>> good morning and welcome to daybreak all shelley a, i'm paul and alan and sydney. we are counting down to the major market opens.

top stories, white house and republican congressional leaders raise to rally support for the deal to avert a u.s. default. president biden personally calling lawmakers as environmentalists condemn the pack. u.s. equity futures post modest gains with optimism on the deal. markets look ahead to important factors when trading resumes after the memorial day holiday. a gauge of chinese equities in hong kong is closer to a bear market is a slow economic recovery -- as a slow economic recovery keeps investors away. annabelle: we've got the u.s. futures coming online. we have had a public holiday on monday. holidays are seeing trading but we see futures pointing higher at the outset. it really is down to that optimism around the debt deal of the u.s. we are seeing the bloomberg dollar gauge holding onto its losses that came in on friday. this had been the haven currency that investors had been retreating to. oil coming in online.

again, thinner trading volumes across the last couple of sessions. in terms of what we are watching, when we do see trade coming underway. the big question is whether nasdaq futures can hold onto the momentum. you can see they are outpacing the gains for the s&p 500 futures, and that comes down that we heard from the nvidia ceo. he has been in taipei. outlining it in a two hour presentation on monday, his vision for the company that seeking to capitalize on ai and they have unveiled products. that ai frenzy played out in the session. we saw japanese stocks really rallying with the news chip in the game. we are seeing the japanese yen holding onto the above 140 level. that could be something else support. japanese equities. we are looking fairly range bound as we get underway.

the big question is, what happens in the china market. we will get more details in just a moment, but essentially the story is that we are seeing chinese stocks approaching a bear market. paul: they didn't get any relief rally like we saw from the debt ceiling debate. the white house and republican congressional leaders are gearing up, lobbying campaigns to win approval of the deal to avert a u.s. default. bloomberg's washington correspondent kailey leinz joins us with the latest. markets around the asia-pacific yesterday are pretty much behaving as this deal is -- there is still a few hurdles to clear? kailey: there are. granted, it was a massive step forward to get that handshake deal between resident biden and speaker mccarthy in the first place. that has been turned into legislative tech that was released -- legislative text that was released sunday night. this is not game over your

lawmakers are returning to washington to be at the u.s. capitol tomorrow. on tuesday, eastern time at 3:00 p.m., the rules committee in the house will see the measure. setting rules under which it would come to the floor for a vote. that could become tricky because several republican members, including congressman chip lloyd and even potentially tom massey could be a holdout. two of which have expressed publicly discontent with the deal. they could hold up the planning of this package on the floor. it may be that three republicans holdout and don't vote, a democrat may need to get in line. even once he gets through rules, it has to get a vote in the house and senate. both sides of the aisle there are parts of the democratic and republican party who are unsatisfied with the compromise that was reached. paul: chip calling this deal, "insanity."

is there anything have a marker they can do on the gop side to assure this through rules committee? kailey: he might have to work hard to flex his muscles as speaker. he may be writing momentum if you got concession from the biden administration in this deal in the first place. but it may prove challenging because he may need to expend political capital to get it through the rules committee and he needs to garner 218 votes in the house of representatives to get it passed in the chamber. we know on the far right end of the party, members of the freedom caucus have taken issue with some of the parameters in this bill. the idea that the spending cuts are not cuts enough, not big enough to make those members that if -- satisfied that this -- that defense spending is an increasing by 3% on an increase of the defense budget. he's going to have to try to rally all these different parts of his party at the same time, but on the democratic side the house minority democratic leader may need to get more moderate

democrats on this. he is also not publicly expressed support for a deal at this time because there's plenty in this package that democrats are not happy with either. paul: tell us more because president biden has been making calls for leaders to try to get this over the line. what sort of resistance is there on the democrat side? kailey: president biden has been making calls to members and says he is feeling good, but we have to keep in mind that democrats, up until recently, have been calling for a clean debt ceiling increase with no concessions, no negotiations and that's clearly not what happened in the cup arise deal. some of the issues democrats are taking real issue with is the idea with stricter work requirements for entitlements. it didn't apply to medicaid in the package, but the snap food assistance program will see some tightening of that, which doesn't sit well with many members of the progressive caucus. there is issue with environmentalist about some of

