To tap into chinas 40 million on Offline Stores. With its new platform. Betty yvonne, no action here in the u. S. , of course because we are closed for the commemoration of Martin Luther king. Marketsties, the bond are all shot and the currency markets of course, continue to remain open. Shut for the day. It depends whether we will see a government shut down and how that will be priced into the equity markets when they open tomorrow morning. We are definitely watching commodities closely, and currencies, which continued to slide in the u. S. Dollar as well as well with five weeks of losses. Pretty remarkable, given that we are in a rate tightening timeframe here in the u. S. Area commodities, and currencies. We are watching those today. Yvonne yes, the dollar could be optimism for some of the asia traders here, but again, we are missing some fresh catalyst with the u. S. Markets closed. If we take a look at futures, it looks like we will be taking upons with the best we are looking at the best start of the year for equities. The kiwi gained the most against the green bark and against the greenback, and the aussie as well. The aussie dollar is eyeing the 80 handle now. Forbig thing to watch is dollar renminbi, pushing higher as well. The yield for the aussie 10year are also pushing high. They are waiting for the opens of japan and korea. We are expecting a uptick in dollaryen 164 110. 60 for the dollaryen. They are very aggressive about easing in japan until japan sees that 2 inflation target. the strongest yen in about 10 years has people speculating. It reached its strongest level on monday since december, 2015, against the u. S. Dollar. The pboc might intervene. The euros gains against a weakening u. S. Dollar, might continue if gains continue to be seen and inflation. Ecbs representative said that this is something to be seen. Investigators are trying to work thewhy a floor at Indonesian Stock Exchange collapsed. Police say that they found no trace of explosives. Turmoil has not been affected despite the turmoil, and the Indonesian Market we started after its usual lunch break, with the benchmark edging higher. Have a feudb states brewing again, after a emirates flight to dubai the was stopped by qatar. An xl qatari royal said he was being held against his an exiled qatari royal said he was being held against his will in the uae, something which is also been denied. This is bloomberg. Rows, thank you very much. Even though u. S. Markets were closed, the decline of the u. S. Dollar dominated, falling for a fourth day, the longest losing streak since january last year. It is putting pressure on cryptocurrencies. Let us talk about the major dollar. Es and the sue yes, even though markets were closed, it really does stand out. We are on the heels of five straight to clients, how is it possible . We have a tightening said, we have strong u. S. Growth. A lot of it has to do with the traders being more hawkish on other places, particularly in europe. If you look at this chart, the bloomberg spot index is at a threeyear low. People are excited about the euro and the strengthening of the euro, which has exacerbated the weakening of the dollar. Bloomberg economists are bumping up their 2018euro and the strenf the euro, which has exacerbated forecast for 2. 2 ,rea growth at certainly exceeding last years estimates, and putting the euro on a very strong path. We are also seeing strength and other currencies which have the dollar weakening again. A very big story as we continue this week. Yvonne regulators around the world are starting to scrutinize cryptocurrencies even more, particularly in china. Get some information from unnamed sources, that china is stepping up scrutiny of cryptocurrencies, particularly on mobile platforms. If we look at bloomberg chart, here, a wild ride for various currencies. Bitcoin in blue, ethereum in purple, really taking off in late december and early january. They are all going up. Bitcoin inthe bloomberg chart ht about 19 in the past week, down significantly from his from its september hype. There are different reports of crackdowns, last week it was korea, and now we are getting fresh reports out of china, according to people close to the matter. The Chinese Government is apparently scrutinizing these platforms. What does it mean . A means that we are probably going to see a lot more volatility going forward, and u. S. Treasury secretary Steve Mnuchin interestingly said, that the fed has discussed the matter. About whether this is something they want to take a closer look at. Et us take a listen this is something that i have talking i have spoken to the fed about. Instead of euros and dollars, you have a different currency. There are Central Banks who are thinking of, inside of issuing cash, issuing a digital currency. The fed has contemplated and looked at this, but i do not think the have any intention of doing this in the in the nearterm. Sue the securities and Exchange Commission has been presented with other vehicles and etf for this, but they have stopped but for now. If we look at the bloomberg chart again, we can see how the features are trading. The Chicago Exchange is out, and what you have here is a tighter start which shows again, that there has been a change in the way that these currencies have traded. The Chinese Government again, planning to block domestic access to homegrown or foreign that forms. Exactly how theyre going to do this, it is not known, but it definitely increases the scrutiny. Yvonne definitely a lot of scrutiny here in the region of asia. Thank you, sue. President trump blaming the democratic side for any problems arising with the immigration deal. Over to washington dc now, we have our bloomberg reporter laura, joining us. Laura, how likely is it that all of this leads to the government funding drying up at the end of the week. Reporter we have a very complicated situation coming up. If they cannot pass a spending bill on friday, or are year and deal, or temporary funding, with democrats demanding immigration