good morning and welcome to daybreak australia. i am haidi stroud-watts and said they. we are counting down to asia's major market opens. the top stories this hour, the federal reserve is ready to take a break in its rate hiking campaign after u.s. inflation slowed in may. quicktime is had to be considering abroad stingless package to boost its faltering economy. including measures to -- mishandled handle classified documents and obstructing justice. let's get a quick check on wall street. futures just started to trade. we will see how they do after s&p rose. the nasdaq also rose. headline inflation in the u.s.

up 1% in may. that showed glimmers of hope of jpmorgan chase. it all blows pretty ok for the federal reserve tomorrow for skipping tomorrow. there are a couple of outliers. that was the main story of the day. you saw yields also surging. the front end of the curve so if moves. look at crude oil right now. we saw crude oil move higher for wti. let's bring in kathleen hays. we also have tom in washington to discuss all of this. how definitive is today's cpi report for the fed policy decision tomorrow? >> it came in as expected.

we were going to see a deceleration. not to target yet of course but no progress for the federal reserve to feel comfortable. time to pause, since the numbers. maybe even give ready to do more. we'll see. look at the numbers. the cpi on the headlight is down to 0.1%. that is the consensus. this how the numbers used to look in the surge of inflation. the third month in a row stuck a 0.4%. that has long been expected to be the sticky part of inflation. look at the drop in the cpi year-over-year. a very big decline. core cpi had a bid -- a big improvement here. this is still above target. there is a certain amount of base effect here.

that helps these numbers look better. in terms of some encouraging signs when you look in the report, used careport, used care been a big reason why core goods have not been coming down more. they are supposed to start dropping in june. early signals of that. the reds make up more than half of the cpi. they are actually starting to decrease. that is another good sign. core services, that is the number that powell watch so closely. it has begun to ease. all of these are very good signs that those pauses will bolster their case. >> how does this feed into expectations for this meeting? >> the federal reserve now is now even more widely expected to

pause and the question is if they will say it is a skip. in other words give it a more hawkish spin. we are watching and thinking things are getting better. we will get a lot of comments on that. certainly from jay powell at the press conference. i think another thing you have to watch very closely to get more of a sense of where the fed is and where he thinks it will have to go, the dot. the consensus has been pretty much clear you are going to get up to about five and a quarter percent. will is he a couple of drops down? maybe we will see a couple more dots above that line. showing people like jim bullard are still pushing for hikes this year.

markets have all but given up on a hike tomorrow. in terms of the june meeting, there is still about a 50% chance that that is bound to occur. a very interesting meeting. a lot of short-term guidance and messaging from powell. messaging from the policy statement, it will be very closely watched. >> moving to china, we had a nice little rally in the regular session of u.s. china stocks. also, something like 22 measures from the government. looks like the government is waking up and injecting some stimulus into the economy again. tell us more. >> the year started really positively for china with the end of those covid zero restrictions releasing demand. as we go to the second quarter, all of that momentum disappeared. we seem to be seeing is chinese

policymakers recognizing there is significantly more for them to do in order to regain some of that momentum. we are virtually certain to see a 10 point cut. we expect that to be followed up later in the year with further monetary easing. likely move on the requirements as well. and that broader set of measures aimed at stoking demand, addressing some of the negative sentiment in particular. >> will that actually create more appetite for this? given that credit demand has been so weak? we have been looking at the fact that productivity and china has been weakening. >> i think you put your finger on the key tension for the pboc.

if you look at where china is in the cycle, inflation is low, the factory sector is actually stuck in deflation. all of that screams rate hike and stimulus. if you look at the structural predicament that china finds itself in with debt to high, significant overcapacity in real estate, significant overcapacity in certain industries, that suggests perhaps rate cuts are not going to be that effective because they will not stoke more credit demand and if they do, that will worsen china's structural stresses. a tough position for the pboc. what are they going to do? probably split the difference with a 10 basis point move. >> lots of questions over the impact on this of these measures.

we are looking at structurally slower growth for now. what does it mean when it comes to where the deleveraging campaign goes from here? >> that is a really good question. of course, 2023, the growth rate gets an artificial boost from the end of covid lockdowns and the low base growth was pretty miserable. where is steady-state for china's growth? optimists will tell you they can still get close to 5%. pessimists would say the years ahead are going to be lower than that. you mentioned deleveraging. low growth also creates problems for the deleveraging campaign. what do you want? if you're going to pay down your debt quickly and painlessly, you want really fast nominal growth.

fast, real gdp growth. that is what uses corporate earnings and government tax revenue, it provides the funds to pay down your debt. where does china find itself? >> unfortunately they find themselves in relatively weak growth and relatively low inflation. not if you are facing a significant burden of debt to pay off. bloomberg economics during is out of washington. kathleen hays is in new york. let's get you there for a look at the set up. >> focusing first on the fed but also china and what tom was saying. weak growth, low inflation. the magnitude of the potential

package has yet to be seen. this is really the time to be buying this year. we saw stocks into the closing and mainland china and hong kong. this shot here showing the golden dragon index in china which was more than 4%. the and partly erased its losses for the years. analysts are saying chinese assets are either at the bottom or very near that point in time. that is especially true given you are having that overwhelming pessimism that will be released into the market. big news in some of the chinese internet and consumer discretion and link stocks. names like jd.com, baidu, the case could be made that this stingless measures could be pretty moderate when they come through as tom was mentioning. there are structural challenges china itself faces. especially if the government is unwilling to reverse some of those policies around local government debt levels and also

the property sector. the market could very soon be turning. >> we will check in with you in just a little bit. donald trump has plead not guilty to federal charges of mishandling state secrets. the former president immediately resumed rallying supporters behind his 2024 presidential bid in his second speech in the coming hours. let's bring in jodi schneider. so many things could change including personnel, location and even more. what are the chances the president goes to prison? >> it was a historic day today, certainly. the arraignment of a 4 -- the arraignment of the former president has never happen. what happened in the miami courtroom even though it was a short process, he was arrested and charged and plead not guilty.

he was certainly not guilty i'm going to fight the charges. then he came out and rallied supporters. chances of him going to prison, it is a long way to that. this is going to be a long process. the case has already been moved from miami to palm beach county. there will be a lot of procedural hurdles to getting it even to trial if that is where it is headed. we will have to see. there has been a lot of speculation none of this would occur until 2024 when it will be seen whether he is or is not the republican nominee. he very much wants to be the republican nominee. he said these charges despite the seriousness of them and there are 37 counts, he has said

it was intellectual interference. he says the democrats have used the justice department against him. >> historically, the former president has done very well in fundraising and soliciting pay support even though with you -- even though he has legal difficulties. does this remain the same? >> certainly. since the indictment was unsealed last friday, he has gained in terms of his approval rating among supporters and he has gained in fundraising as well. that is now and that is in the days following this. we will have to see what happens in the coming weeks and months. we saw chris christie, the

former governor of new jersey come out pretty strongly against him. and saying what he did was a crime and he should pay for it. we have even seen nikki haley who was in his administration, she has come out against him. while he has support -- and on the other was staying quiet is the current president. joe biden. he will not comment today again. he said he will not comment on the indictment, the federal indictment of his predecessor. >> jodi schneider in d.c.. coming up come disney shakes up its release calendar. we will get the details just ahead. before that, investors are

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>> we have a strong report today. >> this is a step in the right direction. >> inflation continues to come down. with the fed has to be pretty

happy with these numbers. because everything seems to be lining up for inflation to come out the way they would like to see it. >> it takes away some of the pressure for the fed. >> i would vote for wait and watch. >> it does not look like they will need to hike this week. >> that makes a lot of sense. twice it is a grudging skip if you will. >> i think it is a skip at this point. >> it turns into a pause after that. >> they are likely to go one more time. >> it does me look like -- it does look like it will need to hike in july. >> some of our guests reacting to the may cpi report and of the fed policy decision. dana joins us now from connecticut. this cpi report, does it give you hope that the fed will pause tomorrow and that we could perhaps avoid a recession?

question philly, yes. it is a great montage. it is an easy call. they signal all that. yes, i will pause. we come out of the bear market and we are officially in goal territory. maybe we actually nailed the soft landing. here's what i would say. if we did, that is great. it is finally welcome here but for the average investor, i would not bet on it. my expectation going in is that we have already had bear market bottom. i would retain some level of skepticism about this. >> what should investors do over the next few days while waiting

to see how the dust settles? >> we certainly promote long-term investing. no movement is based on what your anticipation is about one fed decision on a rate hike. it is more about how i positioned over the short, medium and long term. if you are thinking in terms of that short-term, i am going to say, consider some defensive posturing. to be clear, our expectation is the majority -- majority of people are closet index would not superhigh tracking. if you're in there, you are already super concentrated. just by owning the index, you are super concentrated in growth and tech. to the extent that you're tilting a little bit with some of your assets and you are moving away from the market

index, defensive plays are the name of the game. there is the potential for recession and continued volatility. >> does the broader rate environment have any impact on where the bets on a i go from here? i feeling every conversation converges and we end up talking about ai and the potential there. >> i would say you have massive exposure. it evokes are looking at this and saying the medic investing in a i, i would say look at where the majority of your money is already. you have microsoft and nvidia. nvidia at $400, i think the question is a really good one. for people who are valuation based, thinking in terms of fundamentals, looking at something like nvidia which is a by for a lot of analysts, there

is just this extremely high price and you have to learn to justify that, functions in terms of ai success. that is the bet. just by being in the market index and having these heavy ratings to something like nvidia. if that is what your players, it is speculated money. i am looking the other way a little bit. >> always great to chat with you. you can get around up of the that. you can also customize those settings. this is bloomberg. ♪ ahhh

