Transcripts For BLOOMBERG Bloomberg Markets Asia 20180105

This is Bloomberg Markets asia. Rishaad lets have a look at the big one. 189s bring up this chart, on the bloomberg terminal. What does the show . Unemployment rate. I refer to that because it is the big yoelater. At unemployment, Holding Steady at record lows, or decade lows, i should say. Seasonably adjusted. 4. 1 here. Wage, wet the annual ratehe unemployment go down. We go back to 2008, and wages are pretty high. Then, they plummeted at the Unemployment Rate went up. Around the 10 level. This is a fine line. Unemployment versus wage growth. More wage growth needed to engender some sort of inflation to take the inflation rate in the u. S. Higher. Likeng at that, something 8 30 hong kong and beijing time. Dont hold me to that. Im not sure. [laughter] haidi here in asia, it is pretty data light when it comes to the inflation. Reserves looking m at the impact. Global synchronized growth story. 30 minutes out from the open in china and hong kong. Singapore, thailand, malaysia, joining a set of asian stocks heading towards the best week in six months. Whatever way you cut it, we just keep hitting new records, and the exuberance is continuing into the weekend. One has to wonder where the spanner in the works comes from. Risk on mode. We are waiting on malaysias at noon. Ures, due. 2 . S in kuala lumpur, sixthstraight day. Flirting with the handle. In singapore, the sti slaps its sixday event. April hide. G at the shares in taipei opening. 1 higher ahead of inflation data. Check on apple suppliers, after the tech giant that all ios devices like iphones and ipads are exposed this week. We are seeing a mixed bag for apple suppliers in taipei. On the data front as well, australia posted a surprise trade deficit. Checking in on the aussie, a session low on the back of that data. November exports were little changed from the previous month. We are seeing currency traders take that on the chin this morning. Shares in sydney remain on course for a third day of gains. Minas tracked the broad rights we have seen in Commodity Prices of late. The asx 200 is set to begin the year at eight year decade highs. When you take a look at the bigger picture, we are mostly seeing gains across the board. Come in to the green after starting the year on a weaker footing. We do have japanese stocks continuing their early 2018 rise. Helped along by the tech rebound not only in tokyo, but around the world. Blue on thisne in chart, could be set for a two day advance. Not a bad start for japan this year. Rishaad thanks for that. It has been called the bomb, these weather conditions. But get to the first word news headlines. Paul allen. Paul. Paul a fastmoving snowstorm has grounded almost 4000 flights and promoted states of emergency in parts of new york and new jersey while closing schools from washington to boston. The National Weather service says manhattan could get nine inches of snow by late thursday. In some places will feel like 30 degrees below zero. Ande now says all its mac ios devices are affected by the revealed processes. There is no exploit impacting customers at this time. Security experts say highly regulated sectors are most at , andfrom a security floor chips made by intel and others. Asset management eyeing westinghouse for 4. 6 billion. Canadas biggest asset manager agreed to buy what remains of the former nuclear powerhouses at u. S. Business as well as the long bankrupt european business. Says the deal ceo will transform the company into a stronger, more streamlined expected tot is it tha close. Californias attorney general says the state is considering its options after the Trump Administration proposed opening almost all u. S. Coastal waters to oil drilling. The department of interior plans 47 possible options of drilling rights across more than 90 of the u. S. Continental shelf, activistswaters where have fought for decades to spared delicate ecosystem from oil spills. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im paul allen. This is bloomberg. States ande united south korea will not be holding their annual drills during the Winter Olympics next month. Moon jaein saying he and President Trump agreed during a phone call that the games and should be kept peaceful. More from jodi schneider. What does this tell thi us about the state of negotiations . A bit of wiggle room . Di it does appear this way, because south korea has been pushing for this. President moon said he wanted to try to deescalate tensions with the north, and this has given him an opportunity to do so since the north said they would be willing to at least talk about the olympics. Looks like the u. S. Is saying we will allow that to happen, although no indications whether the u. S. Would really go for any talks themselves. Haidi trump is of course taking the credit, saying his tough stance or tough tweeting led to that dialogue between north and south. Has that actually helped . There has been dialogue before. Whether whatnclear is exactly behind this. Obviously, these things tend to happen because of a number of factors, but it is hard to see that the u. S. Can take credit for this. They. S. Has not even said would be open to talks. A lot of back and forth. Secretary of state tillerson, as you recall, said he would be willing to have back channel talks. The white house shut that down pretty quickly through the condition for talks would be that the north is up its nuclear ambitions. Kim has made very clear that that is not going to happen. Its hard to see that the u. S. Is behind the spirit it seems the u. S. Is allowing there to be wiggle room. They are not saying that are canceling the drills, just postponing them so talks can occur in the olympics can occur. Rishaad jodi, great stuff. Jodi schneider, our bloomberg editor. Will 2018 be the year that japan wins the war on sluggish inflation . Joining us, our guest, later on. Ubps head of, Asia Equity Research and why he remains bullish on emerging markets. This is bloomberg. Mark friday will the first report in 20 18. It is a report for the u. S. Jobs picture for the last month of 2017. A survey of economists expect 193,000 jobs to be added to the month of december, down from november. Watch includeto the Unemployment Rate come expected to stay at 4. 1 , along with average Hourly Earnings growth. This report could provide important clues as to whether a moderate acceleration in Economic Growth will translate into a faster pace of hiring. In addition, it may offer early clues as to whether a strong jobs market for the first year President Trumps term will continue. Ahead of that report, stocks rallied, with the dow crossing 21,000 for the first time as all three major averages put in new record highs. In new york, Abigail Doolittle, Bloomberg News. Haidi that was Bloomberg News Abigail Doolittle on why the official u. S. Job numbers will be closely tied to the eyed today. Over policyivided makers as to have slow Interest Rates need to rise. Rish. Rishaad despite these signs of tighter centralbank policy, we will continue to extend the strong start to the year. Let us get to singapore. The head of Equity Research. Kieran, you are overweight emerging markets. You must be very happy with that call now. Kieran it has gone the right way so far. We have been overweight emerging markets through the course of last year with a focus on asia em, and we continue that into 2018. Rishaad the question Everyone Wants answered is does this go on . Nothing goes in a Straight Line. Are we going to be in line for a bit of a gutcheck at some stage or the other . Ouran so, i mean, from point of view, from the markets point of view, almost Straight Line we saw over the course of last year, it was really driven by the earnings recovery story that started in the Fourth Quarter of 2016, and which has continued throughout the course of until now. As long as the earnings picture continues to look good, and we expect the earnings picture to brought about a little bit to include more sectors, then we should be looking at a positive trajectory from here. Will there be a shortterm correction . Of course, possible. But we still think the underlying earnings the mix of p. M. And asia em look good for the first half of this year. Haidi taking a look at your top three contrarian calls, overweightjapan, asia em, as well as the Global Commodities story, they are not exactly contrary and. What is unique about your strategy . Is there a risk that these are starting to get crowded . Kieran so, you are right. Those are not a gently contrary in place. Onbe a more positive view Global Commodities is early story. But actually, i think the overweight japan view is a little bit contrary and. If you look at the earnings recovery story in japan, its. Ven stronger than we have seen the market is only up about 20 over the last year compared to a to japan. We have seen multiple compression in japan despite a strong earnings picture despite multiple expansion. We have seen strong growth there. Got the prospect of tax incentives tog increase, and the real test of this is meant to come with the spring Wage Negotiations in japan, so we think the isrweight japan story perhaps a little bit of a contrary and call, certainly from a market point of view. Haidi what about the impact or the lack of impact to the yen . We have seen this the correlation decorrelation. That has not played out. It has been pretty benign. We got some calls from morgan stanley, seeing dollar trading at 105 this year. At what point do we see this weighing on sentiment . Kieran we think that we are much more likely to see a weaker yen over the course of this year , predicated on two things. One, the u. S. Fed continuing to increase rates come and secondly, the boj continuing its yield curve control policy, where they are trying to keep the jgb tends at zero, so that weaken the yeny if nothing else happens, which we think can be a bit of a tailwinds for japanese stocks, and certainly for the japanese market. There tends to be more of a relationship between foreign inflows into japan when the yen is weak versus anything else. Haidi kieran rishaad kieran, more from you in a little while. Head of Equity Research. A quick look at the bi business flash headlines. Amazon to bid forlans streaming rights for the premier league in an upcoming auction. They pledged to pay for three seasons. Live sport as a way to get more people to subscribe to it by memberships. Haidi alibaba says the chinese. Iant plans to open more the additions would expand alibabas presence in the capital to 35 stories from the current five outlets. The china daily said alibabas main rival, jd. Com, will open more than 1000 fresh foods doors within five years, after cutting the ribbon on its first store in beijing on thursday. Haad sources saying it is a deal that could be worth 2. 