Supporters. Bloomberg markets asia. Haidi this recovery however long it lasts will be a oneway bet the way it has been over the past few months. There is a sense this is a market that is trying to find its footing after the selloff. The worst selloff in seven years, we did get that treasury story again. Here in asia, not too bad. Lets take a look at where things were tracking. Japanese stocks with strong gains. And it upside of 1 . The topics much the same. Nd we are bucking the trend there is a sense of caution where volatilitys come down but higher than where we were a week ago. Gone backngs have not to normal. When you look at what will be happening in hong kong we will see how much investors look at the trade data. Will they ignore it or put more weight on it . That would give you an indication that we are back to regular programming. The other thing i want to mention, have a look at this chart. To real stress times for the market, gf cn red. You have the european debt and green and the wand evaluation and 2015. We are nowhere new those levels but we are still above average which does speak to the unease feeling that we are getting still as we head into the latter part of this week. We will see what happens when Chinese Markets open up and 30 minutes from now. Get data out of china. We have singapore, taiwan, and asia coming online. Lets get it over to sophie. Sophie markets fell the we do the although we have rebound. To go look at what is happening in taiwan. He taiex gaining markets are set for third weekly drop. We are keeping and i on a you rising over 1 after reporting a 42 rise on january sales. The sti is gaining. 9 of 1 . Dbs very much in focus after fourthquarter profit jumped 33 on Interest Income and wealth management. The stock jumped over five percent which would be the biggest gain since july to the july 2009. For singtel we are seeing pressure for the stock. This after fourthquarter results and we did get some lines out from the ceo of singtel. Saying the investment is for the long term and that it would like to raise its stake under the right terms although it is and no hurry to do so. Get the trade numbers out yesterday showing that exports rose 4. 7 on year in december. That is far below expectations for a jump of 12. 7 for shipments or related. Lumpur set for the biggest drop in 11 weeks. Paul House Minority leader nancy pelosi said democrats won back the Senate Agreement without a commitment for Speaker Paul Ryan for an open debate on immigration. She sport spoke for a record eight hours after leaders sealed the deal to provide 300 billion in additional funding. The agreement should avert a friday government shutdown. This bill is the product of extensive negotiations. Among congressional leaders and the white house. That it isd suggest perfect. But we worked hard to find Common Ground and stay focused on serving the american people. A painstaking and monthlong process, months long process. It is required concessions, sometimes painful by both sides but at the end of the day, i believe we have reached a budget but that neither side loves both sides can be proud of. Its againstcorded loss as record production triggers new worries that supply will swamp demand again. Millionmped to 10. 2 5 barrels. Output is said to increase. Opec and its allies main the forced to reconsider the selfimposed limits on production. And keeping rates at a record low and said they will stay there until the middle of next year. As growth and inflation slow. Grant spencer held the cash rate will25 and said policy remain accommodative for a considerable time. The bank repeated it should start raising the rate and the Second Quarter of next year. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am paul allen. This is bloomberg. Haidi asian stocks are maintaining gains mostly so far in the early session. Condition jermaine volatile. We had the up and down session in the u. S. We have a look at what to expect and we did see the [indiscernible] bond [indiscernible]. Something interesting is going on with treasury yields. People talk about its rising and it will be a bear market coming but it is a threeyear high. Not 3 yet. If you look at what is going with treasury yields, they have been higher and that spells a disconnect that could cause some serious problems. Haidi this is a chart we have here. Guest you can see that is a big spike up. We had a big spike after trump got elected when the reflation bandwagon got going. Decelerated pretty quickly. Unless we see a similar deceleration, we are looking at a situation where, for whatever reason, u. S. Bonds are going really cheap to the rest of the world. Is that because people are coming,d inflation is the extra spending that trump is bringing on, or is it saying the u. S. Economy is somehow breaking free from the rest of the world. Traders are right to be nervous as long as that is happening. David can we get the chart up again . I have a feeling when i look at this, this is the spread over a seven. I have a feeling this pulls back because it and you alluded to this. When you look at german bunds this is so cheap. What would make me believe that is goes up further . And could go up further because one thing that was not timesing back in previous was the ecb was not buying bonds along with the boj. And the treasury and the fed did not have a [indiscernible] that could send it up higher. The wider the spread goes the more nervous Global Markets are going to get. You can end up with the swing back down we had an treasury yields overnight. And what that spells is a lot more volatility coming down the pipes. It was interesting overnight. The vix continued to settle down but still very elevated. The move index of treasury volatility, that