Rishaad its going nuts, bitcoin. Im just going to show you what is happening here. 85,000 record, over earlier today. This shows you the progression of bitcoin in terms of gold lasts since november of year. We were trading below one ounce of gold. Now you need 6. 4 ounces to buy one bitcoin. Thats the story at the moment as bitcoin seemingly goes in just one direction. Is it a bottle . . Bubble will it survive the apocalypse doomsday some people have been betting on . Like gold, there is a finite supply of bitcoin. Sales of gold coins from the the most iniding the first three quarters of 2017 in favor of this cryptocurrency. Were even last week we wondering, is this about to come to a really messy end . Investors apparently brushing aside concerns over technology. We did see a drop in gold on account of that rebound of the dollar. To the rest of the markets. The financial markets, if you because we are seeing stocks recover from the recent pullback. Lets go over to sophie. Japanese markets are seeing equities lead gains across the region. Asian stocks heading higher. The yen holding onto overnight losses. The Bigger Picture here, bit point going nuts. Rally two be relief point zero. We are seeing stocks in taipei and singapore joined the upturn. Mind that on monday, chinese stocks staged a late section rally. Investors not able to shake off the potential bombshell in the Asset Management injury industry. Consumers are keeping up the pressure on the mainland. A stock has been under pressure given the warning it got on friday. A quick check on currencies. The one resuming gains yuan resuming gains. Traders may be focusing on a potential downgrade to the u. K. Growth outlook. Between the euro in the aussie dollar, that is under pressure, little changed. Above . 75le to stay for the aussie. That may soon be lost as we see that yield differential between australia and the u. S. Erode further. Lets show you some stocks that are moving this morning. 1 6. 1 at one point as volume quadrupled. Is climbing in tokyo after the stock was upgraded on the growth outlook. Hyundai merchants has fallen to a record low. Look possibly to more political horsetrading in germany. We go to first word news. Chancellor merkel says she would rather face a new election than try to run a minority government. Negotiations broke down among free business democrats saying differences with the greens could not be resolved. Merkel said she would prefer to go back to the electorate than attempt to government out a majority. United states is designated north korea a state sponsor of terrorism. That opens the doors to further isolate kim jonguns regime. Orth korea adjoins north direct, iran, and syria on the list of state of terrorism. Its planned takeover of time warner is a classic merger that does not lessen competition. The Justice Department has filed a lawsuit to block the deal, saying it would greatly harm American Consumers. The at t boss says any agreement is aring the sale of cnn nonstarter. Despite our disagreements, we have offered concrete and substantial solutions. As we had to court, we will continue to offer solutions that allow this transaction to close. The Washington Post is reporting that eight women have accused tv host charlie rose of making unwanted sexual advances toward them. The post says rose has apologized for what he terms his inappropriate behavior. Cbs news has suspended him while pbs has halted work on his tv show. Bloomberg has suspended his show from bloomberg tv and radio. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 100 20 countries. This is bloomberg. That. Thanks for janet yellen will step down from the Federal Reserve board of governors when her term as chair ends and she hands reins over to her successor. We have a look at potential ramifications, because it is the end of an era. She has had a term as fed chair first vice chair, then fed chair, going through the worst recession in the United States since the great depression, the worst financial crisis we have seen in many decades. Again, as she sent this letter to donald trump saying she will be stepping down once jay powell is sworn in, its no prize. It would be unprecedented for a she hasr, even though more time left on her term as governor on the board of the fed, she is staying on, looking over jay powells shoulder. She ist surprising that doing it. She was the first woman to be head of the Federal Reserve. She made history that way. Her fours of growth in year term after this terrible recession. Unemployment down to about 4 . Inflation is slow, but growth is firmly entrenched. Buying after qe3 when it became unpopular. She lifted the rate of zero. That in itself was considered a major move. She is already training the next fed chair. When it comes to the fed leader, donald trump has picked the man who will presumably be replacing yellen. He has yet to face senate confirmation, but is expected to pass. He will have an opportunity to reshape who he puts on the board. Will it be the under secretary a treasury who is a more hawkish monetary thinker. Kaler, whojohn favors rules on Monetary Policy . A lot of important picks. Rishaad the minutes from the , it looks like the only centralbank fretting over the rising wages shoe is australia. Its so interesting, because this is becoming more and more of a global phenomenon in developing economies, including australia. We know they have been watching unemployment fall. We have been wondering about the markets. Some things have shifted in rbas favor in terms of housing cooling off a little bit. Business investment is picking up in the nonmining parts of their economy. In terms of wages, lets see whats going on. See is that even though unemployment has fallen, you can see wages are not rising. This is a concern they expressed in these minutes. One thing going in the right direction employment. Another thing not going in the writer action wages. This is a concern making people right direction wages. People a concern making wonder if they will keep this or not. Can see they are convinced that inflation, the labor market, it should start rising, but wages are going to be an important part of it. They wonder aloud, our wages not rising because of globalization, because of a widespread use of technology . Evenknow wages are low though unemployment has fallen. This is a dilemma, a conundrum, i should say. They do see gdp picking up to 3 . , thenk the thing for them question you ask about the fed, are you concerned that wages are not rising when inflation is still weak western mark it is a structural conundrum still weak . Conundrum. Structural we heard mario draghi speaking in brussels. What did he have to say about policymaking at the ecb . Iswhat stood out to me is he confident in growth. He noted specifically that with unemployment falling, wages should rise. We know unemployment is below target. This is the important point i think he is counting on. Unemployment is getting close to that. You can understand why mario draghi is getting more confident. This will eventually boost wages and boost inflation. I do hear a note of confidence in his voice. Have awhy some people dovish message for mario draghi. Bloomberg has been pointing out