>> welcome to daybreak australia. we are coming down to asia's maybury -- major market opens. >> i'm annabelle droulers in hong kong. treasury yields falling ahead of the u.s. inflation report.

bond traders so bearish, they risk adding squeezed on anything less than a red-hot reading. haidi: new zealand central bankers set to hold the key rate as the institute of economic research finds business confidences slumping. as japan's prime minister prepares for his summit with president biden, we talked trade and security with the u.s. ambassador rahm emanuel. we are in our away from asian markets opening across the region. take a look at our futures the session. some mild upside when it comes to sydney futures, 3/10 of 1%. mostly skewing higher. following the s&p 500 rebound to eventually cause little change. mixed signaling's going into the session figured kiwi stocks down tense of 1%. the rbnz decision. some of these indicators looking more negative. but there's really just a focus on whether some of that guidance towards the inclination,

possibly a pivot towards easing might be move forward in terms of timing. you want to take a look at some of these rbnz related trades. seeing that trading pair now coming near fair value. they are not confident that the rbnz will be able to meet the more dovish pricing we are seeing across markets. chicago nikkei futures are looking upside one quarter of 1%. annabelle: yes. you said it was that story in the u.s. session. we did have that late they rebound in the u.s. benchmarks or get s&p 500 closing back above that 5200 mark. treasury yields climbed in the session. 10 year yields dropping back from the highest levels of the year so far. oil. we saw it dropping somewhat this morning, fairly steady here. more on the geopolitical angle of what we are tracking here.

gold hit a fresh record high again intraday in the session. interesting to note, given there's not such a clear catalyst for gold in this sort of inflationary environment. certainly the focus is very much on valuations at this point in time. we are getting priced to perfection. anything less than that that we get in the ego data, any sort of political noise is something that could really lead to the risk of the -- of the substantial selloff. haidi: let's bring in the one who leads our markets live asia coverage. you cover everything. what are you watching mostly? it feels like there is so much caution. it's the flip of a coin in terms of where we had next. >> yeah. i kind of's expect that we are likely to get some sort of a relief rally in risk assets in

particular because the market has gone through with moments of extreme fear when it comes to what the cpi could show. as you are flagging, you need a really hot print in order to upset the apple cart. in particular, equities. that's also partly because of the fed set up. we do have the fed hawks saying, maybe just one cut is possible. cash kerry is saying zero cuts. in the meantime, as former fed member bullard reminded overnight, the official central stance is, three cuts are coming. they are going to cut. we don't get a major speaker between now and when the fed goes into its quiet time later this week, before the may meeting. unless you are going to be willing to front of the -- front

run the fed in the wake of this data, even though the meat -- most important speakers have left us with three cuts on the table, we are going to say they are not going to do three cuts because of the inflation data. needs to be really strong. with what's going on going into the data the last couple of days, some of the moves we had in treasury yields from where the heat has come out of that, yeah. if we get something that's in line or slightly to the downside, you could get relief. especially in equities. all equities need is the status quo and they are happy. yeah. annabelle: a group of people would be japanese government officials who will be watching this very closely. if we get something weaker than expected, it could prompt a little bit of yen strength. on the flipside, harder than expected risk and weakness.

garfield: at the moment, you have to think that perhaps the bigger risk for the yen is that it strengthens. we've had dollar-yen go very close to 152. that supposedly i and in the stand that's going to create intervention -- line in the sand that's going to create intervention. it hasn't wrapped up this much. and yet, the line in the sand has held and we pulled back from it noticeably. there's a lot of yen bears out there, depending on which slices of the cftc data that you look at. the strongest bets against the yen on record. and those bets, some of those will be looking tired. if people are sitting on gains, they are potentially looking to

take profits. they are all wary of, if you get a soft cpi print, that brings yields down. began strengthens, you might be forced out. if there's a pot that takes it above the 152, you are threatened with getting squeezed out. there will be a lot of trigger-happy yen bears willing to pull out rapidly so that they don't end up getting crushed in a squeeze if they all rush for the exits at the same time. haidi: garfield reynolds there ahead of a lot of implications coming from the u.s. cpi print. you can get around up the stories you need to know in today's edition of daybreak. you can customize your settings so you only get the news on the industries and assets that you care about.

