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>> will come to do -- daybreak australia. >> i am in hong kong. a selloff on big tech in the s&p 500 to is the lowest in two months. asian equities break with key economic data out of china. haidi: israel vows a response after the iranian attack even as the u.s. and allies urge restraint. annabelle: goldman sachs surprises were a 28% jump in first-quarter net income defying expectations of a draw. haidi: looking how we are setting up an hour from the start of trading. we are looking like a struggle.

no hurry to cut rates. we are seeing that uphill battle in this part of the region. that prolonged wait for monetary easing. futures up by 0.1%. we continue to see a surge in metals prices. kiwi stocks down by 0.6%. we are seeing it to flow as it heads toward the rbn target band. what that means for the monetary policy for central bank that was ahead of the curve. we do see the japanese shares falling in the previous session with these ongoing middle east tensions.

and in the thick of earnings season as well. annabelle: and you can compound that to retail sales. they had better than would have been expected. that tells us that inflation risks becoming entrenched. we saw the s&p 500 falling more than 1% at some point, going back below that 5100 mark. lot of the losses coming through in the big tech space as well. apple and nvidia are some of the big laggards in the session.

most u.s. treasury yields climbing to new highs approaching 5%. we have the benchmark 10-year note rising as much as 14 basis points -- the fed and geopolitics casting a little bit of a shadow right now. haidi: bloomberg's tv and radio political news director jodi schneider joins us from washington. we are hearing about a split vote does this break the month-long roadblock we have seen? >> that is what the house lawmakers who discussed this afternoon are thinking. we heard from several lawmakers who are in the sessions just a few hours ago from washington.

they came out saying it is a split vote and they will start with the israel aid given the urgency of replenishing those defensive mechanisms that were able to block those missiles and drones from doing serious damage in israel. they feel like the urgency there will get that there and then they will test up the willingness of republicans and democrats to vote on the ukraine aid. speaker johnson has to worry about his continued future as speaker a given that marjorie taylor greene green has threatened to go ahead with a motion to vacate -- vacate which would test his speakership and put it to a vote and we have seen what happened last year to kevin mccarthy when that happened. the speaker is hoping that this

way he will be able to test what is going on in the caucus and maybe get israel and ukraine aid through. haidi: does this appear to be a plan that would pass congress at all if this measure were to be up to pass the house they would have to go back to the senate. there is a lot of appetite for support for israel and the senate as well as support for the ukraine aid. any time it happens, it takes a while. this is not going to be that quick necessarily. there is a real question anytime it gets complicated but there is

thinking that the is really aid would be able to get through. they may have to do this through a procedure called the suspension of the rules we needed two-thirds majority but it allows you to move quicker and mike johnson has done that before and has been able to get things through with a lot of democratic votes. what has been israel's latest thinking when it comes to the calibration of a potential response? >> restraint continues to be with the u.s. is advising and what other allies are advising. take the win that this did not result in large-scale casualties and damage. but it does not necessarily seem to be what we are hearing from israeli officials, most notably benjamin netanyahu who is saying

that there has to be some kind of response. that the iranian unprecedented attack directly against israel even though there was not widespread damage -- that there needs to be a response. the real question is what would it lead to a wider conflict in the middle east previously served in the obama and clinton administrations including the deputy assistant for affairs. what do you see is israel's next steps and does it align with what tel aviv should be doing >> asking israel to exercise

restraint and israel saying they'll take some action are not necessarily inconsistent. there is a wide nature of finding the type of action that israel can take which could be consistent with what president bind in the international community's request of restraint . i think it is important to lay that out. haidi: what are the scenarios that would constitute a restraint response from israel that would also meet the needs and urgency of the allies? >> i would note that it took iran 15 days to decide what they were going to do. they made very clear it was reaction to the april 1 strike against the iranian revolutionary guards were are at

an iranian embassy in syria. which israel has not taken responsibility for publicly but it is widely assumed that israel was part of that. so the timing of what israel does, when it struck -- when it strikes is an open question, what kind of action. there are covert actions, singular strikes against individuals -- there is a wide range of different types of things that israel can use to deter iran from further action that would minimize the risk of escalation which is clearly what the united states and many countries in the region are concerned about. haidi: can you give us context on how the dynamics of the cabinet played into the response as well?

