Transcripts For BLOOMBERG Bloomberg Markets Asia 20171129

Getting a carryon of this sanguine sentiment coming through from asia overnight, we had some exuberance yesterday after hitting fresh record highs. Our hopes that we could get up three chris is tax reform surprise prechristmas tax but are concerned about a partial Government Shutdown if a deal is not reached by next week. Over all we are seeing a pickup in the markets. One thing we are watching his commodities. We of course have a situation where it has been a extraordinary bull run when it comes to commodities so far this year and a lot of it has in down demand in china continuing to pick up. We are going to be looking into the question of whether that will be coming to an end, ryan, given that we are seeing the Housing Demand pull off in china cool off and china. In north korea, sanguine reaction when it comes to the equities markets in asia. You can see on the chart, we ave had the increasingly repetitive indications that the missiles have gotten more advanced incapability or nuclear capability, i should say but the markets have really chosen to shrug off this saberrattling and looking towards global earnings and growth. We are going through a little bit of a deep dive later on later on, to see how the markets react to any volatility in a geopolitics. Let us take a look at markets as they are, 30 minutes away from the opening in china and hong kong. In asia, the markets, sophie, how are things looking . Out, as you pointed things are looking sanguine and dude, perhaps dismissive after this that are not complacent the, given that for that past two months weve had spreads from hardly anything from north korea. This is the world map function, you can either we are being a primarily positive start for stocks across the region. As take a look at taiwan, singapore and malaysia. Stocks are edging higher for those markets, helping to used the regional index by. 25 . If we look at stocks in japan, they are shrugging off can learn from the north concerns from the north. Automakers out the most, the yen is also softening after under the index lowering smbc lowering their outlook. About a also a report danger to data in the new iphone at, but it is not dampening the japanese shares at all. Tourism stocks, there are greening gaining ground after a ban on tourist that has been relaxed. We are also keeping a close eye on bitcoin. You can track the move on the chart, it is flirting with a 10,000 mark, the euphoria is hitting fever pitch, it has already hit that mark on several xchanges, rocketing nearly 950 this year. Jack vogel saying a void bitcoin like the plague, avoid bitcoin like the plague. It has been traditionally the start of valley but bitcoin is taking on a lot of burden. If you look at this chart, g there is little that has been able to break gold out trumprange, not any treats or anything else. It . I incredible, isnt let us get you caught up with the first word news with Haslinda Amin in singapore. Haidi, the fed chair nominee Jerome Powell says raising rates next month is coming together. A senate panel assessing his nomination that while unemployment is low, there was no sense of an overheating economy. His comments ally him with a wing of the fomc which believes this is ok without causing worriesp the latest Global Forecast is reported to be going better than it has for the last seven years of more people finding job. However, the organization giving the forecast has warned about growth stagnating. It is calling on governments to tackle debt and do more to ensure higher living tender. Indebtedness of households and corporations has reached record levels in many countries. Particularly worrying are the high levels of continued growth of effort debt levels in china. Given the importance t of china to the World Economy. That saudi arabia and Energy Minister says he is looking forward to a robust discussion as they meet in vienna to this has prolonged output cut. Agreed, andn china they are watching, there is no word on how long and went to end them. Technical issues need to be hammered out before an exit chatterjee is agreed upon. I still have not arrived in vienna, it is too early to talk about this agreement that studies various in terms of the timeframe needed to reach better levels of inventory. The question of what is the normal level of inventory is an issue that needs to be studied and it does best with other parties. Several users have this ever did a significant security flaw in the latest mac os which allows anyone to login without a password. The issue was found in a a few monthsased ago, and it is a rare and potentially embarrassing failure for up which is in some ways regarded as hack proof. News, 24 hours a day, powered by more than 2700 journalists and analysts in whether in 120 countries. I am Haslinda Amin, this is bloomberg. Haidi thank you for that, tensions are once again on the rise in asia and governments are holding an meeting after north successful at missile. South korea has responded with a provisional missile exercise and japan has been protesting in the strongest terms. President trump saying of course simply that the u. S. Will handle it. , so was launched a little while ago from north korea. We will take care of it. In the general mattis room with us, weve had a long discussion on it. It is a situation that we will handle. Haidi alright, our reporter at large. Months of relative calm and a softer tunes from washington, what is the significance of this coming now . Guest i think the real significance of this particular missile is the fact that can said that it would more than 4000 kilometers into the sky. Which means it can easily reach the east coast of the United States, we are talking about new york and washington. The discussion about whether this muscle might have the capability of reaching a heavy Nuclear Warhead on its tip or whether it has the ability to reenter the atmosphere after leaving the atmosphere, there is a discussion there. The United States is having to come into a stage where it is really going to have to accept north korea as a Nuclear Power. North korea, we know, has done multiple nuclear test and now it is showing that it has increased technological capability with its missiles. Every analyst we speak to, almost all of them a that we have to accept it and work around it because he is not going to give up. President trump, he had a brief message saying that we will handle the situation, we will take care of it pure cap. What are his options now really . Guest he did look president ial when speaking today, the press conference took place on the missile was still in the air, as i understand. He said you know, we will deal with this, he did not come out and they that all of the options are on the Table Including the military option. He did not refer to the military option, he just referred to general mattis. The interesting thing that i also think can much of it was secretary of state reps tillerson saying that democracy is still on the table. I think the united days is taking a much more recent attitude and donald trump has really dialed back his our and fury speech which got the markets upset a few months ago. This war of words that was taking place between President Trump and him john kuhn, and people were kim jongun. 10 people are worried about a military confrontation which would have an impact on the economys in market and that is what the markets would be sanguine. Haidi we talk about the fact that the lack of volatility in the market is the inability of investors to price in a wrestling off of the scenario. Is there a chance of nuclear detonating in the bill ackman in the pacific . Guest the foreign minister during the United Nations meeting in new york, this was all happening and all of these threats were happening during the. Of fire and fury that we heard from donald trump that has calmed down it was absolutely of herbal revocation coming from north korea. I think it is interesting that every time north korea fires a missile people describe it as a provocation. But you have to look i think, at every missile to north korea that has been fired. It could be part of a longterm plan to develop the technological knowhow to be able to deliver a Nuclear Warhead to the United States and in order to do that, you have to test your missile. And that is what they continue to do. You have to test your nuclears as well, and that is what i think we need going on. North korea will soon be able to declare its goal of holding the United States to run some, it will declare itself a Nuclear Power and after that, maybe well see the new missile test coming to an end. But it will still mean that will have to and thus we will have to deal with a Nuclear Power on the block. Haidi david, thank you very much for that, the asia government reporter at large. The are seeing the significance of the latest missile test. Still ahead, the supply curve meeting, a meeting in vienna on thursday. Also, hong kong has been one of the best stock rallies in the world of this year. Could be in jeopardy . We will talk about that next. This is bloomberg. Haidi this is Bloomberg Markets asia, i am haidi lun in sydney. We are a few minutes away from open in the hong kong market, shares have been among the worlds best performing because of the ongoing rally. But there is a worry that they could be settled. Is the reasoning behind their plan to invest in hong kong stocks . Guest bear in mind they have not actually announced the lessee officially, they were speculating on the region. I think the biggest concern out there is that it is because they are worried about a large amount of inflows going into hong kong. Hong kong stocks have done a lot better than shanghai shares is your. Even if they are not worried that, it is possible they are word for is to rush for instance that there has been too much fundraising, and maybe some Fund Managers are investing in hong kong and do not know the market that will. We know that beijing usually gets uncomfortable in speculation is too heated. Haidi in terms of what we are looking at with these flows, have they been meaningful in terms of the impact on hong kong equities . Been thee inflows have major force behind the rally this year. Lastetween april 2006 and month, they put 86 billion into hong kong, compared to 3 billion of international investors. You have to remember that for chinese investors, this Program Offers a unique proposition because it allows them to ersify out right of china outside of china, given the tighter capital controls. You can imagine what it would be more motivated than global funds to buy funds to buy stocks through that program. Haidi thank you, christina. Joining us from singapore now, is the executive director and investment strategist at lgt. This is a question which i think china comes up with every time, every corner, you could have region policy messing with the rally . Guest yes, that is correct. Concerned overly about it, i think what we are seeing in china is more of the policy finetuning which has been the course that asian has been taking the last few years. Hasink the focus actually been on finetuning the credit growth in china. Has been a large increase in , something which the authorities are more concerned about and something that they have to watch. Haidi is that something that would affect individual companies as well . We have seen some of them come out saying that essentially they will not get the approval of beijing first. Is this something that investors should be concerned about . Guest i think you are absolutely right. On an individual company level, they would be more conscious. Cameras one company like you just mentioned which falls and scope, that i think the