defense issues expecting to top the agenda during president biden's meeting with the japanese prime minister. we discussed those implications with the u.s. ambassador to tokyo. this is bloomberg. ♪ wealth-changing question -- are you keeping as much of your investment gains as possible? high taxes can erode returns quickly, so you need a tax-optimized portfolio. at creative planning, our money managers and specialists work together to make sure your portfolio and wealth are managed in a tax-efficient manner. it's what you keep that really matters. why not give your wealth a second look? book your free meeting today at creativeplanning.com. creative planning -- a richer way to wealth.

haidi: the japanese prime minister will meet with president biden on wednesday in the first official white house visit by a japanese leader in a decade. that will be followed by a three way summit with the philippines as the u.s. seeks to counter china in the pacific. it's a beautiful evening for you to be joining us. we appreciate your time ambassador. give us your contacts in terms of the implications of this visit, the timing. why has this happened -- why has

this not happened in a long time? this is in the context of countering the moves that we see from beijing. rahm: two points i would add. this comes at a historic moment for both countries as they change dramatically their deterrence posture and position. japan has changed in the last two years, five separate policies that have been on the books for 70 years, from the size of the defense budget, the counterstrike capability, normalizing and bringing the level of relationship with the republic of korea to a new level. the united states also has made some fundamental changes, going from a hub and spoke system to a lattice multinational type of strategic architecture. i see this state vitiate -- visit, the fourth from a head of state in the region, as putting a period at the end of one era

and beginning to write the first chapter of the new era of alliance projection with japan. that's not just for the indo pacific. that's also a key strategic partner in a global set of issues. the second thing is to bookend. the week started with the philippines doing naval and air exercises together in a new multinational effort. and have the friends of the week with a historic first-ever trilateral between the united states, japan, and the philippines head of state. that reflects and symbolizes the change in the united states approach. it also symbolizes the kind of robe -- role that japan will play in our relationships in the area. it also symbolizes, china's whole strategy is to isolate the philippines. isolate australia with their economic origin. isolate japan by not accepting their fish to be exported.

our strategy is to flip that script and make the isolated party china. they are the ones that are isolated in the south china sea as it relates to the philippines. they are the one that are isolated when it comes to china using economic coercion to coerce australia to change their posture. they become the isolated party which is when they throw in the towel. that's how this state visit -- it's been nine years since the last japanese prime minister had a visit. it comes at a critical juncture where the relationship will pivot into a new posture and a new position. haidi: you've mentioned the first trilateral summit with the philippines. how far do you expect japan to involve itself when it comes to these confrontations in the south china sea? these encounters tend to be more aggressive than what we see in the east. rahm: the whole goal is not to have a conflict. that's what credible deterrence is.

understanding that this is not china versus the philippines. this is china trying to coerce the philippines into changing their policy. the international court in 2016 rolled it was in favor of the philippines, not china. understanding that the philippines has some very important friends in the neighborhood. united states, japan, australia. it's all about bringing a level of credibility to the deterrence. whether it is on the diplomatic front, the defense side, or the economic development side. you will see that take place in real time. since we announced it, you can see china's changing behavior and their sense of that. in the same way, the president hosted the hit -- president of korea in august. that was a major shift in the strategic stance and underpinnings in their region. because china's entire strategy is to keep korea, japan, the united states isolated from each

other, not on the same page. that's what was achieved at camp david. haidi: i'm interested in this lattice structure, how strong that is. especially when you hear things like south korea's report of a three way summit with china and japan next month. what is the response and what with the usb making of that? rahm: i know it happened since i was there at camp david. obviously we have this historic one, first time ever between the leaders of the philippines, japan, the united states. this structure is a fundamental shift of the united states to a more note -- multinational approach. whether it comes to military exercises, economic development, diplomatic initiatives. it replaces what was a silo hub and spoke in a more integrated way and it brings a level of not only deterrence -- it reminds china that there's two operative theories here.

china's theory is, this is our neighborhood. get in line or you will get the treatment that the philippines are getting or any other country like australia just recently experienced. our posture is we are a permanent pacific power presence and you can bet long on the united states. when you look at where we were five years ago and today, china is on their back foot and there is momentum behind the united states pledge. we are a permanent power. you can bet long. that's why countries are actually working together on every one of the strategic levels, from development to deterrence to diplomacy, to work together in coordination and cohesion with united states approach. haidi: -- annabelle: what about china's approach?