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release schedule. disney did not specify a reason for the delays. with some of these titles, we are pretty accustomed to some of these delays. what does this mean? question a lot of stuff is going on. we had this writer's strike going on since may 2. a lot of projects have gotten delayed by that. then there is this larger cut back. there was a mission of improving profits. he has been cutting costs and trimming film and tv spending. spacing these projects out like this, it might speak to challenges they are having with

these major franchises. star wars really struggle to find a new team to lead that after their initial flurry of movies. >> they did not give a reason. is that concerning in itself? >> yes. we are trying. these are the 21 movies they have shuffled around. part of this is multilevel chest. if you change one release day, you have to move another. they are trying to claim prime real estate that other studios won't get. there is a lot going on here. this is a big shakeup of their calendar. >> what are we hearing when it comes to the reason? there are obviously some logistical challenges you have already gone through.

what does the commercial case look like? >> we will hopefully hear more from bagh -- bob iger about his strategy. disney's movie business was the envy of everyone in hollywood. marvel, star wars, pixar. all of these franchises are sort of long and the truth. you are seeing other studios like universal with the super mario movies, sony with spider-man, disney is definitely losing some momentum. we will see what bob iger has to say about that. twice we will see. >> that was chris joining us. coming up, more on the chances 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.

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it takes some pressure of the fed to continue to raise central -- raise interest rates. we already have an inverted yield curve. >> if i were floating which i am not but if i were a floating member of the fomc, i would vote for wait and watch. >> abby joseph cohen there. let's get more on this highly important fed decision. we will ring a similar analysis now with university of michigan 's professor of public analysis. i have to start off with the cpi program. it is the details we are encouraging that are trending in the right direction. >> we are definitely seeing the rate of inflation coming down. there is a lot to be optimistic

about. we know bringing inflation down is not something that happens overnight, it happens slowly. we are seeing moving in the right direction. that is the glass half-full story. i do think there is a glass half empty story here which is bringing inflation down from 4% to 2% is the hard part. across a lot of measures, what we are seeing is it getting very sticky. we don't have good reason to think it will come down very easily over the next year or even further. that is what the fed is wrestling with. >> right. it doesn't make this decision interesting but do you think the headline inflation rate is going to make it harder for them to justify continuing to tighten? >> i think that yes, it will make it harder for them to justify tightening but more

because the fed does not like to surprise people. i heard on your show, most people expect them to pause with expectations somly in the pause camp, i think it will really -- it will be really hard for them to do something different. when you do something different from what people expect, it causes a bigger impact than they want to have. the real question will be not to their pause, it sounds like they will need to pause this week given where people's expectations are but will they signal they are going to need further rate increases? where they signal they are going to continue to do wait and see pauses as long as they can? >> you figure at the very least, they will stress how data-dependent they really are. we are seeing that core services are not coming down as quickly as one had hoped. the core cpi broadly seems to

have settled out. as an economist, does that concern you? >> it does concern me. i think they are absolutely going to emphasize that they will continue to be data-dependent. i think the data is showing them we still have a lot of adjustments underway in the economy. when we look at the labor market, i don't think it is a story of a labor market on fire but i think it is a story of labor market still normalizing. we are seeing a lot of growth in places that have been slowest to recover from the pandemic. we are seeing slowdowns in the economy that are fastest to recover. you going to have to continue to look at the data to see if this labor market tightness is going to contribute to further inflation. will we see ongoing price increases at higher than what they want in the service sector

in particular? i think we will seek shelter inflation start to tame but what about some of -- what about some of the other aspects of services where i think it is harder to bring those inflation rates down. >> one thing that concerns me, i am sure it concerns you as well but even if inflation gets lower, prices are going to level out at a very high level. much higher. what you pay for two bags of groceries now, you pay for one. should the fed have their eye on that? >> i am so glad you raised that. people, what they are hoping for is to see prices coming down. they want to see deflation. the fed will never aim for deflation. you're absolutely right, the prices will level out at higher rates. there are two things that have been going on. we have seen inflation and that

is the average price level. beneath that inflation has been a lot of changes in relative prices. some things have come a lot more expensive relative to others and relatives that -- relative to the past. those changes could continue to go on. the fed is trying to get that average increase rate back down to 2%. it is not coming down to something negative. that ship has sailed. there are some parts of the economy where things become very expensive relative to other things. that is through the labor market in the united states.

we are not seeing huge softening in the labor market yet. >> i don't think it was that we wanted the labor market to sever to bring inflation down. it was often just a really bad side effects. what are -- what is driving prices up is people want to buy more goods and services then we have available. we will not sell -- solve that problem by making fewer goods and services. what happens is as the fed tries to bring down demand, sometimes it can have a bigger impact in demand particularly in the small sector than they expected and the result is the business finds my customers are not showing up. we don't really want to send a whole bunch of workers home and shrink the economy when we have excess demand driving price

increases. >> citigroup looking for one tomorrow. after 10 straight hikes, can this economy take another hike without being plunged into recession? how much more can it take? >> i think that is the thing the fed has to worry about. but i am hearing a lot of people saying is they should pause the june hike in july. what we really need to be doing is thinking about if they're going to need to continue to raise rates or can they settle where they're at right now? i like to wait and see approach. i am a conservative that way. chrysler is the potential loss of five credibility? is it that it hikes more and the

economy weakens more? does it have to hike more later? to the end up looking like they have made an error again? >> right now it looks like inflation expectations are in check but i think if they pause right now, they are going to end up hiking again. i think you just asked the most important question out there. which one of these things will affect their credibility. as a people that the pause will be out there calling for a hike this week. >> betsey stevenson, always a great to have you with us. kathleen hays in the as well. taking a look at the new zealand economy. economists are expecting them to share a modest contraction for a second straight quarter. this is something the reserve

bank was expecting, a mild recession. >> the rbnz was forecasting a recession in the second and third quarter of this year. they might be arriving a bit earlier if we get that print is expected. that would follow the 6/10 of 1% contraction. that is the technical definition of a recession. it is a difficult one. a really tough call. they survive just -- they surveyed just none of them. the other five have seen modest growth. a lot of diversions there. there is still record low unemployment in new zealand. immigration is at record levels as well. on the other hand, you have all this piping from the rbnz. a lot of factors to balance. tomorrow's gdp numbers are lining.

>> you see a technical possession. it is a definition. it does actually happen and new zealand is entering the recession. what does it mean? >> you will have to wait and see. you have to remember there was a much tightening in new zealand. they are done. the specialism mortgages in new zealand. it was previously said they would look at using. they're currently running 6.7%.

there will be the next one critical to the path ahead. quick still to come on daybreak australia, rebounding on the back of china's stimulus moves. this is bloomberg. ♪

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>> we are seeing new york's rated oil hold onto most of his big rebound after a sharp drop in the prior session with china's stimulus sparring bullish bets. the slowdown playing a role here. >> it is a lot of forces that are now bullish for oil. you remember the saudi's in opec doing that surprise cut back. it warned of those that were short on oil to be careful. that laid the groundwork perhaps. now you have the stimulus from china. the fact that the fed may go on pause and you have a big pullback in prices on monday here in the u.s.. the rebound on tuesday was dramatic. they were almost 4% intraday. brent crude saw a roughly 4%

bounceback. that has put a strong bid onto oil. we estrosi west texas intermediate above $69 per barrel. the stemless moves are a big part of the bullish sentiment. china supply -- surprised economists by cutting short-term interest rate and beijing is considering a broad package of stimulus measures. they have really been laid -- way down there from a lackluster recover in china. we are now seeing this as the world's largest oil importer. making stimulus efforts so the bet is on an increase in demand ahead. they can further but this out in july. we again have seen the saudi surprised in the last two meetings. there were some concerns that really did not cause the big rally in oil that was

anticipated. has the pullback was on monday. now, the fed possibly pausing. many of the bullish bets are now being lengthened. >> the u.s. is fighting to provide 12 million barrels. does that tighten the market further? >> we have a lot of traders that have been closely monitoring what the plan has been. it has been known the reserves were depleted and at some point the administration would have to buy.