spiked up to a high level. I would not put the crash helmets away yet if i was a trader. Much hank you for so so much for that. More at mliv. And expert analysis from our expert editors. You can find out what is happening to the investments at this point. Lets get more on the markets story. Our next guest says the meaningful pullback was a matter of time before he came and hit us and the head. 19 months without the threshold. Your nice to see you. We are getting a little bit of a rebound. Something does not feel right. I do not know if it is whether it is because we have we are not used to losses like positionse there some that need to be squeezed out question mark what do you think . Adrian it was overdue. At one point what surprised was the large move in the vix. It was the single largest move on the record and we have seen that in some pockets of the market. That is why we saw the short etf. It needs some time to adjust. That is what you see the vix at elevated levels. To put this into perspective, it extends 10 standard deviations. It is a huge outlay that you have seen. This has raised some concerns and you see some markets adjusting. Nevertheless, we should step back and see the fundamentals. Growth is doing well globally. Our growth upwards. We see Earnings Growth and the earnings season is strong. We still expect dodge doubledigit earnings. It still fundamentally looks fine. There is a concern of high inflation went high inflation, higher Interest Rates. It was one single number last week that stands out. The wage growth. Which went back. In september it was 2. 8. The average was two and a half. It was that much of a move but it was higher than what we have experienced over the last couple of months. It has raised some concerns. We dothe treasuries not expect Interest Rates will move significantly higher. A risk that the fed tightens faster than we expect . The lack of inflation has been a lag. Adrian there is absolutely a risk. The markets readjusted. We expect Interest Rate hikes. Some Market Participants are talking of for Interest Rate hikes. Remainsas inflation anchored and that is something we have to closely watch, we do not think this will spoil the party. We expect the yield curve flattening over the last couple of months. We expect the Interest Rate hike from the front and it will lift the curve a bit. , that is theeen highest we should see over the next couple of months. Do stay with us. The exposed frontier. How developing markets fell the impact of this weeks selloff. We will be talking about that with asian frontier capital. Mixedalso coming up, signals. We look at what to expect from januarys numbers. This is bloomberg. Haidi you are looking at this beautiful new york city skyline. It was a bumpy ride again. Investors tried to readjust. Is this the new normal . We had bond yields rising close to the fouryear high that set off the selloff in the first place. Pace of a faster tightening from global central banks. We are seeing a downside when it comes to u. S. Futures despite the gains we are seeing. How investorsut have to recalibrate. What do investors do it this point . Socgend from soft and in november saying do not buy the dip in the u. S. Do you look to europe, do you look to emerging markets or japan for a relatively more safety bet in equities . It is the vix has moved up and historically once it is up that much you should by 87 of the cases. The gain an average was 22 . That is a little bit lower than we would expect. Fewncreases over the next months but we remain bullish on equities. The equity market is probably the most expensive one and the markets are positive and being more cautious. The markets we like is europe. Europe has great potential. It is 30 cheaper than the u. S. The economy is doing well. There is a broadening of economic activities. We think that europe is an attractive market. We still like asia. Steeplso trades at the discounts. What we see in terms of earnings season, very positive. That is will continue over the next couple of quarters. Likewe have such a move monday, volatility will stay high but it is creating opportunities. The markets we happened watching with ernest is china. You see the Chinese Markets still obeying a nice pocket especially when comes to valuations in hong kong . Adrian it was a bit more volatile. It is interesting to see. In somety is ticking up markets. We expect better exports because of the Global Economy is doing so well. We see that the Chinese Market itself is more domestic markets with Companies Achieving most of their revenues within china. , about 7 n is strong growth. We like china. We think any pullback is definitely for us to buy. David i was speaking with a few guys yesterday. Heidi was mentioning the southbound growth. What the guy said yesterday is we can always count on china to come in and buy these big names. You look at the top 10 that they like to buy. How strong is the china put and can i depend on that . We will keep a lot of these big names here supported. Adrian there is a china put. There is a market pullback. It is another risk free trade. The government tries to stabilize all the domestic play. That is what you see in both ways. The market has to become has become a bit too euphoric. In particular on friday and monday we have seen southbound flows are moving up. Pension funds moving in. Directed [indiscernible] and that is something that could reduce volatility but they also have great stocks. Any material pullback we see not flows, we seea them from european investors trying to get into the attractive names in the space. Getd i would imagine we normal losses and it is a stark reminder that sometimes stock markets to go down. Moving forward the next few months, how much cash should i be setting aside to take advantage of these dips . Adrian we like to be invested right. Months weast few could have expected some pullback. At one point it will come and we have seen it over the last couple of days. The market is still very strong. We like to be invested. Try toe are pullbacks we shift out of the more defensive positions we have within the fixed income looking into the equity markets and increasing the risk. In general we do not want to be in cash. Cash is not a very attractive asset class at this stage. From defensive, that is what we probably would do. David thank you for coming in. Head of asia Asset Allocation at ubs. Thats get you an update of your latest business flash headlines. Starting off with rio tinto promising a record fullyear dividend of 5. 