>> >> welcome to debit bigger

crowd. but i whether stress can sustain recent advances. the first of three treasury options this week. >> filing a u.s. legal challenge to his first tiktok sale. it could make its way to the supreme court. request and israeli forces edging to rafah and southern gaza. even a cease-fire negotiations continue with the deal proving elusive. take a look the dataset appear in a stroller. a mixed session is really

happening. we will see whether this is a valley that can sustain the amount of exuberance -- we are seeing a bit of downside with a bit of trading in new zealand. and steadiness when it comes to an open in hong kong. we see the aussie dollar's training and 6591. this is perry much of the drop across the greenback. we are really watching this. they are carefully watching the

impact of these levels for the end. >> that's right. we can expect a bit more jawboning for those meetings there. this is the hokey that we got from u.s. futures. where exactly do we go from here? on the flip side, you have elevated interest rates. investors are split on where we go from here. you have the likes of citi and bank of america are some signals that could actually be the time to step upstairs.

one of the big aspects was just the slightest challenge from tiktok as well. they are suing the u.s. government to block a new law that it was to force its chinese parent. the move sets up what could be a prolonged core barrel against national security interests. jodi schneider joins us now from washington. this is the first legal challenge we've seen since congress passed the law back in april but just start us off here with some of the details of it. >> what is happening is they say they have no intention of selling tiktok that this is -- they say they have been basically given no due process, that this is not constitutional and that the u.s. needs to rethink this. what happened was there was legislation passed as part of

broadvision legislation that funded ukraine and also included this part of the legislation that would require the sale of tiktok on national security grounds or it would be bad in the u.s. starting next january. the biden administration did this on national security concerns. it is really setting up a national security debate against some of these free-speech rights. the chinese government does not see any reason they should get involved in this and they are saying there is no reason to go ahead and make that sale. we expect this will go through various core challenges, really pitting those national security

concerns against free speech. whisk in the apps to operate in the u.s. in the meantime? what is the clinical implications of a band? >> it can operate in the u.s., they will not have to go ahead and pass an emergency order or anything to do that but at the same time, there are politics involved because a lot of small businesses and others have come out very much against a tiktok been saying this is how they do business now and many young people live on tiktok these days and some of these are young voters that the biden administration will really need for his coalition for his reelection. there were actually advertising on tiktok, using tiktok users as part of a way to get their message out.

by then said they are not going to go that route. >> we also heard from the former u.s. treasury secretary saying that he is still interested in buying the u.s. operations of tiktok and things that technology could be replicated to. isn't kind of a moot point if binance has been pretty clear in its intentions to not sell? >> there is that issue if they really not going to sell. so the buyers become a bit of a moot point but there is this issue of replicating it. they've made the point that if you can't beat them -- can't join them, beat them and beating them would be able to replicate this algorithm. others think that's not so easy. the reason tiktok has become so

incredibly popular is this algorithm and remaking this will be terribly easy which is why we saw this legislature passed to begin with. >> it is not just tiktok that is in focus, it is these continuing restrictions on china's access to advanced chipmaking as well. >> today we saw a move to further those export restrictions. hussein is restrictions continue but there was another round of this. then we heard from michael mccaul who confirmed this who said they are really trying to tighten these restrictions and allow no american-made ships to get to our way, making it very

difficult for them to make this advanced technology. president xi jinping has arrived on the second leg of his european tour looking to bolster ties. his arrival comes 25 years after the deadly bombing of the chinese embassy of belgrade. they were the channel never forget the attack. staying with geopolitics. they state the u.s. and hamas should be able to resolve this over a cease-fire in gaza. israeli forces edged closer to the city of rafah. president biden has condemned this as part of the ceremony to

remember victims of the holocaust. >> on the sacred jewish holiday. i have never gotten. you have you. quick suddenly, hamas agreed to the truth without that happening. to do this deal to release the hostages but it's also setting itself up to try to complete his operation as well.

