The japanese Financial Companies because we have the likes of mitsubishi and more, all releasing their numbers. Nomura also one we are tracking, given he reported earlier this week. A big interview earlier with the head of wholesale banking speaking about the outlook for japan. He sees the japanese yen strength coming back so perhaps a question around whether boj moves with the policy settings. He also sees the 10 year yield exceeding 1 . You see continuing yields ticking higher. We are around levels we have not seen going back to november of last year. Equities wise you have optimism but that very much tracks the wall street day given we saw the s p 500 pushing higher ahead of the u. S. Inflation print. Haidi take a look at the day after the budget. The big headline is after back to back surpluses, the budget is set to swing back into the red. A lot of this has been funding for legacy programs were left unfunded by the previous government. Some of this also comes down to some of the spending to fight the costofliving pressures. That is what economists are concerned is going to further stoke inflation. We are seeing a little bit of upside in the first couple of minutes of trade in australia. We are potentially going to see upside across the sectors that were targeted in this budget. Health care, pathology is what evans and partners had pointed to as well as some Critical Minerals names that may be getting a boost. At least in the longer term. Not much of a move and it comes to the aussie dollar trading at 6625. Despite the preelection spending. We are also seeing that solid fiscal stance and it comes to australia, still remaining one of the seven countries in the world that hold a aaa rating. Watching some crude energy names. In addition to the Energy Subsidies are seeing a bit of a bounceback and it comes to trading in crude. We had a lower price for most of the concession as concerns over the inflation print in the u. S. Wanes, as well as opecplus rhetoric. The overlay to all of this of course is the titfortat we are hearing between the u. S. And china on these biden tariffs on chinese goods including the likes of evs, batteries, and across some of the commodities markets as well. Take a listen to what we heard from jay powell in terms of the inflation picture. Also despite this being a very nuanced set of tariffs, we could see inflation pressure as well. The First Quarter in the u. S. Was notable for its lack of further progress on inflation. We had higher readings in the First Quarter. Higher than we expected. We did not expect this to be a smooth road but these were higher than anyone expect. What that has told us is that willing to be patient and let restrictive policy do its work. Haidi lets bring in paul dobson. We really had an inkling from the ppi read. I guess the question is, what kind of a print the market we need to see to see any kind of relief . Paul it seems to me that probably the market is a little bit more tilted towards expecting a more favorable figure here. If you look at the premarket surveys, we are suggesting that more people see a riskon after this number. It is a psychological thing. We have had three in a row where the inflation figures have come out higher than analyst estimates. Some people basically saying that cannot carry on forever. Probably going to be more cautious, therefore there is more of a chance we will see a lowerthanexpected figure in the cpi numbers this time around. That will probably be enough to keep the market looking favorable. Although the ppi figures were not pointing to inflation slowing all that much, all the same, the bond market manage to recover and equities managed to push higher. Of course the devil is in the detail with that. There were some components that feed into the pce that were not as troublesome. All these signs giving everybody just a little bit more hope that we can see lower yields after the cpi rather than higher and that that would provide relief. The risk is we saw that three times before and we have seen very big jumps in bond yields as a result of the disappointment in that has derailed things. Plenty to play for and plenty of worry as well. Annabelle given the pricing it is expecting everyone is expecting a riskon environment. The move in chinese equities has been down to the tech rally. We had earnings coming out for alibaba and tencent and pretty mixed. How does that set us up for the session, of course noting that hong kong is shut for the Public Holiday . Paul we will get the full results and there is so much going on in chinese equities. It is very difficult to think it all through prefor the earnings we had tencent, good. Alibaba, not so good, although expectations were pretty lofty. Nonetheless, it fell quite heavily. About 6 in u. S. Trading overnight. As far as chinese tech is concerned, a little bit of pressure. Plus we have the tariffs playing out across all those different sectors including renewable energy, battery makers. That might be where we start to see some pressure. Chinese companies do not export a great deal to the u. S. So the imperative to all these sanctions will not be humongous at this point. Nonetheless, there will be some concern about what it means for the individual companies. And what sort of response we will get from china. What is interesting is this idea that will date allow the u. N. To start weakening as they did when trump imposed tariffs before. We could see that as soon as today although most people seem to be betting, and if you look at the pricing in the Options Market the shortterm for longerterm, most people seem to be betting that if that were to come to pass, it would be more likely after the u. S. Election than at this point in time. Annabelle that was our executive editor for asian markets paul dobson, which leads us to Stephen Engle this morning. Talking about these Biden Administration moves to increase tariffs. China is vowing to take its own action against this. We dont know what that is yet, but steve is joining us. As we were discussing, very well telegraphed. We had a bloombergs