market over all is having a great Earnings Growth and a very strong reporting season, not just in china but around the world. Sentimentket globally, is very high, sustaining the rally heading into 2018. Haidi i just wanted to throw out this quick chart which goes to the point christina was making, have your flows going into hong kong equities. This is the difference essentially when it comes to that to try and. Resist that trend will see , this tech driven rally in hong kong, do you think that will carry through to next year . Guest is certainly yes, some of the innovation of the text Tech Companies are very good. The tech rally in china should continue to run. Whether it iss of going to continue being dominated by the big names like tencent, it feels like tencent has become the samsung of the kospi index, or the equivalent of the hsi. Do you think that is a theme that will lay into next year or like we have seen was among these tech eight ipos, it might create more exuberance and the sector . Guest i think it is a general trend were seeing, locally across equity markets, not just in china and tech, but also in north america, europe, Text Companies doing very well there. Clear in this sort of maturing face of the bull market and it is normal to see investors changing chasing the Growth Stocks into the bull market, so certainly. Haidi stay with us, stephan, there is plenty more to discuss. Below look at how markets are reacting to the north korea news as well as that coin flirting with 10,000. This is bloomberg. Haidi this is number of markets asia, i am haidi lun. The are talking with the executive director and executive of investment outages at lgc bank. Missile tests in north korea have ramped up and it feels like the market has a loss of sensitivity to it. Everyone is just kind of carrying on an focusing on the good headlines as a posed as opposed to the geopolitical headlines. Is it becoming hard for investors to be able to price in what the next level of threat is going to be . Guest i think that is a good point, you are absolutely right, the markets have been taking these missile test in general in stride. He thought that this morning with the japanese market opening higher actually on the news despite the fact the Missile Launch and near japan. That gives you really good indication of how little attention markets are paying to this kind of stuff. Partly it is this is the ties asian, it also reflect when we look at geopolitical risk events since world war ii, and categorize them, generallys thinking, only those that Impact Global oil supplies tend to have a meaningful impact on markets and the broader economy. So while the missile test is significant, and we have to Pay Attention to its risk, markets are quick to say, they have nothing to do with global oil supplies, so let us carry on. Haidi you mentioned global oil supplies. The have been looking a lot at opecs, maybe getting an extension of the curves. But the broader commodities year. X has been hard this do you see that kind of taking a bit of a breather as we get these suggestions of growth in china slowing . Guest i would not go down that has. I think of growth in china will remain relatively well, around that 6. 2345 , and that is actually more than enough for commodity markets. We have to bear in mind the world we are in right now, it is a synchronized increasing growth across the whole landscape. Trend,owing above europes growing above trend, japan doing ok. There is plenty of demand to go around and keep Commodity Prices were they are. Haidi yes, and i just wanted to interrupt, according has now finally talked 10,000 for the third time in bloomberg. It has been flirting with those levels and other exchanges. 10,000 i know you do not really have much of a view on this, but tell us what you think. How do you value this . [laughter] guest that is an exciting milestone. In all seriousness, i think there is a very solid consensus that the Block Chain Technology underpinning bitcoin makes a huge amount of sense and is revolutionizing the whole Financial Sector and will do is no in the next coming years at an is celebrating pace. Whether bitcoin should be 8000, 10,000, this is really hard to say from a traditional analytical viewpoint. I cannot speculate but it is certainly an exciting milestone. Haidi 10,000 for bitcoin come up into more to come. Nine 20 a. M. In hong kong 9 20 a. M. In hong not right now, and bitcoin quite 10,000 i should say, but very, very close, and this is for the first template to hit 10,000 in number pricing. Bitcoin has been flirting with that milestone. Whatever your views about bitcoin, hitting 10,000, that is really quite amazing. Hong kong markets opening, and enjoying a very calm market and it comes to. To theot of reaction missile test and north korea. Quite significant in terms of high how high a managed to go, we had reaction from the white house saying that they would manage the situation. Equities are surging ahead. As go to sophie for the china open. Yes, equities are plodding along. No way to halt to this potential 11th month gains for the regional benchmark. You can see, on the map that chinese stocks are joining the upturn along with shares in hong kong. Take a closer look at chinese equity markets and have shanghai shares up. We see what is happening in hong kong, the equity market there, we have most of this losses that we saw on tuesday getting recovered. If we look at the numbers of the seng, which just had an asset sale to another consortium, the shares are up. Another insurer is seeking investment overseas and also seeing their stocks go up. We have this International Group leading the drop along with china mobile and china gas. The are watching chinese property stocks which have been under pressure over the past week. The whole china fell over 50 at one point this week, but credit overweight oned expectations, and they believe we will see more skilled growth as more educated buyers are flocking to the market. Checking in now with some other properties rising after a got a not great from ubs an upgrade from ubs. This company up also after the attack from iceberg, after receiving 95 million to cut that. Haidi filthy, thank you for that. Sophie, thank you for that. Let us get you caught up with some of the headlines, Haslinda Amin is single or. Hello, haslinda. Haidi, japans Retail Stocks fell short of expectations in a sober, retail sales, raising concerns about a rebound. Sales fell to 10th of a percentage from one year earlier. Department stores reported a fall of. 7 . The Economy Ministry says typhoons and heavy rain were partly to blame. Reports from london say british and European Union negotiations have reached an outlying agreement on the divorce bill although the final some is still to be field. The Daily Telegraph reported the agreement. 5560 5 billion is what is suspected to be the price. Talks are progressing. Have bank of england has repeated its warning about butit, saying that anything a smooth transition could mean financial distraction and economic pain. After releasing the latest press test for latest stress test for the uks lenders, that was a warning that was released. Barclays is one of the banks considered to be in the weakest position. After our own risk analysis, our Organization Also judges the Banking System can continue to support the real economy even in the unlikely event of a disorderly brexit. New zealand central ease mortgage restrictions because it acts government policy to dampen the housing market. The stability report says banks will be a lot to make more low deposit home loans to owner occupiers from generally first well dont agreement form investors will decline. Fix changes are unlikely to the market. Toldeal estate tycoon has bloomberg that he is not running for president in 2019 and will back the current president for a second term. The founder said he had been is hired by his Business Partner, donald trump to take a shot at office. I have to be clear here come out looking at the situation today, i think also were the current president to run again for 2018. Why is that . Because he is shown his ability to maintain his position basically he, so is great for everybody. When you your self run as Vice President . I do not now. Is it possible . I do not know. Haslinda haidi thank you for that. Global economics reporter Kathleen Hays is here with a look at the fed chair Senate Confirmation hearing. Lots to focus on. Did we learn anything new about Jerome Powell . Guest i think what we got to see is that powell will is going to were will see what he will look like a sound like when he becomes the fed chair. The fedellen is still chair, and he has been on the board of governors, but today we got a taste of a man who has worked in washington, testified before congress, talked before and given many speeches and he had a lot of confidence. When it comes to Monetary Policy, he said when asked about a december rate hike, that yes, the cake is coming together to make such a move. Confirming what we thought, he talked about low unemployment, the economy growing, but when he was asked about in inflation, he seemed a little bit dovish on the labor market. Us listen to what he said earlier in his Senate Confirmation hearing. We do not see wages signaling a tightening in the labor market. There was no sense of an overheating economy or a particularly tight labor market. Went on to say in fact, he gave examples of what is lacking in the labor market, one of them eating wages which are pretty much stagnant. The also give us a look at Labor Force Participation rate. Btve pull up this chart, 2623, you will see a simple line, the Participation Rate of the prime age male, a very long haul going back to the 50s. Ofyou look at the right side your screen, it has come down since the crisis. Did recovered a little bit, but he says that it showed that the , there isworking men room for that to grow and that is the implication. When it comes to bank regulations, he did not say anything a lot of other officials have not said. It was asked at the beginning if ifld be influenced by he had been influenced by the president. Secretary,reasury steve mnuchin, who was one of the people pushing for. Him to become the fed chair that, absolutely not. Doddfrank needs review, even the volcker rule. But he supports for reforms. Capitalsts hire hundred, and that hire people, some people such as republicans who wants to completely overhaul doddfrank and the president who is talking about getting rid of it, i think he is showing us that he will be independent just as the fed chair is supposed to be. Haidi kathleen, janet yellen is still here. So it is a bit of an anticlimatic . Guest a couple of things, yes, to an extent. Misses her kind of swansong. Is the that her turn it shortterm is up next year, she will be stepping down from the fed or. The fed board. One thing that is important is that if we assume that she led these current Current Group of through three rate hikes, we know that there was a consensus for another three rate hikes in 2018, what is she looking at she talked about the dangers of inflation last week . But she believes it will rise. Janet yellen and other fed officials who are in the camp ours weighing that although the curve is not broken, labor market is getting lower, we will he it heating up. That trend in Health Care Costs has also been up, there is one line for medical Health Insurance costs and you can see the have trended lower. But that is not the result of a weaker economy, it is the result holding down thing core inflation, a change in industry, obamacare, that is a lot of things. So i think what she is doing is that when you step back from that, you will see other dynamic suggesting that there are these budding forces. Wages will rise, more inflation the side janet yellen, we will also hear from l dudley and John Williams on the economy, williams saying that we need a global intervention on inflation and how Central Banks account for it. At the National Economy ahead of the meeting on the 12th and 13th of december. For me anyway, haidi, i think i will be enjoying everything he says. Jay powell was able to show today is the man who will be replacing her, what he will be planning to do with that. Haidi thank you, Kathleen Hays. The bank of japan is the only bank looking increasingly as the lonely dove among its increasingly hawkish years. It may be time for investors to pay more attention to what the governor of the bank of japan has this day. Our guest joins us now. The governor of the bank of japan spoke in parliament trying to temper all the talk about the narrative in japan. What is the background story . Koroda gaveovernor a speech on the 13th in europe where she talked extensively ut japan no longer being no longer undergoing inflation and the detrimental effects of low interest policies. His speech is available on the bank of japans website and it gazing the theoretical groundwork for possibly normalizing japans Monetary Policy. That is why it has created a storm and the governor had to step back at the parliament yesterday, talking about a status quo Monetary Policy. Haidi Morgan Stanley and j. P. Morgan are forecasting the boj to start easing next year. Are nowhere near 2 inflation, so what is the argument behind that . Guest in japan, the inflation , and the current 0. 