the u.s. definitely wants this as we reported prime minister netanyahu is aware that president biden does not want that were going on protest. the israelis are almost wanting to track thing here. opposer is the most israelis on those hostages released. these really say they are quick far away but the israelis are also planning on going there. u.s. seems fairly confident something could happen. given the state of hamas, if it does not agree to this, potentially that is the end of the organization and it could be decimated. it is in their interest to try to get a deal down. >> what is the standing of hamas now? because one of the big question

marks is just being how much further radicalized people could be and it would be incredibly difficult to stand power. >> that is exactly right. hamas is popularity, whatever they've done -- certainly in the west bank is sporadic. hamas is popularity is very by. the palestinian authority which is sort of the inheritor of the plo is in single digits. hop -- must've seen as the retentive of the young -- the represent of of the palestinian people. people support what it does but it is the only group that is sort of offering resistance. where almost at famine or if not in famine now in gaza, it is in the generation or two who won't be radicalized. this is why it is so critical having some sort of plan for what happens after this war which is what israel has been very different in trying to avoid. potential for medicalization is

very high. you go into rafah presumably as leadership melts away as well. this is a devastated sort of area. we've seen other areas where israel has bombed or has cleared militant and the pop up again later. it fired rockets and killed some israeli soldiers in the wake of it. it is still a viable group. if not hamas then something else as well. because until the underlying issue is outcome of resistance will continue and people living in a stalingrad style environment down there. there is very little there. it is really worrying about what the future looks like. >> there are problems for regional players as well. the risk of both humanitarian overflow, militants crossing the board as well. how important is that relationship for israel? >> it is obviously important. page was the first country to

sign a deal with israel in 19 79 and egypt does have a problem with militants. it has been very clear it does not want refugees, that these people have a home. egypt at certain points has gone so far as to say that if israel doesn't do its best to protect civilians to ensure they are not pushed out, it would reconsider that agreement which is a really big redline that one. it would have devastating applications if that was to be reversed. israel is highly aware of that. they know how important egypt is. it will be very much guitar, egypt and the u.s. are the ones that are really pressing this deal.

grace you can get the random other stories you need to know and this edition of daybreak. you can customize your settings as well. this is bloomberg. ♪

close your things u.s. government will hold rates until officials are confident inflation is under control. we have bloomberg tv here in the global coverage. they will do what is needed to hit you percent target. >> the second half of 2023 surprised us and how rapidly inflation fell. that was really good news. and the economy remains strong. we all hoped that would continue for the first quarter of this year. it seemed that is stalled out. maybe it is just taking more time. i think we are in a good place right now. the labor market is still strong. we should take our time to get more data. if it does, great. if it doesn't, we need to take that on board. >> what is the compunction right now of disinflation? what actually drove us to the

level we're at right now? ? of the games we saw the were supply chain improvement. i don't think monetary policy actually brought a man down that much. most of the gains will be because of the supplies i. if monetary policy is tight enough to do that -- i write an essay today -- raising the question. we need more data to assess it. >> how do we know that the disinflationary process still has some ways to go? how do we know that maybe this is it? >> it is not the new normal. the question is if disinflation is still underway, it will continue on its own.

if we need to hold rates where we are to tap the brakes on the economy or if we needed obeys, we would do what we need to do to get inflation back. >> i know i the fed does that. i talked to people around the room. the idea is they are saying the 2% target, that needs to come up. that is not the reality of long-term structurally. >> i disagree with that. i think that ultimately the central bank, whether it is the fed or the ecb can't determine whenever the inflation rate is. and over time, if they conduct their policy appropriately, people will come to understand that and adjuster behavior. we will get over of interest rate environment necessary in order to achieve 2%. of course that neil speaking

about our colleagues remain bostick. in a lot of ways it makes complete sense about the fed likely staying higher before there is absolute confidence that inflation is under control. what you think that potentially looks like given that we do see that gap still between monetary and fiscal policy and the distortions that continues to create with the new inflation prints? and our markets at this point kind of seeing the reality of that situation. >> i think longer term there are some out there that are running large budget deficits. there is a tendency for them to move a bit higher. near term we are beginning to see the economy so often. we think the reason economic data to continue to point toward a mild maybe a moderate economic slowdown during the latter part of the year that should take some additional pressure of