that the ecb is going to be going slowly when it comes toward taking small steps toward exiting and holding down bond purchases. Thank you so much for that. , a lot of communication. We will be talking a bit more about centralbank policy and perhaps what the next year holds as we balance longterm strategy was shortterm growth. We will get the view from Goldman Sachs. Rishaad looking ahead, we hit electric avenue in china. Why it is increasingly the car power of choice. This is bloomberg. Rishaad you are back on Bloomberg Markets. Goldman sachs seeing Interest Rate hikes coming as strong growth continues. Goldman sachss chief asiapacific economist, whats going on . I think we are seeing pretty synchronized global growth. Above trend growth. We are pretty optimistic about the year ahead. Rishaad absolutely. Seeing inhat we are the equity market is predicated on fundamentals, for a change. Good earnings. Good earnings season. Decent outlooks as well for the coming quarter. The thing is, how long does that sustain the momentum . We still have room to grow in a lot of the world, in asia. Inflation has allowed Central Banks to be pretty patient. We do think its going to move higher in 2018. Thats going to be a change from what we saw this year, but we dont think its going to move higher for fast enough to force the hands of Central Banks. Rishaad what kind of Interest Rate hikes are you expecting out of the fed next year . We think the fed can hike once a quarter. Theyve already been doing that, if you count sleep if you count the announcement about the balance sheet. They have been moving. We think they will continue to move. What stiffer and about 2017 from 2016 is overall financial conditions have been quite supportive of growth what is 2016rent about 2017 from is overall financial conditions have been quite supportive of growth. One of the themes has been where is the inflation and does it matter . That has been central to global banks. Maybe what were seeing is a real structural shift when it comes to the lack of pressure on prices and wages. Do you think that prevents Central Banks from tightening or they willnk that tighten anyway . The great thing about low inflation is a gives Central Banks flexibility. They are not in a rush to raise rates. Having said that, we are seeing growth and a gradual increase in capacity. Road, that ishe associated with more inflation. I think the reason we have had a low inflation is we have had excess capacity around the world for the last several years, but thats going away now. Haidi i want to talk about china. Is there a sense that the big political risks are over . Rebalancing from quantity to quality. Do you think there are risks associated with that . Think thats really one of the key debates for 2018. Its very clear the direction of policy. As you said, we are moving from quantity of growth to moving toward dealing with environmental damage and cleanup, reducing risk in the Financial Sector and so on. The question is, how quickly do policymakers want to move in that direction and how much are they willing to compromise on growth targets to get there . I think that is still unclear. We think that process is still going to be gradual, that it will play out over several years and wont he an abrupt end in 2018. I think the pace we decide to move and the ability to element for gradually is the key 2018. China is almost half the worlds investment. Managing tightening in that area , that gradual investment slowdown, is really key for china and the whole world. We started out the year i think the most worried about trade between the u. S. And china. Going into 2018, do you think that is still a major risk . I think you have to look at potential trade sanctions and tightening policies on imports risk. The world as a but ultimately, our view has been that will be a low level in tariffs and restrictions on particular industries as opposed to a broadbased trade war. While we do see that as a risk for the Global Outlook in 2018, we are not especially worried. Trade willnsions on probably ratchet higher overtime, but we think that process is going to be gradual and again, somewhat industryspecific. Stay with us. More after the break. We are going to talk about the strength we have seen in south east economies as well as policy missteps we might need to watch out for with the Central Banks. This is bloomberg. Haidi lets pick up our chat with Goldman Sachs past chief asia correspondent, joining me from hong kong. We were talking a little about Southeast Asia just before we left off. Its a little surprising just how resilient the strength has everywhere through, from thailand and indonesia to the philippines. Do you think that is sustainable . We do think we can continue to see pretty strong growth in Southeast Asia. We have already had good news about inflation growing above 6 in the past year. Indonesia is growing just above 5 . I think policymakers had hoped for more. We think growth can pick up somewhat in the next year as well. We think the consensus expectations for growth next year are too low. Rishaad lets go to india for second and talk about the introduction of the gse. These are shots to the economy. How much are they playing out . How much do they reverberate and when does that economy get back on track question mark wrecks you are absolutely right. Those have been huge shocks to the economy. Demonetization particularly affected the rural sector. We dont know we see that in gdp statistics quite as clearly. Reform has had shortterm disruptions as well. Many small and Mediumsize Enterprises were not prepared from a technology, just a call standpoint to manage that system. The good thing about next year think we will get those shocks again. The reverberations will probably fade out in the next year. All things being equal, you would expect growth to be better. More importantly in our view, Bank Recapitalization is key. Rishaad i was going to talk about that, because its one of the worst nonperforming loan problems in the world. How do you address that . I think you have to recognize the bad loans, move them off the balance sheet, take the losses, inject new capital. Happily, that is the procedure i think we are now embarked upon. Agreed toment has provide new capital to the Public Sector banks. There are a lot of private banks not getting the same treatment. Theres also the cultural issue, patronage, and how that feeds into when people are given loans. Hopefully, the new bankruptcy process can hope help to reduce that hazard. I think the possibility that some borrowers who are unable to service debt may actually lose their assets may help improve the quality of lending going forward. I think thats an important part of the policy reforms in india. They are worried about throwing good money after bad. Rishaad what stands out to you . We think india will surprise to the upside next year because of the factors we have been talking about. The fadeout of the shocks we saw over the last year and new capital to ease lending conditions. Still a while there is lot to do in india, we think growth will be to the upside. Rishaad capital needed to be a step to facilitate what youre talking about as well. Thank you for joining us. Its the start of the session in hong kong, just two or three minutes away from that. The premarket session up. Likewise, the futures as well. Latestway, chinas financial crackdown on wealthy individuals. Are they too big to fail . Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Rishaad there we go, hong kong. Ofnting down to the start the session. Tax reform something that had. Een really undermined investments essentially on positive as we have a holiday for congress this week as we approach thanksgiving. Still, concerns linger. European political issues out as well with Angela Merkel think she wont form a minority government and is willing to have another election. Janet yellen going to step aside. Donald trump with another choice of fed governor. Budget in the u. K. On wednesday as well. And bitcoin, another record. Jittersmidst the latest the market had for the last week or so, people are asking, have we gone too far . Is it time for a correction or for the bull market to get shaken up . The s p pushing 3000 the highest expectation sees the s p pushing 3000 by the end of next year. Lets get to hong kong and check on the open. Equity bulls wont be shaken. We are seeing the hang seng rise. 4 . The mood is different on the mainland. Stocksseeing chinese follow the late session rally we saw on monday. Fall off the late session rally we saw on monday. It looks like that is not sticking around. Youing up the board to show how the recent rally has yet to dissipate. Liquor maycheck a or may have misled investors. That stock dropping about 1. 4 . Board to show you that stock that is helping to support gains on hang seng. It would besays wrong to sell just for shortterm game. It has beaten alibaba and samsung to join the illustrious 500 billion market cap club. Today, were seeing this stock falling, among the laggards in hong kong. Rishaad lets get to first word news headlines. Zimbabwe expected to begin impeachment proceedings against president mccovey after he refused to step down. Lawmakers mcgahn they mugabe after he refused to step down. Lawmakers will begin the process. He refused to resign. The stock index fell 10 on monday. It has lost 27 of the rbcs power. Chairman yellen has said she will leave the fed once her successor is sworn in. She could have stayed because her term as governor does not end until january, 2024. The decision leaves President Trump with an additional spot to fill. She was fed joys she was fed vice chair. Before that, she was head of the San Francisco fed and head of president clintons council of economic advisers. To end thefforts impasse may not be enough. The chief negotiator told a conference in brussels that london must offer a solution to the irish border and those who wanted brexit must come up with ideas. Mario monti told bloomberg the ball is in the uks court. What i think confuses the ideas of British Public opinion there. Ably what is out the only thing is the amount to be paid. Central bank has signaled less confidence in wage growth despite fulltime hiring. Lower forh may remain longer. Minutes from the meeting showed considerable uncertainty of how mighten wage pressures emerge. Global news 24 hours a day powered by more than 2700 in 120ists and analysts countries. This is bloomberg. To rein chinas effort in risk faces a challenge convincing investors that risk is real. People assume investments are safe no matter what happens to the underlying assets. Julia, you wrote today that its a sensitive time to be rolling out restrictions on Wealth Management products or Asset Management products. Why the timing . Why now . The Chinese Government seems pretty intent on deleveraging economies. They are rolling out a new set of rules for Asset Management products. This is defensively time to because the benchmark yield has been rising since the congress closed late last month. Last week, it touched the psychologically important 4 . Trillion Asset Management, products haveent become very important funding for china corporate. The question is will they have access to refinance . Rishaad its interesting how there is 015,000,000,000,000 dollars worth of product out there. I suppose any type of liquidity could shock the system to its core and take out various corporate as well, respectable companies. Any evidence of this happening . We just had a default. Big operator. Rishaad a very big one. They trade with north korea. If you looking is, at the filing in mainland china, the first nine months of the year, it was profitable. It had a 15 operating margin. It had to default because it couldnt refinance fast enough. Interesting, because that was a darling of the states as well. We saw ads for that all over state media. One sector has seen a huge amount of activity when it comes to this kind of thing. Are we going to see these new rules really play out significantly for the property sector . Sector property they have and try to crack down on property sector lending over the years. Went to the property sector. The government obviously is going to crack down on that. , they arenew rule wealtho be available management products sold to the general public. Its going to be a private liquidity squeeze on the sector. Haidi thank you. We will have more on this over the next hour. A are going to be talking to chief strategist, and a part when it comes to Systemic Risk building in china. He called the rise and fall of the last chinese equity bubble. Thats coming up in about 30 minutes. Will being up, we talking tech, in particular the push for green energy cars in. Hina we talked to bloomberg about deepening ties with chrysler in china. This is bloomberg. Rishaad in an exclusive interview with our china , the president says the company is poised to enter the american market. Enter a u. S. Ing to market in 2019. This is a crucial move. Current stage, our internationalization process has just taken off. We have laid down all the groundwork and carried forward our car sales and Service Operations to 14 different overseas countries this year. Entering the market will be a huge breakthrough because we on the grand far path of globalization, establishing our brand in the u. S. And winning the trust of American Consumers. You chose the name well before donald trump became , but is this positive for your branding or a drawback for your branding . We will definitely choose a name that American Consumers are totally comfortable with. If American Consumers think our models name is too similar to a certain president and therefore have mixed feelings about our product, we will pick a new name. Fiat chrysler is your joint venture in china. How much of a role will they play in the expansion into the u. S. Market . We are very satisfied with our relationship and both of us are gradually seeking to improve cooperation to a new level. We are discussing more channels and areas to deepen and extend the scope of our cooperation in the future. Where do you see sales in 2018 . I think two key factors are likely to affect car sales next year. Is the continually improving macroeconomic situation, which is supposed to provide strong support for car sales. Although the other factor is negative, the government is due to scrap a policy