2 billion. An additional 1 billion buyback. Earnings at 6 . A . 6 billion with higher commodity prices. The ceo said the minor is looking for deal opportunities and running a new venture. There he go, down about 2 . Asias biggestt byk profit driven [indiscernible] net income was 33 from a year earlier to 920 million in line with a bloomberg survey. It is the first of the big lenders to report. The ceos decision to clean up the long loan book. David Deutsche Bank closed plunged to the lowest since 2016 after an earnings swap prompted downgrades. Shares lost 11 since friday when the Bank Reported revenue at a sevenyear low and declines in business at several of the banks units. Sinceave struggled agreeing a 7 billion deal with the u. S. Department of justice 18 months ago. Haidi you can find our interviews on tv at the bloomberg. And diving to any of the securities of the functions we talked about. And join in on the conversation by sending us instant messages during our shows. Check it out at tv. This is bloomberg. David something tells me it will be an exciting session judging by what happened yesterday. Have a look at the markets opened up. All indications are we will get the first day of gains in six days. We were saying that yesterday and things came crashing down in the afternoon session. sts keep these gains, let take them. Have a look across sectors. Getoes indicate we will [indiscernible] we are watching to see the shares closely. The only Sticking Point i could see and that is not surprising giving the fact that we are seeing a leg lower in oil prices. A big get move up in the u. S. Dollar. If you joined us for the broughtw earlier, he this up. This week is seeing a record amount of money and that is to the right. Of money coming into hong kong. We did see a dip. There was a net outflow yesterday. This is the chart you will want to watch. Follow very closely. They did come in and buy the debt but took the money out. The open,his and there is china. Trade coming out at some point which couldnt could affect trade. 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. Haidi we are counting down to the open. A recovery ining the asian session. We are seeing downside when it comes to aussie stocks and Japanese Equities are taking taking charge when it comes to this recovery rally. Topsyturvy session again in the u. S. It does not seem like certainty as much of a bit these days. David not just at. China coming out with some opening numbers. A little bit lower. A few seconds into the open. We did gete things, a strong fix from the pboc. Hopefully in the next 10 hours or so we get trade numbers out of china just to get a pulse check of what the markets are doing and the economy is doing is doing as well. While we are waiting for that the Chinese Markets opened up. Sophie shaping up to be the worst week for chinese stock since january 2016. The worst weekly tumble since then, over 4 potentially. The mug is not shifting so far. Large caps extending losses for a Third Straight day. The recent selloff for the csi 300 leavings leaving the index below target of 4500 points. And the largest upside along among asian peers tracked by morgan stanley. Pointing out there is a strong tendency to sell ashares into the Lunar New Year holiday. In hong kong, we are seeing the hang seng headed for the biggest loss since 2011. Some respite today. And eight of 1 shares up. Them come online. Given the yuans strength, authorities may gradually relaxed capital controls. Lets take a look at when macau is entering its resuming trade. Pressures are seen easing on scrutiny and macau resignation at when macau. Lets get you the first word news with paul allen. Paul a senior british official says china is wary of providing new trade commitments until it sees how [indiscernible] the you can help to negotiate a new deal with beijing during the twoyear implementation after march 2019. The nations launched a review of their 77 billion trading relationship during Prime Minister theresa mays visit. With the launch of the second [indiscernible] and clearly endorsed by both sides. [indiscernible] paul new Research Claims the u. K. Will leave the area even if it keeps the same trading relationship after brexit. Point l slow to one 1. 1 . The euro area economy will expand after faster than anticipated with growth more balanced than any time since the financial crisis. And handingagreed the finance ministry to the social democrats. Describe the arrangement as a awakening. Germany will take an active leading role in europe. Members and all sides must approve the deal. Hna group says it is a victim of a conspiracy against them and the government in beijing. Themberg us has has seen transcript of a speech in which he said reactionary forces within china and overseas are trying to disrupt the markets and subvert the communist party. Hna has been borrowing after spending tens of billions on foreign assets. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Get the forest reserves. Numbers get the trade out of china. To give you a sense of where we are in the currency and how the transmission effect into trade. Togetherut [indiscernible] that is on the way up as you can see. Seenaching levels last during this time of stress for exports. Is a getting too strong for beijing . Does it show up in the numbers later or do we have to wait a few more months . What do you make of that . It will be a mixed story because early indications for pmis and exporting [indiscernible] the other backdrop is the ongoing trade issues. That is a bit of a dampener with things. Lets not forget the distortion effect. That is the negative side of the story. The Positive Side is if you look , theyth korean exports are strong. And the Bigger Picture should be that trade exports are holding up ok. Haidi stability is always the key. What we make of the progress made in deleveraging . We see that play out into the data points as we get into the new year. Most arcane of the parts but it is one of the most important ones. As china pulls off the Deleveraging Campaign. Not economyd, it is wide, it is focused on key sectors. We are seeing some progress and we are seeing a deliberate attempt to rein in the corporate side of things. Conglomerates were going investors. All told, there seems to be a sense that [indiscernible] they are making some progress and the broader economy seems to be holding up. Seems the deliverance Deleveraging Campaign is on track. It is a good dose of luck. The weak dollar helped them along. That is ahead of their control in terms of where they deserve credit. You have to say the economy is in a sweet spot. The Bigger Picture is down to where the dollar is going. Haidi thank you for that. Ahead of the china trade numbers. For the last month they should be out through the course of the day. In discussions with softbank. Krill are he talks have been held but some transaction is a fair way off. Our reporter. What do we know . Pablo good morning. You summarized the extent of our knowledge on the issue. There is the question of why softbank would want to invest in an insurance company. We could see how it makes a lot of sense. Moreis one of the innovative players. You could see it selling insurance to more of the softbank portfolio companies. It is also an attractive investment in the sense that it offers access to this capital that they can use to invest in other ventures. It raises questions on how it fits with the rest of the portfolio which is tech focused and his whole general vision of Artificial Intelligence and iot and various things. Insurance is not fitting neatly into that picture. David this is one of those things and 50 years, in 50 years we take a step and see that was the plan. The other big part is this planned ipo of the domestic telco unit. What can you tell us about that . Pavel that is something they are seriously considering but they are not committed. It will happen in a year if it happens. The question is how much they will sell and how much they raise and how much of the debt will the Telecom Operation assume. One interesting for shareholders is that the comment that the ipo will focus on the dividend payout structure. He made a good point in his morning notes saying this could be a way for them to kill two birds with one stone. That could give access to the cash flow from the operations while at the same time helping to unlock some of that hidden value and hopefully cut down on that discount he has been struggling with for years area years. Did we get more clarity on the vision fund . Pavel yes and no. He did say theyd did not they did have twice five companies 25 companies. Re do not know the fees o valuations of individual investments. Partially softbank is not to blame because the fund is not closing. If you look at the fine print they are expecting to close in the quarter ending september. June 30. It might be some time before softbank can talk about it. The company is serious about addressing this massive discount on shares and they believe that part of it was to increase disclosure around vision fund and that is something investors are looking forward to. Is ironic there is so much uncertainty in lack of parity in something called the vision fund. Thank you. Gripping the worlds major markets. Should investors take additional risk . It will put the question to our guest. Looking at the topics in that investment universe. Stay with us. This is bloomberg. This is bloomberg is a markets. David Frontier Markets may have opened up opportunities. Did you get in . Are you supposed to get in . Hugger is here. Vietnam ask you, equities came crashing down 10 . Did you embrace that, did you hug that with open arms . Believe that some of the valuations especially the Chip Companies [indiscernible] highading at an all time and pricetobook ratio are the same. Not Comparable Companies and imagine. We have a talk that chart that talks about valuation in vietnam. The has taken valuations out. Out to crazy levels. This is forward and current pe. What would be reasonable given that stage and helmand and growth in the country . Tom david traits around 20 times that is reasonable. The banks or slower growing companies are starting at the index. It should go back to the main which is 15 times valuation. That is more reasonable. Decrease. Rowth can it does not mean it the stock market has to crash. To talk about follett what we saw with volatility. It was such a volatility breakout story but in emerging markets, i want to throughout this. Chart. W out this gauge,look at volatility emerging markets are seeing less volatility. Em is here and developed markets here. This is not the traditional impact when it comes to high beta areas like ems. This