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00:00Very good morning. I'm Heidi Stroud what's in Sydney. We're counting down to Asia's major market opens. I'm Shery Ahn from Bloomberg's New Economy Gateway Latin America in Panama City. Welcome to the BRIC Asia. Our top stories this hour. Asian stocks could be set for gains after a U.S. rally. Sentiment improving following strong data on retail sales and factory output. Markets also weighing the most hawkish comment yet from Jay Powell who's promising to tame inflation even if it brings some pain. Plus Chinese companies listed in the U.S. get a boost after Beijing's public show of support for Internet platforms. Let's take a look at Asian markets. This of course as we saw markets in the U.S. really shrugging off those most hawkish comments yet from Fed Chair Pound saying that though essentially keep raising rates higher until they get convincing evidence that inflation is coming under control. We also just heard from Charlie Evans in the prepared remarks of his speech to be delivered in New York really saying that he favors front loading of the rate before moving to a slower pace of rate hikes to get inflation under control as well. We're looking at a pretty good start to trading here in Asia city features looking like we'll see a gain of about 1 percent. This is a market that has been very well supported from really the higher oil prices. Energy names and some of the commodities names doing particularly well over the past few session. That 10 year old sitting at just shy of three point five per cent but climbing seven basis points after similarly dated Treasury yields also rose by about 10 basis points over not the three year yield also up about seven basis points to just under three per cent. Kiwi stocks up by about seven tenths of a percent or watching dollar again as well given up for a best fall in demand for dollars. And really that recession of Hayden demand that we saw overnight it could see some support for Asian currencies. Take a look at what U.S. futures are doing as well Heidi because we are seeing that extension of gains that we saw already in the New York session when the S & P 500 rose to that one week high. We of course will continue to see this risk sentiment and build. We had consumer spending powering ahead factory production also rising at a solid pace for a third month. And we mentioned those U.S. this is Chinese tech stocks and jumping as well. Treasury yields climbed in the New York session. The curve flatten after Chair Powells remarks. We are watching crude prices as well because they're rebounding in the Asian session. They fell after the U.S. government announced that they plan to ease some sanctions on Venezuelan oil. But Heidi of course all of these market gyrations have affected emerging economies a lot. Given the inflation pressures especially with MSCI emerging markets really falling more than 16 percent year to date Latin American markets have done resilient early this year. We'll continue to see what happens as we're live from Panama City. This is Bloomberg's new economy Gateway Latin America. We'll be speaking with our next guest Inter-American Development Bank President Mauricio Calabresi only about all of the challenges for the Latin American economy not to mention some of the opportunities as we continue to see commodities prices surging. Of course we are talking about big exporters of grains and critical minerals as well Heidi. And investors Gerri have been way that resilient April retail sales data. Those comments from Fed officials including Jay Powell on the rate hike plans for moments bringing across the assets. Asia Emma Chandra have also global economics and policy editor at Kathleen Hays who's down as Chicago Fed President Charles Evans plan speech to be delivered in New York today. Andrea in terms of the markets we saw the bounce back in sentiment that's set to spread throughout the Asian session to Heidi. Yeah that's right. You know investors were looking for an opportunity to wade back in perhaps after the sharp sell offs that we've seen. And they got that overnight following that those strong U.S. retail numbers and also those solid factory numbers and that could support Asian stocks today. But having said that it did push back those concerns about a recession that we have seen you know recently. But investors are still trying to digest so many crosscurrents from the war Ukraine from the Covid lockdowns in in in in China and also from these concerns about you know a slowing a slowing economy in the U.S. In China monetary conditions are tightening. Those bond yields jumped overnight after Jerome Powell sounded resolute in his efforts to you know to fight inflation. So you know these continue to be head winds for the markets. But it looks that you know if they do get a chance to come back even on some positive news like we saw overnight they will trade that. Kathleen we have seen of course markets continuing to take Chair Power's latest comments pretty well but they were pretty hawkish. Well I think they are as hawkish as that. The Fed says it needs to be based on where inflation is now and their acknowledgment. Yes we started a little late. We were making monetary policy in real time. We might do it differently now. But now we know inflation is our number one. Our number one goal. Our number and number one mandate. We have to get it done. He said they're going to keep on pushing until they see clear evidence that inflation is coming down. I at some money market shares of NYU here in midtown Manhattan because Charles Evans he's president of Federal Reserve Bank of Chicago is speaking. We got his headline. And I think it's important to to look exactly what he said in his prepared remarks which are going to start momentarily. And there will be questions and answers after that. But he said yes they have to move. They have to reposition monetary policy. They have to move the rate higher. They may have to go above neutral but importantly said. And then if possible he like I'd like to see if they can get back to a more moderate pace. I think what the markets have to understand the Fed doesn't have a blueprint. They don't know exactly where the economy's going to go. They don't know how quickly inflation is going to come down. And they know that right now for example when they look at demand is sure a powerful demand is strong. And you saw that retail sales today solid numbers strong upward revisions in the previous month. People may be using their credit cards. They still have a lot of unsold a lot of money in the bank. So this is what the Fed is up against. I think Charles Evans is kind of opening the door from the more dovish side of you know we're going to do what we have to do. But maybe we won't have to be that aggressive. But I think markets just have to realize most people have never been through a cycle like this. There's no blueprint. You got to watch the numbers. That's why you're going to get set to do. And Andre how Chinese tech stocks getting that lift. What do we expect in the Asian hours ahead. And is this kind of another way of looking at a bear bounce. Yeah. Look at the rally in Chinese stocks in the US last night could definitely provide support for the Chinese markets and Asian markets today. China's vice premier came out reaffirming support for Internet companies for the development of digital companies in their public listing suggesting that perhaps the government there is stepping back from that from that clamp down on the tech six step that take the tech sector that that you know that has been keeping investors sidelined. And of course a lot of unsaid investors in China which is why we saw Alibaba buy do drive up the NASDAQ Golden Dragon Index. You also had JD dot com coming out with better than expected revenue growth. And that is perhaps you know some some positive news out of China along with the fact that the Shanghai is easing on its own its lock stock down. Is under hip hop and Kathleen Hays there with the latest on the markets and of course monetary policy. And of course at that tech theme we'll be discussing it will be a big focus on day two of the JP Morgan China summit in Hong Kong. Our chief North Asia correspondent Stephen Engle we'll be speaking to a number of big guests from the event in the coming hours. He joins us now from the city Steve. Yeah I think what Andre I just ran through some of the big tech stories as well as what Kathleen mentioned as well about the inflationary prospects and the Fed tightening cycles are going to be prominent themes in our coverage of the JP Morgan Global China Summit a day two here in Hong Kong. Of course yesterday we talked to Philip Gorey the CEO of Asia-Pacific for J.P. Morgan and he essentially said he wasn't going to be distracted by the short term shocks that we are seeing. Obviously what I'm talking about is the lockdowns in China. He says they are long term in that market. Let's hear from Philip Laurie. Their long term perspective off the region in general and China in particular. I think nobody has any doubts about that. Therefore we tried to stay away from short termism and focus on we're doing this for the next 25 years. And we'll flesh out those thoughts from Philip Gorey with his China CEO Mark Long later this morning. Also interestingly we'll talk to Paul Yaron. He's the J.P. Morgan head of Asia Investment Banking because those little her comments are quite interesting as well. Now at Leo Hood the vice premier adding to a chorus of Chinese leaders who have coming out and essentially giving support to the platform and the digital economy in China after what's been more than a year of course of downward regulatory pressure. What will that mean for underwriting and investment banking. Of course at JP Morgan as Leo Hood. He didn't give a lot of details in his speech in Beijing yesterday but he did mention the potential for these platform companies to aid the I guess the the listing on domestic markets as well as of course international markets. So a boost for capital markets. We'll see if it's more than just a shot in the arm a temporary shot in the arm. And then finally yet too we're going to talk all things crypto following the terror USD collapse. And what's the future of block chain. Lots on the agenda Bloomberg Stephen Engle there in Hong Kong. Let's get you to Vonnie Quinn in New York with the first read headlines. Funny piece. Thank you. The Biden administration is poised to fully block Russia's ability to pay U.S. bondholders a move that could push Moscow closer to the brink of default. Bloomberg has learned that the Treasury Department will let a temporary exception lapse once it expires next week. That waiver has given Russia room to pay coupons and helped us avert default on its government debt. China's main bond trading platform for foreigners has quietly stopped providing data on their transactions. Sources say the China Foreign Exchange Trade System last published overseas investors daily trades on May 11th with the data showing sizable net foreign outflows. It's unclear why the platform stopped releasing the figures and whether the move is temporary or related to Shanghai's lockdown Dow Jones reports. Flight data show that somebody in the cockpit intentionally crashed that China Eastern jet earlier this year. The Boeing 737 was cruising at high altitude when it suddenly nosedived a high speed into a mountain. Citing sources close to a U.S. investigation that avoids said no mechanical issues were found with the plane. All 132 people onboard were killed. Japan's cabinet has approved an extra budget of 21 billion dollars to help households and businesses cope with higher prices. The added spending is part of a broader package of measures aimed