granting a tax cut for small engine vehicles. I think the level should be the same as this year. In other words, we can expect a growth of 5 in 20 18. Would you welcome any moves by the Chinese Government to improve the chinese trade relationship . The number and total value of american cars x or did two exported to china are far more than the cars sold in the u. S. Market. I favor policies that will both countries and deepen the collaboration and areas of technology, manufacturing, and sales. I am optimistic about this and looking forward to better policies. Was the president speaking exclusively to tom mackenzie. We will be well, tackling pollution is high on the chinese agenda. The market is reaping the benefits. More about this with james chao, joining us in shanghai. Its fascinating. Is this the kind of cooperation you see across the market once you have government backing for policy . We saw this with solar power in china. Of going toonger much further into green energy and green cars at the moment . Absolutely. And part ofanger, it is that there is massive cost involved in terms of the subsidies placed on these electric vehicles. Deriving theidies sales of electric vehicles in china. Half a million so far sold this year. Expensive toery the government. The longterm outlook is still uncertain in terms of what the results of this electric Vehicle National policy will be. Anecdotally, so many people decided to buy an electric vehicle even though there were plenty of other normal cars because it was cheap and you could get a free number plate you could use on the days you cant drive your other cars. Do you think if you strip out these incentives, what is the level of demand you are seeing . Nd will it pick up you make a good point about the license plates. China areates in restricted. This creates a distortion in the market where people want to purchase these for perhaps not the reason the government intended, which was to further their environmental agenda. This is a distortion in the normal supply and demand market. Rishaad is this a panacea for the Environmental Issues the government has outlined question mark surely, this just puts the pollution somewhere else. Very goodalso a point. The electric vehicles themselves, Pure Electric vehicles, dont emit any co2. Thats great and for that local area, but where do the emissions go. It takes a mass amount of electricity to drive these electric vehicles. How is this electricity produced . Its a situation where the pollution is essentially moved from where the vehicle is driven to where the electricity is produced. Rishaad which begs the question, is the internal Combustion Engine more efficient at converting fuel into energy . Thats key. Its almost as if china is doing this too soon. One overlooked area, the internalin the Combustion Engine have been pretty good over the last decade or two. They have become a lot more efficient, especially with hybrid technology, and much more cost competitive than most electric vehicles. Ways, china is overlooking another solution to the co2 emissions problem, which is enhanced conventional vehicle technology. Haidi i think you make a really interesting point. China has gone all and when it comes to this. It tends to when it comes up with a new policy. Kind of symbolism, right . It wants to be a global leader, so its happening regardless of what level of consumer demand is being engaged. Thats right. Five years ago, china embarked on this journey, and it was called leapfrogging over the automotiveries technology. Shey chose a electric vehicles as a technology that would allow them to surpass the technology of automakers from other countries. They made this bet and they are continuing with it. Its a national strategy. They put a lot of pride into this, and that should not be overlooked, that they have really committed to this. I dont see them backing down from this at all in the coming years. Haidi we are seeing this resilience and other demand this year. Have you made any assumptions about what its going to look like going into next year given how fast the policy landscape seems to be changing . See we are in november now, and we are already seeing some weakness in the market compared to last year. Expirationue to an of a tax cut last year, or a rollback. The comparison to this year, 2017, is very tough. Into next year, there have been a lot of incentives by vr automakers, a lot of regulatory changes, tax cuts by the automakers, a lot of revelatory changes, tax cuts, but it will be flat to slightly growing, not the gangbusters we saw decades ago where we saw doubledigit percentage growth every year. I think now we are coming to a more status quo type of level. Rishaad one thing that should worry environment authorities is suv sales. Thats no good for them, is it . As much as china and the u. S. Are different, one thing that is the same, in terms of the car market, is the love of the suv. China has gone crazy over suvs. The suvs here are not nearly as large as the ones you see in the United States, but they are larger than the normal passenger vehicle. So, those vehicles often are less fuelefficient, said this does create a situation where the consumers are demanding less fuelefficient vehicles, the suv , and this creates a conundrum for the policymakers. Rishaad james comer thank you very much james, thank you very much. We are going to be talking about china tomorrow on daybreak , particularly the aviation industry. Airbus building a new Innovation Hub in china to boost its presence there. Dont miss our exclusive interview with the chief policymaker. Coming up, the Justice Department hangs up on at t. This is bloomberg. Rishaad at t says its planned takeover of Time Warner Cable is a classic vertical merger that reducet require competition, but the Justice Department has moved to block the deal, saying it would greatly harm consumers. Igneous today, the u. S. Justice department suing to block at t big news today, the u. S. Justice department suing to block at ts merger with time warner. The owner ofrge one of the largest satellite providers with the owner of hbo and turner broadcasting. It was more than a year in the works and widely expected to go through. The two companies are not direct competitors. One is a distributor, the other a supplier. In recent weeks, we have been getting indications the justice has been raising problems with this. At t came out slugging today in a press conference saying they thought this suit stretches the that of antitrust law, there was no reason for the government to block this deal. They said they have proposed solutions but would not sell cnn, alluding that this deal may be politically motivated, President Trump not big fan of cnn. He said they would fight it in come and that case could in as little a 60 days. They also played a tape of the antitrust chief indicating before this that he was in favor of the deal. They will likely put pressure saying why did the government change its opinion . That was our Los Angeles Bureau chief with an update. A quick check on business headlines. Uber is buying 25,000 suvs to form a fleet of self driving cars. Majorill be the first the dealer. The rishaad u. S. Workers building the