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>> you're watching daybreak asia coming to you live from new york and sydney. >> counting down to asia's major market opens. at the top stories, u.s. inflation will resume later on wednesday. sentiment getting a boost from the stimulus to support sectors including property and rejuvenate domestic demand. donald trump pleads not guilty in a miami court to charges of mishandling classified documents and obstructing justice. >> we have breaking news crossing the bloomberg whenhaide seeing for the unemployment rate , the seasonally adjusted jobless rate for may coming in at two point 5%. that is a significantly lower number than expectations of 2.7%. that was a surveyed consensus.

falling from 2.6% in april. seasonally adjusted for the month of may. surveyed consensus. fallingwe actually saw the expes that we'd see a worsening when it comes to the labor market and loosening marginally in may. there have been indicators of weakening economic activity. bloomberg economics expected a 2.7% gauge, but this indicates the south korean labor market is more resilipreviously expected in the resilient than y expected in the face of the slowdown. it certainly would suggest that we could see the be ok having more great -- more room to keep their policy status tied. annabelle: certainly, a central bank we are focusing on quite intently. when you take a look at equities, the leaders are going to come from the u.s. inflation numbers overnight. more details ahead. we did see the slowdown coming through. that tells us the fed is likely to pause when it meets on wednesday. in terms of the lead in, we

recap what we saw on wall street. quite a strong lead for the sydney session. new zealand is online to the downside. nikkei futures looking flat. we had seen futures to other contracts pointing to some significant gains. we are not just taking positive cues from the outlook for the fed, there are other banks in action or in focus. the boj is among those, which is expected to keep easy policy settings in place. as well as what we see for the pboc. a chance we see a cut to the medium term lending facility on thursday. these are supportive factors for equities in this session. let's change now and take a look at other asset classes. bonds in particular. we are seeing yields moving higher. very much tracking what we saw in treasuries overnight. that expectation also building in. the fed will be cutting interest rates later this year. currencies likewise in focus. we are seeing the dollar holding on to some of its declines in the early session but currency

is trading flat. watching the offshore yuan in particular giving us all that expectation in the hopes that traders are around the need for stimulus to try to boost the economy. vonnie: as you mentioned, futures have started trading, it's very early going in the session. s&p futures and nasdaq pointing to small gains. dow futures pointing to declines. many reflecting the regular session which is that the s&p is 70's -- 7/10 of a percent and the nasdaq rose 8/10 of a percent. this as we saw a headline inflation cooling. it's now at the 4% rate, down from 4.9% last year. month over month it was up .1%. we get to the core of the super court data with kathleen hays. essentially the message was this gives the fed permission to skip . was it cool enough for an outright pause. that something we will debate over the next several hours until we get the answer.

will the fed pause after an aggressive 50 months rake -- rate hike cycle and what needs to be done next. let's ask kathleen hays. how definitive for the fed's policy decision is this particular cpi report? kathleen: you said will this mean they pause? ethic it's very important to note that for the last six weeks, federal reserve officials are on the fence. let's talk about rafael bostic from the atlanta fed, he has said i think we can pause, but if there is another move, it will be a hike. they fall said important reports will determine jobs and inflation. we have more improvement than expected on the headline cpi down to 4.0%, the lowest since march of 2021, core cpi, less improvement due to the base effect, the comparison to high inflation last year. when you look at the monthly levels you see the story clearly. on the headline there is

improvement. on the core it looks like it has flattened out. we can look into the report further and see things encouraging. energy prices, yes, that's why the headline fell by 3.6%. when you look at core goods and core services and other things happening that are optimistic. used car prices have been driving up core services for months. now we see early reports, early side -- signs that they are dropping in june. that's a good move. rent makes up more than half of the cpi. they have been rising steadily, big headache for the fed, now they are starting to decrease. increases are getting smaller, core services. that something that jay powell is watching very closely. if they needed a sign, it would have been tough to move if they saw hotter inflation. now they've got something that says, we can do it, we can pause, maybe it will be a skip, but that is what we will be listening for for the fed.

haidi: what are we expecting when it comes to this meeting of communication in terms of move and lack of move. kathleen: communication has to say, we are heartened to see improvement. yes, we agree there are parts that aren't coming down yet. probably the most important point of all will be what do they signal in terms of, is this a skip, skip, is this a hawkish? this will come through into things. whatever jay powell says at the press conference. he can say that very clearly. he will get asked the question over and over. another thing we ask closely is the dot plot. every few months the federal reserve updates its forecast for gdp, unemployment and inflation. once they each individually have their forecast, they say, here's where i think rates need to be to achieve the forecast. if we look at dot plots, in april they were so lined up, a vast majority went to five and a

quarter percent, a handful more hawkish. some to 6% because i thought you had to get the funds rate over the inflation rate. but what if the dots change? what if dots drop down? what if more.ca higher rate? that will be a strong signal about what the fed's next move may be. markets aren't betting on one hike tomorrow, they aren't betting on a cut, but when it comes to july, about 50% as the odds people see for the chance that they will do another hike because inflation will prove to be a little more gnarly than they are now. haidi: global economics and policy editor kathleen hays. the other major economy we are focusing on his china, looking to ramp up stimulus as the president faces obstacles for a faltering economic recovery. let's get more details from bloomberg shanghai bureau chief. interestingly we are seeing some levers being pulled when it comes to certain rates being cut

, this comes as credit demand continues to look weak, and more efforts when it comes to these stimulus measures. is it going to be enough? what are they planning to do at this point? charlie: everybody is now expecting the pboc to cut the key policy rate, which is the midterm lending facility rates tomorrow, following the surprise cut in the short-term policy rate, the seven-day reverse repo yesterday. they are doing this because the economy, the post-covid rebound is quickly losing steam. the indicators looks pretty weak across the board. exports have fallen for the first time in three months. there's no inflation. manufacturing activity has contracted, business confidence is low. residential sales has been stagnating. all of this are supporting the argument that pboc will need to have a new round of stimulus.

and also, we hear people familiar with the situation that china will quickly rollout packagespackages -- policy measo boost the economy, including the property sector, and also the internal consumption. but it's easier said than done. the business confidence is low, and that is reflected in the slowing of credit data released last night. the aggregate financing all fell compared to one year ago in may. that just shows people -- corporate's are not borrowing because of lack of uncertainty over the near-term economic outlook. anyway, it seems everybody now is looking at an upcoming round of stimulus package because it's

badly needed, especially when the global economy is weakening, the growth is slowing, the fed is expected to pause or cut interest rates tomorrow. vonnie: how much capacity does charlie have to stimulate demand, given the local governments and local banks may not be in the healthiest how mu? charlie: definitely more limited compared to before. china's local government finance and also the property sector have been overly stretched. china's total debt as a percentage of its gdp, which is the macro leverage is hitting a record high in terms of fiscal stimulus. in this scale of support will be limited.

so the government is obviously facing a lot of challenges in the consensus is they need to do something to boost corporate and consumer confidence. vonnie: we will be watching out for next steps. that's bloomberg shanghai bureau chief joining us. thank you. still ahead, a&e showcases its line of processors aiming to challenge nvidia's dominance in the market. ♪ -- haidi: invesco tells us why the fed wants to sit on its hands that deliver some stern language from policymakers announcing their june rate call. that's coming up next. this is bloomberg. ♪

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>> we got a strong corporate today. >> it was a good report. >> it was a step in the right direction. >> inflation comes down. >> inflation is coming down. >> the fed has to be happy with these numbers. >> everything is lining up for inflation to come out the way they would like to see it. >> it takes away pressure for the fed. >> i would vote for wait and watch. >> it doesn't look like they will need to hike this week. >> the skip is hiked in, that make sense. >> a skip has been communicated.

>> it's a grudging skip. >> i think it's a skip and will turn into a pause. >> they are likely to go one more time in july. >> it doesn't look like they will hike in july. >> they will need to be flexible that all options are on the table. vonnie: some of our guests reacting to the may cpi report. our next guest says conditional pauses could be conditioned given the economy a chance to digest without being viewed as dovish. let's discuss this with our chief global market strategist at invesco. you are dubbing tomorrow's move a conditional pause. you are assuming there will be no rate hike tomorrow and what the difference between the conditional pause is and a pause. >> a conditional pause carries a damocles. it's a way to stop hiking rates without giving the signal that markets can start to party and

ease financial conditions because that's not with the fed wants to do. so having that hanging over the head of markets and suggest that they can always implement a hike for the meeting. we've seen the bank of canada do that in the reserve bank of australia. relatively short conditional pauses and i think that's a powerful tool to have. vonnie: having had a few hours to digest cpi data, look at the labor market data. how long could the fed pause for what the next move would be up or down? >> this could be an environment in which the pause continues. having a pause tomorrow means there are weeks and weeks of data that the fed will get to digest before it needs to make a decision in july. we are in a significant trend, i will call it immaculate -- immaculate disinflation, but

it's a good disinflationary environment. also, we have an economy that is clearly weakening. the lag effects on monetary effects on monetary policy i don't think, has largely appeared in the real economy yet. we will see more of that data appear at i think that will give the fed pause to maintain that pause. haidi: when it comes to the july decision, is the bond out higher given that disinflation is coming and strong. >> what we are seeing right now is in in perfect disinflationary environment. we have headline inflation improving with core inflation rather sticky, but typically what we've seen in the past i ht