at easing the impact of inflation. The money may also support the bill. O'Jays easing plans despite the weak yen. First quarter growth figures due later Wednesday are expected to show that Japan's recovery is stalling. Global news 24 hours a day on air and no Bloomberg Quicktake. Powered by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm Vonnie Quinn. This is Bloomberg cherry pie Varney. Still ahead the war in Ukraine is adding to the economic shocks for Latin America. We discuss that and the growth outlook for the region with Inter American Development Bank President Mauricio Calabria got on their first arena. Investors gives us their top strategies amid elevated living costs and tightening monetary policy. That's coming up next. This is Bloomberg. If the economy reforms about as we expect then that's that's something that'll be on the table. Honestly it's silly. Things are so uncertain in the economy right now. It's very difficult to think about trying to give guidance out into the future. I think we're gonna have a second big bite to sample a recession that's more traditional sense where that where the Fed chimp bail out the recession or tightening to control inflation. Fed chair Jerome Power Marathons. Bruce Richards there. Amid tightening policy globally and domestic growth concerns China's offshore property bond losses. I've hit one hundred billion dollars. Investors are questioning whether all the negatives are now priced in amid the market volatile activity. Let's bring in Dani Burger CEO and CEO of Arena Investors overseeing three point four billion dollars that we were just talking a bit earlier. All the volatility some of these worries over the liquidity situation and ease of trading across varied asset classes. Are you finding opportunities here. Absolutely. I think with volatility comes opportunity and I think a lot of what we've seen out there whether it's investment grade credit or growth equities or crypto are real weakness in situations where investors hopes are pinned upon another investor taking them out of their problem. And so people are actually for the first time in quite a while looking at actual fundamental cash flows and saying what are these things works. And they're discounting them based on elevated assumptions on on risk free rates as well as credit spreads. So we've been hearing from Jay Powell we expect to hear from Charlie Evans a little bit later. So talk about front loading and it kind of presents his cohesive image of a very determined and hawkish fed to try and make up for perhaps being behind the curve. Do you think markets is adequately processing. Is it going to create deeper liquidity concerns. I think the stock market in a very short term sense is always very optimistic. What you've seen with the Fed over the last two years in fact the longer is that they see their day a day late and a dollar short. And so there's more talk and less doing. And we need to see more doing and less talk. And unfortunately we haven't seen that. And when paired with really profligate federal spending I think we have a real opportunity to see significant downside from our. What I was seeing in terms of action coming from the see because we continue to watch perhaps a little bit of more support coming from China. But investors seem to be continuously getting disappointed at this point. Are there any opportunities that you like across the country. In China we're very active with partnerships focusing on non-performing loans primarily focused on real estate in China. I think there's real opportunities there. We have a very large probably trillion plus level type of real estate issue in mainland China. And I don't think the approach on Omicron is helping that end. And so I think there's going to be a really long term opportunity there to really rationalize the property sector in China. And you're also involved in small scale and peels when it comes to some hard assets. What are you seeing across that sector. Well I think you're seeing a confluence of inflationary pressures and the realization in the commercial real estate sector of the long term secular effects of Covid. And so you're seeing a lot of transitional property opportunities whether that's in non-performing loans in this kind of purchase offers from banks banks looking to kind of rationalize their portfolios of assets. I think we're seeing that it's beginning in the US. We're seeing a lot more post GFC opportunities in southern Europe going way back. There's still assets to be dealt with. And we're seeing as I mentioned the emerging opportunities available in China in Southeast Asia. The energy transition space is quite interesting at the moment given that this seems to be a high level of discomfort for a lot of investment houses and investors there's hard work out how they manage this transition transition to fossil fuels and perhaps it's not as quick as initially we thought it was going to be. Where do you find the opportunities there. I think we take a longer term view of what the definition of an energy transition is. And so the real realistic numbers out there show you that it's going to be 30 40 years before we see a real material transition. And so to that end on one side we're very involved in continued appropriate and judicious exploration and production of fossil fuels primarily oil and gas in the United States. And on the other we're very involved in energy transition and financing charging systems and other other means by which over the long haul an appropriate level of transition will happen. Opportunities in Australia is also something that you flagged as well. Yes Australia New Zealand were terribly active in helping New Zealanders kind of get access to housing. There's been a very significant secular shortage there on the housing front. And we've been we found a way to be very active in affordable housing provision in New Zealand. In Australia I think the real nonbank opportunities across the worlds of special situation corporate investment and structured finance we're seeing some real rationalisation in the nonbank finance block in Australia. That's were in always good having you with us CEO and CEO of Arena Investors. Thank you. And of course you can get a roundup of the stories that you need to know to get your day going. And today's edition of DAYBREAK terminal subscribers go to Derby. Go. You can also customize your settings so you only get the news on the industries and the assets that you care about. This is Bloomberg. With the pandemic inflation in Russia it's becoming harder to navigate through persistent uncertainty in what is a tough environment. While it's difficult to predict how long China's lockdown will be we are hopeful that the situation will normalize in about three months time. We're predicting our business plan on Japan's gradual economic recovery after the pandemic peaks out and the global slowdown amid higher inflationary pressure and higher rates. Covid not college that get our forecast. This really I would say it is realistic. Having said that more and more we have certain to be moving forward. Definitely pilot performance could be better. China still has many restrictions under Covid zero policy but overall recovery from pandemic is going to be a positive factor although the time is changing from deflationary to inflationary. Japan may be seeing a paradigm shift. Top Japanese executives they're discussing the country's growth path. We are counting down to the start of trading in Tokyo and saw some of the stories that we're watching today in Japan. First quarter GDP is set to be released in about 30 minutes time. We'll be breaking those numbers when they cross the Bloomberg. We're also set to get to Japan's industrial production data for March. And the country's cabinet has approved a twenty one billion dollar additional budget to help households and firms hit by higher prices. As the government looks to shore up support ahead of the summer election. Over in Korea state run think tank Career Development Institute is set to announce its economic forecasts for 2022. The Bank of Korea will sell eight hundred sixty two million dollars worth of 91 day bonds and the Korea Deposit Insurance Corporation has sold 17 million dollars worth of shares in the Worry Financial Group at twelve dollars each in a block trade. Let's get a quick check of latest business flash headlines. Twitter's board says it intends to enforce the Elan Musk takeover deal and close the transaction at the agreed price with fifty four dollars 20 cents per share. The comment comes as a statement to Bloomberg News. Earlier Twitter confirmed that it's losing three more senior employees reflecting growing uncertainty while waiting for Musk's takeover to close. JD dot com logged better than expected 18 percent revenue growth but that year in year figure was still the slowest quarterly rise since the company went public. As Covid lockdowns in China weighed on consumer spending sales climbed to thirty five point six billion dollars in the first quarter beating at 35 billion dollar average estimate. JD Stock rose on the news. CS Core gaming revenue grew faster than expected in the first quarter offsetting a slowdown across the rest of its business as online activity retreats from pandemic era. High gaming which is these most profitable division posted sales of just over one point one billion dollars against forecasts of nine hundred and thirty million dollars. Its e-commerce business however underperformed a unit of Alliance Wall. Allianz will plead guilty to fraud and pay five point eight billion dollars after misrepresenting the risk posed by a group of hedge funds that collapsed during the pandemic. The deal closes an embarrassing episode for the German insurance giant which has also agreed to sell the bulk of Allianz global investors you with as part of a settlement with the S.E.C.. And take a look at how markets are trading at the moment. We are seeing a little bit of upside when it comes to Kiwi stocks up eight tenths of one percent. Sydney stocks are also up about 1 percent. This of course after we saw some relief rally when it comes to their currencies commodities prices gaining a little bit of ground. NIKKEI futures also higher by a tenth of 1 percent. Of course we have already seen three sessions of gains for Japanese equity markets. And we will be watching their fourth quarter GDP growth numbers coming up in just a few minutes time. We are seeing U.S. futures also extending those gains that we saw in the New York session when the S & P 500 rose to that one week high. We had very solid data including consumer spending. In fact reproduction. Coming up next a fresh signals from Beijing that A may be ready to further ease its clampdown on the tech sector. This of course as it battles a slowing economy. We will have the details ahead. This is Paul Allen Bart. All right. Taking a look there at some of the updated revenue estimates ahead of key 10 cent earnings is coming after JT Dotcom logged better than expected 18 percent revenue growth. But that year you think it was still the slowest quarterly rise since the company went public. Let's take a look at how Chinese 80 hours are looking when we've had so much news flow when it comes to Chinese Internet stocks really being supported by that senior Communist Party official reaffirm reaffirming support for the industry that has really stoked optimism that regulators may be easing their long clamp down across the sector. We asked the Alibaba up about six and a half percent. Baidu as well as net is gaining four point eight percent one and a half percent respectively. And really we are just seeing that broader NASDAQ Golden Dragon index up over 5 percent to the highest level in just about two weeks there. Let's