Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20180130

Designing also, caution is in the air as President Donald Trump prepares to address the nation and the world. He will call for unity after a deeply divisive year. Yvonne just starting things off with breaking news out of south korea, Industrial Production numbers missing by a longshot here, here are your numbers, falling 6 for the month of december. We were expecting that we would see a bit of a rebound here of a contraction of 1. 5 . We were expecting in october 6 soe saw that plunge in we have not seen the momentum yet when it comes to these numbers even though export growth still remains quite strong. There is a lot going on with the south korean economy in general. Something to watch here, the month over month numbers not looking good as well. The territories down half of 1 . In the meantime, we have been talking about the red across the screen for the last 24 hours. We are expecting day three of decline here in the asiapacific. As we mentioned, we saw a Global Equity in general. Since september 2016, this is the biggest drop we have seen. Lets see how things are looking so far in japan. Japanese futures in chicago right now, were seeing a modest pullback here. This isar is unchanged, moving out on this rally, this decline ahead of the president s state of the union address. Them out thisng morning. About a quarter of 1 , to 86 for the aussie 10 year yield. We have not followed the selloff and bond recently compared to what we have been seeing in treasury. This is 7341. Screens really have been flashing red across most if not all asset classes. The dow is posting their first backtoback declines in a month, lets get more on this bloodbath. Declines, about the the first backtoback triple digit loss for the dow since april, what is happening . Ande expected a hectic week that is what we got, theres a lot of reevaluation going on. Combine that with the fact that people are a little bit unnerved about what is happening in the treasury market. Down about 1. 4 and then the nasdaq dropping about 9 10 of a percent. These are pretty big moves. 408 stocks in the s p 500 declined today, one of the broadest selloffs we have seen in the down days. It big part ofis that a big part of that as well. We will talk about that later on. As you mentioned, day two into the weekend we have a lot of potential market catalyst ahead of us. Including the state of the union. What will you be watching for the president address. The analysts are focused on infrastructure spending. Trump has been promising this infrastructure plan that has not provided a lot of details that could potentially provided the economic boost. We are looking for any sort of commentary we can get regarding the dollar. Thereve been a lot of mixed messages coming from trump and mnuchin. And imagine that the strong dollar policy is still a thing, he is still behind it would be welcome news to a lot of people in the fixed income markets. We are looking for any sort of comments regarding the next step in his trade policies, were still renegotiating nafta here on the u. S. Side. He talked a lot about fair trade without actually saying how he will come push that and how he will protect the economy in the process. , a lot ofnuchin confusion there. We will get you the state of union address. In the meantime lets get you caught up with first word news with jessica summers. Jessica the u. S. Has said new sanctions will be posed unable posed on a list of russian oligarchs. Steven mnuchin told the Senate Banking committee that a range of measures will be announced soon. The list is more than 100 individuals has been denounced. Putin would say that russia would have refrain from a kneejerk reaction. Is not a friend at act, it further, takes russianamerican relations which are already complicated and harms International Relations in general. Apple has said to be doing the Software Updates because of quality issues. It usually goes out a major ios upgrade and has been working on a range of enhancements for ios 12. Some upgrades are going to be held back until 2019. Bloomberg sources say the u. S. Is investigating whether apple violated security laws over a Software Update that showed slowed older iphone models. U. S. Regulators are scrutinizing one of the largest cryptocurrency exchanges. Tether has been pointed out. They have yet to provide conclusive evidence of the holdings or have accounts audited. Facebook is banning ads that promote cryptocurrencies, nishikori offerings and binary options. Frequentlyhey are attached to misleading practices. Mark zuckerberg said he is studying cryptocurrencies and other power to correct problems on facebook. He said he is looking at the positive and negative sides of technology. News 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries, i am jessica summers, this is bloomberg. Isnne President Trump expected to spread optimism and call for action on trade, infrastructure and immigration in the first state of address. Joe, and a list of themes that we are looking out for, what should we be watching out for . You will see a lot of in terms oftrokes specifics on infrastructure, immigration, budgets, you may be talking about high spending from the military. I think there may be a lot of new ground broken here based on what he has already said, the general plans for immigration, we are told that he is not go to do anything dramatic in terms of immigration, he will state away from talking about russia and the investigation into the russian interference in the 2016 election. Big thing wille be exactly how far he goes in talking up the economy, will he talk about the dollar . That is unusual for the president to address in the state of the union, he frequently mentions the stock market with todays stock market results, i would be curious to see whether he is talking that up as well. I think we will hit on those themes in terms of spending, asking congress for more money for the military, money for infrastructure and talking about trade being fair and reciprocal. That is his standard language. This will be without any particular threats to withdraw from that or blowup the south korea or u. S. Trade deal, both of which are subject to negotiation right now. The key here is whether he can actually talk and try to unite between party lines. Do you think there is anything he can say that can break the spell that we are seeing in congress right now . I think it will be tough. Both sides are pretty well dug in. It is a bit like the weather, everybody likes to talk about partisanship but nobody does anything about it. Has talked about wanting to heal some of the division in the country, that will take some work. There will be some things that perhaps he can do some infrastructure reports but there on big differences immigration, domestic spending and health care is still an issue that is bubbling out there. It creates a bit of divide. Tone is also another thing, a year ago the unofficial state of the union right after he was it was veryident dark talk, looking ahead here, at least one person from pimco has weighed in. The executive, she has had a policy there. I will play this and get your reaction. He can try to be more unifying, strike a reconciliatory tom tone. There isnt a lot of agreement between the two parties. The tone that he sets is going to be very important. Tone, we have been hearing teases from the white house that there will be something bipartisan and unifying. Tell us more. I think that is the goal. He is torn between two imperatives. Bases maintaining his which likes his combative tone and likes his confrontational stance but the others, if he is going to get anything done, particularly in an election year, he has got to reach across the aisle and he has to be sounding conciliatory. I think that is what the white house is trying to achieve, whether or not he can pull it off from is to be seen. It will take a lot of work to even get people to from the democrats to get them to warmly embrace what they say. We have less than three hours time before the first date of the union comes on bloomberg television. Just ahead on daybreak asia, we will be joined by senator tom phyllis for the inside track on the president must first date of the union address, you dont want to miss that. Ahead, all the important pmi numbers. This is bloomberg. This is daybreak asia, i am yvonne man in hong kong. Inocencio ining ramy innocencio. Joining us from capitol hill is the bloomberg chief washington correspondent, kevin. Kevin just under three hours until the big speech, what will you be looking for . Looking for a recap on the economy, Regulatory Reform and how tax reform is beginning