5 billion. We are told this mumbai listed company made a nonbinding offer through its american division. The owner moves to expand his overseas operations. Sell ther agreement to higher based solaris. That was structure your security concerns. U. S. gas prices in the running hot at a time of the winter freeze. We will be assessing when the rally is likely to cool. This is bloomberg. Rishaad were back with Bloomberg Markets. And Rishaad Salamat in hong kong. Haidi im haidi lun in sydney. Natural gas has surged to 60 times the going rate as blizzard conditions stoke demand. The market mayhem is having a knock on effect even in regions far away from the stormy weather. Lets get over to our energy reporter. It must be strange to be looking at these pictures of the blizzard. How long does this distortion last . What are the widespread impacts we are seeing . For this distortion, the good bombis the storm, this cycle, is moving pretty rapidly. Meteorologists are forecasting that by january 8, monday, past the weekend, we are going to see affect the northeast. It is a shortterm dislocation in the market. In new york, people are paying gas,for thermal units for compared to three dollars for the u. S. Benchmark, and it is trickling all the way down into the appellation areas, priceshia areas, where have doubled. The impact is widespread, but hopefully, it is just going to be a short one. Rishaad this is the traditional period where Heating Oil Consumption goes up, and when you get really bad weather, the demand goes through the roof here. Does that not matter as much as it used to . Dan it really doesnt, rish. You are hitting it right on the head. Heating oil has been replaced by natural gas as heating fuel in most of the u. S. Northeast. Similar to what we have been seeing in china where people are placing coal for natural replacing coal for natural gas. The diesel industry is not really as effective as it would have been 10 years or 20 years ago, where this would have created a big run on those petroleum fields. Rishaad thanks to dan murtaugh. Kieran, a lot of people had bullish calls on oil. Some have gone so far as to say we might be looking at 100 per barrel. The thing is, even at 62, we got into the range where a lot of those refiners, shale refiners in the u. S. , can really come in and kick in their production. Kick in their production. At 65. Is that the line to defend, or has something changed materially . Kieran the one thing that has kind of changed since oil prices started to recover at the end of last year, we have not seen rig counts go up, which is theously a positive for supply side, and at the same time, we have seen quite a few disruptions and potential disruptions on the demand side, so what is going on with the weather in the northeast right now, we have also got geopolitical potential issues with iran at the moment. We think all of these sort of are generally supportive of at least of the oil price not moving lower, and moving higher from here. We saw the news overnight, potential of more offshore drilling. And thats in all of the offshore areas of the u. S. That would take time to implement, about the potential negative. Like always, in oil, there is a lot of issues with demand and supply, but generally, the trend seems to be up at the moment. Rishaad that is reflected on your call for Global Commodities, suggesting that this fiveyear to secure bear market is about to change in the sense that this is a long cycle turn. Kieran yeah, this is something we introduce at the end of last year. We think the commodities complex in general, including oil, has really had, you know, a long, bad period in terms of price over the last five years. We think we have probably seen a bottom in it, so we would expect a slow increase from here. Oil is probably the one commodity that has moved pretty quick compared to what we were maybe expecting, but in general, we are pretty positive on energy and commodities from a sort of longterm point of view. Haidi in terms of the commodities, longerterm prospects for the rally, how much is reliant on the u. S. Dollar staying lower this year . Kieran from our point of view, it is not really a factor. We think that probably the , it will be about where it is by the end of the year. If you look at the dxy, we dont have any strong view of it moving higher or lower from here, nor do we have a strong view that that will affect commodities prices. Herein, thank you so much for that. Kieran calder, head of Equity Research asia. Lookg up, we will take a at the sustainability of hong kongs skyhigh property prices. Men the citys richest with all the opening numbers out of hong kong, shanghai, and shenzhen, on the other side of this break. The sky is the limit, not just for property prices, but certainly, for asian stocks at those record highs as well at the moment. This is bloomberg. Rishaad we looked out towards the peak in hong kong, and it is 9 29 in beijing, and singapore as well as in hong kong. Counting down to the start of the session. What have we got . Equity markets in the u. S. On an absolute tear. Reaching and the dow, that is what we have. The asia pacific basking in the optimism, up. 4 . Pmis came out of japan, services and composites the same, showing expansion. Looking ahead to the payrolls report out of the u. S. , the most important data point of the month, arguably, and optimism as out as the adp figure came yesterday showing also better than expected job creation in the u. S. 62 per barrel. Haidi after a bit of brief the u. S. Dollar, it feels like the same theme. Everything that was driving this rally in the previous year, certainly, we are going back to these stories in the first trading week of the year. If the sox on the edge of the best week. Are seeing we are looking to see whether it can sort of take out the 52week high in todays session. If there is any session to see the exuberance today, it would seem to be a pretty good one. Japanese equities looking the highest since 1991. Lets get it over to sophie, who is taking a look at the shanghai and Hong Kong Market to see whether they are doing this celebratory, festive mood. It is a happy friday. If you take a look at mainland markets, the shanghai composite gaining. Slight losses for the gauge and the shenzhen sharemarket down about. 1 , but shares in shanghai did clock a five day event, so this is something we should keep an eye on to see if th theyt push for a six have gains. A nine day advance to the home saying the hang seng. The eight share index the hshare index climbing. The offshore yuan picking up the handle your the australia is now coming online, trading at 6. 4825. Checking on other stock movers, lets check in on sunny optical, after they cut the price target while keeping a buy rating on this stock. They did trim the profit forecast reflect anticipated slowdowns in the smartphone industry. Just in time for friday happy hour, chinese immigrants. A fifth they and hong kong on the news that chinese brewers have upped prices by 10 to 20 because of higher raw material and labor costs. Happy hour getting more expensive on the mainland. Over in hong kong, take a look at what is moving the hang seng. Energy in tech shares leading gains along with financials. Tencent regaining the alltime high, klei climbing for a fourth session. For a fourth session. We are keeping an eye on real estate stocks your that segment adding. 5 . This amid concerns over the local housing market, but the citys biggest men, no end in sight for the Strong Demand that has driven up equity prices. The capital partners, a real estate pe firm, says they reckon hong kongs prices are unreasonable and unsustainable. If you live here, that is something we contend with on a regular basis. Rish. Rishaad thank you so much for that, sophie kamaruddin. First word news, sydney, paul allen. Chinese regulators are stepping up oversight of leveraged bond trading. A rule says Market Participants should reasonably control leverage ratio in the bond trading. It also tells bond traders to meet liquidity requirements in their deals. It is failing to rectify internal control problems after a oneyear grace problem will be banned from new trading. Steve bannon has pledged his continued support of donald trump after the president s forceful the magician of his former chief strategist. He said nothing will come between us and President Trump and his agenda. The white house has been defending the president s fitness for office, an issue raised by bannon in a book Trump Lawyers are seeking to ban. Secretary sanders it is disgraceful and laughable. He would not have defeated the most qualified group of candidates the Republican Party has ever seen if he was unfit. This is an incredibly strong and good leader. That is why we have had such successful 2017. Paul the United States and south korea will not hold their annual joint military drills during next months Winter Olympics. South korean president moon jaein says he and President Trump agreed during a phone call that the games in pyeongchang should be kept peaceful. South korea plans to fully court mate with the u. S. Talks with north korea, scheduled for next week. Is rushing to sell 9 billion of bonds to meet its financing needs for the year as it seeks to get ahead of other regional economies tapping International Debt markets. The government is selling and 30ies of 5, 10, years. Yields range from 4 to 7 . The sale is being led by citigroup, deutsche bank, and hsbc. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am paul allen. This is bloomberg. Rishaad hong kongs richest man says there is no sign of property demand drying up in the world least affordable real estate market. He says his business is booming. Demand remains very strong. I am still Building Hotels, and have bought shopping malls, getting rental income for the longterm. Our companies rental income was actually at a record high last year. Fromad his comments counter to analysts who say prices are unsustainable. Saw propertyy he prices go up. He said he was doing alright and saw Strong Demand there. It seems to be the case. Last year, he was quite right. He said prices would go up a little bit. Did say demand has been strong, and it will be strong. If you think about hong kong pricing in the property market, he has been driving prices up. The demand is strong, positive for prices. Rishaad there are analysts saying hang on a second they have been saying it for a while, but the other direction. Li could be rate this year. Definitely if the government is really stepping up on supply. I think the key is the demand now. Is there any consensus when it comes to early days this year as to what the market the sees . They see an uptrend in property prices. We have a story out of funds saying prices seem to be unsustainable in hong kong, so at the end, we will see who is right. Rishaad he also said that if he retires, he will be a Company Senior adviser. If he is going to remain in charge, hes not going to really retire. He saids old the son he cant give him 100 , but he would give him 90 ish. Rishaad thanks for that. The only fion li. Haidi toshiba, back to this story again, having sold its Global Nuclear power unit, westinghouse, to the private equity arm. It is worth 4. 6 billion for the details. Lets get over to bloombergs energy reporter, steven, in tokyo. What do we know . Well, what we know is that brookfield sees a lot of value in its unit, and has offered 4. 6 billion for it. The market has reacted. Ositively to brookfield the u. S. Trading the unit, which is publicly traded, jumped 4 . Toshiba is up a bit today as well, so everyone is looking across the board as a good deal. They are still talking there are still talks to go forward, and the deal is supposed to be ironed out in the Third Quarter 2018, so there may be a few more curves to the toshiba westinghouse adventure along the way this year. Rishaad absolutely. Is it a loss for the whole of this division . Know, yes, far as we it is, for the whole of the westinghouse. Course, are sparse. We are not 100 percent sure exactly how they are going to restructure the company, what they are looking at, but in a statement from brookfield, they said the service part of the company, that is, westinghouse business of servicing, existing around, in thes, United States, in europe, and other countries, does seem to be quite profitable. Brookfield looks to tap that. Haidi brookfield doesnt have any experience in nuclear energy. What is the rationale behind why they have done this, what they are hoping to get out of it . Mentioned,ll, as i just a moment ago, they see the value in the service part of the business at westinghouse spirit also, you have to realize that westinghouse is big, and buying it at 4. 6 billion is a bit of a discount from when toshiba for 5. 