But short on spending. And we have the world covered on daybreak asia and we will go to solvi seoul. It is budget day in australia, just hours away from the revelation of details. We are going to head to sydney for the latest. This is bloomberg daybreak asia, coming to you. Im betty liu in new york, where it is after 7 00 p. M. Yvonne it is just after 7 00 a. M. In hong kong. It seems like politics are going to be dominating the market. Not the typical d. C. News flow to get out of the Trump Administration, but south korea voters, 52 million of them heading to the polls today, and budget day down under. Betty as we have noted, it looks like korean stocks seem to have priced in the volatility in those elections. They are just going higher. Markets are actually quite attractive in south korea. Topics is going to be the aaa rating, and what the budget details on whether that rating is in fact going to be jeopardized, or is all that talk just much ado about nothing . Meanwhile, stocks in the u. S. , closing near the alltime highs. Low. Ility at a 24 year it is incredible. The french elections pretty much have got people complacent here. You can do wonder whether or not we are in a danger zone. Are we lulled to much and all the gains . Hurdle weter that whole gir got, there is not much that can spooked investors at this point. China remains a cautious market. No relief inside after we see the forest deleveraging coming out from the government and the trade data we got yesterday. It was decent, but softer than the previous month, so let us see how the rest of asia is performing here so far on this tuesday morning. A little bit of weakness. We are down about a quarter of 1 right now. We did see dollar a lot coming back to the u. S. Dollar after the fed. We are seeing gains against the g10 currencies. T 12 hours now until treasury treasurer Scott Morrison delivers his budget. Will the Credit Rating be at risk . Futures are pretty soft. Slightly positive. The aussie dollar unchanged at 73. 87, ahead of retail sales figures this money. Trading has been robust on that monday morning in japan. 2. 3 for the nikkei yesterday. The topix and the nikkei highest. Futures seem to be pointing to continuing gains with dollar yen above 113 against the dollar. Of course, korea is closed today, but definitely some big events that could shake things up throughout the asian session, and with wall street, it does not seem like we got too big of a leadin. Betty not at all. Not a lot of direction from the u. S. Before we get to have the markets close, i have breaking Singaporean Bank coming out with their Net Interest Income in the First Quarter, coming in at 973 million singapore dollars. That is above estimates of 845 million noninterest income. Course, we are waiting for more details on the company or the bank about their energy loans. The lending they have given to the oil and gas industry and how much that has affected the earnings here for the bank, so ocbc, First Quarter net income, 973 million. That is above the estimate of 845 million. You mention the u. S. Market. Let us pull up the board to give you a sense of the numbers here. We did close the highs of the session, but cannot really tell. Much unchanged. Ow unchanged. The nasdaq basically flat as well as the s p. It might change this week with earnings coming out as well as retail Sales Numbers on friday, yvonne. Yvonne that is right. Let us get to our top story in asia this money. South korea in the election spotlight today after a campaign dominated by political and business scandal, potential trade disruption with the u. S. , and growing worries about its neighbor to the north. Shery ahn is in seoul. Give us the feel of what it is like on the ground at the moment. What can we expect today . Yvonne, so polling stations have been open for about two hours, and it is a cold and damp morning here in south korea, but you can see voters are out and about. They are standing in line inside this building. There are more than 13,900 polling stations across the country, such as this one. The reason we are seeing all of these crowds today gathered here is because the leading candidate, moon jaein, will cast his vote right at this location in about half an hour. And now, this is an unprecedented election of course after that historic ouster of President Park geunhye. s are usually in south korea, you would have the president elect just prepared to take office with his or her transition team. That is not happening this time. Will have to become the next president of south korea right away. Voters have a lot to think about. A couple people i talked to here in their 20s saying that yes, of southsecurity korea is important, but the economy is more important for them. Youth here has been critical of the economy. We keep talking about a revival in the south korean economy, but they cannot feel it on the ground. Others are still worried about north korea and the way that south korea and the u. S. Tackles jogging. Tackles pyongyang. They seem to have taken a backseat in the campaign. The u. S. Is reviewing the free trade deals including the one in south korea. We know the deficit is double with the country. Where do the candidates stand on trade . Shery yeah, i mean President Trump called the koreau. S. Fta a horrible deal. Vice president and said if they trade relationship was falling short candidates have been all over the place when it comes to their stance on trade. Moon jaein as a leading candidate, for example, opposes the ratification of the fta with the u. S. , however, since then, he has changed his position and he says the best deal is the pillar of strengthening ties with the u. S. Centrist candidate has suggested that it might be a Good Opportunity you to review some of the parts of the agreement that have concerned south korea, while the conservative candidate has said that it is not a good idea to renegotiate the deal. Anchor certainly we will be with you throughout the next few hours. Get closer and closer to the close of voting. We will be discussing the election with our guest throughout this program. Later this hour, the managing director, evan madero is joining us. Medeiros is joining us. That is at 9 40 in sydney. Choi joining, paul us from seoul. He will be there with shery. 