♪ haidi: a very good morning and welcome to "daybreak: australia." i am haidi stroud-watts in sydney. annabelle: i am annabelle droulers in hong kong. we are counting down to asia's

major market opens. shery: good evening from bloomberg's world headquarters in new york, i am shery ahn. the top stories this hour. china signals policy continuity by typing a long serving technocrat as the likely next pboc governor. haidi: bond traders are bracing for another world week. u.s. jobs data could push u.s. 10-year treasury yield toward 4%. shery: plus, tesla tops expectations as price cuts lift second-quarter deliveries to a record, soaring 83% from last year. take a look at how futures are coming online in the asian session. of course, we had a lot of letters late last week. the nasdaq 100 saw the best first half ever. we are talking the resumption in gains for the tech sector. it is really helping the s&p 500 touched the highest level since

april of last year. we also have data showing that the fed's preferred gauge of inflation was easing that led to optimism that perhaps the fed will not need to tighten as much. the 10-year yield holding at the 3.83 level. 2-year yield pushing a little bit higher. but we continue to watch the data out this week, including the jobs numbers. after very strong eco numbers last week fueled expectations that the fed might have to tighten more. this is coming at a time when we are seeing this huge rally in tech despite rising yields, leading to apple touching the $3 trillion mark. in the asian session, we are still talking about the $70 a barrel level. we have seen three sessions of gains for the wti. this is still over all. we had been concerned about global demand and that led to back-to-back quarterly losses for the wti since 2019.

the dollar is holding steady at the 1233 level. belle: that is the equation investors are looking at. you have recession concerns, possibly still a hawkish fed on the one hand. on the other is the optimism around ai, that has been really what is powering stocks. in the futures, we are setting up for a higher start. it appears investors are looking to take their cues from the wall street session on friday and also this signals around inflation. moderating price pressures, even at the expensive of a deteriorating economic outlook. there is still that focus on the japanese yen today. we have second-quarter survey. the headline is that we are expecting sentiment to be slightly picking up. also watching the offshore yuan. we are well past the 7.2 mark

that we had been holding onto. but essentially, we do have possibly some leadership changes at the pboc internally. we will get more details on that with steve just ahead. but the other deadline to watch today was the quarterly monetary policy economic report that came out on friday. essentially the pboc vowing to further stem the losses that we have seen in the offshore yuan. we are within 1% of seeing its weakest level in about 15 years. haidi: and belle, of course one of the key themes will be what is next with it comes to bond yield moves. the dizzying momentum over the past few weeks, and of course the recalculation of what we are expecting from the fed. and this is a big week four data to set up the landscape. taking a look at what we are dealing with at the moment,

treasury yields are approaching a march higher. it rose almost 3.9% on thursday succession. of course after the drop in initial jobless claims sparking the biggest day for treasuries in more than three months. we also have a wealth of events to contend with this week as well, the least of which is the first major economic reports for june including market data. and the fed july meeting. the question is whether it yields in the 4% neighborhood remain attractive. does that offer efficient composition for the risk that potentially the fed and other central banks might struggle to get inflation under control? shery: and when you have higher yields, what that does to the rate sensitive sectors. focusing on tech, we have seen the offensive and defensive characteristics of the tech sector lately with the strong balance sheets that have led to this huge sword when it comes to

the nasdaq 100. we are talking about the best first half ever. a little bit narrow and concentrated when it comes to gains, megacaps taking 70% of gains. still, we have seen mpd have become the poster child of the sector, soaring 180 plus percent. the tech balance leading to people asking, can you still chase the stock rally? we could today see more corporate profit warnings. the earnings season will kick off in two weeks or so. and we have the likes of other companies like fedex, european chemical firms, everybody is cutting or withdrawing good analysts slashing forecasts globally. lower trading volumes may not help and may exacerbate negative moves. this remains a key question for marketwatchers entering the second half. haidi: a key question for marketwatchers as well is the