4t in 2006 billion dollars, so they are definitely getting a deal. And since it has gone bankrupt recently, they will be able to restructure it in a lower value than perhaps if they were booming. So that is one positive for them. Westinghousee of is not only in the services, but in the technology they hold your they have a Nuclear Reactor known as the ap 1000. Unfortunately, building it has caused a few troubles for them, and it led to the bankruptcy for them in the United States, but it has a lot of potential for to nuclear according scientists i have spoken to, the technology is solid. Exporting the technology and the designed to china, india, saudi arabia, other countries that are building the your reactors, could put Nuclear Reactors, good post a large value for westinghouse and the owner of brookfield. Rishaad very quickly, what is the future for westinghouse under brookfield . What are people saying about that . Stephen well, the future could be right for them. They have been owned by many Different Companies in the past over the last 30 years or 40 years, so brookfield could give them enough autonomy to allow them and capital to pursue what they want to pursue. Brookfield does this. They buy companies that need restructuring, and they helped the company streamline what they do. That is what analysts and the specialists who look at this industry hope to get out of this. That is what westinghouse management hopes as well. Rishaad thank you very much, stephen stapczynski. Tensions on the Korean Peninsula should we seem to have seen a etante the taunt d taking place. This may well me in the country does take part in those olympics in south korea in john chen. South korea, pyeongchang. Pyongyang accepting seouls proposal for that meeting on tuesday. Haidi. Haidi lots of breaking news crossing the terminal. We have got some news from uber. Said to benick planning a sale of 29 his stake in the company, said to be worth 1. 4 billion. We are trying to get a few more isails on this, but that half of his stake in uber. This comes on the back of what has been a hellish year for not just uber, but Travis Kalanick, his ousting, and the crowning of the new ceo from expedia that is perhaps just another step in the distancing of Travis Kalanick from the company that he founded , planning that stake sale of stake. Alf of his coming up, we are talking japans inflation to where is the inflation in the future of abenomics come 2018 . A japanese economist joins us with his views. This is bloomberg. Five years of autonomic has created new jobs, even though the working days population million. Y 3. 9 the latest data shows the job. Pplicant ratio has risen this was not achieved even at the time of highgrowth periods ii. R world war nominal gdp has increased by a record ¥50 trillion. The japanese economy is making progress towards defeating deflation. Rishaad japanese Prime Minister shinzo oz a voicing confidence of the economy, steadily towards the end of deflation. Haruhiko kuroda did warn yesterday that that deflationary mindset is not disappearing easily. Haidi our next guest worked as senior administrator, and he thinks the boj looks to have virtually have given up on its inflation target. Is the chiefrakawa economist at Credit Suisse and he joins us from singapore. They have virtually given up on 2 in terms of some of these internal struggles going on, but is there such a crucial thing given that everywhere, we are seeing Central Banks struggled the structural implications of why we are not seeing inflation . Hiromichi that is true. You know, there are several headwinds to the inflation rate in japan. Aging population is one thing. Those things are limiting inflation pressure. They are quite intense, and we dont think Japanese Companies can raise prices easily, so i think the question is whether or not the target is realistic or not. The 2 target is not necessarily that realistic. Cannot drop the target, mainly because of their depreciationhe end to vitally, Central Banks seem to have given up achieving 2 inflation, and now, there are thinking of normalizing Monetary Policy, following the fed rate programs, i think it will be the end of qe programs in the ecb, for example. Haidi is it just the case that impatient andoo dismissing abenomics in its effectiveness . If we push aside inflation, growth is going really well, Financial Markets are going gangbusters. Is it the case that as within the u. S. , we are not seeing inflation because there is this lag, and it is going to turn up eventually . We are just waiting for it . Hiromichi i think youre right in saying that the japanese economy is in cyclical recovery, and continuously benefiting from the Global Demand pickup, but in the meantime, if i add in a structural shortage of labor, it is becoming obvious, so many is to are arguing that 2 be achieved, maybe in two years time. Cyclical recovery, nothing really happening in terms of the improvement of the labor productivity, for example, and we have not yet seen any measure in pickup in consumption. People are still quite cautious in spending money. We are not seeing yet any structural shift of the mindset, corporations and households in japan. It is difficult to say 2 inflation is achievable in a sustained manner. And ad absolutely, hiro, lot will depend on this Wage Negotiations, the period we are in at the moment. How does that dovetail into what the finance minister and deputy Prime Minister said as well . Trulyd the economy has changed. What you just said sounded like it was the old japan. The government, taxation,uced a new which is aimed at promoting wage increases, because of companies do decide on a 2 wage increase, the can benefit from reduction tax burden. We tend to think that japanese labor, workers, do not necessarily want wage hikes. They would still prefer job security, so there is a tradeoff between job security and wage increases. So japanese, i think, corporate executives, can raise wages per person if they are allotted to more flexibly hire people. Where japan is still struggling with the structural, you know, stickiness of the labor markets, it is very difficult for pernese companies to raise person wages without being allowed to be more flexible on employment. Again, labor unions remain not so aggressive in asking for wage increases, so i think the issue is more on the side of labor rather than corporate. Rishaad thank you so much for that, Jeremy Fisher a product hiromichi shirakawa, from Credit Suisse. The man behind miss it mifid. This is bloomberg. Some of the impacts of mifid ii were already available in the past weeks and the past months, regarding the unbundling of research and execution. While some other impacts of mifid, including moving towards liquid trading, will be more visible, we expect to be more visible in the time ahead. Haidi on the dark tradinghaidi are youn bringing forward the implementation date of the caps to january 12 . No, we keep to the line. The deadline to start with the double volume cap. We are currently collecting the data on these issues. And we haveng that not changed our plans regarding the timeline in that respect. Major glitches on the first day of mifid ii, as we have established it as we know, stock exchanges have been vocal about rival platforms taking volume from them despite the method to caps on dark trading. They have tried to address this by basically proposing to extend the pricing regime. The thing is, it looks like the e. U. Commission is going to move slowly on this. Will you push the e. U. Commission, and national regulators, to move faster . Steven i as you see as you see, what is important steven is we make sure we have the right balance and a level Playing Field between the socalled si regime and trading venues. We know that the regime is attractive for meeting the trading obligation for equity shares, and at the same time, we need to make sure it is not used around the objective of getting more transparency to the Financial Markets. We have in the past already issued q a is on this issue so day to end a q and q as on this issue. According to the regular thetable, we have changed technical standard or made a proposal for change of the technical standard. We are on track with the change, but we need to see what is coming back from the consultation and then take this issue forward. Haidi will stock exchanges lose out in the medium to longterm . Theen i just said, some of we need impacts to see how it develops over time. This is geared and has the objective of increasing transparency in the Financial Markets. Stock exchanges should be winning and that respect. Thatere is any indication these original objectives are not met, we will see if there are any further changes needed. Your, ephen is steven speaking to nejra cehic. How this could spread throughout the tech industry, joined by brian ma from idc. Haidi asian stocks on the cusp of their best week in six months. Investors piling into equities. Agreed tohe north has a january 9 meeting after washington and seoul, korea suspended military drills. Kalanickavis offloading 30 of his stake in uber. Rishaad apple gets bitten by the bugs, but there is no known impact on users. Derails this exuberance across Global Equities . U. S. And asian stocks at record highs. Japan at levels we have not seen since 1991, the best start since 1996. This commodities rally is responsible. Take a look at this chart of the best performers. Equities and materials performing the best. This is the bloomberg commodities index. It is flat, but 14 Straight Days of gains largely thanks to dollar weakness and demandside improvement. Industrial metals above the rest largely due to that china demand , expectations of Infrastructure Investment in the u. S. And emerging asia. I suppose the other huge component of this is the resilience and oil prices. Rishaad on top of that come looking ahead, what the United States has been doing job wise,hat job report out later today looking perhaps at a surprise to the upside if the adp figures are to be believed. ,ets go to the markets indonesia getting underway. That is an outlier since the start of the year. This index has not been doing anything. Seeing jakarta stocks down. 1 , flirting with that record high earlier this week, but not much in things he has him towards the end of the first trading week of 2018. Elsewhere, largely positive, led by shares in tokyo,. 1 , but weakness in taiwan, led lower by consumer stocks. Elsewhere, gains for manila. Leading the region higher points 6 . The hang seng gaining ground for a ninth straight day as money pours and from the mainland. We are short of the alltime high precrisis. All this money could be coming through because of exuberance around chinese beer makers. 