annabelle: we are counting down to asia's major market opens. perhaps investors will be breathing a sigh of relief. the fed keeping rates steady, slowing asset runoff as well, a bit of a holding pattern but it is better than a hike at least. haidi: yeah. of course all of this still feeding through the big move we saw in the yen. and did or didn't they intervene? perhaps we won't know, given that officials are still staying mum on that. annabelle: that's right. we will find out at the end of the month in regular reporting. japanese officials, whether they stepped into the market. that japanese yen very much the focus, as much of a jump of 3% over the greenback. this morning just a little weaker against the u.s. dollar, trading around 155.7.

japanese currency very much reflecting the dynamics between the boj and the fed. and again, the expectation the boj will be staying easy, very accommodative over the coming months, being reflected in the latest meeting minutes. saying members most expect financial conditions to stay easy and that they will be making decisions based around more domestic factors, things like the economy and whether we see price pressures and anything being sustained. japanese equities under pressure. the nikkei 225 down .7%. the u.s. session a little mixed overnight. we saw initial relief rally but into the closed it was a story of chip and ai hardware names weighing on the market. the likes of amd and supermicro. let's switch because it is not just japanese government officials concerned about the currency direction.

you also have korean ones as well saying they will be taking bold steps if market volatility does not increase. they will also be closely coordinating the government in the b.o.k. amid those various uncertainties. it really does come down to the direction of fed rate cuts and how constrained some some true banks in asia could be against what the fed does given that we are seeing inflation receiving in many parts of the world -- receding in many parts of the world. haidi: a lilibet of a sigh of relief for asian effects as we see that pullback in the dollar. we are seeing asia still suffering. looking at pmi numbers later. a lot of these pmi readings have been languishing in contractionary territory for quite some time. let's get you to the staggered open here in sydney. it is always difficult to get a real read but we are seeing a pretty flat start to trading,

just a couple of minutes as we get that staggered session coming online. the previous session was not a good one and we saw quite a bit of weakness across energy and the base metals seeing declines going into the fed. we have seen a little bit of pickup in the price of iron ore. not unsurprisingly australian bonds are following a bit of a relief rally we saw in treasuries overnight good and the aussie dollar holding pretty steady. we will be looking at some asian currencies. the movie in the yen obviously dominating, but there will be a bit of a breather for some other asian effects that have been under pressure. that is the picture when it comes to treasuries and is down to the less hawkish than expected delivery from jay powell. >> we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably towards 2%.

so far this year the data has not given us the greater confidence. in particular and as i noted earlier, readings on inflation have come in above expectations. it is likely that gaining such greater confidence will take longer than previously expected. haidi: let's bring in steven ricchiuto, chief u.s. economist with mizuho securities. we are also john byers mixo das -- we are also joined by mixo das from jp morgan. since december we have had wild market expectations. super dovish and fearful of more hawkish and a rate hike. did jay powell get it right in the delivery? steven: i think he got it right in the delivery of the message. what amazes me is the bond market's reaction to the message. the message is essentially you thought were going to be considering tightening monetary policy and we are not willing to do that. can you thought we were going to

do it because it is an inflation issue and we are not going to do that. so i am a little surprised the long end of the curve has not moved up higher in yield. he keeps telegraphing the message of the committee which is basically they don't want to raise rates anymore. they really, really, really still want to cut rates. the reality is the economy is not letting them do that is the net result is it is higher. annabelle: what was your reaction to powell's messaging? mixo: i think it was very important that powell clarified they are not considering rate hikes. this was one of the big concerns for the market going into the fomc. if you think back a few months it was the november december pivot when the fed started moving away from a biased to hiking from a biased to cutting and that remains. we can see volatility up and down but unless that changes the fed's bias, the equity market

