Since september. Bigdr pepper is todays winner surging on the news of a 18 billion approach from coffee keurig. Yo betty that is a lot of caffeine to start your morning with. We saw ageold in the treasury market. They, it was really about bond market, and that is spooking investors. I want to pull up this chart. The yieldlking about curve flattening, there was a miss read of that, and we know primarily a big reason for that is the shorter end of the yield curve was rising faster than the long curve. Now it seems the 10 and the 30, which were lacquered, is finally playing catchup. Given the movement we saw today, that catch up might move up pretty quickly. We talked about what a wild week it was for traders. Announcing how much issuance theyre going to be having for this year, and also the report is a recipe for higher yields, and also the dollar catching up with this rising yield. You heard analysts with reports saying it is not going to last they arebecause saying, you cant exactly rely on the trump trade anymore, and the global synchronized growth, other currencies are going to be rallying on the back of that. Betty this whole synchronized Global Growth is confounding even central bankers where the asset markets are moving. Lets stay on were stock markets are headed today. They drop in the face of raising yields. Data and policy announcements, the fed meeting later this week, and lets bring in Bloomberg News editor who has more. Are seeing at we real shift in bond markets or something temporary . It can be a real shift. We have seen incremental movements since october, and a lot didnt think will be at 2. 4 . In the2. 7 today, but interim, we have gone from 2. 5, reloaded, 2. 6, and then to 2. 7. We will see if it will go into the next trading session, but it appears to be a little bit of a pattern on where the longerterm yields are going to catch up with what is going on with the rest of the market. Whether or not we are in a bear water, you have bridge saying where in a bear market. There is a split with people forecasting whether or not we are in a bear market or not, but for the first time, early significantly today, we saw what happened with bond markets. Why . A lot goes down to what everyone expects the fed to do this year. Keep in mind there is this pricing of the market surrounding the fed, going back to when they started raising rates at the end of 2015. There is catch up on the equity and treasury side, and today was one of those pullback days. You saw aown similar drop in the dow jones. Nasdaq down about half a percent of 39 points. All 11 s p sectors finished lower. Some of the bigger move its movers losing 9 . Allegations around steve when, and apple, one of the biggest contributors of the s p down about 2 today by it that is a 4 drop from last week, and that is concerns regarding iphone x sales and whether the company will report earnings later this week and whether those numbers are going to disappoint or meet expectations. We also saw weakness today on telecom stocks. Talking about verizon and down,le sliding at t sprint almost down to percent, this is all tied to some reports coming out of the white house saying they may possibly consider a partial federal takeover of some of these mobile networks that these countries have been working on. Betty todays downturn in equities, there seems to be strong bullish entities remaining. The earnings have been strong on an eps spaces and these revenue beats 81 of the companies in the s p 500 have reported to have beaten revenues so there is a lot of optimism built going forward. The s pthe drop today, is still up 7 on the year, which makes it the best art for a year and quite some time. I believe ever. If you look at that and some of the data coming out that shows that a lot of the net long positions that hedge funds have januarythe midpart of this is the most bullish they have been in five years. This something you are seeing in the options market, the appetite has picked up on the contracts when the s p 500 rises. Above 30 onins the average. Romain, thank you for joining us from new york. Its a get how markets in asia are looking so far. We got ais flat surprise trade surplus coming earlier this morning, we saw the kiwi regain more ground against the stronger dollar, but pretty much flat right now. Trading getting underway in australia right now, we are missing shipping estimates, and we see the aussie stocks at 8093, but 4 10 of 1 . Downe also coming interests in japan, lets check out japanese interest in chicago. We have to is jobless rates coming out in the next hour, and this job labor shortage intensified in december, so one to watch out for in a couple of minutes. Lets catch up with first world news. Jpmorgan has named daniel , aso as copresident frontrunner to replace the ceo. Stay for five more years. There were told that the board believes that he can already run the company. Resorts Sexual Harassment against the chairman, the Company Earns most of its money from operations, and authorities there have been in contact with major shareholders, executives, and key staff. Regulators are to review the process for later this year. Fbideputy director of the is said to have quit early ahead of his formal retirement in march. Has been a target of criticism from President Trump claims he was biased against Hillary Clinton in the 2016 election. He joined the bureau in 1996. He was acting director when james comey was fired in may. The European Union is warning that they will fight back against u. S. Trade measures against the block. President trump was angered by eu policy and transatlantic albums could morph into something big. Great daveare two trade bill worth 100 Million Dollars a year for each sides. Trading policy is not a zero sum game. It is not about winners and losers. We in the European Union believe that trade can and will and should be when when. We also believe that while trade has to be open and fair, it can also be