to stimulate job creation, putting more money in peoples paychecks. Then moving onto immigration, i think that is an opportunity for the president to bring the parties together and have us something for the doctor population. Something im excited about is his plan on a per structure. All these kinds of things that fit in a per structure that we desperately need. Is justresident returning from davos where he was greeted with a warmer reception then perhaps many had anticipated but one of the things he talked about was using private investment as a means for potentially funding things like infrastructure. Highly capitalt in terms of understanding and growing the economy. It becomes a multiplier. We have to have the money to build out the vision and i think we will have a very strong vision communicated tonight. I know that the secretary is doing a great job of flushing that out. We need to resources to get that done over a reasonable. Of time. There are projects that are waiting for funding. They need to figure out how to pull that forward. Also, collaborate with democrats, there are several democrats who are weary of the idea. This maybe willing to work with you is that possible . I think infrastructure is one where you see a bigger base in the middle that are willing to Work Together and i think that is why we have an opportunity to see progress and division that the president will make it tonight. Munich eight tonight. Communicate tonight. Where do things stand on these dolphin negotiations daca negotiations . I met with a Bipartisan Working Group and were making progress. We have to recognize that the four pillars at the present put out make sense. We need to negotiate some of the details within the daca population. For security make sense, that prevents these immigration, family unification, to diversity live harry lottery. Do you think you can reach a deal by march 7 . Idea. I think that most of these have been pass fail attempt. We does that off and use that as the baseline for moving forward. We are having good discussions. I was in a meeting for an hour and a half. People want to come up with a solution, we have to accept that there will be people on the far left and far right that will never vote with the same measure. We have to focus on the people in the middle who will be reasonable, but i a dow list approach and support the president s priorities. He is the president of the united states, you have a republican majority. There has to be some weight given to the priority of the majority while recognizing that we need the minority. I have been covering the partial Government Shutdown four days, this really was the middleoftheroad of the road that emerges as the consensus leaders in terms of getting a deal, you think the middle of the road are feeling emboldened when it comes to Something Like docket . I think many of them to come up with a solution. Talk,e get in a room and we are making progress. Do you think well hear anything about the wall . You are same Border Security means Different Things to different people. Saying Border Security means Different Things to different people. Their plan over the next 10 years is to provide wall structures over half of the full geographical borders. People say the president is still trying to build a wall are either uninformed or not completely honest. Are you saying the president is not tried to build a wall . I think he would take issue with that. The president said that it is not a long, monolithic wall from the Pacific Ocean to the gulf coast, it is structures where they make sense, it is intelligent and personnel work that make sense and the planet his agency puts together is existing wall structure, it has been authorized by democratic numbers and that maybe 500 miles but some of that is to replace createg walls were to secondary was. When you talk about a mile or two miles of wall, it could be onemile where you have secondary structures. People need to report honestly on this to recognize that Homeland Security agencies have done a good job in finding where they need structures, it is not a large monolithic wall. He wont build the western hemisphere version of the chinese wall. We will use it where it makes sense to keep the nation safe. Many people are dying trying to cross the border in texas and arizona because we dont know where they are. Switching gears now on migratory reform, do you think we will hear anything about thinking regulatory relief for any kind of regularly for Small Businesses . What about banking regularly for relief . When they came in, they wanted it for every new rep that came in. Posted far better results for that. 20 are being either revised or appealed. We need to focus on that in the banking sector, i am on the banking committee. We have had this build out on a bipartisan basis. The house already passed their version of this. That is an example where we can have really meaningful thatm and the overreach occurred in reaction to a legitimate crisis with doddfrank so that we are not preventing Community Banks from growing and regional banks. The banks that are not really engage in activity are the ones that need to continue to do what they do well. They did not think it through. To be fair, they were in the middle of a crisis but the reality is they did go back and say do we need to designate so many in florida . There is a way to do it. They are already regulating. There are mounds of regulations that these banks make and the treasury has the opportunity to designate any of these banks. It is not a onesizefitsall, as you said. That changeill see because of the strong bipartisan support it had. If not this quarter, the first part of the next quarter. Thank you. Ve to be honest, thank for supporting my eagles. Focusing on the state of the union throughout daybreak asia, economist, they will join us in the next hour and remind us that our live coverage of this week starts at 10 00 a. M. On hong kong time. This is bloomberg. That is where you can see the state of the union life. We are counting 2. 5 hours until this happens. In the meantime, youre watching daybreak asia and i am a Ramy Inocencio in new york. Yvonne lets do a quick check of the business flash headlines. Blackstone is buying 55 on Thomson Reuters financial business. This is a pension Plan Investment board and gic. They evaluated unit at about 20 billion including debt. They will retain a 45 equity stake including the newswire. The top shareholder struggling the low group wants official investigation. This will wipe out most existing investors, it is written to the Singapore Exchange and they are that this is grounds for an inquiry, is directors and its management. That they have likely rebounded from a record low and it may have tripled on costcutting and Higher Energy prices. The biggest oil and gas producer forecasts a net income for 2017 may have risen by 2. 5 billion. The result is three years of decline. Worstaw petrochinas profits. Japans leading messaging service is expanding into cryptocurrency trading as well as insurance and other financial services. We are told that it has established a holding from anyplace to launch its products in asia and beyond. This aims to expand to hong kong and luxembourg. They want to become an old one to medication and entertainment service. One communication and entertainment service. Softwareout the iphone update, whether that is slowing down the iphone and who is to blame. That is next. This is bloomberg. Taking a live look out of a chilly soul. Fall on are starting to wall street. Those two back to back down days for wall street. What is to come . They need some type of healthy correction. The yield on the benchmark are continuing to edge higher, also expect samsung earnings to be breaking in just a couple minutes or so, we will bring them to you as soon as we get in. It will be a busy day in asia for the latest from Sophie Kamaruddin. There is the countdown to the open in tokyo and seoul. The highlight was this regional data dump that we saw in the state of the union that we are looking ahead to. Youre seeing markets rattled by bonds across the screen. We will put the question to investors about whether or not they can put these losses behind them. Or if they will look at the big picture. Bear in mind, over the past ,onth, the coming onslaught that could help traders maintain the optimism when they open their book in february but going today into todays session, caution to be the name of the game. Enthusiasm among korean investors may be dampening the latest at the data which fell more than expected in december. Half a percent on a monthly basis, they are pointing lawyer lower on the contract in tokyo. We are also waiting for japanese factory activity. Earnings of plenty coming out of korea and japan. Those, ck in on there is a lot coming when it comes to what Asian Traders have to consider. We are taking a look at the 4 1000, is down by about 1 , were looking or inflation data, what you want to put on the radar . So far you have all sectors under pressure which are by 1. 