haidi: welcome to "daybreak: australia." we are counting down to asia's major market opens. annabelle: i'm annabelle droulers in hong kong. the top stories is our, positive move as the u.s. inflation gauge slowdown reinforces fed cuts as early as september. wall street stocks closing at fresh record highs while bond yields retreat. japan's megabanks forecasting record net income as the boj moves away from negative rates, seeing a combined windfall of $21 billion. and china tech earnings on the way. we'll bring you jd.com and baidu results. haidi: take a look at how we are setting up in asia, set to rally after u.s. stocks and bonds

climbed on indications of slowly but surely slowing inflation data from that cpi print. the takeaway was that potentially provides affair with a little more room to start easing sooner, even as we've heard from jay powell that in the face of lacking evidence of disinflation or pressures that we may be staying higher for longer. it's a pretty robust set up, sidney futures up about .6%. a pop when it comes to trading in new zealand, nikkei futures looking perky there as well. fresh highs for each benchmark there as well. watching hong kong as a resume trading on thursday after the holidays and south korea coming online after that buddha's birthday holiday there as well. given the huge rally were seen across various commodities, as well as those that might be more sensitive to that news out of china that consideration of

local governments buying unsold homes. playing out in sentiment in china but across australian assets as well. annabelle: you said it, record, record, record. a record high for the 23rd time for the s&p 500. as we look at how u.s. futures are coming online, fairly steady right now but above that key 5300 mark for the s&p 500. as you said, it really was a cross asset rally. the fear gauge and the vix sinking to the lowest since december last year. treasuries declining across the curve. the dollar as well following, not just the u.s. inflation data but separate retail sales indicating some softening for consumer demand that had been most during the economy.

it seems like this is the scenario that traders one to see, but from the economist perspective, what was your key takeaway? enda: it was the smallest gain for core inflation and the slowest annualized gain in three years. that's kind of good head on, suggesting inflation is heading in the right direction. look into the details of it, shelter costs retrained sticky in terms of inflation because. on the downside there were some relief from used cars, on airfares and furnishings. the takeaway is, it was broadly better than expected inflation numbers, suggesting that perhaps the disinflation story hasn't totally gone away. people are still getting hurt in

the pocketbook where it counts and overall inflation remains quite high. so it has put some fire in the debate that the fed may have an opportunity to cut rates this year. as you pose mentioned earlier -- both mentioned earlier, the fed been talking about the disinflation story. it's a good set of numbers overall, but still a long way to go on the inflation debate. haidi: quite a bit of inflation risk continuing to emerge. potentially more geopolitical concerns as well as what is going into the election, talking about whether the tariffs will have inflationary impact as well. the fed would not be in a hurry to be easing despite the exuberance we see across the market reaction. enda: there's a lot of uncertainty, last year the story was, inflation is slowing

dramatically. that was fairly well shattered in the first three months of this year. then you go into policy and certainty lesson six months out from the election, very hawkish trade policies on both sides. a lot of economies say it is inflationary. and the ongoing geopolitical supply chain story has not gone away either. there's plenty of structural issues for the fed to worry about. retail sales slower than expected, consumer sentiment also softening. haidi: those retail sales talking about that weakness,

wind we need to be concerned that the optimist him around a inflation also translates into a broader economic slowdown, and that becomes the bigger focus? enda: we are getting evidence at the margins, retail sales for april suggesting a pullback on discretionary spending in particular. people are spending on gas and food, an indication they're pulling back their spending. the soft retail sales numbers on the back of weakening consumer sentiment and on the back of the fed data speaking to record household debt, throwing in signs of labor market cooling and broadly speaking it looks like the u.s. economy slowing down. that is where the debate gets really hard in terms of the economy right now is at a fairly good spot.