follows. i think the fed is great to be vigilant, as are other central banks. we don't want to get to a place where inflation becomes entrenched. so having that damocles hanging over markets, i think is important, suggesting that another rate hike could happen at any meeting is important as the fed sifts through the data. but i do believe this sticky core inflation will start to unstick sufficiently by the end of this year. haidi: it's interesting because at least on paper it looks like we have the same situation where growth momentum is weakening elsewhere. and the countercyclical impact of china could potentially come into play. obviously, if you look at the stimulus measures that have been announced, some of the targeted rate cuts and the structural

impediments to chinese growth, does this tell you we will not see china hauling the rest of the world out of a low growth situation again as they have in the past? >> i think china could be helpful. i'm something of a china bowl and that i believe there is -- there are long legs to the post covid recovery. having said that, it is very much an uneven economic environment in china as it has been in other economies after they reopen. it's lopsided. goods are weak and services asta reflection of weakening global'd about that, i think there are lakes when it comes to the services side of china's economy, and that can only be help by the measures that china is likely to implement. vonnie: thank you so much for

joining. we will watch the fomc and the press conference afterwards, that's christina cooper, chief global market strategist at invesco. donald trump pleaded not guilty in a mammy courtroom to federal charges of mishandling state secrets. the president as supporters to rally and is set to deliver a speech in the coming hours. let's bring in bloomberg's kryst strom in washington. the reaction, has a former president got a defense in place that might be actually able to fight these charges? >> it's a pretty surreal environment for the first time in u.s. history, a former president has been charged with federal crimes. the trump defense team did not put on any of their strategy today, but they have previewed what they are going to try to do, they will try to argue that it's selective prosecution and they will try to prevent the use

of attorney notes in the trial, so they will do a lot of attacks on the process that the justice department is using and try to make a bunch of pretrial motions. haidi: how is this playing out for the former president because we know that with legal challenges in the past, he has done well in terms of fundraising and garnering support from his base? >> there doesn't seem to be a downturn for trump at this point. he is fundraising off the indictment. right after he walked out of court he went and did some campaign style events. he is going to get back on the campaign trail, make speeches, rally his supporters. at this point, a lot of

supporters that have been commenting about the indictment are criticizing the justice department and saying the selective prosecution -- will see as things progress and as more evidence comes out in the trial begins, what kind of impact it will have on the public perception of trump. haidi: bloomberg's chris storm in washington. more to come on "daybreak asia". this is bloomberg. ♪ ey client experience? listening more than talk and a personalized plan ♪ to guide you through a changing world. ♪ conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity.

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and keep more of what you make. start saving today at godaddy.com vonnie: tsmc regained its $500 billion capitalization as investors ramp up at seven ai boom. the 2023 gain reach 32% cementing its position among the

world's 10 most valuable corporations. investors are piling into stocks to write surging demand for ai services. haidi: amd is releasing chips to help data centers handle a creche of traffic. its new product will challenge nvidia's dominance in the market. let's bring out nick turner. tell us about this latest amd product and how significant the implications are. nick: this is a series of products they unveiled in january, but they gave a little more detail today and they unveiled an accelerator, which is essentially a gpu, a graphics processor, this same thing that nvidia specializes in that specializes in ai, handling ai workloads and the kind of stuff that chatgpt and all these ai services are using.

so it's kind of a closely watched thing for them, whether they can catch up with nvidia, as you noted crossed a trillion today, so there's a lot of faith in what they are doing. vonnie: we saw a huge reaction when nvidia announced the same thing but shares were down 3.6% so why was the investor response so lukewarm? nick: they are in catch-up mode. nvidia has this part of the market locked down for the moment, it seems like. with amd, i think the hopes were so high, because the shares were hopes were so high, because the shares were up 99% or yesterday, this year, so they haven't been doing too shabby either in the stock market. i think the hopes are so high that i don't know what they could have done today that would've satisfied people. vonnie: maybe we will see more of a positive reaction tomorrow. bloomberg senior tech editor

nick turner, thank you for joining. a closer look at the political fallout from the federal case against donald trump with a university professor. this is bloomberg. ♪ we moved out of the city so our little sophie could appreciate nature. but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go. i might've taken it a step too far. (chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams)

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annabelle: you're watching daybreak asia. 30 minutes away from the open in sydney, seoul and tokyo. the focus is going to be on the fed with its decision do later wednesday. that's after we had the u.s. inflation data coming through overnight in the key take away from that was a slowing. that certainly gives jay powell, his colleague's room to pause in the upcoming meeting. traders say the hike is at around 10%. after the wall street session starts gaining. s&p 500 higher for a fourth straight day. the dollar also a little bit weaker. these are treasury yields spiking. that was more down to expectations. the fed won't actually cut rates later this year. this is a set up we are seeing in futures, a little more steady. we still didn't see so much positivity. we take a look at what's happening in the set up for asian stocks today, we will take our cues, particularly you can see the nikkei futures coming online in singapore.

1% to the upside. also seeing other futures looking higher for sydney in particular. china is the key market you are watching this morning, given what came through in the later part of the trading day. we saw stocks rising and that was after officials unexpectedly cut the seven-day reverse repo rate. the key expectation is that we will also see the key longer-term policy rate lowered on thursday, plus possibly more stimulus measures coming through to try to support the economy that has been under so much pressure. and we are seeing other commodities gaining. we had oil in the price session, iron ore in singapore coming back online at the start of the day's trading. vonnie: thank you. of course the fed tomorrow will influence things. donald trump has pleaded not guilty to federal charges of mishandling state secrets. bloomberg's kailey leinz was outside the miami courthouse with more. >> history was made here at the miami federal courthouse on

tuesday when former president donald trump became the first ever former president to be arraigned on federal criminal charges. he was arrested and processed and pleaded not guilty to all 37 counts related to his handling of classified documents at his mar-a-lago resort in florida after leaving the white house. there were also housed -- hundreds of pro-trump supporters who are at the courthouse today. police that i spoke with indicated there had been no violent incidents that they were aware of and president trump, after leaving the courthouse went to a popular cuban restaurant in miami to speak to some of the reporters. as for where the legal proceedings go from here, this case will move from miami to west palm beach florida weather judge, a trump appointee, will oversee it. it then becomes a question of the timeline. president trump has a reputation of dragging legal proceedings out for quite some time. we could see the fight going well up to the november 2024 election or even beyond. on the subject of this election, we will see if this has the

galvanizing force among former president trump space as happened with his first indictment in manhattan earlier this year. he is still the front runner for the republican nomination in the gop primary at this point. the general election is another matter and we have to consider between now and november of 2024 former president could still face legal headaches. he is still under active investigation in different investigations into his attempts to overturn the results of the 2020 election as well as the january 6 riot at the u.s. capitol his legal woes do not end here in miami. kailey leinz, bloomberg news. haidi: joining us now is a professor of political science and a regular bloomberg news contributor. always great to have you with us. we were chatting in the break, what a day, what a historic weekend it has been in this week

so far, week so far, particularly the events of today. what was noteworthy to you, given the historic aspect of this and how this plays out from here? >> we are looking at former president trump facing his second set of criminal charges while he's making his third run for the white house. quite a defiant run it is period i have to say, something that struck me today is something that kaylee said in her piece. which is after he went and was arrested and pleaded not guilty, he went to a very popular cuban restaurant in miami and the choice of a cuban restaurant was not just made on a whim. he went there specifically because he wants to underscore that like many cubans and cuban-americans, he too is being persecuted. this is what i think is going to be the theme we hear in his speech tonight and throughout the rest of the campaign for the presidency is that he has been persecuted and he understands americans who feel persecuted. he is going to stand for them. that will be the theme going

forward as he going forward as he tries to mount a defense in these two criminal cases and the others that are yet to come, most likely january 6 by the feds and in georgia. haidi: we passed the indictment over the weekend and it was compelling read and. how heightened are the risks for the former president and the fact that, according to his playbook, this has really only worked to galvanize his fundraising efforts and his political base? >> it has. we think after the new york city indictment by alvin, they raised $12 million. he is going to try to beat that, starting tonight. they already are promising that if you are able to raise 100,000 or more tonight to donate, you will have a candlelit dinner with the president, so they are very much pushing forward in terms of fundraising and to bolster his poll numbers.

we saw that after the new york city indictment. the early polls that i should underscore, still early that came out after the indictment and are still coming out, show that this has done little to dampen gop voter enthusiasm for donald trump. you have 80% of gop primary voters say in one recent poll that even if he was convicted of these charges, he should still be allowed to serve as president and only 7% said this would change their minds, in terms of their view of donald trump. so he is leading in the polls at this has done little to dampen that. there's always a question as we move seven months and we start voting, then we wait until november 2024. people's minds can't change. we may see that because this is unprecedented. we really have no clear idea or indication for where we will be in november 2024. vonnie: how stable is donald trump's defense team and how populated?