22 . Rewery soared the biggest gain in over a decade. That gain easing somewhat. China resources beer jumped as much as 12 after reports that major brewers raised prices 10 to 20 . Checking in on the yen, following a january 9 meeting with north korea and south korea , holding onto a two day loss ahead of u. S. Jobs data friday. Some pressure from the korean still near a threeyear high as equity inflows continue. One analyst sees consolidation for the won. The big move has been the aussie , now tumbling to a session low with a surprised trade deficit for australia. The Malaysian Ringgit up for a buth day, and the thailand powering up. 2 , the biggest weekly gain since october. We will see if they can sustain that moment later. That is key given the resurgence in the baht. Lets get to the news, Travis Kalanick maybe getting set to sell his stake in the company while he had previously posted he would never sell his stake. He plans to sell 29 . Our editor joins us now from san francisco. Actualet to become an billionaire from this transaction, and he would have sold more. Thats right. He has a 10 stake. He offered to sell half, but the whereby this agreement softbank and other investors want to boost their stake in uber, that cannot buy an infinite amount of shares, so they put a cap on how much he can sell. It is still a big chunk of his stake. It is a significant chunk of the company itself. He was one of the biggest shareholders. You are seeing other investors lightening their stakes through this transaction. Benchmark is another one. Googles Venture Capital arm is also getting rid of some of its shares as well. Rishaad does this send a there is a lack of confidence or simply wanting to cash out . He issense is that wanting to cash out. He has found challenges throughout the year, including being escorted to the door and a rift with benchmark. There are lots of ongoing legal problems that have been second motion as a result of the climate he created at uber, certainly a rocky 2017, but ultimately this is his baby. There are many rocky quarters. Head, competition from lyft he has been a holder for a long time, founded it a decade ago. Untill not see an ipo 2019, so anybody who has had a , including while employees and longterm shareholders like benchmark, they will want to take a little bit off the table. Haidi that thing you said earlier, Travis Kalanick is uber, and vice a versa. Isnt that the problem . As the ceoa relief tries to move this Company Beyond a horrendous here . Has got to move uber in a different direction. Uber had established itself as a gogetter, move fast, go into new markets, flout the rules, regulations. Idea that the law was something you could iterate on. They saw the limits of that. They are continuing to see the limits in asia, europe, and across the United States. The ceo has to take the company in a new direction. He has had to distance himself and uber from the legacy that Travis Kalanick put in place. In some ways that will work to his advantage, especially when it comes to dealing with rivals, regulators, drivers who had been alienated by travis. Sometimes customers, but at the same time, Travis Kalanick brought this hardcharging culture to the company, move in, ofe fast, dont be afraid rankling regulators, the governments in these countries, and that is something that tabled enabled him to infiltrate new markets in a rapid way and get to that growth we saw in the early quarters of uber. They will have to do it a different way. They will have to play nicer and leave behind a lot of that travis legacy he put into place. Almosttime to grow up come this comingofage. Fascinating watching this happen to uber. Our executive editor with the latest on that planned stake sale from the cofounder Travis Kalanick. Lets get you caught up to date with first word news. Mack andsays all its ios devices are affected by the newly revealed Security Issues. It says there are no known exploits impacting customers. Security experts say highly regulated sectors like government offices and Public Health institutions are most at risk from chips made by intel and others. Westinghouse will be purchased for 6. 4 billion, by canadas biggest alternative asset manager. It will by its nonbankrupt european business. The westinghouse ceo says the deal will transform the Country Company company into a streamlined business. Chinese regulators are stepping up oversight on leveraged bond trading. On the pboc website, it says Market Participants should reasonably control leverage ratio in bond trading, but tells bond traders to meet liquidity requirements. Failing to rectify internal control problems after a oneyear grace. Will be banned from new trading. In fastmoving snowstorm the northeast has grounded 4000 flights and prompted states of emergency in new york and new jersey, while closing schools from washington to boston. The National Weather service says manhattan could get nine inches of snow by thursday, and boston could see 14 inches, 36 centimeters. Windshield in some places will feel like 30 degrees below wind chill in some places will feel like 30 degrees below zero. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thursday saw the release of a private sector job report, adp report. It perhaps did signal that nonfarm jobs payroll report today. Linkfficials saying the between jobs and inflation is broken. The question is what difference does that make to the federal reserves Monetary Policy this year . Kathleen hays has more. What are we looking at . Theo answer your question, former probably has more influence than the latter. Yes, the adp survey which looks at private sector jobs, everything but government jobs, did come in stronger than forecast, up 250,000. The blue line is the adp report, the white line is the governments nonfarm payroll numbers. You can see they probably move in the same direction. Is the magnitude always the same . No. At the very least we can say it supports the bloomberg consensus survey for a gain in nonfarm , a nice,of 190,000 solid number. Lets move on to the next step of this story, more jobs come more rate hikes, more inflation. The problem is the feds dual mandate is not looking as healthy as it used to. Remember the 2017 policy conundrum was stronger jobs, weaker inflation, so not too surprising that jim bullard of the st. Louis fed raising questions about this for some time gave a speech today and said the phillips curve is no longer working. Here is what he said in his prepared text. Curve was once again negative in the 1980s and has been drifting towards zero since 1995, hence the disappearing phillips curve has been widely discussed. If we want to take a look at this on another bloomberg chart, 3475. Look at the dual mandate. The blue line is unemployment, over 10 , down to 4. 1 . Along the bottom, the pce core, the key inflation gauge, 2 is the target. It barely gets there are even as unemployment has fallen so much. This is why jim bullard raise the question, other fed officials as well. If you want to look at the broader expectations for the jobs report on friday, unemployment is supposed to be unchanged at 4. 1 , wages, paychecks flat at 2. 5 year over year. So this is why jim bullard is saying the phillips curve, because Central Banks have been so good at this inflation targeting project since the early 1990s, people dont expect inflation to get out of hand, so this is why he thinks this link between more jobs, stronger economy, done deal rise in inflation that must and happen just isnt validated anymore. Phillips curve has worked since 1977. If we put up a longerterm chart and took it back to 1980, you would see a much tighter link between inflation and unemployment. There have been many more times when they did tend to move together. ,he far righthand side something seems to have happened in the last few years. Other people say things are thatrent, but not different. If you get a tighter labor market and people have to pay up to get people to come to work for them, especially to get skilled workers, they will raise wages and it will filter through demand to demand and higher prices. Our companies at this point going to be willing to do that our companies at this point going to be willing to do that . This chart seem to have a correlation, even a cause and effect. Now whatever unemployment is doing, it seems to have less impact on inflation. That is one of the Big Questions for 2018 Central Banks around the world. Haidi certainly top of the rb s mind. What are we expecting . It is their first look at gdp, the first forecast through march 2018. Bloomberg economics is looking for 6. 7 . Lets put up the chart of india gdp, 3816. You will see the most recent number on india gdp was 6. 3 . The question is how are they looking at the past year . Think of everything that happened, demonetization, getting rid of those big cash through a lotthat of farmers and Small Businesses back on their heels. Then you wait a few months and the economy has barely gotten through that, lets have a new Goods Services tax. Prime minister modi wants to make changes and modernize the economy and make it more is not justo this their specific forecast or what they say about the economy, the most recent purchasing Managers Index for india have them looking better. That is one reason why Bloomberg Economics is looking for that optimistic number. Haidi thank you for that. Hit this hour, we will be assessing what the jobs numbers mean for this region. Have mitsubishi you at sheet joining us in the studio next. And the plus, intel chip fallout widening to government and health services. Is the fear being overblown . That later on. This is bloomberg. We are back. This is Bloomberg Markets asia. I am Rishaad Salamat in hong kong. Haidi despite signs of tighter centralbank policy, asian stocks continued to extend a strong start to the year. Fromng us now is our guest mitsubishi ufj. Happy new year to you. Growth,ize global green shoots everywhere, trade tensions abated, the commodity cycle has turned as well. What could derail this good news story . China,of the risks is where we think the credit risks in the economy have risen over the last year despite that are looking macro signs. It is looking like borrowing has not slowed down. It has probably grown faster. There is some Unpublished Research floating around that with suggest that in addition to the growth in shadow banking, the piping leading into shadow banking might be growing at a much faster rate. Times three or four faster, and it has been growing like that for 34 years. Haidi this is the whackamole situation when it comes to controlling Financial Risks in financial derisking is one of the Top Priorities for beijing, so it will they have success on that front . Or is this fixation on the 6. 5 growth target be the priority . 6. 5 percent is quite important to the top leaders. What we start out with this year is we have a new ateam in charge. A new regulator, banking regulator, and a new governor anyway, they have then given leeway to tackle the leverage that is out there. We will have to see how far they can take it before someone calls for a timeout. Rishaad and with that person b is the question, i suppose . I think everything in china depends on the top two guys. Rishaad that is it. Dohave seen strong evidence you buy into this notion of qualitative growth . Twot is a picture of glasses. You have 60 of the class doing well, private services driven by consumption. Then you have 40 of the economy, the old smokestack industrial economy, which has probably gotten worse in terms of its debt exposure. The mixture of the two gives us. Number between 67 that is the story of china. It is easy to fixate on one or the other, but you have to look at it all. Rishaad stick around with us if you would. Right, just a quick feature i would like to draw your attention to is our interactive tv function at tv. And diveatch us live into the securities or functions we have been talking about. You can become part of the conversation by sending us instant messages during our programming. This is for bloomberg subscribers only. Check it out at tv. Rishaad back from the break now and with cliff tan. His japan out of the woods . Is japan out of the woods . Japans economy is the best it has been this century, but that is not saying much. Rishaad 18 years. Exportlede shown investment, etc. I think the big issue for asia is that this coming year there should be rapprochement between japan and china. Im curious to see how much leadership they can provide the region in terms of growth direction and so on. Rishaad when do china and japan actually become the drivers of growth in asia has the u. S. Still is . China has very specific ambitions like belt and road, and japan is willing to help him about whether that transforms into a viable strategy for the rest of asia remains to be seen. It depends on how much they are willing to open up their own economies. Rishaad there are a lot of issues between the two economies. The other issue is whether they can finance. Chinas high savings rate come i dont think it can finance belt and road on its own here it its own. Rishaad cliff, thank you. Story, positive arrow the hang seng turning negative, gains for the nikkei and shanghai composite. We are on a record run, but what about commodities. We are looking at that. Welcome back. I am paul allen with first word headlines. Uber cofounder Travis Kalanick plans to sell 29 of his stake in the ride hailing company. He stands to reap 1. 