ruthless. Global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. And jessica summers. This is bloomberg. Latest nafta talks have want up with modest progress for the u. S. Team demanding more from its partners. Ithead to washington seems like there is a cautious optimism as we move ahead to the next round. What is next . Is there a prospect of reaching a deal . There is a prospect that a deal will not be blowing up anytime soon. Theres another round of negotiations in february, and we saw today was typical of what you see and a lot of these trade talks. Talks of progress, though big problems remain. The good news is that this is normal. What happens in these talks is that President Trump threatened to withdraw from the deal although he has gone back and forth, saying he wont if we get a better deal. There are sticking points on autos and agriculture, particularly between the u. S. And canada mired in mexico. Talks willws is that go on, and may well last into the summer. The focus turns to asia relations with the u. S. And korea agreement. We have had guests here saying that you cant look at the nafta as a barometer of how other trade pacts will play out. Nowthe chances more likely that that relationship could falter . A real forum in the u. S. And south korea all relationships since trump took office. Yes complaint that the u. S. Runs a trade deficit and goods with south korea. This trade package has been asked from the beginning been taken by president bush and president barack obama and try to do with objectives from u. S. Automakers. Auto is the big sticking point, this has the additional Geopolitical Impact of u. S. Negotiating with an ally who is in the position under threat from an opponent of the u. S. And south korea. Whether or not the trade relationship is going to be keycted by that is a question on whether or not the u. S. And south korea can continue to cooperate closely on dealing with the north korean threat. s trade going to be a big part of the president s state of the Union Address . That will definitely be a part, it is part of his campaign and everything his major initiatives in office. We expect that we are going to hear a less combative President Trump than we have in the past. He will be talking about reciprocal fair trade. Battles we saw in the president came in a measured manner talking about these issues without some of the bombast and threats that he often uses when speaking before a Campaign Rally or domestic audiences. This will be a rod audience for to bring his issues up broad audience. Investigation gets messier and messier. The chief is stepping down and are more allegations from republicans that there is some antitrump bias within the fbi. Betty when does this go from being on the headlines of newspapers, and when does it fit in the presidency . We have a few more steps to go with the investigation. It seems that mueller is moving rapidly with his investigation. A senator from virginia said he has seen some more disturbing evidence coming up. There is a lot of counterpoint from republicans, talking today about releasing a memo written by the Republican Intelligence Committee showing claims that there was bias by the fbi. It is boiling down to a real struggle, and there is continued unease with both democrats and republicans over any threats over mothers independence. Millers independence. Still ahead on daybreak asia, bank of america and Merrill Lynch give us their outlook of japan and when the boj i start to normalize monetary policy. Up next, the health of the u. S. Economy ahead of President Trumps first day of the Union Address. This is bloomberg. This is daybreak asia. Am yvonne man hong kong. Tuesday evening in washington, and a key moment for the president , is making his first state of the Union Address which he is likely to take credit for the improving economy and also the jobs market. Joining us now, senior economist, stephen friedman. More watching the speech and looking for what . I think what we are looking for our signs of the forward agenda for the year ahead. Details on infrastructure, immigration, military spending, things that will impact consumption in the economy. Sense, but aakes lot that could affect the economy, in terms of policy, you could argue have been done perhaps. We are waiting for them to carry out. Tax reform in particular, the dismantling of regulation. Is there much that is going to begin changing for the economy . To say if theres going to be anything that is game changing. With infrastructure spending, there is a clear need for that. Democrats and republicans see that. Wearing a situation where toughest are going up, and there is a philosophical difference with the private sector and structure. Betty traditionally, to be speeches have any impact on the economy . I think it appears to be minimal. Energizing the base, but also trying to broaden ones appeal, and that is something that is important for the president because his ratings have an quite low. You mentioned the deficits that are coming, and we have charts showing different administrations and we have seen the u. S. Budget deficit grew after reagan, after bush tax cuts, and it will be the case with President Trump. Is there going to be a big blowup number when this report comes later on that could sent an even bigger signal that yields are going to head higher, especially in times where we are late in the cycle . The treasury has tried to prepare the markets, they already mentioned the shorter dated coupon issues should be going out. Im not sure if there has been a focus on that yet, but it could be a market reaction. I expect to see higher coupon issues announced in the twoyear sector, and probably some issuance. Out of the curve we could see volatility in fixed income on tuesday. Betty we have seen that the pace has been orderly, to say the least. But mentioning, catching up in the short end, is this a market that the fed is behind the curve . I dont think so yet. I see the feds raising rates four