cross over to Bloomberg's chief China markets correspondent severe hotel ACOSTA. And Sophia of course we also had that J.P. Morgan turnaround when it comes to Chinese tech as well. Now this is really providing further support. Yes exactly what I would say is it doesn't take much to see these stocks rally you know 6 percent in a day. It does take a lot more to see this rally hold. The key comments from her yesterday were that the government vows to support the development of this industry. But again we're thin on details. This is very much very similar to what he said in March that day when we have a massive short squeeze and stocks rallied in the double digits. But again no plans. How does the government plan to do this you know. Are there going to be any rollbacks of the stricter regulations that we've seen since and IPO was canceled. Is there any more coming on the monopoly front. The monopoly was a word that's been used repeatedly. Again China does not support monopolies even if it supports the Internet sector. Where are the details. That will be the question going forward. I think it will be very much a travel than arrive situation for these stocks where we see what we saw a 6 percent gain in the Hang Seng tech index yesterday. I'm not sure whether all eyes today will see. What our market participants saying I mean we saw J.P. Morgan for example upgrade their ratings on more than a dozen tech firms. What are investors out there thinking about the outlook here. A lot of questions over that JP Morgan upgrade. You know what changes in such a short span of time for Wall Street for Wall Street research team to call a sector on investable and then say that you should go overweight on these tech stocks. I mean earnings it's a big earnings week. We talked about JD dot com that was better than expected. It's a double digit revenue growth is very good. This is a sector that we had a great story out of the tech team earlier this week calling the sector kind of utility like stocks single digit returns single digit revenue growth. If we start to see double digits and a resilience from the sector which is of course dealing not only with a crackdown but with China's economic slowdown with lockdowns in big cities like Shanghai if they're resilient to that that could be positive. That's what market participants are looking 10 cent reporting today. The expectations are for the slowest revenue growth since it listed in two thousand and four. If we see a better story into the U.S. in 2004 if we see a better picture a better outlook. If the if management is more positive on the next few quarters that will be something else to keep the rally going. So it isn't enough to create a kind of broader exuberance across Chinese equities where we add in the cycle for the property sector because there are some saying that potentially that is nearing a turnaround in terms of the amount of leverage that's already been removed. Yes exactly. I think right now it's it's a really key moment when it comes to Chinese markets because we're nearly we're nearing a turnaround in basically everything. We're nearing a turnaround in tech when they're nearing a turnaround in the property market when nearing a turnaround in the economy. When is that turnaround coming. The key question is when do you start. And are you. Are you going to miss out. There is evidence that at least in the positioning front if investors offshore are removing some of those bearish hedges. So they're expecting less volatility coming forward and onshore. You see at least a tick up in margin debt which suggests that people are willing to take on more leverage to bet on the stock market. Again people are there's a lot of money waiting to come in. People want to come in. The only place in the world where valuations were actually low at the beginning of the year. So when you start to see more more money coming in. Again I do think the mainland market will lead where we start to see those gains filter through to the Hong Kong. More people will come in nearly a turnaround on basically everything is just about the best I can describe it right now. Yeah especially if we rely on that formal from all of these investors wanting to eventually get to China. Right. Bloomberg chief trying the markets correspondent Sophia Hawthorne. It costs out with a preview of what to expect from Chinese markets. What a timely day to be up there. J.P. Morgan China summit with plenty more from big guests. On day two we'll speak exclusively to the bank's China CEO head of Asia investment banking and head of the Asia Private Bank all in the next few hours. First let's get some Vonnie Quinn with the first one headlines Bonnie. Gerri thank you. Federal Reserve Chair Jerome Powell says the Fed will keep raising interest rates until it sees clear evidence that inflation is cooling. Powell made his most hawkish remarks yet at a Wall Street Journal event saying he will not hesitate to push rates past neutral if needed. Powell repeatedly stressed that price stability is the Fed's top priority. Inflation is coming down. That's what we really need to see. So we watching for that. If that involves moving past broadly understood levels of neutral. We won't hesitate at all to do that. And honestly we'll just. We will go until we feel like we're at a place where we can where we can say yes to neutral conditions or an appropriate place. We see inflation coming down. China's top economic official has given a rare public show of support for the tech industry. Vice Premier Li Her told a symposium of some of the country's biggest technology firms. The beating will support the development of tech companies and funds for public listings. News remarks reported by state media were short on detail but do signal a further easing of regulatory risks. The US is preparing a military aid package for India as it looks to deepen security ties and reduce New Delhi's dependence on Russian arms. Bloomberg sources say the package could include weapons financing of as much as a half billion dollars. That would make India one of the largest recipients of U.S. military aid behind Israel and Egypt. JP Morgan shareholders have rejected the paper or for top executives dealing a rare defeat to CEO Jamie Diamond. Just 31 percent of voters support the pay packages for Diamond and other company leaders. Shareholder advisers DAX Lewis and ISIS were among those in opposition with Charles Lewis criticizing a 53 million dollar option award for diamond executives from Albert Nutrition and other major baby formula. Companies have agreed to testify before Congress on the causes of the US shortage. Others has been at the center of the issue due to a contamination driven shut down of its main facility after the deaths of two babies. Abas has said its products are not to blame for those deaths and the illness of two other infants linked to a bacterial contamination killed will use 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm Vonnie Quinn. This isn't right. Heidi. We are hearing from Charles Evans speaking after his speech in New York answering some of these questions he's optimistic that inflation is going to be under 3 percent in 2023. He's saying that underlying inflation is ugly at about four to four and a half percent. Right now we know that CPI coming through at over 8 percent in the 12 months through to April this year. Charlie Evans also saying in his speech that he favors a front loaded adjustment in the Fed's fund rate towards a neutral range saying that that's important to speed up the necessary tightening of financial conditions. Also to demonstrate the Fed's commitment to getting inflation under control and getting those expectations in check as well. He did also say after that front loading initial period that he's hopeful that the Fed can transition to a more measured pace of rate increases. We heard of course some of the most hawkish comments yet from Fed Chair Power overnight saying that the Fed will continue to raise interest rates until there is a clear and convincing top of evidence that inflation is in retreat. So they'll keep pushing until they see that even if that moves involves moving past a broadly understood levels of neutral Jay Power saying that they won't hesitate at all to do that. We're now hearing some gauges as to what the underlying inflation will be at the moment as well as going into 2023. Charlie Evans from the Chicago Fed seeing that optimism that it's going to come in under 3 percent. Sherry. And Heidi of course it was those inflationary concerns that really led to people thinking perhaps we'll start to hit consumers. Well so far when it came to data U.S. retail sales grew at a solid pace in April suggesting perhaps a demand for merchandise remains resilient despite those rampant surges in prices. But Marathon Asset Management CEO Bruce Richards telling Bloomberg now that the figures really aren't telling the real story. Consumers not buying more. In fact if you go to Home Depot Wal-Mart and see that consumers actually walk down the stores with less but they spend a lot more because the prices were up a lot. And so take this for example because retail sales is not inflation adjusted. It's just an absolute nominal number. So take this for example CPI that we've recently had showed that month over month airline ticket prices went up 18 percent. So imagine because airline ticket prices are part of your retail sales. So imagine if there's only one item that you have in your entire retail sales and you are flying from New York to L.A. the cost of this month 18 percent more. You have the same exact ticket you bought. But retail sales is one of 18 percent. It's nonsensical to think that retail sales is actually doing better because it's not inflation adjusted is actually down some present. So what you saw at Home Depot and Amazon is that inventories built around 20 to 30 percent. That's a scary concept. They built and they sold less. But yet they reported more. And so that's why the stocks are probably going to get hit from here. And the retail consumer sector and the fallout for Goldman is absolute right. Consumer debt has exploded off which is a record of 16 trillion. People borrow more against a home or more against credit cards. Personal savings isn't is plunged to their low of 6 percent. And consumer sentiment as you point out in this survey plunged from one hundred fifty nine where it is now. And so consumers are a good place. OK. Consumer is not in a good place. That's your takeaway. Yeah. We see two year yields jumping up 9 10 basis points. The idea is that the Fed's going to have to act more aggressively now because inflation is high and they can say oh the consumer can hold in. If what you say is true what kind of policy mistakes are we heading for. Like what does the market look like in six months. If you're looking at higher rates and more aggressive fed in a consumer you see already struggling. Exactly. The Polish Polish mistake was already made. The fact that the trillions were dumped into the system through the various stimulus packages and the Fed running up its balance sheet and Bernanke said it well last week I think was actually Sunday when he spoke. And he said the Fed way too way too long. And now as Palin says the pain is going to have to fall. And so there you have the Fed has to tighten so far under the belt. They have six or eight to go. Treasuries have moved nicely up 150 basis points. Increase declined about 20 percent and the high yield market widened a few hundred basis points. So or a couple of basis points. So high yield is now gone from low yield to 4 percent to a more reasonable high yield of around 7 8 percent. So what we see in the marketplace is the markets have adjusted. There is heavy volume these last couple