>> that is an excellent question but i will say there are parallels to what your washington political director was just describing terms of the house of representatives. prime minister netanyahu is currently managing to maintain his hold on the prime minister ship by having two or three extreme right wing members of his cabinet and i believe they are inconsistent with their security and certainly to regional security and stability as well. they have statements about pressuring him to be extraordinarily aggressive, to show no restraint in any way and actions that are counter to the direct interest. prime minister yacht net -- prime mr. netanyahu serves at

their direct interest right now. his coalition stays in place because they are supporting him. can we have seen urges being largely ignored. should we expect anything different when it comes to allies in the u.s. trying to persuade israel toward restraint when there are these domestic pressures? >> i would use restraint carefully. there are differences in views on strategy. the united states has been clear that it supports israel's interest and need to eliminate hamas as a threat to israeli property, disagrees on the best way to achieve that and has strongly pushed for increased humanitarian aid. these actions are related in the

sense that israel has a more carefully calibrated approach in response to iran that can work in conjunction with gall -- gulf countries and others in the region who very likely participated to repel the iranian attack this weekend in various ways. agreeing to work toward a two state solution where hamas is not in control in gaza. haidi: how does the potential response plane to the nuclear deterrence angle for iran? kim of the challenge of president trump having left the agreement that several european

countries and china and russia had joined the united states and nine years ago is that iran has very much sped up, has broken out of the agreement entirely and has sped up its ability to go forward with weapons grade nuclear material. it adds to the danger of the moment. the fact that they are so close to being able to makes an importance of a deterrent strategy that is effective and makes it important for israel to be an alliance with other countries in the region that are concerned with what iran might do and with the united states and nato allies. the risk is high. haidi: we appreciate your time. still have the united nations hosting its first sustainability

week at the headquarters in new york. we get new details with the university president later in the hour. spring goal -- spring global investments are underway in india, china, and taiwan next. this is bloomberg. ♪

>> real interest rates are considerably higher than the year before because inflation has come down. we will need to start the process at some point to bring interest rates to new more

normal levels. my viewpoint is that that process will start this year. it will be driven by the data. haidi: new york fed president john williams speaking about the rate cut path. despite that view we saw stronger than expected retail sales data. the higher from longer narrative is what we are dealing with which is putting continued pressure on em currencies and assets. we now speak to the senior portfolio manager and head of international assets here in sydney. so great to have you. what is the biggest correlation for em assets at the moment? is it the strength of the dollar or the china recovery? >> i think it is the anticipation of the role of the u.s. dollar. in the near term it is china recovery.

we are seeing a slow recovery in china but it is happening. beyond that people will hit the green button once they see loosening of interest rates and subsequent rollover. we are anticipating both. they will both be positive for em assets. haidi: there is a perception that these goldilocks financial conditions that benefit share markets, em is still behind. that is still to play out. >> that is why we remain constructive. a lot of good earnings growth in emerging markets. could dividends and shareholder return. i am quite positive that the economies have held up over the pandemic and coming out as well. we haven't had major dislocation of emerging markets. haidi: we have a d correlation. are you positive for china

domestically? >> we are but we realize that positive -- policy pays a long-term effect on china and we are looking forward to future policy in terms of commodities, i.t., the property sector. we think that it is the anchor in emerging markets. still the largest country but we feel that you must stock select in india as well. it is becoming a larger market than even five years ago. it is in sectors like the consumer sectors and the financials. because we are looking at shareholder return and cash dividend, we are in other suck -- sectors such as energy infrastructure, industrials and areas not as expensive. annabelle: what about in north asia? i noticed that you are a bit underweight on taiwan but overweight on korea. what is the difference?

