Demands for better quality and safer food. We will be live in singapore a little later for the noble groups fight for its life. U. S. , thee in the fallout from the Trump Administration budget for 2018 fiscal. Released hours ago. Going through the mile high stack of papers. I am betty liu. It is just after 7 00 p. M. Yvonne is just after 7 00 a. M. Banks mentioned, central are going to be a key focus. Mario draghi speaking in madrid later today. Weighing inid, on boj policy with governor kuroda. Plus, an exclusive interview in 10 minutes. Betty we had that news yesterday, june 20 will be the day we will hear the announcements on who will be let into the index. Shares, a multiple shared to get them into the index. This june 20 going to be the day that finally happens . It does, what does that mean for the world of global finance. You have Pension Funds all over the world now looking at china a shares, and having to weigh them, which is going to be a different world. We are going to be asking Henry Fernandez when he joins us. Yvonne could that be a boost for the a shares . In the meantime, lets look ahead to the fed minutes coming up in the u. S. In the meantime, how things are playing out in the asiapacific. New zealand, the kiwi getting bouncy after trade data that did beat estimates. U. S. Cents. 70. 18 stocks, slightly positive. Aussie unchanged at some before some the eight at 7478. A modest bounds out of stocks today. Japan, we are expecting that whenng at the 8 00 hour, ben bernanke does talk at a conference with kuroda, 111. 79. Stability toof read could be a boost for stocks out of tokyo. That was a early look. We saw the fourth day of gains on wall street, but we have not fully recovered from the selloff last week. Betty incredible. It is so easy to lose your shirt that so hard to get it back, right . We did try to get a little bit of it back today. Up 43 point. Ow some of that coming from some of the gains we saw in europe, after better economic numbers out of germany. It looks like momentum is increasing in france. Now lets get to the first word news. Nina the Philadelphia Fed president has added to speculation of a rate hikes, three. Yorkld his audience in new the fed is still discussing how and when to shrink its Balance Sheet. It will be done in a predictable and transparent way. Based on strong economic outlook, i continue to see three rate hikes for 2017 as appropriate. We have one under our belt. Given the forecast right now, we will talk about it in the q a, i see two more. Nina u. K. Police say it is too early to know whether the attack in manchester was a loan attack or part of a terror plot. Bomberes says the returned from a trip to libya three weeks ago. The socalled Islamic State group said he was linked to them. All campaign mean has been suspended. Has beengning suspended. The looking president has put the Southern Island of mindanao under military rule. The measure will remain in place for 60 days, and he is cutting short a visit to russia to handle the situation. Lastal law was declared in mindanao and 2009. The u. S. Commerce department is pursuing new leads into its investigation of a chinese smartphone maker over the breaking of sanctions against iran. Zte wasans want fined more than 1 billion for passing restricted American Technology to tehran. The mine will come early next month. The mayor of Santa Barbara has been at odds, but says he will make a ruling on june 6. Some marco says it will need at least five months. Global news, 24 hours a day, powered by more than 2600 journalists and analysts. Betty as we were just discussing, stocks pushing toward alltime highs. Indicating the Global Economy is perhaps on firmer footing. Even the president s Budget Proposal did not dampen positive sentiment. Su keenan with more. We have been able to shrug off what is going on in washington. And the terrorist attacks, which is remarkable. Lets go right to the numbers. Gain is the fourth straight rise. That is a big contrast to last week. The big movers, bank of america up. It shows the banks were in the lead. On plunged. Autozone, profit forecasts missed. If wego to the bloomberg can. As we look at these records, very interesting and perhaps counterintuitive this chart shows investors shying away from the spider of the etf. You see the april and may boxes. Investors are leaving. This could be a confirmation of the events. Taking it off the table as we get into uncharted waters. Is something related to the budget that could affect the oil market. Is proposing we selloff the emergency reserves and all the gasoline piled up after hurricane sandy. Lets go to the video and look at the proposals. He is talking about selling off to 70 million barrels. Could gain traction in congress. 50. 6uld trim the budget by 15. 6 billion. We have been talking about oil at a onemonth high. Opec is optimism about the cuts. Lets take a look at the chart from the bloomberg inventory. These are charts of the iraq and iran output. Buts pretty strong, starting to stabilize as we head toward the cut area. If you asked in for nine more forhs, that could bode well price stabilization. The undercurrent of what trump is going to do with his price proposals may be something investors will continue to think about. First President Trumps budget has been dismissed as a fantasy. It would threaten many of the who propelledpoor him to the white house. Lets bring in the bloomberg managing editor join us live from washington dc how has this proposal been received . It seems like it gets criticism from both sides of the aisle. Democrats and republicans are saying, thank you, mr. President , but we will probably go our own way. Keeping in mind, anytime the president submits a budget request to congress, it is just that. It will be up to the lawmakers to decide what really gets done. This budget has some things to like and some things to dislike. Uponhing paul ryan seized is the president appeared to be trying to achieve a balanced budget. He is doing that through three points extruding dollars worth