Further decline. 2018 has to offer both good and bad. Ramy we are getting breaking news on the south korean front again. We have cbi today, inflationary prices coming in line with what estimates were. A nice rebound from the decline we saw in the previous month. It slightly exceeded what economists broadcast. You know we have been talking quite a bit about where inflation is in the market here in the u. S. And japan. Really there is no difference in south korea though they may be in a little better shape. It is perplexing. Because things are low, they are bound to go up. I a magic the Commodity Markets will kick in. The commodity market will kick in. Fact that an expected tightening from the fed and others is a key risk to watch and 2018. Betty certainly we are watching the markets here today in the u. S. Lets quickly pull up where we ended up and u. S. Markets today. 1 5 of 1 . Er by the nasdaq also higher. Pretty much green across the screen. A lot of people are not taking on any huge position. The volume is spinning out as we get to the end of the year. A lot of people are not at their desks. Betty we are. Anchor blame the day job for that one. A shortened trading session in new zealand. Early happy hour for the kiwi. A 30 hong kong time is when that market closes. Nothing much as much as teachers are concerned. Concerned. Are have a look at the currency space because this is where you want to watch today. Just looking at the euro closing in on 120. 135 on sterling. Another major implication of a week u. S. Dollar is the commodity. Under no one today another one today making it an 11 straight days. Anchor thank you david. President trump is warning china about crude oil. U. S. Satellites have seen chinese ships transferring oil to north korea. Disappointed that they are allowing oil to go to north korea. We are told the prince has left the Ritzcarlton Hotel where they were arrested. Several suspects have been able to buy their freedom. President has dissolved Parliament Today opening the door to elections in march and the possibility of further political instability. Italy is the eurozones third biggest economy. The antiestablishment movement is ahead of the democratic party. Below 40,000 as 2017 heads towards a close. It is debating options for stamping out speculation and the digital currency. Those options include the potential closer of some bitcoin exchanges. It has now fallen around 30 on the record 19,500 it reached on december 18. Global news 24 hours a day, powered by more than 2,700 journalists and analysts in more imn 120 countries, courtney. This is bloomberg. Anchor apple is under pressure again under the performance of the latest iphone. Publicware of the dissatisfaction of reducing battery life. Sayinglso apologizing there is a misunderstanding about the use of older batteries in new iphones. That sorryonce said is the hardest word. Has apple apologized . Said, sorryty much not sorry. Users notice that their phones were not working very well after an apple update and the simultaneous release of a new phone suggesting that apple made the old phones worse to motivate you to get the new phone. Apple apologizes for your feelings being hurt. Anchor how are they trying to make everyone feel better about it . I noticed it myself. A lot of things just lagged on my phone. Are they putting any tangible fix is in place . If your battery suffered as a result and want to keep your old phone, they will still charge you but charge you significantly less. Again, they do not cop to having tried to make old phones worse. Making newcused on phones as good as possible. If that degrades the old phones, it is still tough luck. Makes me want to not upgrade my iphone anymore. The failedt of forecast at all . Analysts that lowered wereates this week minimal. Apple never gives a forecast. Analysts come up with it. They play with the numbers in their own way and change over time. I think this is really analysts playing with analysts and not apple having issues. How many phones they sell . How much do they charge for the phone . The iphone x is so much more have ave that they will fantastic order even if many phones are not sold. Toty let us go from apple toughwho has had a pretty year. They are ending with a major stake being taken by softbank. What is the impact of this stake . About a 30 decline in the actual value of the Company Based on the market capital. That ubershows you future is not as bright as it was a few months ago. Fact thattion and the there are allegations of Sexual Harassment and an unfair workplace have caused a lot of executives to leave the company. Competition in china is better than they can master. Hadmpany we saw months ago potentially influence the decision made by softbank. Anchor was that a surprise to you . Who do you think sold . It appears to be early Venture Investors and employees as well. Violation rise a to the billions, it is the best investment of your life. Captured by the tail. The chance for those investors to get off and take their money off the table. Im sure other folks looked at this and said, i could finally get out of a lot of shares here. They want to take out some of that and perhaps play with the money elsewhere. Betty bloomberg editor at large there on softbank, uber, and apple. Those concerns have had some relief. We are going to discuss that later. Anchor coming up, and inestment strategist rate the top 25 for the past three years. This is bloomberg. Betty this is daybreak asia. To ar 2017 is coming close and we begin to look ahead to next year. The future of the fed. I do not think it is mostly a middleclass taxcut. It is actually, a corporate rate cut. That is very important. Weightedy heavily towards advantages for upper income people. The middle class will benefit. And otherrate cuts benefits. Some will pay higher taxes. The middle class tax cuts are temporary and will go away according to this law. Heavilyit is very weighted towards business and er income people paired upper income people. Anchor supporters say it will benefit the economy but who do you think will benefit in your view . Corporations will benefit. That is long overdue. We did need to get our Corporate Tax back in line with the rest of the world. I would have rather seen it done in the context of a bipartisan and revenue neutral bill. One that did not increase the deficit over the longterm. Be that as it may, we did need some Corporate Tax reform and rate cuts to bring us in line with the rest of the world. Also, various kinds of other businesses that are not will benefit. That part is complicated. Thisas to mention that bill is welfare for accountants and tax lawyers. A lot of experts are going to have to figure out what is going on. Stimulus, terms ofs itd going to be broadly stimulus for the American Economy as the republicans believe . Boost fort a modest the economy in the short run. It is the long run that i am worried about. We are increasing the deficit. We do not need to do that now. Anchor that was the former head of i chair speaking to bloomberg. Lets talk more about tax reform. The fed and the economy of next year. He joins us now from naples, florida where i imagine it is a lot warmer than it is here. Let us start with tax reform for next year. There is a lot of uncertainty as to what kind of impact this package really