inflation at least for a time. the big question is what happens after that. as the economy recovers, what is that equilibrium inflation rate and how hard is the fed have to try to ring that inflation rate down? >> in the meantime, what does that mean for the sort of style of training that we've seen really dominate? are we going to see more pressure when it comes to these sectors given that earnings by large heaven fairly favorable for tech? >> we think the good news has been that tailwind provided. the real concern was the upside risk to interest rates which we think is dissipating now that there are signs of economic growth winding down for the employment report and the purchasing manager survey for services act in the sector of the economy that came out last friday. that alone suggests growth --

growth is losing momentum. we think the market can navigate that fine line between slowing earnings growth and interest rates coming off a bit more and accommodating high valuations. >> if growth is slowing down, where are you looking to put your money instead? quickly have advocated quality for the last couple of years all along. we think in this economic environment, quality because most important. these are benefiting from favorable demographics. we also favor materials.

more for secular reasons. we are positioned to rotate. >> we would be reluctant at the we are seeing export led growth. how durable that will be remains to be seen. the depreciation of the end much like the one is created a more favorable export environment. we just feel more comfortable

toward the u.s. market. clicks that u.s. exceptionalism, a global strategist at wells fargo. thank you so much for the insights. we will have much more coming on daybreak australia. this is bloomberg. ♪

hey you, with the small business... ...whoa... you've got all kinds of bright ideas, that your customers need to know about. constant contact makes it easy. with everything from managing your social posts, and events, to email and sms marketing. constant contact delivers all the tools you need to help your business grow. get started today at constantcontact.com constant contact. helping the small stand tall.

>> taking a look at how u.s. futures are very so far. nothing too much action so far this morning. traders are very uncertain on what is to come from here. we have the prospect for fed rate cuts. inflation is still sticking.

investors as well are getting some different because. you have the likes of jp morgan do for a pullback. now could be the time to snap up shares. let's switch that and take a look at bloomberg and south korea. you have to have the trading debut. we have the trading debut of a big company and south korea. the price at the top of the range, strong demand.

>> i think the most likely scenario is where we are right now which is we stay put for an extended amount of time until we

get clarity on, is disinflation continuing, or has it stalled out? i don't think we know the answer to that so i would say the most likely scenario is we sit here for an extended period of time. haidi: neel kashkari speaking there at the milken conference in beverly hills. looking pretty mixed as we get to the start of trading. we are half an hour away from the start of cash trading in sydney. .2% indicated upside for features after we had a mixed set of interesting messaging from the rba despite staying on hold as expected at 4.35% at the meeting yesterday. kiwi stocks seeing some downside, nikkei futures looking muted, looking like we will see a negative start of the session. we heard from the boj governor saying he had communicated how carefully they are watching doubles and the yen to prime minister kishida. that weaker currency, when it comes to the benefit you have

for exporters, it used to reliably boost shares of carmakers in japan. but it is interesting the correlation between the yen and stock prices has broken down. our senior asia stop order joins us to explain why. you have long said currency is only a small factor when it comes to the rally. we have seen that correlation decrease for the carmakers? >> yeah. it is very interesting because carmaker as the most benefit from a cheaper yen. no other sect it has benefited more than carmakers. even these carmaker shares are on the bubble when the yen declined. that could be a sign things might be changing. since around mid march or april,

japanese carmaker shares have underperformed the broader japanese stock market as well as other competitors in other countries. many investors are starting to fear that something might be changing in the dynamics of the market at the moment. haidi: as that benefit for carmakers comes to an end, are we entering a period for the yen after bouts of intervention or do we expect the diversions to continue to play out? hideyuki: that is a good question. i think it is still too early to call. it is different for market players. but many long-term investors think the yen might rebound in the future given the yen has been so cheap. if you look at the purchasing power parity, the yen should be around 95, whereas at the moment