times this year, and it is a bit more aggressive. I dont think there is an issue yet where it the fed is behind the curve, because when we look at Inflation Expectations. We have seen break even inflation rates moving higher, but they seem consistent with longterm averages. The market does have to think of the risks that the fed will be thinking about this year. This chart shows you the yields right now. The two and the five has been seeing the shorter and the yield has gone up faster than a longer and, but we are sing catch up here in the longer and with the 10 and the 30. A subscriber that we might be seeing in and of the bull market . I do not. I think yields were will drift higher this year, but i dont think they have changed. We are in an environment where when we look at global demographics there is going to be the u. S. Consumer savings rate, it is very low. Consumers never did fully deleverage after the last bubble during the housing crisis, so the capacity for the consumer to take spending to another notch and drive growth is limited. Betty you see, not just the inrt term, but longerterm place, the bull market in place then . This is not the end of the bond from what you are describing. It says it is going to go on for a while. One other factor that i will mention, as the fed will raise ofes, theres a possibly to another recession, certainly not next year, but risk may be rising for 2020, 2021. Market,gets priced into the curve will flatten, particularly in the tenure sector. Betty stephen, thank you for your time. Special coverage of President Trumps state of the union at 10 00 on wednesday. Dont forget, our interactive tv function, tv. You can watch it there and watch us live and catch up with past interviews and bloomberg functions we talk about. This is bloomberg. This is daybreak asia. A quick check of the latest news flash headlines. U. S. Chipmaker jumped the most in 17 years on reports that Japanese Electronic Company is in talks. A potential say deal could be worth as much as 20 billion. There are indications a deal may not happen will keep an eye later on. A food andbuild beverage empire is moving into soft drinks. Are taking control of dr pepper and snapple in a deal worth 18. 7 billion. Ig theeal will make keur thirdlargest soft drinks seller in north america, behind only cocacola and pepsi. Traderg commodity reached a restructuring deal it saves it from bankruptcy on the cost of wiping out current shareholders and handing control to creditors. After three years of massive anses, noble reached agreement to convert half its debt into new equities. Meeting a five in the have billion dollar investment that will see the Real Estate Company retreat from the sector. There also part of the acquisition of shares on by private investors. It will be rebranded and focus on property management. We are counting down the open of japan and north korea korea. They come those as through, and futures pointing to a lower opening when it comes to equities. Steady onyen holding the back of the stronger dollar story. This is bloomberg. Futures are trading lower and we are without the jobless they are at a 25 year low. It was unexpected and was theosed to stay steady, but highernt ratio has moved for someoneed job at thehe job numbers. Rateould see the jobless go a little higher. Out and itpending is is a little weaker and down in december with a survey calling for a stronger number. And theg is going on hit af japan is going to target. These numbers become very important to the bank of japan on. Hey watch what is going thank you. There is a market response here. These are the numbers on your chart and we show you the Wage Inflation and we got promising signs. It is a little bit higher than last month, but this is academic. The point we want to make is the stagnation that we will see a little later on and you can have a look at the market reactions that are lasting with the futures in japan going to a lower start and there is a lot to talk about in japan today with the dollar on the way up and you look at what analysts are saying and the growth of differentials between analysts and it looks like the regan could be temporary. There are lots of other things to watch and stocks to watch. Are companies and you have been talking about that. Sharps said there was a bid for the pc business and it is a long list of names that we have a look at, in case you are waking up to this. You have the fiveyear yields and you talk about denmark and you look at hong kong and there is this chart here. And is the hang seng gain there are many cases where it it ks past this range and was a pretty ugly day yesterday. It is getting of lear in washington, with the house Intelligence Committee planning to release a classified memo that democrats say is trying to undermine Robert Mueller and his investigation. This memo alleges counterintelligence surveillance abuses by the fbi and the apartment of justice against Trump Campaign associate and democrats have come out and said that this is just politicizing the Robert Mueller investigation. This memo alleges antitrump abuses and this is something we have heard from President Trump himself. More is thes for head of japan economics. Thank you for joining us. You are seeing the labor shortage getting more severe and talking about Wage Inflation staying stagnant. Is this a big enough incentive here . We will see and the government is pushing for a 3 wage hike. Outlooks,f wage and we are in the best position we have been in a couple of years. They talk about the Corporate Companies producing a gain. Withuch material affect that have . We see a sign of that working in the u. S. Cuts andms of the tax the text measures tax measures, we dont think it moves the needle too much and any firm that considers this is andgoing to change that they are timelimited. Overall, will be a bigger driver beings is the job markets it looksy tight and like they are feeling a little bit better with the outlook for global demand. In. Et me jump the markets are tighter and that they are feeling this pressure. Bonuses getting bigger because they dont want a certain wage increase and you cannot just raise it. Is that what they have been pushing for . Isthis is a reason and this a problem that has happened over the last couple of years. They raise the base pay and cut back on bonuses. , we arebase pay optimistic and there is the fact that inflation has been in the right direction and it will be positive. To offer more attractive packages. Comments inthose , but he stepped those back a little bit with the signs of inflation. He says he downplays the comments. View think what he said will hold . Japan is moving closer and 0. 