of weeks. And so there is a lot of capitulation. The markets can now move into this bear market rally which we're entering right now. It's a bear market rally. But the best is yet to come in terms of the downside. We've already lost 25 trillion in terms of the system and net asset value and the debt and equity markets more in the private markets as well. And liquidity over the course of the year will get worse. So the Fed has no choice but to hike to get inflation under control and to start to floodgates tightening program which are going to start next month which has Marathon Asset Management chairman and CEO speaking that with windbags Alix Steel. Plenty more to come here on DAYBREAK ASIA. This is Bloomberg. China has been a great benefit to some Latin American countries we've seen lots of trade with China. It's the biggest trading partner for many South American nations. But China's also a double edged sword. You know Latin America suffers from what economists like to call premature deindustrialization meaning their manufacturing sectors are disappearing in large part because they're competing with Chinese exports. So it's a it's a tough relationship too for Latin America. It's not just a benefit. There's a cost. Shannon O'Neil senior fellow for Latin American Studies at the Council on Foreign Relations. On impact of China's economic slowdown on Latin America. She spoke with us from the New Economy Forum in Panama City earlier. We are tracking the fallout of the global supply chain crunch. And these are the top stories today. Global inflationary pressures especially in food and fuel have hit America's biggest supermarket chain. Wal-Mart shares tumbled the most in the last 35 years as it slashed its full year profit outlook even as India makes exceptions on its wheat export ban. Heatwaves in the country a withering fields and concerns of supply weigh on traders. Wait features continue to rally pushing prices up to the highest they've been in two months. Adding to fears of damaging grain supplies the CEO of Huff Harvesting Agro Holdings says Ukraine's agricultural production may fall 30 to 40 percent from the previous year due to Russia's invasion. And that 2023 will quote be very bad. Take a look at wheat prices. This of course as you mentioned. We are seeing those concerns over the erratic weather globally not to mention the war in Ukraine sending prices soaring and those at the highest in two months. They have really not eased much despite India's move to ease its export ban. And Bloomberg terminal users can read more about those stories in our newsletter. Supply Lines. That's on any trade. And now course one of the key supply chain issues has been China's Covid lockdown. Shanghai is tentatively unraveling punishing curbs that confined millions of people to their homes for weeks. Here's how to Shanghai based Bloomberg reporters have been coping. So this is the first time of being outside in 53 days. It's really exciting to be out after being confined to my compound for such a long time. And you can tell people around me are also very excited. The city is tentatively unveiling a punishing lockdown that has confined millions of people to their homes for weeks. The financial half reported three consecutive days of no new Covid cases. The broader community a milestone needing to start online. But many restrictions remain. How to get a pass to leave my compound. You can only do so by bike or on foot for four hours at a time every few days. Behind me is a long queue of people trying to get into a supermarket in my neighborhood. It's not easy to buy groceries while you are under lockdown. So this is a great opportunity to get something from here from home financial district. Lou Dobbs goes home. You can throw it through the quiet. Howdy folks this is Allen. I'm in Shanghai but I'm not as lucky as Charlie. I'm still in lockdown and I probably know what I'll get out until I have a Covid test tomorrow and even then if I do need to leave my compound. I probably won't able to leave more than once every five days. There's only one person for four households and it's only four hours at a time so it's quite limited. And there's a nearby mall here which I'll often go to and I've been told I need another special permit to actually enter the shops inside a mall. And some many shopping also require 40 hour 40 hour test results. So everything is quite limited and I will see a return to normalcy until June unfortunately. So I'm in my own personal zoo here just looking out. I can't get out but let me see if there's anything going on outside. There's a little snug store in the corner. I usually go to school closed school closed locked down schools. Not many people were walking around. And we continue to watch the latest comments from Charles Evans speaking in New York right now saying that he's optimistic that inflation will be going to be under 3 percent in 2023 says that the front loading is pretty much in process of the moment and that he thinks that it's consistent with the Federal Reserve achieving their mandates. This of course as he continues to talk about underlying inflation arguably at around four to four and a half percent at the moment Heidi. Yeah well of course we're not seeing necessarily sustained inflation is Japan. Take a look at that first quarter GDP number. We're seeing contraction of 1 percent on an annualized basis. This is better than expectations of a fall of one point eight percent. Breaking it down we see quarter on quarter a contraction of two tenths of a percent. Again better than a four tenths of a percent contraction that we expected. First quarter nominal GDP rising just a tenth of 1 percent beating expectations. Private consumption was unchanged. Estimates were for a fall there. We're looking at when it comes to the net export side. Cutting zero point four percentage points off that quarter on quarter GDP. That is also slightly better than expected business spending seeing a modest rise of half a percent not as much as expected. We had been looking for a shrinkage when it comes to the first quarter of Japan's GDP numbers. We had strong expansion in the fourth quarter of 2021 as we saw virus crabs dragging on domestic demand that fall in GDP was really coming through from restrictions on activity aimed at containing virus cases. That is clearly being seen when it comes to the private consumption pieces while public investment. Also looking like it fell on a real basis with higher construction costs and some of that inflationary pressure as well. But certainly we are seeing from some of those gauges that the numbers are slightly better than expected. We are also getting some of that breaking news from Shanghai as well where they found for a fourth day. No new Covid cases outside of quarantine as we continue. You saw just a little bit earlier that gradual easing of some of those restrictions in Shanghai. We do have lots more to come on DAYBREAK Asia. This is Bloomberg. A quick check of latest business flash headlines. A unit of Allianz will plead guilty to fraud and pay five point eight billion dollars after misrepresenting the risk posed by a group of hedge funds that collapsed during the pandemic. The deal closes an embarrassing episode for the German insurance giant which has also agreed to sell the bulk of Allianz global investors us as part of a settlement with the S.E.C.. Netflix is laying off about 150 people in the latest fallout from its surprising drop in subscribers. Most of those employees a US based Netflix unexpectedly lost about 200000 customers in the first quarter and expects to lose another 2 million in the current period. The company employed more than 11000 people at year end. Saudi Aramco is considering an IPO of its trading arm amid the boom in oil prices and what could be one of the world's biggest listings this year. Sources say the state controlled company is working with banks including Goldman Sachs JP Morgan and Morgan Stanley as it studies a potential listing. The valuation could fetch tens of billions of dollars. And Heidi there are the stocks that we will be watching of course when trade opens in Asia's major markets especially when it comes to Japan because Vanessa says it's spending six hundred and ninety five billion dollars to restart its coal plant in 2024 to make power chips. Also air liquid Toyota sits a bus partnering to develop the use of hydrogen for vehicles over in South Korea will be also watching those crypto related stocks like CAC Cow and Handler as well. And of course we do have plenty more coming up from Panama City especially this conversation with the president of the Inter-American Development Bank. This is Bloomberg. Welcome to DAYBREAK Asia. We're live from Panama City from Bloomberg's New Economy Gateway Latin America. I'm sure everyone. And I'm Heidi Schwartz in Sydney. Asia's major markets of just opening for trade. Our top stories this hour. Asian stocks set for gains after U.S. rally sentiment improving following strong data on retail sales and factory output. Markets are also weighing the most hawkish comments yet from Jay Powell the Fed chair promising to tame inflation even if it brings some pain. Plus Chinese companies listed in the EU as getting a boost with Beijing making a public show of support for its Internet platforms. And I'm Stephen Engle on day two of the JP Morgan Global China Summit here in Hong Kong. We're talking the metaverse in the 50s and block chain gaming. Later this hour with Evernote and a mockup brand's co-founder yet CEO. And this is a picture across Asia as we're seeing Japanese equities coming online. Their higher six tenths of 1 percent being led by materials financials and communications stocks. Although some of those consumer stocks and utilities are leading the declines. We are seeing the Japanese yen holding steady at that one hundred and twenty nine level still a little bit away from that 130 level. We had seen the Japanese yen falling as U.S. yields resumed their climb. We are watching the 10 year GDP which has held steady at the 10 year yield with point to four or 5 percent. Of course we continue to see super long bonds leading the losses a 10 year yield firmly anchored away. We did have those Japanese first quarter GDP numbers. It was a contraction of 1 percent but it was still a smaller contraction than expected. Take a look at the cost B which is up seven tenths of one percent. A second session of gains for those South Korean stocks. The Korean one is also gaining ground at the moment against a U.S. dollar and really leading those declines that we saw in the previous session. We continue to see an improvement of risk appetite across the board. Of course we have seen Shanghai really reporting no new community cases again for a fourth consecutive session. So that is really helping sentiment. But still we have to put the caveat Heidi of course that the Korean one is still very close to that 2009 low. Yes still quite a bit of fragility when it comes to some of these currencies including dollar China as well. That's not really giving getting much of an assistance when it comes to the surge in effects conversion rates and that weakness in the dollar. Take a look at how we're seeing the first few seconds or so of trading here in Australia. We are seeing the ASX 200 thing upset about six tenths of a one per cent really strong leadership coming through from the material sector some of the big miners as well as well as continued gains across energy. Given the push high that we see in crude we're seeing Australian stocks trading at the highest in about two weeks now. Both the 10 year and the three year yield continuing to move as we see of course similar moves when it comes to similarly dated treasuries with yields continuing to