set up is positive. to us, that has not changed. haidi: when you take a look at the dichotomy we are still seeing in the economy, historically restrictive rates environment versus still relatively stimulus fiscal environment. is there more the can do about that? and what does persuasive evidence look like? steven: there is a correction i would like to make. everyone is saying there is a restrictive monetary policy. monetary policy is not as are stick to as 525 to 550 basis points worth of rate hikes. that is based on the belief that the new normal period, the period after the financial crisis prior to covid, was normal. that was an anomaly. that low level of nominal interest rates is anomalous. the economy is transiting back to a higher level. so therefore the monetary policy

is not as restrictive. in addition to that, fiscal policy remains enormously stimulative. the treasury announced on monday that they are going to borrow an extra $1 trillion between april and september of this year. $1 trillion more. they are showing you they are spending money aggressively. internet environment where fiscal policy is very loose, monetary policy is really not restrictive. it explains why this economy is so resilient it is resilient because it is fundamentally healthy from a balance sheet perspective and getting the benefit of fiscal stimulus that is not being worked back against by monetary probably restrictiveness. haidi: the deficit numbers are really quite stark against the broader picture. i know you have been fairly contrarian. you said they would hold, that there would be no easing. do you think they now need to hike? steven: the reality is time will

tell us whether or not they will. but the concept that they are going to be cutting rates still has not come out of the market. and that needs to come out first. and it needs to come out not only for 2024, but it needs to come out for 2025 and 2026 as well. so there's further adjustment that needs to take place before we can consider whether there is a risk of them raising rates. we are a long way away from that decision. i think the market was to presumptive to think that can happen, and therefore the fact that jumped to that conclusion tells you the market is worried about inflation. so when they did not get it, why did they not selloff the long end of the curve? that is the problem. that is a mistake. the miss price is the long and of the treasury curve. haidi: the ground zero when it comes to who is really being impacted by the rate regime, can the fed do anymore and how much are they restrained by that

demographic which is clearly struggling? you are seeing that come through any consumer picture. steven: there is certainly a demographic gun the income chain suffering from inflation. the problem is they are suffering from the inflation, not the interest rates. so the reality is inflation is their biggest problem. because real disposable income is very far below trend prior to covid. that is a function of the covid inflation. and the reality is that is what is hurting the consumer. not the interest rate story. no one borrows at the front end of the curve. this government keeps on freeing up student loan commitments. this is the second largest component of household debt beyond their mortgage. the reality is their mortgage rates are fixed, and then we are freeing up their student loan debt. it is not the interest rate. they are not suffering from this rise in interest rates. they are suffering from the deterioration in purchasing

power. the fed should be focused on containing inflation, not focused on keeping an economy hot, trying to maximize social welfare by maximizing employment. annabelle: do you think the fed needs to be more concerned about downside growth risks, or upside inflation risks? steven: the fed should be more concerned about upside inflation risk. look, the economy is going to slow from last year. last year's 3.1% q4 over q4 growth is abnormally high. we are going to be closer to 2.5%, which is still higher than the underlying trend. that is baked indicate already. -- in the cake already. the fed needs to focus back on inflation as opposed to its average inflation target regime it's adopted. where it is more concerned they are asymmetrical in their concern to the labor market than they are towards inflation. annabelle: what are your views

on fed policy in the backdrop of what steven has been saying? mixo: i think the fed has been pretty clear that they see the disinflation process still continuing. powell seemed pretty comfortable with inflation staying at 2.8%. unless you are talking about a change in trend higher and the data completely disagreeing with the fed. what really matters is what the fed thinks of this data. that's what we got clarity on at this fomc meeting. powell was very clear that they see the data still as being comfortable and collaborating with their view. it is just taking a little bit longer. at j.p. morgan still have the first cut coming in july and we have cuts thereafter into 2025.

so from a bond yield perspective, yes, we do think it will drift higher depending on the fed view a little bit. if you look into 2024 and into 2025, we do see room for bond yields to decline as well. bringing us to the equity market . the way we try to figure this out is try to understand from market pricing what sort of scenarios the market is entertaining and pricing in. and since the pivot in november, we have seen significant goldilocks pricing from november all the way until march. and since then we have seen two scenarios emerge simultaneously. those are firstly, a higher for longer -- a reemergence of higher for longer. and secondly is the increasing probability of some sort of an ai bubble. these two things are somewhat inconsistent with each other, so one will eventually fade.