>> in terms of taiwan and korea, both benefit from ai infrastructure and interest in that technology. taiwan has had a good run. we are underweight because we took profit off the table. we are hopeful and own a variety of stocks in terms of ai supply chains and semiconductors. in south korea we have large weighting in the samsung electronics and other diversified holdings in the banking sector and telecom. we are hopeful about both especially with this recovery in the semis sector. annabelle: i can see that you have one in taiwan that is still in the ai space. >> yes, chroma ate. it is one that i rarely see the

sale site speak about but it is part of the supply chain for ai. it has a reasonable 3.5% dividend yield. very consistent and relevant. we also like other areas such as in latin america, southern copper. it will only become more important. we are interested in select commodities but copper has a supply -- tight supply/demand situation. it is relevant in ai, i.t., telecom, data centers, everything. very interesting for us. haidi: you mentioned korea briefly. looking at the astronomical run for japan with further to go. how long do you think korea will be able to replicate that? >> i think that it will take a number of years. it requires a change in corporate behavior. it is encouraging.

i have covered japan as well for 25 years. it took them a long time to come around. the outcome was that people looked at what happened with japan and the corporate government improvement. both china and south korea will follow in those footsteps. i can see that it helps the share prices. it could take three to five years. they will be strongly directed by the government. haidi: e.m. in particular was in the cross hairs with the last trump presidency. how closely are you watching u.s. policy and trade? >> we are watching it carefully. there is a high correlation with all countries globally. people are fearful about additional sanctions on chinese tech stocks. we are cautious in selecting certain names. we think about the implication. we don't want to be cut off and unable to invest. on the others, president biden

did continue trump's policies so if anything status quo going into the next u.s. presidency is likely. we have not seen any aggressive action against taiwan as people feared. postelection, things have been calm. keep an eye on these things. it is integrated into our stock selection. it is something we have to keep an eye on. annabelle: the overcapacity issue, is that affecting which stocks you are more cautious on? >> china has worked through that overcapacity. it is coming out of that and we are seeing it more stable. it is going to be up and down a bit. for the most part they have worked through it. i am positive on the industrial side. haidi: great to have you with us. the head of the emerging markets equity team at all spring investments.

you can get the news you need going into the start of today's daybreak. it is also on the anywhere app. customize the settings so you get the news for the industries and assets you care about. this is bloomberg. ♪

annabelle: some of the latest corporate stories we're tracking this morning. two top executives have left the company as they hold their largest round of job cuts. the confirmed an earlier bloomberg report about the departure. tesla looking to reduce global

force by 10%. chinese factory maker catl posted strong first quarter profit as their dominance in the ev sector pays off. income climbed 7% to $1.5 billion while posting the highest gross margin in two years. catl has vowed to keep expanding despite the cooling demand for battery-powered cars. hong kong has given conditional approvals to several asset managers test -- to spot bitcoin and others. a partnership between hash key capital and sara asset management say that they got initial approvals. osl

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haidi: shares of goldman sachs

closed higher after a surprise profit jump in the first quarter. a 28% jump even as analysts had braced for a drop. david: we feel very good about the earnings tower of our fund. this performance was aided by the swift actions we took last year to narrow our strategic focus and play to our core strengths. haidi: for more, let's bring in our bloomberg intelligence senior reporter, alastair. alastair: look, obviously it was a very strong period. it was more exciting than investment banking. they are focused on supporting those key clients. mortgage is strong, investment

banking is strong but they tried to be stronger. haidi: we have sort of seen goldman sachs struggling a little bit here, to define its businesses and perhaps narrowing its scope a little bit under his leadership. do you think that has paid off in this core, the new focus on a core strategy? matt: yeah, look, certainly that is the view of allison stephens, our senior analyst who covers goldman's in the u.s. they did get help with markets helping them along the way, but they also focused on tightening costs as well to number one, focus on those four clients and number two focus on costs. so allison thinks they are on the right path with strategy, and that has certainly capitalized this quarter. haidi: how much specialty when

