We are about 30 minutes out from the open in china and hong kong. Very interesting couple of days to come. We are keenly watching the u. S. Inflation report. Disappoints if cpi to a market that has been awkwardly repricing. Were also passing these comments from jay powell is saying that nothing has changed. Also a reminder, the last trading day for mainland markets before they shut down for the oneweek holiday. The last trading day of the year of the rooster. A modest recovery story playing out a link the lead from wall street. David, it is a busy day in terms of investors passing the data. David there is a lot of data coming through. As you alluded to, there is an Inflation Report that we are stuck between that. We are waiting to exhale or to gasp. Yes, you are getting gains but they are capped. Across the getting likes of gold, the dollar is back below one. 08. 1. 08. That is essentially a picture across the region. Little higher on the regional benchmark. We have malaysia gdp still do out. A decision coming out of thailand. Japan and singapore reporting their Growth Numbers. South korea, as promised we are looking at a split here. We talked session highs a few minutes ago and we are coming down. Here is your intraday chart lots of movers in this market. We are getting a little more upside in this market. Asia, where are we . Route, looking at asiapacific. There is your cascade lower. Im guessing that is 1 10 of the way back up. You had japan close on monday, and heidi, you mentioned the last trading day before the year of the dog. Haidi very exciting. Following that surprise prison sentence, and really surprising walk that we had jay y lee free. Coming under pressure to put it mildly . Yes. we opened down 7 on logiccor. Is latte corp. Your terminal. Everything that matters about a certain asset. In this case it is lotte corp. There is your headline. A lot of stories on the company, but where does this take the Company Moving forward, following that surprise prison sentence on the company here . A lot of volume coming through on the stock here. Average here. Haidi lots more to talk about, david. We will get back to you in a little while. But get first word news from has lent. Missedomic growth estimates in the Fourth Quarter. Oficials show an expansion. 5 of 1 . That was half of the estimates. Down from 2. 2 in the first quarter. President trump has been challenged by republican lawmakers on a potential tariffs on steel and aluminum imports. During a meeting, they said such a move would raise prices and cost u. S. Jobs in related industries such as car manufacturing. Reporters were allowed to walk to watch for nearly an hour. U. S. Forces in syria are said to have killed scores of russian mercenaries. This could be the deadliest clash since the cold war. At least 200 contract soldiers died in alassad failed attack. The Russian Military said it had nothing to do with the attack. The pentagon accepts that. To the fall ofd the president has been jailed for 20 years. Convicted of bribery, conversion, and abuse of power. To us find 23 million. Also paying bribes to win business favors. J. P. Morgan chase has been named a yuan carrying bank in the u. S. Global transactions fell. From a record 2. 79 in august 2015. Take of chinas new york already conducts services in the u. S. And handles payments elsewhere. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Haidi thanks for that. Jerome powell has officially taken the reins as the new name takes the race for vice chair. Kathleen is here with the very latest. Had jay powell breaking his silence. Cap lane he took over the reins of power officially. He was talking about gradual rate hikes. The news that grabbed everyones eyes as afternoon in new york, closing, market was Loretta Mester is in the running for the feds vice chair. A woman may get that second most important seat at the fed. We have to remember that there are a lot of other names out there. Loretta is president of the cleveland fed. Before that she was director of research at the philly fed. John williams also a respected fed. His name is still out there. Are, a former fed governor. When asked what kind of fed vice chair loretta would be, heres what he had to say. Want toas tended to move rates more rapidly than on average of the overall soc of the last few years. I think jay wants to get moving also. As he said, he is on track despite this volatility. Might she push things slightly in a more for more rapid tightening . Possibly. There is also the whole of the fomc. Kathleen Loretta Mester did speak today. She was very much in the consensus of gradual rate hikes. Saying when does your watching stability and raising rates turn into a deeper consideration of the fact that market volatility has worsened. It could affect the economy. We will have to wait until his Humphrey Hawkins testimony, which is not far away at all to hear his official statement and get questions from congress. Then we will get a better sense of if he is in the bill dudley and actually there is no one else so far who said they were worried about it. More significance than usual being assigned to this january consumer rice index dollars that is out in a few hours. What are we expecting . Is it likely to move the markets . Kathleen it could. There on heightened inflation watch. This could be a market mover. Rising 1. 9 is seen yearoveryear. 2. 1 ineen rising at december. Versuse is seeing 1. 7 1. 8 . That is the picture you may see. Bond traders and Stock Traders will have a lot to sort out in a quick. Period. It is not the main gauge. Just remind us where those are. People will be reminded of that tomorrow. The fed target is green. And the inflator is white. Up to 1. 77 . Core stuck at 1. 5 . I think if this number were a lot stronger, the cpi, people would say it is moving up and they tend to move recently in the core. Irection as a weaker cpi should already be a bit rice into the market. There is no doubt that bonds, stocks, the dollar and everyone will be ready. There are benchmark revisions. It could become located. It could be tough to hit the buy or sell button. We will see how it shakes out through the day. Haidi as you said, high or low. Thank you so much. Next, we will take a look ahead at the u. S. Inflation numbers you later. Private wealth says it will remain recently reasonably nine. Why a volatile market makes for a better trading environment. This is bloomberg. Haidi this is Bloomberg Markets asia. Reporting fourthquarter numbers that beat expectations. They clothe and of 778 million u. S. Dollars. Southeast asias thirdlargest lender reported higher fourthquarter profits here it 16 up, the equivalent of 646 million u. S. Shares jumped an extended trade after the rising popularity of the new Aggregation Service. Research in the. Was 3. 6 billion. They were investing heavily in Driverless Cars and ai. They have filed to begin the i o process the ipo process for its video game services. It was cargo, not passengers that provided the list. That is being driven by demand from online shoppers. The Freight Division reporting a 60 jump in profit. The carrier is spending 850 million to reset its superjumbos and premium passenger. Goober endured eight painful 2017 that spill managed but still managed to grow. Adjusted net revenue increased 61 in the Fourth Quarter year on year. Over lost 4. 5 billion on sales of 7. 5 billion over the four month. H period. Taking a look at what the session will bring to us. Inflation numbers from the u. S. That are very key for investors. Many futures trading up about 1 10 of 1 . Less the for it comes to the s p. Nasdaq, but he much flat at the moment when it comes to that futures session. On best gain for the u. S. The s p since midjanuary, although that is not much of a record, given the turmoil and the selloff that issued from that point onward. We are seeing some bond traders on the u. S. Inflation. With us to discuss the implications of all this is norman chan. This isnt even the feds preferred gauge of inflation, but there is unusual significance being assigned to this inflation rating. Do you think the risk of a downside surprise is really there . What does that mean when it comes to looking out how oversold the bond market is . The bond market is quite oversold already because of the region concern. In the mediumterm, it was the end of year. There was some downsize. Interest rates on the rise for another three terms after last year, three hikes already. The u. S. Bond has a chance to climb to 3. 25 or 3. 5 . In the shortterm, bonds will still suffer. In the past two days, bond yields has been quite high already. There is a chance for them to correct. They might rebound. Longterm, there is room for gain in the bond yield. Haidi norman, how confusing or what itof an adjustment be for the market is inflation were to disappoint. This market has been painfully repricing and adjusting to higher inflationary expectations. I think the inflations probably want be disappointed too much. Inflations could be very fluctuating and the near term. In the mediumterm, they will remain at the nine levels. There will be a more normal level around 1. 5 or 2 . We dont expect inflation to be a runaway inflation that requires aggressive tightening. Wouldortterm figures reflect the shortterm sentiment. Medium to long run we expect them to remain in check. I want to drop a quick chart, looking at the number of short bets against two and tenyear treasury figures. The violent moods we had in february for not enough to dissuade traders. Net positioning into and tenyear features are more bearish. A little bit of easing as it comes to the twoyear, on the shorter and we have seen short bets from hedge funds and others in the speculative market increase the most on record. When you said that you could see rights going as high as 3. 5 when it comes to the 10year, what happens to the equity market when you have yields at that level . At the equitycome market would prove that they can withstand the 3. 5 on deal to. Bond yield here it but the path is going to be very bumpy. Of 3. 25 ,iyear high the market would be it would remain very volatile. It will use every chance to correct. We still expect the stock market to have a decent gain of 10 to 12 this year, the path will be bumpy the cousin of the adjustment of the bond yields. Haidi what about the potential coming through from Lower Energy Prices . What do you see happening to the longer and of the market . Oil pricesthink that going to remain low for long time. Overall the longterm oil price has moved up slightly. We have seen some shortterm correction, so i am not relying on Commodity Prices to help ease inflation. After all, and the international economy, there is still some spare capacities. It to be veryt high. It is interesting in your notes, and what we heard from jay powell, breaking his silence, he is ill seeking three to four hikes for the rest of this year. You said before that this is not genuine tightening because while they are not ultra low. You can see that the new Federal Reserve chairman has already started to con the market saying dont worry too much about it. We are talking about three or four hikes this year. We do not expect to be very aggressive tightening as what we have seen in 1993. To breakhave started it silence and comments about it. I think he is trying to calm down a market. That way it is not too chaotic. Haidi were just digesting the slightly disappointing japan Fourth Quarter dep. His is as good as it gets when it comes to the pace of Economic Growth . Viewoes that inform your as the japanese asset . Japan numbers are disappointing, but longterm uptrend is still intact. Japan has one of the biggest structural problems in recent economic history. Sometimes it might be a little more volatile. Too hope and expect karuda remain boj governor. We need him to stabilize. Japan is in a transitional. Highs a very credibility central banker to make sure that japan commerce around the world remains reasonable lee reasonably low. And a government so that they onld have more confidence investing in the economy and companies. Haidi certainly saying we need him longer rather than a change in strategy. Norman chan joining us in hong kong. You can catch up on all of our interviews by using our interactive function on tv. Can become part of the conversation by sending us instant messages during our shows as well. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. Last trading day of the year of the rooster in china. What are you watching them at dave . Im watching whether or not we do close above 30,000. We did see some short positions filled when we did not quite right through the barrier. A lot of headlines coming through out of the chinese mainland. Have a look at some of the names we are following. By no means is it an exhaustive list, just some changes. The lower third, you can see at the bottom of your screen. Falling on a profit drop. A little weakness coming through in c and h and c and why. When thetalk about markets open on the chinese mainland. Haidi also coming up, lottes lost leaders. 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 it is 9 29 a. M. We are counting down to the open of trading in china. Shanghai. Shine the asiapacific stocks trading up by about a 10th of 1 . Story. Nd of modest we have a market that is finding its feet after the reagan recent bout of volatility. Volatility level still reasonably elevated. Much in focus is that u. S. Inflation rate. It is much more unusual to have a focus on that reading. We are seeing a faster than expected rise in treasury deal. Let us take a look at how things are faring when it comes to the hong kong and shanghai opening. This is the last trading day before we get into that weeklong Chinese New Year holiday. You are not expecting too much in terms of volume. Byg kong stock tradings up 1 10 of a percent. The yuan setting is fixing today. Tracking those declines that we saw in the u. S. Dollar. The dollar paring those losses. It really is about love when it comes to the yen. Let us get more on the color of what we are seeing and the hong kong and mainland markets. David we are getting some gains. Well be ending the session with gains, though i would caution , we are readyment started seeing some of the short positions buildup across a lot of the blue chips here in hong kong. That is maria. We opened above . 30 and 30,000. South korea is leading the gainers today. It is fairly mixed. Not a lot of conviction. Once we do get more clarity on that inflation, do we get that lining up when it comes out of the u. S. . We have gdp numbers coming out of malaysia. A decision coming out of thailand as well. Some things to watch across markets in Southeast Asia. Market 3713 at the one. We will get you a bit more to tell in some of the big names we are following. Shanghai, we should have it there. Here we go. Given a few seconds. Their ego. We go. E i am a bit curious to see what we are as technicals are concerned. We blew past 1500. That is quite a gap still before we even start to talk about retesting the systems. Following the collapse we saw on friday. Just to watch out for those stocks and how they are trading. That is what happens to your stock when investors get their first chance to react to that. Lots more to discuss with the chinese market. Last trading day of the year of the rooster. It is the rooster, right . Haidi yes. Lets of people wearing that it will be a dog year for stocks. Market jitters appear to have used for now. The focus on this incoming inflation rate out of the u. S. , clearly there is some volatility or fears of volatility still ahead in ahead. Theas amusing, this is not feds preferred gauge for inflation. It is not a data point we would of much significance to. Indeed. A lot of people in the market are really focused on inflation simply because the bond market has been so turbulent recently. It is deciding whether yields are at the right level or long level. Where is the inflation target and where is it Going Forward . The bond market will be looking very closely. Everybody else needs to pay attention. They do not usually miss by more about 0. 1. Worry tooneed to much. There is evidence that things are starting to pick up in america. We have seen some wage pressures going on. There are Stores Coming through from the states that material costs are starting to rise as well. When people think about refurbishing their homes are doing renovation, those costs are going to be significantly higher in 2018 and they were last year. Atple are worried that come some point this year, the inflation data will start to look ugly. Maybe not today. Im looking at your valentines day missive to the yen. The news that we have seen and the yen and the u. S. Darla dollar, which of these currencies is the story about . Yen started the movements yesterday. It was quite significant. It has been about that for a long time. We are beginning to look at levels that we have not seen since late 2016. It is quite a long time to go. One of the things about dollaryen is that a lot of momentum starts to build and it could go direction leave for quite a long way. Downtrends tends to be more severe than the uptrends. One of our was a very heavily traded strike option. There are some people who see considerable downsides for dollaryen. It is not likely to happen for a few days. One of four is a number to keep in mind. 4 is a number to keep in mind. Given a day where we have this come down when it comes to volatility, it gives us some breathing space to focus on the ecocalendar. Japan and singapore, those numbers on the disappointing side. Yes. Definitely. Japan especially will be a bit concerned. The gdp numbers were not good across the board. It must be a worry. You wonder why the Prime Minister is taking his time to reappoint kuroda. Corona is the best weapon he has against getting the japanese economy moving again. Hopefully we will see a Firm Decision on that soon. Singapore less of an issue. Overall growth for last year was still very good. The early signs of reagan for this year. The numbers yesterday were very strong. Singapore is off to a good chart. , singaporeer growth will rebound. Japan is more of a concern. Haidi singapore having that bellwether gauge. Still looking to see if these microbes signals are going to micro signals are going to be back in. You can get a market run down in just one click. You can find out what is affecting your investments at any given time. Let us get you up to date with recent news. The timeline for gradual wrist lines remain unchanged. Normalizingradually policy and the Balance Sheet and remains aware of any developing risks. Other that officials have play down its likely impact on the economy and the financial system. President saided to be up to considerations. There is considerably currently no brother. The fed has been note rem is a Bloomberg View columnist. Angapores economy grew at slower pace in the Fourth Quarter than previously estimated. It lost some of his momentum. Gdp rose at a seasonally adjusted annualized rate of 2. 1 from the previous. Gdp rosethe median on a bloombey with 2 . The governments prediction was 2. 8 . He has alsoson says brexit can be reversed. Official Research Suggests that the regions who voted most strongly for the divorce could be hit worse. Brexit is now less than 14 months away. Im still hopeful that when all the facts are on the table in front of the house of commons and people realize just how damaging it is going to be for great britain, the written does britain changes its mind at the last minute. The israeli Prime Minister faces the biggest test of his political life with Belize Police recommending that he be charged with breach of trust. There is evidence that he traded influence for favors. Anydepartment he denies involvement. It would be the first time a sitting israeli leader would be charged. Globallys ready for hours day powered by 120 countries. This is bloomberg. Haidi the chilling of one of south koreas powerful businessman through the entire conglomerate into further disarray. He was given 30 months for bribery. Todayian conglomerate getting into the story. It has left the field after the verdict. How serious is this . Is certainly stymies the groups forward progress. There are a lot of wheels in the air, a lot of things spinning around for the company. It has been in a rolling crisis for almost two years. It started off with the family fruit fuse breaking into public view a couple of years ago. Now they have a situation where they have, for example, we organization that is in progress. Putting four of the Biggest Companies into one holding group. Theyre trying to bring a couple more entities under that group. Progress will be stymied. The executive who is being jailed tilt this company on acquisitions. He was a dealmaker. That is the key to the companys forward progress as well as continuing to make deals. There is an ipo plan for the hotel unit. That is part of the reorganization. The progress toward that is stymied. They have lots of executives waiting in the wings to take over. Because he is the prime a dealmaker, that does halt their progress forward. Theres also the question of what happens to him in jail. It is not settled that he will do time. Many examples where executives have received a pretty significant sentences only to have them suspended on appeal. Question, that is a it would be hard for a successor to move forward boldly for this company and take big decisions. What are the chances that this eric kindles the recent thely feud rekindles recent family feud . Close observers of the company said there is a good chance of that. There is a big rivalry going on between the two brothers. The younger brother is being jailed. The older brother has a window of opportunity to try to seize control. Structure of this company has been simplified, but it is so complex. It still leaves the door open to try toder brother retake control. We are doing some reporting on that today. Said they company has are looking at the case, they have not made any decisions on whether to take action to try to remove him from the leadership of the part of the company that is based in japan. That would be the first step to try to reassure come troll can troll reassert control over the group. Who might become the next chairman . There is an individual who is of that Holding Company that was recently formed to group four of the largest units together. He is one name that is being bandied about as a possible successor to take control. Hugh be the first prison without the family name to be taking control. He would be the first person the family name to take control. We have yet to hear whether they are appealing this case. It seems likely they would. There will be a pretty good shot that he would be appealed. As long as that is celeb in the air, even though we know the successor might be, it could be clear who unclear who is really running the company. Haidi the reaction in the stock price reacting how investors feel of a uncertainty ahead. Thank you so much for