of cuts, many of which go to social safety net programs. He is doing it through budget gimmickry. The critics say, there are too many assumptions. You had to have 3 growth and tax reform. Can you describe this is a balanced budget . It takes a little creativity. That is something budgeteers tend to do. 3 annual Economic Growth is a very ambitious target, one many economists say is not achievable. It also assumes the president s tax plan, which we have only seen in rough outline form, would be revenue neutral. It would not cost anything. That is another assumption that many independent observers question. Speaking about taxes, how can they get the overhaul they want any budget . Take someoing to work. We learned today, treasury toldtary Steven Mnuchin the conservative House Freedom caucus neither he nor the president are inclined to support the border adjusted tax that paul ryan has recommended. As you know, that would replace the Corporate Income tax with a brandnew 20 tax on u. S. Domestic sales and imports. On importsthat rely like retail do not want this to happen. It sounds like the president and treasury secretary are inclined to agree. That gives republicans a kind of problem in their plans. Thank you, joining us live from d. C. We will continue our conversation on a Budget Proposal later on in this hour. We have a guest to says the document is a massive unforced error, which proves it cannot govern. Seems he has an opinion on that. Coming up next, Henry Fernandez joining us exclusively. We are going to ask him about the topics a lot of Foreign Investors mind. What risk that might pose. Remember the saudi arabia, that saudi arabia as well is gearing up for this. This is bloomberg. Yvonne we are coming down to the first asian market opens. Japan futures much firmer. 0. 7 gain on those nikkei futures. The open. Gain at dollaryen stabilizing overnight. As we look ahead to the fed minutes, coming up. This is daybreak asia. For those invested in emerging markets, june 20 is going to be a date for your diary. Says they willci say whether or not to include china a shares into the benchmark emerging markets index. I want to bring in hand Henry Fernandez. Great to see you. Know you have been traveling around the world. You must never get back home. Lets talk about china. That is what is relevant to our viewers. I know you cannot say the obvious question, which is will they or wont they get into the index . Maybe i start off here. Why has it been so difficult . I think there has been a process this is the fourth attempt in which we are trying to marry the needs of International Investors with the conditions on shore in the china asian markets, in terms of accessibility. Market accessibility. It has been to do with market prospectus, good or bad. It is accessibility. We tried last year, and there were big topics. Can you access the market through doors . The second was voluntary suspension of trading. The third was the preapproval process of the data, as it relates to launching Financial Products. This year, we are making another attempt. We are halfway through it. We have consulted with 100 or so of our clients. This, givingd on qfii. Our we have seen the implementation of the conditions, regulations, on the suspension. There are still over 100 stocks that are suspended in the country, which is by far the largest in the emerging market. About 5 of the value of the index the third part is the data rights. We are making a lot of progress. You have taken a lot of care of the majority of these issues from last year. Reduceat has done, also, the number of shares or companies that would be included in the index. I just want to pull up the chart. T, this high pie chart. Question, i know why it is important. We all know why it is important. Is this something you look at enure,y, at least in my t i what to get this done . Of chinesea page history. We have a long journey, so we have to take the first that. Step. We reduce the number of securities from 450 to fewer. Caps. , large we took out the midcaps and small caps. We also took out some of the a shares. We make it more flexible. Ithink with that reduction, may be easier to get the first to step. We dont know yet, but we are those needsto marry of investors with conditions on shore in the country. We are trying everything we can to say, can we make the first step so we can get going and everyone gets more comfortable with the accessibility . Betty lets say it does happen, henry. What would be the Immediate Impact . I amnd i talked about sure you have gained this scenario out. What would happen if the a sahres do go in the index . The first thing is to look at the totality. About 2 trillion. About 15 of that is passive. Evenrd is actually though it is a small inclusion, it adds up to a significant amount of money. Compared to the size of the market, betty it is relatively small. Forhat sets the stage future increases. It can be adjusted up and down, andnding on the experience the expertise that International Investors get to do in the market. Place. That they china continues to be very focused on reform. Betty do other countries lose out . Whenever there is an uy ofsion, there is a b securities and there has to be a cell, because the amount of money does not increase. Lls. E will be cellse a little bit of sells from korea and taiwan. Etty a little bit, or impactful . Not really impactful. It is spread over many countries. If it happens, and when it happens, it sets the stage for future steps. It gets everyone to the table and everyone is now married to the process. We can get more progress done. We continue to be very committed to the process, and we believe the chinese authorities, based on every discussion we have had, be very committed to the pace of reform. It is just at times it is faster and at times it is slower, and we need to adjust the process. Betty i was looking through some stories to read one of our says, when you talk to various less than half, only six out of 13 believe it is going to happen this year. Are you surprised