rise. But strangely in this session at least we're not seeing that correlated to a downside in sentiment for equities. Taking a look at treasuries and that's how that picture is really seem to be stabilizing. We had not just those very hawkish remarks from Fed Chair Power but also of course Charlie Evans from the Chicago Fed saying that he's favoring front loading to get inflation under control before moving to a more moderate pace of tightening. He's speaking today in New York. S & P futures looking pretty flat at the moment but we are seeing Brent crude up by just shy of one hundred and fourteen dollars a barrel. We see some respite for some of the Asian currencies including those risk currencies like the Aussie dollar with that broad drop across the greenback. My next guest has downgraded China to neutral from overweight. Let's bring in Manisha Ray Childfree who's the head of APEC equity research at BNP Paribas. Are you comfortable still with that given that it does seem like we're seeing signs of a bottoming when it comes to the regulatory crackdown at least. And the proximate news is clearly positive. You know we have seen Shanghai gradually moving to words in an unlocked state. We have seen positive news flew about the regulatory pressures on the tech universe the Internet platforms. So I think you know at least in the near term we will have some outperformance from China and that could possibly pull up the sentiment as far as the entire Asian equity investments are concerned. Having said that in the in the medium term I think the big concern that one has about China is the ongoing slower consumption. If one looks at retail sales for example that has declined precipitously. If one looks at the earnings estimates of consumer staples consumer discretionary healthcare they have been on a secular declining path over almost a year now. And that's being aggravated by the high unemployment rate. Urban unemployment rate which from five point eight percent in March six point one percent in April. So Yvonne Man put these factors into consideration. I think you know some some more underperformance from the Chinese equities at least in the near-term could still be on the cards. Where are you then overweight. In the meantime across the rest of Asia where are you seeing opportunities and compelling valuations and perhaps some opportunity to hide from further volatility. Right. The main things that we like in Asia are. Number one. The yield ascent beneficiaries or the developed Asia banks. Number two the CAC universe which tends to gain from consumption demand in Western Western Hemisphere. And the the decline in the Asian currencies. Many of them are actually currency moderation beneficiaries. And third the entire energy and material complex because we think that the spike in prices is likely to last for longer. The countries the markets that we are overweight on our Korea India Indonesia and Hong Kong. I think in Korea we are focusing mostly on financials and and and tech. India is more of a tricky story as far as the macro is concerned because of the pressure on the currency and the oil importing nature of the market. But this top choices there are abundant. There are plenty. Yeah. Tell us a little bit more about India because that seems to be a little bit contrarian from what we're hearing especially as you mentioned with the macroeconomic challenges prove India. You know as far as the macroeconomy is concerned it is a bit tricky. The the rebound from the Covid driven economic decline last year has been sharp. If one looks set on the ground variables in India like GST or the goods and services tax collection or the road and rail freight they are consistently surprising on the upside. But having said that the pressure on the currency as a consequence of Fed's rapid tightening and India's oil importing nature which has expanded the trade deficit. Those are the two significant concerns at this point. Fortunately in India you have a few sectors in fact one very large sector which is actually a beneficiary of currency depreciation and that society services sector and some of the other sectors like financials. We have had a significant degree of easing significant degree of decline in the non-performing assets. So some of these broad big sectors they're looking a lot better than they were earlier. Manisha you also mentioned South Korea and we're talking about depreciating currencies. First we have seen the pressure on the Covid one a little bit of strength today against the US dollar but we're still talking about 2009 levels or so. Right. And because you're a big exporting country do you take that as a net positive or could there be some other side effects that investors are not watching historically. Korea unlike Japan has underperformed when the currency depreciated this time around. There has not been a departure from that trend. And we think that the Asian currencies including the Korean one could depreciate some more. We must remember that the Fed could actually hike possibly three times more by 50 basis points each till September. And from June we are going to see Kutty quantitative tightening which would be far more severe than the episode of Kutty than we had seen that we had seen in 2017 to 19. So the pressure on the emerging market currencies the pressure on the Asian currencies will continue some more time possibly throughout summer. But that said you know I think you know there was a rhythm career. I think the tech sector is now clearly beginning to revive. We are seeing price increases on the part of the large tech exporters. The banks are continuing to outperform. As a consequence of the yields moving up this net interest margin expansion of the banks during yield ascent is being tried and tested hypothesis as far as developed Asia is concerned. Yeah we're seeing that strength in the currency of today. Twelve sixty seven Manisha. Right. Chaudhuri good to have you back as always ahead of a packed equity research at BNP Paribas. Let's now get to Vonnie Quinn with the first for the headlines Bonnie Cherry. Thank you. The Biden administration is poised to fully block Russia's ability to pay U.S. bondholders a move that could push Moscow closer to the brink of default. Bloomberg has learned that the Treasury Department will let a temporary exceptions lapse once it expires next week. That waiver has given Russia room to pay coupons and helped to divert default on its government debt. Japan's cabinet has approved an extra budget of 21 billion dollars to help households and businesses cope with higher prices. The added spending is part of a broader package of measures aimed at easing the impact of inflation. The money may also support the O'Jays easing funds despite the weak yen. First quarter growth figures due later Wednesday are expected to show that Japan's recovery is stalling. Executives from Abbott Nutrition and other major baby formula companies have agreed to testify before Congress on the causes of a US shortage. Abbott has been at the centre of the issue due to a contamination driven shutdown of its main facility after the deaths of two babies. Abbott has said its products are not to blame for those deaths on the illness of two other infants linked to a bacterial contamination. China's top economic official has given a rare public show of support for the tech industry. Vice Premier Li Her told a symposium of some of the country's biggest technology firms that Beijing will support the development of tech companies and plans for public listings. News remarks reported by state media were short on detail but do signal a further easing of regulatory risks. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries and Vonnie Quinn. This is. Good morning Heidi. Still ahead we'll be sitting down with an American brands as one of the biggest block chain gaming companies to talk about their latest investment in the metaverse and FTSE. And now education. And of course hopefully through the recent volatility in cryptos co-founder and executive chair yet to be joining us. But first Shanghai slowly emerging from its punishing lockdown. Covid-19 flaring elsewhere in the country. We take a look at the state of play next. This is Bloomberg. Inflation is coming down. That's what we really need to see. So we're watching for that. If that involves moving past you broadly you understood the levels of neutral. We won't hesitate at all to do that. And honestly we'll just where we will go until we feel like we're at a place where we can where we can say yes to neutral conditions or in an appropriate place. We see inflation coming down. Fed chair Jerome Powell there. Therefore more on the US monetary path. Let's bring in global economics and policy editor Kathleen Hays who's been following the Chicago Fed President Charles Evans speech in New York. Kathleen such an important time for this conversation especially after how hawkish chair Powell sounded. Well you know I think he can honestly I think she's hawkish but not more hawkish than he has been really. He said very clearly we'll do more if we have to to get inflation back down. But he's been making it pretty clear the last two or three times he spoke that this is the path they're on now. I think it's interesting that Charles Evans who is president Chicago Bed and is known as a dove said that yes he thinks the Fed has to get to neutral and he considers that two and a quarter to two and a half percent and then they'll see if they need to do more. They definitely have to reposition closely. Now that is you know several basis points from where we are now. But this is not like Jim Bullard president St. Lewis fed three and a half percent. This is not like Deutsche Bank or others saying 5 percent 6 percent is where they're going to have to get the Fed funds rate too. And actually it's interesting because we do hear the hawkishness. Inflation is a problem. We've got to bring it down. We know it's going to cause some pain. We know unemployment may have to rise a bit but the economy's strong. It can withstand it. But Evans laid out a pretty dovish case for what in place is going to do. He said the end of next year is going to be down to 3 percent or less. The supply chain issues they're not going to last forever. They have to fade. Chip shortages aren't going to last to last forever. All kinds of prices including auto prices will come down. And then there's other things are going to flash back now and ease up. I think it's interesting you guys that he said the word expeditious which CAC keep saying you know we're going to move expeditiously. Evans is doesn't that tell it we're going to do. He says that because that word is going to go down in Fed law like measured pace or you know the kind of things that they were saying during the pandemic and even in the great financial crisis. Anyway interesting to hear a double side that markets if I think they closely at his remarks they is prepared remarks. If they're going to say there is a part of the Fed that is open to not having to be as FOC ish as the most hawkish comments would indicate. A global economy and policy say Kathleen Hays in New York or Shanghai is unraveling a punishing lockdown that confined millions of people to their homes for weeks amid signs that its Covid-19 outbreak is coming under control. Over in Beijing the cases of rising as a capital continues to tighten restrictions. For more let's cross over to Bloomberg senior executive editor for Credit China John Neil. So John let's start off with Shanghai. All we're seeing for days now with no community transmission. When we talk about the winding back of restrictions though this is still a lot of restrictions. We're talking about know needy people being limited to two exiting their compounds with building