Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20171213

Made on thursday. Welcome to daybreak asia. Im paul allen. Im betty liu in new york. Story in thejor markets. In the very early morning, leading up to the meeting and digesting everything janet yellen was saying. He bump up in growth. This forecast and Economic Growth here. The job market is still continuing to kind of slug along percenting that three forecast for 2018. A lot of scratching the heads as well. We have strong broad jobs growth. And theres Janet Yellens legacy to think about as well. I have a wonderful piece of trivia for you here. Finalll have the lowest Unemployment Rate of any fed chair since William Martin of 1970. We can have a newfound knowledge of said history. Fed history. I found that out from someone else, by the way. Weve been trading for a couple hours now. Slightly weaker, up. 2 , the kiwi dollar breaking above . 70. Trading in australia just getting underway. It is difficult to get a gauge on how the asx is performing because we have the staggered open here. The first few stocks begin trading in the aussie dollar seems to be consolidating above . 76 again. We are also counting down to the opens in japan and korea. Lets take a look at japanese futures trading out of chicago. Yen looking against the greenback. U. S. Markets in particular and how those close with reaction to the fed announcement. We saw stocks climbing with bonds and the dollar falling. As the saw gold surge fed signaled three rate hikes, a move seen as dovish. Through this. Lets start with the market. We had been at intraday highs and we see the s p fall off of it right after the fed announcement. The dow locking in at seven straight days. The broadest measure of the market really leading the gains in many ways. Lets go look at the market snapshot. Gold surged on this and we will get more into that. The vision for 2018 was viewed as dovish. Bits pumping back up a after hours and the dollar trending lower. There were some sizable moves within the stock market. It was a big infusion of cash. Apple will be funneling a lot of money in manufacturing. Caterpillar getting a big bump , upn the 20182019 estimate about 10 . Thepier 1 imports, ahead of afterhours earnings report. It misses even the lowest estimate. Btv to bloomberg g this is the gold story. , the goldxpected bounce. It has a lot to do with the fact that division for three rate hikes is a lot more dovish. And the gold bowls are taking that as a shot in the arm at least for now. Paul and this is putting betty and this is putting pressure on oil prices . Su it is a bit depressive for price. We are getting the Agency Reports that come out. It is a bit worrisome for some traders. If we look at the gold story, again, its really interesting. It has been a tough year for gold. At least a rough quarter. Even though gold got off to a great start as you can see going into september, we have the stock market perform so well and we have a lot of positive Economic Data. The fact that you have to fed members is seen as a real bullish sign. That is why you see the move higher today. Lets get to first word news with courtney collins. Courtney President Trump says the senate in the house are very close to compromise tax legislation. As republicans try to have a bill signed into law before the years and. Congressional negotiators said the bill would be a historic victory, but the passage has been clouded by the alabama election results. Democrats want to vote delayed until doug jones is sworn in. U. K. Prime minister theresa may suffered a serious blow as proeu conservatives defied the whip in parliament. Hes what a narrowly to change , enshrining elon to domestic legislation. The power to veto the treaty if you dont like the terms of the deal in 2019. Is expected to go closer to a revised brand Coalition Today after opening talks with social democrat leader martin schulz. Cdu and the spd saw big losses in september, prompting schulz to choose authorization opposition. It made him reassess his partys stance. And the longawaited disney fox deal is expected to be announced later on thursday. Sources tell us 21st century fox will retain its real estate port olio, including the 20th century film and tv lots. It sells a chunk of assets to disney. Disney acquires the studio cable channels and International Assets in a deal valued at 60 billion, including debt. Global news 24 hours a day powered by 2700 and analysts in more than 120 countries. Im courtney collins, this is bloomberg. Fed, whatmore on the they did today, and where they are heading next, lets ring in Global Economics and policy editor kathleen hays. At the finallook meeting in 2017, probably the last fed chair janet yellen will preside over. They raked they did a rate hike for the third time this year. To get rid of something on my screen. Here we go. 8788. You can see this blue line. The second one in june, the third and final one in december. It last several months, and seems like this was kind of priced in. So widely expected. Thefomc also boosted forecast for 2018 in 2019. It is rising over the medium term even though it remains a puzzle. They are still looking at three rate hikes. See a scattering that looks pretty much like the same one we looked at before the fed upgraded. Six still looking for three rate hikes. There is still a few looking for less. Janet yellen said that eventually, inflation will rise. This will boost wages. Many firms are having difficulty finding qualified workers and we would expect through normal demand and supply channels to see some upward pressure on wage growth over time. They dont agree with janet yellen. Look at the with me and you isl see that the core pcu far below this yellow line. We think the fed should be waiting. And we dont see it right now. They are the minority and a lot hikesple think it is for this year. We look at the forecast with cumberland advisors. Always great to see you. I was reading through quite a lines. These economic one noted how realistic he thought the jobless rate givenst is going to be the pace they have seen job of 2018. By the end lower, what do you think about that . This is one of those situations where we havent been there before. His guess is as good as anybody elses at this point in time and it will be how the supply and demand matches up and if there are secular problems and dislocations because you cant match the people up with the jobs and you may not get the rate down to that level. We will have to wait and see on that but it is a really optimistic forecast. And ian mademistic the statement, maybe the fed is not that the fed is trying to manipulate data, but they want to stick to the three rate hike forecast. If you look at what janet said today, most people think that even 4 is not sustainable. That it is probably lower than what the natural rate of unemployment would be. Arguing that its going to be pushed down further, i think really suggest that kind of forecast is setting up an inflation round that we probably dont want to see. I would be very careful about that one. The conundrum is that inflation is so far from target. There was a chart again that showed the key gauge 1. 