4, but we have a long way to go. I dont think they are moving towards a nearterm normalization, but they said that they are not at the target moving inhings are the right direction and he just wants people to recognize that. A slamdunk almost and i spoke to the minister of scenario wasis that they would do the appointment when they are ready to do the official exit and that is when we will see the step new fed the points of a. Overnor guiding , this is more of reappointment or not. Nd if he will accept that the announcement is coming at any moment and there will be some focus on the deputy candidates and the possibility governorvery dovish who have importance with monetary and fiscal policy. Confusion and traders are thinking that this hawkishness, but we are seeing the disconnect of what central bankers are saying. Actuallyink this is justified . You could argue the yen is undervalued. To make it seem like marketoving and participants are getting more nervous about normalization down thisine and it might make more attractive to short. Thank you. Reactions to the jobless numbers. Summers. To jessica for ahington is calling review of proposals, underscoring fresh optimism. These rounds of talks were pivotal. Modest,ress has been thethe u. S. Wants more in coming weeks. The finance minister told bloomberg that these policies are setbacks to global progress and that openness in trade has helped countries prosper and said that trade is not a zero sum. Progresss creating decades. E in the past the u. K. Is pushing back against the october deadline for a deal and says that nothing will get signed until there is clarity. There is insistence that the u. K. Must continue to abide by European Union rules. A fund has purchased the First Chinese bitcoin exchange. 2011 and thed in company says that it will now focus exclusively on the International Markets and terms of the deal has not been revealed. News of the day powered by journalists and analysts. This is bloomberg. Thank you. Next, the purchase of dr pepper and we will have those details in just a moment. This is bloomberg. This is daybreak. The shares of a metal group are the most in three weeks. Tell usthe details and what is really going on . They were releasing the production data and the key market. The iron or is counted against and they have suffered lots of discounts on the product. They say that the steel mill the lower costs they could see a discount that they have suffered start to narrow and we will see the benchmark price. Seeing inat we are the share prices. You have those numbers out with gold output and how does it look for the rest of the year . Andhey had an earthquake that is the second largest mine in the portfolio and the remediation work is completed. And thaturge about 50 it is positivend news there. Thank you very much oh bloomberg reporter in melbourne. Bloomberg intelligence analysts, can shape. We have a soft drink maker now question mark yes. Now . Yes. Dozens apprise me that they have interest in dr pepper. It is consolidated and has had theygrowth and i think want to diversify beyond what they are known for the best. Now, moving into the cold beverage side is not surprising. Why does this make sense for dr pepper . A good question because they have a good portfolio of where noncolan is with the sodas. They have spent quite a bit and have built a portfolio for longterm growth and i was a little surprised that they would sell out today and had a nice return. Fore this as more of a win keurig. Talk about what this means for cocacola. Becoming talk of them bigger. Cocacola is coming off of a theretransformation and is more growing on the top line and i think that this can be another catalyst on nonsparkling beverages and i think that this could be another catalyst. I appreciate the insight there. Embrace ofe cryptocurrencies and regulations in the spotlight. The special report is next. This is bloomberg. This is daybreak. This is a quick check of the headlines. Michael dell is ready to bring all of the pieces of his nechnology empire under a umbrella. One option is an ipo and another more onift the debt and the news. The singapore gic had an undisclosed sum and that a loud foreign rating firms to operate and this could allow fitch to go out on its own into the debt market and fitch says that asia and that theyet will invest in the region. One dollar menu is paying off. Trafficen arches share at domestic restaurants up from a year ago. Taiwan may be positioning themselves to be the next cryptocurrency hub in asia, after the crackdown in china and korea. Concerns are fresh. At the23 company is intersection of old and new and this is an establishment that andlenges the establishment pintns can pay for their with bitcoin. We are forwardthinking and we want to support bitcoin and give power back to the people. In light of the demand, they are trying to figure out where they stand on cryptocurrency and if they should suppress the market. It is believed that the state of statelessness works to their advantage. Thehis is not unlike position that bitcoin finds itself and i would like taiwan to be known as the r. O. C. Void left infill a the region. A younger breed of sandboxs, they passed a bill to allow for experimentation, but the fraud and Money