passes lots of limitations on movements to. This is going to be a long process Heidi. The government is saying they're trying to get back to something more akin to normal by the end or the middle of June. So we're about a month off that period. So very initial stages right now. Some of our colleagues in Shanghai how they got passes to leave their compounds some for the first time in two months. But when you leave the compound you can't get a car. You have to either go by foot or you get a bike and you can only leave for about four hours at a time and maybe once every other day. And the only thing that's open when they go out are grocery stores. And when you get to the grocery store you've got to stand in line because there's lots of other people trying to get their goods from. While still we of course have seen so much market turbulence because of those locked down some perhaps a little bit more risk on sentiment. Given that we are expecting some of those restrictions to be eased. But Chinese authorities already taking action. They have stopped reporting bond trades by foreigners. What do we know. So what we know is that in the last couple of months there have been foreign investors have been selling off their holdings of Chinese bonds. We actually overnight got the data for the month of April which showed that we have had sell off by foreign investors overseas investors three consecutive months. That will be the longest stretch since 2015. What we have not been getting is the daily transaction data for overseas investors. So we don't know on a daily basis what those holders are doing with their bonds although I think the suspicion and the expectation is that they are selling off. There is more capital leaving the country because of the economic situation here. And even though the markets are starting to firm up because people are saying well maybe we had a bottom but they start to get better from here. There's a lot of uncertainty still especially around Covid because with Abercrombie so transmissible there's always the possibility of additional lockdowns coming down the pipe. Right. And it's that fear that sort of viewing Shanghai as a cautionary tale that's really in play for. For Beijing is right where you are. What are we seeing when it comes to the trend that cases show and the potential for more restrictions. So Beijing's had an increase in cases today. It's not a substantial huge increase. So far the restrictions on much of Beijing is under pales in comparison to what our folks that have gone through. We can still leave our apartments. We can leave our compounds. But when you go outside there is a dearth of taxis and cars. Most stores are closed. The only things that are open right now are grocery stores and hospitals and drugstores. Public venues are largely off limits. There is testing every single day. The big uncertainty is how long Beijing will remain in this situation of sort of animated status and what the impact on the economy will be. Our senior executive editor for Greater China John. And of course everything that happens in China has big implications globally. Inflation in Latin America's largest economies is the highest it's been in 15 years. This of course after the shocks from the pandemic but also the Russia Ukraine war and central banks in the region have been forced to tighten aggressively in response. Let's discuss the region's economic prospects with the president of the Inter-American Development Bank Margrethe Calabria Carel RTS. It's great to have you with us here in Panama City is a better place to be. Good to actually meet you. Important first right. My grade doesn't come a little bit about the Latin American economy because of course as I mentioned inflation is a big problem and central banks are tightening really really fast at the moment. What is the growth outlook in this region and where do you see growth coming from. Look in regards to inflation I think that merit needs to be due because sometimes the region doesn't get the credit it deserves. And we've actually seen as opposed to 2008 2009 with financial crises the region's central banks have been ahead of the curve. So actually you see the Fed has actually been kind of gradual. Meanwhile the banks the central banks in the region have been ahead of the curve. You see Brazil you see the president there. Campos has been already moving to the curb. Chile Colombia Mexico D.R. small countries. You have countries actually like Panama and Ecuador with our dollar ISE that have had a benefit in that regards. So they learned the lesson not to get caught up in the tail end of these of these interest rate rises. And look I don't think there's an economist that would argue that the Brazilian currency is undervalued right now. It is because they moved ahead of the curve. And so I think that those lessons learned are good news. Now in regards to growth I think there's a great opportunity here. Like last year everyone said the growth in the region was going be to 3 percent. And us here at the IDB we said no we're going to break forecasts. And guess what. We'll work with the region. And the growth across region was 7 percent. Here in Panama was 15 percent this year. Again they're saying hey 2 3 percent. Guess what. You're in Panama. You can have 7 percent growth hopefully 5 percent over the next three or four years. There's great momentum particularly with the shutdown of the supply chains in Asia with the war in Ukraine which on which unfortunately for all the wrong reasons. But it's really creating an opportunity for the region to shine for investors to recalibrate risk. So I think this is a golden era for Latin America in the Caribbean Sea Island right now for this year. The outlook for this year is 2 3 percent. But guess what. That was how I looked at last year and they were horribly wrong. Is that in America able to really take advantage of the supply chain disruptions that we've seen and actually tried to move that to near shoring in better terms with the U.S.. Yeah. Well look we've been talking we've been walking the walk since day one. This is my first day as president to be with all institutions the one that's been financing near Shery Ahn. And that's what we did. Four billion dollars in finance for new short helping countries in the region with logistics and financing companies moving from China and elsewhere in Asia to Jihye Lee American and Caribbean. So it's real. There's not a company I talked to McKinsey did a study last year that 90 percent of CEOs said they want to regionalized. We're seeing a very realistic move from globalization to regionalization and that's a huge opportunity for Latin American the Caribbean. Now the years or decades I would say of lack of investment in infrastructure that's coming to bear. And at the end of day transportation costs in Latin America the Caribbean are 60 percent higher than in Asia. But the risk calculation is wholly different than it was because of the shutdowns in Asia because of the war Russia's war in the Ukraine. So there's an opportunity here is the U.S. looking at that opportunity and taking advantage of it because we haven't necessarily seen a clear sort of vision and framework for the Latin American economy and how Washington really approaches these nations. It's been over a year from the Biden administration. I can't speak for the United States but I can speak Finnish American diplomat and I can speak for being as the first American to head up the Inter-American Bank. We had a record year in private sector mobilization this year and the IDB. And guess what. It was almost all American companies. People said we couldn't do it without the Chinese. Guess what. That record private sector mobilization by FTSE over three billion dollars that we did actually a total package of twenty four point five billion dollars altogether. Guess what. It was without a single Chinese one because what happened. U.S. investors stakeholders see that opportunity. We're working with them. We created a whole new model for IDB investor private sector ARM 2.0 which we're originating where it would be risky so that we can move more money. And then we're distributing portfolio so that opportunity investors are interested and we're taking advantage of. What are you expecting to do in terms of loans this year. You said more than 20 billion last year. What's the outlook for this. I'm the first president IDB to do more than 20 billion in that regard. And I ran by saying we're gonna bring from 40 cents on the dollar to it from our balance sheet to mobilize 40 cents. It was 40 cents. We used to mobilize ISE. It wouldn't bring a dollar. A dollar. We did that. We did. Twenty three and a half almost actually. Twenty four and a half billion dollars. Twenty five billion dollars can be a normal maybe 30 billion dollars can be no more normal. And private sector is going to be the heart of that. We're creating this new model with the first or national financial station to create a full mobilization bank in the private sector. And we're gonna make it happen. Is that going to be in logistics as you talked about earlier as well across the board services manufacturing. We're seeing the opportunities across the board. Hey look and it's not just about China. You know people say hey is this near Shery Ahn a. China thing. I said no it's a pro Latin American and Caribbean thing. I don't want a single company to look at China before he looks at any country in Latin America in the Caribbean. I don't want any company to look for services in India before he looks at the Caribbean. You know Microsoft. Employ half of Jamaica. If it wanted to in that regard. Look how Intel has transformed our neighbor here in Costa Rica. These are great opportunities. These are very real. And for the first time in 30 years you have the rhetoric matching the reality for last 30 years. Investors we're looking at China while talking all 0 oh the Free Trade Area Americas etc. For the first time the political rhetoric matches the corporate reality. Do you really though in the Summit of the Americas what sort of concrete action will we see there. Because we have talked about perhaps a more broad trade framework for Latin America at least from the US. We really haven't seen that. Are we going to see that this time around. Well look some of the Americas. I'm personally when I was previously the U.S. government I led the effort to bring some of the Americas United States and I'm very personally invested in that. It had be successful. We're doing everything we can to help the Bush administration have it be a successful summit. But these summits are political and they they become very politicized. And the economics really take a backseat. We're doing economics day by day every day of our work in this regard. We've been doing it for the first day of our administration. That's where we had record breaking year. That's what we're mobilizing the private sector into the region like never been seen before. And we're taking advantage of these opportunities. But the region itself also has to have good policy integration. Integration has been more of an obstacle believe or not than it has been a benefit to the region. You know 60 percent of 60 percent of all trade in Europe is inter regional 50 percent in Europe only 50 percent of that. America is too complicated when it's 20 billion dollars a year because of it. 15 seconds since you actually took the helm at the IDB has China's influence grown or fallen fallen dramatically. At the end of day we've mobilized more private sector financing than any time in history the bank and it's been because of us institutional investors. And that's what we're focused on. What is your club. Kind of always good talking to you. Thank you so much. Great to see