chinese economic recovery. we continue to watch policymakers from the pboc as well as indications of potentially more stimulus measures on the fiscal side. on the central bank, china has named the pboc deputy governor pan gongsheng as the top communist party economic official. let's get to chief north asia correspondent stephen engle in beijing. you have been watching the succession plan. it is unsurprising. is this the continuity candidate? stephen: he absolutely his. here's another policy wonk. he has another banking background. he was also a visiting professor at harvard and cambridge, he has international experience and is well-regarded both internationally and domestic and he has that commercial banking expertise. it is a continuity candidate. it is interesting that he will be taking over as the party

chief, while yi gong still is the governor. we are hearing that they want to consolidate the role back into one individual being the party chief as well as the governor, like what we had in 2000 2-2018. he was both party chief and the longest-serving governor of the pboc to date. and again, it doesn't necessarily mean that yi gong and the other outgoing party chief didn't do their job. they are at retirement age. pan gongsheng is relatively young, he is 59, so he has a few more years. the interesting part about this is that we all know that xi jinping, as he consolidated his power at the party congress in october and november, he essentially wants to put more party control over some of these

state organs. deep in mind the pboc reports directly into the state council which is run by the premier li keqiang. the pboc is not independent from the party. they have to take their cues from party leadership. the interesting thing about pan gongsheng is back at the party reshuffle last autumn, he was left out of the 200-member standing committee. the man he is replacing as the party chief at the pboc was a central committee member. so pan gongsheng is not a top party leader. what does that mean? does it mean the pboc, if pan gongsheng takes over in the dual role as governor and party chief, will the pboc have less of a say going forward as far as economic policy? shery: let's talk a bit about economic policy, right, you continue to see the word continuity.

does that mean perhaps more targeted lending and not necessarily the massive monetary stimulus markets have been waiting for? stephen: this was a topic we spoke about all week at the world economic forum in tianjin. the former deputy governor of the pboc and former managing director of the imf, on friday he was a analyst and he said, stop thinking about massive stimulus. it will not happen. in his estimation. he is not in government but he said china has very high debt already. we also heard on the sidelines, london school of economics professor said there is enough room for stimulus. the problem is that you need a massive stimulus, in the millions, trillions of renminbi to even have a moderate effect on the economy. pan gongsheng is the architect, he is credited with doing the three red lines of the property

sector so he could do something to perhaps lower the cost for mortgages and give some stimulus to build up the property sector. but the yuan, it is nearing 815-year low. pan gongsheng is the head of the state administration of foreign exchange. what can he do really to stem the fall of the renminbi other than maybe continue to use the tools at hand and that is stronger daily fixing's? shery: bloomberg's chief north asia correspondent stephen engle joining us from beijing. let's turn monetary policy. it up further official says the data will be key and it is too early to say with the central bank will do at its july meeting. our global economics and policy editor kathleen hays is here with the latest. we heard from austan goolsbee on friday, this after the fed's preferred gauge of inflation did ease. did it ease enough?

kathleen: he is considered a dove. another reason why it is interesting, when he is cautious about what will happen, he wants to show data that proves inflation is coming down enough. he spoke on foxbusiness and he said what everybody should put their eye on in the immediate term is goods prices. inflation, is it too high for off reasons? cars, they were at especially high prices for a while. is it something more persistent questionl mark that is coming from austan goolsbeeee. he is not ready, it seems to me, to declare it ready. particularly when you look at the numbers on friday. core pce -- the pce price index, it is consumer spending and the

income report, the one the fed watches most closely. in a year-over-year basis, the headline stayed at three point 3% year-over-year. still above 2%. but the core that takes out food and energy barely declined, from 4.7 to 4.6. when jay powell spoke at the you see the conference in portugal last week, he talked about the core services, particularly how housing is not coming down enough, underscoring this will be a big debate going into the next meeting, and importantly again that vista gold -- mr. goolsby is saying there is more data. everything will make a difference and that is what they are focused on. so the next three weeks are very important in that regard. haidi: a huge week for eco-data that could move markets end-yields. and of course the u.s. jobs report. andl of course the tankan survey>> small firms in those