4 billion from the transaction with a softbank and a consortium of investors. He has long boasted he never sold any shares in the company he founded. He was forced to resign after a series of scandals. Steve bannon has pledged continued support of donald trump after the president s forceful denunciation of his chief strategist. He told the caller that nothing will come between us, President Trump and his agenda. It is disgraceful and laughable. Unfit, he probably would not be sitting there and have defeated the most qualified group of candidates the Republican Party has ever seen. This is an incredibly strong and good leader. That is why we have had such a successful 2017. Californias attorney general says the state is considering its options after the trump openingration proposed almost all coastal waters to oil drilling. Plans to auction drilling rights in areas where activists have fought for decades to spare delicate ecosystems from oil spills. South korea says the north has agreed to a meeting on january 9 to discuss the Winter Olympics. The Unification Ministry says the agenda will include wider relations between the two sides. The breakthrough comes after the south korea and u. S. Agreed to suspend plans for joint military drills next month. Argentina is rushing to sell 9 billion in bonds to meet its financing needs for the year as it seeks to get ahead of other regional economies. Government selling three tranches with 51030 years and range between 4 to 7 . The sale is led by citigroup, deutsche bank, and hsbc. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. I am paul allen. Haidi thank you for that. A datalike day in asia. Datalite they in asia. All this is continuing into resilience when it comes to the equities session, looking like we will end the best week in asian equities and half a year. Rishaad there has been weakness creeping in, but not that much right now, looking at the tailwinds, better than expected adp report helping to propel the three major markets to record highs. On top of that, the jobs report in the u. S. As well. Have wti above 62, but overall lets get a flavor of what is going on. Sophie kamaruddin having a look. Rally in japan has legs,. 2 higher, a 4 rise for the. 4 rise for the topix. The nikkei 225 is still on course for the best today rise since november. With thecs makers biggest boost. Utilities and real estate leading gains when it comes to industry groups, but telco is the worst performing sector, followed by staples as Japan Tobacco leads the drop. Japanese retailers having a tough time after reporting slower Monthly Sales in december. The results were mostly in line with low single digit growth or cast. Growth forecasts. Checking on some other equity movers of note. Buy ratings fell after nomura rkuten to neutral. Thank you for that. Lets get more on the markets from Garfield Reynolds in sydney. Everything is awesome, in particular the particularly this equities party in japan. Japan had a stunning day yesterday. There was concern it would be a oneday wonder, but the volumes were so big and the conviction across a lot of sectors was very good. There are some promising technical things that backup this is similar to what we saw october and earlier last year. We did get a jump up that has legs. To topix, it is starting target Service Levels it got to back in 1990 come and there does not seem to be much they can stand in its way. Rishaad im going to talk about australia. We are still reeling from those trade numbers we had. This few people at their desks are reeling from them. It was a stunningly bad set of numbers, first backtoback trade deficits since january 2016i believe. 2016. Dollar did was fall back by a small percentage. Tolds came off and gapped the premium on the u. S. It was far from the serious reaction. I think australia like a lot of places is looking pretty complacent about the upward trends going on for the last few weeks. Come up betsaway will continue to build. I think the aussie in the shortterm will rise. Looking further ahead, a breakdown in trade is not look good for the momentum for australias economy, and it has been struggling to gain that. I think the aussie dollar and aussie yields may be about as good as they get for quite some time. Haidi what will you be looking at as we get those nonfarm payrolls . , the key for nonfarm payrolls it still comes down to wages. Even if we got a surprise further drop in the unemployment just confirmed the fed will raise, but raise gradually. Same with the actual payrolls numbers. Thate in such a good spot a big surprise to the downside would not worry people. Be looking for if wages started to pick up, and that could bring out the good news is bad news for stocks, which we have not seen for a few years. I think that is something i would be watching. Ouri Garfield Reynolds, mliv person in sydney. Take a look at the commodities narrative, recordsetting gains thanks to a jump in crude oil, booming Manufacturing Sector globally, and helped by a weaker dollar as well. Our bloomberg commodities reporter has been tracking this out of melbourne for us. Given that we had a 56 bear cycle for commodities, does this mean for that to run for the bull cycle . Absolutely. There seem to be further gains and advances this year, but for now that record run has stalled. The bloomberg commodities index and has2 Raw Materials been on this incredible hot streak. Through4 days of gains wednesday, a record dating back to 1991. We have seen that index come off just slightly thursday, so indigo sequence of gains, but there are plenty of reasons for people to because it to be positive on the commodities outlook. Some shortterm factors, supply issues in some markets, that cold snap in the u. S. , a weaker dollar, but the key thing here is very robust global factory output. We have seen some signs of impressive manufacturing growth and good strengthened that the besteally probably since the aftermath of the Global Financial crisis. That is seen as helping boost demand for Raw Materials and even wrote surpluses, so all erode surpluses, so all that is good. Are a couple of notes of caution, citigroup say china still will be a key determinant of the path ahead for commodities, so good to keep an eye on where things are going with chinas growth trajectory. Rishaad talk to me about palladium. We have record highs for this precious metal with industrial uses, but it keeps on surging. Is it down to car sales . The risks as this advance continues . Palladium known mainly for its use in catalytic converters. It is closing in on a record price set in january 2001, a 17 year high, edging towards that figure. It is down to the car market. Last year, you remember the tests. S around emissions what we have seen is stronger sales of gasolinepowered vehicles in europe last year. Palladium is used in catalytic converters in those guzzling cars, so we are seeing that reflected in the palladium prices, higher now. The risk is platinum is an alternative come so carmakers could look to the cheaper metal to replace palladium. Rishaad thank you a lot for that. Up, bit and by the bug, apple confirms that all mac and ios devices are affected right the recent trip problem. That is in a moment. Rishaad we are back. Apple saying all its mac and ios devices affected by the Security Issues affecting chips and processors, but no signs of impact for users. Lets get to all of this. Has come out and others have said their chips are affected by the Security Issues. Tell us what the problem is with the semiconductors first. Basically it was an effort to make computers and phones run faster. It is using something where there chip the chip guesses what will happen next. So it isocess of doing from a book to another application that can look at that information and then take that information. It was a balance between speed and security, and while it made things faster, this phone ability was exposed and hence all the commotion. Its iosapple says devices and Mac Computers are affected by this, but there is no known impact on the users. How can they be so confident . Basically this started a year, more than a year ago, in the research community, where they explored this theoretical possibility. As theyve researched it further, they look at looked at it and kept it under ramps and went forward under wraps and went forward. It has not been exploited yet. Nobody has been affected yet. That is a good thing. That is why they had to keep it they have ways to fix it before the broader public knows about it. Down, breaking it meltdown, you would assume that is the more aggressive of the second isyou said the a problem and how widespread you expect that to be and how difficult to address . Meltdown is being addressed. Intel is putting out patches, microsoft, apple, but specter is the other issue. The issue with specter is that is a lot more it difficult to explain, but it comes down to fundamentally how the chips are architected. It is that balance between speed and security, and it may require a fundamental rethinking of how we design chips going ahead. That will be interesting to watch, how will chips he designed in future iterations. , thehe past 510 years industry has been relying on this design and using these techniques to speed things up, and now we are realizing there are some issues. Another interesting thing to said out for is that intel overnight they were able to make it him you to specter as well. The details are not clear, but it sounds like they have solved the specter problem also. This is what i am watching out for and how they are doing that, but maybe that is a more optimistic way to look at things. Haidi overall it has been contained come a but there will be fallout contained, but there will be thought going into designed to close these vulnerability caps on the future. Gaps in the future. Part is such a fundamental of chip designed that it does not happen overnight. I actually saw a column the other day, someone was arguing that that opens up a lot of opportunities as well. As we approached different ways to design computers, there are possibly opportunities to take advantage of. Brian, we have this situation where we have moores law intact, the speed of semiconductors doubles every two years. Does a move like this jeopardize that law, which has held true since 1965, hasnt it . You could argue that moores law is getting wobbly now. The benefits you are seeing from that are slowing down. It is a good question you pose. At this point, it is not thinking about whether processing efficiency gets better. I guess right now everybody is more concerned about the fears and the security of it all. Dont forget, maybe more directly to your point, has a process of implementing these patches, there is a concern of a performance hit. Architectedthis was , sorry, the performance of these things gets a lot better at the expense of security. If you make it more secure, then that theoretically can impact the performance of the processors, some are saying up to 30 . That mostssue is people will not feel the impact of that because it will depend on the individual workload. Maybe back to your original question. I thinkrformance gains, we will still see that. There may be some minor impact, but i think we will be ok. Lawaad lets see moores and if it is wobbly looking at all of that. , will Corporate America benefit from the rift between President Trump and his former chief strategist . How will it load for america and the Republican Party bode for america and the Republican Party as well . That is next. This