it comes to funding cost, j.p. morgan and wells fargo both mixed when it comes to that metric. what is that outlook depending on what we see on the monetary policy front as well? matt: it's a very good question. obviously bonds has come up quite a bit. the same applies to the u.s. banks as to the u.s. dollars, that there is still a fairly good uptick, and what they are paying now versus what they were paying a few years ago, you are going to see a funding headwind come in for they reminder of the year. obviously depending on the fed depending on how much the headwinds come off, but we don't see that happening at this stage. annabelle: but if we do see the fed environment of higher for longer, how do you see that having a big impact, then? matt: look, these banks are very

reliant on wholesale markets, annabelle, and they are going to be replacing their funding. is not like you have a big lump that comes through in one go. they are periodically replacing that funding. it's almost death by 1000 cuts in australia. as he refined that 500 million or billion dollar bond, you will see the incremental step up in cost. the current cost of funding is now about actually where it was 12 months ago, obviously, but you are seeing a slowdown in that uptick, so perhaps in another six month, 12 months, you might see that stabilize, but you're not going to see it come off, which i think will be an expectation for the market. haidi: all right, matt ingram, thank you. annabelle: time for morning calls ahead of the asia trading day. the japanese yen continuing is

dropped to levels not seen since the 1980's. global fixed income portfolio management says the currency could slide another 10%, as the boj looks unlikely to raise rates significantly. it says it is not in the interest of japanese authorities to have a significantly stronger currency at this point in time. meanwhile, ubs says the combination of strong u.s. growth and sticky inflation is raising the fed hiking rates to as high as 6.5% next year. the two now see the possibility that inflation will fail to get the target. markets have already scaled back from policy easing as recent u.s. data has shown surprising strength in the world's biggest economies. haidi: new york fed president john williams believes the u.s. central bank will likely start cutting rates later this year if inflation continues to gradually ease. he also discussed resilience and

consumer spending in the economy in an exclusive conversation with bloomberg tv. john: consumer spending has been strong. job growth has been solid. we seem real wage gain. yes, it is part of that story, but, you know, i think what we are realizing is we are getting a nice tailwind from the supply side of the economy, good labor force growth, strong productivity, good real wage growth, so consumers are spending. michael: what is the thinking in your office, does this last door is it a surprise that could go away at any minute? john: if we are still feeling the aftereffects of the pandemic, it makes it hard to forecast, especially with ukraine at all the things in between. we are still in the adjustment process. the consumer and economy overall. but overall, i think the economy

will continue to grow at a solid rate, probably not as high as the 3.1% we saw last year, but something around 2% or around that. i think we are still in a good place, not as rapidly grows. michael: you have the strong growth, very low unemployment. why cut rates if the economy is doing fine at this level? john: first of all, monetary policy is working. monetary policy is in a good place over the past 12 months to 18 months. we seem pretty much all the measures of the imbalances of the labor market and our economy. we see many of them back to levels we saw in 2018, 2019. so we see, you know, restoring balance in the economy. we are seeing a slow decline in monetary policy. i'm not fixated on where the rates need to go over the next year. when i'm focused on is how do we

best achieve our price stability goals? the economy is strong, the labor market is strong, at the same time we are getting better balance, so for me it is really about getting that right, and then whatever we need to do to adjust monetary policy, we can do, you know, to continue the progress toward our goals. that is how i am thinking about it. we will have to keep watching the data and the decision based on those goals. michael: is your base case that you will cut rates this year? john: my own view is that with inflation continuing to gradually come down, gradually is the operative word here, and with the economy remaining strong, i do think given where the level of rights are, real interest rates are considerably higher than they were before, because inflation has come down a bit. we will need to start a process at some point to bring interest rates back to more normal level. my own view is, you know, that

process will likely start this year, but, again, driven by the data and achieving our goals. annabelle: that was the new york fed president john williams speaking exclusively with our colleague mike mckee. taking a look at markets here, the open for sydney, seoul, tokyo, this time of the day, we are looking to be pretty risk off across the board, and nikkei futures, singapore contracts down more than 1% at this point. overnight, it was really that story of stronger u.s. retail sales that came through. we had surging treasury yields across the curve, so that tells us the fed will likely stay on hold for longer, and that is the message that investors are really adjusting to hear. weakness particularly in big tech. we saw the likes of microsoft, apple, nvidia leading the drop, so something we are tracking closely.