has. What is your assessment . Kathleen wasat trying to get to is the impact on corporations. It is clearly the benefit and this reform. Discussion on of who is getting the real tax cut. The meeting or impact is for corporations. Where it benefits the most is on Smaller Companies as opposed to larger companies. This is a Corporate Tax package. Anchor will it be marginally better or significantly better . Will have any effect on the economy . It will be marginally better for the economy but i think it will be good for stock. The savings for corporations will go into increased dividends and Capital Expenditures and reinvestment. We will see money real pretty repatriated here. I think it is net positive for the economy and the second form. Anchor what do you make of the want market bond market . Rise andeen equities we continue to see it at the end of 2017. Is that worry some . Worrisome . That yield spread is just north of 50 basis points so we are getting flatter and flatter. If we do not see the nextmediate terms move up year, we note that the shortage is going to move up. If tenure yields are not moving up, we become very precarious. David i look at the tenure in germany and it looks like a bargain. What do you think brakes the camels back here on the bond market . Nothing that the fed is doing is raising Interest Rates. Do i look at the ecb now . That is what we are looking at. We know that the fed controls the short end of the curve. They control shortage rates. They can only influence other rates. We think that mostly the impact on intermediate term and longerterm rates are exactly what you point to. It is the competitive yields comparing europe and japan to yields in the u. S. We are nearly at 2. 4 versus nearly zero in japan and hovering around half a percent. Those are keeping pressure on those 10 year bond yields in the u. S. To stay lower. If we are looking at the ecb, we think accommodation comes to an end. We see a rate hike next year. As rates come up around the world, that would allow our curve or that end of the to raise more. If we do not see those global yields, we could see the 10 year staying low at 2. 5 and the short and the raised by the fed. Forward several funds that you like in 2018, we will bring that up for viewers. Robust. The if you had a pick one what would it be . Probably arc web. We still like the secular gross stories and technology. Those plays in google and crypto isrencies, we think there opportunity there for the internet place to run further, ecommerce to run further in 2018. Really quickly, are you long bitcoin . Yes short tesla and long bitcoin. Since september. Betty that is the gift to our viewers. Plenty more to come on bloomberg daybreak asia. This is bloomberg. David this is bloomberg daybreak asia. Betty a quick check of the latest business headlines. Infocom has agreed to buy mobile assets after merging the companies have not disclosed financial terms. Anil says he wants to cut borrowing by march. David the bank is being fined almost 12 million to resolve claims. Retail customers displayed inaccurate ratings. Incorrectkets showed ratings. 38 of the equities covered or by the Research Department. Says they remain weak there. He is open to hiring entire teams of bankers. Is wellwarned the staff below that of america and jobs could be on the line. David coming up on the program, we are drawing to a close here in 2017. It has been quite a year and we will be having a look at the winners and losers across the market. Also getting down to the last Training Session in japan. The last hour of trade in new zealand. This is bloomberg. Is 7 30 in the morning, friday, the last trading session of the year here in hong kong. Youre looking at a beautiful morning across victoria harbour, just 30 minutes away from the open of major markets in the asiapacific. Do we get 30,000 for the hang seng . It would be a nice thing to have here. Betty a new years gift. 6 30 p. M. Thursday in new york. We are almost to the end of the trading year. Markets closing just a touch higher. Volume, of course, thinning out, the greent a bit in for the s p, the nasdaq, and the dow. Im betty liu in new york. David and im david ingles in hong kong. You are watching daybreak asia. Lets get you an update of your first word news. Thanks so much. Apple is under pressure again over the performance of the latest iphone. It is aware of the public dissatisfaction over life and will release an ios update to improve the visibility of the power. Life and will release an iosit apologizes about the misunderstanding in older iphones. Nevers it would intentionally shorten the life of any apple product. Uber shareholders are said to have agreed to sell a sizable stake to a group led by softbank. We are told the deal implies a valuation of 48 billion for and the Investment Group will pour another 1 billion in the business at a higher value of 69 billion. The deal makes softbank one of the largest shareholders in uber and comes with two seats on the board. Its taking 50 widebody jets that have surging demand from airlines in the asiapacific. Wide bodies offer the best return. He is looking at planes with broad market recognition. They already have 89 planes and count their china, air asia, and ana, among its customers. Rivals statebacked imax aims to become the number one bigscreen player on the mainland. China film digital says it has a government mandate to become the largest premium screen brand in china and its confident that will happen by 2019. The chairman says the priority is growth, not profitability. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im courtney collins. This is bloomberg. David thank you. Lets turn our attention to bitcoin. It has been one of the stories in the latter part of this year. Its declined below 14,000 at the moment. Is considering potential closure of some of these exchanges to slow down this speculation bubble. Ramy inocencio has the bloomberg charts that we need to know. Ramy taking a look at bitcoin as well as bitcoin futures. Bitcoin crossing back. Over the 14,000 mark. It had been down by about 9 in u. S. Trading, paring those losses. Cboe futures are up. Cme futures are also up. I want to show you my first bloomberg terminal chart. This is whats been happening with bitcoin over the past month. We can see that you will remember it hit its record high of just over 19,000 back in the middle of december, but ever since then, it fell, down about 41 . We are seeing its secondbiggest fall. Definitely a wild ride. Theres been a knock on effect in terms of other bitcoin related products. You are probably taking a look at the purple line, the worst performer, down 24 . This is a Telecom Software provider that said that it would add support for Blockchain Technology. It had risen by about 100 a couple days ago, but it is having that knockon effect. Longfin said earlier this month that it was going to buy a Blockchain Technology company, a biofarma, which changed its name in order to put blockchain on the end, also down by about 10 . Finally, lets take a look at whats been happening over the past month. Cryptocurrencies, in general have had a very wild ride,. Lets see here. Looking at light coin lightco in, down about 15 over the past month. Bitcoin ripple has been having the best month to date, up by about 50 . Some analysts are