protection for 800,000 young people, you can see, the talks have not gone well. The president last week indicated he would be agreeable to a deal that would combine border security, deportation protections and two other elements. He suggested that everybody look at all of these things longterm and a van at two days later, rejected a compromise. He has also been accused of using vulgar language to reform from to refer to certain immigrants from haiti, el salvador and africa. So there is a lot of fingerpointing and it looks like it is going to be a difficult week. Yvonne as you mentioned, we heard his was wants, given the fallout from these comments. Are there any signs in the horizon that this could actually calmed down at all. We will have to see. Right now, the way things are going, senators who have worked on this bipartisan compromise have and the weekend trying to see how many cosponsors they can get, to have a show of force this week. We will have the number two leaders in both chambers, the whips, meeting to see a big come up with something. Republicans are trying to separate these issues from the spending debate, and the immigration debate, and they have two leaders in those talks and control both chambers. Nafta. Moving on to betty what signals is the administration sending on a nafta . Reporter very confusing signals. We have meetings coming up in davos, and our u. S. Trade representative will be there, as well as the other country pots from canada and mexico and they may have some sidebar talks there. Hes other cant counterparts from canada and mexico. Week thatast negotiations could continue, but then President Trump sent mixed signals. In an interview with the wall street journal on friday, he once again threatened to withdraw. Our trade partners once again do not know what to take from the signals this year. The u. S. Might pull out, and Steve Mnuchin, the treasury secretary said that they will be talking about the America First agenda in davos. We have these two meetings which could leave us with some very clear signals. Yvonne indeed. Thank you so much, our bloomberg congressional reporter in washington. We will have more from washington straight ahead. Thinksy our next guest that the United States might actually need a Government Shutdown this year. With the yuan at the strongest this year, we look at the view from anz. This is bloomberg. Yvonne this is daybreak asia, i am yvonne man in hong kong. Here and i am betty liu, in new york. The countdown is on for an agreement on fiscal funding for the year. Our next guest thinks President Trump might actually need a shot down. The executive Vice President of the msl group, and teacher of Public Policy at georgetown university, is here to talk about the with us. Joining us from washington via skype, stan. Stan, why do you think the u. S. Needs a government shut down. Guest given what is happened in past week, with the book that came out, fire and fury, and discussions about paying hush money to eight point start, he is a bad negotiator that she needs to prove that he is a good negotiator. This is going to be an emotional decision, not something based on negotiation and compromise. Betty and emotional decision. You think you may want to force this . Guest if the government shuts down on friday at midnight, it will not have that much of an effect on the weekend, expect except for people who may want to go to the National Parks. The real deadline is monday, and the president goes could easily veto, claim a victory than agree to a shortterm funding bill on monday and tuesday, just to show that he is willing to do it. I put the odds at 50 50 at worst, and it could even be 70s 30, that there could be a shutdown. Betty have we been here before . Guest we have definitely been. Ere before in the 1990s, the republicans got very angry at bill clinton and shut in the government because they could, wanting to show the president that they could do that. In the 1990s, the republicans there were2, problems between john boehner and barack obama, and this is the fourth time in the last four months that we might have come close to a Government Shutdown. This one will be the most difficult, simply because, it is not a substantive decision. They can compromise and the democrats could give the president everything he wants, and he might still veto a continuing resolution. Yvonne so who takes the blame if there is a shut down, is a President Trump, or is it the democrats . Guest there are two parts to that. There is a difference between who causes the shutdown and who gets the blame. Blame, soill get the if trump of each is a continuing resolution and shuts down the government, technically he caused it. But his base will stand up and cheer. The democrats, if they decide not to vote on a continuing resolution, because it does not include some of the immigration changes that they want, then they would be considered the cause, but their voters would stand up and cheer. So everyone will get the blame in one way or another. But all the shutdowns that have occurred over the last 20 years or so, have occurred when republicans were in charge of congress, so they do not have the benefit. A lot of people will just assume that this is Standard Operating Procedure for republicans. Yvonne but this would be different, because this would be the first time we have seen the Government Shutdown under a republican white house, as well as congress. The does it tell us about gop this year, and the impact on the midterm elections . Guest the first part of the answer to that is that despite republican leadership, they really cannot make trains run on time. Youve heard from lauras report before the break, that republicans are just trying to see how many deals they can get for some sort of deal with the democrats and democrats are trying to do the same. This will show that republicans cannot really control the government, even when they are in charge. Whether it has an impact on the 20 elections, it is hard to tell at this point. That it should increase