coupon it at the end of last week. We can presume china new about it behind closed doors. What stands out to you exactly . Stephen paul was absolutely right as far as these products they are putting increased tariffs on are a small proportion in a sector, particularly evs. There is already in more than 25 tariff on chinese envies. It will be raised to more than 100 . Lithiumion batteries 50 . Everything from ship to shore cranes, 25 . Surgical gloves, 25 . Syringes and needles, up to 50 . There are a lot of targeted different products that they are raising the tariffs on. That janet yellen has said by the way, this will not cause a meaningful rise in u. S. Prices. We are going to have to see because the u. S. Buys so much daytoday products from china. Not yet evs. It does not look like that is going to happen anytime soon. What has the ministry of commerce said . They have obviously come back with some threat of retaliation. We just dont know what the retaliation will be. China will take resolute measures to safeguard its own rights and interests. The u. S. Shipment directly canceled additional measures against china. It goes on to say that beijing saying the tariffs were a political manipulation. Obviously in reference to the upcoming president ial election in november. Also china really rolling out the guns. A spokesperson for the Chinese Embassy in the u. S. Saying it is a false narrative about overcapacity in china, saying they are more competitive, innovative, and efficient. We want to tell our u. S. Colleagues that blaming others will not make yourself more competitive. But again, it is a political year. And evs and the new three from xi jinping, batteries, solar sells, and obviously evs, are the priority. And they have been able to drive down the price because of their scalability and according to china, their efficiencies. But again, there is rising protectionism in the eu in the u. S. Against these products. Haidi political year, political tariffs. If you take a look at the exclusions, does it tell you careful considerations in terms of how this was built . Stephen look, this was a twoyear review process on these latest tariffs. They took into account all the different industry concerns and the Solar Industry in the u. S. Voiced concern for we need to build up our supply chain in our industry better. But that will be hindered if you raise the tariffs on key machinery that goes into these solar sells and the like. Especially essentially the pleas arguing that tariffs on solar in good and wafer making equipment raised the cost of building u. S. Factories and undermined bidens goal of establishing a broad the mystic supply chain britt chain. They are excluding 19 products used to make solar components. The increased tariffs to 15 50 do not include similar lithiumion batteries for solar or wind equipment. As the u. S. Tries to build up its Manufacturing Base and supply chain does not want to be hindered by those increased tariffs on their own supply chains. Annabelle we are over 10 minutes into the session. Just tracking some big movers this morning. Sony up near 10 at this point. Justin the first few minutes. The Company Announced a buyback and also a stock split. Really tracking the theme across japanese countries companies. Helping to offset concerns around a sales outfit that missed estimates. Financials in focus. Nomura reported last week but we heard from Christopher Wilcox earlier and the company talking about continuing to invest in its wholesale business. Were going to get more on the japanese financials later. These are all set the report later. Coming up we are live to singapore as we look ahead to the new Prime Minister preparing to take power. Avril hong is there. What do you have for us . Avril were seeing a rare leadership try vision taking place in singapore as the Prime Minister gets to hand over the reins after 22 years in power. The swearingin ceremony takes place later today and we have some great guests lined up for you. We have discussions related to the u. S. And china tensions. What is this going to made for the trade reliant economy . Singapore has expertly navigated geopolitical tensions but the landscape is evolving. What will this mean for fallen policy . For foreign policy. And a property boom has raised questions about housing affordability. Those conversations are coming up later today. Haidi avril hong in singapore on a momentous day for singapore. First, we will be getting the opposition view and it comes to australias budget. Angus taylor will be back live next. This is bloomberg. Thanks to avalara, we can calculate sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh something amazing is happening here. Retailers are moving inventory quickly and securely. Thats because cdw designed and built a solution with cisco security. End to end protection, defends against attacks and makes better decisions in real time. So warehouse and Customer Data stay protected every step of the way. Make amazing happen. Cisco and cdw. This budget shows that we are realistic, that the pressures people face right now. And we are optimistic about the future. This budget reflects our biggest ambitions and our highest aspirations. To make us the primary beneficiaries of the world of churn and change. Haidi the australian treasurer delivering the annual budget. Take a look at out australian assets are looking. Watching to see if we see any uplift to comes to some of the sectors targeted by the budget. The likes of health care for example, critical mineral names. The aussie dollar is holding pretty stern pretty firm. Back to bexar plus. The budget seems to be swinging back into the red. Equity is trading higher by about three quarters of a percent following the rally we saw on wall street. Lets get more money comes to the fiscal outlook. Back to cameron we go with paul allen and our next guest. Paul thank you. I am here with angus taylor, the shadow treasurer. If there were an election in the governor would lose, angus taylor it would be your next australian treasurer. Thank you for joining