6 , the only bright spot is the statement 2 10 of 1 . It was like they are feeling the pain this wednesday. This check in on some of those movers. Beach energy, this is the worst performance so far. The stock will downgrade to sell at morningstar. We do have an oil search sliding as crude prices take a tumble. They have resumed growth and we are watching a w eight reaching awa reaching a packed. Ramy lets get to first word news now with jessica summers. President trump is preparing to deliver his first state of the union address. He is hoping to let saggy Approval Ratings. The president is expecting to top off growth talk about growth, gdp and stocks and call for action on immigration and trade. A freespeech lunch with Television News anchors saying that he is driving for unity and is looking to bring the country together after a divisive 12 months. The issues says that caused by verizon are clearing up. Does lower Economic Growth as a result of the point is becoming more straightforward. The bank will make its latest policy announcement when it will also deliver new productions for the economy. Six years after ford regained a new credit name, they say this could be a risk. The agency lowered its outlook from stable to negative setting a challenging environment as jim hackett tries to get ford back in shape. The socalled fitness redesign includes cutting 14 billion in costs, curving lower vehicles and investing heavily in electric cars. Australias Commonwealth Bank is being sued by the Securities Regulator for allegedly breaking this offering. The bank engaged in unconscionable conduct to markman it relation between january and october of 2012. Cba is the last of the big lenders to make claims of manipulation. It is fighting allegations of breaching Money Laundering laws. And a search is underway off southwest france for quicksilver eu ceo after his empty boat washed ashore. Helicopters are involved in the operation. He is known for intense and sometimes dangerous waves. He became ceo of the australia founded california based sportswear maker. Thanis powered by more 2700 journalists and analysts in more than 120 countries, i jessica summers, this is bloomberg. Right now, news samsung has released its final fourthquarter results. We did see this miss a couple of weeks ago. It looks like this is still winning for the divisional breakdowns. We will get the display and chips and other divisions, right now what we are getting is the consolidated operating profit whate, there is similar to we got from the initial operating profit number on january 9 which is 15. 1 trillion. That is about a trillion yuan lower than estimates for the Fourth Quarter. Her company is doing well, it has full your record earnings, it has those big contracts for the led screens for the apple iphone 10. It is the currency. In the Fourth Quarter, the currency was up 7 versus the dollar. They were saying some very interesting things, for every 10 yuan exchange, and that Fourth Quarter, they estimated about 600 billion yuan hit against that number. We are getting that income at 12. 02 yuan. That was estimated at 12. 1. This is net income for the Fourth Quarter. It is very likely that the yuan has been hitting the net income here. Story if theyd have the supply chain, they have strong membership prices and contrast with the like of likes of apple. The yuan is up 8. 5 . More breaking news coming out of d. C. Ramy breaking news, the white onse is releasing excerpts the state of the union, we have less than 2. 5 hours until then. It appears to be a message of bipartisanship, trump is saying that on immigration he wants to work with the democrats as well as with the gop. He also wants to say the u. S. Is a nation of builders but is hamstrung by regulations. We have seen him try to pull back regulations and he may have to potential try to do that as well. On infrastructure, we have been talking about that with the guests of the past hour. He will ask both parties to Work Together on infrastructure and a couple more lines. If you bear with me, he says americans deserve a government that shows love as well as loyalty. Those are the several lines, the excerpt with white house is releasing. That is the exact the white house is releasing. Lets go to samsungs nemesis, apple. It will be under investigation because of Software Updates to its iphone. Separate inquiries are underway for the securities and Exchange Commission looking into whether the Company Misled Investors about the performance of older phones. The spring and mark for more. Lets get into the nittygritty over the doj probe of apple. It has to do with securities. See ifre looking to they are upset over the iphones being throttled or to see if the phones dont reboot randomly work this misled investors or had investors may from decisions based on this change to the iphone software. Lets go ahead and talk about some background on the iphone battery situation here. Things,entral crux of the slowing down of this, tim cook himself said that he and apple ashley told people that this seemed to be a bit of gray area. It is a bit of gray area, tim cook says apple didnt tell people that this was going to happen but that is not the case. It is not true. When apple came out with the Software Update back in february of 2017 they said they were releasing this update to fix bugs and then they later said that this update was designed for the iphones to avoid being shut down and rebooting randomly because of the battery chemistry. They never said at that time they didnt say this until december, the way they did that was by slowing down the phone. Says not really fair to this when they did not. Looking ahead to earnings coming out from apple, the stock is really getting knocked down. I think it is about 7 down over the last couple of weeks or so. A lot of concerns here in asia about the production targets but we have been here before, is the iphone x going to be any different . January, every december quarter after the american Holiday Season we see does reports in the asian supply chain indicating iphone orders being cut. What they do is they build workflows the necessary for the holiday. And then just to cut back as necessary in order to meet the going demand balance through the course of the rest of the following year after the phone is released. Every adjustment there that we are all used to. We will watch over the next couple hours or so. The bloomberg tech reporter covers apple. Chinas group appears to be deepening with a liquidity crunch of almost 2. 5 billion this quarter. Lets look at the latest from Tom Mackenzie. We are talked about the revelation surrounding age and day. How significant is the latest development . Tom the revelation seems to be coming on a weekly basis. It throws into sharp focus the financial challenges that this conglomerate is facing. This came about from a meeting. They outlined some of the financial struggles, including this short term shortfall of 2. 4 billion u. S. Dollars. They said that in the Second Quarter they expect the pressure to ease. It does raise the question about the viability of the business itself, it is a business that has 190 billion worth of assets, including in Companies Like Deutsche Bank and hilton worldwide. Shortterm debt obligations are around 29 billion, bloomberg has been punching the numbers and says that according to our findings, it is cash and earnings that is not enough to cover shortterm debt. This is a question of whether or not the banks are going to issue more funding for hna to tie the motor tie them over. The clock is ticking. It certainly is among many other conglomerates. Another has been anbang. It was surrounding the disappearance of the chairman. How are they dealing with the company . With anbang, the government is trying to sell part of the company, a stake in the company to chinas own sovereign wealth fund. The talks have started but have failed to come to an agreement at this stage. As you alluded to, we heard all about this in june of last year when the chairman was detained. This is the company that has assets of 319 billion, including the hotel with Insurance Companies and Financial Companies as well. It looks like there going through a stake sale but we are winning for more details on that. Wait, there is more. I have to talk to about this one here. They are talking about divesting properties in chicago and beverly hills, california, to what extent is the pressure easing on this company . Right, the pressure has eased at least a couple of degrees. About 5. 