two sectors, is very important. it is put out by the boj. their meeting is in three weeks. right now they are not expected to move yet. maybe they will boost inflation forecasts. the last survey showed that the outlook for large, small and medium services is up to be improving. maybe even more important than this is their inflation expectations. they were dependent on whether it was a small business or large business, you were expecting in the first quarter of this year or inflation to be moving up. their expectations for the dollar-yen rate. it reminded me that where the dollar-yen rate is now, three months ago it was at the 130 handle. rba decision tomorrow, we'll day

or one today? inflation is down, but not enough -- will they or won't they? inflation is down, but not enough. maybe it will convince the fed that there is not enough easy in the labor market yet, odea bank. haidi: one of the other top stories were watching, france remains on edge after protests over the police killing of a teenager continued. the command says around 700 20 people were arrested, down from more than 1300 the night before. insurers' first estimates of damage were more than 100 million euros. there is also a political risk for president macron, who canceled a state visit to germany that was supposed to start on sunday. shery: coming up, we discussed the yen's trajectory as it become the worst performing g10

currencies this year. a strategy from -- westpac banking's senior strategist will join us later this hour. but first, more on market outlook, next. this is bloomberg.

annabelle: let's look at the week ahead. haidi: u.s.. data on friday the day after numbers on job openings and jobless claims come in as well. he indicators for the fed. before that, the central bank will also be releasing minutes of the fed [laughter] june meeting. that is mid-week. cooler inflation is bolstering the case for a rate pause. the aussie trade figures are also due out on thursday. in japan, the tampa is the first

big data point of the week. apart from the usual headline sentiment numbers, we are watching for changes to corporate expectations on inflation as well as the yen. we will also get factory pmi data from across asia on monday. economists expect the survey to come in at 50. that is your week ahead. shery: our next guest says u.s. stocks are looking expensive. shana sissel is president and ceo at banrion capital management. good to have you with us. we have talked extensively about this $5 trillion tech rebound. the nasdaq 100 is trading at near 20 six times estimated earnings. but are you seeing any other parts of the u.s. stock market looking expensive to you? and if so, where can you still find some sort of value or bar game? shana: overall it looks expensive. you touched on the nasdaq, but

the s&p, trading at 20 times forward earnings. but what is more concerning is the number of non-earners on the indices. on average you expect anywhere from 11 to 12% non-earners in the russell 2000. right now we are at 16%. in the russell 2000, the normal is around 28%, we are at over 42%. that indicates that earnings are under pressure, which suggests to me that a 20x multiple is expensive. there are opportunities, though, outside technology. technology is the highflying, sexy area of the market, but cyclicals in particular are very attractive. you look at something like materials, the entire market cap for materials is smarter than the market cap of apple right on the s&p 500. you just have to look at pockets where there is opportunity.

i think materials, industrials and energy, those cyclical names are attractive are those sectors. >> going to be impacted by a pullback in economic growth in the u.s., whether it is a soft landing or a hard, deep recession? shana: typically, cyclicals do well coming out of recession. typically in the higher in affiliation and higher rate environment, anything that is sensitive like that to economic conditions, to supply and demand, and actually do quite well. i know it sounds counterintuitive, but they tend to do well coming out of the bottom. those are the areas i would be looking at. knology has some great tailwinds for long-term changes and disruptions that are going on, and there are certainly players in that space like nvidia, a name that i have followed for all of my career and a name that i really love, is one that will benefit long-term.

apple is another name. there are some tech names that will continue to do well and trade at a higher multiple because of the tradewinds. but there are opportunities in places like industrials, materials and energy. haidi: apple is now a $3 trillion stock. nvidia is up almost 200 percent year-to-date. there are port-a-let easter egg on this positions, i guess pullbacks if we get them -- are there opportunities to add to this positions, a guess pullbacks if we get them? shana: you go back in time to 2006, when i talk about apple to a portfolio manager, he called me crazy for thinking the stock would be worth $100 a year later. now it is a $3 trillion market cap. i wish i could go back and say i told you so. [laughter] there are names which long-term are good to hold. i wouldn't be adding to them,