you in person. Inter-American Development Bank president here in Panama City. And of course we have plenty more. Coming up next the lineup of guests will speak to the CEO from will head to discuss how Latin America can empower more women to drive innovation and create jobs. We do have more coming up live from Panama City. Do stay with us. This is Bloomberg. Would you have a miss when it comes to the Australian Westpac leading index month on month for the month of April we see actually a fall of zero point one five per cent. Previously we had a gain of zero point three five per cent. And that has also been just revised down slightly. And this is of course really the broadest leading indicator of economic growth. It has contributions from stock market gains when it comes to expectations from industrial production commodities prices dwellings approvals as well as monthly hours worked as well in terms of the reflection of the labour market lead. It is a broad gauge of growth for the next six to nine months. So super interesting particularly as we go into that Saturday election where economic growth the management of the economy as well as a rise in household and business costs and the wage growth really not keeping up with that as well as a lack of affordability for property really top of mind for voters as they head to the polls. This is a picture across trading here in Australia. We are seeing upside of just over 1 per cent really extending on those gains over the past couple of sessions. We see materials and energy really leading those gains. The Aussie dollar also seeing something of a rebound really as we saw of course the US dollar saying that broad based weakness in the previous session with risk on sentiment. Despite a more hawkish tone from Fed chair Paul NIKKEI 2 to 5 is up by just about one and a half per cent. We're seeing this recovery rebound really being extended into sentiment in this Asian part of the trading session. South Korean stocks also up by about six tenths of one per cent there as we see trading in New Zealand up by seven tenths of a percent. That broad based rally here in the Asia-Pacific with the MSCI Asia-Pacific up by a tenth of a percent. Let's get you to Vonnie Quinn with the first world headlines Vonnie Quinn. Heidi thank you. Federal Reserve Chair Jerome Powell says the Fed will keep raising interest rates until it sees clear evidence that inflation is cooling. Powell made his most hawkish remarks yet at a Wall Street Journal event saying he won't hesitate to push rates past neutral if needed. Powell repeatedly stressed that price stability is the Fed's top priority. Inflation is coming down. That's what we really need to see. So we watching for that if that involves moving past you know broadly understood levels of neutral. We won't hesitate at all to do that. We won't. And honestly we'll just. We will go until we feel like we're at a place where we can where we can say yes financial conditions are an appropriate place. We see inflation coming down. The U.S. is preparing a military aid package for India as it looks to deepen security ties and reduce New Delhi's dependence on Russian arms. Bloomberg sources say the package could include weapons financing of as much as a half million dollars. That would make India one of the largest recipients of U.S. military aid behind Israel and Egypt. China's main bond trading platform for foreigners has quietly stopped providing data on their transactions. Sources say the China Foreign Exchange Trade System last published overseas investors daily trades on May 11th with the data showing sizable net foreign outflows. It's unclear why the platform stopped releasing the figures and whether the move is temporary or related to Shanghai's lockdown. Dow Jones reports flight data show that someone in the cockpit intentionally crashed the China Eastern jet earlier this year. The Boeing 737 was cruising at high altitude when it suddenly nose dived as high speed into a mountain. Citing sources close to a U.S. investigation the report said no mechanical issues were found with the plane. All 132 people onboard were killed. Global news 24 hours a day on air and Al Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries and Vonnie Quinn. This is Bloomberg Heidi. JP Morgan's Virtual Global China summit is in its second day bringing together top executives and investors. Let's cross over to Hong Kong where our chief North Asia correspondent Stephen Engle is standing by with our next guest. Yeah. Good morning Heidi. Yes we're at day two of the JP Morgan Global China Summit and our first guest is yet you. He is the co-founder as well as executive chairman of Anna Mocha Brands as a big block chain gaming company as well as a V.C. venture capitalist in this space as well yet. Let's bring you in here. And let's start by talking about obviously the turmoil that is gripping the crypto currency space right now. How do you see this turmoil different from what some have described as the you know the crypto winter of 2018 when Bitcoin crashed. What lessons to be learned from that. And what is your outlook for the crypto space given the turmoil we're seeing on the markets. I think the turmoil you know from say like four years ago is very different from what we see today. For a couple of reasons. One I think people may have forgotten you know Bitcoin was like three thousand dollars if Tyrion was like at some stages under a hundred dollars. And one of the reasons behind that is that really. Back then the activity in crypto was purely for speculative reasons because there was no utility. People were in buildings that have metaverse experiences that you know entities weren't a thing yet. You know people were building games. The whole ecosystem hadn't yet matured. Today even though obviously you know what happened particularly with terror which in itself I think was faulty. But you know we don't have to discuss the details on this. One is is the fact that this is sort of more contained we think and also at the same time hasn't had really you know broadly even though there's a reduction in prices has an impact. You know bitcoin ethereal or the entire sort of document ecosystem in terms of its utility. So in 2018 a lot of people basically exited out of crypto interfered which obviously sort of collapsed sort of collapse of prices. But today you know people aren't exiting into fiat proceeding exiting maybe to other stable kinds of deuterium or bitcoin. And what they're doing as they continue to build the number of people who are building and constructing in this space is far far greater. And the economic opportunities for people building in what people describe as Web three is is there as well. So it's much more stable than before. Well we can talk a little bit about terror a U.S. team because of being the source of the latest turmoil. Do you think there could be the positive impact that others can see that the algorithmic failures there that led to the pegging to the dollar and then you know find ways to prevent it happening to them. We've already seen other stable coins have this problem. Well I would say that the other stable coins don't really have the same problem because they're backed by and I think it was an attempt to Deepak you tether for instance which failed. No circle is backed in a 1 to 1 to the dollar for instance. The difference about USD he was in a sense you could say it was an algorithmic experiment to basically create a purely virtual asset backed by another virtual asset that basically had direct correlation. And I think that's the point. Right. The whole idea of sort of sort of a papers to peg it against something that wasn't necessarily correlated in this particular case. It was so. So. So I think you could say that the model of USC was a you know the algorithm worked as planned. But it was it was it was there was a faulty design shall we say. Right. So that's the difference here. Unlike UCC or Tether it's the sort of impact for us. T Taro which was perhaps even more Korean contained as opposed to sort of rest of the world isn't widely used but very few investments outside of Korea are done in in USD. It's you know it's because Taro is very much a sort of a Korean ecosystem plate for the time being mostly. So I think there's going to be more impact in the Korean market. That's probably going to be more sort of shock waves there. But from a global standpoint we don't see it having much of an impact. Relatively speaking certainly compared to say four years ago. It's not you know I wouldn't consider that systemic or anything like that. Yes. How do you see the flow of venture capital money in to the space into your company as well. We have investments by KKR George Soros Winklevoss Capital among many others and we've seen you go from a unicorn status of a billion valuation to 5 billion. There's talk that perhaps there's another round of funding coming down the pike at least rumored that could value Anamika upwards of 10 billion dollars. Does this pause in the market. Does this turmoil in the market make some of the big venture capital funds kind of take pause as well as because we've seen some of the V.C. backers of of those coins that have faltered being kind of pressured to backstop those losses. So I think broadly speaking the space continues to grow right naturally. You know when when there's a market downturn there's always hesitation. I think we're not talking about specifically just in crypto. That's just a macro factor right now where people a little bit more cautious. One of the things that's interesting is that people who understand the space continue to invest quite have to be like ourselves. In fact we think of this as a buying opportunity. Frankly speaking just because our lens is not the next six months or 12 months or three months our lens is what happens 10 or 20 years down the road. Right. And so there's no one like that. Even if you look at DAX sort of the dot that during the dot com sort of bust as it were. You know there were some great buying opportunities frankly speaking when that happened. But it's not even comparable. I think you know when people talk about sort of oh look at what happened Tuesday at one of our portfolios like X Infinity. Well you know but you know they still had a million dollars of cash. A billion dollars worth of Treasury. It's a very different calculus here. These companies especially the big ones are valuable asset of very well. So the financed right. Like the sandbox as well as doing incredibly well. And if tea sales have had to continue to do well you know that's the other thing. I know we just completed fences with phantom galaxies 20 million dollars of planet sales which is basically a non-functional tokens of sort of digital assets of virtual planets that people can sort of play in the metaverse. We just announced that literally I think yesterday. So the space continues to grow. But of course there's going to be a bit of a shakeout for those that are weaker players. That is always the case. So I think I think in some ways you could say it's somewhat healthy but the continued space continues to sort of grow because you know we expect you know billions of people to eventually onboard into three. You talk about what the space is going to look like in 10 or 20 years and I'm wondering given that Anamika is both a game maker but also acting in a kind of venture capital sense. Right. In terms of taking stakes across different projects which side of those businesses and business models do you think we'll be dominant in the years to come for you. Well we're an operating company to be clear. Right. So the goal in everything we're building and constructing and also what we're investing is to help build the businesses that are supporting