4 billion in their commercial property unit, this was a 14 point 14 stake that have been promised a return of around 12 in that unit had not been listed listed here. Forstake has been sold jd. Com. This is in london, new york, australia and more recently, theyre looking to sell some of their property in chicago and beverly hills. What theyre try to do is shift away from Development Properties to the leasing and management of them. That is part of their focus. They have to curtail a lot of their ambitions but the pressures have used at least temporarily. Anbang, Tom Mackenzie in beijing. Thank you. We are counting down to chinas latest manufacturing pmi figures. This is bloomberg. Lets get you up with some of the breaking lines we got from samsung. Their elegant the numbers when it comes to the divisional breakdowns here and it seems like it was chips and displays that are really fueling that net income to a record 12 trillion yuan. That isit a display offered profit at 1. 4 trillion yuan. 4. 2mobile division trillion. The chips division was 10. 9 trillion yuan. It was the growth we continue to see in the chips that often are the game that they saw but the yuan. This was demand for growth in 2018. They also mentioned his 660 billion yuan with a negative impact from the currency, that is really biting into their bottom line. We are seeing unity change for samsung, down 2. 25 . But head over to china. The country is kicking off the global pmi parade. Theyre showing the secondbiggest economy stepping into the new year on a solid growth footing. Kathleen hays is here. A report shows that chinas growth in gdp went from 2017 to 2018. That is a rough at that is solid, maybe not spectacular but find enough. So what is driving it . Driving demand, infrastructure spending, created a lot of stimulus, leverage and that is honored more in the brief will doing. Theyre not doing much to slow down that process, not slowing down the economy either. Specifically to the purchasing managers index, manufacturing is slowing a little bit. They are boosted by construction. 403. Jump into btv the blue line is the nonmanufacturing, the services november,was 55 in anything about 50 signals growth. As for manufacturing, it is supposed to stay at 51. 6. China will also be releasing a new composite pmi that combines manufacturing and services. The Chinese Government says this will allow them to monitor realtime Economic Activity in the country more effectively. What we are also watching is japan waiting for Industrial Production data, their manufacturing pmi and that will come out tomorrow. If we get something on either side of those numbers, maybe similar Market Reaction but this is 2. 7 on a month, it is estimated at 1. 5, lets see what happens with chinas purchasing indexes. Yvonne kathleen hays, thank you. Already breaking the data for us, coming up from japan. Lets bring it back to china. We know that we have two weeks away, the numbers get a little fudgy when it comes to the pmi numbers. Do we overlook this one or what will you be watching for exactly . A generally, we will have good reading but as you said, it is always a little messy when or have these pmi readings other highfrequency data. Big trend is now that the economy is holding well, that is me, that is you but eventually i think the old as regulatory tidy will affect chinese economic performance. That means compared to last year, maybe we will see some kind of moderation. Dont be too optimistic. Why should i worry . We have our it is in china do surprisingly well when it comes to augmenting debt in the midst of inflation. That is true but sometimes it takes time to see how things are coming and also, will we still face the risks . This is the primary concern, the housing sectors. This is the external risk for example. This is protecting around the web. Helpedar, the sector china in boosting growth. We have a problem with the solar panel, the washing machine. You never know what is going to happen. You think of the u. S. Ever committed to their u. S. Strategies it is like a box of chocolates. I want to get your interpretation on chinas pmi. 51. 6 is the survey here, looking at the past, september was a fiveyear high. I was finally seeing tighter liquidity and deleveraging early starting to take hold . Definitely. I think that this is the type of things that will start affecting the economy, we will start to is that impact, our forecast only pessimistic. Our base during, this financial tightening, we already know that this is the high interest of marketing. Already, some small and mediumsize enterprises. When we look at some of the wetors that do make a pmi, are looking at production levels, new orders from customers, speed of delivery, what are we looking at that causes you to be holding more pessimistic a little more pessimistic . Is delivering things, maybe they will slow down. We just heard some news from s p yesterday saying that china may actually be the first ever local government to finance vehicle default this year. We have been talking this for years now. Theyis a default but really havent on the risks involved because all of these are so off balance and we dont really know how stretched some of these credit lines are at the moment. Is the significant . I dont know. If you look at this one, we have been talking about this one for quite a while. I think that maybe from this year we will see market is in the bond markets and not only a couple of things but this one may be private. He mentioned that the one concern that you have is the sector. The banking regulator there said that he is watching the rise and Household Debt because that is certainly a lot of people out there that are actually going somend borrowing just for kind of down payment, how big of a concern is that . That is a very big increase of this private loan. We suspect this is an important part of the private loans that have been transferred. Of course, this is a highrisk behavior, they have a significant correction. Housingsany of these are in trouble. Takenk that they need to more regulations on this part. That is why said although we are now seeing that the economy is holding well but through the years, maybe we will see some moderation in the housing sector and the Consumer Sector and overall. Thank you. The chief asia economist in hong kong. We are getting more breaking news today. Nevada regulators are saying that theyre going to probe those Sexual Misconduct claims against the bloomberg terminal. This relates to allegations that is to essentially harassed that mr. Ees m essentially harassed sexually harassed peanut employees. We are looking at where steve wynn is now. Itd did rally back just a little bit off of its fall after those initial remarks and after initial remarks from mr. Wynn himself. Yvonne we have more lines coming from samsung. We are talking about the year and dividend for samsung electronics, coming up, 24,500 yuan. Dont talk about how this affects the income for the Fourth Quarter. Samsung is looking had and saying that it may be affected by declining demand. If we talk about the concerns regarding apple and overall the Handset Division when it comes to samsung as well. We also saw a lot of growth in the Fourth Quarter in the chips division. A lot of people are saying that the cycle is over. They may have to think again. Coming up on the next hour of daybreak asia, we will head to the chief global strategist of socgen. We will speak to the chair of hangman group. Bloomberg. Hadne 8 00 a. M. Here and here in hong kong. Stories this wednesday, caution is the word as asianpacific markets take a third day of declines. While start wall street saw the biggest drop since may. Jeff bezos joins Warren Buffett and jamie to shake things up for their one millionth employee. Bloombergs global headquarters, i am Ramy Inocencio in new york. Assung in the spotlight korea opens for trade. The last quarters are record earnings on demand for chips and highend displays. President trump prepares to address the nation and the world. He will call for unity saying, this is our new american moment. Yvonne two hours before the president state of the union address, one question everyone is asking, what will it take to stem the bleeding in the markets . You mentioned, today back to lines on wall street. We are entering day three here in asia. A lot coming through here. The samsung earnings, record profits for the Fourth Quarter. Cue a little bit from u. S. Equities. The dow sees its first back to back, triple digit losses, ever since april. Some analysts are saying it is something that is healthy. But if you ask investors, they are saying, what health . We will see how this affects your asianpacific trading day. Upnne we are still 5 of for the year, when it comes to s p. What a busy day it is for asian markets. Lets get an update with Sophie Kamaruddin from the open in seoul. A crazy day when it comes to data and earnings. We do have the kospi sliding 0. 