the energy provisions in this bill. so, those are a few areas to which democrats may be unsatisfied. granted, it goes to show you that this will have to be a deal that ultimately makes it into law by passage at the middle. moderates in both parties are likely wet will get this thing over the finish line. a lot of work to be done. remember, we are one week out from the x date, went treasury secretary janet yellen said the treasury department will run out of cash to pay the bills. june 5 is rapidly approaching. paul: the clock still ticking, bloomberg's kailey leinz reporting for us on memorial day at public holiday. thanks so much. as mentioned, markets in the asia-pacific responding very positively to the news of principal agreements on the debt ceiling. rallying pretty hard, but with one mobile exception. what happened in china? annabelle: i was just thinking, i don't like using the term grim

milestones, but that's pretty active for the chinese markets. it's something we've been tracking. it was the story, the csi 300 raising all of its gains year to date. yesterday, the main benchmark was the hs cei index, this was the hang seng china enterprise index, the one that is china facing or mainland economy china facing down around 1.3%. that takes its losses for the year with a risk of reaching 20%. makes one, which is the food -- the food delivery service was the biggest laggard. this is the biggest story not only of the post reopening bounce not really materializing in a way that investors have been anticipating. that's part of the story. there's also earnings that fell short of what had been high expectations off the back of that. really just lacking any big catalyst given that geopolitical tensions are continuing to worsen between beijing and washington.

certainly, something that a lot of analysts are tracking closely and it's leading to downgrades that are coming through as well, the likes of jeffries, for instance, cutting its overweight allocation on the market for a second time in two weeks. we had citigroup cutting its overrate waiting -- overweight rating on china in just the last couple of days. paul: is there any relief on the horizon for chinese equities? annabelle: there doesn't seem to be. the really big issue is still the data coming out that's disappointing to the downside. china really pulling back. but we have the pmi numbers that will be out over the coming days. and then other factors that are really in play. it's down some more technical factors, including turnover. that has been more than two weeks below the one trillion mark. that really does highlight a lack of enthusiasm for investors. really choosing to stay on the

sidelines. something else we've been monitoring its how investors, who still want china exposure in some way, that turning to other markets around southeast asia that benefit from the china story, but they aren't directly inside the country. not a lot of catalysts could help chinese stocks improved to the outside. paul: thank you very much. that's annabelle droulers in hong kong. we will get more analysis on china's equities from speakers at the morgan stanley china summit in hong kong. in the next hour we will be joined by the bank's chief economist and later we will speak to the chief fixed income strategist and director of quantitative research. for now, here are first word headlines. the u.s. says china has declined to request for a meeting between defense secretary lloyd alston his chinese counterpart. they propose meeting in singapore and aiming to keep lines of commute occasion open to prevent conflict.

he called china's rejection concerning. beijing voiced concerns about u.s. sanctions all over his role from the purchase of weapons from russia. turkeys newly reelected president is said to be met with a market friendly former finance minister as he looks to announce a new cabinet. bloomberg sources say influential names within that circle are arranging the talks. he promises his new economic team will have international credibility following his reelection on sunday. the spanish by minister says he will dissolve parliament and call a snap election for july 23. that's after his socialist party suffered heavy losses on regional and local elections on sunday. the timing will ramp up the pressure on sanctions that left the coalition as it struggles to resolve a dispute over whether they can unite under a single banner. bwc australia is putting nine senior partners on leave and

appointing independent directors following attack scandals. the firm says it will -- with the government to minimize conflicts of interest and boost governance. they have been under fire for one of the former tax chiefs allegedly leaking secret information obtained during his time working as a government advisor. china is said to be looking to grant new tax incentives to high end manufacturing companies. a source tells us the proposal could help qualify manufacturers save hundreds of billions of yuan, but the plan is still subject for approval. aging is seeking to boost the economy as they lose momentum and have more innovation to counter u.s. competition. those were your first word headlines. still to come, u.s. chipmaker nvidia expands its artificial intelligence catalog with the rare valuation of $1 trillion. more details just ahead. we will have more on the breakthrough in u.s. debt ceiling talks.