7 . Is of these Major Economies are having a deflationary problem, the u. S. Is still any 2 , and even china is below. Best to make that governments 3 target. It is having a hard time reaching the governments 3 target. They are concerned that they may never reach the goal which is where they think he is going to normalize the policy. Haidi but surely, governor koroda, is there a chance you could do a sharp turnaround . Guest i think right now he is just taking a look at the Federal Reserve to is there are sharp jumps in the u. S. 10 year Government Bond yields. Are cap throw,es he could stay in the status low. In the past, he has done those sharp uturns, so we need to keep in mind that he is someone who likes to play with the market. Haidi thank you very much, that from that was shelley from our bloomberg gaslight team. Return at alibaba, the to the u. S. Dollar bond market. Are seeing initial price guidance and it looks like the 40 your notes are about 180 basis points over the u. S. Treasury. The fivepoint 5year bond over the u. S. Dollar bonds, and the last sale in 2014 dans at 8 billion, the largest bond issued. Be somewhereing to in the realm of 7 billion and sources are looking for longerterm maturities when it comes to financing. This is an above the year issuing, more than 290 billion of u. S. Dollar notes so far. Has an as wellit or year for alibaba stock as well, up 110 year to date. Opec and russia, can they agree on when and how to do an oil curve when they meet indian on tuesday. This is bloomberg. Haidi this is Bloomberg Markets asia, i am haidi lun in any. Inis on the decline, sydney. Oil is on the decline, and let us take a look at jeff brown, the president of oil and blast consultancy. Great to have you with us. This is the key, they want prices to be supportive at this level. Are we likely to get an agreement . If we get an extension for six months, will it be enough to rebalance the market . 80 t we think it is about , nine months of this, an extension up to 2018. We have to remember that they have another big meeting in june, and this is actually an unusually big meeting because i havent opec seminar around it. They will leave themselves some low room around that to discuss we should give the market some marketecause the will have some wiggle room in it. To do not think we will see a big price reaction. If you remember in may, we had a big price drop. People were disappointed but we do not expect a big price reaction this time. 50s, iid to high noticed in your notes that there i noticed in your notes that you said that a return to hundred dollars a barrel is not on thing we should . Xpect too, too is really a cold too hot and too cold market. We had signs when were up in the 60s that u. S. Production is coming back. There was talk of opec slippage. If we crossed 70 a barrel, we could see opec falling apart and we get slippage. So we are really in the range as of around 55 a barrel, that is where they should try to keep it. They are a little bit high now, because are encouraging u. S. Reduction. This is a really sweet spot until about 2020, before we start to see a gap emerge in the market again for opec to fail. Haidi so in order to stay at that level, or a little bit above, is that in order to extend or do they need to defend deepen deepen . Guest they do not need to deepen. Strong long as they can maintain their discipline, they can keep your prices around this level. It will be a challenge of discipline, they have not are they have never done it for this long before. The market is bloated, we have illusions of barrels a day sitting on the sidelines waiting to come back into the market. But though far so good. Shale what about the u. S. Side. U. S. , dorators in the we see any indicators . Guest there is a lot of talk about discipline but when you start to dig into some of the details and look at the planned is afor next year, there warning sign. To start to see a lot of hedging and what follows is production. So we had to revise our key west ambers, our model shows us numbers. He russians are concerned about this mind they are right to be concerned riyadh they are right to be concerned. Numbers. Haidi plenty more to come, please stay with us. This is bloomberg. Welcome back, this is Bloomberg Markets asia. I am haidi lun in sydney. As we go into this key meeting andienna, between russia opecs, when it comes to volatility, this market is looking pretty bearish. Is this a suggestion that markets are insuring against disappointment when it comes to the output meeting in vienna, or is it because the market is looking bad anyway . It . Would you interpret guest it is really a combination of the two. Everyone positions it . Guest it is really a combination of themselves prior to the meetings, and what we are hearing is a consensus between a lot of the investment cap communities that that will be another round of disappointment, maybe a price drop and i think we are seeing that. They have started to increase pe this is consensus that we will see price dropping. Sometimes you can get surprised by that, but we think 210 that it will stay relatively flat because of the positioning you just showed. Haidi i was going to say, you could potentially one interpretation of this is that you could be surprised and on the upside. Certainly. Haidi what do you make of the demand side of the chart . There is a lot of concern across the entire commodities complex about whether the china growth story or the housing story or the output theresa has gotten as good as it will get . Guest so far so good with demand. If you look at across the barrel, it has been very good. China i know there are a lot of concerns there, oil demand has slowed down but it is still quite strong and india has picked up to take its place. We are still looking at about 500,000 barrels a day of demand growth and that is good and we expected to keep going for the next several years. Petrochemicals if you remember, have been growing very quickly. Haidi i appreciate your time of us, just brown, president fge, the oil and gas consultancy. More coming up. This is bloomberg. 1 00 p. M. Inst sydney. I am haidi lun. This is Bloomberg Markets asia. Haidi hitting new highs, bitcoin defies skeptics and passes 10,000. Ends two months of kong. Calm russia has yet to be convinced on new output curbs. We head into that he and the meeting thursday with opec and nonopec members. Markets pricing in expectations. As we saw earlier, there is bearishness building. There is some concerns that whatever happens with oil mice read to the rest of the commodities complex. This is chart 9395. What a party when it comes to the commodities complex. , deutschecopper boerse as well. Iron ore as well. Yeare up 25 , the best since 2010. Standard chartered saying that will struggle in 2018 and sees andese growth cut in half supplies taking markets to a surplus situation. Also some confusion that added copperdecline in prices. When it comes to aluminum, the Trump Administration invoking a tariff act against china, raising trade tensions. Alcoa rising. The next 12 months, prices seen falling to 50 a pound from 68 a time at the moment. That is the picture when it comes to commodities. It over to sophie and take a look at the open in indonesia. Sanguine is a word we keep returning to when it comes to Market Reaction to north korea. Subdued,e have theissive, complacent given risks that could derail the asian stock rally. , itng a look at the session has turned nexmixed. We are seeing flexion fluctuations in hong kong and china. Forre seeing little mood credit default swaps. The yen slips for a second day. Retailers starting off disappointing data, but tech shares in tokyo being dragged lower by chipmakers. I. T. Stocks of the worst performers across the region, led lower by samsung, tencent, but the miners are the days best performers despite the retreat in base metals, gold, and oriole. Energy producers under pressure as Oil Prices Continue to retreat for a third day as u. S. Inventories are seeing pricing before opecs meeting on thursday. It is a mixed session with little in the way of gdp data or other Economic Data points. We are seeing a pickup in twoyear treasury yields and a slight pickup and jgb yields as well. Haidi thank you so much for that. Lets get you caught up to date with first word news in sydney. Jerome powell says the case for raising rates next month is coming together. Paneld a senate there is no sense of an overheating economy. With thents aligned dovish wing of the fomc that believes the labor market can become stronger without creating inflation worries. Forecast isatest the World Economy is growing faster than at any time in the last seven years with more people finding jobs. However, it warns high growth wont last long and wages remain stagnant. The organization see sustained expansion in the u. S. And euro area and is calling on governments to tackle debt and ensure higher Living Standards. Indebtedness of households and corporations has reached record levels in many countries. Particularly worrying are the high levels of continued growth of corporate debt in china, given the importance of china to the World Economy. The Saudi Arabian Energy Minister is looking forward to a robust discussion when opec an independent producers meet info in vienna. Cus on when two in them are how long the curbs should be in place. The details have to be hammered out before an exit can be put in place. To talk aboutarly disagreement, but studies very to reach a normal level of inventory. A technical issue that needs to be studied and discussed with other parties. Apple users have discovered a security flaw in systemest mac operating that allows anyone to login without a password. He issues are with sierra os it is a potentially embarrassing failure for apple whose software is regarded as less prone to hacking and malware than windows. Japans retail sales fell short of expectations in october, raising questions about an expected rebounding conception. Consumption. Sales were unchanged from september. Department stores and supermarkets reported a fall of. 7 . The economic ministries as typhoons and heavy rain were partly to blame. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. I am paul allen. Thank you for that. Equity markets in asia taking north koreas latest Missile Launch in stride, essentially brushed off in the u. S. With stocks seeing record highs partly driven by tax overhaul moves looking like they are getting one step closer to completion before christmas. The big story is cryptocurrencies, bitcoin hitting 10,000 in the Asian Session as warnings multiply this is a bubble. Lets get it over to our markets editor garfield reynolds. Great to have you. That me throw up this bitcoin chart. We havethe first time seen 10,000 when it comes to bloomberg pricing. We have been flirting with that line on some other exchanges. I dont know what to say about this. It is such a divisive asset class. Well, the only thing to say about it is it is hard to pick a top or bottom because it is so unclear as to what the fundamentals you would look at, what is bitcoin going to develop into . It is part of a Transformational Technology wave when you look at what is behind it, so is it going to be the Cryptocurrency Google or the cryptocurrency netscape . That is the question going forward, or will it be like nokia. . You take somebody from 15 years ago and tell them that nokia will be a niche player in mobile phones, they will tell you you are crazy. The sinking could happen to bitcoin, but that is a long way in the future. In the medium term, there will be interest in whether or not 10,000 ins of being a round that provokes a lot of people who have been making enormous profits on bitcoin this year or sitting on them to take some of those profits off the table. There will be the capacity for people to sit back and say we are going to wait and see if this can go further. I and tending to think it can and will. It is at that Chain Reaction stage where it will just cycle higher and higher and higher until something fundamental or silly causes the drop off. Play that has been driving it comes home to rest in you find it is a bunch of people who bought at 11,000 or 12,000 and 19,500, they turn out to be the greater fools who bought at 1000 or whatever the case may be. Haidi evaluation is the conundrum here. Some saying the Block Chain Technology is compelling, but you could not say should bitcoin be trading at 200 or now over 10,000. Dimon camp and other camps weather is a lot of discussion and disagreement from various people as to how to look at this. Again, it is reminiscent of the dotcom bubble where you had companies valued at enormous amounts that have no sales, and whichou have a currency defies all the usual valuation metrics. , toe is no swaps, no rates give you an actual guide as to what it should be trading at as a currency. Again, you are kind of naked. Longis the ultimate naked as opposed to a naked short at the moment. Haidi garfield, you are looking at the rest of the markets, the conventional markets. We had another missile test from north korea, but is this a new normal where were sing markets not really caring . I suppose we have reached equilibrium when it comes to north korea. In a lot of ways, the donald trump side of things has become calmer about what is going on. There has not been much in the way of little rocket man tweets and things like that. It is interesting that although markets declined, they went up this morning after south korea announced a joint exercises in response, so perhaps the market is saying, well, even if they fire all of these missiles and have the capacity to send 12 missiles against of the u. S. , which can respond with how many thousands of warheads . They will not do it. They are not really looking to actually attacked the United States. What they are looking at is a deterrent against the u. S. Attacking them. When you look at it on that , you can understand why markets are saying until both sides ramp up the rhetoric again to what went on in september, you can probably let this one slide. In fact, it is more interesting to me that the markets look healthy at the open in response to what went on in the u. S. With tax reform and fresh record highs overnight for some u. S. Stock gauges, but now they are starting to come off the cause there are some idiosyncratic asian market concerns that are playing out. What is going on with chinas deleveraging, has the nikkei 225 ,one a little too far australian bond yields are staying down, which is another , andthere is some concern also just a general desire to take money off the table. It is getting close to christmas. It has been a great year. The riskreward for staying in markets is not that attractive right now. Haidi garfield, it has been a great year, big year. Garfield reynolds coming to us from singapore. Uber is said to have lost 1. 4 when it comes to gross bookings in the Third Quarter. It was said to report thirdquarter to shareholders. Billion lost on 9. 7 billion in the Third Quarter on gross bookings. Waymo the delay of the high for uber hearing on account of this explosive testimony from a whistleblower talking about the companys tactics on the that theye data leak, are reported to have tried to. Uppress the controversy we continue to see fallout when it comes to financials as well, getting more details on that story as they become available. , a push towards cleaner energy in china. We speak to the president of one of the biggest companies. Next, how north koreas latest Missile Launches a fresco test for President Trump. This is bloomberg. Is bloomberg. Haidi this is Bloomberg Markets asia. I am haidi lun in sydney. Just to recap some lines from uber, losing 1. 4 billion dollars on 9. 7 billion dollars in thirdquarter gross bookings. Were also getting some information when it comes to softbank saying early uber backers intend to sell shares. They will participate in the share sale and softbank will formally bid to buy uber stock from shareholders. As uber continues to try to hammer out these investment terms with softbank. More details as they become available. Session inok at the asia, tensions are rising when it comes to geopolitics and governments are holding emerged in meetings after north korea fired its first Ballistic Missile since President Trump named it statesponsored terrorism. Japan for its part protested in the strongest terms, President Trump saying simply the u. S. Will handle it. A missile was launched a little while ago from north korea. We will only tell you that we will take care of it. We have general mattis in the room with us and we have a long discussion on it. It is a situation that we will handle. Get over to seoul, korea and speak with our guest. Professor, great to have you with us. Talk about the implications of this test. , analystsicance saying it could put the u. S. East coast in range. Is this an elevation in terms of pyongyangs capabilities . Looks like. First of all, we dont have enough data and i am not a technical specialist, but it looks like they have made another step towards their longterm goal. Any american city, the entire territory of the continental United States, to launch a nuclear missile. Probably they dont have the capability, but they are advancing very fast. What is the message for washington, seoul, korea, tokyo, and beijing. The realityo face they are dealing with a state that will never give up on their Nuclear Ambitions . Fact, manytter of have been talking for 1015 years that no matter what north korea will Never Surrender nuclear weapons. They are determined to reach their second goal, develop a system capable of hitting the entire United States. I dont see what can stop them which wouldar, destroy the entire beautiful city you see behind my back. What was interesting is President Trump didnt say military options are still on the table. Itd seem like a softer response . It is quite different from that fire and fury rhetoric a few months ago. It was useful. For decades such frederick has been widely employed by north korea, but it was quite duet,sting to see a nice pyongyang and washington exchanging bad taste jokes. Having said that, north korea. As been calm for 2. 5 months it might have been assigned they will slow down for a while, but this gesture was not reciprocated by President Trump, who recently included north korea again into the list of state sponsoring terrorism. Careful behavior, kind of selfcontrol will not pay off so they did what they just did. ,nce again, once again seriously they will not stop until they develop, test and deploy the icbm and maybe also submarines capable of hitting the United States. This is what they want for the time being. Haidi stay with us, if you will. Plenty more to talk about. Talking about the implications of the latest missile test from north korea and what we can expect going forward. Plenty more ahead. This is bloomberg. Lets pick up on our conversation with our guest. What is the best Case Scenario you can see given that we have about pyongyangs ambitions, is dialogue possible at this stage . Not yet. Americans are not much interested. They dont want to take now before they will successfully deploy the icbm. It is done, there will be an opportunity for compromise your in order to sell the idea better to the public to the it is the First Step Towards denuclear station, but essentially it will be an. Greement about freeze in exchange of significant political and economic concessions by the United States. Demand south will koreans and americans stop their. Oint exercises probably they will demand official recognition of them as a sovereign state and many other things. Achieved, aement is few years, maybe a decade or more, north korean problem will be frozen. If not, North Koreans will continue to build up nuclear find ways to break through the american antimissile defenses and they will use their Missile Force to squeeze americans out of south korea and probably start dreaming about doing something they tried but did not succeed in the summer of 1950, so it is not a good scenario. , i would like to see a freeze agreement, but i dont expect that to happen anytime soon. Negotiations will start, but not right now. Haidi always of pleasure always a pleasure. , one of the biggest power producers, global vp is with us to talk about solars future as more countries including china are pushing towards a cleaner energy future. This is bloomberg. Rg. 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 1 29 in sydney. I am paul allen with first word headlines. British and eu negotiators have reached an outline agreement on the divorce bill, although the final some is yet to be sealed. The telegraph newspaper reported the agreement will be between 55 billion and 65 billion. Sources in brussels say agreement has not been reached, but talks are progressing. The bank of england has said anything but a smooth transition could mean Financial Disruptions and economic pain. Mark carney spoke after releasing the latest stress tests. The results show the banks are mostly wellplaced to cope with any new economic or Exchange Rate slumpe. Informed by the stress tests and our risk analysis, the Banking System can continue to support the real economy even in the unlikely event of a disorderly brexit. Central banklands will ease lending restrictions expectsr because it Government Policies to dampen the housing market. The stability report said banks will be able to make more loans to homeowners from january 1 and the down payment will decline. Changes are unlikely to repeat the market. Housing marketd policies announced by the government are also expected to have a dampening effect on the housing market. Ballys International Airport remains closed until thursday morning, leaving thousands of tourists stranded and unable to leave the island. Authorities remain concerned about the volcanic corruption at any time. The law that is pricing in the volcanos crater and 100,000 people in the area have been told to evacuate. Dimon knownshaped as the pink promise has sold for 32 million at christies in hong kong. It went to an unidentified phone bidder after a sale that lasted three minutes. Despite the price, it failed to live up to presale promises, expecting it to go for 42 million. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Haidi that is a discount of 10 at pink for th diamond. Asian markets complacent, ca lm, runofthemill session despite another missile test from north korea and reaction from President Trump saying he will handle the situation, but not at the level of fire and fury. Lets take a look at markets. Sophie, another day when it comes to trading. The focus is on the Global Growth story and Company Earnings and news as opposed to pyongyang. Sophie lee have been down this asian stocks sanguine after the latest missile test. The first riser in three days and broadly mixed across the region with barely a whiff of volatility. You are seeing little change on the kospi. We are seeing the drop in the , trading flated while losses are deepening for chinese large cap. Pressure,s are under brent losing. 5 percent, gold trading flat, and base Metals Trading under pressure under lingering demand concerns. Currencies mixed as the dollar holds gains and progressing for u. S. Tax talks, but the Dollar Strength should reforms go through has one bank saying the rally in asian forex may be on its last legs. We have seen regional currencies but 5 so far this year, with higher domestic Interest Rates priced income this rally could lose steam and see resistance around the september high. A last look at equity movers in the region. Noble shares in singapore shaking off earlier losses caused by the attack from short seller iceberg. In hong kong, china gas rising the most since september after being upgraded to hold at morningstar. It is holding a two day drop sparked by a softer growth forecast. Wanda hotels at the highest level since october. Haidi thank you so much for that. Capacity has jumped by half in developing countrys according to a study by Bloomberg New energy finance. The government seeks to move coalfrom polluting electricity. China has taken the lead in innovation and our next guest thinks that is likely to continue. They are the Worlds Largest Solar Panel Maker and joins us now from shanghai. Great to have you. Give us outlook and expectations when it comes to beijings push for a cleaner future, better quality growth, and what that means for solar and green energy demand. Solarhink the growth of sectors will continue in china and the latest announcement sectormatic rise of the given the recent liberalization of markets. China is expected to create 60 gigawatts of capacity and will account for one third come so players 100,000 gigawatts will be as soon as next year, but still accounts china increases the 2030ntage from 1 to 6 by , i think the pace should be slower so we are optimistic about the potential in the domestic market. I think next year yes . I just wanted to jump in and ask, we have been here before, right . I remember when we had those heavy subsidies from the government to boost to the solar companies, then we saw this problem of massive overcapacity and the subsequent come down. Is that something you see, or do see demand and supply side rebalancing a bit more stable and fundamentalsdriven this time . There is still opportunity for solar manufactures because in the future with the market open the solar will still be competitive because the electricity price will have to consist of two parts, one is the generation cost and the other is the transmission and distribution costs, so solar is the only renewable that can be distributed and generated, a real flat or declining value. , thexample, last year price cap working in abu dhabi and in china as well if the conditions are the same, so we trend,he decline is a but will not slow down the development of solar in china i think. Haidi we are just getting this one forecast saying that Solar Panel Prices could fall 40 by 2025. Is this the kind of supply and demand rebalancing you see over the next 510 years . Think supply and demand will be balanced, especially with the further decline of the Solar Panel Price , which will improve the returns , so in the longterm the supply and demand will be balanced. Of i guess sort government enforcement do you see when it comes to the Chinese Market in particular . Coming out from the 19th party congress, there is a drive towards greener energy. Do we know what policies that is likely to involve . Think therele, i are lots of policy in favor of refinancing,ing programs, etc. Also, the improved infrastructure like the ultrahighvoltage transmission as well as the tightening of regulations and legislation and enforcement of pollution. If this policy is implemented, i Government Central will be decisive to take real the coalo pull down power percentage in the energy mix. You were a representative during the Paris Climate Accord negotiations. Im curious to get your views about the u. S. Pulling back from the accord. Do you see china stepping up and taking a leadership role when it comes to Climate Change and transforming Traditional Industries of energy . , a lot of negative comments on the u. S. Pullback from the paris accord. We think it gives china an to lead in sustainability development. The u. S. Whether administrations decision. Investment inal renewable infrastructure will reach 6 trillion. The demand is tremendously huge. Any government that care so much about the job will not ignore this opportunity, so we believe that the u. S. Will change their mind. Jobs, for the sake of very interesting. Thank you so much for joining us. The global Vice President of one of the Worlds Largest Solar Panel Makers joining as they are from shanghai. You can catch up with that interview by using our interactive function tv. You can watch live toward do a deep dive into the securities are functions we talk about. You can be part of the conversation as well by sending us instant messages during the show. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. V. This is bloomberg. Haidi this is Bloomberg Markets asia. I am haidi lun in sydney. The Trump Administration launched investigations into aluminum imports that could lead to steep tariffs. It is the first time the white house has used this little used the case25 years, itself initiated rather than following a petition by a particular company. Is here. Der what is the Trump Administration trying to accomplish . What signal is a trying to send by taking this fairly esoteric approach . Signal andthe latest a strong signal that the Trump Administration wants to go after an issue they have been ,omplaining about for a while including when President Trump was on the campaign trail, china flooding the market or attempting to flood the market with cheap imports of metals, including aluminum, so this is really the first time the administration has stepped up and said, we are going to try to do something about this ourselves rather than waiting for a company to go ahead and issue a petition. They are doing it under a strategy where they say this could affect national security, which is an interesting tactic. , it is interesting, but what is the bigger issue Washington Pass with china and what we are seeing in terms of a potential shift in the gears . Is going to clay out in terms of the larger issue as you terms of theout in larger issue as you note in terms of how the administration deals with trade. There has been a lot of talk and a war of words, then they seem to to back down. They did not deal with currency manipulation, which is something the administration seemed like it might do, brand china a currency manipulator, and now it does seem to be stepping up in terms of the imports because this is becoming a competitive issue. Commercess, the secretary, said the administration is happy to initiate these cases themselves, so this could be the beginning of that. As you noted at the top, this has not been used in 25 years, so it is a pretty interesting approach. The question is how tough will they get and will this lead to actual tariffs and ignite a trade were. Haidi what happens from here . So now it will wind its way through. This will become a case. It will go forward through the Commerce Department mechanisms and it could lead to tariffs. It will be interesting to see how this affects the companies and whether companies also initiate petitions as well. You so much for that. Jodie snyder there talking us through this unusual tactic from the Trump Administration when it comes to chinese imports of aluminum. To our top story of the day, some breaking news, north korea is supposed to make an important announcement at 12 30 p. M. Local time in seoul, korea. We are seeing sharp moves when it comes to dollaryen, but not too much reaction on markets generally. Selling and dollar again overnight as the Missile Launch news came through, but pairing most of those moves and we are seeing asian equities plodding along and doing their own thing and not reacting to this new normal of Missile Launch after Missile Launch despite each one having increased sophistication and showing signs of progress as pyongyang continues on its ambitious path of nuclear capability. We will get more on that as it becomes available and be covering that announcement, 12 30 an important announcement of north korea. Coming up, and indonesian Business Partner of donald trump with his own president ial ambitions. We will find out why next. This is bloomberg. Haidi this is Bloomberg Markets asia. I am haidi lun in sydney. Indonesian media and real estate tycoon has told bloomberg he is not running for president in 2019, but planning to support joko widodo. He previously said he felt inspired by his Business Partner donald trump to have a go at the top office. Get to our chief International Correspondent for southeast asia, what a change of heart. Haslinda oh, yeah. He says it is for the simple joko is doing a good job. Joko is also able to bring the different factions in the , banningogether hardline islam, drawing a line in the sand. A complete uturn. Critic ofsed to be a him and ran against him in the last election. Take a listen to what he has to say. One project, basically a construction,the Building Hotel than of building a golf course and country club, which is under construction also. It will become be completed in 2019. The other one on building is in bali. Everything is on track . Everything is on track. You talked about needing to acquire more land. I acquired more land. We have 2000 hectares already. In terms of your relationship with the trump family, has access to the trump family changed since trump became president . They run the organization, so i can communicate with them anytime. Do think the trump brand has helped you in a big way . The trump brand is a good brand, a highprofile brand, including gulf and hotels, so from the beginning i decided to do that before trump became the president. You have said you are inspired by trump himself and have noted before you have aspirations to run for president. Do you find yourself in that position now for the 2019 election . I have to make it very clear here looking at the situation today, i think i will support mr. Jokowi. Why is that . He has shown his ability to maintain his position in the middle, so basically governing everyone. He has done for everybody. Widget you yourself run as Vice President . Would you yourself run as Vice President . I dont know. What do you make of the reform agenda . It has been successful. It is