that. Up, longlived volatility. Uncertainty is better for his business. Our interview is next. This is bloomberg. Haidi were just watching this market. We are seeing some early signs of this markets recovery in asia starting to gain structure. Strong gains coming through from hong kong. The shanghai, pretty benign going into this weeklong holiday. This is the last trading session for the year of the rooster. Clearly not quite recovered from the clearly violent the recent violent selloff. Of 1 lower for the japanese benchmark. Mixed measuread a when it came from japanese trading. The rate of growth clearly below potential. Take a look from around the rest of the rangers region. Latte dealing with internal pressures as the chairman gets an unfavorable short verdict. Saying its long absence was unusual. Boss told bloomberg that the turmoil is much better for business, in terms of the firemen. He has been planning for it. Usually i get asked, did Goldman Sachs asset cause it . Of course we plan for it. I spend 98 of my time planning for the 2 likely things that could go run. That is my job. This is a Risk Management business. Statistically, of course. Things dont stay the same. Is it going tol stay 60 forever. We are going to have growth in the United States and have Interest Rates be under 2 . Think so. The equity market going to come up forever and a measured way and never retreat more than four or 5 in a year . Were not that lucky. Is no way it is going to be that way in our lifetime. I cannot be that lucky. Things are going to happen. There will be something that happens in the world. Someone will get elected. There will be an astral disaster. There will be a cyber of it. Something will happen. It will cause all the relationships of one asset to another to have to readjust against each other. It has been an unusual. Where that doesnt happen. People are not sure what the reason why is. When they look back, they will centrala point of time banks were buying risky assets as much as they could get as fast as debt was issued. That tends to be a little spikes in asset prices. The probably kept things low. Peoplemarket and anticipate that coming up, we will see more volatility. Youre planning for this. The possibility of this. Is it fair to win for that goldman is doing well right now given what is happened in volatility. The problem with trading was a lack of volatility. This is a much better environment. Insurance to people. We take risk away from each other. If there has not been a hurricane on the east coast for years, people stopped buying insurance. Those who buy insurance do not want a lot. , theu have four hurricanes next year everybody buys insurance and they pay whatever you ask them to pay. Not of the risks have changed that much because anything can happen anytime. The sentiment has changed. The anxiety has changed. It is a much better environment for our clients. Environment. R any given day we could be positioned wrong. We deal in a liquidity. It may not work right every day. The environment is good. It makes usle valuable to our clients. A few look at that better environment, does it distribute evenly among commodities, fixed income, or something get benefited more . When prices of anything changed, it is like the butterfly effect. When anything changes the relationship that Everything Else has has to change with it. Look at what happened when housing prices went up. Everybody thought, g, that has to be related to demonstrate. Real estate. If Interest Rates go up, the value of things very often is the cash flow that gets discounted by interestrate. Nterest rates go up, other prices get affected. Solid and stable real estate prices are the predicate to so much value in the world. Could you imagine what Interest Rates are . A lot of prices will undoubtedly have to reset against each other. You can always find indepth analysis on the days big newsmakers on bloomberg radio. This is bloomberg. Haidi just getting something of a statement coming through from executives of eight and a group saying that the group had total assets of 1. 5 trillion as of the end of 2017. The group is in a healthy financial position. Very interesting Statement Given that this fire sale of assets under pressure from the beijing government has picked up pace of the past few days. We had reports of they were selling off to company land plots in hong kong. They were ball is in a year ago. Also plans to dispose of two office buildings. Hna has one of the most acquisitive conglomerates out of china. Now under pressure to bring that money home. You look at the actions, it does not necessarily look like a company that is not under pressure. Hna was said to tell creditors that it could face a liquidity shortfall of about 2. 4 billion. We are getting more details on that. Coming up next were going to get more on japans gdp numbers. Is this as a good as it gets when it comes to its story . This is bloomberg. I am haidi lun. This is Bloomberg Markets asia. Haidi the fed enters a new era, Jerome Powell sworn in, the gradual path remains unchanged. Japans recovery plan, good news, bad news, gdp slowed dramatically after an eighth quarter of growth. China considers restricting soybean imports from the u. S. Some say the tactic could backfire. We have hit the midweek session. Markets are seeing some stability, parsing the japan gdp inflation,g u. S. Marketsdicted to direct as to whether volatility is here to stay. Take a look at markets in the asiapacific. Bad,hina open was not all more extended gains when it comes to the hang seng, up. 7 . The shanghai composite has fallen into negative territory. 1 lower. The nikkei 225 extending loss ors as we get the yen trading the strongest against the dollar in five months. We have this backdrop of u. S. Dollar weakness and euro the strength playing into the fx state of play. The Fourth Quarter gdp read, more in a moment, but the pace when it comes to the potential of growth a disappointment, that coupled with the strength in the shadows overing this reflationary campaign by the boj. Korea seeing robusta gains of 1 for the kospi, the straight times index, of fairly good set of quarterly Growth Numbers out , just coming off session highs, trading flat. In taipei, about. 5 gain. Today,a gdp print later big data day when it comes to asia. Malaysian stocks flat. In manila, extended declines. 7 . The jakarta composite putting on a quarter of a percent. We are getting a decision from the bank of thailand, expected to hold. Lets get more on what to expect as this trading day gets into full swing. Mark cudmore joins us now. Thisve been talking about significance assigned to an inflation data point that is not even a preferred gauge when it comes to price pressures. Thats the case. I cant remember an indicator this keenly watched. Normally the day we are focused on it, but for the last week or is excited. Dy the tightening between Early September and early february, so there has been an incredible level of tightening in the curve. That is why the market wants to get confirmation. Have rates risen too fast relative to inflation, or is inflation set to catch up to the market . Haidi we have seen a strong move when it comes to the kiwi dollar, a session high. Inflation cpi expectations playing into this. What else are you seeing when it comes to the fxbased . Fx space . Two dominant themes. One is the yen strengthening to the highest level against the dollar. Even on a trade weighted basis, it is strengthening. There is the general risk aversion, higher volatility leading to a flight to safety. That is not the main driver. Overall there seems to be disappointment about what is happening in terms of the boj. Are they reaching the limits of policy . Can they do more . What else can they do . Aen though there is commitment to easing, it needs more than words from the boj to weaken yen here. The yen has a lot of momentum. The other theme is the fact that dollar continues to weaken. Investors are using any excuse to sell the dollar when they get a chance. Is dollar negativity story seems to have taken hold. With regard to the yen, you pair that with a weaker pace of growth as we saw in the latest thisrint, that will make inflation or effort more of the same from the boj even harder . Look, the main problem is that the boj have been consistent that they want to continue easing. The problem is what else can they do . They are at risk of monetizing the fall japanese and death market, a massive market. What is really needed in japan is structural reform of how is this iswork and function, and that is not being seen yet. Was neverarrow delivered, and that is the bigger issue. Investors are saying it is out of the bojs hands. I little disappointment creeping into the market, a narrative that has some legs for a few days or a few weeks. Haidi Jerome Powell commenting on the market selloff in his swearing in, saying it will be gradual rate hikes. The market looking at 34 this year. Going into that inflation print and that fed decision under Jerome Powell, how is the treasury Market Positioning itself . The tenure part of the curve is still short. That is where there is risk of a rally in treasuries if the inflation print does not surprise on the top side. The other part of the curve is flatter. There will be less fall into the in the twoyear. There was this exceptional tightening in the twoyear, rising almost 90 basis points in five months. That has reached a stable level unless there is a massive shift in fed policy. That will come with the fact inflation is not near target and the completely fed pricing lower. Or there is an open change of policy from the fed saying we is notare that inflation reaching target. We want to raise rates so we have more ammunition for the next recession. If there is a surprise come it is more likely to see yields come lower. David thank you for joining us. Haidi thank you for joining us. Mark cudmore in singapore. You can follow this story on the bloomberg at mliv. There is commentary and analysis from bloombergs expert editors. Lets get you to first word news in hong kong. Thanks. Jerome powell has been sworn in indicatingfed chief, the timeline for gradual rate rises remains unchanged. He said the fed is gradually normalizing policy and the Balance Sheet. He did mention last weeks market selloff, but other fed officials have played down its likely impact on the economy and financial system. Cleveland fed president under consideration for vice chair of the central bank under Jerome Powell. Sources say he impressed the white house, but there is no front runner at the moment. The fed has had no deputy cents Stanley Fischer step down in october. Mohamed elerian is also in the mix. He is a bloomberg columnist. Has named achase Clearing Bank in the u. S. The first an nonchinese lender to win such a role. Global transactions fell in december from a record 2. 79 in august 2015. Bank of chinas New York Branch conducts Clearing Services in the u. S. Other chinese lenders handle payments were elsewhere. U. S. Forces in syria are said to have killed scores of russian mercenaries in what may be the deadliest clash between the two since the cold war. At least 200 contract soldiers fighting for syrian president Bashar Alassad died in an attack on a joint kurdish base. The Russian Military said it had nothing to do with the attack and the pentagon accepts that. Person linked to the fall of the south korean president has been convicted of bribery, coercion, and abuse of power, and find a 23 million. The court also jailed the chairman of a corporation for paying bribes to win business favors. Y leeses come after jay was given a suspended sentence. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. Haidi thank you for that. Still ahead, how livestock is caught between the u. S. And china in a trade battle. As japan loses be, the key gdp takeaways next. This is bloomberg. This is Bloomberg Markets asia. I am haidi lun in sydney. Japans economy expanded for an eighth quarter, but the pace fell sharply amid expectations. Lets get more with our chief asian economics correspondent. Net, it was what we expected . It is a reminder of the challenges ahead in japan. Aenomics has brought japan long way, but it still has a distance to go. You just have to look at exports. The dividends from exports. There was none. Offset from imports. It speaks to this idea that the boj will not be pulling away from their powerful easing anytime soon. Market,e the tight job it looks like there is still work to be done on the policy side. Haidi still uncertainty over whether governor kuroda will be sticking around for five years given that we have that one line saying it is a blank slate as to who becomes the next governor. Did he mean something by or was it a throwaway line . It is governor kurodas job to turn down really. They would want a big shift in boj policy at this stage in the economic cycle. He wants stability. They clearly havent finished the job yet. I think it would be a big surprise really if abe didnt reappoint governor kuroda. There is a feeling among investors that that will be the case. Haidi always a pleasure. Our chief economics correspondent in hong kong. Our next guest is assuming a governor kuroda reappointment and things the boj is too optimistic on the inflation outlook. Economistsenior japan at Capital Economics with us. Isng through the gdp print, this as good as it gets when it comes to the momentum behind the Growth Numbers . The activity data suggests, survey data suggests activity accelerated this year. We think last year is as good as it gets because the economy is now operating above sustainable , so and growth has slowed we think the last quarters figures is a sign of things to come. We have been talking ,bout the strength in the yen really pricing in a stronger yen by the end of the year. Growthared with weaker is this a spanner in the works when it comes to the deflationary efforts of the boj . A stronger yen does not help. Get inflation going in japan his stronger wage growth, and that is not what is happening despite the tight labor market. I think inflation will continue to disappoint in the coming at the boj will be in no place to tighten policy. Haidi we were talking to mark cudmore. There is very little the boj can do. Appoint governor kuroda for another five years, insuring a continuity of policy, and with that make a difference . Is it to get out of this deflationary spiral they need more time . Hike guess so. The boj is running into a lot of constraints. If the economy recovers further in the short run, although it has had little success in getting Inflation Expectations higher, and that is the key to getting inflation permanently higher. That could happen if inflation except. Constraints would have to intensify further for inflation to approach the 2 target. This i think i asked you 34 years ago when we started talking about abenomics, but structural reforms, the missing air row, do you anticipate that will come into play . And is that what is needed to get inflation and wage growth into play again . I think reforming the labor market could make a difference. One of the reasons why wages are not picking up his regular workers are not changing jobs, do regulatione the of the markets would lift inflation in the short run. It should boost wages. Haidi in terms of the impact of the fed, are you expecting much of a surprise in how the boj will react . Intels recent the the narrative was we will see this convergence until recently, the narrative was we would see this convergence of policy with tightening. I think the boj is in a different position than the fed. Wage growth in the u. S. Is 3 . In japan it is. 5 . They have the same inflation target of 2 . Conditions in japan are nowhere near as good and inflationary pressures are nowhere near as strong as they are in the u. S. Them a so clearly there will be no convergence between the boj and the fed anytime soon. Word, the animal spirits we have seen return to the japanese economy, you see that through the stock market. Do you think the recent volatility, sell off, and these ,lips in the pace of gdp growth does that stop that a little bit . I would not think so. Households in japan hold little equities, and corporate profits are still strong, and capacity ges have and to supply it have intensified. We think inflation will be one of the growth drivers. Haidi im going to let you go. I know you have an important appointment. Expecting a valentines day baby there. One new feature we would like to bring to your attention is tv on the bloomberg. And catchtch us live up on previous interviews and dive into any securities or functions we talk about. You can join in on the conversation. If you have questions or talking points, send us instant messages during our shows. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. Haidi this is Bloomberg Markets asia. I am haidi lun in sydney. Baidu jumped after fourthquarter sales top testaments thank to a rise in popularity of its and news aggregation and web search services. Our reporter joins us now from beijing. S woes aremean its far behind it . Company had a lot of problems in 2016 come impacts on revenue or material. Up number of advertisers is 2 . New products such as the news Aggregation Service is drawing a lot of dollars into the company. Haidi video as we expected is one of the big stories. Thats right. The company is planning to ipo, potentially in the u. S. This year. They need to do that. Something that was just flagged on the call that just finished his content costs are sent to increase by 80 plus percent. Almost 4be spending billion on content in 2018. Come from needs to somewhere, especially when you are competing against alibaba and tencent. Haidi what are valuations looking like . That is a positive move given that they need the money to finance other ventures. Thats right. Robin lee tried to buy the company and a deal that would have valued it at 2. 8 billion. The board did not agree with that. Analysts from cicc, jeffries, and numeral all value the business between 15 billion or more, and that is at a discount to netflix. Haidi what are the risks for operating in the content space in china . Every once in a while you see the regulatory side of things cause problems. The two biggest risks at the moment, commercial and regulatory, the main one is you in up against real giants the space, alibaba and tencent believe video is crucial for their business Going Forward, so they are all pouring huge amounts of money in. By do does not have the cash reserve of its rivals, but needs to compete. The second unseen threat is regulatory, the Chinese Government could decide that people with tattoos will be stand or women who sit on beds are no longer allowed on streaming videos, so that is a risk of the companies have to bear. Haidi what about some of these moon shots they are working on . In the second half of this four we will see level autonomous minibuses that drive themselves get released in mass production come a but we wont see cars that do the same thing until about 2021. Haidi thank you for that. Going through those baidu earnings. The latest business flash headlines. China boosting subsidies on electric vehicles that can travel longer distances on a single charge, while raising the bar to qualify for incentives. Vehicles range for from 1000 to 7,900. Cars must travel at least 150 kilometers to qualify for payment come up from 100 kilometers. A painful 2017 come up but still managed to grow its operations. It has chosen to release select Financial Information. Adjusted revenue increased year on year. 4. 5 billion dollars on sales of 7. 5 billion. Shares in an austrian retailer have jumped after the ceo stepped down. His tenure was marked by shrinking profits. Sinceock is down 69 taking over the company, compared with a 1. 2 decline on the asx 200. Said trading had worsened and could not give a fullyear profit forecast. Ocbc eat as rotations beat expectations. The head of the average estimate of 722 million in a Bloomberg Survey. The thirdlargest lender reported higher fourthquarter 16 it, net income climbing in the 646 million, comparing 660average forecast of million dollars. Plenty more to come. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. 10 29 in hong kong. First word headlines. Economic growth in japan missed estimates. Expansion from the previous three months. That was half the average economists estimating, down from two. 2 in the Third Quarter 2. 2 in the Third Quarter. Singapores economy grew at a slower pace in the Fourth Quarter than estimated. Manufacturing lost some momentum. At an annualized rate of 2. 1 . While the was 2 , governments projection was 2. 8 . President trump has been challenged by republican lawmakers over potential tariffs on steel and aluminum imports. They said such a move would raise prices and cost jobs in auto manufacturing. Openly republicans challenged the president straight position. The israeli Prime Minister netanyahu faces the biggest test of his political life with police recommending he be charged with bribery and breach of trust and fraud. There is evidence that he traded influence for favors. The Prime Minister denies any wrongdoing and claims he is a victim of a leftwing witchhunt. It would be the first time a sitting israeli leader is charged. Lost hissange has appeal against an arrest warrant in the u k. The judge rejected the defenses argument. He said he should come to court in person to make his case. Julian assange has spent five years in ecuadors london embassy, fearing he would face charges in the u. S. Over wikileaks. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. Haidi thank you for that. Lets look at the asiapacific, pretty mixed. Fairly decent gains from hong kong, off session highs. Further declines when it comes to the shanghai composite. The last day of trading until mainland market shutdown for the next seven days. Probably could have used this a few days earlier given the declines in mainland markets. The nikkei two to five weight down by the strength in the yen, also a lackluster futures in terms of the pace of growth slowing a bit. The rest of the region, some notable decliners. Reactionup reeling in to the bribery charge against its chairman. Overall the kospi up. Robust numbers out of singapore, giving credence to the synchronized Global Growth story, but the straight times off by. 1 . I look at the movers when it comes to fx land. The dollar negativity has returned. The Bloomberg Index building on losses of. 5 overnight. The yen on the other side of the spectrum there. 75. 50. Lar trading above the euro the other part of that dollar weakness story. Joining us now is the senior currency strategist at the Commonwealth Bank of australia for a look at what is to come. Im curious about chairman term dollar forecast. You said there is scope for recovery. That the focus will be the Inflation Report for january later today. There are upside risks in that is looking consensus for core cpi inflation to pick up 1. 