here why our next guest sees more uncertainty ahead for markets as the deal faces congressional scrutiny. this is bloomberg. ♪

>> everything i'm seeing come out of this negotiation is --

negotiation gives me a sense of optimism and thankfulness that we will get past it. >> i think the clown show is over. there is a 100 percent chances passes next week and we are done with this. >> this deal is pretty good, not great, not perfect but no deal ever is. democrats should be satisfied. >> i think that global financial markets and economic watchers more broadly will breathe a sigh of relief. >> obviously when the u.s. share market reopens on tuesday, there will be uncertainty about whether it passes through congress. that will hold the market back a little bit. >> i think it will be a positive development that eases threat wins -- positive development that eases things. paul: some of our guests talking about the debt limit deal. joining us now is hebe chen. most of the voices there, all of them feeling optimistic. we did see a really fun asia-pacific markets on monday,

but a bit of a disclaimer, this deal is not done yet. it still has to get through the rules committee, it has to get through congress, it has to get through senate. are there still risks in your mind and the risk of a market pullback? hebe: thank you for having me. i think, just based on having a deal for this date, there are good reasons to feel a bit of relief. we are feeling that it will all go smoothly, more than likely the stark market -- the stock market will finish at a higher level. if you take a long-term view, it's not easy to not notice that all these conditions to make this last-minute deal happen changes the course. the u.s. government will face a high level of higher debt. and a spending cap, which is one of the key conditions to make

this happen. it will likely have a long-term implication on the economies objection. not only that, we are going to see less liquidity in the market and all the ramifications that the investor needs to navigate after this deal. in the longer term, what i can see is there's more uncertainties, they are still waiting -- there are uncertainties waiting to be resolved. paul: agencies are looking a little bit quieter. u.s. futures are looking fairly modest. what do you anticipate when markets open in the u.s. after this long weekend? hebe: i do anticipate the relief rally will still be at work, but we also know that this is the week of the job market. there is more information coming for the job market. we all know that has been

focusing on the job market's and developments. we have the job opening, we have a payout. they're all potentially had a big state into what the market would perceive that would move. after this concern about the debt ceiling, crisis aside, i believe the market would refocus on the fundamental of the economy and the monetary policies. paul: in to their point, once this debt ceiling debate is out of the way, and ideally finished before the x day, all of those other macro factions are on place and we have the fed meeting coming up. what do you anticipate, a pause, skip or a modest rise? hebe: looking at the datint of view more broadly, i see that the market has increased the possibility for another 25 basis point hike, quite sharply. about a week ago we only saw a 20%.

but i think the percentage has been increasing by 50%, 70%. so it looks like the market has been increasing after last week's data. increased on back of the basis point hike. what i also significantly noticed is the market increased five basis points in july. it looks like we are likely to see another 50 basis point hike in the next two months time. paul: i just want to get your thoughts on china as well, miss doubts on the relief rally we saw yesterday, do you anticipate we will see stimulus from chinese policymakers as the economy continues to stutter? hebe: yes, i think chinese market, if we take in the hang seng index is a key indicator, we can probably say it's safe to say it has lost its steam. we saw markets pulling back roughly about 80% since the

reopening applied. so, moving forward, i think the key reason for markets failed to cue facing is because china's data has been so -- not getting into the expectations, especially with all the information on this month. for the markets to get more fresh catalysts, the policymaker will be a big source of the catalyst. on the others, if we see the tension between the china and u.s. getting ease, that potentially will boost the market as well as what we saw last week and we see the chinese market rally because of the new message. biden saying he has seen relief. those are the two sources i see that could potentially see the chinese stocks rebound from the current low level. paul: how important is this pmi going to be tomorrow? we are expecting to see a modest rebound of this.