the yen is 160. so if you think over the long term the economy might correct to levels where prices -- where price levels are justified. i think many pay attention to that aspect rather than incremental increasing profits in the near future when the dollar-yen moves two or three yen. so, for long-term investors, it is not time to buy exporters shares, just because the yen is getting very cheap. on the other hand, short-term players tend to look up volatility in the currency market. so if you think the yen might weaken further in the next three weeks, it might be a good idea to buy japanese carmaker shares. so really, it depends on the timeframe of your investment, i

think. annabelle: that was hideyuki sano there. sticking with the weaker yen theme and the impact on earnings, nintendo is another company that says it will soon announce its successor to a seven-year-old switch gaming console after forecasting a bigger than expected profit decline. their president posted on x to say an announcement on the next hardware platform will be made in the coming year. that came after a warning that operating income will fall 24% in the current fiscal year. while disney shares tumbled the most in 18 months after a tepid outlook for growth in streaming subscribers. it also said theme park visits are expected to moderate from peak post-covid levels. disney+ announced more than 6 million subscribers in the second quarter but sees no core growth of this period, with profitability hit by expenses

for cricket rights in india. >> we are looking at asia representing growth opportunities both in terms of the streaming service in select markets as well as the parks and cruisers business. we do see good growth opportunities. europe and latin america continue to be growth opportunities. in north america, we still think there are terrific opportunities for us at home. annabelle: reddit shares jumped in extending trading, and pressing investors with first results is a public company. revenue increased 48% to $243 million. the social network projects sales of the current quarter of up to $255 million, well ahead of the average analyst forecast. you will be -- gains in wealth and card fees cushioned a slight drop in lending income. net income for southeast asia's third-largest lender was $1.2

billion u.s., down 1%. the bank maintain their outlook for lending and fee growth. ubs shares jumped as it returned to profit after two quarters of losses. net income of $1.8 billion was three times what analysts had forecast. the ceo told us the bank is close to cementing the implementation of credit suisse. >> was great to see a very strong return on profitability, both on a reported basis but also very strong underlying process. we also see good momentum with clients, with inflows across our businesses. and our capital is strong. so, allowing us to continue to pursue our capital return plans. >> the investment bank is better than expected. what does it tell you about what you can see in the future?

is it a one-off, or is the path ahead better? >> actually, it is good momentum. in the fourth quarter we also had very strong performance in banking. as we integrate credit suisse on our platform, we started to see the platform -- pipeline developing, we are able to execute. it is very much aligned with our expectations of improving the mix between our markets business and banking business. >> the investment bank, where do you see the biggest strength? we also heard of possible job losses in asia. is asia weaker than parts of the u.s. in investment bank? >> we reinforce our banks globally. we are still going across the entire bank. there is a lot of work to be done to restructure the businesses, and to bring them back into even stronger profitability. i think that is a good momentum.

we achieved almost a 10% return on citi one, which is still 50% away from our final target. so, still work to be done. 2024 is an important year. as we now approach the end of may, we're going to execute on our legal entity mergers, which allow us to unlock in the future further cost savings. >> an important year, 2024, because it is also a more difficult year than 2023? >> first of all, we have two huge milestones, the the merger of our legal entities and the migration of our clients from credit suisse platforms into ubs platforms. it is very technical. still requires a lot of support and people to do that. but as we start to do that, we can unlock some cost savings,

but also unlock capital savings, bonding savings, and therefore, achieving our final targets, to achieve $13 billion of savings by the end of 2026. for this year, we do expect half of that being achieved, so, $6.5 billion. haidi: the ubs ceo there. more ahead on daybreak australian. this is bloomberg. ♪