saying that it is because theres a little more trust in terms of Financial Institutions with ripple. For example, American Express has had a partnership out there and that is lending some support to this cryptocurrency rival to bitcoin. Suffice to say that, over the past year and especially into 2018, we are definitely going to be talking about bitcoin into the future. Those are your three bloomberg terminal charts for bitcoin. Happy new year. Betty happy new year, ramy. As our last guest said, he is long it going long bitcoin. Look at the bloomberg mxap index. You can see asian markets have led by gainsy 30 , in the tech sector, the i. T. Sector. Investors have stayed optimistic and pushed stock markets across asia up, from india to indonesia , despite geopolitical tensions, government interventions, and surprise elections. Our editor is joining us from singapore. Its been so curious to see how the markets have shrugged off everything from exploding phones to president s jailed to missiles in north korea. They were still buying. Thats right, betty. It has been a great year for asian stock investors, thats for sure. Whats been really interesting is this huge gain, of about 30 . If you compare it to the u. S. Or europe, asia is really at the front of this. About three or four things that investors are focused on. The one main thing that people have obviously been talking about the entire year is the tech rally. Tech stocks have a huge waiting on weighting on the msci asiapacific index, and they have gained about 50 this year. That, thanks to Companies Like tencent, alibaba, and samsung electronics, who also have huge weightings on the index as well. A couple of other things would be Global Economic growth. That would be one thing. Also, cheap valuations. When you look across the globe, shares are still pretty cheap. Betty they are relative to other markets. Investors like blackrock also saying they are keeping an overweight recommendation on japan going into next year. Why . So, japan started off a little slow this year and then it just took off toward the end of the year, with regards to blackrock, it is more again about cheap valuations. They are still expecting great corporate Earnings Growth in the new year, and they think theres still room for stocks to grow. Number of just put nomura just put out a note overnight saying they expect stocks to rally next year in japan. All in all, it looks like it might be a good year next year for japan. David thats japan. China tends to dance to its own beat anyway, but it has been a relative underperformer this year. What happened or didnt happen . China is an interesting market. Was always is an interesting market. There was a lot going on this year from shortsellers to government interventions. Towards the end of the year, the government was campaigning to cut risk in the financial sector, and that led to a lot of investors rushing into state owned largecap stocks, and that created a huge gap between those stocks and the broader market. So, thats one of the things that happened this year for chinese stocks. Year,k going into next you are still going to see people are going to be waiting to see what else could happen in the market there. Like i said, its interesting. Maybe there will be more government intervention. Who really knows . David really. Who knows . That is the key question in china. Thank you so much. Lets have a look at china. We were just talking chinese markets. We are going into 2018. Have a look at our bloomberg chart. This was inspired by peking duck. This is chinese growth three ways. You have the official numbers out of the mbs in yellow. We are seeing a convergence here. We are talking 6. 5 on the 7 growth. Into 2018, the key will be controlling financial risk. The pivotal challenge of a lot of policymakers there, as we head into the new year our chief correspondent is here to talk through those risks and how next year is shaping up. The duck rolled up in a nice pancake. Ing. Growth is not pancak we could go on and on. Controlling financial risk will be the pivotal challenge, and thats what state media has called it, for china for the next three years. The Deleveraging Campaign is going to kick into over drive, if you will, now that xi jinping has this mandate following the party congress. He heads into his second term for the next five years with controlling financial risk at the forefront. Again, the consensus estimate is for gdp growth to slow to the slowest annual pace of growth since 1990, 6. 5 . But they believe they are on stable footing right now to embark on this Deleveraging Campaign with full force, despite slowing expectations for growth. The biggest wildcard are going to be all the other things. You have domestic debt, poverty reduction, always a persistent challenge. But also, pollution is going to be one of them. I will talk about that in just a second. Internationally, the rising specter of Interest Rates from the fed to mabye overshooting maybe overshooting. That could spark another rally in the dollar. That could spark outflows again. Thats a big concern of the chinese. A trade war threat could rebubble. North korea always a big threat. Again, we had donald trump warning china about what he called illicit oil exports from china to north korea. Again, following these latest, tighter, u. N. Security council sanctions, donald trump tweeting, chinas caught redhanded. Very disappointed that china is allowing oil to going to north korea. Containing donald trump, containing kim jongun, maintaining the status quo they like to set a lot of challenges and then outperform. That is chinas modus operandi. Betty thats right. Underpromise, overdeliver. Pollution, that has been a persistent problem in places in beijing, but how much of a priority it has been a priority for officials, but what about next year . I think the main priority for xi jinping the next five years, if not even beyond that, is going to be keeping the middle class happy, and the middle class is not happy with the number of things a number of things, including the state of pollution. I have a little tickle in the back of my throat just watching some of this video. I remember the seven years i lived in beijing and how much damage that did to me. Can you imagine if you lived there year round through the wintertime, like the chinese have to do . This is a big problem. Beijing today issuing another warning, a pollution warning, smog warning, that will last throughout the day today. Children and elderly asked to stay inside. It is a persistent problem, and it is something that the chinese authorities are doing efforts to clean it up. They have closed a number of different coal burning power plants in beijing proper city, however, they need to do a lot more. David yeah. Just looking at the screen here, almost taste it. I still taste it. I lived in the second most polluted city back then. David looking on the bright side, we are going into 2018 and the economy is stable. Stephen there are possible external and internal shocks with deleveraging i still taste. And the possible aftershocks we could see in the housing market, in the construction markets. That could have ripple effects, but these are similar challenges that china has faced the last few years, so i wouldnt say there is a major, major new challenge. It is just