but for now we see the price movement this way where the market is entertaining both. this bubble of ai and value does really well. haidi: we saw the big move in the yen, and of course japanese officials having to come out and neither confirm nor deny if they were behind that. you are in asia. you must get asked a lot about the impact and trajectory of the u.s. dollar. do you see this as being a purely boj fed divergence story, or is it u.s. exceptionalism story? steven: i think it is a divergence story between monetary policies. but i think the thing people keep on missing is the inflation story is higher than the fed's target. and therefore, in a world where everyone is targeting 2% inflation, and consistent with that target, we can contrast currencies based on relative nominal interest rates in front of the curve. in an environment we have one central bank that is implying,

he's comfortable with inflation at 2.83%. that's giving you a lower real yield than the u.s. in the reality is the dollar should be moving lower in this environment, not higher. and it should move lower against the yen, against the euro, and against the aussie dollar, and it should move lower against the chinese yuan. the federal reserve is not living up to the commitment on inflation other central banks are. and it's time markets hold them to task for it. annabelle: yen depreciation, we have always seen it typically a positive with japanese equities given so many exporters on the benchmark. but do you see that correlation starting to slip a little bit? mixo: that is exactly what is happening here, actually. if you look at the yen correlations to equity markets and real rate into the macro economy overall, we see this level at around 157 where this correlation starts to flip.

. so while yes, you are right, yen depreciation has been positive for equities in yen terms, although if you look at the dollar terms the japanese market is not been doing that well. but in yen terms in should be positive about -- above 157 it becomes a problem. if you look at the japanese equity move -- market overall the outlook has become more challenging. annabelle: you mentioned the exuberance around ai extending. how does that play into the picture, and is it playing into your thinking for other tech heavy markets in this part of the world? mixo: that is absolutely right. if you look at the ai upside we are seeing layout across the tech space, it is not just the semiconductors could you have sent equipment, power and cooling makers, networking equipment, you have the grid players. all of this i would qualify as a broader ai theme. all of these stocks are doing

well and we expect them to continue to do well. if we look at traditional rights patterns heading into bubbles, we are not quite there yet, if you look at any subset of the ai space overall or the u.s., we are not there yet. that translates into markets like taiwan and especially the tech space, in markets like korea again, with memory as a big exposure to ai. annabelle: you mentioned bubbles and it makes me think of the indian equity market. what are your views? will we continue to see investors put money there, or given the outperformance is a time to reallocate back to china? mixo: it is funny though, everyone assumes naturally that because the indian market has done so well that we must be super overweight the market. but the reality is the complete opposite. the entire indian rally has been driven by domestic buying.

foreigners have been look behind. if you look at foreign buying into the market it is kind of flatlining. if you look at global u.s. funds, they are massively underweight india. because in their mind, e.m. is china, so when china is doing poorly they are not looking at e.m. and their assumption is the indian market weight is the same it was 10 years ago. so they still hold the same number of talks -- of stocks, but they are significantly underweight. we estimate if all of these global guys simply close in india, that is an hundred billion dollars of inflow into the equity market. from a flow perspective, as the domestic flow sides stay supportive, there's a lot to company market. as you talk about bubbles and valuation peaks, we don't see the indian market at a level where you would qualify that is a bubble yet. if you look at any of the historical bubbles at a market wide level, it never peaks below