4 . Basis, the weakest reading since early 2013. Samsung reporting record earnings, but missing analyst estimates. Highlighting negative impact from the stronger won. Shares fluctuating right now. Dow down slightly of the open. The korean won down below the 1073 handle. Ony do not u. S. Jobs data friday. We do have the nikkei 225 opening 0. 4 lower. The topix also under pressure. We did have japanese activity accelerating in december due to strong exports. A orders raised production through 2017. A mixed bag for data. So far, pressure for asian. Tocks asx 200 sliding to the 6000 level. Energy shares dragging the most. Tracking the drop in crude prices, u. S. Inventories will build after 10 straight weeks of declines. Aussie dollar gaining ground, 0. 2 higher. Before we get Fourth Quarter bottomon data due at the of the hour. Elsewhere, the ringgit under pressure. The kiwi dollar gaining ground so far today. Lets take a look at the movers we are watching in tokyo. Fuji still in focus this morning. This amid reports they could be nearing a deal that could come as soon as tomorrow, when it comes to the announcement. It lets check in on stocks were watching. To report earnings today, nintendo and others in tokyo. In seoul, we are waiting on others. Biologic and samsung under pressure, down 0. 33 . Tuesday, whendrop it fell. You. E thank it lets look closer at samsung earnings sophie just mentioned. The record earnings on robust demand. Lets get more analysis from bloomberg intelligences Senior Editor here in hong kong. Initial opinions when you look at these numbers . It seems the super cycle in chips could be over, maybe premature . I think a selloff may be a concern about the currency boost. [indiscernible] in terms of memory chip demand, the Company Remaining optimistic about demands, not only samsung, but others. They are pointing to continued robust demand for memory chips. It is more about the macro rather than the memory chip cycle. We may have more supply coming and smartphone demand slowing, especially in china. A positive news, will decline this year. X will decline this year. Yvonne another launch, the galaxy s9. We have had concerns from apple about cutting production from suppliers. What do we look ahead to when it comes to galaxy . Anthea the good thing about launch onethey will month earlier compared to last year. Last year they were still trying to deal with a battery problem. They want to get it right, so that was a delayed. They need to spend more in checking all the procedures and manufacturing processes. This year, it would be an early lunch, number one. Domestically, lg may delay a new product. At the same time, the pricing would not be too premium, unlike the iphone x. It would probably stick in line with previous models price range. Ramy you are bringing up the iphone x, we are seeing problems in terms of demand being cut. Displays from samsung going into the iphone x. With that cut in terms of production, is there any clarity for any impact samsung might see . I believe that for this display unit, the earnings would be hurt quite significantly. The oled panels they sell to apple cost hundreds of u. S. Dollars. Samsungs strategy, they have to look elsewhere to sell those panels. And perhaps go to chinese vendors. That a lack of iphone x would hurt samsungs oled business. Ramy this may be the last time we utter the name jay y. Lee. We are putting that era behind us. I want to put a button on this. Anything left in this area we might need to say, wait a second, there is still one thing more . Continues to be a concern. Are amsung group complicated structure. They still have cross holdings. Even though the chairman, whether the outcome of the verdict, we are not sure. They still have a lot of holdings to figure out and improve transparency. The company is trying to take steps, to fill the role of the ceo and chairman. Fix thel continue to structure. But that is the longterm story. Ramy a very longterm story, indeed. News get the first word with jessica summers. The u. S. Says new sanctions will be imposed based on russian oligarchss and officials with links to president putin. Mnuchin told the Senate Banking committee that a range of measures will be announced soon. The list of more than 100 individuals have been announced by the kremlin. Although president putin said russia would refrain from a kneejerk retaliatory action. Fact not a friendly friendly act. It further complicates u. S. Russia relations and harms International Relations in general. Jessica apple saying it to be delaying key Software Updates. He usually rolled out a major ios upgrade each year, and has been working on a range of enhancements for ios 12. However, some upgrades are likely to be held back until 2019. Shares fell as the u. S. Was investigating whether apple violated security flaws over Software Update that slowed older iphone models. U. S. Regulators scrutinizing one of the Worlds Largest cryptocurrency exchanges. Coin claimed it to be tied to the dollar. Tether has coins outstanding but has yet to provide conclusive evidence or have its account audited. Meanwhile, facebook is banning ads that promote cryptocurrencies, initial offerings, and binary options. They say it is frequently associated with the misleading or deceptive practices. Mark zuckerberg said he is studying cryptocurrencies to protect problems on facebook. He is looking at the positive and negative sides of the technology. Australias Commonwealth Bank is being sued by the Securities Regulator for allegedly rigging the benchmark. They say the bank engaged in market manipulation between january and october 2012. Cba is the last of the nations big four lenders to be facing this. And Money Laundering laws. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers. This is bloomberg. Ramy thank you very much. We are a couple hours away, less than two ever the way, from President Donald Trumps first date of the union address. Youre looking at a live picture from capitol hill, the american seat of congressional power. Unity, andl for action on everything from trade, infrastructure and immigration. But what will he exactly say . Schneider joins us. Lets talk about both policy as well as all importantly, tone. Of the tone is expected to be more somber, more president ial, less bombastic than some of the other speeches he has made, and more of become a less dark than last years speech. He had just taken office. However, this year he is expected to try to look for some bipartisan issues to really call for unity. Romance is how the speech is being branded. He is expected to talk broadly in five areas. On the issue of taxes in the economy, and take a victory lap on the tax bill, to say the tax bill passed at the end of the year, to be about the take credit for the economy, saying he passed the tax law, and therefore, can take credit for gains in the u. S. Economy. Immigration, infrastructure, where he will present the plan. The trade issue, and regulatory issues. Looking at deregulation and the plan for further deregulation, saying america deserves to be about the build roads and bridges much more quickly than they can now. Basically everything is on the agenda here. Looking through the lens of bipartisanship as he and the white house have said in the ahead to theoking midterms, what do you think is the best time to get republicans and democrats together . You mentioned infrastructure but i have been reading some who say it is dead on arrival because the fed once to give 200 billion. And they need 1. 