managing expectations again. David steve, thank you so much for that look at china in 2018. Our chief north asia correspondent, live in the studio. We will look into the crystal ball and hear from the chairman of one of the largest banks on the biggest risks and opportunities for the sector in southeast asia. This is bloomberg. Risk would be the interruption of the internet. If you have some major hacking in the [indiscernible] david the risk the risk we think is not so much economic or political. It is more geopolitical side. We are monitoring the situation known in north korea. Tension has been up again. There wont be any escalation. But if something happened here, it could cause a major market disruption. Things i think much Higher Oil Prices could lead to some tempering around demand. Prices could impact the consumer. Demand growth this year has been particularly robust. Next year, jpmorgan is forecasting another robust year of demand, but obviously with Higher Oil Prices, you could start to see some moderation at the pump. As rates rise more rapidly across the globe and liquidity gets tighter across the globe more than people are expecting, then the impact on the emerging markets could be our biggest challenge. Betty those were some top views from our guests on what they see as the biggest risks that could move the market next year. B groupas cim holdingschairman has confirmed he is planning to set up a private equity fund. This is at a time when crossborder equity deals in asia offer exciting opportunities. He spoke exquisitely to bloomberg at the year ahead asia summit in jakarta he spoke exclusively to bloomberg at the year ahead asia summit in jakarta. I think the biggest risk is on the geopolitical side. Ofhink this this year rising Interest Rates will be ok. I think that the banks have been very good at managing the pace of rising Interest Rates and so on. The geopolitical shocks worry me. Asean, a foothold in nine countries, soon to be 10. Given the projection for the region, ranging between 5 and 7 , how does that impact the Banking Industry . I think its interesting because, at the moment, you are seeing in some countries gdp growth,head of loan which is quite unusual. I read that to be potentially a lag effect. If im correct, i think 2018 should be a very good year for banks in the region. Haslinda where in particular are you placing your bets . Which countries in particular . I am always bullish on indonesia, in terms of i think the potential growth is there. I think the key to indonesia is, snce the infrastructure improve significantly, i think it will get a significant uplift. It may not come in 2018, but maybe two or three years. I think malaysia, singapore will continue to be very stable. And we are excited about philippines, which is our new market. Haslinda when we spoke to vikram pandit, he spoke about how 30 of the jobs in banking will disappear in the next five years. I think its probably more. Haslinda how are you preparing for that eventuality . In terms of productivity, competitiveness, i think you have to go for it. But at the same time, you also need to knowledge that to acknowledge that there are human issues involved. Maybe banking doesnt require so many people, but does it mean it is only limited to banking . How do we deploy these resources . How do we help retrain . These are things people need to do. We need to think about the bottom line, but not forget about the human cost. Haslinda are there more opportunities for deals inside of asia compared to the rest of the region . Private equity in asean has underperformed, but i think there are a lot of things to do. One of the reasons one of the things we should be looking at is the opportunity to originateone of the deals, in pr crossborder deals. A lotk asean theres of opportunities for combining businesses in malaysia with businesses in philippines, etc. If you look at it today, maybe not so many deals, but if you think about creating deals, i think there could be a lot. What do you sense is a better opportunity in 2018 . There are a lot of opportunities in technology, but it is dangerous. If we look at many of the can they they execute . Is someone else doing it faster . Multipleto fire in directions and hopefully get one of 10 right, for instance. Thats just the order of the postIndustrial Revolution. Haslinda it helps to have deep pockets, right . What do you think are the biggest risks in the next 12 to 24 months . I said earlier its the geopolitical risks. The synchronized Global Recovery is real. I think the way Central Banks have managed economies has been very good. So, the only risk is shocks that could come, whether its from the middle east or the South China Sea or north korea, i dont know. But certainly, we hope that political leaders contain these risks. David that was the chairman of cimb, speaking to haslinda amin. Now, lets have a look at one of the functions we would like to bring to your attention. This edition in the morning, everything you need to get your day started. Thats on your terminals. The big story as we head into this last trading session of this year has been the u. S. Dollar. The euro up. Sterling pushing toward 1. 35. The bloomberg Commodity Index now in its longest win streak pretty much on record, 10, 11 straight days, maybe taking you back to 1991. Its all available on bloomberg. You can customize your settings and get the news and information on the industry, assets, and areas you actually care about. Check that out. This is bloomberg. ,tty this is daybreak asia and im betty liu in new york. David im david ingles in hong kong. Chinese conglomerate a chinese conglomerate may be stepping up plans to raise as much as 3. 2 billion in the local bond market, although the timing of the deal has yet to be confirmed. Fosun is among the private sector giants in china that have faced Greater Regulatory scrutiny this year. The government cracked down on a lot of its outbound investments. Betty carl icahns investment in freeportmcmoran is finally paying off. The miners market value has surged, thanks to a rally in copper, on course for its longest winning streak in a generation. Icahn disclosed an 8. 5 stake. His initial investment is on par with the return of the s p over the same period. An electronic whoseent maker show stock has soared, trading more than 130 million shares. Thats the most ever for the stock, and the company has not made its filing. No one has been around to comment on the companys change. Now, lets have a quick check of how we are doing across some of the markets that are open. We are just coming down to the open up markets in japan. Maybe a slight uptick at the open in japan. New zealand, entering flat. A big story. Lets have a look at currencies and commodities. Commodities on the longest win streak going back to 2005. We take you back to records. A lot of it comes back to the fact that the dollar has mostly been dumped against its major peers. Betty currencies and commodities will be a big focus for investors next year. Much more ahead on the next hour of daybreak asia. We will be joined by a fixed income analyst in just about 10 minutes. Later, we will look at whats ahead in the auto sector. This is bloomberg. It is 8 00 a. M. Here in hong kong, we are live from bloombergs asian headquarters. I am david ingles. Top