35 times. 35 is the bare minimum you need to get to qualify. haidi: we are seeing signs of life from china, and certainly chinese equity markets. i wonder as you travel through asia how much you have been asked about november, what happens after november in the u.s. and how that impacts, in your view, how trade relationships and economies like china and australia? steven: i think the trade story is over and done with. i think everyone gets the story on china. that is not a ship that has set sail and it will not come back to port anytime soon. the hollowing out of china continues on an ongoing basis. whether it is from a domestic or global standpoint. supply chains are being diversified. we are building chip plants in places like japan and giving the philippines money in order to expand chip production and diversify away from the taiwan

risk exposure and have it in places where we have secure supply chains. so that story i think is permanently gone. the bigger question about the election story itself and is anything change from a policy standpoint once we go forward from a trade standpoint, the answer is no. from a domestic political standpoint the answer is yes. they are spending money like mad and they are going to spend even more money postelection. so that really is the underlying motivation. all we are arguing about who gets into the white house in what form of government do we have, is it divided or a single party rule, that we wind up in an environment of how they spend the money and how quickly. the democrats will be able to spend money more quickly because they basically want to do transfer payments are very easy to do. a trump administration wants to do different things. but the reality is both of them are actually going to be willing to cut taxes. and they are only going to have

one year because neither of them is a new person coming into the white house and therefore they will be a lame-duck after one year. so they will have one set of programs and then they will play around the periphery with regulations and executive orders and things of that nature but they will have one year to get things done. haidi: jay powell has his work cut out for him then. steven ricchiuto, and of course also mixo das. reacting to the fed. you can get a roundup of the stories to get your stay -- your day started. go to dayb on your terminals. you can customize settings so you just get the news that he care about. this is bloomberg. ♪

annabelle: some of the latest

corporate stories. jp morgan is expected to pay an additional $100 million towards trade monitoring gaps. this has to settle a new complaint from the u.s. commodity futures trading commission up it jp morgan earlier agreed to pay over $300 million to two other regulators including the fed. barclays has begun cutting hundreds of jobs as the firm advances on a massive cost-cutting drive. cuts will impact several hundred staffers and local markets, investment banking, and research. barclays is seeking to cut 2 million pounds of costs. national australia bank says it will buyback up to 1.5 billion australian dollars of its own stock. the lender's cash earnings fell 13% in the six months ending march 31. the ceo says disciplined

execution of strategy helped the bank manage impacts of slowing growth and competition. irvine took charge of them last month and appointed rachel's late two had the bank. quick check on how european futures are opening this morning. you are seeing a bit of weakness creeping through for euro stocks. that is following the fed decision and we saw u.s. equities initially posting a relief rally. the fed not expecting to hike anytime soon. cuts also still the expectation. the question being when. we also see weakness around ai hardware stocks in particular. this is bloomberg. ♪

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cybersecurity agency wants so-called pro-russian hacked of us are attempting to compromise computer networks in north america and europe they have targeted small tail -- new york police arrested almost 300 people raking up escalating protests over the israel hamas war. the arrests were made at columbia university and city college of new york. police officials out said agitators had joined the columbia protest, but are still determining how many nonstudents were arrested. bloomberg learned the u.s. and saudi arabia are closing in on a historic pact offering security guarantees in their path to diplomatic ties with israel. they are optimistic a deal can be reached. israel is expected to be offered a choice to join the deal dependent on ending the gaza war, and agreeing to a path toward palestinian statehood.

of course those negotiations and that potential deal weighing on commodity prices as we continue to watch an upside when it comes to oil prices. .3% higher for brent. new york road -- we saw a slump with the jump in u.s. crude inventory the highest since june adding to concerns about the demand side of things. 7.2 million barrels were added last week, the most since early february. also watching iron ore, slipping a little bit but coming off the biggest monthly gain since late 2022 with some of the optimism that perhaps chinese data is through the w

>> the whole game plan is basically unchanged. we are going to keep rates here until we are highly confident we

are going to get inflation down to 2%. no hint of a rate hike. >> there is a lot of relief here that the chairman stayed true to what we have seen from the chairman. >> i think jay powell was disciplined here and stayed on message very well. there is a clear bias towards easing, and he stuck to that. >> they have left wide open the question of why has progress been less than they expected on the inflation front. >> let that policy work for longer. i think that is about as far as they are ready to go today. that is hawkish in may. we will see what hawkish might look like in june. >> this is really good for the markets. because here is a fed that is telling us, look at the longer-term, look where inflation was, and look where we have gotten it to. don't worry about the last couple of months, we will see what happens here. annabelle: that was some of our latest guests reacting to the fed decision. taking a quick check on markets, 30 minutes into the session for sydney, seoul, and tokyo.