7 billion. Some say 3 billion. Jodi state of the Union Addresses are not expected to reach reality. They are supposed to be broadbrush agenda items. Things the president would like to happen. Obviously on infrastructure, he is going to propose something that had been a campaign promise, something he talked about as president , but has not occurred yet. I think that is what we are going to see. It is the tone, looking to do things, move forward. Again, different from last yearss speech and different from the dark vision of that inaugural speech little more than a year ago. Yvonne what about immigration . Last week we saw a bit of a breakthrough when it came to daca. Can President Trump on this momentum . Him to getnt expect specific about the dreamers in immigrants,l, young undocumented, brought to the u. S. As children. We dont expect him to lay out the details of that plan today, but to talk about immigration in a more general sense, and that will allow him to do it in a more bipartisan way. Democrats disagree with a lot of the details of the plan. What we are hearing is that he wont get in the weeds about it. He wont get in the weeds about much. Maybe the infrastructure plan. But Everything Else will be the broadbrush. There may be surprises, we may hear him on north korea. President trump is unpredictable. Even if there is a surprise in the speech, we may get some tweets afterwards. Yvonne not just the prompter, but the tweets, as well. Jodi schneider, thank you. Under two hours before that state of the union address. Our special coverage of the state of the union begins at 10 00 p. M. Hong kong time, 9 00 p. M. Eastern. You can watch President Trumps address live, with analysis street after. A fall in sales, rental properties. Estimates. Beat we speak to the chairman later on. Ramy up next, dollar bears have oneen on a on keen eye President Trumps speech. This is bloomberg. Onne this is daybreak asia i am yvonne man in hong kong. Ramy and i am Ramy Inocencio in new york. The dollar pared its losses after steve reiterated his support for a strong greenback. While investors await President Trumps first state of the union address. Lets bring in a chief social strategist at societe generale. He joins us from hong kong today. Kit, great to see you. Your newest note you sent over, youre talking about if post crisis policies are demands of, fx appearance of calm in land is effective. They be you are getting ahead of me. G btv, 86. The volatility index is in yellow. Kit, talk to me about volatility rising. Kit the driver of low volatility has always been the low level of u. S. Interest rates and the markets complete conviction that whether the fed orses rates once, twice three times this year, they are edging ever so gradually to a point something. They question that and say, what if they have to go to three point something . What would it do to equity markets and risk . There is an outbreak of uncertainty about where we are traveling to, as opposed to worrying about the speed we move that. Gives us at least a temporary spike in volatility, which we are beginning to get now. Ramy lets make head or tail the about what mr. Mnuchin said. How do you make heads or tails about this . Kit i am really tempted to turn up my music. What he wants,m what he really, really wants. [laughter] ramy love it. Yvonne it is also spice girls. Old for this,t you have to understand. Look, what matters is what youre going to back up with policies. You have to have policy supportive for your currency. You can see around the world, the japanese really, really want a weak currency. Currency,nted a weak but are now trying to normalize. The story of this year, as everyone starts to normalize policy and move away from the kind of post crisis policy architecture, talking about tapering, getting back to normal, that currency is coming back from really weak levels. The dollar is not so much going down, as weakening because people are finding more interesting stories somewhere else. I cannot think Steve Mnuchin wants a really strong dollar. It would not fit in with most of the things the u. S. Would like. Whatnk he wants to correct would probably give the impression of [indiscernible] but i think he really, really wants to get out of the hole from last week. Yvonne certainly doing damage control. There isbut a the idea of the 10 year yield needs to crack 3 before we see support on the dollar. Will that be doable or eligible . Kit i would go one step further. If you think the market is currently pricing a terminal fund rate of two point we could, and we think go to three point something, that could help the dollar. But we want to get there and it wont help the dollar is moving to 2. 72 splatters the equity market all over the floor. We took penny yields to 3 during the taper tantrum. Everybody at the fed turned up at the conference, and every banker in the world seems to have pigeonholed them. Ramy we have some breaking news crossing the bloomberg terminal. A very busy day coming out of samsung. One stockying 50 to split. That is the latest news coming off the bloomberg terminal. After samsung reported its most recent earnings, confirming what we have been told earlier. Right now, the stock is up by about 5. 5 . Even as we speak. Yvonne the question about the ecbs emergingmarket currencies rally. At what point will it hurt . In particular,on it is not like they are trying to fight in inflation problem. 50 folksrobably lineup who do what i do. They are all getting ready to sell it now. They know it has been a difficult run. It is one of those things. It is fraught with danger. I understand how when this low rate with global recovery, money flows to sexier currencies in more interesting places. Low interest, moderately growing economies, dont stand out. But they have performed better than almost anyone thought it would. Samsung may be part of the reason. An incredible run when it comes to the chinese renminbi. I have a chart, 6656. Everyone has been talking about the dollar renminbi, if it continues to drop, it is not a concern, because it is against the basket. The highest we have seen in the year already. At what point do they get worried about this and step in . They were perfectly happy on a trade weighted basis, they were flat. It is clear that the pboc did not like the volatility and the side effects. What the pboc mostly wants is to be in control of the domestic monetary situation. Yvonne they got rid of the cyclical factor that was supposed to reduce volatility. Kit that has helped. But they dont want to go back to a weak currency that results in Large Capital outflows, losing control of the situation. They had an experiment and really, really want control. It is the price of control, a slightly stronger currency. Strong on as not weighted basis, it is fine. But it is strong against everything. Stronger a weaker move against the basket or the euro and dollar, i think they would start to get concerned. My sense is, when push comes to stroke when push comes to shove, the pboc wants control over domestic money, more than a wants the weaker currency that would be helpful. The i want to go back to bloomberg terminal with that seasonality function for the dollar, the dixie currency. This is seasonality, 2013, 2. 33 down. Last time we saw that was more than 30 years ago for january. Looking ahead to what the fed expects, three rate hikes. Do you think we will see a floor . What is your forecast for 2018 . And last question, is now the time to get into the u. S. Dollar . Kit i think the dollar can have a correction. It is a very big move. We all of got ourselves very excited about how fast the European Central bank might look to taper its bond purchases. They did not like that and will be able to lean against those expectations. We are raising rates. I know they can probably flush out some of the competition. I wont be getting bullish over the dollar on the back of that. I would only get bullish with the dollar if i thought the fed was heading to a terminal fed funds rate that was 3 or higher. If it was at two point something in a nominal growth of three point something, i will not get excited about an already quite expensive dollar. Yvonne kit, thank you. Kit juckes of societe generale. Plenty more to come on daybreak asia. How the u. S. Economy has fared under president , and his first state of the union address. This is bloomberg. We use our phones and computers the same way these days. So why do we pay to have a phone connected when were already paying for internet . Shouldnt it all just be one thing . Thats why Xfinity Mobile comes with your internet. You can get 5 lines of talk and text included at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And now, get a 200 prepaid card when you buy an iphone. Its a new kind of network designed to save you money. Call, visit, or go to xfnitymobile. Com. Yvonne taking a live look outside the city. Markets, we are seeing the asx 200 following the declines we saw across the board, down 0. 33 for equities down under. Herey of breaking news today. Australia cpi numbers for the Fourth Quarter, slightly missing estimates. 1. 9 , year on year for the Fourth Quarter. Tonomists were expecting percent. Edging higher from what we saw in the previous 1. 8 percent. Quarter on quarter, seeing a gain of 0. 