but long-term, i will not be selling either. haidi: when you look at some of the global developments, are you watching for any potential exposure indirectly to the china story, if stimulus is forthcoming? something like caterpillar would do really well. it is a stock that is trading at a very low multiple. about 12 times. that will actually really benefit from the china story, there are other names like that that can benefit from the china story, especially in the industrial area. anything in the manufacturing infrastructure, things of that nature. there is also some opportunity in consumer, although i am less bullish on consumer because the overall economic sensitivity and the u.s. consumer's impact in driving consumer consumption is a bit iffy to me. shery: how much will what happens in china help or hinder what happens in the china energy

sector, which surprisingly this year has been the worst performer after becoming best performer last year. shana: that is one of the reasons i am taking a second look at energy right now, because it has done so poorly. i think the china story is not as impactful on the energy markets as it once was. i think that there are other things impacting the energy markets. what i do believe is that it has been going into the early cycle of an economic cycle, going down into recession and at the bottom, cyclicals like energy do better. supply and demand will definitely be impacted by china. large impact? not necessarily. but given how beat up sector is, it is an area i would definitely be looking for opportunities in. shery: shana sissel, president and ceo from banrion capital management, good to have you with us. thank you. you can catch up with all the

stories you need to know to get your day going on daybreak. you can customize the settings as well for the news on the industries and assets that you care about. this is bloomberg. ♪

shery: the latest from the corporate front. tesla set a new record for deliveries in the second quarter as price cuts give sales a lift. it shipped their cards up 83% year on year and above analyst expectations. the ed maker also trimmed the gap between production and deliveries to 13,000 from nearly 18,000 in the first quarter. tesla owner elon musk has raised

the number of tweets that accounts can view each day after twice imposing lower caps. he now says unverified users can view 1000 posts daily, while verified users can see 10,000. he initially set at lower limits for both. he says that cap is needed to address what he calls extreme levels of data scraping. up next, we will discuss the fx space with westpac as we continue to watch the yen and major currencies ahead of the hi, i'm jason. i've lost 228 pounds on golo. so when my doctor told me i needed weight loss surgery, i knew i had to make a change. golo's helped me transition to a healthier, sustainable lifestyle. i'm so surprised just how crazy my metabolism has fired up. i have a trust in golo 'cause i know it works. golo isn't like every other program out there, and i'm living proof of it. (announcer) change your life at golo.com. that's golo.com.

shery: as we enter the second half of the year, take a look at

how g10 currencies have been performing so far in 2023. the japanese yen is now the worst performer year-to-date, down 9% against the dollar, briefly weakening on friday to the 145 level. you can see the line in orange. take a look at this other chart showing the weakness of the chinese yuan. it has been falling. the basket of currencies, every week since late april, a losing streak and matched since 2015. according to our bloomberg analyst, it is the yen, not the yuan, that threatens stability. the yen's persistent weakness disrupts the model in asia. you can read the rest of his analysis in his macroman column in the terminal. this is for bloomberg subscribers only. haidi: i want to get a bit more analysis on that with sean callow, senior currency strategist at westpac, joining us in sydney. great to have you as always. when it comes to the yen, 145 is where we have typically seen

intervention. the differentials this time around, does it make it harder for any type of intervention to have long-lasting effects? sean: certainly verbal intervention. last september, q4 last year, we heard a lot from them and they delivered on it. i must say if you had asked me this time last year, i would have said, what is the point. but they did. they are willing to act, i guess, when they think things are very lopsided. they should know that this is an unusually strong differential. it is probably not going to turn around too soon in terms of the bank of japan's own monetary policy, doesn't sound like they are likely to change it in july. so long as they are doing that and the fed is maintaining its tight policy higher for longer, they can't realistically expect a sharp appreciation in the yen,

they can only monitor where the speculators are. haidi: do you see further weakness in the yen? we often talk about the yuan in terms of the trade dynamics. actually having a significant impact on the stability of treating currencies sean: sean: . not sure if it will be that dramatic. the key is that it will probably be a relatively short period. in the big picture, in terms of trade flows, that is a multi-quarter or multiyear response. so long as the bank of japan indicates it is getting closer to a change probably six month from now, and of course they insist that inflation is still below target, i think that is something that you can work through. i know they will be watching it