that it should increase democratic support, but if the president is successful in appealing to his base, they could get some of those voters out as well. So it might the awash. Betty who is looking good, if anybody, out of this . Who could raise their own profile . Guest the quick cancer, is nobody. The quick answer, betty, is nobody. This is going to be bad for everybody, further reducing come confidence in the u. S. Government and giving wall street and the bond market in particular a reason to pods. Thehey can shut down government, what happens when the debt ceiling comes around . Betty that is a great point, stan. I am curious how you think investors might react even if we get a weekend a weekend Government Shutdown. Even though as you said, no one really wants to visit National Parks right now. These think it could be detrimental to the market . Guest not immediately. I believe the markets will just shake it off and say politics as usual, no big deal. If it lasts more than two weeks, which is a possibility, it means that Government Contractors cannot be paid, coffee shops across government facilities have to lay off workers, because theyre not making as money, and it will start to have a negative impact on the economy. The last three weeks or more, expect the bond market and the equities market to react negatively, almost immediately. Aftery can get two weeks that, it starts to hurt and it hurts badly. Yvonne one year on with President Trump, is there one piece of policy or legislation that you think the administration is doing right . Guest they got the tax bill passed, but i think he was one of the worst pieces of legislation that Economic Policy of Economic Policy that has ever been considered by congress. Supporter,a trump one thing he has done right is getting the judges through. Other than that, we are not getting progress in any area. F right now, or at incomplete. Betty harsh words. We have to leave it there. Georgetown University Professor of public incomplete. Betty policy. Coming up, the worlds secondbiggest iron ore exporter drives up to the record. Next, this is bloomberg. Betty this is daybreak asia, i am betty liu and hong kong in new york. Yvonne and i am yvonne man in hong kong. Itsr an announcement that fullyear iron or shipments hit a record thanks to its real network and other productivity upgrades, this Mining Company has jumped. They beat the median estimate of analysts. To our bloomberg reporter david stringer, joining us from melbourne this morning. Shares down in light of this good news, it seems like there is a believe that the iron or space is getting more overheated . Guest thats right. There arely those who see some problems ahead on the supply front. Tinto,ght give them, rio some reason to slow down. Its fullyear shipments just over 330 million tons, that is in line with what the market expected. In fact, it is at the bottom end of their original guidance at the start of last year, a range of 330 to 340 million tons. What thef speaks to biggest producers have been saying over the last year or so. You have been telling the market and investors that the priority is on value, supporting prices of iron or, and not volumes. , not volumes. I think this could give people a few reasons to reassess the outlook on the supply side, in terms of rio itself. It is continuing to make those productivity improvements and it will have flexibility. If it wants to go hide this year on market demand, it can. What it said last month similarly is that if it wants to go smaller, it can also reduce exports. David, our people expecting 2018 to look a lot like 2017 though . Guest on the earnings margin, it is going to be another strong year. Forecast rose about 66 , so we are seeing strong metal prices. Things like copper, are really performing well, and we are seeing output in the Copper Division rising again, up about 11 . Somes really going to reap of the benefits of those higher metals prices, the stronger out put, which will translate into profits. What we are expecting is that some of the additional cash will be returned to investors. Strong onny is very capital management, and we are expecting more of the same. Betty thank you very much, david stringer. Coming up, tencent we chat doubling down on its program. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Host it is seven 30 in hong kong. We are 30 minutes away from the open. 6 30 here in europe. Markets were closed for the Martin Luther king holiday. Spirit. This holiday you are watching daybreak. We are getting the first word news. China is escalating the clampdown on crypto currency trading and is targeting platforms. Theorities banned to Cryptocurrency Exchanges last year and have noticed and uptake in alternative venues. Enables centralized training. Collapsed under 2. 2 billion of debt and created a new headache for theresa may. The series of construction profitts created warnings. The eu is looking at north korea and the United Arab Emirates as tax havens. The countries could be moved onto a list for further monitoring, along with mongolia and panama. The recommendation must be approved at a meeting next week. The president of the u. S. Aluminum Association Says that china has been a focus as to whether imports of the metal threaten security. Bank of America Merrill lynch says that the trump trade rhetoric has pushed the market in a better direction and china back capacity. This is bloomberg. We are counting down the market open. Looking for any real direction from the u. S. What are we looking towards . We dont have much to keep this rally going. This futures board shows contracts up to a lower open in tokyo and we are seeing some gains there. The pause and equity gains could be a bump in the road, according to mufj. In 2018,is bullish thanks to the improved earnings and they forecast 2100 for the topics at midyear. The possibility of the economy moving out of deflation. This is a catalyst for wage growth and they see an end to an era. Bullish ecessarily there. Sellers have been