4 and a target of 2 . Puts into perspective something that janet yellen said at her press conference. It is a classic. It you have unemployment coming down. Thats the blue line. Get aboutd can you wage put inflation when you have this kind of number that even janet yellen is scratching her head about. Maybe we are in a different world . I think we probably are in a different world. To be honest with you, im not one that clings to the idea that somehow inflation is a real side phenomenon. That is not inflation in the sense that it translates into broad pressures on prices. Those on or off, you will not get any inflation. This jobs versus inflation conundrum we talk about always says to me that some of the data is being misread it. Does it take into account things like the gig economy. We are looking at the wrong price. Some of those are important. You will not get much in the way of real gdp growth. Money causes inflation. We have plenty more to discuss in a moment. We will talk about the women cashing in on bitcoin. The cofounder maxine ryan and Digital Currency join us in about half an hour. Looking forward to that conversation. And a look at the future of health care that includes the fight against dementia and alzheimers. This is bloomberg. Betty weve been talking a lot about him in a these days. It looks like jim eltel rejected a ptosis unposted bid to buy the Security Software maker. This was for a price tag of 5. 1 billion. Say it was significantly undervaluing this company, all in a bid to create a larger Global Cybersecurity company. All in one. Again, rejecting the bid saying it undervalues the company. Weve sort of gotten a few hints , the company was reviewing this and seeing if the price was going to be fair. That is a story well keep an eye on. Bomb, the vice chairman and chief monetary economist, just for we left you there, we were talking about that battle between the jobs numbers and the inflation numbers. It does remain persistently weak. Timetable of three, possibly for hikes realistic. Inflation remains weak and maybe we are only looking at two. Been very theyve consistent, ultimately, saying they will be data dependent. You pencil something in and you wait and see what happens. Up,ou see inflation pick the three is going to be o a very realistic number. Maybe they will put it off. It depends on the timing of when the gdp numbers are coming out, and its going to be a while before we get a reading on the fourth order of this year. Couple meetings are not going to have much information upon which to base anything other than what the forecast has been telling them. Another variable will be the tax plan when it does eventually get past. Tothe benefit of that going have any impact on the feds decisionmaking process . Or will there be a benefit . Be hard to, it will dissect what the program is going to be. While before that gets identified. And it will take a while before impact actually starts to hit the economy. I would be surprised to see the fed try to fun run that. The more pricing in the markets. And you will not see much of an anticipatory action on the fed because of the tax program. I have a couple of questions. The yield has start and to steepen again. It janet yellen was asked specifically about that and she continued to downplay it. Does it signal a policy mistake in the making . She doesnt think so. Nevertheless, g btv 2500 can show you the yield curve last year and how much it has flattened out this year. You have a former director of research. Is this an issue . It is not so much of a red flag where you dont have an inverted yield curve to begin with but the real problem we face is to try to keep people from reaching for yield that they are not being appropriately compensated for the risk they are taking. That is the real problem in this kind of a market. I would make a point that with the fed Program Running off of securities, the real impact as far as the yield curve is concerned depends upon how the treasury responds to those funds. If we dont refinance, there will be a shortage of treasuries in the market that would further flatten and depressed the yield curve. Refinances, it will affect the shape of the yield curve. That will be more important than what the fed does this year. Ask about stimulus, this tax package that will likely go through by the end of this year. How much will that change the Monetary Policy picture at all . I dont think in the short run, there is a policy picture at all. Overreacting to potential stimulus, it will have the online more on what is happening as far as the inflation output is concerned. I dont see it really reacting to the Stimulus Program at this point. We dont know what the content is going to be. We dont know who the beneficiaries are going to be. We dont know how it will be distributed across the economy. Given those uncertainties, it is runature for them to front and move policy in anticipation of an overheated economy. Usty think for staying with , bob. Chief monetary economist. And also the Global Economic policy editor kathleen hays. You can get a roundup of that subscribersberg available on mobile and you can customize your settings so you only get news on the industries and the assets that you care about. Betty this is daybreak asia. Im betty liu in new york. Paul and im paul allen in sydney. Lets get a quick check of the latest business flash headlines. Chanos has renewed his condemnation of tesla saying elon musks car company is heading for a brick wall. Speaking in detroit, he said every bull market has his poster child and tesla is a bad one. Recently, he told Bloomberg Tesla is structurally unprofitable and way too leveraged. Toyota and panasonic are strengthening a bid to take over the lead in electric vehicles. The largest supplier of car batteries built on a joint venture theyve had for two decades. The decision to go electric is a uturn for toyota. It had been heavily on hydrogen for next generation in electric power has proved the industry leader. I believe that 50 of car sales in japan will be electric light 2030. Theable supply of nextgeneration battery for the electric vehicles is the key to the industry for the next 100 years. Panasonic ared the best possible partners to Work Together on this area. Uber is turning to the taxi sector in an attempt to turn former enemies into allies. It is bringing bangkoks power a quicker and more convenient ride. To sell its unit to comfort growth for more than 200 million. Uber has teamed up with Taxi Companies in taipei. Betty report from china says julie is saving up to buy daimler. Report said the decision has been made in the exact amount of shares to be bought yet to be agreed although there is a report that they want up to 5 which would be worth about 4. 7 billion. Daimler reportedly rejected the initial release. The detail starting to emerge about the hollywood blockbuster called the fox disney merger. We will be live in a for more. 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. Paul it is 9 30 a. M. Thursday in sydney. It we are 30 minutes away from the first major market open. Betty and it is hump day and new york where markets closed , bankers taking it on the chin today. A beautiful skyline. Im betty liu in new york. Paul im paul allen in sydney. It lets get to first word news. Courtney the fed has raised rates and lifted the growth forecast for next year. The fomc raised a key rate by 25 basis point and maintained a projection of three hikes in 2018. Janet yellen said the decision underlined the view that the labor market will remain strong and will eventually trigger higher wages. Wo members dissented Neel Kashkari and chicagos charles evans. Tok of indonesia is expected have the sevenday reverse repo rate unchanged at 4. 