the mood here is tilted to the downside. most stocks under pressure, really feeling the brunt of the more rate sensitive sectors like consumer staples, consumer discretionary, i.t. as well. jay powell not as hawkish as had been perhaps feared, but still, we sawtek also playing into the picture given that slump in ai hardware names like amd into the close. haidi: take a look at asia pmi's a focus for the markets after the fed as we have seen a number of these languishing in contractionary territory, casting doubt over the strength of the economic recovery and how we are proceeding in his final leg of the rate cycle. we are seeing some deterioration it comes to indonesia, falling. we are also seeing deterioration for south korea still under that 50 level that demarcate's the

contraction continue to see. some improvement in frontier markets like myanmar. taiwan seeing a flip to above 50 and vietnam also above 50. so some sense of improvement across some of those economies with the manufacturing pmi's. of course currency has been one of these aspects that had been troubling a number of asian fx we have been following. the yen has seen the biggest surge in the reaction this morning. the big move of 3% in the last minutes of the new york trading session. that fueled speculation japanese authorities intervened for a second time this week. let's bring in michael wilson. i guess we will find out in due course from the data that is released in a month. did it have the characteristics of intervention? michael: you know what? it actually did. it was the price action in a way

-- i spoke to a couple chaps in new york before they went home, and what they described and what they saw was much like what happened on monday. a situation where dollar-yen was around 155.70. suddenly offers would come in, some of which came from japanese banks, all the way 20 points through the level. now, that is not typically how japanese banks clear their business. it does seem predatory in terms of the effect on the market. i was actually skeptical. i thought after monday's effort it might have just been the authorities checking rates and asking for levels which is a precursor for intervention. but having heard what transpired after the powell press conference in new york, i think

it is sounding more and more like intervention. having said that i don't think they're going to be happy with the way it is recovering so well and so quickly. we are near 156 after hitting the 153 low. do not spend any time down there at all. there is obviously a lot of residual demand for it. as far as the intervention question is concerned, i think it is becoming apparent. although like you mentioned at the start, we have to wait until the end of the month to get confirmation one way or the other. he did not want to be drawn into any commentary about it and that is fair enough. but that does leave dealers who are critical conspiracy theorists to draw on own conclusions. if you are buying dollar-yen and suddenly you are being given dollars by a japanese bank you

probably spin around and trade them back out and get on with it to see how low it goes. currently that has just been the wave of it right now. further out i think -- sorry. annabelle: which way do you think the yen is going to go? are we looking at 150 is 160 more in play? that is the mliv question of the day today. michael: there is a lot of actual buying from customers, fund managers, real money, macro funds from 152 and below. that 152 level more or less was basically where we took off from the hot uscp i level. it never came back and it is working his way back down now eventually. so i think the market still has that propensity to buy the dip. if you look at the options

market the risk reversals for dollar-yen for the one month period, they are actually cheaper. i think they hit a one month low yesterday. and they are not far from there now. i think the 167 high on monday is still very much in play. annabelle: that was michael wilson there. let's go to the cryptocurrency world because the binance founder says he will remain a passive investor in cryptocurrency's. a u.s. court sentenced him to four months in prison for failures that allowed cyber criminals and terrorist groups to freely trade on the world's largest cryptocurrency exchange. while the sentence was far below the three years prosecutors sought, it closes a long-running probe for the justice department. let's bring in our next guest, dennis kelleher, cofounder and ceo of better markets, a nonprofit that supports stringent financial regulation. so, yes, dennis, the sentence is

far below what was requested but it is the first time we have seen a ceo go to jail ever for a bank secrecy act violation. dennis: that is true but it is also the first time we had a crypto kingpin who created a crypto money laundering superstore for the most despicable global criminals in the world. it is true that he is the first one to go under discharge. on the other hand, here's an outlier in terms of the extreme criminal conduct that was money laundered through his company. even a compliance officer at binance said -- annabelle: just to interrupt, sorry, just some of the language used there, it's quite colorful and we don't actually have evidence of those allegations. dennis: if you read what the secretary of the treasury said, janet yellen, at the press

