Will come to do daybreak australia. I am in hong kong. A selloff on big tech in the s p 500 to is the lowest in two months. Asian equities break with key Economic Data out of china. Haidi israel vows a response after the iranian attack even as the u. S. And allies urge restraint. Annabelle Goldman Sachs surprises were a 28 jump in firstquarter net income defying expectations of a draw. Haidi looking how we are setting up an hour from the start of trading. We are looking like a struggle. No hurry to cut rates. We are seeing that uphill battle in this part of the region. That prolonged wait for monetary easing. Futures up by 0. 1 . We continue to see a surge in metals prices. Kiwi stocks down by 0. 6 . We are seeing it to flow as it heads toward the rbn target band. What that means for the Monetary Policy for central bank that was ahead of the curve. We do see the japanese shares falling in the previous session with these ongoing middle east tensions. And in the thick of earnings season as well. Annabelle and you can compound that to retail sales. They had better than would have been expected. That tells us that inflation risks becoming entrenched. We saw the s p 500 falling more than 1 at some point, going back below that 5100 mark. Lot of the losses coming through in the big tech space as well. Apple and nvidia are some of the big laggards in the session. Most u. S. Treasury yields climbing to new highs approaching 5 . We have the benchmark 10year note rising as much as 14 basis points the fed and geopolitics casting a little bit of a shadow right now. Haidi bloombergs tv and radio political news director Jodi Schneider joins us from washington. We are hearing about a split vote does this break the monthlong roadblock we have seen . That is what the house lawmakers who discussed this afternoon are thinking. We heard from several lawmakers who are in the sessions just a few hours ago from washington. They came out saying it is a split vote and they will start with the israel aid given the urgency of replenishing those defensive mechanisms that were able to block those missiles and drones from doing serious damage in israel. They feel like the urgency there will get that there and then they will test up the willingness of republicans and democrats to vote on the ukraine aid. Speaker johnson has to worry about his continued future as speaker a given that Marjorie Taylor greene green has threatened to go ahead with a motion to vacate vacate which would test his speakership and put it to a vote and we have seen what happened last year to Kevin Mccarthy when that happened. The speaker is hoping that this way he will be able to test what is going on in the caucus and maybe get israel and ukraine aid through. Haidi does this appear to be a plan that would Pass Congress at all if this measure were to be up to pass the house they would have to go back to the senate. There is a lot of appetite for support for israel and the senate as well as support for the ukraine aid. Any time it happens, it takes a while. This is not going to be that quick necessarily. There is a real question anytime it gets complicated but there is thinking that the is really aid would be able to get through. They may have to do this through a procedure called the suspension of the rules we needed twothirds majority but it allows you to move quicker and mike johnson has done that before and has been able to get things through with a lot of democratic votes. What has been israels latest thinking when it comes to the calibration of a potential response . Restraint continues to be with the u. S. Is advising and what other allies are advising. Take the win that this did not result in largescale casualties and damage. But it does not necessarily seem to be what we are hearing from israeli officials, most notably Benjamin Netanyahu who is saying that there has to be some kind of response. That the iranian unprecedented attack directly against israel even though there was not widespread damage that there needs to be a response. The real question is what would it lead to a wider conflict in the middle east previously served in the obama and clinton administrations including the Deputy Assistant for affairs. What do you see is israels next steps and does it align with what tel aviv should be doing asking israel to exercise restraint and israel saying theyll take some action are not necessarily inconsistent. There is a wide nature of finding the type of action that israel can take which could be consistent with what president bind in the International Communitys request of restraint. I think it is important to lay that out. Haidi what are the scenarios that would constitute a restraint response from israel that would also meet the needs and urgency of the allies . I would note that it took iran 15 days to decide what they were going to do. They made very clear it was reaction to the april 1 strike against the Iranian Revolutionary guards were are at an Iranian Embassy in syria. Which israel has not taken responsibility for publicly but it is widely assumed that israel was part of that. So the timing of what israel does, when it struck when it strikes is an open question, what kind of action. There are covert actions, singular strikes against individuals there is a wide range of different types of things that israel can use to deter iran from further action that would minimize the risk of escalation which is clearly what the United States and many countries in the region are concerned about. Haidi can you give us context on how the dynamics of the cabinet played into the response as well . That is an excellent question but i will say there are parallels to what your