25 , sending a positive for back cuts in august and september and the subsequent plunge. Are forecast to leave the overnight rate unchanged at 3 with inflation easing since the november meeting. Prominent reflation nest moctezuma ewok atop he says the bank of japan must boost stimulus now. The University Professor says it will not be strong enough, leading up to 2019. Withabes view contrasts most economists. Some see him as a potential candidate for one of the two Deputy Governor positions that will over open in march. A South African president jacob zuma has suffered a third legal defeat in a week. The high court demanding an inquiry into allegations he allowed the influential to family too much say in state decisions. Claimurt rejected the that he alone could order a commission and told him to stay calm. Andeaffirmed in order corruption last year that zuma tried to block. News 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. Im courtney collins. This is bloomberg. Thanks, courtney. We are counting down to some of the major market opens. For more here is david. We need to stop the currency to do what is the state of play right now . David dollar dumps is the short version. Have a look at what weve done here. Move. Entially measure the it all hours, 16 hours into the fed decision. 8 , against virtually every single currency. Trading closer. That will be the cash market over in japan and were looking ahead to the bank of england. To scroll down and give you a sense of some of the other things. This is what we are following. Dollars down. 8 . We will see how this plays out. You dont have inflation coming through and it will weigh on the dollar essentially because it has in up for the most part the last two weeks or so. Betty how are stocks looking as we approach the open in japan and korea . David we are looking mixed. We have two markets up and running right now. Heres a look at how things are patting out. This is new zealand, basically flat right there. Just to break things down, taking it on the chin. That is essentially betrayed you will get. If you look at the futures, i alluded to this earlier. A stronger yen will be pricing it at the moment. Declines in the tokyo session when it opens up in less than 30 minutes from now. A flurry of economic reports to look forward to. David we have to talk about aussie jobs. It cover your eyes and lets see what the guesses are going to be not be this one tends to consensus. Lets put it that way. Nikkei manufacturing coming out and industrial production. We have these in the region with no change expected. But certainly lots to look toward to as we make our way throughout this trading session. So much. Ank you were looking forward to that. President trump says a compromise tax bill is close and will be extremely impressive. Joining us from washington is Bloomberg Congress editor joe. It victory by doug jones in alabama, does this complicate the tax situation at all . Joe hes not likely to be seated until after the first of the year. Any complication its because republicans were unable to get it done this week or next week. It doesnt look like thats going to happen. Doug jones wont be a factor in that but he will be coming next year as they start dealing with some difficult legit issues and some domestic programs. Immigration. Lifting the debt ceiling. These are issues congress will be having to take up after january 1. That is where he will be having his impact. Maybe one of the last things republicans can deliver. How close are we, exactly, on this . Joe they are moving toward getting something together to be able to release on friday as early as friday, followed by votes early next week. By wednesday, sending it on to President Trump for his signature. They are still working on details mostly to keep on board hadous senators that expressed concerns, particularly susan collins. And dealing with some other legislation that will come separately. So that they can fulfill all those promises. Joe, how uncomfortable does the situation in alabama make the internal politics in the gop . Senatora florida tweeting, thanking steve bannon for gifting the democrats a seat and the Great American alliance blaming Mitch Mcconnell for not endorsing roy moore. Are we on the brink of civil war in the Republican Party . Joe yes. It is something that will be boiling up more and more. For the tax plan, it gives republicans in the Congress Much added incentive to get this done , to work out whatever they have to do. They may have to come back and make a few technical changes later. That they have the motivation to get things done now. Comes to Congressional Elections next november, i think that will be where it becomes interesting. Whether or not been in and that wing of the party can raise enough candidates to challenge incumbent republicans, that will be the big difference. It could be that they have lost some steam with this. Betty the former White House Communications director, anthony scaramucci, was on earlier talking about steve bannon and not to count him out yet. Let me play for you what he said. Dont underestimate steve bannon. He is a warrior. Is about to be defeated by the Republican Party and america. You dont want this level of disunity and contention. It was a good day for america yesterday in the sense that dan and lost. I dont think it was a great day for the Republican Party either way. Betty where might bannon set his sights next . Joe a couple of places that he will be looking for candidates to run in arizona where jeff flake is going to be retiring. Probably in nevada. He has vowed to run against republicans in every case in the senate except for ted cruz in texas. Stage will be seeing if he comes up with candidates, if hes able to raise enough money, or if donors and others will shy away from him now that the magic rubbed off a little bit. Paul joe, thank you for joining us with that analysis. Keepfirst century fox will its real estate portfolio after it sells a chunk of assets to disney. People familiar with the matter says it includes the film and tv studio lot in a way as in south america and asia. Our entertainment reporter joins us now. Wendy you expect an announcement . We work on the basis that the deal will be announced tomorrow. The market open in new york. Probably about lunchtime in london. Potentially be a very complicated deal. Murdoch off some of the assets, the rest of them going to disney. We will be looking for that tomorrow morning. Those,t a bit more on the winner will be announced. What do we expect to be announced . We expect the deal that will value the company. 