we have a bit of a track record of disciplining data out of china. do you see risks that tomorrow's numbers might be a bit of a let as well? hebe: the manufacturing for china is still in trouble. we didn't see much boost that the opening head for the manufacturing sector. in the key reason is received demand for the market is not strong enough domestically and globally not strong enough to push out of that. given that we have seen all the data from may and last week resolve the drop of 20%. we see the retail sales mixed with expectations. more likely, i think the manufacturing status still will be in the contractors sector. the other end is likely to slow

down a little bit because last month we saw the gross that manufacturing sector and we will be likely to see that it was cooling down a little bit as well. paul: hebe chen there, thank you for joining us. you can get a round up of the stories you need to know to get your day going in today's edition of daybreak. terminal subscribers can go to dayb and you can customize your settings so you are only getting news on the industries in the assets that you care about. this is bloomberg. ♪

>> 15,000 start up companies in the world building on nvidia today and 40,000 large companies and enterprises around the world are using accelerating computing.

we have now reached the tipping point of a new computing era. paul: that was nvidia's ceo as the world's most valuable chipmaker unveils a new batch of ai products and services. they have taken the wraps often ai super platform and called it dg x two h2 hundred which create successes to chatgpt. microsoft, meta and google are expected to be amongst the first users. >> this is the first new computer industry. software is no longer programmed just by computer engineers. software is programmed by computer engineers working with ai supercomputers. these ai supercomputers are a new type of factory in the future -- type of factory. in the future every single company will have ai factories and you will build and produce your company's intelligence.

paul: let's stay on artificial intelligence. the french open has picked an ai told to help tennis players cope with online pressure and protect their mental health. caroline: sports celebrities have gotten constant online harassment and tennis stars are no exception. rough fail the doll, roger federer all have received take comments on social media despite their achievements. a year-and-a-half ago hate speech against djokovic inundated social platforms when he was prevented from playing in the open due to covid vaccination rules. there french open organizers are trying to limit the damage, giving players access to an ai software that is aimed to protect them from cyber bullying on twitter, instagram, facebook or tiktok.

>> the only person that can see the comment is the one that posted it. we saw the online toxicity don't impact their field personas as well as tennis players. it's really amp to focus on the game only. caroline: the french company has noticed an increase of 60% of what they called online toxicity during covid, and 20% over the past year. when i was his age, we had to be inside to watch live sports. but with xfinity, we get the fastest mobile service and can stream down the street or around the block! hey, can you be less sister, more car? all right, let's get this over with. switch to xfinity mobile and get the best price for 2 lines of unlimited. just $30 a line per month. i should get paid more for this. you get paid when you win. from xfinity. home of the 10g network.

hi, i'm katie, i've lost 110 pounds on golo in just over a year. golo is different than other programs i had been on because i was specifically looking for something that helped with insulin resistance. i had had conversations with my physician indicating that that was probably an issue that i was facing and making it more difficult for me to sustain weight loss. golo has been more sustainable. i can fit it into family life, i can make meals that the whole family will enjoy. it just works in everyday life as a mom.

paul: you're watching daybreak australia, i'm paul allen and these are the first word headlines. japanese prime minister says he will fire his son from his post as political secretary. this comes after a scandal over a party held at his official

residence in late 2022. the premier had already reprimanded his son but a local poll shows three quarters of respondents show his behavior as a problem. paul -- apel has showed that a recent rise in support for his cabinet is stalling. singapore's president, who has served the country since 2017, says she will not be contesting in this year's elections. according to her the election date is expected to come in a few months time while the nationstate is run by the prime minister. the presidency holds important powers, including the right to veto spending bills and signoff on civil service appointments. reuters reports that elon musk is expected to visit china this week. the tesla ceo is expected to meet senior chinese officials and visit the company shanghai factory. it would be his first trip in three years. tesla shanghai plan to come from more than half its global production and more than 2022 in

the facility cannot produce a million cars a year. chinese president xi jinping is calling on officials to increase efforts to build a high-quality education system that has created a global influence. he says china needs to set up world-class universities offering scientific courses that meet the nations major strategic means and attract more overseas students. the call to step up comes as the country continues with rising youth employment. president biden said his team is reaching out some embers of congress to get them to vote for the debt ceiling deal. republican senator mitt romney says he will already backed the bill and so has the leader of the moderate coalition of house democrats. biden and house speaker kevin mccarthy had expressed confidence their proposal will pass and prevent an unprecedented default on u.s. debt. those were the first word headlines. joining us now is the professor of trade policy at cornell

university to discuss a few things among them, the debt ceiling debate and the fact that we have got a principal deal. professor, yesterday, i want to start with this idea. president biden did take a question at the press conference after announcing the deal on the debt limit or that principal deal about the possibility of just doing away with the debt limit altogether. australia had a debt limit for about six years before it was collected lee decided it was unworkable in the country got rid of it. what are the chances of the u.s. doing the same? eswar: eswar: pretty slim -- eswar: pretty slim because the debt ceiling has become a symbolic political tool that whatever party is in the minority, one house of congress can wield effectively when it doesn't have other levers of power. so in economic policy tool has uncertainty and chaos in the chances will give up that tool.