camry are told to cut costs or face an uncertain future. Build the car in japan, ship it to georgetown, and still make more than it does on u. S. Made vehicles. Toyota insists it has no intention of closing the plant. The indian tycoon houston announced charges against him as baseless and fabricated as he fight extradition charges in the u. K. The billionaire has been living in selfimposed exile in london, saying he wants to be closer to his children, also said he fears for his life in india. Rishaad it is the end of an era at the fed. It janet yellen will leave when her successor takes the chair next year. The minority government says she is ready for a new election. Feeling the heat. Nook north korea is facing new sanctions as President Trump branded a state sponsor for terror. Also coming up, 2017 has been very good. The stock has doubled. This is Bloomberg Markets asia. It is starting to get to that time of the year where we are heading into thanksgiving. Also the time of the year when we start getting through the strategy and forecast reports for a number of investors that bloomberg tracks. The most bullish out of the reports we have gotten so far. Ending and s p 500 pushing almost 3000 points. He is not even in this scenario, accounting any kind of processing that comes through from a Corporate Tax cut. He said if they get a 20 tax cut, that means another 10 for s p earnings per share. Which in hundred 45 per share. Highest. Be the Goldman Sachs ratio the most at 2500. Ut of the lot we are looking at upside of 15 as we end out year. A hour ago,t under they were talking about the economy. Particular, china and korea, we talked about all those things. India is the surprise package for 2018. We have indonesia coming on track. The session getting underway in jakarta. Stocks are joining. It asian stocks are leading those monday blues behind. It is being led higher by japan and offshore chinese stocks. Higher. Led index is being supported by i. T. And health care stocks. Onshore shares on the mainland for a second day of gains. Most high has swung to gains after a twoday drop. Checking out some other movers in asia, we have this falling the most after two years. Jcl energy is jumping to a july high. Take a look at other movers in asia. We want to highlight what is going on with tencent. Crossing the threshold of 500 billion in terms of market cap, set for its best war day valley fourday rally. On an upgrade from jeffries. Gaining ground amid reports that korean officials will meet this month to discuss plans to invest in china. Take a look at the laggards. Gains. Ng mondays thank you so much for that. Janet yellen announces that she will leave the fed in february. Australia centralbank hinting that it will leave rates on hold. Lets see how that is playing out when it comes to that effect base. Morganto hear from stanley when it comes to the aussie. Reaction has been interesting in the market. Euro is a bit steadier this morning, but the true picture was actually seen in the overnight action. The euro came up quite a bit. Some dovishso comments. We saw quite a bit of interest at the 1172013 level. Market with very little reaction with a risk of reversals come calling for the euro to be much stronger. It is quite thing green. Sanguine. Policy monetary unwinding path is still very much in play. We see very little concern about the state decline. If merkel does call for an election, there could be a few months for this to play out. This could lead to a little more unwinding. Hedge funds are holding a record amount. They are not unwinding at the moment. That is a little bit of a concern. Rishaad lets take a look at what is going on with the yen. We have seen the young come back. Come back. What are the prospects for japan . The dollaryen did come under pressure yesterday. It is finding quite a bit of support of rebound overnight. There is a very interesting technical level at the moment. It is a convergence of the 100 and 200 day moving average. It could entice japanese investors to buy the dollar around these levels. We are getting quite a bit of support there at the moment. The minutes with a muted reaction there. Why . Patricia the traders are expecting that they will remain on hold for a bit longer. Todays minutes confirm that the rba is quite concerned about pressure at the moment. Mention earlier that Morgan Stanley made quite an interesting call. . 10 lower for the Australian Dollar in the next two years. Bearish amongost forecasters. The reason is because they think that eventually, the Australian Dollar will lose its premium against the u. S. Rates. The Australian Dollar could actually be at a discount. We have always known the Australian Dollar carries in this part of the world. For it to use a premium against the u. S. Dollar is something that the market has yet to come to grips with. That theanley expects rba will be on hold for much longer next year. That could possibly hike three times. The new premium will vanish. Haidi thank you so much for that. Lets get you caught up today with the first word news. Janet has confirmed that she will you leave the fed. Leaves trump with an additional spot to fill on the seventh person seven person board. She was the head of the San Francisco fed and chair of president clintons council of economic advisers. Designating north korea as a state of terrorism. Sponsor terrorism. North korea joins iran, sudan, and syria on the u. S. Terror list. Pyongyang was on an earlier late list but was removed by president bush in an attempt to salvage a nuclear deal. Take over time warner is a classic vertical merger that does not allow competition. They have filed a antitrust suit to block the deal, saying it would greatly harm American Consumers. The dealment requiring is a nonstarter. Our disagreements, we have offered substantial solutions. As we head to court, we will continue to offer solutions to allow this transaction to close. Reporter the Washington Post is saying that a woman accused charlie rose of making unwanted and sexual advances towards them. Rose has apologized for what he calls inappropriate behavior. Bloomberg has a production and distribution arrangement with charlie rose and has suspended the show from Bloomberg Television and radio. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im even on man. This is bloomberg. Ne mann. This is bloomberg. Haidi thinking has been a Necessary Evil in china. Why and what happens now. This is bloomberg. Haidi it could check of the business headlines. Told to substantially improve its offer if it wants to buy. Lots at leastst 80 before they buy it. They rejected the approach of earlier saying it was too low. They have not improved their proposal but said they remain committed to a deal. Rishaad china is acquitted. The conglomerate is struggling with that. If the banks will push the due date back to february. They have three more loans coming due in the first part of next year. Haidi the Worlds Largest listed jeweler. Bloomberg intelligence says their operating margins probably surged after it closed an outlet and renegotiated rent. Rishaad regulators have posed saving rules tightening supervision and breaking into a guarantee that has driven business interests. Therenot surprising that is a feeling that these products are too big to fail. , to a certain extent. We are talking about a hundred trillion 10 trillion. Many of these products have been an important funding source. Now we are talking about getting rid of them within a specific time. It will probably make some of the bank funding difficult. Rishaad there will be repercussions. How much of a shock could it be . It would not be systemic on a global scale. There is a time to implement this. Number one. For different parts of the funding market, you get a different degree of effectiveness. For example, some of the product which has an implicit principle guarantee conditions involved probably not be able to be sold anymore. Some of the market funding that is coming through different vehicles, some banks are trying usingings to use them to bypass restrictive chinese lending routes. They will have to disappear. Rishaad they are not actually all that. Some of them are toxic. What percentage of those are toxic . You are right. We should not throw the baby out with the bar the bathwater. There are so many layers and so many intricacies over the system. Is tohey are trying to do shock them. The number of transactions involved from funding to the final borrower in the market is number one. It is now skewing the pricing of risk in the chinese market. Is saying about how this has turned into a monster too big to fail situation, you have to let some of it failed because how do you reduce systemic financial risk and a country where investors do not believe or have had to put up with losses . Tremendous amount going on in the financial market. , guarantee product is offering 7 or 8 yield. Much of thehat, money in the market is being put into this kind of product rather than bonds and equities. In the near term, with the implementation to get rid of some of the products, there could be some pain in the market. It is actually good for bonds and equities. Haidi to get investors to recalibrate that view, do you see them tolerating a certain level of control of default in the market . We have actually seen some defaulting. Saw,he 20 cases that we chinese. Mostly it is happening at a gradual rate. It is trying to get the market getting used to this. We are talking about a market we have never seen before. Money, threeo much haidi what is the underlying problem . Whackamole. Isnt this a problem that will keep coming up whether it is equities, commodities, Asset Management products, given that we have an environment where they have capital control . Yes and no. It it is a very complex system that needs much time to fix. With this conference is move coming out, it is a step towards the right direction. We do see a lot of unnecessary transactions. Probably illegitimate transactions in the market. At one stage, the chinese commercial banks are having problems with attracting. They have to use creative ways to move loans off the balance sheet. In a creative way to chinese growth. At the same time, it does create complexity for the financial system. Haidi stay with us. Plenty more to talk about as always after the break. This is bloomberg. Haidi lets pick up on our discussion. We are looking ahead to next year. Committing to Financial Stability and committing to quality over quantity growth. Also looking at this theme of income equality. To does that come together inform your picture of the chinese economy and where we are going in the next year . So far, we are doing ok. Bp k growth has somehow beat the consensus. Economic growth is slowing down. We are seeing most obviously the property sector, which has been the driver of chinese growth. In a way, this decelerate in trend is going to continue for the next couple of months. After that, what we are trying to do now is take away the systems ability to reduce the systematic risk. There will be a slower credit growth. What is your view when it market inhe equity comparison to where we have come . What does next year have in store . I would say that next year, if it does not collapse, it seems to be the new mentor of the government. Inflation come back. We should continue to see nominal growth. Stocks should continue to perform going forward. Rishaad tencent doubling. You are joining an exclusive club. That is right, one of the largest companies. Rishaad can it go on like this . Do you see any limits . Isthe Technology Innovation a great system. Tencent built a great platform. On top of this platform, he basically wrote everything into it. At one point at what point does the government think it is too big . If it is too big, they would try to build a Congress Party division into the company, which is happening. Because it is so big. It is making it easier to be controlled. Now extending its reach into so many sectors of peoples lives area if one could company is controlling some new things, it makes it easier to control by someone at the top. Rishaad does that apply to alibaba . To a certain extent. They are very innovative. Some of the innovations they are doing now is unseen and other parts of the world. I would say because of that, because so much power is interested in these two companies, i would say they become more or less a target of control by someone at the top. Rishaad you wont say who. Last word. Malachi is a great company. Autai is a great company. They are potential demands. People would start to consume. Rishaad take you for joining us. Coming up, President Trump calling north korea a state sponsor of terrorism. We assess what that move really means. That is on the way, next. It is 10 29 in hong kong. Chancellor merkel said she would rather face a new election then run the government. Democrats say differences with the greens could not be result. Id she would prefer to go back to the electorate than attempt to govern without a majority or clear mandate. Tencents extraordinary rise has allowed entry to a very extraordinary club. Tencent has become only the Fifth Company with an excess of half of 1 trillion. Tencent has beaten alibaba to the milestone and is expected to continue for the foreseeable future. Is refencing their assets as the corruption crackdown widens. People who are not currently implicated have been asking banks and those in power to protect their wealth. Bitcoins willis and volatile rally shows no signs of slowing. The currency rose more than 6 to a new high of 8,220. Bys slump was followed rallies. Bitcoin has risen more than 700 in 2017. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. Im stephen engle. This is bloomberg. We see asian stocks continued to pick up. Yen. E weakness in the were not getting weakness when it comes to tax reform. We are getting a bit of relief. Reasons,one of the congress is off on holiday because it is thanksgiving this week. There is no discussion on tax reform. Europes political shenanigans continue. We have chancellor Angela Merkel saying she would not form a minority government, which could set the stage for another minority government. There we have it. Off. , thehis column of green on terminal. Chinese equities are firmly looking positive after a soft start. The hang seng is rising for a fourth day as the hang seng rallies for a session. These chairs are also powering up. The pboc new assetpbocs management rules are hurting. Of 16 and the yuans appreciation. In hongon the rise rising. Fosun is and a last look at chinese bonds. The 10 year yield has picked up once again. Trumpd president declared north korea a state sponsor of terror, paving the way for more sanctions on kim jong uns regime. Donald trump the north korea regime must be lawful. It must end its unlawful development of Nuclear Missiles and cease all support for international terrorism, which it is not doing. Rishaad this is all part of what the president has called a maximum Pressure Campaign against pyongyang. Rex tillerson has been calling the move more symbolic than anything else. But what does this effectively mean for the north . As secretary tillerson said, it effectively closes loopholes. But it is largely symbolic. It is an attempt to put more pressure on this peaceful Pressure Campaign that the u. S. Is taking part in to get other countries to step up the pressure on north korea. The sanctions themselves are not that much tougher. There is not a whole lot else, but it is symbolic. This had been removed in 2008, so reinstating it is the u. S. Sy aying, we are trying to do everything we can under our law to pressure with korea. Rishaad what does this mean for the united dates and their interactions with other countries, though . Reporter this is part of this campaign to get other countries to do what they can in terms of not only sanctions but other countries. The u. S. Has been trying for some time to get china to stop exporting oil to north korea. China showed no signs of going along with that. But the u. S. Again, is ramping up. It is effectively a war of words. With the secretary of state and the president coming out again and making comments against north korea. We have been in this situation before, but that designation was removed in 2008. What were those circumstances . Jodi in 2008, the b ush administration removed that asset request at the pushing of north korea as they tried to really have some Nuclear Talks to try to get north korea to not be doing not be ramping up the program. Of course, that didnt work and the obama administrations campaign of strategic patience, as they called it, in terms of trying to work with north korea, didnt work and they ramped up the program significantly over that period. Now the u. S. Is going back to putting in place this designation. Other than a couple of personal barbs between the two leaders, its been quiet on the front for a couple weeks. Do we expect the reaction from Something Like this . Jodi well, the north Korean Leader kim, whenever there has been a new development with the u. N. Sanctions, with president hemps speech at the u. N. , has come back pretty hard in terms of the war of words, and he has done another test. That is certainly possible. We could see th at. We will certainly expecting him to have a verbal reaction to this as well. All right, we are waiting, bracing, perhaps, for that. Jodi schneider there in hong kong. Oil will trade beyond 62 a barrel, according to as a traitor. According to asset trader. This is bloomberg. Rishaad lets have a quick check of the latest visited headlines. The latest business flash headlines. Officials approved an alternative route that could be challenged by environmentalists and land owners. Moodys says it does not provide certainty for the projects completion. The construction of the pipeline has been on the drawing board since 2008. Buying 24,000 suvs from volvo. It will be delivered from 2019 through 2021 in the first major commercial auto purchase by a ridehailer. Its small compared to the 2 Million People who drive uber, but it does raise efforts to replace humans, which is the biggest cost to the service. Rishaad building the topselling camry to cut costs. The head of the kentucky plant said they can build the car in japan, ship it to georgetown and still make more money than it. Made cars. Has no intention of closing the toyota has no intention of closing the plant. Make sense ofnd this with a chief asset strategists. This is kind of the backdrop to Morgan Stanleys latest output. Do you see this scenario . Goldman says we have five hikes between now and the end of next year. For all sit on its hands bit. I am on board with goldmans. We have upward pressure on both ends of the u. S. Curve. The rba, those minutes were very dovish. Rprise,kind of a su actually. It really reinforces that the aussiu. S. Two year will be under pressure. You know what was interesting, one that was a head scratcher was technology. These are reasons why we do not see inflation elsewhere. That is exactly right. When you think of the world in a gdp way, it has not reasserted itself. Top. You put technology on it is really hard to see inflation kicking back really soon. But i think the increase in oil prices, is that remains, which i think it well in 2018, will remain. On the aussidollar . 2. 65 . Timeframe. A longtime friend that Retail Sector is under pressure and certainly, we are heading to the low. 70s. Is it under control enough for them to cut, or even hold . I think hold, distantly. We are still concerned about high debt levels in australia, still concerned a lot of people might have fudged their numbers. Its pretty clear to me there is no chance the rba will cut to reinvigorate that market. Rishaad is the Housing Market a ticking time bomb . Ang well, thats interesting question. It depends on who you ask. Is aow levels in australia good sign, the low level of unemployment. Unemployment has been a strong point in australia. And i think social factors in australia in the sense that we are not a country where people love to go bankrupt. We could easily fall even 15 without really threatening an economic dislocation. Andnemployment were to rise we had an economic downturn, that which is the outlook, but overall, its at worst, going to drop and be a big headwind on growth, but i dont think it is a time bomb. Will this slowly ease back, because it is something that does artificially support that market to its detriment . Greg 100 . Im like you, i got into the Housing Market back in the 1990s. These kids are trying to compete with their parents and parents friends. We really need to look at that. It costs the government a fortune, causes inequality and makes housing i unaffordable. It could possibly fix the issues we have with affordability, particularly in sydney and melbourne. Greg i wish i had gotten into the market in the 1990s. Lets have a look at oil. You have a call at 62 a barrel. That is where we will persist with trading, up until that level. Sand . A line in the it becomes more pervasive with shale. Does it become economical at that point . Greg very much so. Is key for me is opec tightening the market and the increase in demand is turning us into a tightening market, which will keep prices elevated. Also, what we are seeing from shale is an important behavioral change from investors and business owners. They are looking for an economic return. We are not seeing this rush back to production we saw a year or two ago. That means the economics of shale are working together with the production cuts of opec to tighten