10 40 if you are watching in sydney. Anchor south korean markets closed here today. Let us get to the first word news with nina melendez. Nina former white house Officials Say president obama warned his successor against hiring general mike flynn as National Security adviser. The revelation comes as a former acting attorney general told the Senates Committee that she feared that flynn, in her words, could be blackmailed by moscow. She was testifying about budget interference in last years president ial election. The u. S. Navy says it will continue to contest beijing plus claim to most of the south china use andsisting a pa patrols did not mean the disputed waters are a lower priority for washington. Scott swift told the briefing in singapore that the changing administration naturally meant disruption, but there was no change in overall policy. Chinas biggest soft drink maker says it is worried about being watched from u. S. Takeovers as it looks to growth through buying abroad. A company is in negotiations. The chairman told the trump us that heion Trump Administrations protectionist stance is a concern. Impact on have a huge chinese companies, acquisitions in the u. S. Having spent a lot of money and energy on the early stage, we are rejected in the last minute. In fact, i think the u. S. Should not be too worried by china. The world will be peaceful as long as china and the u. S. Have normal trade ties. Commonwealth banks, thirdquarter earnings rose through tba reporting on audited thirdquarter cash profits of 2. 4 billion australian dollars, undercharges are just 200 million for the main domestic rival, commonwealths net interest rival fell on higher competition. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im nina melendez. This is bloomberg. Anchor as we have been discussing, it is budget day in australia. Treasurer Scott Morrison preparing to deliver his view of the nations finances. Paul allen in canberra for the speech. Lay it out. What are we expecting in the budget . The first thing we always look for is how big is the deficit going to be . Estimates are that it may have narrowed a Little Things to the high prices we are seeing for iron ore and call, so the deficit may come between 25 to 27 billion australian dollars, between the 20 billion u. S. Dollar mark. We will be looking at the growth forecast, which would get the budget there. The government things around 2021, we will see that mark reached. The treasurer, Scott Morrison, arrives for what will be one of in biggest days in the year camera. He spoke to the media on his way in. Let us see what he had to say. We have been listening. We understand. While australia has grown, ahead of the advanced economies in the world, and our National Growth gets strong headwinds, has been impressive. All rstand that in that not all australian have felt that growth personally. One of the other things we can expect to see, we have been talking about in the weeks leading up to this. Big spending on of the structure. The government has a few plans in that department, including a second airport for sydney. Betty, yvonne. Anchor it seems like it is a discussion of good debt versus bad debt. What will that mean for the triplea Credit Rating, then . Paul that is the big question and we will be waiting for the ratings agencies to react to this budget once it is released. Has not for example, made any comment about the distinction between good debt or bad debt, but moodys did express potential concerns around growth forecasts, onectations for savings made efficiency drives, that sort of thing, and as far as movies is concerned, the australian postural a rating is on negative outlook, which means there is a one third chance of a downgrade over the next two years. From his bank point of view, looking in cheap money to spend on infrastructure, that is something the reserve bank of australia has in wanting the government to do for a very long time, so the announcements today could be welcomed by the rba. Back to you. Anchor fair point. Paul allen, thank you. Looking ahead, we speak to advisert obamas former about south koreas option to relations with china and the u. S. Anchor , chinas secondlargest Ecommerce Company finally posting a profit. We will take a closer look at jd. Com. This is bloomberg. Betty this is daybreak asia. Im betty liu in new york. Yvonne im yvonne man in hong kong. A slice of the u. S. Market. Jack moss andd by financials and clinched a deal to let users shop at 4 million outlets. Dominate thencent market with a combined 90 share. Alipay want to leverage that to millions of chinese travelers abroad. Betty struggling Dairy Company has written a demand for a a loan. Ent of they are seeking 50 million that was due on april 28 plus more than 900,000 in interest. It has been frozen in hong kong since plunging on march the fourth. They may not return to trade without official approval. Yvonne marriott shares rising after the worlds Biggest Hotel operator reported strong firstquarter results. Growth inredicting 2 the north american revenue for the Second Quarter. Between 2 and 4 and the rest of the world. Strong demand in china and the asiapacific as a whole is behind faster than expected growth predictions. Let us go back to wall street now. The u. S. Stocks ended virtually unchanged, near alltime highs. The vix hitting a 24 year low. Joining us on set is su keenan with the latest. The fix up 10 right now the vix up 10 right now. Su we did have the s p hit a record, which has been part of a Running Series we had. We going to the close and you will see it is relatively flat. Not much of a big changen the market as investors may be questioning digesting all of the information coming at it. Let us take a look at the big movers and spotlight stocks. Apple hitting another alltime high. A 200 plus price target put on apple. That means it is 1 trillion valuation if it its evaluation in the next 12 months or dont on the rise as it starts to integrate its 2. 