>> they are still looking for a defense team. he had two attorneys there today, they were interviewing as late as last night. some florida members of the florida bar who have experience in this area and could serve for the president. of course, the amount of the presidents woes he has faced illegally over the years, and the amount of trouble for the attorneys that have served him -- one name that comes to mind is seven became a witness in a case. many attorneys are shying away from serving with them. that said, i think you will find a good defense team and will have it in place in time to defend himself. the real question will be, when does this trial occur? i imagine we could see a scenario where we are voting before jurors are voting in the jury box on his innocence or guilt. vonnie: we are watching live

pictures of the former president's plane arriving at newark airport in new jersey, not far from new york city but also not far from bedminster where the former president plans to go and give a speech scheduled for 8:15. he will be reaching out to his supporters, no doubt. what can you say tonight beyond the usual rhetoric that we've been hearing that this is a witchhunt and there is no substance to these charges? >> i think you just said what we are going to hear. we going to hear. we will hear the same apocalyptic language we have heard on truth social, we have been hearing from his press folks. he has been saying when he's gotten a chance. unfortunately, i think that's what we will hear for the remainder of the campaign. and that's the problem for the other gop contenders. anybody who wants to talk about issues, say the economy, say education, even issues regarding foreign policy, they are going to be drowned out by donald trump's consistent claims of a

two-tier justice system, a witchhunt, political persecution and the fact that he is here to stand for all americans in the faces what -- in the face of what is an onslaught of the biden administration and democrats who control what he describes as the swamp in d.c. that will be the message, it will be apocalyptic, as he always is. it will be dark for the remainder of the campaign. which is unfortunate, as a political science professor, because we are facing so many issues and other contenders in these issues, they can't find oxygen to make their case against donald trump, who pretty against donald trump, who pretty much consumes the free media airwaves at this point. haidi: was this a missed opportunity for collective strategy for conservatives that don't align with donald trump? could they have done something more as opposed to allowing him to not dominate and how do democrats and independents potentially benefit from this? >> i think it's very tough for

these republican opposition contenders. we've heard some dry. chris christie has been very strong. asa hutchinson. also most recently, nikki haley and tim scott. i think nikki haley has the right tone when she says this is a danger for people like her husband, who has deployed to africa next week. it is a soldier and is a danger for all soldiers who are in the field if we don't treat the classified document issue seriously. so i think that is a message that may resonate with members of the gop. but this is the challenge for all of these candidates. how do you breakthrough? trumpets deleting double digits. the latest real ear politics full had him up 36% over ron desantis. so it is still very much donald trump's gop. he benefits because they have about 10 to 12 viable candidates

in the race right now. the more contenders, the harder it is for anybody to touch him because he has a bottom of 30%. the more contenders in there to break up the remaining -- remaining 6%, 70%, the tougher it is for them to break through. as you said, joe biden benefits from this. the biden administration has long said that if he can go against donald trump, it helps him because joe biden has his own political challenges, his poll numbers are fairly low. in a general election, when you are talking about independents, moderates, suburban women, these issues will play the democrats advantage, as will other issues like, abortion. it's something the biden administration is not talking about openly, but anybody engaged in politics knows he would very much like to go up against donald trump. one other thing i should add on

that, for all the talk about joe biden's age, tomorrow is donald trump's birthday, he turns 77. it's his birthday eve. that helps joe biden because you now have two thoroughly elder gentlemen by way of presidential candidates, running. joe biden wants to run against somebody that age versus a ron desantis or a chris christie. vonnie: we are reminded of that when we had the happy birthday song to the president. professor of political science. a bloomberg news political contributor. this as we saw the president arrive at newark airport. these are live pictures. newark is in new jersey, 37 miles to bedminster. former president trumps golf course will deliver remarks at 8:15 eastern. having pleaded not guilty to 37 historic charges, accusing him of mishandling top secret government documents and conspiring to obstruct justice. plenty more to come on "daybreak asia".

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haidi: take a look at fx trading. got a pair is benefiting from the dollar decline.

that headline disinflation seeing numbers trending a little bit lower, supporting the fed rate because, that putting down side into the u.s. dollar. also watching the end. traders really cheering the soft approach we are seeing from the governor as we get into the boj. these revised expectations of any future timing for why cc tweaks in the light being lightd back. dollar-yen holding steady at the 140. we are seeing the aussie dollar seeing upside alongside prices of the likes of iron ore, really getting a lift from the expected china stimulus measures, as well as some of those great cut expectations. dollar china trading pretty flat at the moment. vonnie: oil is holding onto most of its rebound after a sharp drop in the prior session with china stimulus move. bloomberg su keenan joins us. u.s. inflation slowdown is obviously playing a role here. su: combination putting a

bullish bid under oil, which did pullback in the monday session here in the u.s. on concerns of a number of matters, including what the fed may do. but now we saw in the latest session, oil up as much as almost 4%, both in west texas intermediate and brent coming back a long way from the pullback. and we are holding a lot of those gains again in asia trading. china surprise the economist on tuesday, cutting the dust surprised economist by cutting short-term interest rates. cutting short-term interest rates. being that it is the largest importer of oil, there is now a demand play. a lot of traders betting demand will increase. crude has been weighed down by the slowdown in the recovery in china. there has been sluggish data, international flights have been bogged down, the trading data also an issue. but according to a commodity strategist at td securities,

it's now risk on for a lot of commodity traders. it has a lot to do with china. also has to do with the renewed view that the fed may pause on the latest data, showing that inflation in the u.s. has cooled down a bit. nymex crude has been on a wild ride both last year and this year. the short-term direction for now, analyst and trader say appears to be higher. haidi: watching the reserve refill plan, does that seem to have tightening implications for the market? su: many traders have been watching what the biden administration will do to refill this fairly depleted strategic oil reserve. it was last year when russia invaded the ukraine that you had that dramatic 180 million barrel drawdown, unprecedented at the time, so now the question is, how does the government refill

that deficit? people close is a matter telling bloomberg of land for about 12 million barrels to be purchased throughout the year. the plan is to buy it in chunks. they say it includes 2 million barrels scheduled to be delivered in august and 3 million from a solicitation the biden administration entered on friday. that's according to sources. the white house, thing on the matter. an energy department spokesperson has said that they will continue to seek offices these's for additional repurchases as market conditions and constraints of the spr allawi a transition to buy on the this but now you have oil heading higher. haidi: bloomberg su keenan with the latest. binance got u.s. and the sec have agreed to work on a deal that avoids a total asset freeze for the trading platform. which the regulator has accused of operating illegally. it's compromise proposal with the court the sec asked u.s.

customer assets. that would leave them outside the reach of its founder. elsewhere, the singapore-based investor has paused withdrawals on its high-yield asset management platform citing a certain issue with one of its partners. some online reports in south korea where haru was founded, called the suspension a rut bull. the microstrategy chairman and career founder said bitcoin dominance will rise as stablecoins and tokens as stablecoins and tokens will disappear. only the original cryptocurrency and maybe a dozen other transactional coins survive. >> micro strategists views since 2020 has been that the only institutional grade investable asset in the crypto space is bitcoin. bitcoin is the universally, globally acknowledged digital commodity in this industry. i think it's pretty clear that the regulators don't see a legitimate path forward for cryptocurrencies, like the stablecoins.

crypto securities like the tokens mentioned. they don't have any love for crypto derivatives, they don't have any love for crypto tokens, and they have a view of crypto exchange's, which is far constrained. crypto exchange is should trade and hold pure digital commodities like bitcoin. so the entire industry is kind of destined to be rationalized down to a bitcoin focused industry, with maybe a half a dozen to a dozen other proof of work tokens. >> what happens to the what haps ? in the u.s. it seems if they are only going to offer trading in bitcoin or other, clearly pure commodity tokens, that's not going to be a great business model. do exchanges in the u.s. go away? >> i take a different point of

view. i think there has been confusion because of the 25,000 other crypto's and because of all of the crypto securities that have been angling to position themselves as the next bitcoin or a better bitcoin. so now i think that the public is beginning to realize that bitcoin is the next bitcoin. the next logical step is for bitcoin to 10 x from here and 10 and again. eventually i have confidence that the crypto exchange's will come around to realizing that bitcoin really is the dominant asset in this space. and their business models are fine when bitcoin goes up by a factor of 10. we can see that the dominance of bitcoin in the crypto economy is measured by coin market cap has moved from 40% to 48% this year alone. but i think that as the stablecoins in the tokens go away, that long-term dominance is headed for 80%. i think what you have to

remember is, the reason we don't have mega institutional money flowing into the space is confusion and anxiety. when that disappears, you will see mega amounts of money flow into space. the business models will be fine focused on bitcoin. vonnie: microstrategy chairman and cofounder michael seiler. 20 more to come on "daybreak asia". this is bloomberg. ♪ thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh

haidi: -- vonnie: with the vo j and focus i thought it was fascinating to see that even after having seeing a rally, investors are piling into any bts they can find for japanese stocks. the ishares msci japan etf, which is blackrock's etf, japan's focused etf, the green and right hand side. there is a few days of red but it attracted something like $1 billion in the last week alone. the biggest weekly inflow since 2018. haidi: it's interesting because we have talked to strategists who said there is still value to be found in parts of the rally yet to be run. but a lot of the background elements contribute into the optimism aren't exactly new. yes, inflation is starting to pick up. you have the policy divergent story.