important for us to have proper infrastructure everywhere, not only in the csuite, but other places so that the big city, but other places so that the distribution of wealth will be more even. Usually a man of few words. He was on the guest list for trumps inauguration. They have had a longstanding relationship. We are talking about whether he would run as jokowis Vice President. It is hard to see him doing that given the current political climate. Earlier this year, a former Jakarta Governor was toppled in a election marred by religious tension, so perhaps several months yet to work things out, but at this point in time it is hard to see him running for vp on the ticket led by jokowi himself. ,aidi very interesting i guess donald trump seen as something of fun aspiration, a success story, right . Couldially at tycoon that become political leader, very interesting interview there. , davidhead on bloomberg will update us on the big stories of the day. David, this very important announcement from north korea. News. According to yonhap that should be happening in 35 minutes from now. We will be talking about that. Haidi maybe it is about bitcoin . David maybe. Maybe they are starting that etf. They have done the rocket. We know they like to soar to greater heights. It coin 10,000. In fact, we will put those two things together. Bitcoin, ill ask about the rising yield environment. Tomorrow about this time, the on rates,rea decides expected to raise rates for the First Time Since 2010. Im also looking at dollaryen. Dip, some strength coming through the japanese currency following these lines from Yonhap News Agency that as we mentioned in 35 minutes from now the North Koreans will be making an important announcement there, so lots to talk about in the next hour of Bloomberg Markets asia. Stay tuned for that. Lots of things to flesh out for everyone. Stay with us. This is bloomberg. Is bloomberg. 2 00 p. M. Out of sydney. Midweek session in the asiapacific. Last hour of trade here in hong kong. Welcome to Bloomberg Markets asia. David President Trump says he will take care of it as north korea fires an icbm. Alibaba picking off a jumbo bond fell. It could be in the region of 7 billion big ones. Skeptics,fined topping 10,000. Some still say to avoid it like the plague. When you have a look at how quickly and how violently this chart has moved up, simple one, have a look at it. For the first time in forever 10,000. Oin tops perhaps it is worth, strengthens the speculative environment whatever happened to this being framed as a currency, it has almost disappeared since we havent hitting these milestones. Hopefully you know this by now prepare for more volatility. Spread ak at the lot of these exchanges in bitcoin. He says you are essentially looking at terms of pricing and liquidity, the same amount of jumpiness, if you will, as if you were trading relief debt. That explains why we are seeing these massive the other thing i want to bring up so how is november compared to the best month for bitcoin in 2013 . Quickly have a look. We are actually up 60 . Four years ago we were up 450 . So the price equivalent that we have to hit over the next 24 to 48 hours is this gets to 30,000 for bitcoin. In other words, we are still very, very far from historically the best month for bitcoin in november of 2013. But 60 is not bad at all. And obviously it is continuing this mania in bitcoin. Sophie, it has really lost a lot of luster. We saw a violent uptick for bitcoin but in contrast the are seeing a fairly janinducing gold yawninducing gold. Not even trump tweets can shake it away. You can see the 30 day volatility is hearing year holding near a sevenyear low. We have markets saying a flattening u. S. Yields will also prove to be a headwind for gold. Short and yields are offering more of an Investment Opportunity and curbing any ballistic upward movements for boolean. Humming along for gold. Flattening for the u. S. Yield. David gold is not doing anything. Suffice to say when you look at the broader commodity space is not doing well. Sophie Precious Metals are keeping fairly steady. Base metals are falling along with oil. Brent and newth york crude are falling for a third day versus expectations that u. S. Inventories will climb. We have the opec meeting insight and that is keeping anxiety simmering about whether or not an output cut deal will be extended and if so, for how long. Six months, nine months . Base metals are also being led lower by aluminum as well as copper. Shanghai has lingering concerns around chinese demands. Seeing, wet we are are seeing mining stocks lead gains across the region. Gain ground in shanghai. Producers also on the up rise. But that is not helping the shanghai stocks which are moot losing ground. Markets, tech not doing well. Beenly speaking it has not the most stellar week across the equity markets. Now we are strength coming through in dollaryen. We will talk more about the north korean story but back to this. It stands out. Sophie tech shares. Theres the question whether or not valuations have been too sweet for that space. We have a few come out to say perhaps it is time to take money off the table when it comes that area. Today we have japanese tech shares coming under fire. Outlook. A fairly grim Semi Conductor stocks are falling in tokyo. Samsung electronics are losing the drop. Tencent also under pressure. Tech shares are the laggards so far. David thank you so much for a wrap of just about everything we talked about. Lets get over to sydney and paul allen with your first word news. Paul more disturbing headlines from uber. They are said to have lost nearly 105 billion on billion bookings. The news is said to have been included on the companys report to shareholders. It comes as softbank has reportedly bid to buy uber from existing stockholders. Several eager Jerome Powell assist the case for raising rates next month is quote coming coming together. He says while unemployment is low, there is no sense of an overheating economy. Alignnts a while him with a dovish wing who believes the labor market can become Even Stronger without creating inflation. The Saudi Arabian Energy Minister says he is looking forward to a robust discussion when opec meets in vienna to discuss prolonging output cuts. The cartel and russia agreed curbs are working and should be extended, but there is no accord on for how long and how to end them. They say technical issues need to be hammered out before index strategy is a great. Before an exit strategy is agreed. It is too early to talk about the agreement but studies vary in terms about the period needed for normal levels of inventory. The question of normal level needs to be studied and discussed with other parties. Bank new zealands central will ease mortgage lending restrictions next year because it expects corporate policies to dampen the housing market. The report says banks will be allowed to make more home loans while a down payment for investors will decline. The changes are likely to repeat the market. Reheat the market. Also expectedrd, to have a dampening effect on the housing market. Paul global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im paul allen. This is bloomberg. David ball, thank you. In just about 23 minutes we are waiting for this important announcement out of north korea. Bitcoin atking about the top of the show. Withe put that together dollar yen which is obviously moving down on the back of potentially whatever rhetoric comes out of north korea. Dollaryen is at the bottom. I want to put those together. I put them together on a chart. Asking whether or not the market is now looking at this north korean situation and going all right, im getting back into the yen and also back into bitcoin. We are also talking about at the top of the show that the spreads would you look at bitcoin it is so wide youre almost trading the threat debt. You do understand while we are getting a lot of jumping around in bitcoin. Dollaryen comes down to tencent rising in the region. Government has been holding emergency meetings. President icbms since trump labeled them a space a state sponsor of terrorism. They responded with what they called a position missile exercise. Japan protested in the strongest terms possible while president said he will simply handle it. A missile was launched a while ago from north korea. I will only tell you that we will take care of it. We have general mattis in the room with us. We have had a long discussion on it. It is a situation that we will handle. David we are joined out of seoul right now. I have to ask you, i know we are still witty for the actual announcement from the north based on what was reported and about 20 minutes from now that is or any sense of what they might say . Peter it is unclear. There is speculation that they might declare the Missile Launch was successful, particularly with delivery of a reentry vehicle. That is a Key Technology required to have a working icbm. It really does not matter if you have a missile to have a range to reach the east coast if they cannot survive reentry into the atmosphere and deliver the thermonuclear weapon. It is a useless missile. So thats a possibility. They have declared they are a Nuclear Power already so we are not expecting that. It is never clear as to what they will say, but it could be that. David just to understand for our viewers who may have just joined us or people from around the world waking up right now, the headline is that the missile now puts the entire u. S. In range. Is that what we know . Peter yes. That is speculation, or at least initial analysis from rocket experts, mainly because the ruckus went up the rockets went up to about 2500 miles. If you put that at a normal trajectory that would give a range of about 8000 to 10,000 miles which basically puts the entire east coast of the u. S. Within its range. Just very peter, briefly take us through what the reaction has been. Not just from seoul but have you heard from washington as well . Peter sure. The reaction from washington is what most folks here in south korea have been looking at. The fact that they did the missile test, actually many folks here are desensitized to it. The words we use here are just are fatigued and unfazed. What people are worried about is how washington reacts. Particularly Donald Trumps comments. They could see come his muted response unlike the fiery rhetoric he has put up before, has actually calmed the markets, as you saw with the stock markets, with the yuan. Really not much change. Again, folks here are not looking at the geopolitical risks. Actually a lot of investors talk about headline risk, basically what donald trump says. And today he has not really been that caustic. David yeah. Thats a good way to put it. Thank you for coming on the program. Live for us out of seoul. 31 sold time , the bitcoin rally seems unstoppable for now. But the recordbusting division painting could help explain the exuberance. Of next we are adrian comes on the show. This is bloomberg. This is Bloomberg Markets asia. When you look at markets come investors shrugging off the use of what about other key risks especially at these valuations as we move into 2018 . Lets bring in adrian. He is here with us in the studio. What stops this . Adrian we think it will continue first of all, but obviously there are risks and we definitely think volatility will move up because some risks will become more apparent over the next couple months. Us isy risk for inflation. Inflation should start to build up slowly. The Unemployment Rate in the u. S. Has dropped significantly. We do see pricing coming back for some corporate. Gaps are closing. Even in asia the investment that could mean high inflation. We dont think inflation will run away but theres the potential of a risk. We think Central Banks are now in a position to monitor that and also to react on that because in general, Global Economic growth is solid. Its the most synchronized since 2010. It will allow tight Monetary Policy move the market higher. Moving aggressively could mean david thats the other thing. Do we see that coming . Output gaps are closing. Where d. C. That most pronounced and how quickly does that enveloped the world . Core pcere basis still inflation in the u. S. Remain stable for next year. We see two Interest Rate hikes next year. When in december and next year as well. 2. 