4 billion dollars acquisition of kate spade. They are doing a lot of different moves, promotions. Investors seem to like it here charter along with comcast, their stocks have been under pressure. They negotiate better contract together to ward off some of the merger mania out in the industry. Let us go into the bloomberg real quick. Talking about records, do you notice that the dow has been lagging behind as the s p shoots to Higher Ground . We saw some correlation. To the beginning of the chart, they were all hitting new highs together. The s p has broken higher in the dow just has not been hanging in as much. Anchor it has not been. Ok, hanging on. Even outperforming is jd. Com, alibabas closest rival. The stock just rocketed higher. Su big surprise in terms of the strength of the quarter. Its First Quarter profits since it has gone public, and of course one of the things that all a big difference was mine walmart and the chinese web business, really driving sales. So what we have is a chart showing a real strong what have we got coming appear . A nice year to date chart for jd. Com. You can see how it really took off. It is alibabas closest rival through the Walmart Partnership with the online transactions, really climbing over 42 . 41 andsaw sales rising that was something that the jd. Com chief Financial Officer said was a quarter milestone, but that is not something they have got to promise one forward. A lot of analysts are taking a lot of positives away from the quarter. They are saying that it puts them in good footing. We are also seeing that because alibaba is neckandneck, the battle between the companies could spread to indonesia and southeastern asia. Said to be in talks to invest hundreds of millions of dollars. That will be something to look at going forward. Anchor we will certainly be watching this. Thanks so much, su keenan. Of next, we just talked about the stock market, but what about bond markets and how they are reacting to all of this news . Sonings, geopolitics, pimcos mark joining us. This is bloomberg. Yvonne bloomberg daybreak asia this is. I am yvonne man in hong kong. This is bloomberg daybreak asia. I am yvonne man in hong kong. Betty three rate increases this year even remains a possibility. They to look at this chart. Bloombergs chameleon trend indicator. That is what it is. For treasury note yield, turning green as you can see in the circle for the first time in almost six weeks. An uptrendnning of that should be there to bond. Bebearsates should perp on. Hould be bears joining us, pimco chief overseeingofficer, 300 billion in assets. Good to talk with you again. Are you a believer in the fed and what they see . We are not going anywhere in our rate forecast. Hi, they, ity think it was week due to temporary factors. An inventorylly brought down, and a delayed tax refund. The Second Quarter will be much better. 60. Saw bonds 10year hit 2 basically, we reduced expectations for fiscal stimulus, but the fed is set to go. The economy is doing reasonably well. The labor market is very healthy. 4. 4 ve a four part 4 Unemployment Rate. Im confident we will get you been more height this year hikes this year. Anchor do you think the rates are going on the matter what happens in washington . Mark i would not say no matter what. [laughter] mark under most states of the world, thae best cases we see mildly improving rates. Inflation should trend higher and the fed is such to raise rates in a big case and they are doing it because they want to normalize to a more neutral you know, obviously, the things i think could stop that would be more evidence that the fiscal stimulus could get delayed. There is the inability of the senate to put forth a package on health care that could get obviously, gop, and north korea, i can give north korean intentions were to heat up again, we could see yields come back down, but under most states of the world, i think the trend toward higher rates remains. Anchor how much higher, though . 230 level, the 10 year yields, has gone from support to resistance. It is mature to call it a bond market story . Mark theres reasons to believe there is support, but it would 3 , justore around factors. Demographics if you look at what the reasons why we should see higher rates, it is not just the economy. It is the fact that after the fed does raise one or two more times, the market has to place in the taper, so the fed is set over the next couple of years, to reduce its balance sheet. If we do get cap reform and we did it tax cut, remember that a lot of it will have to be financed. The market has to build in what i call more inflationary risk premiums as well as the term premium for more issuance down the road, and right now, rates are so low. The term premiums are so low. I think the risk is that we are going to see mildly higher rates overtime. Anchor that is very interesting. We are watching the selloff in crude. We are below that 200 day moving average, but the impact when it came to the highyield spreads has been minimal at best. I want to show you. Spreads between speculative and investmentgrade have continued to contract. Why do you think that is . Is this more complacency we are seeing or investors getting too hungry reaching for yields . Mark i think it is exactly that. Investors have become a little bit complacent. There has been this reach for yields. We been selling a lot of energy in this farcical risk. We have been going up in quality so we prefer to be more an Investment Grade than highyield. Clearly, the beach for yield is attracting investors. It is prudent to be more conservative today. We still see some select row, but overall, we have been derisking. Anchor great to have you, marc keisel. Stocks fell a