burned. Have they had a change of heart . They have slumped and, last year, the shortest stocks surged 43 , even with the highest Short Interest with the percentage of free flow shares. Pizzan see that dominos is at the top of mostshorted there and this is up there and Goldman Sachs expects earnings to be limited for the carmaker this year, given this week Production Outlook and it has cut the earnings estimates for the company. Thank you. December and we just talked about rio tinto hitting a high and the question is how long this will last. We have the bloomberg charts you need to know in commodities. Every time something gets too bubbly here, it hangs on the dollar. The dollar is in the doldrums. Bloombergone is the by 11 andt is down in commodities index is up that timeframe. The big moves have been in the past few days with this falling and has only had four up days. His index is up 6 the dollar is at a threeyear ect on peoplen eff who want to purchase commodities and do not do that in u. S. Dollars and it helps chinese investors. Premium, inting a terms of the commodities they can get. And that isn yellow down and is seeing strength from the buying power. Price look at the copper in white and the blue you are seeing is a copper stockpile. You can see the stockpiles are up near recent records and we saw that price start to fall and we are now seeing the inverse of and over the last 1. 5 years it is going downwards. Ahead, it says it will be seeing prices rise and there is a pull off in terms of about a it is down in month or so. Eake a look at the iron or stockpiles in white. They are at a record and the question is why we are not seeing the price fall and the answer is because of the environmental push and they are making it more attractive to go in and not supporting prices there. Prices and we are seeing the effect with dividend yields for Commodity Prices andkly here every quarter investors are getting support sheer. Says will this go, he analysis forpid the future. I will leave it there and we will keep on talking commodities. Thank you. We are now talking about earnings. The number two maker of Construction Equipment says that grew in chinars omatsu stocke k to a high. Similar to caterpillar in the u. S. A lot of it has to do with china. Absolutely. Them that are benefiting from this twin engine of growth. The Infrastructure Investment in ,ighways and bridges in china which is just entered the last half of the fiveyear plan to that these projects done. In, there is a bull run commodities that has been a story last year and is expected to continue this year. And not justounded excavators. Nd it has been a driver of growth for the equipment makers. Run we have seen and the economy has pushed the shares to a high. Is this a little bit excessive . We are expecting the growth to moderate and we wont have that low base effect anymore. Right and there is a sense of prices looking a little frothy and we have just heard that city and goldman are bullish on the outlook. Plan isthe fiveyear coming to an end in the next few years and there will be a demand for digging equipment and machinery. Same kind ofe the growth that we saw in 2017, but the outlook is still pretty 2018e for the growth in and you could see the valuations go up a little bit. The underlying business is very solid. Thank you for breaking it all down for us. A double down on the programs with the it has attracted 100 million users. They are targeting some ambitious goals. We have said before that this is a tool and i think that is true. It is really just a tool and our goal is to make the best tool on the internet. This is ambitious and difficult to achieve. We only want the best tool in the world. Lu. E are joined by lu programs . Hese are things youms dont need to download, but you can access from within an app. There was a slow start, but they have attracted 100 million users they really dont think of it as a traffic acquisition portal. Service wheree a people come to use the tool and they leave after and come back if they like its. They are not doing anything for these programs. It is by word of mouth and recommendation. Would you say this competes with traditional apps . Thatey do, in the sense games dont need to develop specifically in the future because people do not use these often to begin with and what they are doing is cutting down the amount that people may have to store on their phone. You probably only interact with less than 10 of these on a daily basis and they are making it so that users can Access Services that are lights, in terms of and the bike sharing app, well, that is also direct in traffic. Bloomberg spoke to them and here is what they had to say. Retail covers internal and external resources. It incorporates different departments and graphic design, programs. Puting, mini externally, it incorporates more. We are teaming up with giveparty providers to solutions to customers for specific parts of their business operations. This means that we are creating a unified platform to provide Technical Solutions to all of the various pertussis offense in the retail industry. All of the various participants in the retail industry. See 2018 has a key year where they will face saturation in the local market, especially for the Payment Systems. They want to follow the chinese users as they spend more overseas and the second ring is that they could replicate what they have already done in china and create a Digital Payments business in countries that are seeking to replicate the success that they have in china. We are confident that this pay market share will rise and it infiltrated into all walks of life in china. The mobile payments business will benefit from this and we think this could be the last year to benefit from market penetration. There are 40 million Offline Stores and we think mobile payments will have entered all of them. The market will create some space, but we will reach saturation in 2018. What was the key tous and they will continue invest in this space heavily and we will keep paying attention to this space. Thank you. Will talk to the head of Asia Research about when oc will intervene and what is there a line in the sand. This is bloomberg. Host this is daybreak. Rose against the dollar to the strongest level since 2015. Joining us now is the head of it Asia Research and he sees it touching in the near term. We are talking about a line in the sand for china. Where does that lie . View, the line in the sand is not in reference against the dollar. What china is focused on is the renminbi index. The level they dont want to andch is above the 95 level it is still below that. Room for theterm gains on the dollar and i think that we could still see it head towards 6. 