60 billion, around that. Take the disney to fx,udio, a fax another network of fox. National geographic guide. And for the remaining Murdoch Company that will remain, we will be fox news, fox broadcast. Network,onal sports allowing it to really dominate the sports market along with espn. Off of some kind of spin the murdoch controlled assets. There are issues about tax liability. Howill be intriguing to see they structure this transaction. What about the regulators . Is this likely to sail through . There is a fox disney part of it, from an industry perspective. And my understanding is that it is a more likely deal to clear u. S. Regulators than a vertical merger that would of been with comcast. After the doj really opposed the has time warner merger, it colored the reading of antitrust in the u. S. There is that element and it should be fairly straightforward. Fox has been trying to clear u. K. Regulators for it to buy out the shares and the expectation is that the murdoch have said they expected to close next year. And when it owns the shares of sky, that deal with disney is closed. Fox will own sky, and disney will earn sky. Thats how we expected to roll out. Its a little bit complicated. Everything has to fall in place. L. A. ,oomberg reporter and that deal imminent. Bitcoin is shaking things up. Some of the women doing the same in this maledominated world of cryptocurrency. This is bloomberg. Paul this is daybreak asia, im paul allen in sydney. Im betty liu in new york. Cryptocurrency fans say they can be some of the most Disruptive Technologies in the world. It may also include shaking up the traditionally maledominated financial world. Four of 30 of the largest initial offerings this year through october had female cofounders. Up from the number of women leading Tech Companies with the largest ipos worldwide. Joining us is the Digital Currency Group Director of development and invests in a lot of this technology. And in hong kong, maxine ryan. Thank you so much for joining me. First about the investments here. On numbers certainly sound, a relative basis, pretty good here. Starting up these companies in bitcoin. But still relatively small, on a basic level. It is still pretty small. Is there room for disruption here . So i think there is definitely room for disruption. One of the trends we are seeing, as the Technology Protocols are being developed and activity is really shifting to the networking player and the application later, we are seeing more founders getting involved. We are seeing more female investors getting into the space and capitalizing hedge funds that are investing in tokens and ipos through these initial coin offerings. Where also seeing more female venture investors. And overall, the general maturation shift from technology into business application is opening the door for women from all sorts of industries, whether they are coming from corporate america, coming from a nonprofit side, a lot of opportunity as the ecosystem matures. Overall, we are seeing a shift but i think there is still work then needs to be done in the ecosystem. Ifty maxine, im curious you found it easier to invest in Companies Among female Led Companies . Maxine it is pretty much an equal playing field. What you get with the Bitcoin Space or the block Chain Ecosystem is that there isnt many people in the space laying down the foundation. It is easy as a founder or leader to make your mark whether you are female or male. Ist it really comes down to the knowledge that the person had of how this technology is applied and what involvement they have in this environment. I want to ask you how that technology is applied. Outfirst cash in and cash platform. Can youconsumer, explain what that means and how it works . Send microdo is we transfers overseas. We started in 2014 and were able to release two products ranging from a web platform and a mobile platform. With these two products that stem over seven countries, we are able to send micro transactions. A customer would create these transfers and we would do it on the back and doing the trading for them. Using the Block Chain Technology, you do get better fx rates. And we can really cut out intermediaries and we are able to provide more services. This is incredibly important for migrant communities that are duplicating cash and have very little money to spend to send home. The Technology Without any sort of knowledge necessary, but be able to reach the benefits of that. That is what this park is able to do. Paul you corrected yourself when you said bitcoin but went block chain because there is a difference. Both of you invest in Block Chain Technology and i wanted to of, is this a good way investing in Block Chain Technology and staying away from some of the risks we are always talking about . There are different types of investing. One is a traditional venture investing, buying equity stakes in Companies Like bit spark that maxine is working on. The ico model, offering tokens to incentivize users to participate in a network or even some Companies Looking at using tokens to sell equity. The crowd platform recently announced that they will be launching an ico marketplace and is one of the biggest crowdfunding marketplaces in the u. S. There is an interesting opportunity to create regulatory compliant tokens. Theink it is dependent on Risk Appetite of the investor. What we are seeing is companies assing both Equity Capital well as token capital. Foreign investors have in the near term as opposed to having ,o wait five to 10 years certainly appealing. I think there is a role for both markets. Ic see investors motivated by the idea of highly liquid token investments. In this fast cycling of capital. They are not so sure about bitcoin, but they like the Technology Behind it. Yount to play for both of another comment, yet another comment being thrown in here how speculative bitcoin is. I want to get your reaction. I know about monetary economics is that bitcoin is valueless. It is a bit like you talked about the mona lisa. I would rather have something that is objectively valued that i can look at and enjoy. Similar value. Betty let me direct this back to you. No matter what it has, valueless, does it matter with your investments . A think the first reaction that i would have is collective fiction. A money throughout the history of time has been whatever people believe is valuable. Salt, seashells, and the idea of what is valuable and not valuable is really in the eyes of the beholder. We see a social, political, and economic movement. Of mathematical scarcity that gives bitcoin devalue. They find that really appealing. Perhaps it is not for every investor. Tremendousinly potential for Something Like , a nonpolitical global open Financial System playing an in the moneye transfer and value transfer. It depends on the perspective you take as an investor. I think the market is responding to that narrative. Betty thank you so much, the Digital Currency Group Director of development. Dont forget you can find andepth analysis on bitcoin on bloomberg radio. Tenant to into daybreak asia from 7 00 a. M. Hong kong time and download the app. This is bloomberg. Paul all right, a quick check of the latest business flash headlines. Shikoku electric plant after a court band barista with a counter Nuclear Reactor, the ruling in favor of local opposition passes more doubt on the Prime Minister shantou abe of bringing japans nuclear grid back online. Since the 2011 fukushima disaster, there are 36 cases pending, seeking to prevent the return of nuclear power. Betty said to be asking banks to pitch for coordinators and book runners for the anticipated huge expected to be the biggest share sale in history. Sources tell bloomberg that aramco said to bank the last few days that it aims to make appointments by early next year. Much more ahead on the next hour of daybreak asia, we continue our conversation on Interest Rates. Global chief economist, joining us in about 15 minutes. Is this a phone . Or a little internet machine . [ phone rings ] it makes you wonder. Shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And ask how to get a 200 prepaid card when you buy any new samsung device with Xfinity Mobile. A new kind of network designed to save you money. Click, call or visit today. Paul the fed ends its last meeting of the year with a 20 basis point hike. Three more rises than in 2018. Betty a tightening market may trigger four hikes in the First Quarter alone. Paul the china connection, beijing and london with bond trading to open up at the debt