it's pretty some at the moment. paul: there are hurdles for the principal deal to clear. there are three republicans on that committee who have signaled it's still pretty lukewarm and that's putting it kindly. one of the republicans, i believe it was mr. roy, called the deal insanity. we may be getting ahead of ourselves, assuming that this is even going to get past. eswar: the political posture in washington is far from the main couple of days. we will have people at both ends and the democratic party and in the republican party taking on their positions. but ultimately, sanity will prevail and i think they will get the majority in both houses of congress, in this day will come through. certainly until the dail -- the deal is finally signed and passed in both houses of congress we can't count on it

being a full thing. given how close we were getting to a default scenario and how hard the two-party -- the two parties have worked to make this deal come true, i don't think there is any going back at this stage. i don't think there is going to be much more the other party will be willing to give. just a matter of handing out the support on both sides. i don't get will happen. paul: when you look at the concessions won by the republican side, was it worth dragging the world's largest economy to the brink of default, or at least the threat of it? eswar: it comes down to political posturing. if you think about the amounts, amounts that were in the range to 50 to $150 billion, that is really peanuts compared to the size of the u.s. economy and peanuts compared to the size of the u.s. fiscal deficit, so now we have debt in the u.s. that is about 130 percent of gdp, and all the elements that the

republicans have gotten concessions are are going to mean virtually nothing to really stop the rise in the debt, or really tackle the fundamental problems that underlie the deficit spending, which are the entitlement items, social security, medicare and of course defense. paul: you called this political posturing. we had one guest to call this whole thing a clown show, but we are going to do all of it again in 2025 after the next presidential election. it's not hard to imagine there being an even more political environment then. what sort of risks do you foresee? eswar: one could see what is happening in washington assuming it goes through being read by the market in one of two ways. one is that the checks and balances eventually work, even though it may lead to volatility and uncertainty in the interim. on the other thing, one can certainly see this is becoming

regulatory, creating a loss of confidence in the american system. this is the largest economy in the world. it's financial markets underpin the global financial system, and yet we seem to be seeing an extremely high level of political dysfunction, which affects not just the u.s. financial markets but the u.s. economy and potentially global financial markets. so it's not doing that much confidence in the american system, the american financial markets and of course the dollar of the american currency. paul: is there another risk in terms of fallen relations? president biden had a cancel a part of his trip to rush back to washington and -- to negotiate this deal. part of that was to new guinea and it bears remembering the country next-door signed a security pack with china back in march. one of the risks to this posturing, as you describe it is

to america's foreign-policy. eswar: both in terms of economic and geopolitical leadership, this does no favors for the u.s. i think the u.s. needs to be seen as a country that has not only economic size and deep financial markets, but institutions that work that includes the rule of law and independent central bank an institution -- and institutionalizes checks and balances and they seem to be holding together so far, but the fact that we have come to the brink of the precipice so frequently, the policymaking process is really broken and significant implications for american allies, and for those countries that are in the wings wondering if they should be with the u.s., china or somewhere in the middle. paul: to that point, do you think there is an appreciation among a lot of u.s. policymakers about how this sort of thing makes them look to their friends

and around the -- and to their adversaries around the rest of the world? eswar: you might think, the reality in washington is congressmen and congresswomen are very focused on their very narrow interest, which means, what is going to get them reelected with the sizable margins. the reality is that the implications of something like a near jet default scenario and what effects it might have on the world are really not factors that play into a congressional basis. certainly from higher level offices, such as the president's office, there foreign-policy lays a significant role, but not at the level where some of these decisions are made, which is in congress. paul: do stay with us. cornell university professor. we will talk a little bit about the u.s.-china economic relationship in a moment. time now for morning calls and