call it a soft landing, whatever you wish. retail sales coming off a fairly high base, the key question is where it's going to go the second half of this year. all indicators are that it's going to slow down. the question is how much of a slowdown. that will take on significance as it heads into the elections in november. haidi: we did hear from new cash carry in a discussion on the restrictiveness of monetary policy and he reiterated his view that fed might keep rates where they are for a while. >> how much downward pressure is monetary policy putting on the economy? that is an unknown. we don't know for sure. that tells me we probably need to stay here for a while longer until we figure out where underlying inflation is heading before we jump to any conclusions. haidi: great to have you with

us. do you see the market getting a little bit carried away with this idea that this doesn't make a change in the trajectory? >> obviously the reaction today was very positive. i'm not saying it is a completely positive scenario yet because one day is just one data point. but in general what we are seeing is a much more bifurcated view when you look cross asset. long-term things are bullish on equities but at the same time were seeing short signals of fixed income indicating higher for longer, and also the commodity moves have been at the center of focus. take a look at gold today, copper recently, those are definitely not trends in the direction we are getting to any time soon. annabelle: so how would you be

investing around the growth sensitive sectors at the moment? is a great deal of exuberance we are seeing here. >> bonds has been a tricky call, every time we've had this type of indication that things are getting better, we start to see yields definitely starting to go down, but we probably have to wait for some time. so a position of higher for longer at least over the next couple of months, and taking inventive higher rates when you have that pop up in yields, if you do believe that at some point those will happen otherwise. annabelle: you mention gold and the run up and copper as well. how are you investing around that? >> the biggest issue with commodities, they are often the first driver of eventual price

movement in goods at the consumer end. they start as a first indicator to where prices might be going. the fact that commodities bottomed in february, particularly metals and energy, now you're starting to see turnaround in the agricultural sector. one needs to watch corn prices and other raw food prices that would eventually trickle in if we start to see that trend reverse as well. so disinflation is really not observable in the commodity sectors and that eventually has ramifications for the economy as a whole and eventually prices. haidi: we seen record highs around the u.s. but also markets in asia. is this an environment where you want to turn to places that have cheaper evaluations like china? >> this is a good point.

signals have been much more neutral until recently. there's a chance you might potentially see some recovery. i know that china has been up about 18% since the bottom in february. so there is some potential for rotation, given the high valuations and the potential for upside risk and inflation can dampen the exuberance we are seeing right now and some of the set or set have outperformed. japan as well has been one of the best performers this year. we will have to watch policy there and see if that continues to be the case. it could be time for rotation. annabelle: thanks so much for your insights. get a roundup of the stories you need to know to get your day going today's edition of daybreak. that be focus on u.s. inflation, retail sales healing those fed easing bets.

you can customize your settings so you only get news on the industries and assets you care about. more ahead. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa?

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annabelle: russian president vladimir putin has arrived in china on the first foreign trip

of his new term. it underlines the importance of his relationship with beijing as russian forces press forward with a new offensive in ukraine. stephen engle is here with the details. that sorta become a tradition that they start a new presidential term each visiting each other's country. so is this more symbolic, or is it important and vital for this specific visit? stephen: it's absolutely vital for vladimir putin. china has proven to be the vital lifeline as the war hit its deep into -- heads deep into its third year. moscow relies on beijing for an overwhelming amount of trade and economic support. i'm not necessarily saying its products from china are supporting the war, but they have found you will use technologies finding their way onto the battlefield, whether semiconductors, ball bearings, or other equipment and technology. clearly putin is going there,

yes, there is a tradition to go to your best friend with which you have no limits partnership signed a couple of years ago, moments before vladimir putin invaded ukraine. but to go there as well to shore up his support. he is an early riser, he gets to beijing before we got to work this morning. it is clearly an indispensable ally, beijing is. what will be interesting as well is what will be the messaging coming from xi jinping as this war does go into its third year? the pressure from the united states has been ramped up on potential sanctions on chinese banks for potentially supporting, indirectly or directly, the war in ukraine. so that is a dell and sing -- delicate balancing act that xi jinping will be walking as well.