how can the u.s. counter that approach from beijing, that could be looking to have its own lattice structures in place? rahm: first of all, china has no treaty allies except for north korea. china is never going to win the award for the best neighbor policy. they've had to land conflicts already. they are having a constant qinetiq with the philippines. they fired five missiles into japan. there's nobody in the neighborhood that china has in claimed their real estate or having some economic or political confrontation. so they can try a trilateral. great. anything that deters china. there's consequences to try to use raw power rather than a rules-based system. it's a good thing. i think china is reacting to the united states not initiating. the reason they want a japan, korea, china trilateral meeting

is in reaction to what the president achieved. they are trying to minimize that which underscores what i said earlier. five years ago, you would not have put the initiative on the united states. the wind is at our sales. china, at home and in the neighborhood, is on the back hill. they are trying to make up for lost time. annabelle: what's the risk of u.s. initiatives being underlined -- undermined by election changes in the u.s.? we are approaching that vote in november. donald trump potentially inclined to overturn biden policies if he wins. rahm: first and foremost, i would say that when it comes to the indo pacific and china, we are strong because of our allies and alliances. what we are building here is starting to be put down in the roots of the institutions of korea, japan, the united states.

or the quad. that's being woven into the dna of not only the strategy but the institutions that help uphold those strategies and strategic areas. i think we should be honest. president biden brings a level of commitment that all the other leaders respond to, that he values allies and the alliances that they are part of and sees them as core to america's strategy. so our advances over the last three years being built and being put into the dna, yes. can a leader that doesn't believe in that start to roll the rock back down the hill? could. i think there's enough progress. everybody and then institutions understands how this goes to the core strategic interest. the united states doesn't want to be alone. they want to isolate china. that means our allies are key

partners in that strategy. haidi: from within japan, are you getting more questions that suggest there's a rising degree of noise and uncertainty and concern about what the outcome might be, post november? rahm: first of all, i know little about american politics. people are watching american politics. because it has a keen interest. there's a keen interest in who the president is and what their ideas are. yeah. people are interested in american politics because it has consequences. elections have consequences. of course. they are interested and they asked me about it. that doesn't mean they aren't interested in doubling down on their partnership with the united states. they know it's in their strategic interest. it's in our strategic interest that they are aligned with us. annabelle: when we spoke to you back in may last year, you talked about the micron deal with japan being a way to counter a chinese coercion in the tech and strategic space.

do you expect more to come out of his visit this time, in terms of further investment to try to extend the lead that japan and the u.s. are trying to build? rahm: one, microsoft announced a $3 billion investment in data and ai capacity and research in japan. we also just announced carnegie mellon and cahill university in japan will be doing research on ai, as will the university of washington. there will be 50 million -- 110 million dollars collectively by major corporations to back up that ai research in the four universities. building on what we did in hiroshima with the university of chicago and tokyo university in the quantum computing space. we put together around 206 d+

million dollars just in the two areas of research of ai and quantum community -- computing. that has a benefit. keeping the two countries ahead in some of the most important research areas that china is putting a ton of resources into. there will be commercial diplomacy. the prime minister will be going down to north korea after his visit at the white house, looking at the $13.9 billion ev investment in the united states and a honda auto factory. for the last four years -- the number one foreign direct investor in the united states. we've been the number one in japan. that's going to continue. annabelle: i'm curious about the u.s. opposition to nippon steel overtaking united states steel and what that signifies to japanese companies that are looking to make investments inside the u.s.. is there a need to think about

the role that election politics plays in investment strategies? rahm: here's what i would say. as i just said, for four years in a row, the united states and japan are the number one foreign investors in each other's countries. japanese countries employ one million americans. six weeks ago, a corporation from japan received a contract to replace all the cranes in our ports because we don't trust the chinese cranes that are there on an optional secured he basis. -- national security basis. and then i would remind everybody that in 2021, there was an election in japan. some foreign entities were looking to buy toshiba. japan said, that's not going to be permitted. so there's a context here. one is that the relationship is bigger, more significant than a single commercial transaction.

two, there have been things with matsui and toshiba that put this all in context. the united states continues to be a target of investment for semiconductors, japan autos, ev's, food, pharmaceuticals, financial services. japan continues to be a number one market for the united states as an investor in japanese economic growth and economic capacity. that's going to continue. whether there's a disagreement on a single transaction. annabelle: thank you so much for your time this evening. that was rahm emanuel joining us there from washington. plenty more to come on daybreak australia. this is bloomberg. ♪ re you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning.