stories, tech leads. Customers,gizing to insisting it would not intentionally shorten the phone life. Someone likea year to forget. Betty from bloombergs Global Headquarters come iambic he liu in new york global iu inuarters, i am betty l new york. When an investment goes down well, the market for fine wine. Where to uncork a winner. But it might cost you. A very good morning from hong kong. We are finally here. Trade, and hours of local markets as we wrap up 2017. Lets highlight what we have seen. Thinking we might not see Something Like this again. Look at the function on the bloomberg which tracks monthly gains for the regional benchmark. Every single month going back to november of last year, into where we are. Have a look at this. Every single month, gain. The first month on record we borrowing over, the last 24 hours. That is the top row. 2017 has been about some risk. Betty a lot of love there. , itd, i think in my hold seems. We look it trade in january, a lot of people say what will happen in january will set the tone for the rest of the year. Gathering themselves up in 2017 and crossing their fingers it will be just as good. David that is the hope. Conditions might not be as cooperative. A lot of people hope, given what year we have had. Tokyo is opening up, south korea shot. Sophie is following all the quiet market moves. There is no one at work today. Sophie check out australia. 200, downor the asx 0. 4 . And aussie dollar just below that. 78 handle. The nikkei 225 adding 0. 2 to the topix. Index jasdaq index has gained. Msci index slightly higher. Lets take a look at other assets keeping in mind. Overnight we had treasuries slighting for the 12 year yields to 2. 43 . No change as of now. Bitcoin back about 14,000 after being knocked below that following south koreas warning. Oil, fairly flat. Gold, creeping toward 1300 again. Dollar speaking, weakness has been a boon for gold. 1595. An see that on g btv as the dollar crumbles, its worst year since 2012. You have the year and balancing adding to the lows. The trade deficit not helping the mood, either. Anticipating a 2 decline from current levels. This bodes well for asian equities because it boosts inflation expectations. Lets see what is moving the dow on the nikkei 225. Financials adding 0. 2 . Real estate leading the drag when it comes for laggards for the nikkei 225. Zero point 5 s, higher, following uber agreeing to the deal that gives a soft bank the top shareholder role for the ridesharing company. Betty thank you so much. Lets get the first word news with courtney collins. Courtney President Trump is warning china about illicit deliveries of crude oil to north korea. Say u. S. Er in seoul spy satellites have seen chinese ships transferring oil to north korean vessels at sea. The president tweeted, caught redhanded. Disappointing disappointed china will allow north korea. Many said to have been released from detention in the crackdown on corruption. The princes have left the written the Ritzcarlton Hotel in riyadh. They had been held since early november. Several suspects have bought their freedom to avoid trial. The italian president has dissolved parliament, opening the door to elections in march and the possibility of an inconclusive result. Italy is the eurozone thirdbiggest economy, but the recovery is trailing most of its peers. The antiestablishment fivestar and a potential centerright coalition. Apple is under pressure again over the performance of the latest iphone. It says it is aware of public dissatisfaction over battery life and will release an ios update to improve the powerpack. Apple apologized but said there is a misunderstanding about the use of older batteries in iphones. The company said it would never intentionally shorten the life of any apple product. 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. Betty thank you so much. Softbankledhe Investment Group plans to invest 1. 25 billion into the company. Reporter isch tracking this from tokyo. Tell us about this deal and the key government reform that will kick in with softbank and goober. Y get two board seats softbank and uber. They get two board seats. It was complicated, we did not know if it would go through until the last moment. They would extend the board to about 17 seats. Two of them will belong to something. Effect to cumulative reduce the influence of early backers. More specifically, of the former ceo and cofounder, travis kalanick. As part of the deal, benchmark, one of the biggest investor in uber, will drop the lawsuit. Hopefully it will end a lot of the internal strife that held the company back in 2017. Betty 2018, hopefully a clean slate. And what will uber do with this money . The 9 billion softbank toinvesting will go directly shareholders. But the 1. 25 billion will remain with uber. There is an aggressive global expansion. If you look at the list of cities where they offer a service, they have had a strong year in north america. But you also find it in pakistan. Like 4t forget they lost billion this fiscal year, all while investing in self driving cars. Pavel, david here in hong kong. Softbank acknowledged they have a stake in uber. They also acknowledged they have a stake in competitors. What does that mean . Softbank already has a and grab,e in didi which covers southeast asia. Uber had been waging a war against local companies, which was hard for everyone involved. Pulling out,s uber striking a deal. It would certainly make sense to step in and strike deals and avoid competition. Broadly, we have been talking about a potential deal and the amount for some time. What is the broader thinking, white uber is getting into these softbank, rather. Pavel softbank has a 92 billion vision fund. If we knowain son is the mastermind behind these investments. May congeal to a more cohesive piece, instead of a loose portfolio, which it has been up until now. David thank you for wrapping that up for us. Coming up, more on the auto sector. Looking at why some of these Analysts Expect slower sales. Betty the outlook for the asian dollar bond. Mutual says they will outperform most other credit markets. This is bloomberg. This is bloomberg. Tty this is daybreak asia i am betty liu in new york. David and i am david ingles in hong kong. Heat for bond traders in 2018. They are dealing with the mystery of low inflation. And whether or not to temper the skepticism. Believedguest centralbank policy overall will remain him remain a number one driver. He is with us here in hong kong. My first question, global tightening it has been a while. Backthat break the camels . Do we see a multidecades at bull run . The Million Dollar question is when that will happen. A significant headwind for asset prices going forward. When it happens is a key unknown. We have gone from this accommodative cycle where centralbank policy has been easy. It has gradually been getting tighter. The long end of the curve is not budging. Globally, not just in treasuries, right . We look at the ecb now . The fed is not doing anything to the long end. I am wondering what the incremental catalyst is that moves it. Mark ironically, as the front end drivers, could be the backend driver as well. The curve is flat because of low absolute yields, forcing investors out of the curve to generate yield. We think it could reduce demand of the long and