the japanese lender is positioning for big shifts in the boj and fed policies over the coming months. annabelle has got the details of these portfolio changes in hong kong. are they preparing for any eventuality? annabelle: that's right, not looking to move at any big positions. but let's take a look at what they are expecting in terms of major central-bank policies. this chart taking a look at the fed, boe and boj, two banks air focusing on is the fed in purple, you can see the key rate at 5.25%. but they say, like many others, we could be nearing the end of that aggressive tightening campaign. also, for the boj they say that an exit from negative rates and -.1% is possible. also shifting were scrapping the policy of yield curve control entirely. that could be changed depending on the how -- depending on the health of the u.s. economy.

as a result, if you change now, they are making changes to its bond portfolio. essentially de-risking it to some sort of sets and shortening the duration of its bond holding. that's number one. they're looking to off hold any liquid assets they are getting into positions that they can deploy cash over the coming 12 months if these policy changes to take -- do take affects. muzuho is bullish on japanese equities. in particular, what they say is they are attractive given the low valuations. paul: stick with us for japanese stocks. bank of america is also bullish there, right? annabelle: that's right. they put out a new know, looking out what's next, given we saw the topics, the nikkei, both hitting multi-decade highs. the big question that investors have is whether these gains can be sustained. muzuho around the bank of america says it is possible if we do see japanese corporate earnings continue to improve.

what they are also looking at is the underlying economic fundamentals and they say they are improving. we are tracking that across of range -- across a range of metrics. inflows from overseas investors and that's because typically they interest in futures to begin with and turn to cash equities with a multi-month lag. that's a change now. they've actually raised their end of 2020 three targets for japanese stocks, taking a look at the big run-up we are seeing over the course of the year. particularly in the nikkei with a 20% gain. eyeing a bull market. but their year end targets they are looking at 30 to 500s of the nikkei two. they are also 2300 for the topics -- topix. paul: you can watch us live in see past interviews on our interactive tv function tv . you can dive into any of the securities are bloomberg functions that we are talking about. you can become part of the

conversation by sending instant messages during our shows. this is for bloomberg subscribers only. you can check it out at tv . this is bloomberg. ♪

paul: wants to dear risk from china or as a way to explain restrictions on trade. beijing has rejected that language saying washington's goal is to decouple, to suppress china's economy. let's bring back the professor of trade policy at cornell university. seems to be a bit of disagreement here, between the words the risk and decouple. china sees no distinction. is there a distinction? eswar: i think the u.s. is china walk a fine line because there is a recognition in washington that maintains a good relationship with china, a very important trading partner, it's going to be quite empty and for the u.s. economy, especially if the u.s. economy looks to be weakening in the latter half of this year.

but at the same time, i think the entire negotiation is being frayed around security issues. it will be difficult to get around what is intrinsically a game between the two countries. paul: to that, i just mentioned in the introduction there that the chinese are unwilling to meet with u.s. military leaders at the shangri-la dialogue. what's your view of that? is it purely an economic argument, or does it go deeper? eswar: i think there is a deeper dynamic at play. you thick about the geopolitical relationship, intrinsically, this is zero-sum game, one country gains influence at the expense of the other. the economic relationship was seen as a positive and the two sides had something to gain from each other. in that used to be a balancing factor against the zero-sum game. but now, unfortunately, the economic relationship is being seen in both countries through national security lenses, so

that balancing forces have gone on these two factors, the geopolitical and economic relationships are both feeding off each other and making it difficult to see a path, whereby there can be a de-escalation of hostilities between the two sides. it is unfortunate that communication does not seem to be working well. there have been attempts by both sides to try to initiate discussions, but i think the chinese would prefer to keep it on the economic track and keep the political and security tracks completely different. they don't want to undertake any further discussions, but the u.s. wants to bundle the two together in the chinese don't seem receptive to that. paul: you mentioned a month ago that the u.s. facing headwinds -- headwinds, and the chinese economy is facing headwinds. i do wonder to what extent you think economic reality will force these two back together again. eswar: the economic dynamic should certainly be forcing the

