does this move the needle for the boj? inflation has been, even prior to the virus, and will continue to be sluggish. willthink inflation deteriorate further. energy prices -- also from april. you know, the government is providing subsidies to the high school education for the poor families, and that is starting from april, so that gives a downward pressure. together with energy, you know, thisnergy pricing, and policy, and also hotel and accommodation fees, i think we expect to see a negative growth for some time. haidi: right, so in terms of what the boj can do in its emergency meeting today, we are expecting a little bit more detail in terms of their funding plans. is there anything more extraordinary that the central bank could even do for it to have any kind of payoff that would make it worthwhile? sayuri: i do not think the boj is going to do anything bold. very aggressive approach this reluctant to do aggressive moves at this time. i think what they are going to do today is that they are going to provide more lendin

should the boj be doing more to prevent inflation?leen: let's bring up this chart again, just because it is pretty dramatic. the white line is cpi minus fresh food prices. 0.2s at minus year-over-year. they were coming out of deflation. you go back to the 2014 time period. that was ending a period of deflation. is japan going back there? official said the boj should be bolder like the fed. couldn't they innovate more? she thanks governor kuroda is -- thinks governor kuroda is hesitant to take steps that look like he is helping abe. she thinks prime minister abe needs to get money to the people who need it. like many central banks, there is more they need to do. is showing heda is doing whatever it takes. rishaad: kathleen hays in new york. let's move to the latest business headlines. geodet to invest in its digital unit. 2.3% of theing kkr platform, valuing this unit at $65 billion. it plans to use its millions of subscribers as an e-commerce base. later on, alibaba out with fourth-quarter earnings. investors looking for further signs

the boj, we've got another emergency meeting today.l a week inflation rating really force them to do anything different? kathleen: it is interesting because it is going to be negative. been negative, the cpi, for three years. however, our bloomberg team in tokyo saying what they are trying to do is show a couple of things. they want to show a nimble stance on recovery. maybe the boj is trying to say, look, we are doing whatever it takes, in terms of concrete things, maybe not just optics. they want to finalize the details of their small business lending plan. the team in tokyo is saying, don't expect any showstopping policy moves. they are going to be looking at what they can do -- the main concern now is keeping small businesses afloat. they have a direct lending plan that they hope to finalize and probably announced to the world. this is different from the federal reserve, like that main street lending facility where the federal reserve is setting up a lending program to go out to small businesses. this will funnel money directly to

the boj setting an unscheduled policy meeting for friday. the hang seng down 0.3%.5.2 percent, climbing for a seventh straight month. , giving look at crude up some of those gains, taking a breather. theas been searching above $30 mark. gold futures inching higher. goldman predicting gold will be heading up from here. other metals also rising. we are looking at a fintech firm behind one of the newest virtual banks launching its cash drop program monday. without having to wait until july. simon, great to see you. great to have you. , what was the motivation behind this? how does it work? and how long does the interest free period fall. >> it is good to be back. we introduced this idea of the hong kong campaign. you want to do something to cheer for the economy. the hongto give people kong handout two or three months ahead. online. to apply people have already gotten it within the first couple of hours. people will benefit from this initiative. it will be in the form of a five-month interest free period. you have more than ample time to pay us back. the motivation is

thefutures are ahead of boj's friday meeting.a, high school seniors will be the first to return to schools as they are reopening in stages in the country. they are set to staff a three-day gain and the korean yuan -- korean won is holding steady there. we heard from the finance minister that a 10,000,000,000,001 special purpose vehicle will be used. isy are to lend -- the be ok to lend a trillion one. yearg lower after a 10 high. notearrie in a recent positing that the worst may be over as long as a second wave of infections can be avoided. kiwi stocks are under pressure. the kiwi dollar ticking higher. earlier, they spoke of negative rates being just one option for the central bank that it is prepared for but not to be adopted at this point. shery: let's dive deeper into the markets and bring in mark in singapore. here in the u.s., we saw the valleys and the selloffs elated to that moderna vaccine. it was a similar picture to what we saw a few weeks ago with the experiment of drug. are we seeing the same sharp reaction into the