market. Betty pump up the volume, one of the years most anticipated ipos may be music to the ears of tencent investors. This is the second hour of daybreak asia. I am betty liu here in new york. Paul and i am paul allen in sydney. The only big story for us is on the other side of the world, with the fed meeting. The 25 basis point hike, of course. But the conundrum of strong growth, but persistently weak inflation. It is the last time we will hear the soothing tones of janet yellen in a press conference. She has one more meeting, but that was the last press conference. A good legacy she leaves behind. No other fed chair has seen markets climb that far, that fast. Betty it seems a smooth transition to jay powell in february. What was interesting in the statement, what was missing, words on the labor market strengthening here in the u. S. Recognition we are not seeing much power in wages here in the jobs market. That is that conundrum you mentioned for the fed. Lets get the first word news with courtney collins. As it you were discussing, the fed has raised rates and lifted its growth forecast for next year. Key rate bysed its 25 basis points and maintains the projection of three hikes in 2018. Yellen said it underlines the view the labor market will remain strong and eventually trigger higher wages. Kashkari, andeel chicagos charles evans. Expected tonesia is leave its sevenday repo rate unchanged. Thebsequent plunge in rupiah. They will leave the overnight borrowing rate unchanged at 3 , with inflation easing since the november meeting. Senatent trump says the and house are very, very close to a compromise on tax legislation. As republicans try to have a law signed in before the years end. They said the bill would be a historic victory, although its passage has been clouded by the alabama election results. It is delayed until doug jones is sworn in. U. K. Prime minister theresa may suffered a serious blow to her brexit plan, as proe. U. Defied the whip in parliament. Voted for domestic legislation. That parliament is guaranteed a vote on the final brexit deal. Powerives mps the of over the withdraw treaty if they do not like the terms and 2019. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am courtney collins. This is bloomberg. News a bit of breaking coming out of new zealand. The new zealand with the billion surplus of 2. 5 for 20172018 that is less than we thought in the preelection update. Forecasting that surplus to continue contracting in 201828 20182019. Growth forecast similarly year,d 3. 3 in the coming versus 3. 5 prior. 3. 4 in 2018. 2019 at 3. 5 had been expected. This on the back of a change in government in new zealand. A coalition comprised of two parties, with the thirdparty in support. A few big spending plan to new zealand. The first year of education, free. A lot of spending going on. That is behind these forecasts. The kiwi dollar, not a great deal of change. To improveeffort productivity in new zealand and reduce inequality with programs put in place by the new government, contributing to lower forecasts in new zealand. Lets take a look at how the markets are trading in reaction to this and other headlines. David ingles with a look at the open. A good starting point, lets get started with the kiwi dollar, an intraday chart. Have a look at the today. The picture across currencies, a massive drop in the u. S. Dollar against asian fx. This is a kiwigreenback you are looking at. We are back above . 70 for the First Time Since october. It jumped above that level, right at that decision, when that came out. Broader picture looking like this. Somewhat more momentum coming through the equity markets. Australia is up for a sixth straight day. Software, industrials leading by 0. 4 . Japan, pressure because of the stronger japanese currency. Today, but compared to this time yesterday, stronger levels on the japanese currency. One stock we are watching closely in japan there we go. The most in three years yesterday, down over 8 . 12. 3 overdown about the past 48 hours. Reversede high court an earlier position that would have allowed one of the Nuclear Reactors of the company to open. They are saying, keep that thing shut. With nearby volcanoes, they say it is not a good idea to have a uranium field and Nuclear Fission in the same area. The company canceling a bond sale. Lets look at your bloomberg. 4. 3 . Ove it down today, there is your consensus rating and the headline. A lot of factors to the story. Coming out with a revised forecast of Nuclear Capacity into next year. The Bigger Picture is this. You have the trade surplus or deficit in japan. Here is the 2011 earthquake, here is Nuclear Capacity. It is a problem if it does continue. Betty thank you for giving us that perspective, david. Said to behe u. K. Assessing feasibility of a bond trading link that would open up the largest emerging debt market. Tom has the story in beijing. How close are we to this bond connect . British and chinese officials expect to be meeting for a dialogue here in beijing over the next few days. What we have been told, a key part of these discussions will be about setting up a working group to look into the ofsibility, practicality, setting up a bond connect between china and london. This would allow twoway flows. For the chinese, access to u. K. Fixed income investors. Thisor the u. K. , access to 10 trillion dollar bond market, the second largest in the world. Crucially, higher yields than you would find in the u. K. The terminal charge that illustrates this, g btv 5232. The top line, the chinese 10 year bond yields, then the u. S. Treasury, and u. K. , and german bunds. A yield just under 4 for the chinese yield, and over 1 for the u. K. That is the attraction for u. K. Investors. For the chinese, another step to opening up their Financial Markets after the july decision to open up the shanghai to hong kong bond connect. There have been discussions for two years between the birth and chinese over setting up an exchange in equities link between london and shanghai. For thischallenges bond connect, capital controls. Will they have an impact, how will they be factored into any bond connect, and the effect it has on investors . And of course, the time difference between these two countries. We hope for more details over the next couple days in beijing. Paul what other deals are china and the u. K. Likely to incur the next few days . One thing we have been told may come up is the option for yuan bonds onsue the interbank market. That would be interesting. We have also heard what the u. K. And china may do is set up a joint venture fund to invest in infrastructure, along with the belt and road initiative, x president flagship infrastructure programis. Probably worth around 1. 5 billion we have been told. We will have the u. K. Chancellor in beijing, along with britains secretary and top executives from the u. K. What will be interesting is to see how this supposedly relationship, golden era between china and the u. K. , will be maintained. It was discussed under the former chancellor and Prime Minister. Has the brexit chaos put a dent in that relationship . We will see how these talks progress. It may be something of a standard if britain looks to set up in the future a trade deal or start talks with china after brexit is done. China correspondent Tom Mackenzie in beijing, thanks very much. Woodward on the fight against dementia and alzheimers as part of our official series on the future of health care. Betty the fed hike is expected, but raised forecasts. We discussed this with klaus baader. This is bloomberg. Ul this is daybreak asia i am paul allen in sydney. Betty i am betty lou in new york. A look at how trading is shaping up in the first 15 minutes or so of trading. You have the nikkei trading about flat. Some Economic Data to watch out for later. Some factory output from japan. The cost the index in seoul the kospi index in seoul up about 0. 