haidi: there is a variety of asks given that he's bringing his new central defense team and central bank governor. stephen: he is bringing his new defense chief who is an economist by trade and the central bank governor. that tells you right there what vladimir putin needs. as a student of world war ii history, i know exactly where the country needs to sustain a prolonged war. you need friends, finances, and firepower. again, i'm not saying necessarily that china is supplying that firepower, but again, the dual use technologies are finding their way onto the battlefield. as the key and perhaps main or only diplomatic friend in this world right now, vladimir putin need so's finances to continue this war in ukraine. trade between the two countries in 2023 hit a record, no

surprise there. it was more than double what it was in 2020. but we've already started to see , as i talked about those possible sanctions on chinese banks, we started to see that trade number come down in april for a second month. basically russian media has been talking about how these transactions have been kind of held up by the chinese come on some electronics and some products since the end of march. does that indicate there is some hesitancy for the chinese banks to facilitate this kind of trade , under the threat potentially of secondary sanctions from the united states? that's why this potential meeting is critical, because the central bank governor is coming. a new defense chief who is an economist by trade is coming. the speculation is they will try to find ways to facilitate and finance this kind of trade, a

lifeline for moscow, at the time of increased threat of sanctions. i was there in beijing when antony blinken again reiterated we are looking at the banks, and we will take whatever necessary actions are at hand to stop any potential facilitation of the war coming from china. so it's absolutely critical for vladimir putin to get those finances. haidi: stephen engle there covering that meeting and other geopolitical developments today, the u.s. is accelerating arm supplies to ukraine as the country's military confronts a russian assault in the northeast. russian troops are pushing deeper into one region, taking control of some villages close to the border. it may push kyiv to read deep

alloy from the front lines to the east. the slovakian prime minister was shot in public, the first attempted assassination in decades. he was in the hospital in serious condition following an attack by gunmen who put lisa had a clear political motivation. he returned to power last year in brussels. the u.s. has warned israel that it risked creating a power vacuum in gaza, urging leaders to focus more on personal planning. it appears to be the start of a full-blown invasion into the southern gaza city. and tina blinken says the u.s. is worried about the blocking of aid to palestinian territories. >> one of the deep concerns we have is the impact of this limited operation that we seeing to date on the ability to provide humanitarian assistance. the two main points of entrance

in the south have been affected by the resulting conflict. haidi: plenty more to come here on "daybreak: australia." this is bloomberg. ♪

haidi: saudi arabia and southern wealth fund has slashed a number stocks reporting earnings at the end of the first quarter. analysis shows u.s. holdings almost halved $18 billion. the changes were particularly of interest. >> in a couple of sentences, first because they are clearly bringing down those direct positions in u.s. equities. they had a fresh record in the u.s. market in the last few

hours. despite all the wrangling over where rates would go. it is interesting they are doing that, but at the same time they're getting more into the options overlays and looking for opportunities for equities to gain. so on one hand that is bringing that back down, but also adding to positions that clearly payout and will give them some return for upside potential in u.s. stocks. i don't think it should be seen as a bearish time. maybe dialing down some of the risk as we've seen the run up in u.s. equities. on the option side of the equation, it allows them to benefit quite a bit from the upside. some of the stakes have been reducing as well, the big tech holdings as we know that have been so popular. microsoft and salesforce have reduced their stakes.

haidi: what have we found out about what they're doing across financials? >> there's been some expectations that they will never cross the regulatory threshold to have to disclose it. now that they are there in a sizable way, it's clear how investors are taken that. the broader finance and banking exposure is still interesting, given what was said at the big meeting recently about cash levels still being very elevated and still wanting to be cautious on deploying cash in the current environment. it's interesting to see you're are still getting these sizable increases in elements of financials and banking, which speaks to not a huge amount of worry and what's going on with the u.s. economy, but clearly some level of fragility is still

acknowledge their. clearly not afraid to when they can be decisive, to deploy that money and go in and in a big way as they have always done historically. haidi: and also some interesting stories in terms of what apollo is doing. >> with the ability of these large asset managers and alternatives, there is still a lot of scope for some of those big private equity selldowns that have been basically put on the back burner until the market improves. a lot of that sentiment is still quite cautious. still a lot of big firms holding onto big positions and don't necessarily want to sell yet. that's a good example of them actually wanting to make a move. we will see how the rest of the year plays out.

maybe if we get to see more of this private equity activity picking up, then it could lead to more of these kind of moves. annabelle: taking a look at how u.s. futures are tracking, this is a day full of records. a lot of markets globally are hating fresh record highs. the s&p 500 touching its 23rd record just this year alone in the session overnight. a big cross that -- cross asset rally, the dollar dropping. we look ahead to the open of asian markets here a half-hour after the start of trade for after the start of trade for sydney,

all of the work that we're doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything.