policymakers decided to create a system enabling the boj to provide funds to select private financialnstitutions at a 0% interest rate. the move aims to encourage banks to participate in an interest free loan program for small and medium-sized companies. the scheme was launched by the government earlier this month. >>> the japanese government has officially approved the resignation of the chief prosecutor of the tokyo high public prosecutor's office. he was embroiled in scandal after admitting he'd illegally gambled on mahjong during the state of emergency. he visited the apartment of a newspaper reporter in tokyo on the night of may 1st and 13th. this is while authorities had asasked residents to stay at ho and refrain frorom social activities. it's illegal to play mahjong for money i in japan. he submitted his resignation on thursday and the cabinet approved it thursday. the justice minister apologized for the scandal. >> translator:r: as justice minister,, i apologize for causing anger and anxiety to the people and for undermining public trust in prosecutors and the administration.

a couple headlines coming from the boj governor.shrink more in the second quarter. don't expect a pan to fall into deflation. this coming on the back of the economy opening up. it has been battered. vowed tot and boj have cooperate further in aggressive measures to fund struggling companies, to support the battered economy. 107.82.at they say they are not looking at deflation. just ahead, after a brief hiatus, china's luxury home buyers are back. they are snapping up properties from sydney to singapore. details straight ahead. this is bloomberg. ♪ ♪ yvonne: a wealthy chinese buyer is said -- snapping up luxury homes in asia. prices andoperty providing the market with support amid the pandemic. let's get to charlie suit with the story with us. what is driving the shopping spree? >> share. as far, this is partly due to a graduate -- gradual easing of virus restrictions. it has made it easier for people to view properties. the main driver is expectation of inflation as a result of global monetary easing. and a weakening of the chinese

of we have to look at is the market is convinced there is a central the fed,in place -- the ecb, the boj- they have all essentially put their money on the line saying they are prepared to backstop the market with credit. the question that remains is at one point in time do we shift into a gdp issue regarding debt? that will come in with italy. that question marks of how long governments can sustain the amount of spending they are into now will come question especially if the lockdown produces a revival of the coronavirus curve. in my point of view, it is very victory claim an early because there is a difference in the financial market and the real economy. have 16% or 17% unemployment. a year ago you would have been hard-pressed to believe me. between a distinction the real economy and the financial asset economy. aed, if we look at what deutsche bank is saying -- they willhe length of time determine if the crisis moves from being a liquidity crisis which the fed, many would say has prevented a liquidity crisis, it could move to households. re-evs the risk of a olution of a solvency cris

in the fx and rates market, it feels very similar, despite the fact the boj is unleashing a big program small and medium-sized businesses. in the commodity market, that is a china growth target story. there is no growth target. really hard to know how they will actually wind up importing commodities, and all of the cyclical commodities getting really hit on that news as well. how do you digest all of these headlines when you are still dealing with coronavirus as well? going the is jeff kleintop, charles schwab chief global investment strategist. let's take it a little bit by a little bit. when it comes to the hong kong issues, from trade and financial, how are you digesting those headlines? jeffrey: i hate and tensions -- heightened tensions rather than cooperation between the two biggest economies during a recession, there isn't a huge moving u.s. markets. there was already negativity, so the market isn't caught completely off guard. the concern is obviously, there's more hong kong unrest, but this becomes the focus of back that may be less negative for some sectors. if beijing were to

and we are looking at the boj regular bond buying with treatment -- with three-month treasury bills onlia and india tapping bond markets. the kospi gaining ground this morning up 1/10 of 1%. korean won holding steady against the greenback. because back gaining ground. line-up, we are keeping an eye on korean air. asx 200 adding one third of 1% at the open of cash trade in sydney. aussie dollar slightly stronger but still under 65. yield lower by one basis point. kb stock holding steady. kiwi dollar -- kiwi stock holding steady. let's get more on the markets with mark who joins us in singapore. a lot of factors are affecting dollar end trading. trading. and yuan mark: we are beginning to see the option market taking more seriously that there could be downside risk so we are seeing a build up activity of people expecting it to be a higher rate during the year, particularly for the six months that goes into november. things like he does not want to talk to xi jinping, you see an increase in activity of hedging. we might see more in the coming days if tension increases between the u.s. and