is bloomberg. Beef withve bannons President Trump or vice a versa, ill for america and the Republican Party . Hope not. This current rift is unfortunate. There is never a good time, but with all the other distractions going on, you dont need that for the administration. You dont need it for our country. We have so many positive things going. You look at the board, it is all green. You have a lot of rollback in regulation. We have this new tax bill. There is something in that for every one right now to see something positive. You hate to see this other level of distraction. The three different wings of this party put aside their differences for the tax cut. Where else do they have Common Ground . They have to look at infrastructure. There has to be Common Ground there. We just heard 3000 flights closed today. There are areas of, where they can come to gather, not only the Republican Party, but the democrats could join in on some of this. You were talking earlier about daca and what has to happen with immigration. I think there has to be some coalescing and coming together for commonality and the good of our country and set aside partisanship. Like sports and football. When the team takes the field, they should all play for the brand on the front of the jersey, not the name on the back of the jersey. That President Trump is getting Mitch Mcconnell and speaker ryan together. There are a lot of cultural differences in this administration. It is important to get harmony among various cultures, businessmen and businesswomen, government officials, military officials, private sector. It is like when you do a merger and acquisition, the integration has to be a core component to this a core competency. You said earlier the steve bannon incident was unfortunate, but can it be fortunate in some way . You take out as an antagonistic influence on the president. He can help republican lawmakers project protect their majority. This is critical towards the midterms. If the rift can settle itself down and the apologies and apologies could be expressed to each other and you bring that faction that steve bannon lead and it does coalesce and come together, then you have more unification than separation. Do you think that is likely or difficult . They were very supportive of bannon and what he stood for. He did bring a long of a portion of the gop. So now we have to make sure those individuals, certainly the ones financially supportive, see from an administrative standpoint the direction we are going, the new regulations, the new bills are good for the country, and we need to set aside personality and focus on what is good for the population. Breaking updent with steve bannon, does it help or hurt . Hard for me to speak for all of them, but those that i have spoken to, they are pleased. 40 companies have immediately done a bonus for their employees as a result of this. If you think about the repatriation of funds, i might have done that differently and suggested 25 percent goes into a Government Bond for infrastructure. Anotherhave suggested 25 would have gone in strictly for research, development, and innovation. The other 50 , you let the companies do what they will. I hope they dont buy stock back. That is playing into the hands of the detractors. All of us that have 401 k s or pension funds, we are getting that lift. You hate to see them, because what will happen is they will be broad brushed, raising the stock price, all these options, putting money in your pocket. Perception is not reality all the time, right . Rishaad just going to leave things there for the time being. Hong kong is positive. A positive asiapacific trading day. More next. David it is almost 11 00 here in hong kong. Im david ingles, and this is the last and final trade day of the first week of 2018. Welcome to Bloomberg Markets asia. David asian stocks on the cusp of their best week in almost six months as investors around the. Orld pile into equities north korea agrees to its first talk in two years. And a 1. 4 billion other 1. 4 billion cash on Travis Kalanick is floating off of his stake in the company he founded. Lots to talk about. Inre is the development over south korea that has started brought optimism. Chops numbers later out tonight, almost academic when you look at the probability that the fed will likely move in march. That being said, we could hold for a better start of any year when you look at equity markets. Here is your case for emerging markets. We put this together with the mci developed markets. Em and. M. And dm dm. The spread between those two does underscore it has almost nothing to sort of narrow that valuation gap between where we are when it comes to the likes of europe and japan and the United States, and when it comes to china, brazil, and the rest of the markets. When people say em is a bullish call because it is cheap, they still have a point. It is friday. Here is sophie with a look at the open in thailand. Is high as a horse for the asian markets. Take a look at what is going on with the philippines. The manila equity market gaining 1 . Shares in bangkok gaining one third of 1 . Aussie shares are set to close out the first week of 2018 at a , while the aussies were taken down by the surprise high trade deficit for november. Singapore have a sixday rice. Sbi. Early days for the we are about an hour out from malaysian trade figures. Still set to deliver doubledigit export growth. Ringgit is clocking six days of gains. Helps with expectations that the central bank to tighten as soon as the january 25 policy meeting. We have gold losing ground, along with oil, which is slipping from a threeyear high. Checking out trading in mumbai, we are looking at a positive open as they set up for the nifty there. Dave, the expectation is for the slowest pace of growth since 2014, when modi came to power. David that is kind of a damper, but all right. Thank you, sophie. Hass get to paul allen, who your first reading. Ubers Travis Kalanick plans to sell 25 of his stake in the right healing company. Billions to reap 1. 4 in the transaction with softbank and a consortium of investors. Kalanick had long boasted that he had never sold any shares in the company. He was forced to resign as ceo last year. Apple now says all of its mac and ios devices are affected by the newly revealed Security Issues affecting ships and processors. Are no, it says there known exploits impacting customers at this time. Security experts say highly regulated sectors are most at risk. Bloomfield Asset Management is buying westinghouse for about 4. 6 billion. Canadas biggest alternative asset manager agreed to buy what remains of the former Energy Powerhouse as a u. S. Business, as well as its nonbankrupt european business. The westinghouse ceo says the deal will transform the company into a stronger, more streamlined business that is expected to close in the Third Quarter. Chinese regulators are stepping up oversight of leverage bond rating. Macaboc website says participants should control their ratio in bond trading. It also urges bond traders to meet liquidity requirements in their deals. Global news 24 hours a day, 2700ed by more than journalists and analysts in more than 120 countries. Im paul allen. This is bloomberg. David south korea says the north has accepted the proposal to reduce tensions ahead of the olympics. The date has been set for next tuesday, january 9. Lets get to our bloomberg se oul bureau chief. It was quite a development. Significant. They restored the hotline that was on hiatus for about two north and the fact that korea message, hotline to say lets do talk is a significant development. There are skeptics as to what will be talked about, what will result, what will come out of this, these talks. That is a good question. There are skeptics who revealed that north korea is up to some no good, maybe buying some time that they perfected nuclear and on the other hand, the sanctions may be working, north korea may be hurting quite a bit, and the need to reach out and look for a way to improve relations. David this may be another simplistic way of looking at this, but what happens after the Winter Olympics . Is the hotline still open . That is the six to 4000 question. 64,000 question. The fact that they are talking does not mean that they are going to continue to have broader talks on the geopolitical tensions on the Korean Peninsula. Whether that will continue after the olympics is a big question. Right now, as we know, it is primarily to talk about sending north korean delegations to the olympics, which are 50 miles from the border, and at least temporarily reducing some of the tensions and possibility of hostility breaking out. After that, it is anybodys guess. David it really underscores the adage that sports rings down all sorts of barriers. Doesnt obligate or help these talks between the u. S. And south . We know that President Trump is hoping to salvage the relationship. On what thes outcome of these talks are. Of this overture by north korea is a way to put a wedge between south korea and the u. S. , and if that is occurring and there are disagreements on , that couldl nature create greater tensions or even more demands from donald trump, for instance, who has criticized the trade deal, and it could come down hard on the great trade agreement. It could turn worse for south north korea is successful in creating this wedge as some believe they are trying to do. Peter, thank you so much. , annualp on the program gdp estimates related later today. We are live in mumbai to see how the rbis rate calls may boost or , j. P. Xpansion, but next morgans chief asian Market Strategist joins us to talk contrarian views. This is Bloomberg Markets asia. Investors are awaiting the latest u. S. Economic data with the december jobs report out later today. Bloombergs chief Economist Says it is shaping up to be a major challenge. We know the relationship has changed. The coefficients in the equation are significantly different from what they were in the last cycle or several cycles before that. I dont think we can say officially the phillips curve has broken. I think 2018 will prove to be ,he year where they test that where we are declining to a 3. 