washington political director was just describing terms of the house of representatives. Prime minister netanyahu is currently managing to maintain his hold on the Prime Minister ship by having two or three extreme right wing members of his cabinet and i believe they are inconsistent with their security and certainly to Regional Security and stability as well. They have statements about pressuring him to be extraordinarily aggressive, to show no restraint in any way and actions that are counter to the direct interest. Prime minister yacht net prime mr. Netanyahu serves at their direct interest right now. His coalition stays in place because they are supporting him. Can we have seen urges being largely ignored. Should we expect anything different when it comes to allies in the u. S. Trying to persuade israel toward restraint when there are these domestic pressures . I would use restraint carefully. There are differences in views on strategy. The United States has been clear that it supports israels interest and need to eliminate hamas as a threat to israeli property, disagrees on the best way to achieve that and has strongly pushed for increased humanitarian aid. These actions are related in the sense that israel has a more carefully calibrated approach in response to iran that can work in conjunction with gall gulf countries and others in the region who very likely participated to repel the iranian attack this weekend in various ways. Agreeing to work toward a two state solution where hamas is not in control in gaza. Haidi how does the potential response plane to the Nuclear Deterrence angle for iran . Kim of the challenge of President Trump having left the agreement that several European Countries and china and russia had joined the United States and nine years ago is that iran has very much sped up, has broken out of the agreement entirely and has sped up its ability to go forward with weapons Grade Nuclear material. It adds to the danger of the moment. The fact that they are so close to being able to makes an importance of a deterrent strategy that is effective and makes it important for israel to be an alliance with other countries in the region that are concerned with what iran might do and with the United States and nato allies. The risk is high. Haidi we appreciate your time. Still have the United Nations hosting its first sustainability week at the headquarters in new york. We get new details with the University President later in the hour. Spring goal Spring Global investments are underway in india, china, and taiwan next. This is bloomberg. Real Interest Rates are considerably higher than the year before because inflation has come down. We will need to start the process at some point to bring Interest Rates to new more normal levels. My viewpoint is that that process will start this year. It will be driven by the data. Haidi new york fed president John Williams speaking about the rate cut path. Despite that view we saw stronger than expected retail sales data. The higher from longer narrative is what we are dealing with which is putting continued pressure on em currencies and assets. We now speak to the senior Portfolio Manager and head of International Assets here in sydney. So great to have you. What is the biggest correlation for em assets at the moment . Is it the strength of the dollar or the china recovery . I think it is the anticipation of the role of the u. S. Dollar. In the near term it is china recovery. We are seeing a slow recovery in china but it is happening. Beyond that people will hit the green button once they see loosening of Interest Rates and subsequent rollover. We are anticipating both. They will both be positive for em assets. Haidi there is a perception that these goldilocks financial conditions that benefit share markets, em is still behind. That is still to play out. That is why we remain constructive. A lot of good Earnings Growth in emerging markets. Could dividends and shareholder return. I am quite positive that the economies have held up over the pandemic and coming out as well. We havent had major dislocation of emerging markets. Haidi we have a d correlation. Are you positive for china domestically . We are but we realize that positive policy pays a longterm effect on china and we are looking forward to future policy in terms of commodities, i. T. , the property sector. We think that it is the anchor in emerging markets. Still the largest country but we feel that you must stock select in india as well. It is becoming a larger market than even five years ago. It is in sectors like the Consumer Sectors and the financials. Because we are looking at shareholder return and cash dividend, we are in other suck sectors such as energy infrastructure, industrials and areas not as expensive. Annabelle what about in north asia . I noticed that you are a bit underweight on taiwan but overweight on korea. What is the difference . In terms of taiwan and korea, both benefit from Ai Infrastructure and interest in that technology. Taiwan has had a good run. We are underweight because we took profit off the table. We are hopeful and own a variety of stocks in terms of ai supply chains and semiconductors. In south korea we have large weighting in the Samsung Electronics and other diversified holdings in the Banking Sector and telecom. We are hopeful about both especially with this recovery in the semis sector. Annabelle i can see that you have one in taiwan that is still in the ai space. Yes, chroma ate. It is one that i rarely see the sale site speak about but it is part of the supply chain for ai. It has a reasonable 3. 