5 . More data out of australia in about 15 minutes time. Jobs was the focus today in the Federal Reserve statement. The Federal Reserve raising rates on wednesday, signaling more to come in 2018. What is expected from europes three Central Banks that meet on thursday . Kathleen hays here with a look. Done with the fed, now lets move on. Kathleen lets start with the Federal Reserve. 2017, thewrapped up beginning of the end of the Janet Yellens term as fed chair. They signaled three more rate hikes in 2018. Lets jump to the terminal. Here is 2018 come of the fed six voters clearly in line for rate hikes. Some see maybe four, some see fewer. Statement its policy in projections boosted their gdp forecast for 2018 and 2019. They continue to see a mediumterm inflation rise. It is almost like what janet yellen said at the presser. Market,e strong labor we are having difficulty finding qualified workers. We would assume to resume normal supply and demand channels, to see growth in wages overtime. Kathleen she does expect the labor market to remain strong. That will eventually boost raises wages. Take a look at g btv 711. Here is the feds key measure, up to 1. 4, a long way from 2 . Over the past year it has gone down. The Consumer Price index, watch closely. It was starting to rise until november. It went down to 1. 7, yearoveryear. What does that tell you about the difficulty of getting to 2 . That is why there were two dissenters at the meeting. Charlie evans a Neel Kashkari. Charlie said, what is the hurry . We can wait until next year and see if it is moving toward the target. Neel kashkari has been saying the same thing. He said rate hikes are sending the wrong signal, pushing down inflation expectations. Banks, noentral policy change is expected. But a change in policy or rates. We will see what they do next. Paul lets bring in klaus chief, Societe Generales economist. Kathleen was just talking about the problems of the fed, that we weekgood growth for jobs, inflation. It says to me one of the three things, either the phillips curve is not a thing anymore, perhaps the data is incorrect, or we have got to be patient. Would you concur, and which of the three would it be . I would portray the first point you made a little differently. Yes, many Central Banks find it difficult to reinflate reach inflation targets, despite loose Monetary Policy for a long time. We have growth in practically all the developed economies, running up of potential. Aboutis one dimension this discussion of the phillips curve. They feature unemployment and nominal wage growth. Growth,ook at real wage it was very strong. It was around 1. 5 in the u. S. In europe, it was running about 1 . 0. 7 , in line with the longterm average. We have seen since the beginning of 2015 a normalization in inflation. It certainly moved up a lot. Until suddenly real wage growth is not that good. My prediction is, you will see wages follow upwards. Not the most revolutionary statement made. But it is also clear, there are factors many people believe, that the degree of Technical Innovation we have seen that is squeezing the retail margin, means we have none. Kathleen lets take a look at what this means for the bond market, globally. Bond yields are still low. Tighty were convinced labor markets would boost inflation, you would think they would make and inflationary and is a anticipatory move. Three rate hikes take it up to 1. 5 . It shows the benchmark 10 year yield in october in a range from 225, maybe 250. The bond market seems pretty sanguine. Are they getting it wrong . Klaus i have difficulty completely agreeing with the bond market. The whole Financial Market has prejudice about what the fed is telling them. The bond market still falling short of discounting the three hikes. See ntinue to for foresee the three hikes in 2018. And another one in 2020. The bond market did not believe it. They are extraordinarily low. Not just low when you look at nominal gdp growth. But they are low when you look at the trend in fiscal policy. We expect chunky deficits in the u. S. , up to 4 . Normally the bond market is not react well to that. One Factor Holding down bond yields, both the ecb and boj and other Central Banks continue to expand their balance sheet. That is probably Holding Things down. Only are we focusing on the bond markets, i am curious about the dollar reaction. We saw the dollar fall after the fed statement in yellens presser. The dollar has not turned out the way we thought it would this year, with declines. Do you expect more pain ahead for the dollar . Klaus yes, we do. We think the best of the dollar is behind us. It depends what currency you are talking about. But the euro is pretty undervalued on just about any measure. There is room to the upside. The euro area economy continues to perform well. I think of the yen is a slightly different story, so is sterling. All in all, the dollar was a bit overvalued. It is just coming off the shortterm reaction in the fx market. I am not even going to go there. On the whole, the best of the dollar is well behind us. Betty thank you, klaus baader of societe generale. And thank you, kathleen hays. You can get a roundup of that story to get your day going in todays edition of daybreak. Subscribers go to dayb on their terminal. It is available on the anywhere app. You can customize settings. This is bloomberg. One of the most anticipated ipos may be from tencent investors. Theyre streaming and downloading unit is seeking 1 billion in its ipo. Here is selina wang with more details. Why is tencent taking their music unit public . This will be one of the most highly anticipated ipos next year. It is excellent timing for tencent. They are solidifying their lead in the digital streaming music market in china. The market is maturing. Tencent is the most dominant player in the country. They have proven to many people, this would have been unheard of years ago, people in china are willing to pay for music content and business and industryware had likely been pirated in china. It unlocks more value for investors and allows the subsidiary to strike more partnerships and deals. Tencent stand is in the domestic music market . Selina tencent had more than 50 of the market share. Part of the reason why it has done so well, tencent benefits from its octopuslike empire. They have a video streaming, they are the dominant messaging platform, they have online learning. Across this content they conserve these services to their customers. More and more chinese consumers are living within the wechat app. Even more reason for them to watch their movies within tencent businesses and listen to their music there, as well. Betty will it be even harder for spotify and apple to expand into china with their music offerings . Selina absolutely. Apple desperately wants this to work in china. A big piece of their Services Business is building that up in china, which is a huge and growing market. But a lot of smart phone users in china have android. That is something, tencent can be used for iphone or android user. Spotify has not yet entered the country and tencent is ahead with exclusive partnerships and licensing deals. It will be difficult for anyone to compete with the depth and breath of content tencent has already amassed. Betty thank you. Up next, more on the asian property market. This is bloomberg. Paul lets get you breaking news out of australia. We have the unemployment numbers for the month of november. The Unemployment Rate steady at 5. 