8 Unemployment Rate sometime in the back half of the year. Labor scarcity is going to reach a point that employers are going to have to cough up the money and pay workers more to retain them. We will find out the phillips curve was not broken. It was just behaving a little bit different relative to the past few economic cycles. Chief u. S. Was our economist carl riccadonna. We are looking at an estimate of 190,000, with a range from 132,000 to 240,000. Here are some visuals to accompany this. More important, wage growth is the one to watch. That is the bit down here. On top, all sorts of data coming you areell, in case concerned about how the winter storm will affect these things, they are going to come out on schedule later tonight, in about 10 hours. Lets bring in time way to make sense of this, and how 2018 looks. Lets start with this. We are likely going to get another strong jobs report that puts march formally desperately on the table for the fed. That will berk a question, but i am expecting a smooth transition. The data, the economy was still the leading a what leading the way. Like you said, these numbers are still responsive to another hike in march, and at the same time, i think markets are very forgiving to any of the downside risks, or any of the downside shocks to data. We had hurricanes and floods earlier last year. I think the winter this year could, again, be seen as a oneoff where activities only delay and not eliminate. It is going to come back in springtime. I would argue the markets are still in a constructive mode when it comes to looking at the u. S. Economy and the global economy. You have flagged inflation is the biggest risk. When you look at oil and brother commodities and how the sharp recent leg up are you earlyng to look more at signs of inflation, and when do these show up in the numbers . I think it is important to recognize a couple of things about the oil place oil priceinflation relationship. It is fueled i strong Global Growth. Some driverse are of oil prices. To me the key here is to things is opec going to start to prices pick up, and how will shale producers in the u. S. React . On inflation, for Central Banks, especially in the developed world, i think High Oil Prices will not be a trigger for aggressive monetary reaction. Higher rates will not do much to push the inflation down. It is the demand that they care about. David we are not there yet, is what you are saying. We are not there yet in terms of the demandside inflation. There is still more room to run before we run into demandside inflation. We were talking during the break, we could not have wished for a better start to the year. Hong kong, a ton of money coming through. Why do you think that is happening . It is very much something we carried over from 2017. Last year was spectacular. For asia, it is the fifth best return in the past 30 years. I think investors have good experience. The truth is a lot of economic fundamentals are carrying over in 2018. Investors sort of missed the boat a little bit. Last year, they are quick they were taking advantage of this tailwind. In the global environment, we dont have a lot of major risks, whether political or otherwise, on the horizon. In the near term, at least. That creates a constructive environment for investors to put their money to work. Cash rates in asia, in real terms, continue to be zero, if nonnegative, which means that even as the fed raises rates, your cash is not doing anything for you in terms of returns. David guess what it does to valuations. Even my dirty socks would have attractive valuations. Done much bc strategy from 2017, but you have done minor ones. What are those little adjustments . Last year, it was technology. That is still important, but earnings trends are broadening out to other sectors, such as financials, industrials, or conceptions. It is no longer a technologyled story in asia with a broad set of companies that one can choose from. I think one market that people have neglected is japan. In japan, earnings have been growing steadily in 2017, despite the fact that the yen was arguably stronger in the first half of the year and flat for the second half. The relationship between the yen and a good market is broken down, but the correlation has weakened quite a bit in 2017. As the global cycle remains in good shape, i think that is another potential dark force for 2018 dark horse for 2018. A sense that get global funds are still relatively underway in japan . Looking at the level of interest of asian investors, there is a lot more room for improvement. In the past number of decades, investors have tried to invest in japan, but their experience has been somewhat mixed. It takes some convincing of the investors. David you went through two of your top three conviction traits. You talked about equity and financials. One final thing, Global Corporate credit. What would you say is a decent yield . Are we talking 5 to 7 . I think 5 to 7 is what investors in asia expect. David do you expect the yield will . To steepen, if you that would help this and your call on banks. Tofor banks, it is not just steepen the yield curve, but also the absolute number of yields. You would expect the yield curve to flatten, but nonetheless the nonetheless, when the yield curve is moving up, banks are able to generate more revenue. Perhaps more importantly, the being in good shape, you will see a bunch of financial activities. Boosted with more trade volume and economic activity. David finally, what would lead you to rethink your bullish goal . Back to her inflation discussion, the central bank needs to give a much more aggressive start. Thats one problem. The other is a loss of momentum in Global Growth. I think at the moment, the upside to inflation is larger compared to a downside on Global Growth in the next 12 months. Hui, thank you so much. If you are one of our subscribers, you can check out all of the interviews, including , using your interactive tv function. Join the conversation. Send instant messages to our team for our guests during our live shows. Check it out on your bloomberg. Man, hong kongs richest , sees no end in sight for the demand that has been driving up prices. He has been selling some of his assets and property in recent years along rising real estate prices. Speaking before the annual dinner for his group of companies, the billionaire said he continues to build and continues to buy. The man demand remains very strong. Andre still Building Hotels have bought shopping malls, getting rental income for the longterm. Our companys rental income was at a record high last year. David a Bloomberg Survey has found Chinese Property Developers face the biggest risk in terms of default in the domestic debt market. Funding continues to curve. They are facing a record 31 billion onshore and offshore note maturity this year, which may jump to 70 billion. Wanda and Country Garden are among those facing the biggest payments. Told that as been chinese livestreaming company is planning to spin off and listed esportsts list its platform for broadcasting in the United States. Twitch is seeking to raise at least 200 million this year to fund expansion. Adr gained as much as 5. 5 in new york. Not bad. Theme a little bit as we continue our conversation. Larger slicegrab a of chinas market of milk. That is after 1400 products were removed from store shelves this week. Happy new year to you. There he nice to see you. Numerals are in place. Very nice to see you. Rules are in place. What are those . Were put inations place this week requiring vaguely formula to be registered with the fda. They now have to be limited to producing a total of just nine products. David why are we suddenly seeing this . The overhaul had its roots in the 2008 scandal in which melanietainted milk formula killed and sickened infants. That was 10 years ago. Since then, scandals have persisted. ,ou have seen fake formula and as recently as november, fake ingredients, or inspired ingredients. The Chinese Government introduced these legislations to weed out the products and better regulate the products that come onto the markets, and therefore ensure quality and safety. David youve got to protect the babies. I was studying there in 2008 during one of the major scandals. It was a storm for beijing. Can we get the pie chart which shows the Foreign Companies in the market . There we go. We have this to show the breakdown for the industry. What does it mean for the industry, when we look at these new developments . 1400 products have been removed from shelves this week. That presents an opportunity for the bigname brands such as nestle to grab a greater share of that market, especially as smaller local brands in secondary cities and countries are likely to disappear. David there is a preference for the foreign brands, of course. Thank you for the latest on this big story. It is on the website. What time is it . A few minutes into the lunch break in china. Have a look at the close. Not bad, but not very good, almost the opposite of what we saw yesterday where we had large caps on the way up and small caps lagging. A little bit on the opposite. Japan comes out of its break, next. Stay with us. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. It is 11 29 a. M. In hong kong. Steve bannon has pledged his continued support of donald trump after the president s forceful denunciation of his former chief strategist. Radio,told breitbart nothing will come between us and President Trump and his agenda. Co the white house has defended his Mental Fitness for office. It is disgraceful and laughable. Probably unfit, key would not be sitting there and would not have defeated the most qualified group of candidates the Republican Party has ever seen. This is an incredibly strong and good leader. That is why we had a successful 2017. Californias attorney general says the state is considering its options after the Trump Administration proposed opening almost all u. S. Coastal waters to oil drilling. The department of interior plans 47 possible options for drilling rights across the u. S. Continental shelf. That includes waters where activists have fought for decades to spare the ecosystems from oil spills. North and south korea will have a meeting to discuss the upcoming Winter Olympics. The breakthrough comes after south korea and the u. S. Agreed to suspend plans for joint military drills during the games in pyeongchang next month. 9entina is rushing to sell million in bonds to meet its financial needs for the year as the six to get ahead of other regional economies tapping into National Debt markets. 4 to 7 . Ge between the sale is being led by citigroup, deutsche bank, and hsbc. Global news powered by more than 2700 journalists and analysts, im paul allen. This is bloomberg. David paul, thank you. The markets are shooting up. 6100 on the asx 200. For that, all the fun, all the glee, all the love. Here is sophie with a look at the sea of green. Sophie we are feeling the love. On this, equities, currencies on the upward trek. The dollar is at a threemonth low as we wait on the last u. S. Jobs report for 2017. The dollar is looking at a fourth weekly loss. Currenciesd to asian. The ruby coming online higher for a second day. It is the best such winning streak since october of 2007. Ore highs across asian markets when you take a look at trading at mumbai, you can see mumbai stocks may join the party. We wait on the governments official gdp forecast. Lets take a look at specific equity movers helping voiced sentiment today. A priori surging a priori surging. A brewery a deal to buy shopping malls is pending approval from chinese regulators. Macys is having its best day since november, gaining almost 8 . Malaysian Government Linked Companies lower investors amid speculation. Not a happy friday for japanese retailers. Two Companies Lighting after reporting slower than usual december sales growth. Otherwise, everything is awesome. David everything is always awesome, regardless of what happens. Markets, top of the show we should do this valuation gap between emerging markets and developed markets, and the case that this group of equities continues to climb. In terms of a simple, plain vanilla, have a look at the levels. 