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haidi: australia's government planning to reform roles on

corporate mergers. paul allen is here with the details. is there a problem with the current system? paul: there is. to give you context, last year, there were 1400 mergers in australia. on average, the competition regulators scrutiny -- scrutinize 330. a lot is slipping through the net here. they don't know if they are scrutinizing the right 330, whether they are getting the mergers that have potential to cause harm to competition. this is the sort of thing the rules are being changed correct. competitiveness has been disklike -- declining in australia. these reforms will mean that companies will have to tell the regulator about mergers of a certain size. we don't know what size yet. that will be put together with some cousins will hear -- consultation with industry.

it will be more streamlined, more transparent. mergers that are in the national interest will get fast-track. we will get more detail on this later. when the rules come into place, the reform should start by 2026. haidi: paul allen here in sydney with a look at these changes. we will get more details as they come to us. much more to come on daybre her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

♪ >> time for morning call had the aviation trading day. state street is booking consensus, they think the central bank will cut by 50 basis points as soon june ahead of november.

it sees 150 basis points i the end of the year, two point five times what markets are pricing. mohammed is joining the ranks of those who expect less easing. that is due to slow growth and sharp disinflation. policymakers will meet wednesday and are expected to telegraph a rate cut by june. >> we will see the ecb cut as much if not more than the fed. it is having a huge impact on relative pricing between europe and the u.s. and you see it in the bond market and currency markets. >> monetary policy is not

conducted exchange rates. in such a situation there is a monetary policy response, this is a general statement. >> for more let's bring in our asia government editor brian fowler. talk us through the ramifications on the outlook for policy and the yen as well. brian: it definitely would raise the likelihood of a second rate hike this year. economists we surveyed, 60% expect a rate hike by october, but the key is what is driving this and it is wage hikes, big wage hikes due to things. they put more money in the

pockets of consumers and that could lead to a revival in bending. spending has fallen every month for a year, but governor ueda flagged an expectation that personal spending will start to recover in the coming months referring to the wage hike effect. wage hikes give incentives to companies to raise prices. personnel prices go up, so they need to cover that to keep their margins healthy. we've seen price hikes which we had not seen for decades and we expect to see more of those this fiscal year. haidi:ueda said they would reduce stimulus, so how much conviction is there in terms of not getting there, but staying there. are we basically there? brian: that is the key question.

inflation has been at or above the target for 23's will rate -- 23 straight months. two full years of being at or above the target. a lot of price hikes are coming from temporary transitory factors. last month with february data we saw a big jump in the cpi due to the base effects. a year ago, kishida weighed on utilities, prices jumped this year. the weekend which has driven up import cost is an unwelcome source of inflation. ueda wants to see demand led inflation which is why he is spending so much time looking at how those filter through the economy as soon though wage

hikes take effect from around june. haidi: how do the boj forecast compared to what we see from the private sector? brian: so far boj in private sector have been close. boj's latest forecast for the fiscal year is 2.4%, we will see a higher forecast later this month. private sector has been doing the same thing. bnp paribas raised its forecast this fiscal year to 3% from 2.2 based on wage increases that were surprising. we sought snb nikko raise this fiscal year, so you could say the boj is in line, catching up with the private sector if it does increase forecasts this fiscal year. haidi: asia economy editor brian

fowler. from the boj to the rbnz, expecting them to hold at five and a half percent because of inflation risks and sluggish growth. let's get more from the deputy executive, christina. we will start off with your latest reports and something suggesting quite a bit of downside when it comes to sentiment and confidence in the economy. is that a good enough reason for the rbnz to consider moving forward the timetable for easing? christine: with the outline shows is a decline in headline confidence and activity when it comes to what foods are seeing in their own business. offices feel pessimistic about the general outlook ahead with