6 . Just a slight miss there. This was underpinned by momentum. Last years employment increase 000 or so was the largest in decades. Not enough to pick up household spending. Household debt still a big issue. Commodity index tracks well with inflation, also slowed a bit. A push and pull when it comes to the inflation picture. Not going to do too much for this year. A lot still calling for the aussie to weaken. We will see if we have Market Reaction as we get the latest from Sophie Kamaruddin. That slight miss to inflation data made bring the right speculators. We are seeing a move up from the rba this year. It looks like aussie currency traders are frowning on the latest data. It puts the inflation market just a little further away from the rbas 2 to 3 target range. Looking at chinese pmi activity, potentially encouraging data, could help of the aussie see scope to gain ground today. For now, it has been pushed back below that 81 handle. Aussie stocks dropping a second day, below the thousand point mark. Tracking a drop in crude prices, the likes of beach energy under pressure. Increasing their output for the year. Are seeing some other sectors now joined real estate in the green. Telco and Consumer Staples seeing slight gains. A look at samsung shares, which did see a pop following the Company Announcing stock split, which means more investors can buy into stock shares. Lets look at this graph. The stock has come down slightly. It rose as much as 8. 7 , the most in january 2009. We are seeing how the polls in the bears are going when it comes to samsungs latest announcement. Ramy lets get to first word news with jessica summers. Issica President Trump preparing to deliver his first state of the union address. He is hoping to lift a stagnant Approval Ratings in the Midterm Election year. The president is expected to talk up growth, gdp and jobs, and call for action on immigration, trade and structure rebuilding. Tv anchors he is striving for unity, the bring the country together after a divisive 12 months. U. K. Prime minister theresa may says she will raise concerns about human rights and hong kongs independence during her threeday china visit wednesday. She told reporters britain wants to secure a formal trade deal with china. She also said president xis belt and road plan must be transparent and meet international standards. Mark carney said issues caused by brexit are clearing up in the u. K. Economy. He told the house of lords the struggle to manage inflation as a result of the split is now more straightforward. The bank is due to make its next policy announcement next week, where it will also deliver predictions for the economy. Six years after ford regained a good credit name, moodys says the Credit Rating could again be at risk. They lowered the outlook from stable to negative, citing a negative environment, as they try to get ford back in shape. The fitness redesign includes a cutting 14 billion in cost, and investing heavily in the electric cars. A search is underway off the southwest france for quicksilver ceo, after his empty boat was found washed ashore. Two ships and three helicopters are involved. The bay of the skate the bay qay is known for being dangerous. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers, this is bloomberg. More on the countdown to President Trumps state of the union speech to a joint session of congress. This is his first. You are watching live pictures from capitol hill, in about an hour and a half time, the u. S. President will take the stage, to the nation and world. He is expected to emphasize the strength of the u. S. Economy after his first year in office. Talking ahave been lot about policy. I want to get to the politics, if you dont mind. Looking at the Approval Rating for donald trump lets hop into the bloomberg g btv 6943. His Approval Rating is at 40. 1 . Has he spent all of his Political Capital he talks about infrastructure, immigration . Steve i dont think President Trump really cares about that. [laughter] most president s in the past have worried about things like Political Capital and spend a lot of time on that. He has his agenda. It is almost a bipolar presidency, in some ways. This public tweeting president that sees what his base wants to hear. And when you look at the things he has actually done on a the economy, they are pretty ,traight down the middle republican kinds of things. It is hard to look at that tax plan and say that if any other republican became president , it would be dramatically different. Ramy the phrase when you are saying that came into my head, that ran through, is he able to ram something through, maybe on the republican side . We are talking about immigration. Excuse me, immigration. Do you think that is the most likely thing . The reason for this unifying type of speech, he he has a one seat majority. And he has a number of shaky republicans in the senate. The ability for him to ram through legislation like they tried to do and manage to do with the tax cuts, is really the reason why he is going to go for the easy stuff. The easy stuff is the infrastructure. The plan for the infrastructure, interestingly, is 20 . Publicprivate. Where, if they can match the funds, 80 , a local area will put up 20 . I would not say it is a nonstarter, but that is a long runway before you get money spent. It is easier said than done. To me isration issue the most fascinating one. Since were going it is a bit of a kabuki play. Sides, if the microphones were off, would agree, one of the longerterm solutions to the u. S. Economy and oncoming financing of the baby boomers is to grow the population. This is something we have in our advantage because immigration is part of our history, as opposed to germany, japan and china now. The real question is, who is going to come in the door . You can take a racial tone to it on the one hand. But on the other hand, it is very simple. Who is going to vote for whom . Republicans want to fill the country with those more inclined to vote for republicans, and the democrats, the other way around. They will fund of the wall, but fund it within a broader it wont be a line item, but part of a broader allocation of money. Everybody will claim a victory because that is washington. It is especially washington when you only have a one seat majority. [laughter] yvonne we are expecting the President Trump will have himself on the back, although today is an exception. Myth that Business Confidence has soared under the president. How crucial has he been in terms of awakening analyst fears . In this way, he is typical of every president. Every president will absolutely take credit for the good news that occurs on his watch, whether or not he was the architect of it. The economy went through a slump in 2015 to early 2016, started to revive in the second half of 2016 before the election, and then took off. 2017 was theays, first year of a recovery. And a lot of the numbers we saw not just in terms of growth and wages, prices reflect that. As far as feelings are concerned, a lot of these sentiment numbers fly high early in their recovery. I call it the absence of pain. They go up to a very high level. And as the economy continues to roll forward in any expansion, these tend to come down toward a more normal level. In light of tax reform we have seen more than 70 Current Companies in the u. S. Announced bonuses, raising wages, increasing capex. Is this really trickle economics working, as the president promised . Thegiven how late we are in business cycle, these wage gains were expected even without tax reform . Steve i think it is a tailwind, no question about it, to what was already coming, which was, higher wages and greater capital expenditure. The two major pieces of it in terms of domestic businesses, andlowering of the tax rate one year expensing on capital equipment, the one year expense is a much more meaningful one. Get a boost in capital expenditures, 2018, in any event. But i think the way to really look at this tax plan is, not in the impact it has in 2018, but going forward. , this taxas a problem plan, whether you like it or not, is attempting to solve. That is the erosion of production relative to gdp in the united states. This is an attempt to shift terms of trade, favor domestic production. This is going to take three to five years before we see whether it works. It does not stand alone. You have two other pieces of it. One is deregulation, cutting taxes, and recutting trade deals. Done the first two, and he will be particularly vocal in 2018 on the third. The dollar will be a part of that story. Ramy we have to leave it there, steven blitz of it ts lombard, thank you. Were counting down to the state of the union address, happening in just over an hours time. This is