2 . Judging from faster wage growth in the u. S. And a survey that points to a pickup in wage the risks are skewed to the upside. If the material lysis, it could lead to turbulence in Financial Markets, which tends to bode well for the u. S. Dollar, and particularly the japanese currency. We have not seen the haselation come up dollar not been keeping up with Inflation Expectations or the rising bond yields. In the shortterm, it is potentially room for that dollar relief rally to continue, especially if we have this upside surprise to inflation. Longerterm the downside for the dollar remains intact because inflation pressures remain contained. We dont expect a sustained pickup inflation in inflation. The cpi deflator 2 only in 2019. Yes, caring on. Haidi lines coming through from toshiba. Toshiba naming a new chairman. We will get a few more details on that story has we get them. I want to stay with japan. The yen was the big story overnight. This chart is a two to on the bloomberg. We have not seen heavy haven flows. Clearly there is demand when it comes to the yen. This is the bloomberg correlation weighted currency index. Have the yen trading at the strongest since november 2016 aainst the dollar, we are at fivemonth high at the moment. Where do you see the yen ending the year . , the moveterm overnight was due to broadbased weakness in the u. S. Dollar. The yen was sent out performer potentially because of positioning ahead of the big event which is the number later today. Participants are probably hedging themselves in case of an upside risk to inflation because the yen will probably have perform if equity markets come under renewed Downside Pressure. Longerterm, al outlook on the currency remains constructive, especially against the u. S. Dollar. We expect dollar yen to hedge lower this year because our view for a lower u. S. Dollar, also the risk of more aggressive easing from the boj has diminished despite the disappointing q4 gdp number. Haidi there is not much more they can really do. They could raise their target. Increase their annual purchase of jgbs here at the q4 jgbs. The q4 underperformed expectations, but gdp growth in japan his growing at above trend them a so clearly consistent with the theme of diminishing expectations for more aggressive boj easing. 2 , japan hasow started to bottom out and is picking up, so this roads well for the yen. The yen because of its large current account surplus and position, and the yen is a good hedge if Financial Market turbulence comes back. Commodityk about the linked currencies. How do you view the aussie given the turn in oil markets . We are constructive on the commoditysensitive currencies because we dont expect the potential for more Financial Market turbulence or pickup and volatility to derail this Global Economic pickup. Monetary policy remains loose. Fiscal policy is about to turn stimulative. Global manufacturing pmis are pointing to a decent and above trend world gdp growth of referee 3. 9 of roughly 3. 9 . For Commodity Prices and commoditysensitive currencies. Market tantrum, a lot driven by this sudden repricing of Inflation Expectations and where bond yields are going to go. A lot of people are saying 3. 5 is where we will test. Of the taperrepeat tantrum if you see a more hawkish fed materialize . The behavior of bond yields, bond yields or the pickup in bond yields for treasury yields especially its selflimited. The higher u. S. 10 year treasury yields go, the greater the potential selloff in equity markets can turn out to be. This will potentially encourage the fed to turn more cautious with their Monetary Policy or removal of Monetary Policy accommodation, which will bear fight weigh on rate expectations. Current lowinflation environment, i see a significant headwind for u. S. 10 year treasury yields to sustain a move above 3 . Haidi lets also talk about the yuan. We have seen volatility returned to trading. Will that continue . Homeless the natural Circuit Breaker that is regulation come into play . The big driver behind our isw for a lower dollar cnh because we expect a lower u. S. Dollar. We dont expect policy makers in china to intervene and try to reverse or weaken the chinese of sparking fear trade wars with the u. S. You look at the latest trade ,umbers out of china, it shows the trade number with that u. S. , it shows the trade deficit with china in january widened the most ever on record. Doubt that policy makers in china will step in and try to reverse the chinese currency. Haidi your top call . Bearish on the u. S. Dollar. We expect the dollar to have a relief rally shortterm if we have this upside surprise to core cpi inflation today, but the rest of this year, we expect and dollar to trend lower particularly against the commoditysensitive currencies. That is the top call. Haidi what about here in australia . We have had this jawboning from the rba. Are they comfortable with where the aussie is at the moment . And i think so. A good measure to monitor our value the currency is to look at the Australian Dollar relative to the terms of trade. This is a good indicator as to whether it is expensive or not. This indicator, from a trade weighted perspective, it is in line. Will not at a level that be restrictive court that will choke off Economic Growth in australia. If you look at the latest projections from the rba, they are looking for above trend gdp growth, roughly 3. 25 for the next year. It is encouraging. Haidi thank you so much for joining us. How the humble soybean could become weaponize in any u. S. China trade war. This is bloomberg. Haidi this is Bloomberg Markets asia. I am haidi lun in sydney. One of chinas most potent weapons in any trade war with the u. S. Could end up backfiring. President xi jinping is considering restricting imports of american soybeans, but the move poses a risk. Tom mackenzie joins us from beijing. Weaponize in soybeans and a trade war. Yes. Potentially a doubleedged sword. China is to a large degree dependent on u. S. Soybean imports. Pork is a staple here. If they were to cut back on imports, farmers say it would raise the price of feed, the price of pigs, and that will hit farmers, but chinese consumers. The government does not want to see a spike in work prices. They are aware of what happens when you get hyperinflation. They are concerned about that, but looking at this has potential retaliation against steps taken by washington, those tariffs imposed on solar panels and washing machines. This is an. That chinese are looking at. U. S. Farmers and chinese farmers are looking at this. They say it would be a worst Case Scenario hit the chinese were to trigger a cut back on imports from the u. S. Of soybeans. China just get soybeans from somewhere else . It could. It has been trying to diversify. China his the largest buyer of u. S. Soybeans. It lies about a third of the market. It has increased imports from brazil by 33 , while decreasing imports from the u. S. By 3. 8 . The timeem lies in between october and february when chinese farmers say day are almost entirely dependent on u. S. Soybeans. In brazil, they are still growing and not ready for farmers, so they have to bring soybeans, and that is where it becomes painful. It will hit u. S. Farmers. A massivethis will be impact if soybean exports to china were restricted. That is why you have heard from the u. S. Agricultural secretary saying they are extremely concerned about this, but we also know trump in the white house are determined to close this trade deficit. It kicked up 8 highest year. We also know trump is considering further tariffs, whether steel or aluminum. If those come into play, this is a card china could play. It really comes down to how much pain china is willing to accept as it looks to push back on these trade tariffs imposed by the u. S. Much im curious, how feeds into the broader concerns or pressure on beijing to achieve selfsufficiency when it comes to food and Agricultural Supplies . That is a good question. That has been a focus for policymakers. Bloomberg did some reporting last year about the attempts to improve the Agricultural Sector here because of concerns around an overdependence on products like soybeans. They are very aware of this. Pork is a staple here. The fact they have to rely on imports of soybeans is causing concerns. There are efforts underway to reform the Agricultural Sector here, but the vast majority of the land has toxins and a lot of the arable land is not suitable to farming now. That is causing some problems, tothey are putting science work to improve the Agricultural Sector here and have less dependence. They have also been buying land in africa or latin america to ensure they have a ready supply of food sources for the growing population and growing Consumer Needs here. Haidi thank you so much for that. Tom mackenzie in beijing. You can always find indepth analysis and the big newsmakers on bloomberg radio. App or download the access it by bloombergradio. Com. This is bloomberg. Haidi this is Bloomberg Markets asia. I am haidi lun in sydney. Lets get you a recap of this story on toshiba and the Management Changes disclosed. The company saying a current willsentative director become the next ceo and chairman of toshiba. The current ceo was step down and become the coo instead. These changes will take effect on april 1. Toshiba is in the process of selling off the memory unit to this Consortium Led by bain capital. They are likely to miss that deadline. Avoid didg done to listing after losses in the u. S. Nuclear operation. We are expecting a press conference to go through these changes at 1 30 p. M. Today. Nick woodman remains optimistic about turning around gopro after exiting its and run business. If there isasked any change to his openness to partnership for acquisitions. No, still the same. Is to look for opportunities to realize our vision and create as big an opportunity for our investors as possible. If that is a standalone, independent company, that is terrific. If we can achieve that more quickly with a partner, we would jump to look at that. We learned the drone business with shutting down. That is something investors were excited about two rejuvenate growth. What can we expect as neutral new revenue drivers for 2018 . Roughly halfnding the advertising dollars right now to sell approximately the same number of cameras we did year over year. That tells you that gopros lineup is selling much more easily, and we see an opportunity to increase our advertising spend to significantly grow our business this year. Operating that in our envelope of sub 400 million, so there is significant opportunity to grow gopro even without the drone business. What about the software ,usiness, Subscription Service how meaningful will that be to revenue in coming years . We hope it will become more and more meaningful. As we shared previously come we have 130,000 paying subscribers. We have only really just turned on the marketing for our plus Subscription Service. Last year we grew it quietly and were in test mode. We found we had a strong conversion rate, which told us our customers by you this service, and we think they will value it even more given that we have dramatically increased the benefits but cap to the price the same. Haidi that was the gopro ceo and chairman nick woodman in san francisco. Loss airways will post a due to the isolation of the nation. The ceo says the ban on the airline has forced it to flood longer and more expensive routes through iran and turkey. Size of theow the loss by april, calling the antiqatar campaign wrong and unjust. We have never promoted terrorism. Us ofople accusing extremism and terrorism. It is not the state of qatar. It has already been proven by the intelligence agencies, both european and the cia and fbi, that qatar is not a promoter of terrorism. Haidi Singapore Airlines reported its best quarterly but itin seven years, was cargo, not passengers, that provided the left him of being driven by demand from online shoppers. The Freight Division reported a 66 jump in operating profit. The carrier is spending 850 million to refit its superjumbos and attract premium passengers. Philippine airlines to take delivery of 15 planes worth 2 billion this year and aims to clinch a deal with a strategic investor. Airbus emblem barty eight aircraft and other aircraft. Philippine air in the red after settling navigation charges of 115 million. , david will stick around and update us on the big stories of the day so far. Lots more to talk about. Markets of dead flat. That flat for a reason. Not a lot of volume. Inflation data coming up. Timewoods joining us local at 11 30 on where he thinks these markets will go. He has some specific recommendations on the Chinese Markets and when to buy the dips. The other thing we will be talking about, ocbc out with earnings, decent numbers. Of net this widening interest margins. They did not declare a special dividend. The ceo joins us and 10 minutes to talk about the earnings, a little problem when it comes to oil and gas services. Markets yet again, dollaryen right now 107. 