Laundering fears are here. I think that the government you cannot run away from it because there is a think implications and i this can be a trading hub in asia. Thehat happened violated idea of doing no harm and this was safer. See bitcoin and bitcoinay they can use in their everyday life and this er atere you can have a bear a local pub. It is an 00 here and we are live from bloombergs asian headquarters. Welcome. Bute was modest progress, they want more from their partners next month. There is a chance for a transatlantic trade spat. Brussels says they will fight back. Markets are set to follow wall street down. Days winners says that the change in policy will lift there key product. Here we go again as there is a selloff in the bond. We have seen the Global Equities there is a level here with prize with theic underpinning of the rally. Herewe saw that turn lower and they are seeing this materialize a little bit more. You see a chart like that and you have the earnings outlook underpinning the equities surge and it is sort of like you pick and choose what you want to hear. That is where the markets are going. Lets see where the markets are opening . I am kidding. Are we fiveyearolds . Have looked at the kleins in upures and lets bring this to get a closer look at the equity indexes and the moves aross the bond markets with lot of other things to consider as well and we are continuing to nowthe Asian Pacific right followare continuing to what is happening in the bond this innd we are seeing as we enter the earnings season and it appears there is more weight placed on big as we look at the movers here with the asiapacific and there are jobless and spending numbers and it hasnflation stagnated since then, so that is just something to watch for lack and we are seeing a groupsation with these and Growth Numbers coming out of the eurozone. They say that the current levels have actually raised price backts and they are on the of this with global Commodity Prices and some of it could do not being aware inflation to wants be at. Benchmark at the 2014 andevel since will that continue . We have a look at what is hitting the bond bears. We dont know if this market will last, but it is going to this and the 10 year got traded today. What is the red line . This in the to and i think that is a double top and double that is what we are legitimate bear market in the bonds that we are seeing now and what drives this in bond purchases eventual exithe with Inflation Expectations meeting to rise and the that starts on tuesday and finishes on wednesday with the bears conceding on this. We have spending and inflation and what does that tell us . Recuperated losses the month the splurge risingwith the income we see the support in the expendituresnal economists say that trust me that and this is a 12 year low and the yearoveryear is stock. With the bond market selloff and here is the is somethinghis that they are not looking at now. Theyre looking at inflation in the stronger economy and an Interesting Research roundup on bloomberg today has some people last press this conference from janet yellen herd be hawkish about message and the consumer. Japan data and it seems like the wages are stagnant, even though the labor market is getting tighter and this is the unemployment ratio that has was 1. 6 jobs per applicant. Updating and it should be up, but that general trend is there in the tighter labor market and we spoke to the bank of japan governor where he said that it was slightly picking up and the bank of japan change was not signaling and there was just a gradually improving picture with retail household spending, the broader measure, being down you are looking for Sales Numbers to encourage the bank of japan and their view that there will be increases in wages with Business Investment thatnough chances to say the glass is half full and not a move to loosen up on the yield the bonden though market could make that tougher to carry out. Sayingsee the economist that this could be tough. Thank you very much. Lets get to the news in new york. The house of Representatives Committee will look to release a republican memo that alleges bias and abuse of surveillance. They are looking to pursue the possibility of kremlin ties under false pretenses. To replace jamie dimon. He says that he plans to stay with the lender for five more years. He said that he and the board believe that some of the direct reports could lead the company. Resorts fell as the allegations against the chairman on nerves investors. The regulators are going to review the process for casino year. E bidding later this the year in they will fight back against trade measures against the block. Trump said that transatlantic problems could morph into something very big. The trade policy is not a zero sum game. We think that trade can be when when. Fair has to be open and and has to be rulesbased. Cryptocurrency stocks andshed higher in japan they cited the potential value of the cryptocurrency. Theyre going back to mount gocs in 2014. Global news powered by 2700 journalists and analysts. I am jessica summers and this is bloomberg. Still ahead on daybreak, we will hear from a bitcoin evangelist who says that taiwan will become a hub for Digital Currencies. How far the selloff has to go. This is bloomberg. Daybreak. Stock investors took profits with ourecent history asiapacific manager here in hong kong. Seeing the bonds here and are we here . Is this what was talked about . Is a repricing in the bear market and treasuries. This First Quarter marks the peak of Global Growth and we could see a moderation. Growthponse of that moderates and that could put a ceiling on the backing up and and will this be more inflation coming through in a big way . Technicalre of a move. I think this is a rise in the volatility of the treasury we will see the backing up in the rates. You talk about the fed and and it all seems like a recipe for higher yields. Is a multipleoutfit find theand you can