closely. they don't want a super weak yen. shery: what are the implications of the yen being so weak against other partners like the chinese yuan and the south korean won. there are still exports that they compete against each other. sean: no doubt the yen-won is watched very closely in seoul. they will be watching the policy that the fed is pursuing. i think they just have two be able to manage through this attentional, probably relatively short-term period of the yen advantage in terms of the export side. they have to plan ahead and look for ways to try to get an edge. because they can't expect a sharp appreciation in the yen until there is a change in policy. and it could happen. remember how sharply the yen

appreciated in december of last year simply from the widening of the target of the jgb. so i think they have to write it out for now. shery: what are the implications of the weakness for the yuan perhaps as we have more clarity as to what will happen with the pboc. it seems that continuity is the name of the game that also seems to mean widening rate differentials with the likes of the fed. and now we are seeing the record low funding cost for borrowing the yuan. sean: yes, the yuan weakness is very pronounced. it is in trade-weighted terms as well. it comes as there is still a very large trade surplus. we have very low inflation in china, so you can't really blame them for allowing the currency to weaken in terms of it is not causing inflation pressure. so that will probably continue. but of course, we are not

talking about free capital flows, the interest rate differential does matter. but still he have limits on capital flows. there is certainly a limit as to how far the yuan will be allowed to weaken. but it is still higher than the u.s. dollar over the next six months. what haidi: are your rba expectations? markets are split as to whether we get a pause or another move this week. is that a bigger mover for the aussie dollar or is it where we get meaningful stimulus from china? sean: the china question overlays everything. in terms of how high can the aussie rally. it is trading below where historically commodities suggest it is. no doubt we have very big movements in terms of the rba. we are looking for a rate hike clearly, we could virtually write the statement in advance as to why they would pause and

why they would hike. it would be very messy on the day. we think in general, the base case is a hike this month and a hike in august. four point 6%. it limits the downside for the aussie, even if there is the ongoing pessimism on china. haidi: sean callow, currency senior strategist at westpac here in sydney. this incoming co-ceo says rising rates are taking trading. he told us exclusively white debt markets are at a major inflection point. >> the liquid in the market is lower today than what it was pre-covid or even in 2021. we are not seeing a lot of trade volume and high issuance in high-yield bond spork in senior loans and part of that is because they just are not willing borrowers. in the case of m&a activity, we are not seeing willing sellers.

it is really because at this point there has been a massive inflection point around rates where we have had the inversion or the reversal of 40 years of downward movement in rates and about 12 or 13 years of easy money in the markets. with the rapid inflation have seen in the economy, the fed have said as much, the fed is very much of the opinion that it needs to raise rates for battle inflation, to get to the point where we actually have real rates. in other words, rates in excess of nominal inflationary picture. >> we have seen extraordinary happenings on the monetary policy front. in the time that we have with you, i am curious on your thoughts of what we have seen in the banking sector. you said in the past you are expecting tougher regulation ahead of u.s. banks. what opportunities do you expect

that to create and are you seeing those opportunities already? >> absolutely. in the case of investment banks that use their balance sheets to commit to deals and to syndicate to investors, in the broadly syndicated loan side or in the u.s. high-yield bond side, we are seeing reductions in access to those balance sheets and air reduction in issuance volumes -- and a reduction in issuance values. the home loans that were placed on balance sheets in 2022 were placed at massive discounts to the market. they really created a big hole in the back balance sheets, in the billions of dollars. so the regulators are watching this closely. in the case of regional and commercial banks in the u.s., they have tremendous amounts of real estate loans and other corporate loans as well as the fed that has article needed a higher level of equity capital needed to manage those banks. as a result, we are seeing how

that plays through in the market is a reduction of lending activity by commercial banks across the board, in real estate as well as corporate lending which allows for private lending, nonregulated entities like investment managers such as oaktree capital to step into that void, and partner with banks in some cases as well as just land directly to borrowers for real estate as well as corporate borrowing that no longer have that incumbent lender available to them. shery: oaktree capital management's incoming co-c armen panossian. annabelle joins us now with what investors are sayingeo for morning calls on e.m. we have been talking about bullish calls on wall street on e.m.'s, but we have been disappointed in the past. it seems that when it comes to e.m. bonds, though, there seems to be more consensus? annabelle: that is certainly what is developing on wall street and i am glad i can give

