are seeing the japanese yen here holding fairly steady in the morning session at that 143 level. in terms of the direction of stocks, we are looking a little bit to the downside here. a little bit unsurprising is that big central bank action and focus. inflation is still elevated. we do need further hikes to come. it is really forcing traders to recalibrate expectations. class bloomberg also learning that u.s. authorities have launched investigations.

the u.s. attorney's office in brooklyn is forcing investors to do one think they are told by the indian conglomerate. we have more on this. what do we know? >> good morning, sherry. we know the u.s. authorities are talking to investors that were in touch with this group. this is like a very early stage. there is no formal accusation being made there in the u.s. but there is a conversation here. this brings a lot of attention to everything that happens. they have been communicating to the markets by the hindenburg grew. at the same time, it will be interesting to see other the companies are going to react to this throughout the business base.

there should be a reaction. there has been a lot of missed medication. investors at this moment because the company is raising more funds. >> how are they in terms of assuring investors? there are moves to divest. >> i am sorry. did you repeat? >> has the company done well in terms of being able to win back investor confidence? the initial reaction we had, one of the first of the best various funds. >> that is a very good point. i think it is fair to say there has been a recovery of competent. there's been a recovery in the stock prices. the turmoil was huge.

the authorities in india are investigating the group. we know they are seeking to raise up to $2.6 million, u.s. dollars in funding throughout different measures. three different comedies have already made that clear. how this is going to break moving forward, this'll make a huge difference if the group is able to regain the confidence in the foreign markets. use point of the fact that the

company needs money. >> now, under fresh scrutiny. we have the list of elements here. we have much more to come on daybreak asia. this is bloomberg.

>> one of the most read stories

on the terminal right now. manages lines that are they will face consequences if they don't comply. the move targets employees with persistent and unexplained absences. >> we are actually seeing major changes. there are broader staffing changes that will affect 1500 workers in the second quarter.

let's get some more on this. who is the managing director for hong kong. great to have you with us. the ones that we have seen in asia and in china specifically have been some of the worst in years. do we expect this to get worse before they get better? >> yes. it has been one of the slowest quarter dues" a while.

if you look at staff numbers now, there are many investment banks are than they were. if revenues don't hold up, it is very likely there could be more cuts. in saying that, depending on some market and economic variables, there could because toward the end of the year. >> with the end of covid zero and hong kong, has that made it -- made a meaningful impact in terms of more positive sentiment and hiring? >> it has and it has not.

this is from the beginning of 2021. sentiment and hiring levels of already tailed off. it allows the very movement of people. it makes certain parts of asia attractive. it comes at a time when hiring levels are very much depressed compared to where they were. i was talking about these large banks started to freeze hiring or cutting their staff as well. what about the smaller ones? does this mean bankers who have been laid off can actually find opportunities in smaller places? is this just smaller across the board? where do they go? >> that is a good point. we tend to look at global investment banks and hedge funds

and what they are doing and we extrapolate that across the financial services sector. it is kind of myopic. there are reasonable pockets of hiring activity. if you are a senior banker and your heart of this, it is certainly not all doom and gloom. there are levels of hiring out there. it may not be within the global investment banks. if i am comparing this, it is not as tough hiring market as quarter two of 2020. or indeed anything like 2008 or 2009. >> put that into context for us.

we have had tough economic times for hiring. >> yes. we had that run of 1.5 years of significant amounts of hiring. probably compensation inflation. it was just imbalance between demand here in 20 -- 2021. it has been difficult for the candidate market to adjust how quickly things have changed. by the middle part of last year, the revenues across the

investment bank went will did not support the hiring the way it had been. answer the question of where we go, we are comparing it to previous times. even in the wake of bonuses, usually get a little bit of movement. people tend to rain risk.

if you missed any part of that conversation, tv is your function. you can also watch a live. you can dive into the securities or bloomberg functions that we talk about and become part of the conversation by sending us instant messages. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

>> this is how we are looking in the crypto space right now. a little bit of pressure. pick one remaining above the $30,000 level. we have seen that assessment of the series of u.s. applications to start investing in the token spot market. >> that is the u.s. crackdown that has taken place. three different crypto exchange's have been sued. it appears that a lot of the crypto trading dollars and

crypto trading volume migrating to asia. this is a fed center of gravity with a marked increase of trading volume that many are predicting will continue to accelerate with so much regulatory uncertainty in the u.s.. you can see investors and the marketplace are flocking to singapore, japan and south korea and more recently to hong kong. they just introduced a new regulatory regime for crypto. the resilience in asian crypto volume is underpinned by institutional investors. there is research that the crackdown we are seeing is uploading the phenomenon. many are remarking how remarkable it is that asia has

become a new center of gravity when china is still banning crypto trading. this is via the banking giant. it's registered money agents and trust companies can issue the tokens. stablecoins are a key part of the crypto sector where investors are -- involve more volatile tokens. we will likely see a lot more on this front.

>> su keenan with the latest on crypto. melenchon markets remain closed. we are also watching chip stocks , the dutch government is planning a new export controls. we are watching gaming names as well. there are new domestic online games in june. that is a lot more than the previous month. he is planning a new offshore oil and gas exploration in partnership with the state owned petroleum developer. plus, keeping an eye on crypto following the rally that saved bitcoin leveling off around $30,000. still to come, our exclusive conversation with the government

after the central bank's decision to hold rates plus bank of america tells us why the wise and when indicator is in the variable zone again. that is it for daybreak: asia. market coverage continues as you look ahead to the start of trading in hong kong. this is bloomberg. ♪

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david: good morning and happy friday. welcome to bloomberg markets china