fixed income. And therefore see a steepening of that curve, as well. Betty if and when that happens, what is the big risk there will be huge shocks or instability, a tantrum in the bond market because the yields are so flat . I want to point out a chart i am sure you are familiar with in the u. S. G btv 5080. It shows you the flattening yield curve and how much it has converged as we head to the end of this year. What are the chances we will see a big disruption in the bond market . Mark i guess the optimistic case is that it happens gradually, yields rise gradually and we get a steeper curve gradually. But there is risk. Betty chaotically . We are not necessarily predicting a big bang in terms of market disruption. What were saying to clients, given asset valuations are stretched, not it now is not the time. As we are seeing these rates rise and a possibly being supportive of the dollar, how that might affect currencies in asia, particularly the chinese currency . The dollar,ronger the flipside is the weaker the local currencies. Ironically we have seen that whenever the dollar rallies, the demand for from Asian Developers goes up. It can be supported for the bonds, even though it can be negative for some of the credit fundamentals in these emergingmarket regions. Betty it absolutely could be negative. We were talking yesterday with another credit analyst. We could see a risk when rates rise and that increases borrowing costs among the asian corporate. Watch. One risk to how big of a risk might that be from asia, when you have Global Central Bank tightening, safer the bank of japan . Mark that is one of the reasons we are saying to stick with better quality. Dont reach for risk. Those most vulnerable are the weaker quality credit. Saying asiae dollardenominated credit is a safe haven . That is a fairly big space. It, seekinge dollardenominated product, and where that Investor Base is growing. Chinese bonds are good case in point. It is growing at a very fast rate. The demand for dollardenominated products set of china is growing at a faster rate. We can see some style of tantrum scenario and market volatility. But we think asia will perform relatively well compared to the u. S. They are more driven by mutual funds and etf. Asia, a big and growing part of the ownership base is insurance companies. Less volatile, less vulnerable to outflows, because they continue to grow and seek the dollar product. David speaking of dollar products, china, 4 . The philippines, 5 . Indonesia, 6. 2 . India, 7. 3 . Risk or reward . Mark i look at the dollar space. It comes down to what the dollar does. Some of the higheryielding currency yields do not look too bad, as far as i am concerned. Some of the fundamentals in those emerging market regions are pretty supportive. What we worry about more is what happens to u. S. Treasuries. Betty before we go, we touched a little upon this. Inflation. Some are saying 2018 is the year when you see inflation where it is ugly. We have been talking about that for a while. Do you sense at all that 2018 may finally make that come true . Mark inflation is pretty low. I can see a scenario where it rises a little bit. Weak inflation remains relatively benign. It is not out of control. The converse is, most people think the same way. It is probably the number one risk in financial markets. If inflation gets out of control, Central Banks have to fight it. If they have to speed up the pace of normalization, that is the main risk for all asset markets and financial markets. Betty thank you so much, mark reed, fixed income analyst at Mizuho Securities in asia. Get a roundup of those stories in todays edition of daybreak. Subscribers go to dayb. It is also available on mobile in the anywhere app. Customize your settings and get news on industries and assets you care about. This is bloomberg. About. This is bloomberg. Lets get you a check of your business flash headlines. What is a few billion between brothers . Coming to the rescue of a billionaire brother, agreeing to buy mobile assets after this merging. The companies have not disclosed financial terms, but they are expected to share all costs. They do want to cut 6 billion by march. Betty citigroup being fined almost 12 million to resolve claims their brokerage unit harmed consumers with their rating. They say citigroups local market showed incorrect rating sell onbuy instead of 38 of the equities covered by its Research Department from february 2011 to december 2015. Nomu said itr has had enough of its underdog status in the u. S. A ceo says he is open to hiring entire teams of Investment Bankers and chasing new acquisitions. He warns the banks european staff is well below that of americas, and jobs could be on the line. Betty a warning. The u. S. Property market enjoying a robust 2017. Saysestate database zillow the entire u. S. Housing stock increased by 6 , or 2 trillion. They gain in housing values is the fastest in 2013, when real estate was in the early stages of recovering from the recession. Think about australias housing boom may be over. Further growth and prices could be stymied by a record Household Debt and poor wage growth. Is inputy bureau chief sydney. James, what does this mean for the Property Owner in 2018 in australia . James this is a topic in australia we like to call a barbecue stopper, it is a national obsession. What we have seen in the past year is the sydney market peak, and then it came off. That trend is likely to continue in the year ahead. There are mitigating factors. As you mentioned in your lead is the Australian Household struggling with a high debt burden. That will continue to restrain them. Curbingthe Government Investment lending. , and it was aaged struggle to get them to lend again. I had to move some of it to p rincipal and interest. Support. L be some there have been incentives to support come up to support the lower end of the market. Certainly a continued coolingoff. Melbourne, slightly more positive. Also a very expensive market. Very strong population growth will keep the demand side quite buoyant in melbourne. It should perform, relative to sydney. Looking at bank is upturn, rate hikes probably not for the foreseeable. That should keep it manageable for most people. Good competition in the mortgage sector, giving the big banks a run for their money. David that is residential. Help us out with outlook for the commercial property space. Is that different from what we see in residential . James in commercial it is a very good pitch. The government is investing heavily in infrastructure. That it is locking out a lot of office space. It is reducing it at a time when demand is quite high. Amazon expanding in sydney and other multinationals. David james, thank you so much for that, are Deputy Bureau chief out of sydney. Lets stay in that part of the world. New zealand, last few minutes of trade in 2017. We are up 21 on the year, not bad. Have a look at the yeartodate chart. When you look at new years celebrations, new zealand is the first one to come up. It is the first one to close. It is roughly in line with how the Global Benchmark has done for equities. Coming up, taxes, tightening, and trade talk. This is bloomberg. This is bloomberg. David it is a 30 in the morning in singapore. Of asx closed a touch short 3400. It has been quite a year. Embrace