23 percent of businesses reporting weaker activity in their own business. in terms of what this means for the reserve bank, we've seen weak demand weighing on pricing and pressures, they continued slowing in inflation pressures. when reserve bank started increasing interest rates from october 2021 that was to take the heat out of the new zealand economy to reduce inflation pressures, to bring inflation back to its target. when i see that impact of those interest rate increases across the broad economy, we should feel confident things are on the right track in terms of slowing in inflation in the new zealand economy. haidi: i wanted to ask about the property sector because it shows builders are pessimistic.

if you look at headline data, we are seeing gains in the property market year on year. if we are seeing demand driven by rebound in migration, what is making builders pessimistic about the broader sector? christina: as you say while the pessimism was pervasive, we saw one sector particularly downbeat. we are seeing emerging signs of stronger demand in housing supported by the strong population growth. construction demand for the near term, this outlook is weak and the measure of architects, based on work in their own office, what their expectations were over the coming years,

architects are expecting a decline across housing, commercial and government construction work over the coming years. we feel that a large part of that is uncertainty in the economy. we saw the impact of high interest rates dampening demand, access to finance. with that uncertainty while we expect over the longer-term, strong migration will support housing demand and flow to debt recovery and construction when it comes to housebuilding activity, right now, the near term outlook for construction is weak. haidi: i'm interested because i levels of immigration in new zealand has been one of the big inflationary pressures, but now

we're hearing calls for rebalancing. do you see that that trend could taper off? christina: we have seen a surge in migration since our borders reopened and while that supports demand across a wide range of sectors, we are seeing some lies side impact on the economy. this is particularly true if you look at supply over the last year. migration is helping to alleviate labor shortages, during the height of covid when finding labor was a key concern. now we see a shift to a drop in demand, lack of demand being the dominant concern for businesses and finding labor has dropped away.

businesses are reporting that it is easier to find skilled and unskilled labor, that is particularly the case for unskilled. haidi: do you think there is space if they are holding, space to turn more dovish in the language after the meeting? christina: with weaker demand flowing through to the easing in costs and pricing pressure and the new zealand economy, the key question for the reserve bank is whether the easing of inflation is at a fast enough pace to be comfortable that annual inflation will return to its one to three percent target. we think it will return and the second half of the year which should give the reserve bank comfort to start cutting from may next year.

in terms of the balance of risks, around the timing of that, weakness and business opinion suggests there is a risk of an early start to the cutting cycle. haidi: when you look at broad deterioration in confidence, how concerned are you that that will become embedded? christina: so the confidence, there is a risk of it being self-fulfilling prophecy. at the moment we are seeing impact of high interest rates and dampening demand and on top of that was uncertainty about the new government priorities and in terms of spending and cutbacks in the public sector, what that means with softening in the labor market, businesses are more cautious when it comes

to hiring and investment, so what we've seen over the history of the survey, in times of uncertainty, you tend to see business start to be more cautious. that has a risk to be a self-fulfilling prophecy reducing activity because businesses are in a holding pattern, wait and see, until there is more clarity about the outlook over the coming years. haidi: that was christina, deputy chief executive at the new zealand institute of economic research. you can turn to your bloomberg for more on the rbnz decision. go to tliv to get commentary from bloomberg's experts. we will have more ahead on daybreak australia. this is bloomberg. ♪

♪ annabelle: south koreans are voting for a new parliament in a referendum on president yoon's performance. the results will determine how much power he has in his remaining three years in power.

john herskovitz is joining us. what is at stake for the president in the election? john: what we are looking at is what will happen for the remainder of yoon's time in office. the progressive block has the power block. if yoon can take control he can push through his pro-business agenda, tax cuts, taking on labrie onions, deregulation. so it determines what the course of his administration will be for his remaining three years in office. haidi: what are some key numbers to watch for? john: this is a 300 member unicameral parliament so the big number is one 51, who can get the majority. the next number is 100 a.d.. if the progressive block can get

to that level they can block filibusters, really take control. the big number is 200, if the opposition party reaches that, they have the power to override vetoes and impeach the president, so these are the numbers to look at as results come in from 6:00 the local time. haidi: ahead of the vote we've been talking about the doctors strike, is that something that can provide a boost to president yoon? what else is on the mind of voters? john: pocketbook issues, inflation really hit the price of fruits and vegetables. housing prices have been steadily rising over the years, so people are worried about their finances and going to the polls with this being a big thing. the doctors strike has been going on for nearly two months