you a treat to kickoff your monday morning. what we are watching today is the theme developing for the likes of goldman sachs, citigroup and others, saying investors should be locking in interest rates as they are right now in these emerging market currencies. because it is that outlook for rate cuts that will be developing in the second half of this year. we have already seen central banks in the emerging world, think about taiwan, india, at emerging markets like mexico, even hungary, brazil has also indicated they will be pausing. it is that expectation that we will start to see cuts into the second half of the year. because it appears at least that central banks in this region, emerging markets generally, versus what we saw for the fed, the boe, the ecb and others, they were faster to recognize that inflation needed to be quelled, and they were also faster in hiking rates. so essentially what is driving that is that inflation as a

result of these aggressive moves, is starting to receipt faster than in the developed world. if you -- is starting to recede faster than in the developed world. the index has been trading lower for 11 out of the past 12 months. that tells us that it is that realization that inflation is starting to recede faster. that tells us that cuts could also be underway. haidi: from her favorite topic to mine. that outlook in china is looking a bit different? annabelle: that's right. actually both of you guys got something this morning. [laughter] it is that expectation that we have around the outlook for the chinese economy. there has been the call for stimulus coming through. we are hearing from different analysts in the market that china needs to load up on debt. something they have avoided so far. infrastructure bond issuance. partially because of high debt

loads. it becomes sort of a policy constraint for china. but there has been that realization that rate cuts that we have seen so far from the pboc have not been enough to stimulate demand from the retail individual consumer site. if you change over, investors have suddenly become quite impatient so far with the need for further stimulus. we have the csi 300 erasing all its gains year to date and then trending lower. the big slump in the a-shares index, and the offshore yuan. we are tracking it past the 7.2 level, down more than 5% over the course of this year against the greenback. shery: i want to chime in with another chart. the point that belle just made on the interest rate outlook for some of these emerging markets. you have the outlook on bond prices, the overweight fixed income, yields are still good.

so you have the carry trade. that is leading to latin america becoming home to the world's best performing currencies. you can see it on that chart, courtesy of david in glass. of course, he just had to highlight this, heidi bang, to say, latin america is your home. so from my favorite topic, we go to yours next. [laughter] haidi: this is how you start off the week. coming up next, economists are divided on whether australia's reserve bank will hike on tuesday. we'll get a preview of the rba decision, next. this is bloomberg. ♪

haidi: we have an alert crossing the bloomberg. building permits in new zealand, seeing if all of two .2%, expanding the contraction in april of two point 6%. at the same time we are seeing cooling and confidence in the property sector. residential property listings at the lowest in the month of june since 2007. the broader economic uncertainty is causing a lot of vendors in new zealand to hang onto their homes. we have seen that uncertainty as we have seen the tightening

cycle from the rv. australia'ouicesclimbed in june ahead of the rba decision this week that has divided marketwatchers. let's bring in bloomberg's sydney economics reporter. there is said to be another live meeting. sean callow earlier saying it is on a knife edge. what are the considerations underway? guest: good morning. inflation is still pretty strong , core inflation is double what the rba once to see, about 6%. the rba's mandate is to percent to 3%. that is a key concern. we are also seeing some upside risks from wages, and the job market is pretty tight. so that is a risk where the rba wants to frontload more hikes so that we don't see a situation like we have seen in other places. in the housing market, even

though price increases have eased off a little bit, they were still strong, a fourth month of gains. this is not what you see during a tightening cycle. these are all considerations for a hike. for a pause, economists are saying that the rba might want to wait because they have done 4% of hikes so far. they might want to wait for the quarterly inflation report and then make a call. given that we did see a slowdown in monthly inflation. services was sticky, but there was the good news that prices came off. that was the biggest consideration for a pause. but the decisions are mostly on the hiking side of things. shery: i don't think you will be able to hear me because you don't have your -- on, but heidi

bang, if you could ask her about the property sector, that is what i am curious about. haidi: what do you think is next when it comes to the property sector? swati: we are seeing a very tight housing market on the supply side. we are seeing strong population growth. these are two great recipes for house prices, great ingredients for housing prices to go up. there is not a lot happening on the policy side as far as boosting supply is concerned. we had government policy on boosting supply that was knocked off in parliament last month. and so people are expecting prices to remain strong. and there is no reason why we would see a strong cooldown unless the rba takes interest rates really high.