specifically. So when we make all these investments the core philosophy is to invest in things that add to the network effect of non-refundable tokens as initial property rights. Right. So it may not seem obvious that someone was focused initially on watching gaming would for instance be supporting sort of defy lending protocols. Right FTSE sort of lending protocols as an example or even layer one of their tools. But we do that because it aids in the network construction and then the facilitation of the growth of non-functional tokens. When we started doing this four years ago most people didn't even know what an artist he was. So we had to basically invest in companies that can help grow that. That's how we invested in companies like Central Land and Open Sea and Better Labs and you know many sort of more household names today of course but back then was sort of really early companies. So I think you know you talk about 10 years that's a long time. But we think Web 3 is a natural evolution of the Internet. We think that most of the world will have onboarding to that form of off the Web. And that's because we're really digital dependents today. I mean we can't live without you know our Instagram or Facebook or WhatsApp or WeChat whatever that may be except that we are dependents. We have no rights on these platforms. We don't own a stake in any of that. So we don't have a say. So the whole point about Web 3D is that now we have ownership in that we have the ability to have a stake and a voice in that and in the future. No that's what we describe as the Internet of ownership. That's that's the big impact here for Web three. And it's a better paradigm for end users because they get paid for their time. They get paid for the data. There is no reason to sort of go for it. I guess that's an inferior model. That sort of is not and not respecting sort of the time and contribution that we bring to all the networks today which is not rewarded at all. We spend time on Facebook and Facebook doesn't pay us for any of the time we spend despite the fact that we add so much value to the network. After all if we all stop using Facebook what is the value of Facebook. Nothing. So we are basically free labor is at this moment the time for platforms such as Facebook. All right. See you. Yeah. I stopped using Facebook a while ago at least on a broad sense. Thanks a lot for your time on Bloomberg Television of course. As we come from the JP Morgan Global China Summit Haidi Lun to send it back over to you. Stephen Engle. I'll take it all I'm here. He's been there a layer which the latest from JP Morgan. Still ahead we speak to the CEO of microfinance provider Pro Mohair to discuss empowering more women across Latin America. This in order to drive innovation and create jobs. That's next. Live from Panama City this is Bloomberg. That make an inflationary pressures have been affecting the lowest income households around the world with women ahead especially hard. Our next guest runs a microfinance firm that provides credit services education and health care to women across Latin America. Joining us now is Carmen Garcia CEO of Pearl Moorehead. Good timing is really great to have you with us. So give us a little bit of more insight on what's happening across Latin America especially when it comes to women in the economy in the recovery. Yes of course. It's a pleasure to be here. Thank you for the invitation. Actually women face in Latin America huge inequality. And with the pandemic these inequality widened up. And he was more visible to the public in China. But if you can see Latin America today 50 percent of women only participate in the workforce market. And instead we have more than 69 percent of men participating in the workforce. On the other hand you have always in Latin America women we have been earning much less than men had to leave the same position in the same even organization. You will have less income for women in about 20 percent than men. And what about access to financing especially if they want to actually start businesses and make lives better for themselves. Yes it's very difficult for women to access finance. Actually 70 percent of women entrepreneurs don't have access to their needed finance to develop their companies. So there is a huge huge need for women to access these finance. And I tell you from her we have been given this service to women especially low income women giving them access to financial services also health services because if you don't have healthy women they won't be able to achieve their objectives. And also the training because you it's not only given the money you need to teach them how to better use that those funds they receive. How do these women access all of the services from Moorhead provides. They can come to our offices. We have offices in the countries we are operating. We were born in Bolivia in El Alto. We have more than 40 offices in Bolivia. We have operations in Argentina in Mexico and Nicaragua. We just stop funding what the MLA. So anyone who approaches the offices up from will have will receive this services. Besides you can go into our web page but I will not ask and you will be able to access all the services too much in terms of loans of your body provided. And what are your plans from here. We have deployed already more than four point four billion dollars in Latin America in very small loans that on average are on about 80 hundred dollars. And also we have been working in Latin America. As I said for more than 32 years providing more than 10 million health services training more than 2 million women. And each tier we reach more than 200000 women. How. What is the ratio of how women can actually pay back these loans. Like are you seeing any of them defaulting. What's the scenario like right now when you actually provide that financing. Of course the pandemic was a huge team back in the lower income women and actually we were trying to support them in this specific time. But additionally women are better payers that men the default rate on average and more had it has been around 1 1 percent 140 funds per cent. It went up during the pandemic of course but we were very close to women. So we tried always to understand what's going on in their life how we can support them how we can actively work with them to repay that long. Digitization especially during the pandemic has accelerated immensely. Is that affecting your operations or perhaps to businesses that you're funding. Well actually we run to digitalized most of our services. And today we launched various platforms to support women. We learn to put in the premise that this is a platform that gives the resources to those women that want to develop their their companies. We also deployed from the heat that through from credit hit that we are able to provide those loans on a digital way. So we actually develop all the necessary tools to reach women on the day shift the mode. Caroline Connan was really great talking to you about all of these efforts to help women across Latin America seal off from Moorhead. Heidi. Cherry let's get a quick check of letters business headlines this hour and Twitter's board says it intends to enforce the Elon Musk takeover deal and close the transaction at the agreed price of fifty four dollars 20 cents per share. The comment comes as a statement to Bloomberg News. Earlier Twitter confirmed that it's losing three more senior employees reflecting growing uncertainty while waiting for Musk's takeover to close. Saudi Aramco is considering an IPO of its trading arm amid a boom in oil prices in what could be one of the world's biggest listings this year. Sources say the state controlled company is working with banks including Goldman Sachs JP Morgan and Morgan Stanley as it studies a potential listing. The valuation could fetch tens of billions of dollars. Sees core gaming revenue grew faster than expected in the first quarter offsetting a slowdown across the rest of the business as online activity retreats from pandemic era heights. Gaming sees most profitable division posted sales of just over one point one billion dollars against forecasts of 930 million dollars. Its e-commerce business however underperformed JD dot com logged better than expected 18 percent. Revenue growth that year in year figure was still the slowest quarterly rise since the company went public. As Covid lockdowns in China weighed on consumer spending sales climbed to thirty five point six billion dollars in the first quarter beating the 35 billion dollar average analysts estimate. Chinese stock rose on the news alongside of course China. Tech stocks more broadly jumping in the US session. This after fresh vows from Beijing officials to support the industry. For more let's bring in our chief China Marcus Crossman. Sophia Hauser a closer and civil. Let's start off with that statement from Lahore and whether that will see tech stocks rally at the open in China or Hong Kong. And the question is the sustainability of that rally. Yes exactly. That's the major question. The comments oft offered no real context and nothing in addition to what was said in March. But again another show of support. It reinforces the point that the sector will be important when it comes to lifting economic growth this year. And again this is China's top economic policymaker. It's strong words. The meeting had involved CEOs from important Chinese tech companies like JD. We saw that company reporting a slower growth but again double digits. That going forward will suggest that at least this sector can still grow their revenue. It won't be the utility like single digit gains that many analysts have predicted. It is no longer a zero growth industry. So how long will it last. We saw a 6 percent gain in the Hang Seng Tech Index yesterday. There was some expectation that we would get a little bit more clarity on how China intends on making the sector important to economic growth. We didn't get that. So let's see if it will last. There's a lot of distrust from international investors. There's a lot of distrust in the market. So no clarity might be a disappointment. We could see a travel in and arrive situation where the stocks drop today. Sophia how much of what happens in Chinese markets right now depends on the earnings season as well. Tencent reporting later today Tencent reporting later. I was looking at actually what the options market was expecting. Some people were buying bullish calls yesterday. I think the the news that we got from JD sets it up for a better than expected quarter for the industry because expectations are so low the earnings season could provide an impetus. But again a lot is still dependent on policy. This is not a market that's going to move on what the PBS he does what the what China Inc. Shows us. It's indications from the government on what the path forward is after Covid 0 what the path forward is after regulation on the tech sector and any clarity we can get on those two fronts could do could do a lot to lift sentiment. But we are seeing some positioning at least hoping for recovery in the market. Our chief China markets correspondent Sophia Tai Acosta there. And coming up we do have plenty more when it comes to a lineup of guests. It's day two of the JP Morgan Global China Summit. Our next guest from there is head of Asia-Pacific Investment Banking Paul Europe. Be sure not to miss that class. Cambridge Associates now saying that investment sentiment towards China has been the worst I've seen in nearly 20 years. That's also coming up. That's it from the brigade. Joel Weber Moses a diabetic had been down afraid in Hong Kong Shanghai and Shenzhen. Stand by for Bloomberg Markets China Open. This is Bloomberg.

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