now, so that way is on the mind. it has been quiet this election, so we have not seen much from kim jong-un's regime going into the polls. haidi: east asia government editor john herskovitz. latest geopolitical headlines we are tracking this hour, russia and china agreed to start a dialogue on your security to counteract the alliance led by the united states. russia's foreign minister told a conference in beijing that nations would seek like-minded countries to join. beijing and moscow have intensified their partnership since the invasion of ukraine. china is sending its highest level delegation to north korea. the third ranking member of the politburo will lead the three day trip starting on thursday. china has been north korea's biggest benefactor but kim jong-un it regime is receiving

aid from russia for the war in ukraine. coming up, a bowl run on japanese stocks boosting the asian benchmark versus its piers -- versus its peers. this is bloomberg. ♪ the future is not just going to happen. you have to make it. and if you want a successful business, all it takes is an idea, and now becomes the future where you grew a dream into a reality. the all new godaddy airo.

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haidi: take a look at the latest data crossing the bloomberg when it comes to japan ppi. march purchaser prices rising 2/10 of 1%, less than expectations of 3/10 of 1%, a rise of 8/10 of 1%, in line with expectations. vanke lending numbers seeing a rise of 3.6% year on year and 3.2% year on year including trusts. the weight of japanese equities has hit a five-year high against chinese peers. let's bring in our senior asian stocks reporter in tokyo. we've seen this in the flows away from equities and into

markets like japan and india, how big is the gap? hideyuki: the gap is the largest in over 60 years, so the japanese market accounts for 80% while china accounts for 15%. three years ago, the gap was five percentage point and i guess most people in the market thought it would be inevitable for china to overtake japan, they have the economy that is three times larger. but since then as we all know, chinese shares have slumped while japanese stocks have found renewed momentum. at the moment, japan seems to be

-- japanese shares are favorite for international investors, but from now on, it really depends on how long japanese markets can sustain the current momentum. annabelle: how long can this last if you've got the waiting that is so high. more than a third of the asia-pacific index versus investors dipping toes back into chinese equities. hideyuki: we are starting to hear investors shifting back to china now that there is a sign that policymakers seem to be more serious about trying to boost the economy and stock markets and also, some people are starting to worry that the japanese market might get ahead of itself in terms of expect the changing corporate behaviors in japan.

the tokyo stock exchange has been doing this campaign on japanese companies to take stock prices seriously and boost capital efficiency, etc.. many japanese companies are expected to announce their plans in the coming weeks, but it is easy to come up with a plan. actually doing what you have promised is a much harder job, so you could say some investors might think it's time to take money off japanese stocks, but we will have to see. the next few weeks will be interesting to see how japanese companies will announce their thinking about capital efficiency and rewarding more to shareholders. haidi: that risk of conservative guidance, a strengthening yen

and perhaps money going into china, is that why we've seen the new k -- the nikkei to do? hideyuki: i think so, exactly. of course one thing to consider is we're going to have an earnings season so most investors are waiting for earnings results and they yen is another factor. dollar-yen is trading near 152. it is basically the highest level for the dollar in many years and investors expected authorities to intervene if they yen weakens further. that could complicate the short-term outlook for the stock market, so at the moment there are not many incentives for investors to take a large

position. annabelle: that was senior asian stocks reporter in tokyo. time to check some stocks to watch when japan trading starts. keep your eye on chipmakers because microsoft is investing almost $3 billion to boost ai capacity. tokyo electron will be in the spotlight. ♪ at morgan stanley, old school hard work meets bold new thinking.

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♪ >> this is daybreak asia, counting down to asia's major market opens and japan is watching closely given the

weaker yen lifting exports. haidi: how long does that last? if we see more momentum from the bank of japan, the yen starts strengthening, going into earnings season, guidance from japanese companies could be conservative. we are seeing the fund flows going back into china. annabelle: citibank saying nikkei 225 could have lost momentum given risks you addressed from strengthening yen. if we see revision in inflation forecasts. this is the outlook for japanese equities, pretty much flat, weakness coming through, not tracking those moves on wall street. we saw a late day rebound for u.s. equities. priced to perfection, any surprises out of the s