reporter: the boj way, i love that. and of course, people have been wondering. this be next on the yet -- list? control?ve the president of the new york fed said it is something that he is certainly looking at. it would complement tools. at are committing yourself keeping your 10 year bond yield and three year bond yield at a certain level, so it's a concrete way to say you are serious about keeping rates low. theyt. louis fed said could consider yield curve control, but right now it would not be impactful because rates are low and expected to stay low. it's interesting what they set about the economy. both of them agreed with each other at separate offense, but bullard said there was a trough in april. last month when the shutdowns , the headlineoing says it all, catalog devastation wrought by the pandemic on the u.s. economy, saying economic activity declined in all districts, falling sharply in most in the latest reading. get the fed ready for the june 9 and 10th reading coming up. there may be a yield curve control need when you see that kind of dark outlook

google watch the boj ahead of the emergency meeting on funding for small businesses and china expectedo hold after last cut very weis point will get pulmonary sales data for australia. forreliminary sales data april in australia. imposed duties on barley exports from australia. more true troubles emerged, unsurprisingly is virus concerns and the latest fund manager survey by the -- two thirds believe we are in a bear market rally. while there was a jump in global growth expectations, 10% of those surveyed expect a v-shaped ofovery with a second wave infections being debated -- being the biggest risk. haidi: which showed optimism over a quick virus vaccine has drained away with questions about the initial trials of moderna's vaccine. early they said they were safe and data shows immune response. early nature highlighted by the health publication was enough to put a pin in investor hopes. let's go to our opinion columnist. this is not new information. if you are accustomed to reading this early clinical trial data, this should not come as a surprise. >> no. reading the biotech press rele

trading sessions or weeks, that would be nothing to catch the attention of policymakers, japan and the boj happened over the course of a few months, from the levels we are at now where the yen is but current levels are , inrvalued on most metrics the context of other shocks it is absorbing, it depends on the context of how we get there a move -- get there. i think it will be manageable. if it were a rapid move driven by speculative flow, that is something the authorities would have on their radar. -- radar quickly. tom: a good summary from adam cole with rbc capital markets. ritika: there is a little chance that the house democrats' package will be turned into law. a $3 trillion package includes and food stamps. passage in the house would give the democrats a marker to sit down while they position themselves for the election. investors are waiting to hear what fed chair jerome powell has to say about the prospect of mass bankruptcies and long-lasting unemployment. he is likely to call on congress to provide additional relief signals that gain he is opposed to cutting the benchmark interest

we have heard from the boj as well.say they may change the way they target in terms of that yield curve. they may change the interest rates around that. something else to watch for. of emergency has ended. the nikkei has been performing well over the past two days. we will expect that trend to continue of more than 2% so far in today's session. so much green on the screen in terms of this risk on sentiment from investors looking past the geopolitical tensions that seems to focus on stimulus, that we are getting out of japan, that will see another budget, and singapore as well. kospi is doing well. we have the contraction forecast, maybe as much as 7% for 2020, which would be the worst since independence. nonetheless, equity performing well. theerms of the future for u.s., yesterday was memorial day in the u.s., but they will take some cues from asia's session. crude is up more than 3%. russia has the balance of the markets. it will be there in june or july. that is giving the booze. gold is essentially flat at the yen.

have been talking about the fed considering yield curve control policy down the road similar to the boj indeed the rba. the other central banks doing that at the moment. you mentioned negative rates. for a period of time, the markets have been speculating about negative rates but the fed has so far ruled that out. never say never. it may come but i think that they will try to use other options, yield curve control included, before they resort to considering negative rates. nejra: i find it interesting that you point out the further out the curve that the fed were to target with yc see, the more negative the impacts would be for the dollar whereas if the fed were to signal the focus of purchases at the near end of the curve, he would see a steepening and that would be positive for the dollar so that is an interesting distinction that you make. on negative rates, even if the fed fed were not to move and kept pushing back, as long as the markets have expectation of negative rates, how negative is that for the dollar? valentin: yes, indeed. it is one thing to be telling the markets that neg