pockets of relative value and the positive earnings against expectations. Do you focus on asia or do you look at more tax reform . There is a clean story and tax reform is positive with people seeing deregulation as a catalyst. There is no Political Risk and the equity market has a clean this is part of the asian equity space. Are wemany quarters talking about and what is the true impact for the company . You see a lot of analysts we gog with numbers and through the reporting cycle and we are seeing the companies guiding me markets and we are only about a third of the way through the earnings season with this passing through the markets. You notice the u. S. Banks as the conviction trade. Why is that . Some relative value across Asset Classes and there capital that will lead to ongoing share buyback. Is a yield curve that shortens. This is pretty remarkable and this is an assumption with steering away from the shadow banking sector. Longterms a positive measure regulating parts of the that is positive for the risk appetite. So, there are the relatives discounts that are not relate to the recent rally. Ultimately, the lead indicators are suggesting the chinese Growth Outlook is moderating over the next few months. Have talked about the deregulation of positive rates for years and competition is going to heat up. Update is that regulators dont want to see a flood of confidence into the market. It is pretty thin. What you are seeing is large bases and Smaller Banks and you are seeing a rise in the bond yields with these Smaller Banks struggling for liquidity because they dont have the base. Us. Hank you for joining do not forget about the Interactive Television function. I have some of the past interviews and you can look at the right set of the screen. This is bloomberg. This is daybreak. Peers,ny of the asian they benefit from trading capital flows, but the outlook is uncertain. The Prime Minister said that moves from multilateral to bilateral trade deals could provide opportunities and obstacles. Globally, we have to global tradet helps a lot of countries and there has been a region that 100 millionrty and people have escaped from poverty. That is because of openness and investment. Is with at language process being made. Indonesia is a country that relies on what you call the Global Markets to be able to move from low income to become middle or higher income it is verynd powerful to improve prosperity for all. Exporting quite a lot in the region, not only the United States and we are diversifying newndia and there is a market destination. Have you had any discussion of this . Mean to haveit this . The United States says that having this approach march with bilateral rather than multilateral will be very useful because it is the largest theymy in the world and are going to put this into what this means with this country to create prosperity for the u. S. And the world. See this from london and we are getting some breaking news with renaissance denying a chipmaker andu. S. There were reports that this will be to the tune of 20 billion and shares surged on the back of this after the shares are hours and up 1 here. This andetting back have your next there looking at whether scandal has hurt their plans. This is bloomberg. We are half an hour from the open of trading. Heatuld take some of that this morning in hong kong. Betty i am betty liu in new york. You are watching daybreak asia appear koke daybreak asia. Lets get to jessica summers. The six round of talks in montreal were framed as pivotal with the u. S. Ramping up pressure on its partners. The u. S. Once more in the coming weeks. New fight is brewing in brexit negotiations with the u. K. Pushing back against an october deadline for a deal. Davis says nothing is defined until there is clarity. About also shaping up over the terms of the twoyear transition. Europe says the u. K. Must abide by european royals, including the court of justice. The market. In take part in the customs unions. Economicto have benefits. Apply all rules to the single market. Jessica a top advisor says the minister is likely to stick to a path of Fiscal Consolidation when the budget is revealed on thursday. It declined to rule out a asitive belttightening year before national elections. A Hong Kongbased blockchain has purchased an exchange following a crackdown. Nowcompany says it will sell exclusively on the international market. And anotheroby, exchange. The terms of the deal have not been disclosed. Global news 24 hours a day powered by more than 2700 in 100ists and analysts 20 countries. Img jessica summers. This is bloomberg. Thanks. Time to see how markets are shaping up. Fairly clear. Everyone down, not by a lot, but a fairly clear risk off day. An early look across sectors in the asiapacific, key names we are following. Somee going to give you details here. Session lows on the benchmark. We did get declines overnight across a lot of these chinese tech stocks. Down about 3 overnight. Key earnings coming through at the moment. As i mentioned, broadbased. Ecline we are also looking at shares of renaissance. Lets get a threeday look at the chart opening higher. Roughly flat at the moment. Company is denying earlier reports that it was in massive rights. When you look at shares there is the headline. Can we get that up so that viewers can see . There we go. All of those gains, 8 down. The function on your bloomberg. Other metrics to follow. Have a look. In terms of volume, six hundred 60 compared to the 20 day average. Shares are roughly unchanged. Mention, thisg to is what happened overnight in japan. We are back to zero on the fiveyear. We might get a on the short end of the curve. A comes ahead of the gdp, which comes out to 30 p. M. Asia time. 2 30 p. M. Asia time. For the eurozone, 6 00. According to Toronto Dominion theyre coming out with a note on the back of this move. I think we can get that for you. Let me bring up the city surprise index for the market. Basically saying