Australia. Markets have just come online. Paul asian stocks set lower and a commodity surge reviving the good news is bad news trade. Fewer rate cuts expected than the fed. Haidi First Quarter sales missed estimates by the most on record raising concerns over ev demands. Paul president s biden and xi speaking. We are open for trade in australia. We do have a staggered open, if occult to get a comprehensive read, but we are higher by 0. 1 . One trade continued from the u. S. , rising yields. You can see the 10 year climbing 4. 121. We saw bonds yelling selling off. That u. S. Data keeps surprising to the upside. In australia, bond sale, 3 million worth at 2. 75 . Oil prices we are watching, that keeps creeping up. U. S. Crude futures topping 85 today, first time that happened since october. Rising middle east tensions simmering in the background. We are expecting the cartel to reaffirm its current production policy. Elsewhere futures for the nikkei looking flat as we continue to watch the yen for possible intervention. Haidi the idea of good news is bad news, higherthanexpected data out of u. S. , compounding data out of asia. These economies contributing to the idea that may be rates will stay longer higher. A coin toss scenario when it comes to whether the fed moves in june according to market pricing. Futures of the s p flat. We are hearing from Morgan StanleysWealth Management arm that investor expectation is getting stretched and may seek opportunities outside the s p 500. Steer clear of the overboard territory we see for that market. Nasdaq 100 futures looking meek. Tesla, those sales missed by the most ever. Not just a blow for tesla, but across the broader evs. List slashing predictions. Tesla shares down 5 , extending the 2024 selloff, one of the biggest drops in s p. The First Quarter coming as another one after another reducing the estimate for vehicle liveries out of tesla. Still managed to surprise to the downside. We are also watching what fed speakers have to say. We heard from the cleveland chief saying they need to see more evidence of inflation. That has been the data dependence we have heard from many fed speakers. Take a listen. That is a reasonable baseline but i would like to say, this is a projection. Three rate cuts is a projection, not a promise. I think the most likely scenario is inflation will continue on a downward trajectory to 2 over time, but i need to see more data to raise my confidence. Some further monthly readings will give us a better sense of whether the disinflation process is stalling out or whether the start of the year readings reflect a temporary detour on the downward path back to price stability. Paul lets get more on this and bring in kerry craig from jp morgan asset management. We just heard from the fed, no sense of urgency when it comes to rate cuts. July as the first month fully priced in for a fed rate cut, but if this data keeps surprising to the upside and inflation stays outside the target window, could expectations get pushed out more . Kerry good morning. That is the market narrative today, the idea we have had speakers from the Federal Reserve saying, we need more time, more data to assess. They will get that, two or three cpi prince before june. Prints before june. They should see the projection they have come into play to allow them to start cutting rates. Whether it is june or july that one month does not make a difference. There is the rate cutting cycle. Maybe we do only get two rate cuts. The base rate is three, but the Federal Reserve is saying, only two could come through when it thinks about the dot plot. I midyear starting point for the fed, continues to count down in line with their forecast and will be looking at developments in the economy. Avoiding that recession. Paul that good news is bad news mantra starts to get embedded again. In the 15 years since gfc have investors come to the conclusion that this is normal . Kerry there is an adjustment if they do because we will get back to the era of ultraeasy policy and low rates, there is a debate about interest in the u. S. Economy. We saw the fed slightly nudged up their view of an Interest Rate back to 2. 6 . In the past it has been as high as 4 . The idea that we could go to the zero bound or close is not something we will experience now given the outlook for inflation, it will be more choppy. We could see structural drivers leading to higher and more volatile rates of inflation in the future. For asset locations, needs to look beyond stocks and bonds for the portfolio. Haidi outside of the u. S. , like in japan, where do you see opportunities and the next leg of this rally . Do potential concerns over the yen at insert uncertainty to the equity rally . Kerry the weakness in the yen helps exporters, but it is not just an export story driving the market higher in japan. It is structural government shifts, abenomics. We are seeing a shift in the economy. And growth with that. Domestic demand is coming through and in line with the weaker yen is helping lift markets. It is a market that is under coverage. It is a stock pickers market. The yen potentially strengthening. We might see intervention from the bank of japan, but do not expect a massive move in terms of the yen strengthening given the yield differential between u. S. And japan is questionable as markets priced out rate cuts by the fed and we do not think the bank of japan will go to far in terms of rate hikes after moving away from the negative Interest Rate policy. Haidi for china part of that good news is bad news narrative has been, the bottoming out of the slowdown has taken place. Does that mean youre more strategic on chinese assets and how would you play that . Kerry when it comes to the broader asian region we prefer markets outside china at the moment. Pmi numbers overnight, the resumption of the manufacturing cycle, a pickup in orders and the ratio is favorable. That should feed into the supply chain sensitive parts like korea, singapore, taiwan. Outside of those markets and china, valuations are compelling when it