4 , as forecasted. 1,600 jobs created in the month of november, outstripping expectations. Most of it, fulltime employment. 19,700 parttime jobs. Separatists in Participation Rate surging. It was at 65. 1 in october. We see the aussie dollar climbing steeply. The jobs rate Holding Steady at 5. 4 . But a big increase in fulltime jobs. For more market reaction, lets get to david ingles. David we are getting a whipsaw from the aussie. Big picture, up until many maybe two months ago, there were expectations it would be up. That was because of the string you see here. A massive beat, 62,000. Here is your expectations expectation of 19. G btv 5239. Have a look at the equity markets. 1 5 of 1 . The markets that are open, seeing pressure because of the slightly weaker read on inflation overnight. The dollar is getting hammered, compared to this time yesterday. Materials are up, Everything Else is split. Have a look across the kospi index. Hardware, software and industrials. Here is your tech space, 0. 8 higher. 0. 2 to the upside. The two markets we pointed out, a stronger yen may be a problem for the nikkei 225. Have a look at futures. We are counting down to the open markets in hong kong and china. Retail sales, industrial productions, two rate decisions in the region, on top of bank of england later on tonight. Before i go, look at the big stock mover were stacking tracking today. This electric company. A decision from the Hiroshima High Court came out. It reversed an earlier decision to let them restart their Nuclear Reactor in the countrys south. What that has done is the biggest drop in nine years. Said iout and dont think we have it. Toy are cutting the stock neutral, if i am not mistaken. Just have a look at the headlines coming out. It percent drop yesterday. Here is your consensus rating, and your pop in volume and interest. Lots of things happening for shikoku electric. Not a good day at the office, considering what happened yesterday. That. Thanks very much for lets get the first word news. Us minent reflation reflation us reflationist says they must stimulus now. His view contrasts with most economists, who expect the bojs next moved to be to tighten. Many see the potential candidate for one of the Deputy Governor positions that was open in march. New zealand is says budget surpluses in the coming years will be smaller than previously seen. And Economic Growth will be slower as the new government tries to reduce inequality. They say surpluses in 2018, 2019 and 2020 will be less than forecasted in august. Well the economy will expand 3. 3 in june, below what was forecast. The longawaited disneyfox deal expected to be announced later thursday. Less 21st century fox will retain its real estate portfolio, including the film and tv lot. Will spin off of the assets, with disney acquiring the studio, cable channels, and international access, in a deal valued at 60 billion, including debt. Zumaouth african president facing defeat. Allegations he allowed a family too much say in state decisions. They told him the ruling an order. Order global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am courtney collins. This is bloomberg. Investors will be getting a check on the state of chinas economy when they released the latest factory and sales data in 90 minutes from now. Economists are forecasting a pickup in sales. They see a slowdown on its factory floors. Curran joining us now from hong kong. Expecting xactly a mixed picture . Enda i think it will be reasonably solid for the end of the year. A bit of a slow down on the industrial outflows and investment. But no disaster expected. Retail is expected to be hit hard. The great rebalancing continues. Positive, noite matter what the numbers say today. We know the pmi is holding up. Inflation is in a good spot. Chinas moderation in economy rather than a steep slowdown. Betty this year has been pretty solid for chinas economy. Did it defy the skeptics here . Almost a Year End Report card we will get. Expectationsting, for the u. S. China trade war that did not quite play out. Expectations are down. In terms ofte lucky how the dollar fared over the year. It will probably sputter through the year. A growth target around 6. 5 . It continues on the upside. Even after the midpoint of the year, when they thought it would slow down after the party congress. Despite all the talk on rhetoric and curbing leverage in the the system, they are managing it without hurting them wider economy. The chinese economy is in the sweet spot now. For next year, there are complications. Paul coming up is the communist partys annual economic policy. How important is that . Chinas economy is planted in the center and we get continual updates. It will be gathering all the top officials from the central bank and regulators, including president xi jinping himself. Including the allimportant growth target. Expectation they are not necessarily producing pursuing a high growth target, as they did in the past. It will be a shock if it goes much below 6. 5 . There is a feeling next week will be important in terms of language on the growth target and updated language on how to tackle the system without hurting the real economy. That is what they have to pull off in 2018. Kong,enda curran in hong thanks for joining us. The evolution of housing policy in china and hong kong, spurs new sources of Earnings Growth in 2018. Lets get into that more with our real estate analyst, patrick wong. To haveg prices likely seen doubledigit growth this year, the largest yearly gain since 2012. Is that sustainable, given the expected rate hikes next year . Patrick for this year, i think the first half is strong in terms of momentum in hong kong. Isthe second half, it slowing down a little bit. It is up over 1 for the onemonth cycle. It looks at the situation right now, the Interest Rate has expanded, the growth was there. [indiscernible] for the upper demand, large home demand, is there. Some of the people in hong kong want to upgrade. Reason for theg market. In hong kong we could see more supply. Risky have the potential that the momentum will be coming down. Places less than 400 square feet could be a potential risk to the market. Paul you pointed out the onemonth high while searching the past four weeks. How will that affect investment demand in hong kong . Patrick this year it is still pretty strong. Market, weand retail see similar blackhawks deals in hong kong. [indiscernible] there,estment is still even if there is an increase. The main reason they think rental growth momentum in hong kong is pretty solid. T is why the reinvestment [indiscernible] it has gotten the market to this level. Betty you mentioned the surging onemonth hibor. We are anticipating more of risingiven the overall are tightening of Monetary Policy in the u. S. And elsewhere. I know you talk a little about this how will this Stack Investment demand in the Hong Kong Market . The Mortgage Rate in hong kong is moving up to hibor. [indiscernible] i think they are quite aggressive to do their business. See the Interest Rates have increased. Weically for coming months, see the full market, [indiscernible] lets