5 overeasuries at the next 12 months. We are at the lower end of the range. Inflation is different. Humanalso related to being psychology and behavioral bias. It can sometimes happen quickly and unexpectedly. Therefore it is something we want to monitor very closely. Its definitely some of the key risks we see. David would you rank that higher than possibly china efforts or miss reading chinas appetite . Adrian currently the cycle, its probably the biggest risk we could see. China is always one of the key risks. The debt increases we have seen over the past 10 years has been phenomenal. 270 Percentage Points with gdp. Even the Chinese Government and officials are concerned. We see they are starting to tighten. It is more like reigning in. Thats definitely something we monitor closely. We think it is more of a medium to longterm risk. We dont think it is an immediate risk for six to 12 months. We have seen regulating Development Management programs in a closer way and bringing it more into a framework that is treating all products similar. That definitely helps to at least deflate some key rates. David speaking of tightening were getting a line right now. The onemonth hyper in hong kong is above 1 for the first time. With that speaks to the whole cycle. At what point does Something Like this perhaps at what point does that collide with valuations . We have six months more to party, essentially . Yearn we expect for next we have the support of Earnings Growth. Looking at asian equities they are up 40 . Earnings are up 20 . There is a currency effect. We do not think they are overly expensive at this stage. David i think you brought it up. Lets bring up a graphic so our viewers can visualize it. This is what you like. Do you expect the earnings upgrade in 2018 to be better than 2017 . Adrian not better but we still expect doubledigit growth. Its the first time doubledigit growth for two consecutive years. Even for the rare latest bull market before 2007 we only had one occasion we had doubledigit Earnings Growth for two consecutive years. We have very macro momentum. Like global equities. We dont think they are overvalued. They are more on the higher end of valuation. Where they are trading at the moment come historically they still produce around 12 returns for the next 12 months. Its a high valuation. David yes or no, equities is still the place to be . Adrian absolutely. Higher Interest Rate we will see more headwinds. Highyield bonds in the developed world the key risk and flareups and uncertainty will start at higher volatility will show up david thank you for coming on the program. Solid input. Just in case you are a bloomberg subscriber you can check out all the interviews in case you just missed that one. Watch us live, send us messages during our shows. Check it out. This is bloomberg. Bonds. Ali baba bonds. The company kicking off a sale of what might be the biggest dollar get sale this year. We have the story. Its a massive deal. How big is it . The market anticipation is 7ween 5 billion and billion. It could be asias biggest dollar bond deal from any corporation. Institutions,r Institutional Investors in the u. S. Retail market to buy into the bonds. It is alibabas first time in three years to issue a bond. Its a bit of a rare commodity right now. Investors are saying the yield they are offering right now between 100 bits to 180 bits depending on the different it is quite attractive and indicates alibaba may do a deal close to the top end of the market expectations. David you talk about timing. Why are they doing it now . The company doesnt really need funds into doesnt really need to say how they are good to use the money. They struck a deal earlier to buy chinas against hydro market chain. Dealbillion bonds yesterday. Theres a little bit of avenues for the company to use their funds. Also if you look at the yield curve it is quite flat between 10 year to 30 year. Alibaba is actually coming out with a 40 year and 30 year to david whacking the whack. Thats a joke very few people are going to get. In terms of pricing what is it benchmarking against . Whats the benchmark . Alibaba always wanted to benchmark itself against u. S. Rivals. It is looking at amazon, ebay and apple. Because it wants Global Investors to think of itself as a truly global company. Premiumhave to pay a because it is a chinese company. Even if it is rated the same with the u. S. , it has a structure which is hard to understand for Global Investors. I will give you an example. Ebay is rated three notches lower than alibaba. Bits indicate it is 30 more than ebay. Well see how close alibaba david we will have you on the show again tomorrow to tell us about the spread. Lets get you an update of the latest business flash headlines. Users have discovered a significant security flaw in the latest mac operating system that allows anyone to login without a password. Was released back in september for macbooks and desktop. Asir software is regarded less prone to hacking and mall where than windows. Up more than 7 despite new criticism from longtime they say they dont believe nobles ballot sheet is clean. The company has consistently rejected those claims but have sons done much of what was predicted. We are watching out for a few things in a few minutes before the tokyo reopened comes up. Dollaryen very much under pressure. Comes on the back of this announcement that North Koreans might come out with a very important announcement in roughly at the same time as the tokyo reopened. Just over three minutes from now. A lot more to talk about. Stay with us. This is bloomberg. 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. Bloomberg markets asia. Bank of korea will likely for the First Time Since 2010. When you look at the chart i am about to show you, it is not only rockets racing higher in the korean peninsula, so our bond yields. Get close to a live meeting, tomorrow is perhaps the most live meeting for the bank of korea at any time over the last three years. We want to track the spread between the three year bond yield and where they are rated. 124 basis points. We will be giving you updates in case we get an important announcement from north korea. We have stocks climbing in tokyo, but we are losing buying momentum. Samsung is dragging the most on the share market. Cosmetics and tourism stocks are climbing as china partially lifts the band on a group towards to south korea. 300 csi 300 was down. Tencent is dragging the most on seng. Me thing heng weakness for the hong kong and the 10 year yield is jumping for hong kong debt. The onemonth hibor rate is also up. It is climbing. I wanted show you some equity movers, kicking off with noble shares in singapore. The stock earlier climbed over gas in hong kong, dana rising. Morningstar climbed to one of the best gain since august. Where waiting to hear what is going on with north korea today. Key rightt on the there, we are getting announcement appeared north korea says it has fired a new type of icbm. The country saying it has fired a new icbm, that the Missile Launch was successful. You are looking at live pictures out of pyongyang. More context for what we got earlier this morning and asiapacific, a lot of people woke up to the latest launch from Carlos Correa from north korea. Icbm puts the entire United States in range. To recap what came up came a newyou type of type of icbm was fired by north korea, it was successful. They have improved the technology when it comes to that missile. The take away so far is that the missile now puts the entire u. S. In range, which we were able to extrapolate to a large extent earlier, seeing the trajectory, distance and height the missile actually reached this morning. To recap, the Missile Launch was successful, it is a new technology, a new kind of icbm that puts the entire u. S. In range. Who might want to follow this closely, live go is your function on bloomberg. Now, that being said, we will get you updates with we get more from pyeongchang, here is first word news. Paul south korea carried out what it calls a precision Strike Missile exercise in response to the latest launch from the north. Pyongyangs icbm test was the First Response to President Trumps decision to label the country a state sponsor of terrorism. That missile reached about 12,000 kilometers in altitude and potentially puts the United States within range. Oecd has issued its label latest Global Forecast come a saying it is growing faster than any time in the last several years to however, wages remain stagnant and the organization in u. S. And other areas but is calling on governments to ensure higher Living Standards and tackled that. Reached record levels in many countries. Particularly worrying are the high levels and continued growth of corporate debt levels and china, given the importance of china to the World Economy. Reports from london say british and european negotiations have reached an agreement on the brexit divorce bill although the final bill has yet to be decided on. It will be between 45 and 55 billion euros. Anrces in brussels say agreement has not been reached the talks are progressing. International airport is to remain closed until at least thursday morning, leaving thousands of tourists stranded and unable to leave. The volcano me arrived at any time. Hundreds of flights have been canceled since the airport was closed monday. Is rising in the crater and 100,000 people in the area has been told to evacuate. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am paul allen. This is bloomberg. David thank you. Lives out of north korea, kim jongun saying of the north has begun to complete its nuclear program. The missile did use improved technology, it puts the entire United States in range. Ink at the move down and up dollaryen, initial reports that they were going to make an announcement drove it lower, and there we go, a little bit of a move up in dollaryen. Kim jongun, they are saying the north has begun to complete its nuclear program. Nominee Jerome Powell may be on board with a rate hike in the summer, but he is not backing a Major Overhaul when it comes to banking. We have a look at his Senate Confirmation hearing. Kathleen, did we learn anything new . He expressed views on banking, views on monetary , more than initly the past. He is never dissented on moves the fed has been taking to raise Interest Rates a last couple of years. Hes been on the board of governors the last five years. Explicitly when it comes to bank regulation, he has been a supporter of the doddfrank, or at least the core reforms in the doddfrank rewrite of bank regulations. Especially Interest Rates. Some interesting things, when asked about a december rate hike, he said the case is coming together for such a move, so it seems to me he is on board with a move and a lot of others are also on board. Asked about inflation and the economy and labor market, he had a dovish tilts. He talked about the fact it has been weak, and i think he sees concern in that. Lets listen to what he said about the link between the labor market and inflation. Signaling anyages tightness in the labor market, there is no sense of an overheating economy or a tight labor market. Kathleen he did say that stagnant wages among other things are a sign of slack in the labor market. Lets look at 2623 now. We are looking at a civil chart of Labor Force Participation , lookfor prime aged males at how it came down over the years. Years, and itis comes even lower, it makes up a little bit, but he references also the reference is also something he is concerned about. As he is said in the past, and he is testified to Congress Lots ofis, he does see reasons to look at the doddfrank rules, there are a lot of them, to see what is working and what isnt. The core reforms he is at least not in favor of all outperform to throw a lot of it out what donald trump talked about on the campaign trail. Donald trump has picked him to be said chair, i think this is an indication that Jerome Powell is independent. I think what he said today in a subtle way shows that. Yellen, do i stay up former . Kathleen i will certainly wake up for that one. It is reporting, democrats, republicans, the house, the senate. Said llen has always has already said that once powell is sworn in, she will step down. If she agreesknow with him, particularly on the question of inflation . Because we know last week, she acknowledged there are dangers in low inflation. To seemed to open herself that concern, but she also gave the reasons why she expects it to rise. Lets look at 5372. Janet yellen talks about special factors a lot that pull down inflation, part of cyclical factors in the economy. Health care costs, insurance. They have come down a lot in the last couple of years. Thats one of the things she puts to one side and says, there are signs the tight labor market is starting to boost wages, that will boost inflation. Desknk we will be listing listening even more carefully tomorrow to see if she opens the view, pohowell well view. We will hear from bill dudley, John Williams in san francisco, he has been talking rather 2 inflation target. We dont listen to janet yellen exactly as we did. Think because she is on her way out, maybe she will show more candor on inflation, then mistry theyre trying to unravel and give us more insight into what she thinks. Again, maybe that is a clue on too. Jay powell thinks, david absolutely. Coming up, opec and other Oil Producers will hold a crucial meeting on thursday. We discuss whether an extension of the cuts will move the price. Stay with us. This is bloomberg. Update, north korea out with some more lines. Completed they have state nuclear they are close to completing its nuclear program. Stay tuned for that. Yellow thing where following, opec. Take a look the other thing we are following, opec. Take a look at this chart. You can get this on your the qualityust run forecast function. Topclick on the icon at the and this comes out, and Oil Sentiment chart. As you can see, there has been a move up. This is a week in advance. Have a look at it. T is the highest level all level going back to september. There is some optimism. A few adjustments. Look at this one. When you look at this, it was the two month high. What a lot of people are saying, it was 4. 1 going into this morning. Ofments out from the founder a hedge fund here, he is saying this move you are seeing into this morning and perhaps into tomorrow might just be an indication that the market is moreps pricing in a little , insurance just in case opec disappoints or doesnt come through with a lot of details. Sayingd chartered is not , opec, the path of least resistance is to deliver. Betterain vanilla, it is than not doing anything. That is it, coming out of standard chartered. Happening tomorrow, opec said to be in agreement that the of kurds a curse could be extended. Just spoke to a president of oil and gas consultants, he said the cartel is perhaps leaving wiggle room. We think its about 80 they go out nine months and extended through 2018. We have to remember they have another big meeting in june, this is an unusually big meeting because they have a big opec seminar around it. They will leave themselves some wiggle room around that time to discuss. That the market some pols, i expect the announcement will be sort of, have a lot of wiggle room in it. We would expect it would get rolled over. Well think we will have a big price reaction, if you are member in may, we had a big price drop after people were disappointed. We dont expect as large a price reaction at this time. Mid, high 50s the sweet spot . I know you had said a return to 100 barrel is not something we should expect, and a blip as supposed to sustainable levels. A too hot,is really too cold market. If you set opec aside, drop low 50, you start to see production get shut in and demand takes off. Above 70, we have not tested that since the last price drop, that in theigns 60s, u. S. Production is coming back, there is talk of opec slippage, certainly above 70, we start to see opec frankly falling apart and we get slippage. We are in this range, as you around 55,bably is where they should try to keep it, theyre probably a little high right now because they are encouraging u. S. Production. There is a sweet spot there probably through about 2020 before we start to see a gap of march in the market again for opec to fill. In order to stay at that level or a little bit above, do they need to extend or do they also need to deepen . Deepen dont need to necessarily. We show the market balance going sideways here. As long as they can maintain discipline, they can keep prices right around this level. It will be a challenge, they have not done it this long before. That is the biggest threat in the market. We have 1. 8 Million Barrels per day of oil sitting on the sidelines waiting to come back at some point. That is out there in the background. So far, so good. David that was the president of fge speaking to us. Lets get you an update of the latest business flash headlines. Bloomberg has been told that at ts ceo met with the u. S. Antitrust enforcer over the time warner take over a day before the Justice Department sued to block the deal. Sources say talks broke down after less than an hour, feeling to prevent a court case. Piled in response filed a response to the lawsuit, saying the merger does not possess harm to competition. Sheriff leeward is buying a startup that helps people connect in the real world. The deal is the latest way leeward is finding new ways to improve revenue. At roughlys a valued 20 million and has been on a buying spree, including singaporebased and a computer coding academy. The u. K. Trade secretary told us he is prepared to take a tough line with the eu just as the Prime Minister is engaged in highstakes diplomacy with brussels. He said london has done enough and brexit talks to move the negotiations on to trade. Of a breakthrough, but said he and the government are not afraid of the talks collapsing at some point. We want an open, liberal, conference of agreement to maintain Market Access and to be sure we dont have any impediments to trade on investments that dont exist today. We want to work toward that agreement at think it is in the interest of the prosperity and wellbeing of the people of europe, but we are not afraid not to get an agreement. Terms as we doon with the United States, for example. David coming up, what do bitcoin and the recently auctioned Leonardo Da Vinci painting; . Painting have in common . This is bloomberg. Supply, ihe limited dont weve been asking everybody what their target is . Is goingd say it higher, if i were looking at 6, 12 months, we would be talking about the bitcoin and a higher price. 15,000 . Sure. There are transparency issues around crypto. Open, we aretely public offering, a consortium thinks of banks. We are cautious because we think bitcoin has a number of unattractive characteristics. This a bubble and there is a lot of fraud mixed in. Ande is a lot of fraud like this. Nything i think this will be the biggest bubble of our lifetime. I want the record a show i did not say this. Mostly because it is global. David some interesting views there. You really get the sense, is this the resistance to change or just not recognizing there is maybe fundamental value there . Lets try to make a comparison there. About a week back there was a massive auction, a Leonardo Da Vinci painting. What does that tell us about bitcoin . The two . A link between i do think there is. Conspiracies, although a lot of bitcoin investors might think so. Scarcity. There are only two or three Leonardo Da Vinci paintings in private hands of the world, and about 45 billion of art changes hand in the world every year. Bets 450 million might spent on one of these extraordinary rare paintings doesnt seem that improbable. I think if you think of bitcoin in those terms, you see something similar. Cap,ocurrency has a market bitcoin has about 150 billion. Itts a market cap of 3m, less than it unilever. Compare that to be fixed trillion in gold. 94 trillion in debt securities. Flownly need a very small of funds out of these much bigger markets trying to make its way into the bitcoin market. To have quite dramatic effects on price. It really brings to mind why you would buy it. We heard this morning from the founder of vanguard saying avoid this like the plague, because when you look at other asset classes, bonds obviously have fixed income, equities, earnings and dividends there, what is the fundamental reason why you would buy bitcoin . In one sense, there is none, and in one sense, it is the oldest reason and financial markets. There is no good fundamental reason, i think, but i think we overestimate how much thought goes into investing. We think it is based on a fundamental analysis of a companys Balance Sheet or its earning prospects for equity investors, but a lot of the time people are just buying because ory see shares are going up the pricing looks good. I think there is an awful a lot of that going on here. An interesting gold is an interesting comparison the bitcoin. Been a massively losing investment but a lot of people have a lot of faith in a particular narrative about gold, and from the mid2000s until about 2011, it saw a certain price. I think its similar to bitcoin. Perhaps the best reason to invest in it would be because you can balance out your portfolio, it is a negative beater outset asset. Thats the best reason to invest in gold. The ironic thing is equity markets are going bananas at the moment at the same time as the coin. As a bitcoin. David one comment coming traded bitcoinou its almost like you are trading back because of the lack of liquidity. In that way, yes. Your thoughts . Clearly there is a massive lack of liquidity come i think thats one of the reasons why bitcoin as a currency doesnt make sense, as a medium of exchange, because you need great , for money to work. I think that makes a great deal of sense. Bear in mind, we will be seeing groups are going to be producing derivatives, futures and options on bitcoin. I think youll see a lot more liquidity on those then the underlying itself. David we have to leave it there. Us, is just about it for Bloomberg Markets asia. Bloomberg markets middle east is coming up at the top the hour. You are watching bloomberg technology. The sun with a check of the first word news. Without offering details, President Trump said today we will take care of it, following a north korea Missile Launch. He said it is a situation they will handle. The pentagon attract a single north korean launch, believing it is an intercontinental Ballistic Missile that landed in the sea of japan. Republicans on the Senate Budget gopittee today passed the tax cut plan, advancing the measure to the full senate. President trump applauded the panel foit