the market and keep the prices elevated. But i would not expect this to go through the 2015 highs. With the resignation of janet yellen, it leaves four Member States wide open. Is that potentially a policy misstep or policy change in trajectory . Greg truly interesting, isnt i . Isnt it . With all these seats not yet filled, where Jerome Powell takes the fed when he takes charge next year is interesting. Expectation is that he is a consensus man, that remains to be seen. You can see the stirrings of inflation. He may be more aggressive than janet yellen. Greg weve been asking this of everyone. Whats been going on with the yield curve . Greg i expect it will get a big shock next year. Its flatted at the moment because of all the money being anded in from the ecb they can japan. We will see the front end conti nue to rise. Coming up, were going to look at how a harsh winter means an even harsher energy crisis. This is bloomberg. China is looking to deepen its ties with Fiat Chrysler. The fpre president said they aro poised to enter the u. S. Market. Thee are aiming to enter u. S. Market in 2019 and this is a very crucial move. At the current stage, our internationalization process has just taken off. We have laid out all the groundwork and carried forward our car sales and Service Operations in 14 different overseas countries this year. Entering the u. S. Market will be a huge breakthrough for guan gzhou, because if we want to reach far in the grand path of globalization, establishing our brand in the u. S. And winning trust of American Consumers, it will have extraordinary symbolic significance to us. Reporter you obviously chose the name, a long time ago. Well before donald trump became president. Look, he is a controversial figure, to say the least. Is it a positive for your branding, or is it a drawback . We will definitely choose a name that American Consumers are totally comfortable with. If American Consumers see our models name as too similar to a certain president , we will pick a new name. Reporter fita chrysler Fiat Chrysler is your joint venture. How much of a role they play in your expansion into the u. S. Market . Feng we are very satisfied with our relationship with fca, and both of us are seeking to improve our cooperations to a new level. Now, the chairpeople are deepening the scope of our cooperation in the future where do you see yourselves in 2018 . Reporter two you want although the other factor is rather negative, the government is due to scrap the policy granting a tax cut for producing small engine vehicles. I think next years sales should be around the same level as this year. In other words, we can expect growth of 5 during 2018. Reporter would you welcome any moves by the Chinese Government to lower trade barriers to improve the u. S. China relationship . It could help you when you are looking into the u. S. Market. Is that something you would be happy to see that this stage . Feng the number and total value of american cars exported to china are far more than those of the chinese cars sold int h the u. S. Market. Therefore, i hope the governments of the two countries will introduce policies that favor more measures to encourage both nations to deepen collaboration in areas of technology, manufacturing, and sales. Im very optimistic about this and really looking forward to better policies. Was guangzhous ceo feng xingya speaking with tom mackenzie. Some are calling this a golden age of gas. Inre has been success presenting natural gas. A challenge could be the chinese winter. What is this dilemma when temperatures drop in the winter . As you mentioned, the Chinese Government has put a lot of pressure on industrial users to switch from fuels such as coal and petroleum to natural gas. Consumption is up 18 this year. Now, we are running into this test period, whether china has enough infrastructure, whether they can store enough natural their additional heating winter demand and his newfound industrial supply. China is trying to do it without the benefit of these massive Natural Gas Storage caverns that countries like the u. S. Have. What are companies trying to do to prepare for this . Dan one thing they have been hasg already is petrochina raised the price of natural gas for some users. They said they have done it to make sure they keep enough supply for residents. They are prioritizing the home heating use. They are also doing a lot of extra lng imports. The French Company is sending a tanker that is full of natural gas that can actually regasify the gas itself to beijing. Companies are trying to open up lng import terminals in time for the winter to get here. Rishaad what is the effect on the lng market, very quickly . Dan it has been really strong for the lng market. The prices were down in the five dollar range this summer. They are now well above nine dollars. Its doubled in the last six months. There is a much tighter supply and demand balance out there because these chinese importers are bringing in so much extra. Dan it is the price to pay at the end of the day, i guess. What happens to the rest of this gas market as we move i suppose we have a situation where china is moving up the value energy chain. Dan yeah, its as you said, the price you pay. Do you want to pay a little bit more for energy or do you want citizens to breathe clean air . China has made the cut decision that right now it is more important to pay a little bit more for the cleaner air in places like beijing. An murtaugh, joining us from singapore. David is here to tell us a bit more talk theres lots to about. Very good in europe. Of germanyofiele has changed with the prospect of fresh elections. We would actually be a problem . The other thing i would ask him, there has been a surge in equities in hong kong. As a look at the last six weeks or so, the daily quotas on these tunnels, or the southbound quotas from shanghai and shenzhen, typically on a good day we see 2 billion. We are now closer to 4 billion. A lot of the money has gone into the usual heavyweights. You have tencent. Rishaad nearly 5 of a gain with tencent. David also, we talk about this potential partnership in india on electric vehicles, perhaps. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. It is almost 11 00 in hong kong. Im angie lau. David im david ingles. Welcome to Bloomberg Markets asia. F green across the region as markets recover some of the recent losses. David tencent, one of todays big winners. Tehhe stock has doubled. Angie Angela Merkel rejects a minority government and says she is ready for a new election. America,d coming to guangzhou plans to offer its flagship brand, though there might be an issue with the name. Man, oh, man. That risk aversion, how long did that last . Just a few seconds. Twoa is up the most in years. Something is happening in china, though it is hard to understand what it is. Angie you can market investor sentiment, to the end of the year or two chinese regulators. All of it is pretty much in play now. Lets look across the board. A sea of green when it comes to chinese equities and also, the broader equity market as well. Gmm is your bloomberg function on your terminal. Gmm and right now we are seeking china in play, and hong