i usually beat up on the jgb market because of how much the boj ads. the securities in japan hardly trade anymore. but on the european can package -- on the european package, i find it really interesting that even when we had a smaller number, the netherlands and austria weren't behind the plan. so you're telling me that the plane is more encouraging because the plan is bigger. i believe it could be bigger and the perfect place -- bigger in the first place. a bigger plan sounds good, but i want to see everyone on board with a plan to do something at the european level. conversations the have been going on. the frugal four, the ones that contribute th more than they get back, analysts have been talking about that if there were some real pushback issues, some of that would be incorporated at this point. so those discussions have been going on, but you are right. this isn't a done deal. you wonder what kind of downside risk there is if this doesn't come together. jonathan: i've been crossing my fingers for the best part of a decade, hoping that europe wou

fed fund futures are there what is different about the fed than the boj and the ecb right now?only big difference right now is like outside, we are going into negative rate, but the fed has been insistent they don't want to do it and jay powell's going to speak tomorrow and supposedly he's going to say we're not going to go to negative rates and then you can punch fed funds futures on your screen and you'll see they'll price in negative rates and they'll supposedly not listen to them so they say they don't, about the japanese are very much in fife are on ever, but the bigger thing we have to be careful of in 2014 and especially 2016 when the japanese ratcheted it up, the liquidity in the bond market disappeared and it's ten% of where it might be two years ago. >> you take it over like that and shove out all of the private sector flares and it becomes a permanent fixture and the government itself. that's a, they really can't do anything with their markets and their economy with it, andy hope we don't get to that point, as well. >> jim bianco, of bianco research grasso, what are

stimulus and what central banks can do in terms of enlarging its balance sheet, we will follow the boj, what it means, from 9:00 a.m., on may 22. president trump says he will cut funding to the world health organization. we will talk about that next. this is bloomberg. ♪ francine: you are watching "bloomberg surveillance." i'm francine lacqua in london. president trump is taking the anti-malaria drugs he has promoted as a treatment for coronavirus infection, despite government warnings that hydroxychloroquine can cause serious side effects. the president says he has been on the drug for about a week and a half. pres. trump: and a lot of good things have come out about hydroxy. a lot of good things have come out. he would be surprised at how many people are taking it, especially frontline workers. he frontline workers, many, many are taking it. i happen to be taking it. i happen to be taking it. hydroxychloroquine. right now, yeah. a couple weeks ago, i started taking it. francine: meanwhile, president trump escalated threats against the world health organization over its handling of th

she says the boj and government are united in ensuring it does not go back to a negative cycle.1%. the kospi also lower by as much. >> checking on the indian markets, which are headed down, despite the stimulus program. -- sun text, 1.5% lower sensex 1.5% lower. bloomberg daybreak middle east is coming your way next. ♪ announcer: the following is a paid presentation brought to you by rare collectibles tv. ♪ the california gold rush is considered to be one of the most impactful event to affect america during his first 100 years. it has certainly had a long-lasting impression in numismatic history as well. the people of california soon needed a way to standardize the value of the new gold, so they set up as sayers offices.

one boj member saying that more active bond purchases are desirable.that they should have forward guidance when it comes to the impact of the virus in the sense that guidance has been difficult to make. need to continue to monitor the financial system has also been flagged. priority should be given on providing liquidity. one member saying it is appropriate to keep adding easing to keep market stability. same downward pressure on the real economy has further intensified due to the pandemic and that although financial and capital markets have been led there recently, that reflects the policy responses taken by major economies. there is still great risks that they will become unstable again. coming up in the next hour of daybreak asia, they will be allowed to give us her views. more people to talk to. this is bloomberg. ♪ there are times when our need to connect really matters. to keep customers and employees in the know. to keep business moving. comcast business is prepared for times like these. powered by the nation's largest gig-speed network. to help