>> inflation is taking his sweet time. >> the big picture on a core basis is that inflation has come down a lot. >> a great set of data for the fed, especially on the inflation front. >> this is a chair who would like to cut. you could easily see one and if he has the opening, two. that will give him the opening if it persists. >> i don't think july but september is possible. >> we need to see more weakening in the data, especially on inflation, for the fed to gain confidence and get comfortable in terms of beginning to ease rates. >> i don't think we are heading into a higher for longer environment but a normal for longer environment. annabelle: some of our guests talking about the latest u.s. inflation print, and an aggregate to show coolness through retail sales softening,

and these are all the different datasets that have given us more conviction on where the fed goes from here. this chart here, looking at the dollar reaction off the back of that, we saw the pullback in treasury yields. a weaker dollar is falling below its 200 day moving average and the weaknesses broad-based, but the biggest single day dropped for 2024 here. let's take a look at the currencies in this part of the world and the euro. a big component of the dollar gauge, but here you are seeing a little strength persisting across some of these major counterparts, keeping an eye on what happens with the japanese yen because you are traveling below that 155 mark. it is the narrowing yield cap between the boj, the fed, and that plays into the natural situation in japan, as well. >> yeah, watching japan's bigger

banks, their trading in the next hour, they are predicting record profits after the boj ended its negative rate policy. let's discuss more with russell ward in tokyo. what are you watching when it comes to these numbers? russell: yes, so just to recap, the three megabanks posted record for the last fiscal year and forecast record profits for the coming fiscal year, the first full year without the dreaded negative interest rate policy that banks have hated and that has been on their business for seven or eight years. they are in a good situation right now with rates at home, benefiting from high rates abroad, and the brilliant stock market here in japan, japanese banks have been sharing their cross shareholdings, set to share more, looking at healthy gains on the sales because of

the stock market here, and the big ceos, when they spoke at their briefings, they were touting the fact that they are being diversifying -- that they are diversifying their businesses. they talked about investment banking in the u.s. doing well, so they are in a good situation right now. annabelle: if they are in a good situation, how does that translate to shareholder returns and will they be satisfied with the buybacks announced? russell: good question. we will find out in half an hour when the stock start trading. it was announced that buybacks would be around ¥100 billion, which is a little on the small side, and one analyst, the size of the buyback was a negative surprise.

and they were framed where they held off on buybacks entirely, but that was to be expected because the situation was not quite as high as the other two banks. modest buybacks but more to come as the year progresses, so we will have to see how shareholders digest the first round. haidi: where there any downsides to the results? russell: yeah, i would say downside risks. one downside is the fact the japan stockmarket rally has stalled lately, stocks reached a record in march but have not moved much since then, so that might limit the gains of what they make, and another risk is interest rates, if and when they start falling, abroad, their interest income prospects are on that front, so those are a couple of downside risks, and

geopolitics and ceo spoke of that. haidi: we will see how those stock start to trade. annabelle: that is russell ward in tokyo. sticking with the earnings theme because chinese tech boarding continues, bloomberg intelligence senior analyst joins us now for a preview. we are making comparisons based on the fact that they are reporting on the same day but if you looked up both companies, it seems like the concern is that there will be a pressure on profits. >> yes, for both companies, baidu and jd.com. another set of underwhelming results from the companies, particularly, bear in mind that ai is unprofitable, even though the company will probably update the market on developments.

jd.com, the retail business itself, we are expecting lower profitability, especially as we step into the upcoming shopping festival. we will see the competition, and we have seen it from alibaba, who is going all out to get the market shares, so jd.com will face the pressure on the profit front from that. haidi: what are you watching when it comes to baidu? catherine: clearly, i think all eyes are on whether there will be more updates. again, very mindful that we will continue to see the company coming from competition with tencent, alibaba, and while way -- and huawei, so we will see if they have anything new and exciting to update the market on later tonight. annabelle: you mentioned jd.com

and the competition with alibaba. alibaba is trying to get back its market share, and jd.com has tried to fend that off with lots of measures like free delivery and return. is that going to work? what are the options? do they have to continue to try to push back on the pressure? catherine: we have seen some signs of that coming through. one of the entities which does speedy delivery and china, they have decided that there was a doubling of on-demand orders of jd.com in april, so slight positive signs. these moves and these orders could have come on the back of costlier investments from jd.com . in fact, we have seen them lower the bar for free deliveries to be done in 2024, so let's see how it actually impacts their profits tonight. haidi: senior analyst for the