40. We have talked to analysts who say that this is just a oneway trade for the dollarrun enminbi. They say it turns around one the market expectation is heading oneway. Interventionsee and, when they do so, what capital controls could be eased . There has been a lot of capital control measures put in place already. Going forward, i do not expect an active intervention to try to stem appreciation pressure. Authorities will refrain from that. Instead, they are going to start to resort to a signaling. I think what was suspended last week could make a comeback and, was another side, there appreciation bias and we could see that reintroduced with a send a signal to the markets to slow down the depreciation. A line inink it is the sand. There is an index that i am watching closely and i think that is where we could see signals sent from the authorities. That is more important to you. That is the benchmark or index you are watching. Tell me how complicated it is to see this and how much more complicated it will be for the internationalization of the chinese currency. Will it get more complicated . The strength is largely a reflection of the dollar , despite brexit. Be sustained and it is why i am looking at the Effective Exchange rate closely and i think that this is part of an internationalization of the dont think that this will be a backwards step. Willst saw that they include this as part of the reserve and the widening yield and wider yield stage will continue over the coming years. On thewe finish off topic we heard about last week with the reports of the chinese slowing down or halting treasury purchases and saying that those wereons the space unsubstantiated or fake news. Do you think we will see this with the chinese . The authorities have slow down their purchase of u. S. Treasuries for some time. Let us not forget that the reserves have fallen since they. Eaked in 2014 since 2017, they have refrained from intervening in the market and have not been accumulating needves and there is no for them to purchase treasuries. The key question is, given that that they are the largest holders of treasuries, are they planning on rebalancing to reduce the amount of treasuries that they are holding . That the they have treasuries are the most liquid market in the world and, if they divested the reserves, where do they go . They dont have other markets that offer the liquidity of the u. S. Treasury. The u. S. Treasuries will continue to make up the bulk of the chinese fx reserves. All right. We will leave it there. Thank you for joining us live from singapore. Lets break down some of the numbers from japan. The prices for the month of december missed estimates on year on year and month on month. This was a slight miss from the expectations of economists. Month ande previous we have seen higher Commodity Prices. Talking about the crude oil prices with the upward pressure of inflation and a slight rise in the yen. These 80s effects will be challenging and miss estimates for prices. We have plenty more to come here on daybreak. This is bloomberg. Coming up on the next hour, some of the main investment themes and we kicked off the week for asian equities. Iming here in hong kong and we are live. Welcome to daybreak. The top stories are the asian stocks surge. Fourthlar sinks for a session. Markets guessing where chinas redline is. I am in new york and it is after 7 00 on monday. Members call for output cuts to closes aboverent 70. A flagship carrier is weighed down by 8 billion in that. It is a slow day in the u. S. And we are looking for fresh catalyst here in asia. The dollar went to the lowest level in three years. The key focus will be the fix here after the renminbi at twoyear highs. See some of side in growth and what will tv line in the sand for china . We listens to the last guest who said they were looking at the index reaching above 95 and that is what other authorities would act on and you mentioned that currencies were a big focus with the on markets and trade and they continued weakness in the greenback, despite the further evidence in the u. S. That we are set for rate hikes this year. That is certainly the case. Holds and we see shares in japan and not much pressure yet. With prices data raising on the year. There was a Third Straight pressure by half a percent so far. Yuan trading the ahead of the december minutes. We have the lower levels we were anlk about and the offshore yu holding with speculations on the currency after the offshore rates strengthened to the highest level. Yuanin mind that the rallied and they made it easier to that against the currency. Snapping aydney are rise. We have a bright spot with as drags. And telcos intense mobile competition. Jumping in on shares sydney after the lift of the outlook. All right. Thank you for looking at the early going in the markets. Lets get the first alertness. Alert news. And escalation on cryptocurrency trading. Targeting the exchange services, the authorities banned cryptocurrency last year. Domesticis to block access that enables centralized trading. The euro gained against the weakening dollar and they said that the federal bank should if growthurchases, and inflation is in line with projections. They should have policy guidance. It is not a big deal anymore. Reignitedtates have with a jet intercepting to commercial planes and it is something they said was untrue. Flights that he was being aeld against his will in the u and that claim was denied. Work out why there was a collapse that injured 72 people. The balcony came down and they found no trace of explosives. Marketonesian stock restarted after the monday at lunch break. Day,l news, 24 hours a powered by 2700 journalists, this is bloomberg. Those pictures are incredible. Levelrongest yuan prompted calls on gains. Tom, how much higher are the policymakers prepared to let the currency strengthen . That is a line in the sand and we saw that ad the strongest level since 2015 and what we saw was a move to make it easier to bet against the renminbi and we saw that measure suspended and fell. An it is one of the strongest currencies in the market. There is a question as to what will happen from the policymakers side. 6. 