27. That takes you all the way back 15 months on dollaryen. Ep, stay tuned for the next hour of Bloomberg Markets asia. It is almost 11 00 in the lion city. David i am david ingles. Almost 11 00 in hong kong. Welcome to Bloomberg Markets asia. David mixed messages across the markets, hong kong is up and investors are bracing for the Inflation Numbers later tonight. Haslinda the fed enters a new era, pal takes the reins powell take the reins and this is a plan for gradual rate hikes remains unchanged. David good and bad news in a straight quarter of growth, but slowing dramatically through december. Haslinda and talking about brexit, branson says that lawmakers can always think again. Ok, a lot to talk about across the markets. In the asiapacific, i can tell you that essentially when you look at the regional benchmark, we are dead flat on that one, we will get you an update in moment. Go for it. Haslinda you know what, we are looking at the yuan arrowhead ahead of the lunar holiday. I want to bring in this chart. Shows you how the yuan has been moving over the last few trading sessions and we see a weakening ahead of the Chinese New Year holiday, a static decline among volumes. Investors reluctant to hold it in the lead up to the one week Lunar New Year holiday, both onshore and offshore, weaker, the long positions being squared away. About 634 versus the osd. How is it looking in the broader markets . As far across the markets, we alluded to this already, that when you look at equity markets, we are a mix. All with an equal number on either side of the fence and we are almost dead flat on the regional benchmark, there we go, last trading day of the year. And of the rooster, as we go into the year of the dog, some markets are also coming aligned this hour. Rate decision coming out of bangkok in the next four hours and india will be open about 45 minutes, 43 minutes from now. I should mention, the dollaryen, now trading at 107. 09. Can we take a look at the bloomberg terminal to show the viewers where we are, very quickly. Very important. As we move into the inflation later tonight, session lows, takes you back 15 months, takes you back to september, when we hit bottom at that point. Talk about the story and how it flows into the equity markets in japan when they open up for the afternoon session in about 25 minutes from now. Haidi yes, we will stay with japan because toshiba is getting a new boss as under joes undergoes a new revamp. Nobuaki kurumatani new chairman, at the start of the new Financial Year on april 1. He will be seceding satoshi tsunakawa. He will become the chief operating officer. Toshiba in the process of selling its memory unit to avoid being delisted after billions of losses in the Nuclear Energy operation. Economic growth in japan missed estimates in the Fourth Quarter and official figures show only. 5 in the past three months, half the average of economists estimates and down in the Third Quarter. They also fell short of expectations. At a 10th of a percent. And slowing at a grower pace in the Fourth Quarter than previously estimated as manufacturing lost momentum, gdp growth at a seasonally adjusted growth, the median in a Bloomberg Survey with 2 while the government initial projection was 2. 8 . United airlines made a safe landing in honolulu after an engine blew off during a trip from san francisco. The carrier says the crew followed correct procedures during the emergency and everybody on board left of the triple seven normally at the gate. Faa says that the flight alerted air Traffic Control to a vibration in the right engine and an investigation is now underway. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im haidi lun. This is bloomberg. David the fed has begun after a new leader is sworn in. And a new name joining the race to be his deputy. Here is our correspondent with us, what we know on who will be number two . Guest early days of speculation. If this was to be the hasintment, the candidate spoken about keeping Interest Rates in line of where were last year in terms of pace of increases, and she has spoken about the need for good communication in terms of the fed policy for the rest of the world. That would be welcome in this part of the world. Remember, going back to governor in india and others since then who were critical of the fed. Now we have a number to the could be transparent and that would be welcome. David the other thing to bring up his inflation, that comes out tonight, those things are interrelated. A lot of it is being made of the number. Is it that big of deal . Hot, inflation is red everybody will be watching to scrutinize, same thing goes for tonight if it is accelerating beyond what we expect and that would mean that maybe prices are starting to go. The Bigger Picture remains in the u. S. , certainly globally, that inflation has not matched the fever pitch hype around at the moment. There have been signs of increases in the u. S. , but around the rest of the world it is subdued despite the tight labor market and the secret eyes Economic Growth and the Strong Equity story. Yes, if we were to see a much faster than expect, maybe prices are turning a corner. If it doesnt, it would revert to, yes inflation pressures are building, but no sign of runaway inflation just yet. In oura i want to bring macro strategist, Mark Cranfield joining us. When you take a look at this, pretty mixed picture, what does it say about expectations for inflation in the u. S. . Mark it is best to look at the dollaryen. The traders are seen by the chances on the miss of the downside, a weaker inflation number is what we can expect today. Bloomberg just ran a story saying that a weaker number could see the dollaryen at 1. 05. We saw a break yesterday which was a technical factor as well. So this is telling us that traders are probably leaning toward a soft number on inflation. Haslinda mark, thank you so much for that. We are waiting on the important inflation number. Bloomberg chief asia correspondent, a macro strategist, martin crane filled in the lion city cranfield on the line in the lion city. Coming up, why the bank sees overall loan growth in high Single Digits this year. David and Credit Suisse says china is the standout among the emerging markets, cio for the asiapacific joins us later this hour as well. This is bloomberg. Haslinda this is Bloomberg Markets asia. Haslinda i am haslinda amin. David i am david ingles. David lets talk about earnings out of singapore. The past two or three days, we look at a summary of how it looks. We are looking at the index, to give you a snapshot of earnings the season, 59 on the 27 constituents of the entire index 15 out ofinancials, the four and in terms of sales surprise, there we go, three of the four have reported revenue that has beaten analyst estimates, but only one of those companies have actually come in with a surprise when it comes to these bottom lines. Haslinda and you know what, david, singapore banks stocks have done really well. Last year among the best performances performers and stocks were up about 50 . And ocbc, which released earnings today, we will bring in the group ceo who is with us in the lion city. Sam, congratulations on the strong numbers, 30 up on the earnings. Question is, whether it can be sustained Going Forward . Sam good to be here. The momentum that we reported today is really a continuation, quarter by quarter, in 2017. In that respect, we respect momentum to continue into 2018. Opportunities to you see given that singapore is in a pretty strong position economically today, 2017 grew about 13. 6 , asia as a whole is also gaining momentum so how do you hope to capitalize under the growth we are seeing across the region . Sam first of all, i think the fundamentals are the key. The economy we are in is very strong. Secondly, the investment sentiment, the Consumer Confidence has also significantly improved, so as a result of that we believe that ocbc having a regional presence in asia will be able to capitalize on those opportunities as they come along. Haslinda but where in particular, with management . That is a key sector for you. With Wealth Management . That is a key sector for you. Sam it would be in a number of areas. On the banking side, trade we expect to pick up, asia trade will pick up. Investments, likely to increase as well. You will notice that the Property Market has also been with more activity in the Property Market, so this is on the banking side. And the Wealth Management side, that has been preparing to grow, and to doing quite well for ocbc. It as a result of not only capitalizing these opportunities, but also because wealth accumulation is really quite high and there is a demand for proper banking services, so we are also capitalizing on that. Our insurance business, the third pillar that the group has, is also doing really well because the fundamental need for insurance is also improving. About sam, i want to ask your loan portfolio, because you did single out oil and gas, the weaker part, and you have provisioned a little bit more to address or reflect that weakness in the portfolio. Do think the bulk of the us andons is now behind do think that part of the portfolio can worsen in the months ahead . Risk in the oil and gas portfolio, i can describe it is now comfortably contained. We have created additional provisions against it, but on the other hand we are actually inquiries, charter which are stronger than before. There is also Major Oil Companies starting to look at projects in deepsea drilling. All these are favorable to the oil and gas portfolio, having said that the rates, despite the rise in oil prices, has not been strengthening indivisibility as to when they will strengthen is uncertain. As a result, despite the fact that are indicators that say that the worst is behind us, we decided to contain the risk by creating a provision against it, so that we can move afford with a stronger Balance Sheet and without that particular sector to continued to drag the banks earnings. Were still working with borrowers