annabelle: apple has unveiled a new ai-focused ipad pro and a larger i bread -- ipad air. the pro revamp includes an oled screen and faster chip. let's get analysis now with kiranjeet kaur, associate research director at idc asia-pacific. let's start off with your reaction to this lineup that came out. of course we have seen weaker tablet sales. they sort of picked up this year, but do you expect to see this lineup further stimulate demand? kiranjeet: i think it should stimulate further demand. apple did not announce any ipads last year. but with this announcement and

four new ipads and a price job for the 10th generation, it should hopefully trigger some consumer interest. they should be looking to upgrade devices they had produced earlier during the pandemic time. annabelle: where do you see most of the demand coming from? there has been that lower-priced tech segment, then you have the upper end where it is clear competition where apple is looking to compete for aipc's. which one are you more excited about? kiranjeet: obviously the ipad pro with the oled display and the new chip and with a more powerful engine. obviously it is for the premium users and has the most upgrades apple has seen in the ipad. but because of the higher price it is going to be focused on the

pro users, more premium users. but most of the growth should come from ipad air that was just announced, and at the same time for people coming into the ipad camp. there's the lower-priced ipad that should be driving most of the volumes. at the same time, the ipad pro, that clearly puts apple in the space where we are talking about ai devices, whether it is laptops, ipads, or any other portable devices we are talking about today. haidi: interesting we didn't hear whole lot about the ai strategy. do you think that is what investors are really looking for? if they are saving that for june, is there a risk of under delivering and disappointing? kiranjeet: it was kind of expected. this event is more for the ipad rather than focused on the ai strategy, because the ai strategy will not just be ipad-focused, it will be encompassing all the other devices. the phones, macs, the whole

range of apple devices. we should hopefully hear more. from this event, what we see is the focus on making the hardware capable to run some of those ai algorithms, and have the processing power, have the horsepower when apple is ready to bring the software into it. haidi: how do you think this plays out in the key market of china, where obviously there have been a lot of challenges for apple? do you see a steady recovery there, or are these levels more of a new normal for apple? kiranjeet: i think apple should probably brace for a new normal, which means that maybe it will not get back to the same levels we have seen. but at the same time, the interest in ai and a new features will generate interest

not just in china, but other markets as well. annabelle: do you think apple needs to make tweaks that are specific to market, and mainly china, given it does appear to be losing some ground there? kiranjeet: the challenge for apple in the china market is the research. if you look in 2019 when some of the -- the pandemic happened and people were all grappling to get their hands on the latest and premium devices. now if you look at the most chinese vendors, they are bringing ai into the language when they are selling a product. i think 2024 is the year we see a lot of chinese players talk more about ai in their devices,

how they are differentiating in terms of their own generative ai applications. i think it is the right moment if apple announces something next month. then in fall this year when a new iphones launch, if we can see some of those features differentiate iphones from the android in the market, that should definitely help apple to claw back on some of its share in the market. annabelle: do you think the news to be any concern of apple losing ground to chinese made smartphones in markets outside of china? kiranjeet: in the other markets apple has clearly had a dominant position in the premium segment. but what is more interesting to see is even in the emerging markets, apple is having an independent segment. we are seeing more and more users moving towards the premium segment. so the overall pie is increasing

for apple. we have seen tremendous growth for apple in india, indonesia, some countries in the middle east. even though there is competition for the chinese space, at the higher end, apple is in a safe situation. but yes, again, we have seen samsung come out with an ai smartphone, so that is creating a lot of interest. they have been talking about ai in their smartphones and smartphones alone for ai. in the premium space what apple needs to look at in the not chi na markets is, what is the overall messaging coming around ai. but overall i think apple is still in a safe space there. haidi: kiranjeet kaur, associate research director for mobile phones research at idc asia-pacific. you can watch us live on our interactive tv function tv and dive into any of the

securities or bloomberg functions we talk about. you can send us instant messages during our shows. this is were bloomberg subscribers only. do check it out, it is at tv . this is bloomberg. ♪