is that a lot of the volatility you are seeing presents a buying opportunity because inflation is still not there. That theer story is ecb does seem like it is headed toward september. The hang seng fix is at the highest level in more than a year. To the levels of november, 2016. Betty thank you for watching the big movers in asia. Another big mover fell as sexual wynnsment claims against continued. L. A. T to bring in our bureau chief, chris palmeri, who has been following the story. Give us the latest on the fallout. Onafter the initial report friday that all these women alleged they were pressured to , thesex with their ceo stock initially fell. The second seeing on day of trading our regulatory , wynn resorts, and nevada all saying they are going to look into these allegations. And they have pretty broad powers. Ir approach could be making a requirement that steve wynn set down step down. Betty how are regulators approaching this . What are or have they been saying about this so far . Chris even launching investigations is kind of a strong word. Review. They have to do everything publicly. Going today, they are have a meeting and the massachusetts the gaming commissioner will be asking what own investigative arm the possible ramifications are of all of this. Macau appears to be doing the same. Nevada company and the chinese publicly traded arm have both launched independent investigations of the boards of those two companies. Betty we are still getting headlines from wynn macau. They have formed a committee to investigate allegations. Of course, we heard reports yesterday that the Parent Company under Patricia Mulroy said they are going to cooperate fully with any requests from the government. When you look at analyst reports, people are saying the concern is that mr. Windows the company. Imagine what it would look like without steve . Chris no, it would be hard. He is 76. Its interesting to see the reaction that he is such an important figure that the company could lose almost 20 of its market value. You could make an argument that wynn becomes a takeover target, and its not unusual to see stocks rise in situations like this when a key figure is departing and the company is up for grabs. That is something analysts suggest may happen down the road, but first, we want to see what happens to steve. The keythat is still question. Chris palmeri, our bloomberg l. A. Chief. Trading kicks off in singapore in about 20 minutes. The Chrysler Company has reportedly reached a deal to restructure a debt and stave off bankruptcy. Lets get to james poole. He has been tracking this story for us for many years. For three years, we have been covering this story. Have we finally reached a resolution in the crisis . I think its hard to say we have reached a resolution. We are near a revolution. We have reached and in principle agreement. This comes at a cost. Its the cost of control to creditors. After a threeyear crisis marked losses and controversial accounting, there is an 1. 7ement to convert roughly billion dollars into new equity. That gives the hedge funds and the creditors about 70 of the company while management has about 20 . Betty the question is, what is going to come about with the creation of this new noble . There are still some issues that are outstanding. What are they . There are a lot of issues that still need to be resolved. There are many stakeholders in this whole deal. For instance, one of the most potentialis the bondholders. They have 400 million of petrol bonds. They are going to lose about 97 of the value. Thats a big issue. Dilution of the equity of the current shareholders and chinese sovereign wealth fund. A lot of approvals could take about six months i think to get the final solution. Betty thank you so much. James pool of Bloomberg News, asian metals and mining reporter in singapore. Perhaps almost the end of that chapter. Tencent making a new push into , leadingmortar retail an acquisition of a commercial Property Unit as be indebted conglomerate continues to divest. From beijing on this. Tom, why is this deal for tencent, and what about the timing . Its interesting. What we are seeing is the likes of tencent but also jd. Com and alibaba making a concerted push to make their mark in the physical retail space. They think they can revolutionize bricks and mortar worth about 4 trillion u. S. Dollars. This is tencent, as you say, taking the lead on this deal. 14 is being put up in the commercial Property Unit. Year all so a 5 stake in a superstore chain. Alibaba bought a stake in november. About a 40 stake. Big players getting into the physical retail space. Of course, they want to harvest some of the data to help with targeted advertising, and of course, they want to continue to carve out a market around mobile payments, and tencent and alibaba are the two big players in that space. Betty its incredible seeing foray intocompanies this oldschool retail space. Where does this leave ambitions for wanda . Tom wanda, like other big inquisitive areas are in retreat, under pressure from policy. Its part of the ed risking risking campaign. Just last year, of course, wanda sold off some properties here in china and some of its resorts to our enough properties rnf properties and soon act. It is pushing down some further assets and properties in australia as well worth about 255 Million Dollars. This commercial Property Unit was delisted and privatized in 2016. What was said to some investors was i am going to read lifted in china. If i fail to do that by december, i am going to pay you 12 . Hes under pressure at that front as well. Chinas richest man, but it is providing opportunities for tencent and alibaba to get in on some of these older sectors, as you say. Betty our china correspondent joining us live from beijing. Coming up next, a half 1 billion crypto heist in japan. Wanda become a Digital Currency had . We will hear from one of the largest bitcoin brokers next. Benne how well may positioning