4 ber two watch is 6. 4. Tch is they could ist, capital controls and we should look at the basket of currencies uan traits. Ch the y you have a diversion picture of the basket. This is 6656. You see that strengthening in the last few weeks and you see the basket of currencies from the Major Trading partners and it is calm her. Aboveay, if this crosses 95, there could be policy changes, including a countercyclical measure. Others, in terms of the strength and the impact on the chinese exporters, it is less. Supporters are less sensitive to this because of the move to the valueadded manufacturing. This may not be the final line of defense for the pboc yet. We have seen reports that france joins germany in the reserves in the last 24 hours with these developments. How significant is this towards the internationalization . It is a vote of confidence that will be welcomed in beijing. The French Central Bank has diversified some of this into the yuan as part of the move to diversify. There is the conversation with bank that said that they were looking to diversify move and itwing the may be more about the symbolism than the amount. We dont know how much these banks are investing and it could be more of a symbolic. Move certainly, china is pushing him with the belts and road initiative. The we saw this included in basket, this was seen as a vote of confidence. We have seen a drop in the use of the currency because of capital controls. This is an irony. Certainly, this will be welcomed here in beijing. Thank you. Is looking tondia break up a carrier into four companies. Asian stocks had their best start in a decade. We are joined with a forecast for 2018. This is bloomberg. This is daybreak. A stock is forced to take a break or after a market holiday and the dollar remains lower to the euro gain. There is a possibility of a hawkish policy shift. The ecb may need to adjust guidance to ease qe early. We have been talking about the convergence that we are expecting. Are we getting closer to this . The boj is watering down nds. Uage with long bo it is remarkable how sentiment has shifted and we thought a risk this year would be knocked heading a coordinated these are thet indications we are getting. Good,owth numbers are so it is not just about inflation. Andslack is disappearing the need for the emergency policy is less. Hawkish may be too far on the other end of the spectrum. Not got thatas price yet. What will it mean, with all of this lessaccommodating language. We have seen correlations breakdown a bit. Will that continue . This is the important point. Bearish and we should not underestimate the role that this plays. The fact that the current environment of the ecb is a little bit more positive, we need to continue the dollar weakness for a little while. This is a year of extremes. Last year, we talked about how we saw so much going to the dollar and we are now going to different spots. When does this get oversold . Interesting question. Around september last year, we were concerned that the dollar was oversold. We had a substantial position correction and, as it stands today, the last time this happened, we were concerned. I think this move can extend in the shortterm. Changeou see significant in the direction of the dollar . L we see powell takeover of the dollar when powell takes over next month . I think that this will be more of the same and we will not see a significant change in style that we could have seen with other candidates. We will see. The change for the dollar will be a higher inflation or wage growth and there are not enough signs of that to suggest the fed more than three times this year. That would change mindset. As it stands, the Risk Appetite is fine and we are focused on the boj. Seems like there is a we areus on hikes and not in dispute on the numbers. Is there a debate on the pace and how quickly we could see these hikes . Will they be evenly spread out through the year . It would be a game changer. Markets have themselves on a tightening cycle. The market is there for the march hike and a half way there for june. There is an assumption the cycle continues. Different would be a changetion and it would the Market Outlook significantly. Be in dollar continues to have we reached a point where it is too much of a good thing . We are seeing this hurt the bottom line. Are you factoring this in when it comes to forecast . We have the equities from last year and ran into some is alock because this challenge with the impact less clear. About the concerned think itg cycle and i will get easier as they tighten and they may need to tighten faster. Are the equity markets the place to be . Relative to bonds. Everybody was calling for a correction at the start of the year and we have not seen that. What will be the trigger . Into aeed more money high yields . These are factors that support this scenario. You have fundamentals, good earnings growth, Central Banks not at play yet and you have money coming in with returns being great. The biggest fundamental risk is that inflation gets too strong all of this virtuous circle could go into reverse. Evaluations, as good as they have been, they are not that asianparticularly