warren buffett probably has something to do with it. he's interested in japanese stocks. the corporate governance story is one that's frequently cited but it is a longer-term corporate restructuring story. we continue to see the nikkei 225 rally powering on. this is going into a 10th straight week of gains. it has really been the longest winning streak since 2017 and the highest levels since 1990. continuing to watch this. of course, the week again over the past little while that hasn't really hurt. over the next hour we will be taking a look at j.p. morgan joining us to look at how the fed could impact asian equities and a look at the broad stimulus measures that we could see from china. ♪

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>> this is daybreak asia and we are counting it down to asia's major market open. heidi, i thought it was fascinating to see the cpi data out of the united states. giving the fed some leeway to pause tomorrow if that point they -- is what they want to do. we won't know for another few hours if that happens. >> could be a double whammy when it comes to an impact on the markets, could be more dovish, and we are looking for reaction internationally to this potential stimulus measure from china and the rate cuts, whether we could get more. it is this confluence of potential easing that is the direction we are talking about. >> not just easing from the pboc, the fed staying on hold and the boj with its rate decision. a lot to keep investors happy as we kick off trading. we had the nikkei coming online at a strong jump at the open here up nearly 1% at the start

of trading. it really is that inflation data , that softness that tells us that the fed is likely to keep rates on hold when it meets later on wednesday. only around a 10% chance of a hike. we saw treasury yields moving higher, it's just that the reopen of cash markets making expectation rise that the fed will not cut rates, which is what we saw bond traders expecting for a while. the dollar yen holding at that 140 level, something else that can be supportive throughout the session for japanese equities. in south korea we had eco-data coming out earlier, the big number was that may adjusted jobless rate coming down to 2.5 percent, the expectation from economists had been 2.7%. that is a record low on a seasonally adjusted basis. the employment ratio also climbed into a historic high, in

terms of what that means for that be ok it tells us they may need to keep their hawkish stance in place even though we have seen the be ok keeping rates on pause for a few months now given the economic weakness we are seeing there. we are also watching the korean won and we see it at a four-month high against the greenback. it has been a next petition that the fed will pause rates later today. we are also watching what is happening in two millions, we have new zealand food prices coming out and we see that game on the month of .3%, -- .03%, and we saw the food price index rising levels that we have not seen in decades since the early 90's. it has been something that the rbnz has been watching and the kiwi dollar is looking firmer against the greenback and we saw the dollar drifting lower given the cpi numbers. australian trading hi, we have

crude coming online softer, but really it is that other stories we will be focusing on and what investor reactor -- fraction we get to china, we do expect a rate cut when the pboc delivers that tomorrow. >> let's bring in our guest, our -- the issue equity management manager at j.p. morgan. let's talk about the boj, we have spoken about the fed and the pboc, is the boj predictable? >> it's definitely a big question, but the message we have been hearing from the new governor is that he will be taking his time and studying the impact of inflation, of wage hikes. we don't see a drastic change in policy, but further down the line, maybe next year we do expect normalization of monetary

policy. >> is that what the market is moving on, is that by we see 25% -- why we see between 5% or more gains, how much of a bull market could be safe? -- we see? >> the bull market has returned to japan, it's a big positive, it's not like other areas where it is heating up, it is about normalization. we do see domestic recovering, we see -- domestic capx recovering, and the stars seem aligned and the market is reacting to the positive news. >> does what we are seeing in terms of stimulus offerings from china and the pboc potentially change your view when it comes to constructive opportunities that you see in china?

>> with china, i think we all agreed that we cannot expect the kind of stimulus we have seen in the past. i.e. the property sector that stimulus which had a great impact not only on china but globally. instead, we will see steady stimulus focusing on consumers, that is where we have a lot of our investments. we also think that the macro backdrop is good for stock because it is not going to be the type of market where everything goes up and you have to stick to the quality companies and know the management and find your good investment ideas. >> what are some of the more interesting narratives and investing stories that you see for china? >> so, we have always been invested in the quality growth areas of the chinese market. we are very much focused on some

of the internet names or the gaming names. we see the cost discipline playing out there. we see quarter after quarter of controlled cost, while the top line gradually recovers in gaming and online advertising. that is very encouraging, and we continue to focus on those types of companies with good cost discipline. >> is there geography that your staying clear of or a sector -- you are staying clear of or a sector? >> we have always been big positive investors of indonesia, they have had structural changes which have had a positive impact to the market. but we are also now starting to focus on thailand, for example. and we see the elections that have happened and we don't have the concrete results yet.

but our belief is that eventually it will lead to more growth focused policies from the new government. at the same time, when the chinese outbound travelers will start to rebound and gain momentum. we are focusing on thailand investment opportunities at the moment. >> thank you, pleasant news they're all around, it seems. asian equities per fully manager at j.p. morgan asset management there. let's look at how things are moving in asia as markets open. annabelle, you are more. -- have more. >> we are just 10 minutes into the session and we are watching japanese construction stocks in particular like komatsu, more than 3% higher as we get underway. that is what came out of china overnight, specifically we saw the pboc cutting its seven day rate. that was unexpected.

it paves the way for the medium-term lending rate to be cut on thursday. these are supportive factors to boost the economy and you could add to that these signals and reports that we are getting that china could unleash further stimulus as well, which could include support for areas like real estate, one sector in focus. we are also watching these japanese construction stocks and miners in australia are taking a look at these coming online. this was a sector that had dipped into the session prior. it was shot on monday for a public audit. and goldman sachs said that the public sector could be a growth drag. iron ore did climb in the prior session when we got reports of stimulus coming through, also high for a second straight session. >> early going, we continue to monitor throughout the session.

still ahead, anz is back in miller china since the pandemic. we talk about potential stimulus measures. the clue than expected u.s. inflation numbers and the flow on effect from federal reserve policy. this is bloomberg. ♪

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>> it was a good report. >> a step in the right direction. >> inflation is coming down. >> the fed has been happy. >> everything is lining up for inflation to come out the weight they would like to see it. >> it takes away some of their pressure. >> i would vote for wait and watch. >> it does not look like they will need to hike this week. >> skipping the price and makes sense. >> escape that has been communicated. >> begrudgingly skip if you will. >> it will turn into a pause.

>> it turns into a pause. >> they are likely to go one more time in july. >> they're going to communicate that they have to be flexible at all options are on the table. -- and all options on the table. >> guests reacting to the cpi reports there. the fed may have to decide what needs to be done next. kathleen hays is here and how definitive for the policy decision is today's report? >> everybody who has doubts about whether or not they should pause and -- this encourages them to say that we have the ground laid and will we do it or not. there was definitely improvement, and if you look at the headline cpi versus the core cpi, there was definitely on the monthly cpi and the year-over-year headline, improvement.

4.92 -- 4.9-4.0. it was usually favorable to declines in inflation on the court. on the month, no improvement at all. it has been stuck at 0.4 43 months in a row. -- 04 -- 0.4% for three months in a row. auto prices have been rising because used car prices have been showing that those will start to drop in june. it is a good move. rents come up which are more than half of the cpi's, they have stayed high, and they keep increasing, they are rising at a slower rate. it's important to jay powell, core services, x housing. he think that is a super number. and it has eased bit by bit over

the last few months. so, all of these are keeping the high rate -- rate hike, but there are still lots that they will go ahead and pause. jay powell seemed pretty ready to do this and remember over the past six weeks, fed officials ready to pause or not have been seeing three numbers will be important, the jobs report on the hot side and you have the cpi report which came in on a less hot side. a big date -- debate tomorrow lies ahead. we will see whether they are ready to pounce. maybe more than we thought. >> chinese policymakers are also in that situation, the ability to offer more stimulus, and possibly more rate cuts to come this week. what are we talking about when it comes to how effective these measures will be? >> i think the effectiveness is

that they let people believe that -- a month ago they had a chance to lower their main lending rate and they didn't. a lot of people who follow them closely were saying they will have to do it. but they did not. now, we not only got the cut. that was important, the cut of 10 basis points, 2.0% down. people said there'll -- that won't help because there's so much liquidity and the banking system. however, it shows intent, that they are opened to doing -- open to doing this, and they expect the medium-term lending facility will come about. there is this idea that there is less demand for credit, you can see it in the corporate credit market and the kind of measures now that the government is talking about like getting people to buy more cars. will that make them by more cars. they are definitely going to be trying to stimulate housing.