comes to china. Actions by the government and policymakers to find a flaw in the economy and market to provide stability, but there are question marks around how strong the recovery will be, the drive of consumption at a time when the Property Market is weak, and regulatory shifts could impact the market. There is a way to go to get more confident. Certainly valuations what they are will keep us mindful. We are looking for a broader resumption and more strength and resilience in the market before becoming more positive. Paul valuations in china look appealing, but are there other sections of the market, other assets, where valuations are looking stretched . Kerry the biggest challenge looking at the economy, the broad macro narrative is one of a soft leaning. An upside to the data beating on market expectations. The idea you could have a better economic outcome and rising profits in this market is overlooked in terms of a more bullish case for equity markets. Yes valuations are high. We should expect a pullback in the equity market that fuels disappointment. That means we look for a relative valuation. Thinking about cyclical parts, industrials, the energy sector, or keeping a watchful eye when it comes to europe. Again waiting for confidence the economy will turn and we are seeing rate cuts from the ecb. It is a range of opportunities globally and seeing the broadening of the rally in the u. S. Gives us confidence the market will continue on this more bullish outcome than thinking of a bear market or significant correction in the near term. Haidi do you think that rally is at risk from the november election and other geopolitical factors risks might arise from . Kerry is a year of heavy elections in 2020 four. The u. S. Election is front and center. There is a degree of not necessarily confidence but familiarity given the two parties running and president ial candidates that will come through, having relived this in 2016, the market may have familiarity which is keeping this risk adverse. It is also some way off. We are getting early indications with the policy dynamic may be and the split in terms of who has the majority in the house or senate as well as who is leading the white house will have a big impact on policy outlook. I think the market will pay more attention the closer we get to that november election, but it is more a case of thinking of the outcome of the election, not the biggest impact on the market, and about earnings and profits and policy changes may not be as severe as many are concerned about. Haidi always great to chat with you, carried correct kerry craig. We will take a look at teslas big miss on firstquarter deliveries and how the ev pioneer may be able to turn around sentiment. And details from beijing staying silent on washingtons claim they talked about tiktok. This is bloomberg. To me, harlem is home. But home is also your body. Last one everyone. I asked myself, why doesnt pilates exist in harlem . So i started my own studio. Getting a brick and mortar in new york is not easy. Chase ink has supported us from studio 1 to studio 3. When you start small you need some big help. And chase ink was that for me. Earn up to 5 cash back on business essentials with the chase ink business cash card. Make more of whats yours. Haidi President Biden and xi jinping have spoken by phone in their first oneonone communication since november. A political news director joins us from washington. Tell us more about this call, what was discussed and the significance of it happening at all. Jodi the last part is the most important part, that it occurred. A bit of a surprise. We only knew shortly before the call took place that they would be talking today. It is their first oneonone since november so quite a long stretch and of course the temperature has been dialed up often between the countries in terms of things Like National security issues, and taiwan. Also the industrial base, something janet yellen will be talking about when she goes to china this week. The call they said was candid, constructive. The fact that it happened and looks like they want to continue these kinds of conversations, and it happened in advance of janet yellen the treasury secretary going to china this week and antony blinken, secretary of state, going shortly after janet yellen, this is significant that they want to cool the temperature and try to find areas to agree on. One is stopping the flow of illicit drugs like fentanyl. Another is climate change. They are far apart on many other issues, but the fact they got on the phone and talked to each other, both readouts of it were cordial, is a good sign that at least they are talking to each other. Paul plenty of areas of disagreement, among them the tiktok divestment. Did that come up . Jodi the u. S. Said it came up. John kirby a white house spokesman in the briefing today said yes, tiktok did come up. He said President Biden brought it up. Not as an issue of banning at button issue they wanted to be divested, they dont want to see china owning it anymore. The house of representatives passed a bill that would require the divestment of it by the chinese owned company, or there would be a ban. It has not gone forward in the u. S. Senate, but there is a lot of support for it among lawmakers and support by the Biden Administration. The chinese version of their statement about the phone call did not mention tiktok. Haidi do we think anything specific and tangible will come from this conversation . Jodi i think there are areas they would like to say they could move together on. Fentanyl is one. Trying to take steps against the illegal flow of drugs globally. There are some other issues they keep talking about, trade. Of course tariffs. I dont think we will see anything concrete, the u. S. Has to decide what to do about tar iffs. The fact of this and the lead up to janet yellen going there, there could be Economic Policy discussions that could lead to concrete steps the countries can take together. Paul that visit from treasury secretary is happening later this week area what