haidi: it's an interesting time given we know many households are battling with the cost of living crisis. this is a highly uncertain time with record high interest rates. we have been taking a look at this bloomberg story at the cities with the most millionaires, and what changes we have seen across these major cities. we know these are cities like new york, hong kong, sydney as well. when it comes to new york, the stats are quite interesting. one out of every 24 new york city residents is now a millionaire. the number of people with that seven-figure net worth has jumped in manhattan, also across the bay area and singapore is the other one that saw a major boost. interestingly, hong kong,

london, moscow seen declines. you see sydney also in play as well. annabelle: it really is that shifting dynamic. of course hong kong stands out as one that has seen that bit of wealth exit is coming through. tokyo is another where we have seen a bit of a decline. cities on the rise in this part of the world, shenzhen, cities across india, ho chi minh city, scottsdale, arizona, all of these are seeing more millionaires coming in, or doubling in the past 10 years. really driven by that boom in financial markets we have seen concurrently. actually, this is the most read story on the terminal over the past day or so, banker bonuses. it is a close topic to many of our viewers, but looking ahead to a pretty good pay packet towards the end of the year. the earliest predictions are coming through for wall street

burness is -- bonuses this year. if you are someone who underwrites debt, you can see it pay out as much as 25%. bond traders, equity underwriters could rise as much as 20%. haidi, always a very perilous task to try and predict bonuses at the start of the year. the big question of course is what happens over the next few months. haidi: and what is interesting is how we are seeing, you mentioned shenzhen, but i imagine there are a lot of changes in it comes to major banking cities like shanghai. we have heard more and more reports of, if not layoffs, at least some attempts to try and, through attrition, reduce headcount through chinese brokerages as the business continues to come under pressure there. some interesting stats and i thought interesting for new york, given we have been talking about this big exodus for that

city in favor of florida. and of course geopolitics always at play. the big story we are following is what happens with bytedance and tiktok. we heard from steven mnuchin and, he is still interested in buying tiktok from bytedance. he spoke with david wilson -- david westin on the sidelines of the milken institute. >> still very interested in buying it and to the extent they want to sell it or spin it off, we very much want to pursue that. i support that congress passed a bill and it has been signed into law. this has had incredible overwhelming support with republicans and democrats. this may be the only thing everybody agrees on. the fact it is on 160 million phones, i do think it is a security issue. >> does the deal still work if the algorithm does not come with tiktok? >> the chinese government has been very clear that they will not give an export license on the algorithm. and i understand that.

we have sensitive technology that we don't want to transfer to them and they don't want to transfer this to the u.s. i've actually spoken to a lot of tech companies on working about rebuilding this. i do believe the algorithms could be rebuilt. so my plan, if we were to purchase it, would be to rebuild the technology under leader -- under u.s. leadership, make sure that it is all disconnected from bytedance going forward, and then it is very robust and secure. annabelle: that was steven mnuchin speaking to david westin. and geopolitics is one of the key themes we track for market moves across this part of the world. today for futures, setting up for the open for japan, australia, south korea, looking very subdued. not really expecting any big moves in either direction, given that lack of uncertainty and movement on the wall street session. intraday traders are really split over the expectations of

fed rate cuts. at the same time you have sticker inflation and the prospect we stayed higher for longer. one of the key stocks we could see a pop at the start of trade is one in seoul, a ship repair firm. it's raised nearly $550 million in its ipo, the biggest when we have seen since january 2022, and cements south korea's -- the stock could see a pop at the start of trade. ♪

♪ annabelle: this is "daybreak:

asia." we are counting down to asia's major market opens. setting up for an absolutely lackluster session today if you look at the queues we have for mustard overnight. , rally continue from here? haidi: not just the fed, we heard from neel kashkari speaking to bloomberg earlier saying they are not going to back down from higher-for-longer until they are confident inflation has returned to desired levels. but also, australia going into the open, we had our rba signaling it will be a higher-for-longer rate environment in this economy you will. annabelle: that's right and one of the stories we are tracking is that rents could be the next thing to fall in this inflation battle. at the start of the day, it is that focus on what is happening with the japanese yen, heading closer to the 155 mark. we had governor ueda meeting the