it and enjoy it, dont get greedy. I am david ingles in hong kong. Betty new zealand i am betty liu. We will have an early trading session tomorrow in the u. S. Lets get more with courtney collins. Rival tos state backed become the main streaming player. That lets model theater operators keep a bigger share of ticket sales. They say they have a government mandate to become the largest streaming brand in china and are confident that will happen by 2019. The chairman said the priority is not profitability. Bitcoin slid below 14,000 in 2017, heading toward a close. Is latest slump said korea has speculation in the digital currency. Options include the potential closure of bitcoin exchanges. Bitcoin has endured a wild ride in december, falling 30 from 19,500 dollars it reached on december 18. Beijing issued a warning about heavy air pollution, with schools told to reduce outdoor activities. It is expected to clear later friday, but they advised the elderly and those with breathing problems to stay outdoors. Aesident xi has launched crackdown on pollution, saying it is one of the challenges facing china in 2018. Indian bond yields spiked after the government said it aims to borrow an additional 7. 8 n the impact ofe slowing revenue. The rbis of the government will borrow almost 15 million in the three months through march. More than twice the amount of the same period announced in december. 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. David thank you. It is time for the final countdown, asian markets and how they are shaping up in the last trading session of the year. Sophie the final countdown. The asx is lower. And we do have the dow up 1 for the year. New zealand getting a head start on their new years eve celebration, closing out the nzx 50 below the 50 point level. Nikkei 225 keeping an even keel. The biggest boost to the index this morning. Following that cooper deal. We do have consumer stocks under pressure. I will show you one of those players in that space. The chain of Clothing Stores in japan, the stock falling this morning after reporting its ninemonth profit. 1 for aut g btv 447 snapshot of the journey for japanese stocks. Both of the nikkei and the topix have gained 19 this year. But a big difference between the two, we have been waiting. It led gains when it comes to that benchmark. You can see when you have the breakdown of the msci. Index. The i. T. G btv 2008. Adding nearly 37 this year. Index is the line in blue, gaining 8 in 2017. When you break it down and see the top performers this year, maker,he top 10, a robot a Silicon Research company and tokyo electron, in the Industrial Electronics game. Chemical players have done well, as well. When you take a look at the laggards, it has been a rough year for conglomerates. Mitsubishi losing over 20 . They got caught up in the kobe steel falsification data scandal. In a year that saw a series of corporate and government subarus for japan, dealing with its own episode. For 2017. Ost 25 next years revenue may be dented. Stellaring up to be too a year for subaru. As 2017 comes to a close, it is time to look at what the coming year will bring. Especially at the fed, a new chairman and anticipated fed reichs. Lets get the news from the fed. To raiseers want rates, but they will because this and are unlikely to let the republican tax cuts affect their decision. I dont think so, substantially. They are expecting that if the economy continues to grow and growth accelerates, they need to raise Interest Rates. They will not do it in a big rush or do anything to destabilize it. That they are on a track to gradually raise the shortterm rate. To unload their big thefolio of bonds to offset depression. I expect that to continue. Are you on board with three hikes next year . Some say four because they see the early signs of inflation. Them, should the fed be hiking rates that much in 2018 . I do not see signs of inflation, and neither does the fed. It has been falling, very mysterious. I have been saying for a long time i think we are in a new era in which the threat of inflation is almost nonexistent. I may be less surprised than other people. As the fedon measures it has gone down this year. I am not worried about inflation and i do not think they are. What they are worried about is that at some point, we will have another recession. And they want to be in a position to do something about it. If you have a huge portfolio of bonds and your Interest Rates are down near the lower bound, there is not much you can do. I think they want to get more ammunition for the next recession. Lets say you were the vice chair again, what would you say around that table . Some people are concerned that the fed, in avoiding being in a tough spot, will cause the very thing they are trying to avoid by continuing to hike rates with inflation low. What do you think . While were at hypotheticals, just make me chair. That is much better, yes. [laughter] in any case, i think the fed will monitor what is happening very carefully. Up asonomy is speeding the proponents of the republican tax bill hope it will, they will rev a little faster. If it is not, they will stick with the game plan, three rather than four or maybe two, things are going so well. They will calibrate the speed of the increase in rates to what is happening. What about those including rob kaplan, neel kashkari, and jim bullard, all concerned about this flattening in the yield curve is a red flag to the reserve and the markets and something that will continue on a rate hiking path with inflation far below target, they risk even helping to push the economy on a downward path . I think if you had a very rapid set of increases from the fed, that might be a danger. That they are not going to do that. Theyre going to look at what is happening in be very cautious, as is the tradition of the fed, the recent fed. Again, as we head into 2018, any advice for jay powell as he takes over the lead chair at the conference table . Jay powell does not need advice from me. He is a very Competent Person and has been there for a while. I think he will have to focus very heavily on regulatory policy, or avoiding too much regulation in the financial sector. I think that will be more even then his agenda, monetary policy. Former fed was the vice chair, alice rivlin, talking to kathleen hays. Theme, 2018 is expected to be tightening and tax hiking in singapore, as the economy gains strength and inflation, fingers crossed, rises gradually. Lets bring in our correspondent, haslinda almond. Amin. When i think of singapore i think of expensive dear, good food, hot weather, and low taxes. The fourth one is about change, isnt it . Right, butou are thankfully, probably not incoming Corporate Taxes. That will impact competitiveness, at a time when the u. S. Is cutting taxes. I want to show you this chart, a couple options for singapore. Raised, perhaps even a Motor Vehicle levy. Perhaps range even a Motor Vehicle levee. They have hinted higher products higher taxes are coming. Singapore a country already among the most expensive to live in. Of 40 rise in prices. Set to feel the pinch this new year. Betty how convincing is a singapores recovery . Can it withstand further tightening . Fingers crossed, it is not just 3. 