will be the focus for her and what will be the message . Jodi she is going to look at industrial plants. She is going to speak at the American Chamber of commerce in beijing. She will speak to students as well. Her message will be a tough one, basically saying she is worried about overcapacity in china, industrial overcapacity, and the effects it could have on the global economy, a statement she has made before, but directly to leaders. She is viewed as someone chinese officials like to deal with. They know her, she has been there before just a few months ago and they can talk about the economy with her. China had several major American Business leaders in china recently, just last week. Those meetings seemed to go well. Given chinas economic woes, this seems to be a time they want to talk to people about the economy and see ways to move forward. Even janet yellen with a tough message i assume will be welcomed in china. Paul bloomberg political news director Jodi Schneider in washington, d. C. Other geopolitical stories the white house calling for accountability after is really airstrikes in gaza killed 78 workers. Among the dead are british, polish, australian and other volunteers. Netanyahu admitted what he called an unintended strike on innocent people. They have called on several charities to suspend food deliveries to palestinians who the u. N. And others say are on the brink of starvation. I rans Supreme Leader promised revenge on israel after a Deadly Strike on its embassy in syria. He said israel will regret its crime. Israel has not confirmed it was behind the strike in damascus which tehran said it destroyed its consulate building and killed 13 people including military personnel. Nato with funds for ukraine, 100 billion over five years. Part of a package leaders would need to sign off on one they gather in washington in july. The proposal could take charge of weapons deliveries to ukraine, amid european concern a second Trump Presidency could change u. S. Policy. You can get a roundup of stories to get your day going in todays edition of daybreak. Terminal subscribers go to dayb. It is also available on the bloomberg app. This is bloomberg. So, what are you thinking . Im thinking. speaking to self about our honeymoon. What about africa . Safari . Hot air balloon ride . Swim with elephants . Wait, can we afford a safari . Great question. Like everything, it takes a little planning. Or, put the money towards a downpayment. On a ranch. In montana. With horses lets take a look at those scenarios. J. P. Morgan Wealth Management has advisors in chase branches and tools, like wealth plan to keep you on track. When youre planning for it all. The answer is j. P. Morgan Wealth Management. You have to make it. And if you want a successful business, all it takes is an idea, and now becomes the future. A future where you grew a dream into a reality. Its waiting for you. Mere minutes away. The future is nothing but power and its all yours. The all new godaddy airo. Get your Business Online in minutes with the power of ai. 1000 Global Leaders will gather in doha gain unparalleled insight and make new connections and uncover valuable opportunities. Request your invite now for this exclusive event, the qatar economic forum, powered by bloomberg. Paul it was not a very good day for tesla. Lets run through numbers. 386,810, how many tesla cars were delivered the first three months of the year, a massive miss. We were estimating 420,000 and thought that was conservative. Bad numbers. The share price responded accordingly. Haidi we had cut after cut in expectations and they were too optimistic in terms of what we finally saw. It will be interesting to see if this contributes to weakness across evs. Lots of factors tesla blamed. Production, logistics, the refresh of the model 3, a blackout near a factory in berlin and disruptions in the middle east. If you look at numbers for production, still outpacing deliveries. More than 46,000 vehicles. It is producing more cars than it sold in seven of the past eight quarters. It does not seem to be a production series. Paul does the market buy this . A slight is in between two waves, just a question of how big is the trough between. A lot of market watchers are doing their breath for something new from tesla, may be the model 2. Haidi the wave of chinese supplies just crushing. We talked about weakness in the Chinese Market at a time when producers the huge discounting we see putting pressure on tesla which has increased its prices in china. March shaping up on the other end of the spectrum as strong for chinese ev makers. A slow start to the year because of seasonal holidays, but byd sales jumping 46 . Others listed in the u. S. Surged in deliveries between 14 and 39 in march. Paul we will have more commentary on this tesla story. Dan ives called this a train wreck. Standby for what should be an interesting conversation. Haidi should mention rivian numbers also beating expectations. 20 tony for output target capped at 57,000. Good news across the space if you are not tesla. Lets look at developments. Toyota and hondo, big u. S. Sales gains to start the year. General motors demand helping automakers defy expectations of a slowdown, underscoring the importance of affordability after pandemic driven shortages and high Interest Rates are driving up costs. Disney management pulling ahead in a proxy fight with an activist investor nelson peltz. Biggest investors vanguard and blackrock will vote for nominees at a board meeting. It is a major boost for bob iger looking to stave off trian. A worker committing to spending and job protection as a meaningless piece of paper. The Japanese Company was trying to bolster support for a planned takeover of u. S. Steel. President biden said the company should stay americanowned. More to come on daybreak australia. This is bloomberg. Not all Caitlin Clarks are the same. Caitlin clark. City planner. Just like not all internet providers are the same. Dont settle. You want fast. Get fast. You want reliable. Get reliable. You want powerful. Get po