5 dividend yield. Very consistent and relevant. We also like other areas such as in latin america, southern copper. It will only become more important. We are interested in select commodities but copper has a supply tight supply demand situation. It is relevant in ai, i. T. , telecom, data centers, everything. Very interesting for us. Haidi you mentioned korea briefly. Looking at the astronomical run for japan with further to go. How long do you think korea will be able to replicate that . I think that it will take a number of years. It requires a change in corporate behavior. It is encouraging. I have covered japan as well for 25 years. It took them a long time to come around. The outcome was that people looked at what happened with japan and the corporate government improvement. Both china and south korea will follow in those footsteps. I can see that it helps the share prices. It could take three to five years. They will be strongly directed by the government. Haidi e. M. In particular was in the cross hairs with the last trump presidency. How closely are you watching u. S. Policy and trade . We are watching it carefully. There is a high correlation with all countries globally. People are fearful about additional sanctions on chinese tech stocks. We are cautious in selecting certain names. We think about the implication. We dont want to be cut off and unable to invest. On the others, President Biden did continue trumps policies so if anything status quo going into the next u. S. Presidency is likely. We have not seen any aggressive action against taiwan as people feared. Postelection, things have been calm. Keep an eye on these things. It is integrated into our stock selection. It is something we have to keep an eye on. Annabelle the overcapacity issue, is that affecting which stocks you are more cautious on . China has worked through that overcapacity. It is coming out of that and we are seeing it more stable. It is going to be up and down a bit. For the most part they have worked through it. I am positive on the industrial side. Haidi great to have you with us. The head of the emerging markets equity team at all spring investments. You can get the news you need going into the start of todays daybreak. It is also on the anywhere app. Customize the settings so you get the news for the industries and assets you care about. This is bloomberg. Annabelle some of the latest corporate stories were tracking this morning. Two top executives have left the company as they hold their largest round of job cuts. The confirmed an earlier bloomberg report about the departure. Tesla looking to reduce global force by 10 . Chinese factory maker catl posted strong First Quarter profit as their dominance in the ev sector pays off. Income climbed 7 to 1. 5 billion while posting the highest gross margin in two years. Catl has vowed to keep expanding despite the cooling demand for batterypowered cars. Hong kong has given conditional approvals to several Asset Managers test to spot bitcoin and others. A partnership between hash key capital and sara Asset Management say that they got initial approvals. Osl i dont want you to move. Im gonna miss you so much. You realize well have internet waiting for us at the new place, right . Oh, we know. We just like making a scene. Transferring your services has never been easier. Get connected on the day of your move with the xfinity app. Can i sleep over at your new place . Can katie sleep over tonight . Sure, honey this generation is so dramatic move with xfinity. Haidi shares of Goldman Sachs closed higher after a surprise profit jump in the First Quarter. A 28 jump even as analysts had braced for a drop. David we feel very good about the earnings tower of our fund. This performance was aided by the swift actions we took last year to narrow our Strategic Focus and play to our core strengths. Haidi for more, lets bring in our Bloomberg Intelligence senior reporter, alastair. Alastair look, obviously it was a very strong period. It was more exciting than Investment Banking. They are focused on supporting those key clients. Mortgage is strong, Investment Banking is strong but they tried to be stronger. Haidi we have sort of seen Goldman Sachs struggling a little bit here, to define its businesses and perhaps narrowing its scope a little bit under his leadership. Do you think that has paid off in this core, the new focus on a core strategy . Matt yeah, look, certainly that is the view of allison stephens, our Senior Analyst who covers goldmans in the u. S. They did get help with markets helping them along the way, but they also focused on tightening costs as well to number one, focus on those four clients and number two focus on costs. So allison thinks they are on the right path with strategy, and that has certainly capitalized this quarter. Haidi how much specialty when it comes to funding cost, j. P. Morgan and wells fargo both mixed when it comes to that metric. What is that outlook depending on what we see on the Monetary Policy front as well . Matt its a very good question. Obviously bonds has come up quite a bit. The same applies to the u. S. Banks as to the u. S. Dollars, that there is still a fairly good uptick, and what they are paying now versus what they were paying a few years ago, you are going to see a funding headwind come in for they reminder of the year. Obviously depending on the fed depending on how much the headwinds come off, but we dont see that happening at this stage. Annabelle but if we do see the fed environment of higher for longer, how do you see that having a big impact, then . Matt look, these banks are very reliant on wholesale markets, annabelle, and they are going to be replacing their funding. Is not like you have a big lump that comes through in one