asia-pacific consumer, catherine lim. some other corporate stories we are tracking, some shareholders in bhp and global america expect to continue. they talked about a room for a third offer from bhp. bhp's previous was rejected and announced a revamp that includes exiting diamonds, platinum and coal. paramount is said to have had discussions with amazon about expanding ties between their businesses. paramount has struggled with add sales and money-losing businesses, fielding takeover offers from an independent producer and global apollo management. bloomberg learned that hpcc -- hsbc is going to point its next ceo from internal candidates.

we are told that they have engaged an external recruitment firm to benchmark them against external candidates for the role. annabelle: the bridgewater ceo his warning investors of becoming overconfident in positions. we spoke to the ceo at the qatar economic forum. >> what environment is your portfolio going to perform well in and where is it not and then stress tested. say, hey, what if policy stays type or what if inflation remains higher, what if u.s. outperformance will not persist, what will happen to my portfolio? measure that against her goals because every investor has specific roles in your portfolios. close those gaps by doing one of three things, either shifter allocations, shift within your

allocations, so you can look at equities in the same way, but choose the equities that perform the way you would like relative to your goals, and/or create returns that specifically address the problems that you are worried about. so that is what we do at bridgewater. we spent a lot of time with clients, talking about their portfolios and stress testing it , making sure we create solutions. >> one obvious thing, one reason why people have done well is if you simply bought six american tech stocks, and just to push you on that, the new normal will not be the same, that would imply to me at least that maybe those u.s. tech stocks might do as well over the next decade as they have the past time? >> big point i cannot agree with more, and this is what i meant at the beginning, not just in

the u.s., but you drop it out pretty much anywhere, and it could be u.s. tech stocks, it could be other things and i agree that you should be open to a much wider range of outcomes and assume that you are going to be wrong. even bridgewater. we have 400 people spending day in and day out mapping how this affects the world and we still get 40% of our calls wrong, so you have to acknowledge the fact that you will be wrong a lot and make sure that you build a portfolio what you do not need the last decade but you will the next decade. annabelle: that was the bridgewater ceo speaking with john micklethwait at the qatar economic forum. haidi: take a look at the set up after record after record after record, almost across the breadth of asset classes. this is how we are approaching the start of major trading arc it's in asia, a robust set up in australia with gains across

the key recession, and in chicago, nikkei futures are looking strong as we are set to mirror the u.s. rally as expectations of slowing consumer inflation for the first time in six months. it gives leeway for the fed to cut rates sooner rather than later. there are still complicated headlines. of course, we are also seeing commodities trading at the highest in over a year. i pretty mixed picture, but it looks like we are setting up for a bullish start to trading this thursday. we are also getting hong kong and korean markets back online. more ahead here on daybreak australia. this is bloomberg. ♪ 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. a future where you grew a dream into a reality.

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the answer is j.p. morgan wealth management. annabelle: you are watching daybreak australia. political news in the u.s., they will send a delegation to taiwan for the inauguration of the president-elect. washington says the visit is in keeping with its long-standing practice of sending former officials to support the democratic electoral process. it was a setback for the chinese president for more influence over the self-governing island.

singapore's new prime minister is warning of a riskier and more violent world as he officially takes the home of the city state. he says singapore should brace for new realities as great powers compete shaping new global order. he says singapore will continue to engage across the u.s., its largest foreign investor, and china, which is its biggest trading partner. haidi: the indonesian president-elect says he would like the country to become the world's fastest growing economy early in his term, speaking exclusively with bloomberg at the qatar economic forum. we were told about his priorities when he takes over in october. >> i'm determined to build on that foundation, emma court focus will be first on food security. indonesia must be self-sufficient in food, and

then energy security, energy self sufficiency, and we are determined to bring down poverty in a massive campaign and effort, determined to get rid of hunger amongst our people, especially the young, and in the end, we have to concentrate on processing our natural resources. we have to make a great effort in down streaming and industrialize, and all of this needs good governance. i'm determined to cut down corruption. waste. and with that, we are confident

and bullish and determined to bring this all about. >> all ambitious if you would like to do it in your first term, five years. can you achieve a growth target beyond 5% in order for you to fulfill what you have set out to do/ in my commerce -- to do? in my conversation earlier, he said he has laid the foundation, implementing the policies, and put infrastructure needed for indonesia, can you achieve 7% or more in five years or less? >> i'm very confident. i've talked with my experts, i have studied the figures. i'm very confident we can easily achieve 8% and i'm determined to go beyond. >> 8% within the first, second year? or are you going beyond? >> i would say within three years, yes.