conference, that more than 100,000 suspicious transactions appear to have gone through binance. they included everything from drug trafficking to sex trafficking, to sanctions of agents for russia, iran, north korea, as well as numerous other sentient individuals and groups like hamas and al qaeda. that is all in the press conference and in the indictment. now, it's true that cz was only charged with a failure to have an effective money laundering program. but that is because the department of justice decided to charge him with a very minimal charge which is an extreme disparity between the allegations of the criminal conduct that the money was laundered through binance. binance pleaded guilty and admitted to the charges. cz was the founder, owner, and leader of binance. annabelle: again, just to reiterate, this is cz, who has

gone to prison, will be facing prison time of four months. he has been charged with the secrecy act violations. i understand he will be making other statements around misconduct, but that has not been proven by the judicial system. broadly do you think the outcome of this court system sends a message to the crypto world? dennis: to be clear, binance did admit to the allegation. cz pleaded guilty to just one count of bank secrecy act. so the allegations, they are not allegations. they were admitted to, which is why binance was fined $4.3 billion and will have a monitor for five years. unfortunately the message this sends is that crime pays. cz himself said better to ask forgiveness than ask permission, which is to say better to break the law ahead of time rather than comply with the law.

break it it ask for forgiveness and that is what happened. his plan, what appears to be his plan from long-standing, is he engages in this conduct, he gets caught, gets a very minimal sense, goes to court, has all his friends talk about what a great guy he is, talks about turning over a new leaf and goes into philanthropy. everybody says that when they are facing a judge continue to jail. so he is going to go to jail for four months. he gets to keep his $43 billion. he is number 29 on the bloomberg billionaires list. that money has been accumulated through binance and binance admitted that it is engaged in years long violations of all sorts of laws that binance facilitated from egregious criminal conduct. and so unfortunately our concern at better markets is that that encourages crime. individuals have to go to jail. the only person at finance who

was even charged for all of these crimes was this single person who is the ceo. and he should have been charged. he should have been charged with much stronger crimes and gotten a much bigger sentence. but they should have charge many other people because cz did not do this on his own. there are dozens if not hundreds of others. one of their compliance officers actually publicly said that they should hang out a banner, quote, is washing drug money too hard these days? come to binance. close quote. that was a compliance officer at binance. they were in the business of laundering money of global criminals. and to be fined $50 million by the doj, which is .01% of cz's net worth, and be sent to a relatively comfortable federal prison for four months, it is not even a slap on the wrist, and that is going. to send the wrong message. . annabelle: that was dennis kelleher, cofounder and ceo of

better markets. we will have more to come on daybreak asia. this is bloomberg. ♪

haidi: watch of shares of dbs

when trading gets underway. reporting a profit beat and continue to benefit from higher lending income. when it comes to dbs, what was the standout for you? >> it beat estimates on all aspects. from lending income, wealth income. the ceo also guided for a better year this year. in 2023, dbs already posted record earnings, where the number topped 10 billion singapore dollars. this year so far it would be even better. annabelle: what stood out to you in terms of asset quality? does that remain manageable for

the lender? >> singapore banks typically have lower than peers mpl. that assets still only at 1.1% of total assets. it is not just manageable, it is quite good. it is a good sign. there is one thing i would like to add -- annabelle: please, continue. >> one thing i would like to add is some analyst pointed out that traditionally, the first quarter for dbs are the best ones. so we should expect to see muted corridors going down the road. annabelle: thank you very much. that was our senior asia finance reporter. let's stick with banks. standard chartered is also releasing earnings. analysts will be focused on plans to return capital to