when you see that the financing is lacking, it's not because the banks don't want to lend it's because demand is weak. sometimes this is referred to pushing on a string. we think about it a lot when you cut rates. but it doesn't affect things because there is already weakness and that is the big issue for china. if you want to be optimistic on china, at least there seems to be because of what we heard our -- from our sources close to all of this is that they are planning bigger stimulus and trying to figure out how big and broad to make it, that is what matters to investors. and to markets. >> this big shift in mindset to stimulus. we will be watching how that plays out. kathleen hays there, and now to donald trump will shortly deliver a televised speech after

pleading not guilty to federal charges of mishandling state secrets. the former president wasted no time getting back on the campaign trail, let's bring in courtney rosen who is in arlington virginia. this is kind of in his playbook, right he has done well out of his legal challenges in terms of fundraising and galvanizing his base. this is really no different. >> it isn't. one of the items that struck me today at the courthouse was that the president is a candidate, there are lots of people and cameras an opportunity for him to be seen publicly. today, no media where camera -- allowed inside and we rely on courtroom sketches. this is an opportunity to get his own narrative about the courtroom today from people seeing that visual of him. and that opportunity was not here today. >> we will see how much is televised and how many

opportunities he can take over the next couple months. between now and the next appearance, what will the president be doing and trying to do? >> experts will tell you that the former president and his legal team will try to stretch out this case and one of the next items that will pop up his discovery. what we are talking about here is classified information, information that the government might not want shared publicly or even with the jury. and so there is going to be a lot of back-and-forth i would expect about what type of information can be made public and that is going to take time over the next couple of weeks and months. >> courtney, what is the real the look -- legal danger to donald trump? we have seen those not aligned with him perhaps seeing this as an opportunity to neutralize hidden, can the democrats and independents benefit from this >> --

>> one of the things that i noted with the president going into the courthouse, he took a motorcar. -- mona. when i travel with president biden there is always security and police cards -- cars. sirens. white is sure to put on today, the former president to go to the house. so thinking about politics and the optics he is trying to project, was quite striking to me to see the juxtaposition of this presidential motorcade which is so normal for president to travel, even a former president, but inside this motorcade what was different about it was someone was accused of a crime on their way to a courthouse. from a political perspective those images are huge and i would expect democrats to exploit those in the coming days and republicans to shy away from it. >> 37 federal charges, really phenomenal. we're looking at photos right now, of the former president on his way to bedminster in that

motorcade you were speaking of. courtney rosen there. and once again, the former president having pled not guilty to 37 federal charges in miami on his way to bedminster to address the crowd. there will be cameras there. you can get a roundup of the stories you need to know in today's edition of daybreak. go to dayb under terminals. it's also available on the bloomberg anywhere app and you can customize your settings so you only get the news that you care about. this is bloomberg. ♪

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and shanghai crude up two point 6%. let's get more on the day's energy moves from su keenan, and it starts out with that cpi report. >> the lowering of inflation seems like the fed might pause, that gave oil a very big boost in london and new york trading and we see those gains holding in asia even though there has been a bit of a pullback with westech, trade in new york was up 4% intraday, brent crude had significant gains almost the same size before pulling back before the close. a lot of this had to do with the combination of speculation that the fed might now pause and that stimulus out of china. there was this surprise to economists on tuesday of cutting short-term interest rates in china and beijing also considering a broad range package of stimulus measures because china is the biggest importer of crude oil.

there is a view that traders have that this will boost demand. crude has been way down in the past year because of sluggish data on the chinese economy, sluggish trade numbers, and also the slowdown in international travel, which uses a lot of energy. in the words of a commodities strategist it is risk on for a lot of traders and that comes on the heels of a big pullback that we saw on monday. they might be concerned about a surprise move by opec. it has a fresh push with a number of these issues i just mentioned, economic outlooks, and the api data which foreshadows the wednesday u.s. inventory data and indicates a move forward in increase in price for the u.s. supply. who >> --

>> we are watching as an indication for china market on refilling crude oil reserves in the u.s.. >> traders have been following what the might do in terms of need to refill this reserve and trying to time it. we note from sources close to the white house that the biden administration plans to do its buyback and chunks and the plan is to buy a total of 12 million barrels throughout the end of the year which includes eight 2 million barrel purchase erase schedule for delivery in august, and an additional 3 million we are told from the sources that the biden administration issued on friday. the energy department spokesperson says they will continue to seek opportunities for more preacher print -- repurchases. they are looking to buy on the dips, ideally as market conditions and constraints operation -- and operations allow. >> su keenan there.

thank you. russia has resumed sending oil to north korea for the first time since 2020. in a sign of deepening cooperation between the two nations. shipments had been halted in october that year, but a new report from the yuan sanctions committee says they started sending oil again in december of last year. this comes as the u.s. accuses north korea of sending arms to help the kremlin's were in ukraine. -- war in ukraine. vladimir putin has also acknowledged that forces in ukraine lack advanced weapons. he made this recognition in the presence of mill bloggers and he says that they have lost numerous taxes since last week. ukraine's forces are pressing on the counteroffensive, the -- their allies announcing aid to backup the campaign. >> let's take a look at futures opening in europe at the moment and the ecb in case you forgot

is also something that we were watching of course this week and for all of these idiosyncratic drivers, we can see some gains when it comes to euro stocks, that u.s. inflation fueling these fed pause bets and that china stimulus adds to some of the positive sentiment for risk appetite. euro stocks 50 futures off by about .09%, and we saw mining and leisure stocks as some of the biggest gainers, and significant losses in real estate. we're continuing to watch some of that financial bank action as the week plays out. this is bloomberg.

>> this is daybreak asia,

checking on the markets here with 30 minutes into the session for tokyo seoul and sydney and we see moving marginally higher, but you could see the opening in japan up nearly 1%, a big gainer is toyota which has been rising as much as 5% at some point even though we have the annual shareholder meeting taking place later today. there big focus will be there electric vehicle strategy, 5% to the upside. something supporting japanese equities is the weaker yen and we are seeing it holding at that 140 level. in terms of what us we are focusing on today, the kiwi dollar is the standout to the upside with gains of .02%. we did have the current account -- account balance number coming up, that deficit now or in more than expected, something quite bullish for the currency. but broadly the focus for investors is looking ahead to

the fed and what we can expect when jay powell and his colleagues make the decision wednesday and the board expectation is that we will see a pause from policymakers there terms of also watching yields, they have been moving higher. a reflection of what we had and treasuries the prior section. that is down to these changing predictions for where the fed will end up because we saw bond traders betting that rates would be lower by the end of the year and that has been unwound. here's that focus on commodities, moving higher as we see futures for the next hour looking higher for hong kong, mainland china, and funny, that is down to the stimulus measures from china. >> will be back with you in just a minute. china looks to be on the ups as debt -- on stimulus as the presidency runs out of options to help the ailing economy. let's go to hong kong.

we got some details of several different initiatives that the chinese government seems to be taking. how effective is policy stimulus at this point? >> what we are seeing right now is that the chinese government understands that cutting interest rates is not going to be enough to really boost this economy. we have some fundamental underlying issues with consumer and business competence -- confidence that we are struggling with. we have upcoming data that we expect to be week as this economy is in slowdown right now. what we have heard so far about this potential upcoming stimulus package, a lot of details have not been finalized yet. maybe they will be able to export that on friday. see measures in the weeks. but with targeting domestic demand and trying to figure out ways to boost that looking at the real estate market in particular, property has been week for years now in china and

82 look at stimulus to boost things. even though we were thinking this cut on thursday to the right on the one your policy loans, that might not be enough to get things going as we have seen over the last couple of weeks. >> including weaker and weaker credit data. that credit policies is weakening and it does not -- pulse is weakening and it does not seem like loosening credit will help that. where is the recovery going to come from given the structural weakness that you referred to? >> it comes down to the idea of boosting confidence and figuring out other ways that, for example, china can make the real estate market recover. some of the measures we have heard discussed or maybe there are ways to lower costs for residential mortgages in the cartier. but ultimately is tricky for china to figure out how to deal with these things because local government debt continues to

mount, that is a major concern with tax stimulus cycles in china, and the runway that china has to implement a lot of big stimulus is not that great this time around. they have to be careful with how this is implemented as we move forward and see how this recovery is going to continue. >> the latest there with that potential shift on more stimulus driven mindsets for chinese policymakers. sticking with china, our next guest runs the institutional business at the agency, the largest revenue segment for the bank and he is back in mainland china for the first time in four years as economic momentum slows. weighing their options when it comes to rejuvenating the economy. joining us exclusively from shanghai, the chief executive of the and safety. -- division. this is your first trip in a long time. and this was viewed as

potentially in meaningful pullback from the market which was a round of layoffs as part of global restructuring. is this what you are doing there a sign of renewed commitment to the chinese market? >> absolutely, we have been in china now for almost 40 years. our business has very been centered -- very much been centered around dealing with large float -- corporations globally and particularly in china and the asia region. what we did a few years ago was we moved into a -- an area where we cannot serve customers well and investing on services and people on the ground in china for the last two or three years to ensure that we can be part of the growth opportunities in china. >> i understand there were meetings with regulators and can you tell us about what was discussed and how they went?