contagion or weakness about the u. S. Dollar or emerging markets have stronger fundamentals . The latter one. Talking about u. S. Market overvalued. And higher than an average asian or especially Frontier Markets. We agree the future growth is in asian markets are Frontier Markets. We should be surprised that correction and. The Frontier Markets were somehow contained from this selloff. What are the risks coming through for potential normalization or quicker paces of monetary tightening because the taper tantrum. Do you think those risks are becoming a concern when it comes to Frontier Markets or frontier market assets . Tom Frontier Markets, there is not to much debt in the system, especially not on the company level. Unlike some emerging markets. There is always some exception. Some of our Frontier Markets like engle or sri lanka which are importing more than 40 of their energy. We also invested in iraq. It read a fantastic month in february. Costs. Of the disappearance of isis and the higher oil price, it is a 40 dollars to 60. David broadly speaking, the sense i get is you are not recommending when you go in full force when you look at Frontier Markets but you have several picks you feel strongly about. We will get that out for our viewers. You had banks in pakistan, farmers and bangladesh, and youre looking at a central infrastructure in vietnam. Airportis infrastructure and Airport Services in vietnam. The growth has increased in the in vietnam by 29 . It is still a small number compared to thailand where it is 14 million. But helps Consumer Spending also the Economic Growth in vietnam. Mobile phones and older i. T. Goods that need to be transported by air cargo that companies in vietnam. And we like banks in pakistan. At 10 times trading p. An emerging market for us, truly a frontier mike it market. Unloved and they are growing. Has the Interest Rate cycle turned. That means increased margins. David thank you for coming on. The risks and opportunities in Frontier Markets. Coming up on the program. Twins. Kelvoss why they think tighter regulation would be a boon for cryptocurrency. This is bloomberg. Haidi this is blood work markets asia. I am haidi lun in sydney. David the world bank has expressed doubts about the legitimacy of digital coin, comparing them to ponzi schemes. Despite the chorus of critics there is no stopping them. Toldake lost brothers Tracy Alloway that they are in infor the longhaul that regulation would be bullish for the space. We remember bitcoin when it was eight dollars. Happy with the price around 8,000. You have seen the cycle happen, i lost track of how much it has happened but probably over 20 times. There is a lot of excitement, new money coming in. It gets a little frothy and corrects back but it seems to find a floor that is healthier and higher than the previous one. I think this is going to be the same. Does the volatility concern you . Him sick it would be difficult to build is this plans around an asset that is this volatile. The volatility is a function of being a new global asset class. One of the things we worked on is we launched a futures intract with december. People can start to short bitcoin but it is only six weeks old. It is a great step in the development. Has that played a role in the price decline . Say. Is hard to it increases price discoveries so we are seeing more and sophisticated traders expressing viewpoints on it. Do you have an idea of what would be a fair price of bitcoin . Do you have an idea of what we use the price of gold. When you look at the many characteristics or qualities of gold and why it makes gold coveted, on the merits, bitcoin matches or is better, is superior to gold and all those nine characteristics. The market cap of gold is 7 trillion. The market cap of bitcoin is 100 billion to 200 billion. We think that bitcoin disrupts gold. It as ads and appreciation from 100 billion to 700 trillion. 7 trillion. Most sensible framework for what the value of the coin is and what it should be worth. You both have sizable investments. How do you protect your Bitcoin Investment from the aspects of hacks, do you go full on analog . Initially we built our own storage system and it involved cutting [inaudible] and disperse in them. We have moved our assets into gemini. Are you still bitcoin billionaires after the recent crisis . Ofwe have our portfolio cryptocurrencies, we invested in ether early on and others. We are long on the space. We do not sit there and watch the price daytoday today. We are in this for the long haul whether it is a decade or many decades. We remember when bitcoin was eight dollars. As far as we are concerned it is all gravy from here. David the winkelvoss twins there. Haidi they did not answer the question about whether they were bitcoin billionaires. We will be back in an hour. We will have more analysis on chinas trade numbers. On, insights from michael ever. We are looking at markets staging another try after this recovery story. Hong kong markets up i. 1 of 1 . This is bloomberg. David did you always know you that you wanted to run fidelity . Abigail i never felt any pressure to. David did your father say if you worked hard in 20 or 30 years, you will be the ceo . Abigail he was not the guy to make promises to anybody. David what do think investors mostly want . Abigail everything. David was it complicated growing up with your father and family being famous . Abigail we were not famous at all. I mean this was the equities market in the 1970s, david. David as you look at what your future will be . Abigail i think this is the moment that i have been waiting for. Would you fix your tie, please . David people would not recognize me if my tie was fixed, but ok. Just leave it this way. All right