in markets. Where are you looking for value . Japan. It, but not quite yet. We could get it. Michael, appreciate your time. Thank you for joining us here. You get a roundup of stories to get the day going. Your terminal. You can also get on your mobile and the bloomberg anywhere app. You can look at the industrys you care about. A look at plans to break up airindia. We will ask if there is any interest in a debt burdened airline. This is bloomberg. This is daybreak. Latestick check on the business headlines. Lower afterares are the iron ore shipments rose. Net work and other Product Committee of grades to shipments in the Fourth Quarter jumped to 90 million tons. They replace the chief executive officer. Change at therst helm of the biggest banking group. The Financial Performance has trailed. They plan on cutting 19,000 jobs over the neck decade. Next decade. Flagship says that the risk is to shut down if there is not a crucial purchase from carrier isased looking keep the plane alive. Left airbus hanging. This left airbus hanging. Once i believe we can find a solution with emirates in the nottoodistant teacher and we aed a strong base that only egg operator like emirates can provide. Operator like emirates can provide. X air india is looking to rake up there company into four companies. Asia Industry Expert joins us now. They have talked about the debt problems surrounding them. Why would anybody be interested in purchasing . The government came out and ofd that the debt that a lot people are concerned about is going to be set aside into a separate company and the core that is generated from the aircraft purchases will remain with the airline. That really is the line into burden that a lot of potential buyers were looking at and it looked to open up an avenue or potential that investors could be interested in. The you expect interest in this purchase . Who would put in a bid . Said they were considering and we have heard that they have already selected banks to look at the sales. I am pretty sure that there is interest. Up a lot of opportunities for investors try to get into india, the fastestgrowing aviation arc it in the world and this opens up opportunities to tap into the fastgrowing market. Help thell the sales Indian Government . Has been pushing for this and the sales of the governmentowned, air india would show they are serious about doing reforms. Financial burden off of the government because it has been getting a lot of funds from the government to sustain the operation. It is going to be very good f or the government to wase financial ease financial burdens. Thank you so much. Meantime, markets are closed here and we see some directions for the asian markets that are open right now, with t he nikkei higher and the kospi flat and you see some the kleins from the declines from the despite record shipments. Thinking of commodities, oil strength and calls from oil nations for out put curves. Curves. Output that is ahead. This is bloomberg. 8 30 in singapore through halfway from the opening. Man in hong kong after it are watching daybreak asia. The stronger suwanee and more than two years yet from about possible steps to cool its gains. All six or could intervene. Currently has 2. 2 billion in debt. The company had around 400 government contracts. Ofjuly, picture is construction projects. The eu looks set to remove selfcreated in the uae from tax anens later this month to eus finance minister approved the recommendation at a meeting next week to question the president says china should be or focus of the u. S. Inquiry it will the department is expected to deliver a report next month to President Trump three strong current market is poweredped curate by more than a 700 journalists in more than 120 countries and is contradictory countries. Which was fairly thin given the holiday inn is your is were seeing the one for treating morning and with the in losing somed, that might be right a the things we saw during losinghing because now 2 10 of a listen. We seeing financial a. With a, is along with 2 , gaining ground as well, the solident expecting margins and 2018. When you take a look at ihi, that is the worst performer this on monday, the real estate player revised its earnings forecast. Other equity movers, you have opec jumping to an eight year high in hi. High. Is focus from much in one of the biggest drag in sydney after being downgraded. They just a. Some of the commodity players, speaking about commodities, brent crude hovering for the first time in years. Also, concerns the recent rally may weaken the commitment of certain analysts over surging u. S. Production. A lot for Oil Investors to watch. A pretty high closing above 70 for the first time in three years. At the moment, there are some banks showing some concerns. Whether the cuts will continue producersber a happy holding their resolve result, these cuts will go through. At the end of the week, we have monthly report and that will get better idea on compliance and where the market is at the moment. Result time, this is a in the sea here andt run most in six months you and you correlation, but that is a correlation that things start picking up. The most i can say will be a concern, but it would not be a surprise. The u. S. Supply has not reacted as quickly as many of them all caps. There is talk that it will comply client sixmonth. The problem for opec is as they forgot a deal really, then prices will first and only hard work will be under and in and around the summer, im sure a lot of people will be happy. U. S. Suppliers making a lot of money. The market will be comfortable there will be more people thank you. The market has been quite incredible. 