>> you talk about down streaming, what are the other growth drivers? or but will be key to you achieving 8%? >> down streaming will take several years. what will be a gross driver in the first years will be our concentration on agriculture, food production, food distribution, and energy. we would like to go green in a quick way. we would like to reduce our palm oil, and this will be a very strong growth driver. we import $20 billion every year

for diesel oil, so can you imagine the savings we will have when we will switch to biofuel? >> i would like to touch on your spending funds. you talked about how you would like to provide free lunches, free milk for students, and some are questioning how you would pay for such a program. can you fund that program if you are unable to raise the limit of your budget office beyond 3%? you have said you can. >> we have studied this. we have -- we have studied all the figures, and we are very confident we can do that. we are very confident that we can do that, -- >> while keeping your budget deficit at 3% -- >> yes, 3%. and 3% is not arbitrary.

not many countries hold to that, but we have a tradition of prudent fiscal management. i think we have the lowest jet to ddp -- lowest debt to gdp figure in the world, one of the lowest. so now i think it is time to be a bit more daring within good governance. annabelle: that was the indonesian president-elect with haslinda. we have breaking news, japanese gdp figures coming out, and these are undershooting economist expectations. first quarter gdp dropping 2% on an annualized basis, and that is from past economists surveyed, who have seen -1.2%. so what is driving that is a couple of factors coming out of the numbers.

first, you have spending by consumers, we saw private consumption falling more than expected, spending by companies is falling, and this is not a great outlook here. again, part of the reason for the contraction is we actually saw order experts weakening because we had that verification scam that erupted at the toyota subsidiary during the first quarter, so the boj really does not want to see these numbers. haidi: take a look at what we are watching when it comes to trading in australia as we set up the cash open in nine minutes time. increased strong risk appetite, just really mirroring what we saw overnight in the wall street session, closed record after record. and the s&p 500. we are seeing the prospect, and hefty reading into the asian

setting, as well. some gains when it comes to aussie bonds, we are watching the aussie dollar, 67 is where we are at. we have the hopes of potentially stronger action when it comes to the property market in china and has been passing through and some of the other proxies. that rally that we are seeing across australian bonds also seen across the kiwi bonds, following the gains and treasuries. yields were pushed lower, really across the board there. annabelle: more ahead here on daybreak australia. this is bloomberg. ♪

>> the latest delivery data for oil demand, especially in europe, the u.s. and other major economies came really weak in the first quarter. as you noticed, it is weekend industrial activity that is driving this in europe in particular, but also the second warm winter here in europe. haidi: the oil market division had, as we see commodities rally across the board. driven by the recent gains across copper.

it is releasing their the last few sessions. the highest levels we have seen in about one year, up about .60%, and we are seeing a recent recovery with the headlines and bloomberg reporting that potentially beijing is considering aligned local governments to sell unsold homes to absorb the glut we have seen. the copper short squeeze i mentioned as being felt across the global market, as well. oil was taking higher on the decline in u.s. stockpiles, as well as the broader risk on signs of ebbing u.s. inflation passing through across many asset classes. the market opens in sydney, seoul, and tokyo, next. ♪

haidi: this is daybreak asia, counting down to major opens. we are expecting a lift to equities following the u.s. inflation print. japan gdp figures were really disappointing what economists expected. haidi: thank key cpi data, by the way, seems like it came out early. we are hearing from the bureau of statistics talking about the early release of the cpi and real earnings data that they had inadvertently loaded a subset of files 30-minutes before the release, the office of the inspector general had been notified of the incident and they are conducting a full probe into controls there. annabelle: certainly and is a surprise for markets because we saw them push higher off the

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