us. I want to start with the obvious question around inflation. We have had so many different forecasts. The government says this is not inflationary. They see inflation back to the rba target by the end of the year. Rba disagrees. What is your view . Angus it is very clear the reserve bank has warned the government that these inflationary pressures have not been beaten yet. That is also in the markets. There are still significant inflationary pressures that are unbeaten. And without beating them, the risk is ongoing insistent inflation. That is certainly what we have seen so far. We have the most persistent inflation in the world, according to economists. I think that is a very reasonable perspective to have. Sadly, this budget is not beating that. 16 increase in spending in two years. Four dollars of spending for every one dollar of savings. We needed to see restraint. We have seen reckless spending in this budget. And we think that is creating a risk of a more extended period of persistent inflation and high Interest Rates. Paul i have heard some of your commentary say you will be supporting some of that spending when a budget comes to a vote. How do you square that . Angus there are significant parts of it we have a ready disagreed with and we will continue with. We are opposed in parliament. Production tax credits of over 13 billion in the budget, which is money not properly allocated. There are significant parts of this budget we think is inappropriate for the times. Whatever you think about those initiatives, production tax credits for some of the most successful industries in this country, now is not the time to be doing that. We need restraint. We know that is how we beat inflation in the past. Getting back to basics, making sure we have genuinely low energy prices, making sure we have fast approvals for most important projects, getting redtape out of the way. These are the ways that you deliver a Strong Economy with low inflation. Not through government subsidies and government spending. Paul there was costofliving relief in the form of Energy Subsidies. 300 for every household regardless of their income level. Everyone is getting a tax cut as well. Do you feel that should have been more targeted . Angus if you look at the Energy Relief it is an admission of failure from the government who promised a 275 electricity price reduction before the election. They are clearly not going to deliver that now and so the answer is to hand out is subsidy. Well, it is sad that it got to that point. It is putting a bandaid on a bullet wound. Sometimes when you have a bullet wound and all you have is a bandaid, you put it on. There are very real questions of why this is going to everybody. Particularly at a time like this. The big numbers in the budget. Initiatives like the 13 billion in production tax credit. They are highly expansionary investments. I dont think they are ultimately going to deliver the pathway to prosperity we need. This country has succeeded on the back of some extremely globally competitive industries. When you say that is going to make the government subsidize industries, i think you are taking us on a pathway to poverty. Paul talking about some of those tax incentives for some of australias most successful companies, part of the intention of this is to boost Critical Minerals production, other things that are essential for green energy revolution. It is hard to argue with that logic. Angus you can argue with it. Australia has been an economic miracle over multiple decades. And on the back of globally competitive industries. Where we are the best and have been the best in the world. Make no mistake about it, when it comes to iron ore, we created that industry in australia. They have powered our economy, prosperity, they pay taxes for the hospitals and schools and universities we have. And now we say they have to be governmentsubsidized . That is a pathway to poverty. It is not the right way through. We can build a Critical Minerals industry in this country which would be very successful. I have no doubt about that. But it is about getting back to basics. Energy prices, approvals, getting industrial relations right. We know what has worked in the past. It is very clear that is what will work in the future. Paul the impact of this on the Budget Bottom line is it is back to a deficit. This appears structural and this was something happening the last time your party was in power. The budget seems to exist at the whims of global Commodity Prices and other large macro events. It is clear there are some structural issues going on. Would you be willing to take the pain at the about box bring about the reform that is obviously needed . Angus the first point is the budget is moving to a structural deficit in two years. And there is a sea of red beyond that. This is a windfall surplus we have, not a structural balance, which is what we need. The government has taken the structural balance rule out of the budget. We would reestablish that rule day one. There has to be a commitment to getting to structural balance. You do that exactly how we did between 2013 and 2019, which is you grow the economy faster than you spent it. It is very simple. The finance minister at the time was relentless on this and it worked. We did it. We know how to do it. Instead in this budget, we see a 16 increase in spending in two years, more than double the pace of the economy. That is why this government is taking into the red. If you want to beat inflation, having a sea of red in your budget is not the way to do that. We know that from history. The lessons of history are very clear. And we would change those rules, reestablish those disciplines. That needs to be done now. Paul shadow treasurer, angus taylor, thank you for joining us. Reacting to the budget. We are in a surplus for this year. Back in a deficit for the years following and potentially interact election in the years following. Haidi more to come. This is bloomberg. Ffice chatter is it me. Or is work not working . At least, not the way it could work. Your people are