investors and progress on pushing down costs. for more let's bring in denise we and. we just heard this is typically a good quarter for dbs. what can we expect later? denise: profits might be below last year. businesses expected to do quite well our financial markets. in similar story to dbs. not quite the same but mixing strong inflows pretty a lot of inflows from other banks like credit suisse. those are the sort of focus areas. [indiscernible] streamlining the business,

improving digitization. i think analysts will be looking for more progress on how that is going basically. haidi: what was the outlook we heard when it comes to china? denise: china is something we have to watch out for. it will be interesting to see if there is a change in tone. they have had issues, which have been persistent even though they are coming down. hsbc's recent quarter saw improvement. if it's an improvement if we see mpr is coming down. haidi: what about expectations for cost management? denise: i think that will be a focus. it's supposed to simplify the bank, reduce cost and overlaps.

the bank has announced management changes within the corporate investment bank. it will be interesting to see how they drive the business forward as well as keeping a lid on costs. annabelle: that was denise wee there. on the earnings front, bringing you some news crossing the terminal. the entertainment company hybe in seoul reported its numbers. a miss on estimates for operating profits. that came in at 14.4 billion won, down more than 17%. the estimate had been for 24.2 billion won, so quite a significant miss on expectations. sales, likewise we saw them at -- the estimate had been for over 412. a big gap between what analysts

were predicting versus the numbers that came through. net basis 10.8 billion won, the estimate nearly 20 billion won. stilll, hybe is managing to stay positive as we head through the morning session. tune in to bloomberg radio to hear more from the day's big newsmakers and get in-depth analysis from the dave brat team -- daybreak team. you can listen via the app, radio plus, or on bloomberg radio.com. we have more ahead. stay with us. ♪

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haidi: china's top climate chief is warning the climate fight will be too costly without china. he spoke exclusively to stephen engle and says western de-coupling could cost the global economy trillions of dollars. >> if western countries -- it will cost the world maybe an additional $6 trillion u.s., a 20% increase of the overall cost. we need to maintain the low

cost. otherwise nobody is going to afford the energy tradition process. stephen: officials claim china is given unfair subsidies and that has led to the situation we are in right now which could distort global trade in these clean products. how do you respond? >> [indiscernible] all the renewable energy equipment technology, they are developed and manufactured by private companies. it is very unique. very unique. i think private companies normally do not receive any government subsidies. we should highly appreciate the dedication and contribution. after more than a decade, now we

have both solar and wind products which are now affordable to start a transition. stphen: while we are talking about overcapacity we have to talk about the domestic economy. we have been seeing profitability sink at a lot of these solar and ev companies. price wars are driving down their margins. what does that do to the climate fight if the world is bifurcated on trade? >> we talk about capacity in two different ways. for global demand, china domestic demand still a high demand for renewable energy products. we are determined to increase our renewable energy capacity to a high percentage. maybe over 80%. i think for the next decade we are still in the process of

increasing are renewed energy capacity. globally i think that is much slower than what china is doing. they will be high demand for renewable energy. for the so-called overcapacity, chinese manufacturers, it is a temporary issue. it would be good for competition. they can make much better products. haidi: china special envoy for climate change speaking exclusively with stephen engle in beijing. take a look at what we are tracking. we saw the labor reversal in the u.s. equity rally as investors continue to pass through communication from fed chair jay powell after the fomc meeting. rates staying on hold but persuasive evidence would be needed for any rate hike in the future. a lot less hawkish than what markets had been positioning for. futures looking positive.

upside when it comes to nasdaq futures from a little earlier on. taking a look at how we are setting up and it comes to trading in china. we continue to see that revival of chinese equity sentiment. a little bit to the downside, about .3% softer. watching dollar china with a pullback in the dollar and some of that in a fitting asian fx being able to take a breather. a big move in the yen, speculation as to whether intervention was behind that remains front and center. our markets coverage continues as we look ahead to the start of trading in hong kong, shanghai, and shenzhen. the china show is next. this is bloomberg. ♪

and they're all coming? those who are still with us, yes. grandpa! what's this? your wings. light 'em up! gentlemen, it's a beautiful...

...day to fly.

>> this is my kitchen