two countries together because u.s.-china hostilities trade doesn't do much for confidence in both countries. business sector and household confidence are going to be very important for china in terms of sustaining its growth momentum, and for the u.s. in terms of trying to prevent the economy from tipping into a recession, but the difficulty here is that there doesn't seem to be a meeting of minds because the internal political dynamics within each country are driving what is happening on the ground. in the u.s., in particular, there is very little appetite on either side of the aisle to be seen as being soft on china. unfortunately, that positioning is only going to hard -- harden in the run-up to the november elections, which are not that far away. they are beginning to play a big role in the u.s. political debates already, and in china, i don't think there is much of an appetite for being soft on the u.s.

there is no clear path in terms of the political dynamics on each side to move towards economic reconciliation. paul: that's a fairly bleak prognosis, i'm wondering if you could characterize the u.s.-china relationship. is it historically low or whether you can see any glimmers of hope in there at the moment? eswar: at the moment i think we settle for further escalation of hostilities rather than any de-escalation of hostilities, which is better for both countries. i think there are some issues like climate change on which there is a meeting of minds between the two countries, so i hope that they will continue to cooperate on those big issues. if they then can compartmentalize and put aside the issues on what -- on which is clear between the two countries on cooperate on issues which is a common interest, there might be a bit of a path forward. but ultimately, keeping channels of communication at high levels and at the technical levels it's

going to be important to make sure you don't have any further escalation, and the progress does not seem that good at the moment. paul: professor of trade policy at cornell university and the author of the future of money. thank you for joining us. we will get more analysis from speakers at the morgan stanley china summit in hong kong. we will talk geopolitics with former u.s. diplomats. we will discuss self driving cars with david lee, cofounder and ceo of the -- group. we will be live at that jp morgan global china summit on wednesday and have an exclusive interview with ceo jamie dimon. this is bloomberg. ♪ ♪ ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf

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paul: seeing live pictures of wellington as we get news out of new zealand. on your bloomberg terminal, building permits for the month of april contracting by 2.6 percent after we saw a 7% expansion in the month of march. new zealand facing a few economic headwinds, as our many countries around the inflation picture. kiwi dollar trading right now just above $.60 u.s. building permits contracting by to fix percent in the month of april.

qantas shareholders may get more insight into future plans as the airline hosts in investor date on tuesday. the airline expects air travel demand will outstrip available seats for the full seeable future. from what to expect we are joined by our global reporter. fairly relentless stream of good news out of qantas. what are we expecting to hear today? >> they seem to be a company that is firing on all cylinders. qantas is expecting record profit this year. stock is up 20% in the last 12 months. projections are for another 20% in the next five months. this will be a case of does the reality meet those expectations. this would be the first investor day in four years that qantas has held. they are on the whole during covid. this is the investor date. the last one for alan joyce because he retires in november. this will be the first time

analysts will get to see what vanessa hudson, the incoming ceo, really has in mind for the airline. that will be interesting for me to see how much ceased -- see how much she steps forward. it will be interesting to see what kind of print she puts on the day. paul: to what degree is she a continuity ceo? one of alan joyce that projects was flying nonstop from sydney to london. is that something we are expecting to hear more about at this investor day? >> we will hear more about the fleet plans for qantas. they have said there are no big changes, it's more of the same. but the fleets is the one area where qantas could fall down. it's a huge investment coming in the next decade. they are do to get a new plane every three weeks for the next few years. they have 300 airbus planes on tap. really, vanessa hudson is

getting handed the bill for the fleet upgrade that alan joyce made for her. paul: this is good news from qantas. there are challenges, part of the reasons for the huge results is airfares are so high. are we expecting any commentary around change that price coming down? angus: one question is the degree of sustainability over the current market. we saw last week that demand still exceeds supply. there won't be huge decline in airfares at the moment. does it start to -- when does it start to normalize to a significant degree? that erodes profits. we will see that cramping of high costs and lower fares. paul: global business reporter who will listen into the qantas invest date later on today. for now, that is it for daybreak australia. "daybreak asia" next. do stay with us. this is bloomberg. ♪

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