by a number like that . No, not surprised. The process has been hard for the last three years. There are other places that have been harder. There are still a lot of issues to result in a short time. We believe the market data issuance is a big one and actually are investors betty do you think is the biggest . All of them are related, but in terms of timing, trying to resolve the market data, the creation of Financial Products for investors, is something that will have to get result. Resolved. Betty you were in saudi arabia a few weeks ago. Thiswant to get into index, and they are doing everything they can to do that. I want to talk about saudi arabia for a moment. I want to contrast between what you have seen in saudi arabia and china, and the chinese officials have been giving mixed signals. On one hand, they say they would be excited for this to happen. On the other hand, they say it will make much of a difference. Authorities and markets would like an inclusion to happen. Obviously, on their terms and conditions. It is a sovereign state. They have every right to want it at the pace and conditions that they want. That is a choice a country makes. That choice. Act i think what is happening in saudi arabia is they set up a process a few years back, they invited us to give our opinion and our views. We collected feedback from investors in terms of what they needed to do. They have been following that blueprint, first in terms of regulatory reform. And the naked another set they launched september of last year. They get a series of market accessibility changes in the marketplace. They launched that at the end of april. They have been following every step of the way what investors have wanted them to do. We are now monitoring with the reactions have been. Like other countries, qatar, the shares rise, there is a lot of buildup. When you were there and saudi arabia, give me the flavor or sense of what you were seeing. How they were viewing this. Is very exciting to see what is happening in the country. Vision 2030 is very transformative. Social economic change, cultural change. Dependence on oil, creating new industries and all of that. Quite a big transformation in the country. We are all hopeful it will continue because it will be a shining example of what can happen any middle eastern country, an arab country. Betty and what it means to be considered an emerging market. Part of that has been the capital markets, the Equity Capital markets. The pace of reform and all of that. They have been following a lot of what we have been telling them that they need to do. Betty i want to pull been other chart here that shows just how bullish investors are. Lets pull up a chart which shows the vanguard ftse emergingmarket fund, and the flows that have gone in. On the righthand side, you can see the blue bars are the sheer amount of volume. It has been incredible, over the last several months. A lot has to do with the lowered dollar. How much of an impact is the dollar having . We will take this one for now. There are a lot of things going on emerging markets. The countrys bitten down a lot in terms of valuations. Secondly, the increase in wereest rates people about going to happen did not. Bit,ollar strengthening a although lately it has been a little weaker. Conditions that these countries could be more investable and a good bargain. That is what is happening. The index has been out more than 15 . Betty i had a chart, but we ran out of time. Of msci. Man and ceo weve got raindrops. 7 30 a. M. Wednesday in hong kong. 30 minutes away from asias first market open. Betty not much better, a little bit loony as well. The markets are brighter, though. Fourth day of gains on the s p. I am betty lou in new york. Yvonne you are watching daybreak asia. Lets go to the first word news. Trumps firstt budget has been dismissed as a fantasy. Impact manyatively of the rural working poor who propelled him to the white house. To food stamps, medicaid, and low Income Housing assistance. It is a fantasy document. The assumptions about Economic Growth are ridiculous. It does not even include the president s tax cuts, and it is hard to believe republicans will go along with it. It simply creates more deficits because of these huge tax cuts. Nina the u. S. Treasury secretary is hiring. Four top aides with the title counselor. The senate will not vote on any of them. Administrations on both sides have used the tactic in the past. The new wells fargo ceo says the bank is making Good Progress rebuilding trust after the revelation that staff opened thousands of unauthorized accounts without permission. Incentives,shook up change structures, and denied bonuses. The turnaround is going well according to the ceo. I am proud of the progress the team has made. We have changed our incentive plan. We have reorganized how the bank is structured, and we have focused on remediating customers. Over the last nine months, we have done a year or yearandahalf of work. Go hass alpha struck another victory for Artificial Intelligence. Program beat the top european player. Beat a chessue champion in 1997. Global news, 24 hours a day. I am nina melendez. This is bloomberg. Yvonne lets get more on what we should be watching as trading gets underway in asia. Good to see you. Stocks remaining strong. There a further upside for stocks in the asiapacific . Start with a we do little bit of that positive rollover from the u. S. Interesting,th was so that has got a little further to go. Those comments this morning, adding more weight to that argument as well. Elsewhere in the equity markets, it is interesting to hear the chief talking about a lot of work to be done before we get to for chinastep ashares into the index. We have two rate decisions coming. And then in canada, later in the day. The big gold up today, leading into the fed minutes. If the dollar can hold that with thegoing in, latest set of evidence we are getting from policymakers about the trajectory for rate paths, heavily scrutinized when that comes out later in the day. It