bloomberg. Ramy welcome back, this is daybreak asia. I am Ramy Inocencio in new york. Yvonne i am yvonne man in hong kong. After they reported a 13 fallen underlying profit for 2017 due to fewer property sales and a decline in sales from its Mainland China business. Here to talk more about those earnings, the chairman himself ofhang lung group, ronnie chang. A little bit of push given these ever higher property prices. What is your read on the year . The hong kong property for sale, we basically sold everything. [indiscernible] we did not have too much to sell. In hong kong and the mainland, flat for the year, minus one or plus one, does not matter. There is also an inflation issue. It is basically flat. The markets however, recovered nicely. But it takes time with the lease terms to be reflected in our numbers. I would not be surprised within the next 12, 18 months, you see an uptick. Yvonne you mentioned Properties Last year. This was a substantial drop from a year ago. You say this was a deliberate move . Ronnie no, we just cleared out inventory. Yvonne you are not waiting for higher prices . Ronnie no, we just sold a most everything we had. For thehave to wait right buyer to come along. We only have 13 unit left to sell. Preference for a china over hong kong. Ronnie we always do. Yvonne you can see the property market, the bears competing. We are not seeing a crash anytime soon. Dowhat point do you say, prices need to correct more, do you need more mainland players . Ronnie everyone has a strategy. Unless there is blood on the street, we are not that crazy to buy. Every time we buy, there is blood on the street. So when we buy, no one is happy. Including myself. Yvonne you lost out to buy henderson on the murray road parking lot. Do you see more of these government do you plan to bid . Ronnie just to keep ourselves sharp. The market is still pretty strong. When the market is strong [indiscernible] yvonne what do you make about land prices . Prices iel land am not overly worried it will fall anytime soon. Although i think the government is doing the right thing to release a lot more land. They were having difficulty and struggling the past five years. But i think they will make it eventually. That will be the time when prices will moderate. In china we saw prices dip a little bit. How do take advantage of that . Expansion,d up your if the right plot comes along . Ronnie that refers to residential land. We are interested in high retail highend retail and commercial space. Where the market is is not the most important thing. Is most important thing defined find the right piece at a reasonable price. It is a long process. Usually each piece takes three years to buy. Yvonne there is a lot of competition when it comes to ecommerce. Ronnie no. Yvonne you dont think so. Are you more competitive than your rival . Ronnie absolutely not, we are competitive. In the highend property, highend retail we do, actually we complement each other very well. Ecommerce hurts if you are selling adidas and nike, or washing machines, you will be hurt. Selling verye expensive dresses that you where and you buy, the competition is a lot less. Ramy lets go further into retail. What is your outlook for 2018, looking ahead . Ronnie hong kong or Mainland China . Ramy hong kong. Ronnie hong kong will be fine. Anyone who bets against hong kong Residential Real Estate should be careful. Especially if you are buying it for your own residence. Almost any time is a good time. Anytime the market dips, surely, people should jump in to buy. It should be fine. Ramy you brought it up, china retail, mall properties. Do you expect further improvement . The retail sales for all of our properties in the last year, the number has been up. The occupancy rate is up. Our rent for the most part, up. As the market continues to recover, our number is reflected in perhaps 12 to 18 months time. Ramy some of the Chinese Developers have been very aggressive in Hong Kong Government land building. Do expect this to change, going ahead . Ronnie six months ago, a lot of the land was bought by mainland developers. Today it is quiet. Thing, when the mainland players were crazy about hong kong prices, all the hong kong guys stepped back. They were not that crazy to buy. Fromthey began to retreat the market, the hong kong people rushed in. Is aong kong market complicated one, volatile. The players have experience and a lot of money. Most of them are debtfree or have a very low debt. Whereas, mainland players have borrowed a lot of money, and have never seen market trough in hong kong. I would bet on the hong kong guys. Yvonne you said you are close to nearing the end of your home inventory. Some analysts have said you are more of a landlord it then Property Developer in hong kong. Does that give you more reason to raise rental prices this year . Ronnie i wish i could want to raise prices and prices would be raised. But i think the hong kong market, particularly the commercial, retail market, will recover gradually. Our issue is, in the last five years or so, when the market was really bad because of all the asset enhancement initiatives, we were able to up rents by almost 10 a year for the last couple years. The basis we are now facing is higher than before. Whereas the market is recovering, i do not expect our growth in rent will be able to match of that of the market. Just because of the time difference. We just rose so well in the last five years. Yvonne what will be the biggest risk to that outlook . We see this incredible wealth of fact in the region. Stock prices are up, rising interest rates, as well. What will be the big worry . Retail i will say first, sales have been slow for the past couple of years. Because of that, there is a little bit of catch up to do, as well. In hong kong, there are not a lot of issues that worry me. Economically, socially, politically, will be stable. Yvonne what about in china . Ronnie china, i am hopeful after the 19th party congress, that things will be a lot more clearer than before. I march of this year, we will know who are the Major Players in the government. I hope and believe the chance of it happening is quite good. Another gentle rise in the economy, perhaps 6. 5 or higher for the next year or two, or maybe three or four years. Ramy thank you very much. We are going to do breaking news. We have manufacturing pmi for china just breaking on the bloomberg terminal. The actual for manufacturing. Pmi is 51. 3. The expectation was 51. 6. We are seeing a difference of 0. 3 points. Looking at the past four months, it looks like this is that its lowest in the past four months. As for nonmanufacturing pmi, 55. 3. The survey was for 54. 9. Yvonne we were looking ahead to this, knowing we are heading into the seasonal factors that could be playing a part for these numbers. About two weeks away from chinese new year. Some said we could be seeing a likely boost. Not seeing that at the manufacturing side, but a slight miss from what economists were expecting. It goes to the broader trend, we are expecting manufacturing to slow in 2018 after what a bumper year it has been for much of 2017. Nonmanufacturing will be a clear sign of strength, 55. 3. We continue to see strength amidst rebalancing. It is embarking. We will see how things will react. We will see if there is any reaction to these numbers. 60. Ng a little drop, about 88 against the dollar right now. Softbank, global tech investment takes an ondemand dog walking. Spending 300 million. They let users call someone to exercise their fourlegged friend. Wagmillion in total funding has raised since it was founded in 2015. They say wag is a clear leader in the dog walking field. Ramy profit likely rebounding for a record low. It may have tripled on cost cutting and Higher Energy prices. The biggest producer forecasted net income, they have risen by 2. 5 billion. That is a positive result. If that happened, it would snap declines. Crude crushed the bottom line. A 21 increase in thirdquarter profit, higher commissions made up for a drop in trading revenue. 297 ended december with million dollars. Japanese brokerages counting on consumer businesses to fuel earnings, as investors returned to a stock market trading nearly 26 year high. Our special coverage of the state of the union starts at 10 00 a. M. Hong kong time. Rishaad President Trump is the fan of the hour. His state of the union will say this is our american young moment. Plans for a fifth the one stocks with. Help stocks on the way down as threeplans for top figures camee up care between them they have a million employees. Im rishaad salon it Rishaad Salamat in hong kong. Haidi and im haidi lun. This is bloomberg markets, as