175 millionrs, less than an estimate given back in october. Lets bring in numbers asian theyt reporter and quite did not mean to price. Will last year, the expected to sell it for 575 million originally, but as it said yesterday, the price tag was only 400 and dollars. That is because of the trading losses leading to the prepared sale. In this debt restructuring also underway as well. How are those going the main discussion has been centered around a deputy swap. That is taking a long time will creditors to agree on because we dont know. Also, the company said for the remaining it may assets which is actually dotted. That is jamaican refinery. After the restructuring, expecting which was once a big giant in the global Commodity Trading to become much smaller. Recovery willhe live on. What are investors going to get . After less than expected to was are cutting the recovery value estimate. We have seen analyst said it devalue by 5 to about . 45 on the dollar and jpmorgan has to aroundcovery value the low 40s. They are also saying noble would paying on of problems nobleth of this month and has its principal of about 4 million coming in march. Thank you. And it is vital to the metal as we have been talking about. Other base metals bringing their urine luster to 2018. Listed at deeper dive into these metals. Lets get a deeper dive into these metals. The dollarl about doldrums. You want to take a look at the light here. I put it here. Since you were certain to we have seen some of the acceleration just in the past 30 days. 3 in the by about bloomberg commodities index has risen by about 6 . Low andar now is your that is having an impact in terms of more buying power for countries that dont use the dollar. And that means it has Great Potential in terms of getting the commodities that it wants out there. When we talk about china, we have to talk about the copper price. The copper price is still in white. The stockpile copper and we can see it is a near low not seen since the middle of 2017. It is definitely coming off its highs during with the ahead, it looks like Goldman Sachs is bullish on the price of copper. Byron ford or to the thet a record price is also rising. This is a paradox, but it orects both copper and iron. Sydney for example is raising its forecast for 2018. It is also saying it expects to rise in 2018 and 2019. If youre investor, you are very yousitting have a can see with the price of these commodities rising, they are seeing a bump in the yields. Well be more of ahead to theng second or third corners. Second or third corners. Quarters. Up, why she may require patient. This is bloomberg. You. This is daybreak asia. U. S. Proposed takeover of money gram. Chad is we spoke exclusively to its general manager. Are two main ways for we chat to expand to other markets. Secondly, we welcome collaboration and thirdparty worknies and we will only with capable and qualified partners. Joining us, sandy shen. Also joining us is our Technology Reporter who has been recording reporting on this story. Companiesar about wanting to go overseas or expand internationally, what theyre talking about is to the u. S. Market. That is the next field to conquer so when you see a deal not going through some does that put a big day for International Expansion . Will their ambition their mission is more pragmatic. He will be starting from the regional area it will be starting from the regional area. I think the u. S. Is the ultimate somet is also the hardest marketwill hardest to. It will be a long time will before we can see in its success will him any success in the market. There any we have is any of or possibility these Payment Systems will make it into the market . Actually, they have made some progress in the market. That, it doesnt require acquisition. Those Payment Providers that and companies to connect provide coverage. In that respect, i think alipay have already made their presence in the u. S. Market. The mainstream Market Opportunity to market. The market share, you have the ecosystem. I think every person in china has the we chat. It has invested huge amount of money. Margins i think there is no signs of slowing. We chat has a lot more initiatives and at the same time the Media Business on top of a payment system. Even if they have the advantage in being in every smartphone in those markets. We chat are playing their strength. Usot of people have told that they expect market share to of around 30 to 40 . Where do you see those steps further down the road. They at least we dont expect it to decline any further. Probably come it would be relatively stable. You age is also we chat is trying to go to those all caps will and rural markets. Added to the us,. Alipay is probably more ahead we take a look at tencent golden. Is it more about volume or global transaction values . Will wechat pay, there average transaction value is relatively lower than the poly pay transaction because they are mostly focused on the payments. I think right now, not their choice. Ink signs whichg some alipay is taking some shared away from we chat. Think we need to Pay Attention to. You are also want to dont forget, you can watch us live in catch us on past interviews. This is where bloomberg subscribers check out bloomberg go. Latestick check of the business flash headlines. The report says the lender has promised to reduce the leverage ratio by adding capital. Recordar, they issued a 37 billion. Bringlix ceo says the present to get a share of the all electric vehicle. Cadillac will be the lead brand for technology. The decision is powered by rapid growth in china. Bloomberg ld official talks are set to resume in montreal. Despite claims from President Trump healthy all right in the negotiations to they see a u. S. Pullout rising. Fortunately is nothing was going pressure they would put the pressure at risk for it risk. It could be updated and modernize. Almost on daybreak asia. Heres a look at what is coming next few hours. Lineup when it comes to our guest. Be speaking to mr. Nixon himself. Demand for high me and how that impacts here in asia. Also getting in on big coin bitcoin which allows regulation of currency. Deputy haidi, thank you so much. Stand by for Bloomberg Markets. Is bloomberg. This is bloomberg. Asias is bloombergs a are in this is Bloomberg Markets asia and all is and in an
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