haslinda: and in japan, we have kuroda saying he can promise -- can't promise the boj won't pause hyperinflationere's really no where he of that now. japanese carmakers toyota and honda out with fifth quarter results today that should reflect a drop-off in global demand and significant disruptions. northget to our chief asia correspondent, stephen engle. steve, what is expected? >> this is a global story. retailand honda, with sales in japan and the united states and china falling, those are three of the biggest markets , and the results coming out for toyota and honda, it is all about virus impact on demand. bloomberg intelligence for yeara expects the full fiscal fourth-quarter operating and nonoperating profit to have aen dragged lower on top of booking of unrealized losses. 18.5%pix plunging about in the fiscal fourth-quarter. the first quarter for the japanese fiscal year. japanese retail sales fell. vehicle sales in japan plummeting in april. and then you had all those suspensions of factory , northion lines in japan america, as well as china. we are starting to see some of those factories

to's, they are starting decline after a solid 10 year auction, plus the boj's regular bond buying today to be supportive. let's jump in the terminal now to get a snapshot of foreign appetite for japanese stocks. we have seen that come under pressure with foreign funds -- during april for the first time since 2000. disappointing earnings from toyota may add to the drag, haidi. aidi: coming up next, taking look at india with the country's commitment to a huge virus relief package as cases continue to climb. we will get more details on that, ahead. this is bloomberg. ♪ staying connected your way is easier than ever. you're just a tap away from personalized support on xfinity.com. get faster internet speeds with a click. order xfi pods to your home in a snap. or change your xfinity services with just a touch. all in one place. you're only seconds away from all of that on xfinity.com. faster than a call. easy as a tap. now that's simple, easy, awesome. karina: this is "daybreak asia." i am karina mitchell with the first word headlines. toldop disease expert officials that reopening the count

been underpriced compared to the rest of asia and the rest of the world and now the government and the bojether in the same direction. a good tailwind to get ahead of other countries and asia. things are looking brighter. even the yen is playing its part. fromollar-yen is not far one dollar zero eight cents. $1.08. haidi: aging has been warning for the u.s. not to push the relationship into a new cold war. what are some of the ideas that participants are batting around? how do you trade a cold war? the: a lot are looking at offshore yuan. we saw a significant increase in activity in the dollar against the yuan, particularly trading for the offshore yuan. which is free to trade in any range it wants to. there is very little liquidity in the yuan market. all of the derivative activity is very liquid as well. when people think about how they want to react in terms of any changes between -- of any changes in the relationship between the u.s. and china, particularly the trade relationship, if companies are being put under any kind of threat to their business, probably one of the first places we

with a benchmark of 20,000, the boj is likely to cut off on buying, which has already cooled.ng steady, trading around 107, holding a two-day gain, given the narrow yield gap. watch definitely on the ahead of the bond option. let's check in on south korea. kospi.an 1% for the watching for earnings. some shopping today on domestic demand. the korean won on the back foot as we get more dire warnings about the global economy and u.s.-china tensions escalating. let's check in on the antipodes. asx 200 up. the aussie dollar holding ahead of the jobs report. withiwi dollar flirting the 60 handle. edging as much as the pricing for negative rates in new zealand, which would reduce options for yield hunters. the strong demand we have seen saw australia syndicated bond notch another record wednesday as investors are lining up to get a piece of the surge. haidi: let's get more analysis. i want to bring in the director of equity asia research at morningstar. great to have you with us. you say when it comes to china, you are more optimistic on prospects of their economic recovery. we just

we are talking about the fed and ecb, the boj and rba, you name it, who are here for a considerable periodorever. haslinda: that's right. how will they clean it up? our opinion columnist. ahead, we speak to a singapore-based money manager who says there are only two possible outcomes for global markets and it all depends on how the world's major economies reopen amid the pandemic. ♪ later this hour, the president of india's advani peopleelling us which stand to gain the most. this is bloomberg. ♪ haslinda: welcome back. fed chair jerome powell is warning stock and other asset prices could suffer significantly declines should the coronavirus pandemic deepen. he's also forecasting the u.s. recovery could stretch through until the end of next year. 25%ets may fall as much as if there is a second virus wave. the gmc capital founder joins us from singapore. the rally so far has been driven by liquidity. to pumps said they need and more liquidity and they will do so. why does it matter if we have a second or third wave? >> it's not about expectations. when you say the rally is driven by liquidit