10 year highs here on the msci emerging markets index. That would be about, what, 2 , maybe, of that 2010 high . Back tohat, we are levels of 2008. Lets have an 18 year look. There is your peak, your alltime high, before. Before gasquet down the crisis. Before gas came down in the crisis. Lets have a look at this story and moved to tech. Apple says all of its mac and ios devices are affected by this newly revealed security issue affecting chips and processors, although no exploits have so far been detected. Take a look at this security flaw. The vp of economics at Frost Sullivan joins us live. Happy new year to you. Thanks for coming. Happy new year. Next, david. Id your initial falls your initial thoughts on this meltdown . How concerned should i be as a consumer . I think there are different views today that we see as far as the implications of these flaws or bugs or whatever you may want to call it. There are analysts that predict these will be difficult to fix. Eventually you may need to change the entire i. T. Infrastructure. There are those who believe there are fixes based on software that can contain the current issues. While there are both ends of the spectrum, i believe that given the current knowledge we have, most ofe fixable, and the companies should be able to do that in the next couple of weeks. David i think we should also underscore that we have not really seen something come out of this. Exactly. David that brings me to the next question is the worst behind us . Not really, because i think now this issue has become public to the hackers area it to the hackers. Someone may want to try to see if they can exploit and do something around this. I think the next few weeks are quite critical in terms of the companies coming up and trying to patch the existing flaws related to these processes. David i want to talk about the outset for 2018, just to have a look at the bigger picture. Was breach, which led to losses. What they are saying is that these names have in a fitted massively from this uptick in prices, but the industry, they say, have benefited massively from this uptick in prices, but the industry, they say, is about to turn. Do you buy that . Not completely. This year, the entire Semi Conductor industry grew bright 20 grew by 20 . If you are looking at key trends over the next three to five years, your driverless cars, that is going to feel a lot investment in the Semi Conductor sector. We expect that growth to continue over the next three to five years, though there will be pressure on prices, and a lot of lastnies which benefited year and this year may not see the same kind of benefit in the future. I do not think we have come to the end of the cycle. David and the internet of things, there is this fresh leg of growth for the industry, but are we still talking about the same two or three names that dominate the space . If you look at the smaller companies, the startups, which are coming up with different solutions, i think it is spreading much wider than just looking at two of the companies today. A lot of these providers are creating very specific, solutiondriven programs that will help and benefit a lot of companies in the way they support their consumers through the use of iot in the future. I think it will be wider. We will see a lot of new players, including startups, that will play a larger role in the iot environment. Smarter automation and manufacturing is a hot topic among Fund Managers and esters and investors. Help us narrow that down. Making the large part of factory equipment smarter . It is all about the industrial internet of things, what we call the industry 4. 0 of smart manufacturing. We are seeing a lot of companies, both from the i. T. Them coming, we see together to create a lot of solutions for industry. I think that will primarily drive the overall smartness factor within manufacturing organizations. Of integrationot of other technology coming into the manufacturing space. Printing,k at 3d artificial intelligence, all of these are coming together into what we call industry platforms. I think it is an exciting time for the manufacturing site, and we see huge potential of limitations which are likely to happen over the next three to five years. David lets have a look at consumer electronics. I want to talk about tvs. If i bought a tv 10 years back, i would have looked at the quality of the picture that came out of that and said, this is amazing. It was obviously tenures on, clearly room for improvement. But when i look at 2018, how much clearer can these things get . Are, you know, very clear as of now. K whichre examples of 8 will come in the future. A lot of the question is, is content available across all of the media at that kind of level of clarity of viewing . , therethat is generated is no point, really, to go in television immediately, because you dont really have content being presented with that level of quality. David that being said, lets move to other consumer gadgets. Is there anything in the pipeline that might the groundbreaking and not just an improvement from what we had today . Think we have been reading a lot of news and statements coming out from Different Companies on what they will present. I have not seen something which is really groundbreaking or completely different from what we are seeing today. A lot of them are improvements in terms of capacity and performance, or extending it beyond what they have been doing in 2017. I really cant pick out something which is singularly groundbreaking that we are likely to see in 2018. Other key trends we may have missed from the conversation . Anything that excites you that you think we should be talking about . I think a lot is still around this concept of iot. We focus on cars. Vcs are moving into a lot of things coming into the automotive sector, relating to connectivity, entertainment, driverless options. There is a lot of excitement we can see. There is a lot in the ces program that is likely to happen in the next four to five days. There will be a lot of opportunities for companies to geared to what consumers are looking for in terms of the daily lives, the way they commute, or the way they interact on a different kind of media, different kind of platforms. David lovely. In other words, make us lazier. Thank you. Automation at Frost Sullivan, live from us in singapore. Coming up, india sunoco is said to have earmarked 3 billion for acquisition. Which company is a tying . David Indian Markets just opening up. Have a look at these opening numbers, well in line with what we are seeing across the region. A broad move across the equity space. We are close to the alltime high. Nikkei up 2524. 10,524. Watch that. We are talking about that in a few moments. Ave a look at the chart we are close to a record, if not already. What are we doing . 34,068. There we go, alltime high. We do have to close above that level, but we will see. 34,063 on the sensex index. Lets have a look at one of the shares we are following in that market. There we go. This morning, after sources told bloomberg the company had did for u. S. Alone for u. S. Aluminum in a deal that could the worth 2. 5 billion. George alexander joins us now. My question to you, where are we when it comes to this process . Year,you look at it last both said they had started the talks with the new bidders. [indiscernible] it may take another quarter for the deal to be completed. David i guess that takes us to the core of the issue. Yes, there is the preference or but today actually have the pockets to buy, the backing, if you will . Flow,you look at the cash it has around 300 million to 500 million of cash with it. Funding is not much of an issue. Hindalco has a good rating. Get support from the financial community, from banks and lenders. David all right. George, thank you for a lowdown. Watch this closely. George joining us live out of mumbai. Coming up, the verdict for the Growth Prospects this year. What could put this recovery at risk. We are live again out of mumbai next. Hna group has had to walk stagerom late negotiations. They pulled out of talks to purchase a significant stake from Value Partners founders just weeks before the final agreement was to be designed was to be signed. Bloomberg has been told that, when you look at hong kong developer henderson man, it has varied to sell an Office Building for 1. 2 billion u. S. It is priced at more than 30,000 hong kong dollars per square foot, which would be a record for the area. Of adding set a goal soccer and football to its slate of streaming sports. Sources say the digital giant plans to bid for streaming rights. The auction is set for 6. 9 billion for three seasons. Wayon sees live sports as a to entice more people to subscribe to their prime memberships. We are moving towards noon here at hong kong, Indian Markets just opening up as well. A Growth Outlook is coming out of the country. This poised to pick up coming year, but the outlook may hinge on rate decisions by the r. B. I. We are joined by our indian economist, live in mumbai. Interest start with rates and inflation before we get to the growth picture, because when you look at oil, up, is it a problem for india . What do you think . Oil prices rising is suddenly a problem for a the a, because india is one of the biggest importers of oil. For india, because india is one of the biggest importers of oil. Their trajectory has been muted because of the government cutting taxes on gasoline. Domesticok at the prices of petrol and diesel in india, over the last three or four months, while International Prices have increased around 30 or so, the domestic prices of petrol in india have barely moved. They have been flat over the last three months. R. B. I. A lot of people would agree with this they missed the window to cut rates when inflation was low. The consensus is that the next move is going to be a hike. Does the inflation picture change or bring forward any expectations of a rate hike from the r. B. I. . If you look at the Inflation Trajectory for all of last year, inflation was pretty much hovering around the 3 mark. There was a 4 target for the r. B. I. However, in the last three months, inflation has moved up to around 5 , and that is primarily driven by a seasonal uptick in vegetable prices of onions and tomatoes. To look at how these vegetables are expected to do over the next few months, tomato prices have exceeded sharply. That is expected to pull down retail inflation quite substantially over the next few months. Even as you look at the onion markets, im prices have remained elevated and remain a concern, but if you are looking ahead, then the fresh onion supplies are expected to hit the market in march, and these prices are expected to receive sharply as they remain elevated due to the season. Forerms of the tragedy inflation, my forecast suggests that inflation for the month of december is expected to be 5 . Going into the area in march, it could go down below going into january and march, it could go down below 4 by march, which will be a big surprise. What that means in terms of the rbis policy rate action is that the r. B. I. Is likely to be surprised in inflation since. At the same time, the Growth Numbers are not looking good beense they have downgraded to r. B. I. Projections over the past few readings, which means that the r. B. I. Might once again have a window into Interest Rates in june. David what is your forecast . , we knowms of growth april 2017 to march 2018 was beset by disruptions in terms of demonetization impact. Some of these challenges have been addressed. Demonetization is now squarely behind us. Even with regards to the goods and services tax, some adjustments have been made. Pay might actually start to in terms of the growth momentum going ahead. One of the key challenges in terms of Growth Outlook remain etary Monetary Policy outlook, because there are two bank levers there are two levers. David we will see what happens. Our bloomberg india economist for us, live out of mumbai. Closely, lets have a look at the charts. We have seen a pickup in overnight swaps. R. B. I. Doesif the need to bring forward this expected rate hike, or maybe seek a cut. Who knows. A quick look across equities in the region, suffice to say we are pushing towards record highs in the benchmark. India is at an alltime high. Hong kong, by next week, just might reach the alltime high. Thats it for us. The best of Bloomberg Markets middle east is coming up next. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. 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. I am Alisa Parenti and washington. You are watching bloomberg technology. Lets get a check of the first word news. After heavy snow created hazards throughout most of the eastern u. S. Today, the region can expect to feel a win show up 2030 degrees below zero in some areas by friday. Nearly 4000 flights have been grounded so far. We have temporary closures at new yorks jfk airport and let cord airports. The United States is suspending Security Assistance to pakistan. A state Department Spokesperson made the announcement today. The u. S. Was already withholding 255 million in military aid to pakistan as the white house reviews the nations contriti t