>> we have been meeting with regulators and a hold range of long-term customers. at the discussions have centered around what we can do to ensure that we do more business on the ground. that will be in areas like financial markets where we have been getting progressively new licenses, regulating and allowing us to participate in multiple lucrative markets, and we have been very happy to serve customers on the ground with a dollar exchange in our currency. hopefully we will be doing more business in that way. in all of those areas we feel that we can continue growing on the ground here in china, and providing services and servicing customers better. a lot of opportunities going forward. >> presumably you have had

precatory meetings, they go and what were you asked? >> the regulatory meetings were centered around our activities to date and we are well known, we have been here for an extended. -- extended amount of time. it was more about what we wanted to do for a extended amount of time. and the other way what the regulators wanted to see from the bank. and we are the only really active australian banking in china today and therefore it is important that we talk about things like trade, and how the trade opportunities are growing. we talk a lot about where we see opportunities in sustainable finance and also investment in sustainability in the country. and china is leading the way there and a number of our large customers are acting in that space. when we look where we ought to operate, sustainability is the

part -- part of that. solar wind, battery, electric vehicles, where china has become the largest amount -- exporter of automatic vehicles. so this opportunity in the new economy which we discussed as the regulators and the traditional one that we do which is in agriculture and so on, that will continue but there is a shift into the new economy. >> explained why the anc is the only large australian bank in china and author advice to others who might think this is a good opportunity? >> we have been the most international bank of our kind since we started. our bank is 185 years old. china -- we set up the bank to promote trade into the european markets which was 185 years ago. it's in our dna. we always had a very strong

physical presence in this region because obviously this is where trade is growing. so in asian countries we have been there for 40 or 50 years. so we have long-term relationships and the capability to move products like supply chain, corporate finance lending, and payments and cash management and also financial markets. a really strong product set that matches our ability to operate in different countries to facilitate these trading capital flows. it is in our dna and that is why week are probably the most active here, the most active bank in the region. >> the risk for foreign firms doing business in china has heightened, as i'm sure you're aware, auditing firms and consulting firms coming under fire over how they treat data, does that concern you?

>> i think it is more complex, that's how i would explain it. we remain alert to those issues, not necessarily concerned. because we have such strong relationships with the regulators in these large international companies. we know what is expected, and we respect the rules we are operating in in whichever country. . but we also ensure that we act with the appropriate -- we are in, but we also ensure that we act with the management. data -- -- appropriate management. if you are in a position where you have strong relationships and you keep the dialogue open i think you can ensure that you can manage the risk. >> what expansion plans are in the pipeline for you in china, how does that reflect on your view of where the economy goes

from here given that it seems like we have reached kind of a turning point with that shift to more stimulus from the government? >> i think it has been announced overnight and there has been a lot of talk on the program, it is important for china. let's not forget, it's a trillion dollar economy, still growing at 5%. as the previous test was talking about, they were saying that their confidence level is down and there are issues with the property sector here. china of the has plans to stimulate and they will continue to drop rates and to do something at property, which will get the economy back on track. there will be a little bit of pain in the short-term. if you look at the medium-term opportunities what they are doing for infrastructure and plans regard -- with regards to climate, there are significant medium and longer-term opportunities for china and also the region because they are

participating in the supply chain across the areas like southeast asia. and so, we see great opportunities so in the medium and longer-term even though there are some bumps in the road in the short-term. the stimulus packages will be good for today. but also that longer-term investment, that investment in clean energy and clean products, one of the biggest exporters now in solar and wind turbines and battery technology, i think the old economy and the new economy will create significant opportunities here. short-term pressure, but long-term massive opportunity. >> market, a quick comment on commodities and where you see them headed -- mark, a quick comment on commodities and where you see them headed due to the pressures in the environment? >> it is tied to what we see in the future. if you look at iron ore they

have been very strong. they've been up significantly. trade in iron or is still strong. and while we think it is slowing and there might be short term impacts on commodity prices with urbanization in china and what we see in india, we expect commodity prices to come off the highs we have seen in recent times but longer-term, again, you have to be quite bullish with regards to commodity prices. so we think that is going to warm the well for australia. great for trade relationships. and we are still very positive. >> thank you so much for all of your time and we wish you luck with the rest of your trip to china. mark wheeling, chief executive at the anc. we dive into the property sector and wipe real estate tycoons own so much debt as the empires crumble. this is bloomberg.

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>> it has been two years since the crisis erected in china's property market, leaving bills unpaid and homes unbilled. real estate tycoons continue to own their crumbling empires. i can't believe it's been two years.

it kind of speaks to a level of consistency in terms of how little has happened since then because we are seeing chinese property tycoons keeping control of their companies and it has been different from previous cases of distressed firms in china, and elsewhere in the world. >> in india. it's actually very rare. so in the previous round of company failures we have seen, one founder was persecuted by regulators and also elsewhere in the world, executives were sort of wiped out by shareholders. it is quite uncommon that after all of this -- the sinks that the sector has endured that tycoons have massive control over the company even after debt restructuring plans. evergrande founder still holds around 40% of the company shares.

>> why are creditors and investors supporting them, is there any pushback? >> if you are creditor, you are thinking about your recovery rate in the restructuring process. and for that to happen, you have to have an operating business. from that perspective, i think creditors have the incentive to support these tycoons because they are people who founded these businesses without them it is possible that these businesses would not even run as usual. i think that creditors want these tycoons to keep control of the company and keep running so they can keep generating cash and get their returns. >> what does this mean in terms of any prospect for performance for the broader sector? >> as we have seen clearly in the past two years, regulators are not going to stimulate the market massively. we are still in a downturn where

property sales are not picking up, especially for these private owned companies. and i think that in the long run, what we are going to see are these tycoons helping the company's -- companies run. and especially if they can whether these downturns. but i think in the long run. i think it is very difficult for these companies to pick up again and returned to their glory days of a couple years ago. christ loretta chan joining us. in terms -- christ loretta chan joining us that. in terms of the impact from these rate we did see the ramp -- the impacts on commodities, and plenty to watch the australian session today. and we saw that after the broad

package of stimulus measures was weakened centered -- was being considered. and that was to give it a reboot to a metals market that has been beleaguered as a result of the downturn at the downside in momentum from the economic recovery in china. iron ore trading up by .2%. we are also watching gold as well, as we saw that pullback from the triple top suggesting that we could actually see an extension of that selloff and critical will be inflation expectations and we did see a boost after cpi's were released adding to bets to a pause from the fed. taking a look at many stocks trading in australia, after we saw that rally from that shift from more modest levels of stimulus to something more impactful from china, we are seeing those names like fortescue up almost 3%, and rio

tinto seeing gains of the -- over 2%. we could see that the slope -- slowdown has passed through to steal demand. fortescue's founder and executive chairman spoke with us exclusively at the new economy gateway africa form about the opportunities he still sees in china. >> i have come out of the country and seeing their plans. i have leaders there who are listening. we put to china that you have this magnificent manufacturing economy. it did not go to sleep during covid. it actually automated. her about accidents to a point where i say it is leading the world. i travel everywhere, but we have machines building a -- machines at a rate of excellence i've never seen not even in germany or america. it is the future. we can move away from oil, coal,

gas, because we have all the energy we ever need. we just need the machines that make machines to save this planet fully great. we can convert solar, wind, geothermal, other green electricity's. it's all at our fingertips. i have put to the leadership of china, if the next five-year plan, state 22 a 7-20 32 involves 500 gigawatts a year, escalated -- escalating every year, you will have enough green power to run your entire country in the 20 30's. they are listening to that. and i would say advanced economies around the world should listen to that as well. that is our economic opportunity. >> do you think that the concern around china's rebound after covid is overblown? >> it's something to fill the

papers. we have to write something. we have to write a story. we are serious -- seeing serious demand in that fabricated manufacturing sector where it is all stable. you can walk into warehouses, i did it the other day. i was talking pre-covid, these were massive workshops, and you have machines building better electric trucks, at the rate of 1000 per day. one company, no people just machines. they are great trucks, battery electric. this is what i'm seeing. with cable it's the same, but solar wind. i speak to china very firmly about the things that we talk about come up behind closed doors, and i am praised china for when they get it right and they are working hard in the direction of their people and our planet. that is what we are working hard to do now. >> enter force speaking to us

there. -- andrew force speaking us there. donald trump just began remarks in bedminster, live pictures of the former president who plead not guilty to 37 charges, accusing him of mishandling top secret government documents and conspiring to obstruct justice. this is bloomberg. ♪

>> watching ahead of the market opened in hong kong and china, high type there with ipo application to the hong kong exchange. then property stocks in china in focus after the scoop that beijing is weighing broad stimulus. keep an eye there garden, and others. energy stocks might move as soon this measures stoke bets on higher demand for crude. coming up in our next hour, macro policy perspectives gives us their outlook on the fed rate strategy and later goldman sachs tells us why they expect the property sector to remain a multiyear growth drag. that is it from daybreak asia, this is bloomberg. ♪

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