5 . Broadcasting 4 growth. As oss will return construction will pick up. Call, it could be a headwind for growth in the economy. Global growth is picking up, which is great news. All of that points to a sustainable momentum, as you know. They open the door to a tightening up the last policy meeting. They say the move may come as early as april. Not long to watch. Betty not long at all, just a few months away. Up next come on the ride hailing market looking pretty clouded. Which one will lead the pack in 2018. This is bloomberg. Is bloomberg. Is daybreak asia. I amdavid ingles in hong kong. Betty i am betty liu in new york. Fosun may refinance their debt. Theyre planning to raise as much as 3. 2 billion in the local bond market. Although the timing is a concern. Fosun is among the private sector giants in china that faced Greater Regulatory scrutiny as the government cracked down on outbound investment. Isid china Aircraft Leasing to spend 5. 5 billion for airbus. There is surging demand from airlines in the asiapacific. The ceo says they offer the best returns and is looking for more market recognition. They are ready have 89 planes. Shareholders agreed to sell a sizable stake. They applied of valuation of 48 billion for uber. Quite a discount. 1. 2 5ll pour another billion at a higher valuation of 59 billion. The deal makes softbank one of ubers largest shareholders. It comes with two seats on the board. Softbank could have uber strike more partnership deals. Asia. Ally in lets bring in the Senior Vice President of a research firm. He joins us now from singapore. How important is this Uber Softbank deal . For uber, they needed better working capital and funds and expansion of the market. We know they are burning cash. I am sure they needed more funds. If uber was just looking for money, i sure there would be a lot of companies a lot of firms, would offer that cash up. Not a huge amount of targets, but softbank is one of them. Doesnt softbank offer great Strategic Value for uber perhaps expanding globally and in asia . Vivek that is right. The method, they needed funds, but they needed it from the right person. Softbank is one of the largest investors. Definitely need a partner that can help them to expand and go to the different markets trying different partnerships. That is exactly what their competition is doing. David i have always been curious. With all these ride shale it all these ride hailing services, does that longerterm lead to more sales of vehicles or less of it . I think it started with utilizing an underutilized asset. Car a privately owned car is running three to four hours in the day. It began by using an underutilized asset. Now it is become a different way of consuming cars. We started migrating from being a product to a service. Some people understand the utility and convenience it offers. Now uber and grab and Similar Companies are gaining, [indiscernible] it is not a question of whether it will increase or decrease. They need to look at a different way in which the cars being consumed. Which is through car sharing and ridesharing services. David every year we see substantial progress in self driving cars. The most supportive Regulatory Environment for electric vehicles. Who is leading the way as far as Car Manufacturers . Who are the top one or two . Vivek first we need to understand where it is happening. The Industrial Revolution was led by western europe. But now it is asia. It is china, india, indonesia, thailand. All of them are electric carmakers. Which determine manufacturers like mitsubishi and nissan are leading the way as far as the market. However, [indiscernible] david you mentioned china. Ambitiousproperly set mediumterm targets for electric vehicles. First, do you think it was overly ambitious . And second, what do you think of the progress . Vivek i just saw it before i came on tv. There was news about beijing. This exactly is the challenge when we talk about [indiscernible] vehicles dependent on fossil fuels goes up, it deteriorates the air quality. For china it is inevitable they need to go for electric vehicles. We expect in three to five years, china continues to be the largest market. They will contribute 40 of electric vehicles sold across the world. David we are looking forward to having you back on the program to track the progress of china and the broader trend as we enter 2018. Is friday, lets talk about wine. China and hong kong, a taste for more. This is bloomberg. This is bloomberg. Ages they say a good wine well. The same might be said about investment when it comes to good vintages. A chairman says wine is a good place to put your money, no matter what the state of the economy. People will always want to drink wine. Burgundy has become the hottest segment of the market. One is scarcity, there is not a month there is not enough of it, 500 cases, very strong small production. Awareness has blossomed in hong kong and china. There is more knowledge about the greatest burgundies. They are buying more and more, which adds pressure to prices. Some wines have doubled in the last year or two in value. There are some wines the wine economy is up 30 or 40 this year alone. They tend to do small production to make the biggest winds. Bordeaux is very consistent. Slowly but surely accumulates in value. ,ut there was a lot more of it a study a steady increase. Rothschild has taken a jump in the past few months. In france, this year was the frost in spring in bordeaux. How do you see it that affecting this batch in 2017 when it is bottled and put up for auction . For us, frost is no winemakers friend. Burgundy has been hit not just by frost and hail in the last four years, which has heard the south. In 2016 in burgundy there will producers had to Work Together because they were so devastated by hail. When Mother Nature does not cooperate, it means less bottles. The price goes up. You can see a sharp runup in 2010,w of peak 2011. It dipped off a couple years. Perhaps i am reading too much into it, but in china, there was anticorruption crackdown. Was that a big reason the prices started going back down . There was a huge bordeaux and 2011. 10 the prices have quadrupled. Over that twoyear run it was insanity. I think that anticorruption probably stopped a lot of the bordeaux buying and they fell off a cliff. Then the rest of the market came up. Bordeaux crashed a bit. That is when burgundy started spending. Italy, the most expensive it has ever been. Betty what else pairs well with fine wine is cheese. According to our chart g btv 20 52, we are having one of our best wine and cheese years since 2010. Not only are stocks up, people are celebrating by eating wine and cheese. David the bloomberg wine and cheese index, a fairly liquid investment, lets put it that way. [laughter] david wine is meant to be consumed and not invested in. That is for another conversation. Betty unless there are quite a few zeros behind that bottle of the vintage. David, happy new year. I am so glad to be ending this year with you. Have a great celebration, i will see you next year. That is it for daybreak asia. This is bloomberg. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Newschnology leading the today. Apple apologizes for poor iphone batteries but insists it never would shorten product life. Imax mains to become that aims to become aims to become the mainland competitor. Is bloomberg markets