we will have more on "daybreak australia." ♪his is bloomber and if you want a successful business, all it takes is an idea, and now becomes the future where you grew a dream into a reality. the all new godaddy airo. put your business online in minutes with the power of ai.

but starting it eight months pregnant, that's a different story. with the chase ink card, we got up and running in no time. earn unlimited 1.5% cash back on every purchase with the chase ink business unlimited card from chase for business. haidi: the u.n. is hosting's flagship sustainability week in new york, bringing tea officials to discuss global issues on tourism, infrastructure, energy, and transport. the event is aimed at the agenda

for sustainable development. we are joined by v president of united nations general assembly, dennis francis. happy to have you with us give us an update in terms of the progress being made toward these goals. amb. francis: first of all, thank you for having me. it is a great pleasure. in 2015, the united nations agreed to the agenda for sustainable development, which is one of our sustainable development goals. the first on the sustainable development agenda is to empower people, to lift them out of poverty, marginalization, and de-privatization, because, even today, there still exists something like 800 60 million people living in poverty, and abject poverty in the world.

and a similar number in hungary -- who are hungry, not to mention another number of people, another cohort who are food insecure. so the sustainable development agenda is really about lifting people, empowering them, rising dignity, and to do so in a way that minimizes the disruption and the harm to the national environment. for a number of reasons, progress towards the achievement of sustainable development goals have fallen off track. progress has not been maintained at the rate at which it had been hoped, and of course there are only six years left to 2030, so we need to speed up, we need to refocus and speed up in getting

countries to undertake the necessary reforms, that would result in the implementation of the sustainable development goals and sustainability week is designed to do precisely that. haidi: you talk about the slowness of the progress. including the eu as a whole, none have a whole, non-havoc policies to keep the world from warming less than 1.5 degrees celsius from preindustrial levels. so an event like this, how do you make progress with closing that gap? amb. francis: well, sustainability development is the most, significantly more is important, in fact as crucial as it is, it is about significantly more than climate change. climate change is one dimension, an extremely important one, of sustainable development.

there are a number of issues, really, there are issues, for example, around access to education, to quality education for all people, everywhere, because as it stands at the moment, hundreds of millions of people, particularly people in poor developing countries and in the far-flung rural areas, many of whom, women and girls, do not have access to quality education, and of course there can be no development without access to education. so that is an imported development of sustainable development goals, as is the case with help, that people need the guarantee of access to affordable basic health. and in many parts of the world, that is not the case. so it is time to change in part

because, of course, we need to preserve our natural assets, the ecosystems that we depend on, on a day-to-day basis, to give us the comforts of life that we enjoyed it, but it is about a significantly wider range of issues that, put together, will create the sustainable development that is necessary. haidi: even amongst the world's biggest economies, we see climate ambitions that have been weakened. annabelle: whether that is through scrapping low carbon programs, for instance, or backtracking on different regulations. why is that exactly, do you think, and what is the best way to address that at a government level? amb. francis: well, of course, countries make their own determination. you would be familiar with the

concept of nationally determined contributions to climate change. the concept involves everyone, every member of the international community, making a contribution to controlling, mitigating the effects, the impacts of climate change. so countries make their own determinations, based on a number of factors that are relevant in their particular circumstances. i am unable to speak to the reason why countries might feel that they can renege on those commitments when, in fact, the evidence, the scientific evidence points to the fact that the effects of climate change will become much more bill virulent and much more invasive, intrusive in our daily

lives if we do not act swiftly to the carbonized the atmosphere. decarbonization will require direct intervention by state that various levels, and not just states, by the private sector, by local communities. by towns, to rethink how we consume and produce, given the dangers that we know exist with continuing the supply of carbon and other greenhouse gas emissions into the atmosphere. one hopes that enlightened thinking would in fact propel countries to act responsibly and to recognize the importance, the crucial importance of maintaining and, in fact,