go outside of hong kong and a at singapore and their residential market, which is been quite an underperformer compared to other cities like hong kong. And expect any recovery in 2018 . Patrick yes, i think singapore has underperformed. Prices in at home singapore versus markets like hong kong, beijing, those major markets have 40 over the past four years. For singapore, almost 10 during the same period. Of this year, we see a recovery in the singapore market. Also for the office market, as well. The improvement of the recovery is driven. [indiscernible] singaporein [indiscernible] it also triggered demand. More demand is coming into singapore, as well. Very reasonable pricing for singapore, when we compare it to other cities. Definitely we perceive more recovery going into singapore next year. Betty patrick, thank you so much. Patrick wong on the property markets in asia. The World Health Organization says the world is heading for a dementia epidemic, which could overwhelm health care systems. What researchers are doing to curb the crisis. This is bloomberg. Paul time now for our weekly look at the world of health care. The World Health Organization warning of a global dementia epidemic. Iron is key to numerous brain functions, although too much of it is toxic. Researchers in melbourne show two years ago iron levels in the brain can predict when someone will be struck with alzheimers. They hope to show how are moving excessive amounts can stave off of the disease. Joining us from melbourne, a researcher leading the study. Lets get to the iron story in a moment. Can you give us an idea of the burden dementia will be placing on the Health System globally . At the moment, it is costing the Health System about 1 trillion per year. It is estimated that by the turn of the middle of the century, we will have a 150 Million People with a mainly alzheimers disease. That will cost about 2 trillion per year. Most of it is care in residential places. But a lot of it is related to care in the home. Paul are we ready for this burden . I suspect of answer is not. Michael i dont think so. I think this is a huge impasse coming like a tsunami. We talk about diabetes and obesity and other global issues as what we should be worried about. But i think dementia is something we need to be concerned and focused on. Austin why work between health and others is very important. Paul lets talk about the work you are doing now. I could ask you to describe it to us, reducing the amount of iron in the brit reducing iron in the brain. Michael there is a link between iron and brain cognitive function. There was a study decades ago in canada that showed twice daily injections to remove iron seemed to improve cognition and memory. We are trying to do that again, but with a larger, more structured study, using an oral agent rather than an injection twice a day. It will involve 170 people and go for one year. It will take some time to recruit that number of people. The duration will be three years. I am hoping this will be a brandnew approach to this epidemic of alzheimers disease. Come it has taken so long to expand this approach, to restart this, and a sample this on a bigger basis . The brain is a very complex organ. We have tried to oversimplify it. We believed the main toxic toxin was from a protein called ameloid. Most have targeted those particular toxic proteins. We are moving toward using large doses of drugs targeting these proteins, using drugs at an earlier stage. Those of studies have yet to produce an effective drug. We now need to look at other approaches. This is why this is so refreshing. Using data we already have and easily available drug, we may be able to make a difference in the way other trials so far have failed to do. Betty how soon might you know if it is working or not . Michael it will take about three years to complete the study and then we have to look at all the data. None of this goes at a breakneck pace. It is important we continue our endeavors. There are a number of other approaches looking at were looking at. There is more to alzheimers than just preventing it. We have to look at health care centers, education. There are a range of issues. In terms of specific therapy, this is promising. We feel it is worth a try. Councilcal canceled and the health units funded this trial. We help to delay the onset or slow the progression of alzheimers disease in those who are already showing memory symptoms. Betty it is such a terrible disease. Why is it so complicated to tackle . It so hard and intractable to find a cure or treatment for this . Brain is found to be a tough nut to crack. The brain is probably the most complex organ in our body. It is a computer, does so many things, and has so many different systems it is difficult to think of one particular approach will ever do much. Otherlow progress against degenerative diseases of the brain like parkinsons, multiple sclerosis, lou gehrigs disease. We need to accept that the brain is tough. But it does not mean we cannot come up with effective treatments. We just need to try harder and keep trying. Layperson i have associated a lack of iron as impairing brain function because of a lack of oxygen to the brain. But you are saying too much can bring on alzheimers . Those familiar with anemia or not enough iron in the diet, how can some end up with so much iron it puts them at risk of dementia . Michael it may be it is not so much excess iron, it could be a normal amount that is toxic for people building up these proteins. If we can lower their iron levels through these medicines, we are likely to make a difference. Yes, iron is necessary. I am not advocating that people reduce the amount of iron in their diet. That is not an advised approach. We hope that by removing iron with this particular medication, we can make a difference to those who already have the building up of proteins. They are also already duilding up the toxic ameloi and other proteins. They are on the 20 to 30 year journey to alzheimers. It takes years to build up these proteins before we have memory start losing memory functions. Paul thank you, Michael Woodward from austin health. You can find out more on our series of the future of health care on our website. Had to bloomberg. Com. This is bloomberg. Betty a quick check of the latest business flash headlines. Afteru electric slumping the banning of reopening their nuclear plant. They cast more doubts on shinzo abes hope of bringing japans nuclear grid online. The plan had been in moscow alls after the 2007 disaster. For saudi aramco pitching book runners for the anticipated ipo, said to be the biggest share sale in history. Banks from theng last few days and aims to make appointments early next year. Beene told aramco has not telling banks where they intend to list the shares. Brewer willam sidestep laws about foreign ownership. The anon beverage is a local company. Sole biddeer bidder for sabeco. Breakings, we will be chinas retail and factory data as soon as it is out. We will get a reaction from j. P. Morgans chief china economist. Keep an eye out for that. Plenty to analyze. Betty that is it from daybreak asia. This is bloomberg. Haidi the dollar is down as the fed offers a more tempered view on growth and inflation. The aussie jumped, slashing expectations. 61,000 new jobs created last month. Pump up the volume. One of next years most anticipated ipos may be music of tencent of ear investors. Welcome to Bloomberg Markets asia. It is 9 00 a. M. In hong kong. It is the day of