itself to become the next cryptocurrency but in asia. Fresh concerns about fraud. We are joined by our chief north asia correspondent who spent the last week in taiwan. How do you see the coin check heist affecting taiwans efforts, if any . What taiwan has been doing is fraud allegations in china and seeing what is there as they build up the Regulatory Framework. They also look to japan, interestingly, as a model for innovation with regulation. The fact that this coin check heist happened in japan is raising some eyebrows in a place where they are using japan is kind of a model on how to build a blockchain or cryptocurrency hub in asia. I did speak with alex liu. He runs one of just a few brokerages for cryptocurrency in taiwan called my coin. He is also known as kind of the evangelist for cryptocurrency in taiwan. He is no doubt a big supporter of taiwan playing that role. Hear stories of students taking on Credit Card Debt in order to purchase bitcoin. Thats crazy, right . What we have in taiwan is a safer version of that where our exchanges do not offer any sort of margin training and credit extension. Like taiwan toou be . A Bitcoin Trading have, mining hub, exchange . This awkward position taiwan finds itself in is not unlike the awkward position bitcoin finds itself in in the established banking world. I would like there to be a wholesale embrace of his undetermined status. Like taiwan to be known as the r. O. C. That sort of egos pervades so deeply here. Says ethos pervades so deeply here. We want to protect the freedoms of the week and put the onus on the stronger players to say why shouldnt the world operate in this fashion . Can be fraud . What absolutely. It happened on the mainland and it violated the fundamental tenant of do no harm. Of illicit lot activity using cryptocurrencies. Its understandable why mainland authorities clamped down the way they did. There is less scope for massive defrauding of a consumer. You are basically a broker, right . Wallets forned up customers and they can exchange, right . Its a privilege, not a right, but they can exchange government fiat money for Digital Currencies and they can go to Convenience Stores and buy digital assets. So, the Regulatory Framework is conducive. Of december 29s with the passage of this law, we have a new playground, no guarantees in this world. Hopeful signs as are the lawmakers who are advocates of the sandbox or innovation within the sandbox tend to come from the younger generations. Comments ort some headlines out of japan following this heist. Agencyancial service haveits very important to that balance for promoting innovation and protecting users. That is exactly what taiwan once instead of rushing into this. And also, of course, better management at the Currency Exchange companies is needed. Termhey use the regrettable that Virtual Currencies were stolen from coin check. It digital to market. Where else could taiwan exploit is it manages that its advantages . That would be the obvious question. We heard from semi conducting manufacturing that they got a big used in revenue on the bottom line in the latest quarter. The demand for chips the go into servers that power those minds. When isu, the lawmaker, asked him directly about that possibility, why taiwan wouldnt be perfect for mining, he said we can barely power all of the motherboards and ships chips. In the summertime, we have shortages. That is a back burner issue right now. The front burner is bolstering the power grid, thats having lots of electricity shortfalls. Last week, we were there for several hours trying to do live reports. There was a massive power outage in the entire city block. Thank you for that report, this is certainly timely. You can get a roundup of that story and many more you need to get your day going in todays edition of daybreak. Bloomberg subscribers can go on their terminal. Its also available on mobile in the bloomberg anywhere anywhere app. Download it now. This is bloomberg. Yvonne lets get a check on the latest business flash headlines. Getting all the people of the tech empire under one publicly traded roof. Sources say its to allow Dell Technology to manage their massive debt. One option is an ipo. The other is shifting debt on to vmwares shoulders. Vmware slumped on the news. Fitch says asia is a core strategic market and the world continues to invest in the region. Mcdonalds says it is seeing a rise in customers, a sign that the one dollar menu is paying off. Shares of domestic fast food restaurants hit almost 18 on the week. Positive results show that mick donalds mcdonalds one dollar, two dollar, three dollar menus are resonating with more frugal customers. I like my one dollar coffee. Yvonne i do too. You have to love the dollar menu. That is it for us on daybreak asia. Bloomberg markets, betty and i think about breakfast and dinner. What do you like . Rishaad i like the one dollar menu. Yvonne you cant not like it, right . Rishaad yep. He likes the finer things in life. Rishaad dollar menus. Right. Living on and having a look at what we have coming up in the next hour. Taking a look at the relationship between america and beijing. How is the rhetoric coming out of donald trump . Before davos, it was quite strident. There has been a marked change, hasnt there . How will this play out . This mean for businesses in the United States . Just over 25 hours to go before the state of the Union Address. Yvonne it will be adjusting. Will he use the prompter or go off the cuff . Rishaad we will see. Thats just a couple of the highlights coming up on bloomberg markets. Betty a lot ahead. Our coverage continues with rishaad and heidi. This is bloomberg. Rishaad we are talking about trade and making headlines today, nafta. There is a chance of the bump. Tlantic trade trump is angry at european policy. Investment from tencent and others, the start of a retreat from physically owned property. , wynn also coming up macau in the spotlight to this hour after shares