the boj's upcoming purchases may provide some support but the superlong sector, likely to see pressurethe u.s. 20 year auction in fear. in australia, 10 year yields adding six basis points ahead of the rba minutes. sharing. shery.let -- shery: let's turn to the federal reserve. testimony, he is asking for additional government spending. kathleen hays is here with a preview. mr. powell will be testifying along with steven mnuchin. what is expected? kathleen: the cares act is on the table for the senate banking committee. it is their first quarterly report about how it is going so far. this is a coronavirus aid relief and economic security -- $2 trillion to help people who have lost their jobs, small businesses, and more. let's go right to one of the things powell is going to be saying. testimony was released in washington by the federal reserve ahead of the testimony at 10:00 a.m. eastern tomorrow. and what he said was we are committed to using our full range of lessee tools to support the economy in this challenging time. even as we recognize these actions are only part of a broader pu

haidi:haidi: are we seeing a blurring of divisions between the boj and the finance ministry in this whateverapproach? istin: the bank of japan financing the government. that is important in the current situation. the government packages are really outsized. the bank of japan was focusing on the market, pushing banks to provide credit and liquidity for smaller businesses. this is the main point, getting cash into the market. keeping companies alive. shery: policy economist marshals with us. coming up on the next hour of "daybreak asia," we will be taking a look at asian stocks. they are set to end may on pretty weak to mix footing. this is bloomberg. ♪ haidi: i am haidi stroud-watts in sydney. asia's major markets just open for trade. shery: good evening, i'm shery ahn. welcome to "daybreak: asia." our top stories. haidi: the white house will respond to china's new laws for hong kong late on friday. beijing is defying u.s. criticism insisting it will have ensured fundamental freedom. asia ends a bumpy month after wall street erased gains and finished assessment lower. reaction could further d

when it comes to the monetary base, end of the period, we are yen.ng at 529.2 trillion the boj had thision a year target of boosting the monetary base. they have recently given that up , saying there is no limit. even before that, they have not reached that ¥80 trillion ceiling. it was more a commitment to do as much as it takes to help the economy and try to boost inflation. let's talk more about the japanese markets because they are now reopening, and in just a few minutes time, after several days of holidays, let's take a look at what to expect with bloomberg's global markets editor, adam haigh. how are japanese equities looking? they have a lot of catching up to do. adam: they do have a lot of catching up to do and it is really the overarching sense. the global markets have really come off in the last few days. that risk sentiment that has been gathering and building at the rally came up from those march lows and it has somewhat dulled in recent days while the japanese equity market has been closed. they will have to catch up with some of that sentiment but we are not expecting a wh

space they feel they need to do this, but i don't think they want to get in so deep similar to the boj or ecb but the question is what are they trying to address here. one of the major problems in march was liquidity or lack there of well i argue that a lot of that was well post volcker rule where big investment banks would have step ped in and would have been intermediaries to buyers and sellers. that entire market disappeared and that's why you have these vacuums in market that is the fed claims now they're trying to trace or on the other hand, are they just trying to buy time for companies by allowing them to extend maturities until we get to the other side of an economic recovery >> sarah, how would you answer that what is the fed trying to do here >> well what the fed is should be focused on of course is a full economic inclusive recovery and to the extent it is using its tool, it wants to make sure its tools are focused where they need need to be, which is on the real economy. so ideally, the fed is is looking through markets to the effect of these corporate debt purchases on emp

>> well if you look at the major central banks, ecb, boj, u.s., fed, bank of england, their balance sheetsreeping up in the last 10 to 15 years in reaction to the global financial crisis that hasn't turned out the problem ducing very much affiliati inflation. we'll have larger balance sheets than we would have pre-2007. i do think some of these programs will be reversed after the pandemic goes away so it will come down some. but it's definitely a large balance sheet compared to the previous 2007. >> good. that's a yes to you are a full on mmter now you thought about it and gave me the affirmative. >> i think the fed controls inflation. there are limits to how much you can borrow but i think we're re-examining all our theories of where we think those limits are >> you know what i've heard this like a thousand times in the last month. you got a great plan until you get punched in the face. i don't think mike tyson in the world knew every person in the world would use that line. it's so true until you get the daylights knocked out of you >> that's one of the aggravate quotes in the last 50 ye