increasing the ambition of their commitments, because if we don't, the consequences will be dire. there are some countries in the world, for example, in the pacific region, where there is increased risk of inundation due to rising sea levels as a consequence of climate change. and some of those small countries in the pacific have already entered into discussions with third parties to relocate their populations, should they in fact become inundated. so climate change is not the future. it is already here! haidi: there are complications, of course, as we know with developments being fast-moving, the political aspects is complicated as well. can i get your view on what the u.n. is thinking at the moment,

in terms of steps and options that are available with regards to the situation between iran and israel, whether israel will retaliate? amb. francis: i do not have a crystal ball, so i don't know. i know as much as you know. what the u.n. would like to see is no further escalation in the problem of tensions in the middle east, because escalation is a slippery slope, and the only consequence, as i've said in my statement, released yesterday, the only consequence would be more death, more destruction, more misery, which i believe nobody wants. it does not serve the international community nor even those who are directly involved

in the conflict, then that should be the case. we need instead really to be focusing in a very constructive way in getting a cease-fire in gaza. getting a cease-fire in gaza. that should be where our main priorities lie at this point in time, in order to ensure that there is no further bloodletting in gaza, and that all the remaining hostages are released, unconditionally, immediately. annabelle: are there any -- haidi: are there any further measures available to the united nations, both regarding a cease-fire and improving situations in gaza but also what the reaction would be if there is a further retaliation from israel? amb. francis: well, we have made

clear, the united nations has made clear what is the action it would like to see, with respect to gaza. a cease-fire needs to be agreed, and we hope that that will happen soon. in our view, it is long overdue. more than 33,000 civilian deaths in gaza is not by any means, by any measure, a comforting statistic, particularly when you consider that there may well have been violations of international law and international humanitarian law. however -- yes? annabelle: do you think that the

iran strike, do you think that complicates or risks chance of a cease-fire and also the hostage negotiations? amb. francis: we have to wait to see what the consequences are. i am in no position to anticipate what the fallout of that would be. the iranians have said very clearly that having made the strike they may on israel, they deem the matter to have been concluded. i take them at their word, and i urge them to maintain their word, but in terms of predicting

or looking into the crystal ball, to see what the impact might be, that is not something that i am in a position to do. that is speculation. i would like to ask you to help us, the u.n., to spread the word about choosing sustainability, which is actually the subject i thought we were here to discuss. choosing sustainability is important, because that is what will result in our ability to empower people across the world, to live healthier, stronger, better lives, in dignity and create a future that is inclusive and equitable, so that

everyone in the world has a chance, has at least a fighting chance to live a life and to self-actualized in the interest of themselves and their families. haidi: thank you so much. annabelle: dennis francis, president of the yuan general assembly. a broad range of complex topics, and as we said, the yuan hosting its flagship sustainability week in new york. investment also pouring into green hydrogen energy at this time. the bloomberg's nes data shows evolution is heading in the wrong direction. costs are rising and there are even signs of overcapacity. let's get the latest from bloomberg nes hydrogen analyst, kathy. why is it rising? kathy: there are multiple

reasons to it. first of all, inflation is higher than expected, expensive materials. governments are also getting delayed to hydrogen, so we are not seeing the market scaling needed to guide the cost down. but more importantly, for this study, the scope included in the study is larger than last year, because as we see more projects heading to the internet jenny ring study phase, we found that actually deploying the hydrogen project, the indirect costs, building a water tank and other supporting infrastructure, the result of the study shows that digital sectors, the cost in the u.s. and europe, has increased dramatically over the past year, whereas in china it has increased marginally. ♪

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>> this is "daybreak asia." we are counting down to asia's major market opens. chief among them is u.s. retail sales. if that combines with a stronger labor market, fed staying higher for longer, something to watch very closely, especially for the japanese yen. >> the barreling ahead of the u.s. dollar has huge impact when it comes to the yen. the fed talking about the volatility. a lot of downside for asian fx at the moment. >> absolutely. as we march ahead to the open, as you said, we are hearing from tsuzuki himself this morning's saying he is watching these fx moves very closely but he's going to keep from repeating the same warnings we have heard