haidi: haidi: bloomberg's economics reporter swati pandey in sydney. more after the break.s is bloome ♪ makes earning your bachelor's in nursing possible. balance online coursework with local in-person clinicals to prepare you to lead as a charge nurse in the time you have - from wherever you are - leaving room for what matters. achieve your goals with your personalized plan and team behind you. find your purpose at grand canyon university. visit gcu.edu

haidi: tesla delivered a record number of cars in the second quarter, suggesting the plan to increase volume by cutting prices is working. how did the numbers look? paul: they were passed wall

street estimates and wall street had healthy estimates. these were released sunday morning. just over a hundred 60 6000 cars for the second quarter. that was a beat of 80,000 vehicles and an 83% rise on the year -- 466000 vehicles. it doesn't break tesla sales by model type, but it is expected the model 3 and model y account for the vast bulk of the sales. there was a problem of inventory buildup in the first quarter, produced 80,000 more cars than they delivered. that pulled back to 13.5 thousand. they will really have to pick up the pace to reach the target of 2 million cars. shares have almost doubled your to date. very encouraging numbers ahead of tesla earnings. we might have to see more discounting from tesla in the months to come.

shery: what are the chances of tesla cutting prices further as competition gets tougher in the ev space. paul: we have seen some sharp cutting. at the start of january, the model y was 66,000. analysts say we might see more price cuts. that is to do with that tougher competitive environment particularly in china where just last week, tesla announced another 4.5% price cut for one of its models. byd, the key competitor, build your dreams, backed by warren buffett. easy ed more and more in the streets here around sydney. tesla has its work cut out for it in terms of maintaining its market position. still number one in the u.s., in the rest of the world, not so much. shery: that is paul allen joining us from sydney. etfs focusing on individuals equity sectors in mainland china

continue to lead inflows as they outperform equity indexed years this year. let's get details from etf analyst rebecca sin. tell us what types of roads we are seeing in mainland china right now. rebecca: from a low perspective, no surprise that ai and tech is leading the sector. if we look at the four out of five top etfs getting inflows, it is into tech and semiconductor and health. from an outflow perspective, the csi 500 and 300 are getting outflows. interestingly, health care seems to be getting lots of inflows, but they are not really performing this year. we have found that perhaps health care, people viewed it as a cheaper sector to invest into from a valuation perspective. ultimately with china, they have an aging population and we expect people will be investing in health care in the coming years. so we expect the health sector to grow.

haidi: other than health care, what other sectors do you see our performers when it? rebecca:? rebecca: comes to etfs this year if we look at where investors are putting money, tech is a place where it is going to grow. the ai boom has helped a lot of investors be interested in tech. a lot of, but that a lot of companies are investing billions in ai. we expect technology sectors will do well and we will see more inflows into this. also in a recent survey, they interviewed investors in mainland china and found that 83% of them said they plan to increase investment into tech and the internet income years. so we think tech will do really well in the coming years. haidi: intelligence etf analyst rebecca sin. the next hour, our guests tells us why they expect diversions between them and fracturing and services sector -- between the

manufacturing and services sector in asia. that is about it for "daybreak: australia. "daybreak: asia" is next. wall street signs of moderating inflation. support for global stocks. and we can today to watch where treasury yields will go from here as the divergence player continues on fed expectations. teachers in japan, australia and hong kong at this point are pointing to early gains as well as u.s. listed chinese companies. this is bloomberg. ♪

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♪ sherry: you are watching "daybreak: asia." i am haidi stroud-watts in sydney. annabelle: i am annabelle droulers in hong kong. we are counting down to asia's

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