to help them work out of the Currency Press to state. Hard to know it is extrapolate into the next quarter because there are a lot of moving parts, but do you see yourself provisioning more than you did last quarter into this specific part of the portfolio . I think that this portfolio is currently quite sufficiently provided for. Sam, talking about Wealth Management again, you may to some acquisitions. Is there a need to look at more Going Forward . Is a focused area for ocbc and we have been doing well, we have a good reputation and Wealth Management, and also under the group where we do premier banking. It is a business that we would like to continue to scale up. This is not a cheap the business to be in, the cost you need to invest into the banking and wealth venture side is significant, not only in terms of regulatory cost, but in terms of technology platform, product platform and to the suite of services we need to expand. Over ar to scale up larger base, we will continue to organically grow this, in addition to that should there be opportunities in the market that is appealing to us in terms of culture, in terms of the customer factor, we would be interested to look at that, but it is we always say that, because when opportunities present themselves we will always look at those. Haslinda in order to scale up, do you see the need to hire more Portfolio Managers . Sam we are still in the growth mode, as a result of the recent acquisition of barclays, we have added some rms and very qualified knowledgeable rms into our base and with the recent acquisition of nab, the National Australia banks portfolio, it was included in in butpersonal banking side, we have also recruited some very highly qualified relationship managers there. In terms of people, we want to continue to invest in them and look for additional recruitment. Results,st back on the we are looking at a second half dividend of the essentially rivals said that the yuan to be handing out special dividends to investors. It is a prerogative of the bank into the board to determined that, but help us understand, i am sure investors are wondering why they did not get a special dividend this time around. Sam ok, good question. Seeing with we are the other banks doing come i think we should put into the context that our philosophy has it was been to deliver a sustainable and reliable dividend stream to our shareholders. We have purposely declared that we want to declare 40 or 50 of our core earnings as dividend to the shareholders, so they can expect what is likely they will be put to get. Second factor, is we would like to have enough capital to continue to look for growth opportunities, organically as well as in organically, so these are the opportunities that we think having a stronger capital base, retaining more of our earnings within the bank is the right thing to do. On the other hand, also look at the return of equity. The return equity has improved from last year at 10 to 11. 2 this year, so in terms of equity i think it is quite appealing and we would like to continue to make use of the capital to deployed into areas which are a to our shareholders in the longterm. Haslinda david just the pivot to the macro environment and what the bank is feeling right now, we have seen the money market rates move up, which i think would be systematic, so are you starting to feel that in the interbank market . Sam yes, we do see that. The rate has also gradually moved up, it is not at the same altitude as the u. S. Dollar rate has moved, but i think it will follow the Global Trends and the u. S. Dollar trend of moving up, which is beneficial to the banking operation because as you know we have about 50 of our deposits in current account, which have you lower the yielding and we will get a better return out of that. Haslinda your take on the route that we saw last week, a correction in a bull market you think . Think, if you look at the fundamentals there has not been any significant change of opinion that the fundamentals of the key economies continues to be quite strong. In that respect therefore i think that the Financial Market sometimes could have gone ahead of the fundamentals, and as a result of that there is some effort to liquidate it and restart. I would not pay much attention to what the Financial Market is, evidencing but look at the fundamentals. I think the fundamentals continue to be quite strong. Haslinda ok. Tsien, we thank you so much for that. Cbc. 1 for ob coming up, branson has a thing or two to say about brexit. We will hear from the virgin founder next. This is bloomberg. David this is Bloomberg Markets asia. I am david ingles. Haslinda i am haslinda amin. Thousands of Business Owners are at the Goldman Sachs summit today and Richard Branson gave us words of advice for wouldbe entrepreneurs. Really thought of government as have a much to do with foreign investment. I have just gone on and done it and i pray that the government does not get in the way. And i think that in the 50 years since i have been in business, by and large governments have gotten less and less in the way of business, in the when i started, you know, there was british gas, steel, british airways, british coal, everything run by governments. Fortunately come all of those companies, they were broken up and now they are competitive entrepreneurial businesses and, and the country has been more successful as a result. And i suppose what we have to hope is that if there is a change of government in great britain, they are talking about renationalizing a lot of industries again and i think is aone of the sad things lot of young people cannot remember how awful it was when the government ran the businesses. Akin to russia and we do not want that to happen in our countrys again. How worried are you about how brexit negotiations are going at this point and what is your biggest concern as we move forward there . Richard i have been in open book as far as brexit, i thought it was a disaster for the u. K. , very sad for europe. And i think that the facts are now beginning to be very clear, just what after brexit will be and sadly it is the very people who voted for brexit, i was in the rural areas of britain, that the latest Research Shows will be the hardest hit by brexit. So i am still hopeful that when all of the facts are on the table in front of the house of commons and people realize how damaging it will be for great britain, that britain does what ireland did and they change their mind at the last minute. And we will see what happens. David that was the Virgin Group Founder sir Richard Branson speaking to jason kelly in washington dc. Now an update of the latest business flash headlines. The ceok of meyer, stepping down. This has been marked by shrinking profits and a share slump that almost wiped out there market value, down 69 compared to 1. 2 decline. The company said last week that trading had worsened and could not give a fullyear profit forecast. Uber in during a painful 2017, but still managed to grow operations. The company has chosen to release Financial Information to investors in the recent quarters. Adjusted net revenue increasing in the Fourth Quarter year on 4. 5 billion,t that is 7. 5 billion over a 12 month period. David counted on to the real of markets in japan. It is not going to look pretty, futures are down since the lunch break and the dollar yen at 1. 0 7, 15 month low. And brace yourself for tokyo, next. This is bloomberg. Haslinda a beautiful and night in new york city, almost 10 30 p. M. And the markets are recovering from the 2 trillion stillt from last week, the risk lingering and volatility is easing ahead of the inflation data today. Futures pointing toward a slightly higher open, a 10th of 1 . David a little bit of a bid. Tokyo, and the market is getting underway for the afternoon session, 30 seconds from that. The reopening over in the cash markets, dollaryen, while you are sleeping, 107. 08 right now and key support levels breached so we will talk about the Technical Levels and what the chart looks like in a moment, but we expect when this gets underway in 10 seconds that the cash market might be experiencing some Downside Pressure where the futures were pointing to in the last a minutes. Haslinda stocks in japan are pretty much being weighed down david, thenger yen, rally fizzling out yesterday and it is continuing today and we take a look at where the nikkei is, down. Red across the board. The strong yen weighing on the markets over there. David yes, and the inverse coalition correlation snapping back. Dollaryen, 107, and we have a look at the bloomberg chart. 107, 88. 33out the is the level breached, that was in september. That is a retracement going all the way back, there we go, right below, like a knife through butter. 107. 01, quickly let me look, on the dollaryen now and we are watching the 107 level. We will see what happens when the markets continue to digest what is happening in the currency market. We are getting numbers out of risingfdi for january,. 3 and that is in renminbis terms. As far as the absolute figure is concerned we are looking at 18. 3 6 billion renminbis. We will get you an update of more Market Action later in the show. Now first word news. U. S. Forces in syria are said to have killed russian mercenaries in what could be the deadliest clash between the two of them. One u. S. Official and three russians and contract soldiers fighting for the syrian president died in a failed attack on a kurdish base. The Russian Military says they had nothing to do with the attack and the pentagon excepts that. The pentagon asking for 9 billion to counter cyberattacks, saying the risk of a breach are rising. The Intelligence Community says that enemies are trying to delete vital data or cause disruptions to infrastructure. The director of National Intelligence name to china, russia iran and north korea as the top Cyber Threats facing the u. S. Military. And israeli Prime MinisterBenjamin Netanyahu faces the biggest test of his political lifetime with police recommending he be charged with bribery, fraud and breach of trust. They say that there is evidence you traded influence for favors and the Prime Minister denies wrongdoing and says he is the victim of a left wing witchhunt. It would be the first time that a sitting israeli leaders charged. Dealing assange has lost his appeal against an arrest warned in the u k, the judge rejected the argument that it is no longer in Public Interest for him to be detained for jumping bail in 2012, saying he should come to court in person to make its case. Julian assange has spent five years in ecuador fearing that he would face charges in the u. S. Over wikileaks. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im haidi lun. This is bloomberg. Haslinda thank you. We have been talking to some big names at the Goldman Sachs 10,000 Small Businesses summit and among the biggest concerns is rising Interest Rates. And i saysibility, probability, the likelihood of higher interestrate at this point will be problematic, but if what is driving it is a better economy, there is good and bad in that in the near term, the shock of higher Interest Rates will be in immediate negative and the longterm success of the economy will be just that, a longterm success, but you have to take both of those things together. We should always be worried about Interest Rates, remember how low they have been for quite some time and i do not see them spiking right away, people are fearful of inflation because we of growth coming back, but if we want to solve debt, you cannot just cut, you have to grow the economy. David a lot of market themes. Have we finished repricing these revised expectations for core inflation, have we overshot the target . The other thing coming out in the last few minutes, the move of the dollaryen, 107 at the moment. Lets talk more about where we go from here. John woods is in the studio. I was going to ask you about inflation later on tonight. But what do you think is happening with dollaryen at the moment . John growth is surprising to the upside in japan and we have to look at our expectations for output, but at the same time we have to revise what we think the boj is doing. That some, a sense kind of tightening could be on the way, alongside growth surprises to the upside, is pretty positive for yen as a rule. David how can they begin to consider tightening, because yes inflation is nowhere near the target yet, the pace at which, or the time it took for inflation to get where it is now tells me that we are maybe three or four years away so how can we consider talking about tightening . John growth is surprising to the upside and if you look at the forward looking metrics and indicators it is positive stuff and i think it is right that the yen should reflect that reality, but at the same time do not forget the dollar is showing signs of weakness still, and inevitably that supports the cross. So we see for example in the states, widening deficits, fiscal deficits, ongoing political uncertainty, all dollar negative, and when you have that growth surprised to the upside in japan it generates a positive momentum. David inflation out of the u. S. , to talk about what people are saying, some disagree, but what do you think how big of a deal is it coming out of the u. S. . John it is important. It seems that the 10 year real yields have taken over, for example the vix, as the indicator driving macro risk appetite. More thansee, much the 1. 9 expected for example, we could see yield under some pressure to move higher. Inevitably that brings into sharp relief this growth inflation tradeoff, which is currently behind market volatility. I actually think that yields really have not moved so far so quickly, that possibly they have priced in a large part of inflation expectation. 10 year yields are likely to stay range bound for the time being and that is critical for the equity market and in particular the rally, if it is continue if it is to continue. Haslinda i want to bring in the fed. Being sworn in. I want to bring this in, how it is humming along, the fed chair has a suggested he will go ahead with the fed rate hikes. His comments first to be made public, and in there has been some financial stability, he says. What do you make of it, three or four of them, and you see a move in march . John we absolutely see a move in march and we are currently revising our forecast, we are looking at three rates, three hikes definitely this year, but it seems more likely that there will be four of them. Let me explain, we have had to incorporate into our forecast the impact of the tax cuts, but now we have this infrastructure signed overt was the weekend and i think that in particular now that is likely to add further growth stimulus to the economy. I do not think, i have to be clear, i do not think that the fed in any way will react to the recent market volatility by putting on hold their intentions for Monetary Policy. I think they will push ahead. Four aressibly likely for the course of 2018. Haslinda anything different in the way that you price in risk right now . John yes, there is. I have to be quite clear that the, for example the spike in some of the volatility that we have seen, we do not reasonably believe they are firmly reflected in the underlying fundamentals. I have to say that we are looking at this correction in the markets over the last week as a buying opportunity. I would overweight china actually on friday, in anticipation of a bounce higher, because generally i think the Market Reaction was slightly overdone and there were technical factors driving it possibly and certainly the growth inflation tradeoff, which i think is priced in, so we are looking at it more positively. Isid i imagine with china, there anything that has changed, any parts of the market that you would not pick up any more . John first of all, from a fundamentals perspective, china macro indicators are surprising to the upside, so there is a stronger fundamental story, we believe. Betweenying decline 13 50 depending on which index that you look at, has normalized or made valuations more attractive. And just having the price correction there we are trying to take advantage of the correction in price, improvement in fundamentals, and have a look at the southbound flows from china to the market, they are extraordinary. We have seen those accelerate consistently over the course of january and they have not reasonably, or really responded to the volatility in a way that they might have been expected, so we see Technical Support as well from flows. As i say, the price correction i think represents an attractive entry at the moment. David to your point, to highlight that for the viewers, guys, can you get my terminal up . We put together this shanghai and shenzhen there is the pickup, the volume coming through. I was talking with friends and this is only anecdotal, of course, but they say it is a strong coming from the mainland. How strong is this . Is a limited to only a select few . John good question, i suspect the Chinese New Year affect is at work. Typically there is volatility around Chinese New Year and also the various in markets and usually it is evident in order to smooth out the possible volatilities. At the same time there is a concerted effort to support liquidity in the market and improve the overall environment for Foreign Investors participation, particularly in the banks, the china big four financial institutions. We anticipate it will continue. It is in china, attractive and we are looking over the course of the year and it is attracting attention. Liquidity is a reflection of this more attractive investment opportunity. And we frankly think it will continue, just to finish up on the point, and i think more structurally we will start to see flows from the mutual funds, pension funds, large financial institutions, onshore into china, taking advantage of the liquidity available and we think it will continue. David seems like we are just getting started. Will have john talk more about his Investment Team ahead. Minutes until the india markets open up. Futures pointing up, strength coming through in the currency. We also have cpi reports, inflation coming out of the u. S. Later. Much more to talk about. Stay with us. This is bloomberg. Haslinda welcome back. And Southeast Asia have forecast to keep their Interest Rates on hold this week am opting for stability amid the recent swings in the market. The bank of thailands decision is due in a few hours into policymakers will be looking to restrain the gains, which has weighed on the countrys exports. On the other hand come indonesia has been the worst performer in asia of this month, prompting officials to intervene to support the currency. The bank of indonesia will announce the Rate Decision on thursday. David ok, so a lot more to consider when you look at ems. John woods is still here. A lot of Central Bank Decisions and chances are they will not do anything, but for equity investors, this move froom 2. 3 to to point you percent was bumpy. 2. 8 was a little bit bumpy. Do think it will be more bumpy Going Forward . John with depends on the trajectory and how smooth the trajectory is. The 10 year has probably come too far too soon and i think that some back filling is probably likely, which as you suggest, some time of the volatility. In general, coming back to Southeast Asian central banks, they will use the rally in local currencies as a way of remaining on hold. And you know, the fact that we see risk rise in the state lends a strength to these currencies and generally tightening conditions, so Asian Central banks are looking at the moment. They have been able to see some dollar weakness as an opportunity to hold firm on their Monetary Policy side. Haslinda john, you talked about how you have changed of views on ems, they will outperform. In terms of emergingmarket bonds, are you liking them and which ones in particular . John we are absolutely liking them, it is one of our key overweights, and in general when we come to choose those particular ones it really just depends on the yield. For example, i have to say that thailand is not that attractive to us, given the benchmark yields there, but conversely indonesia, the philippines are attractive to us because we see some pretty attractive curry trades in the 510 year segment. Just to remind, year to date this but the asset class has outperformed wonderfully for investors participating in the local currency risk. The key is to be reasonably selective, we want to avoid those that we think are marginal to zero riskadjusted value and focus on the higheryielding names, which also have fundamentals upside as well. Haslinda when you take a look at these, quite a number of them will be going through elections this year. And the risk [indiscernible] david i think we are having technical problems. I think what she was trying to ask, you look at the political calendar across ems, can we assume that yes things will change, but it does not matter for the markets . [laughter] john you are right, david, ultimately you are right. We tend to see Political Risk premiums only weighing modestly on spread behavior in emerging markets in general and asia in particular. Obviously, if you have a major risk event like north korea blowing up, then clearly it would impact the bond yields and spreads of korea, south korea, but in general we tend to see political events as having a modest a minor impact on overall yield considerations, much more important is the economic story. And inevitably the technical store, how much debt is being issued. David wonderful having you on the program, john woods, Credit Suisse asiapacific cio. Speaking of emerging markets. The indian Prime Minister may have missed an opportunity to deliver on promises of reform as we look ahead to the regional and National Elections. Subsidies, the decline in Oil Subsidies is reversing. Lets get more from our Bloomberg Economy reporter in mumbai. Modi has allowed the subsidy bill to rise, why now . The timing is not very surprising for most. After the ruling party won a hardfought election in modis home state, the government is looking to cut down the subsidies, slowly but surely evaporating. Modi faces election this year, plus National Elections next year, so we will see all of the phasing out of subsidies will probably be in the coming months. Now like david said, the food subsidies are almost double from five years ago and Oil Subsidies are all kind of looking to the client as well as fertilizers, the subsidies for farmers have stagnated, these are all signs that we are going into an Election Year and the government is likely to increase handouts in the next in this coming year. Whatnda the question is, does it mean for the government finances, for indias overall rating . It is not good news. You must remember that modi has just upgraded india in november. The finance minister presented the budget with a fiscal deficit expected for this year, which ends in march. That is expected to come down next year, 3. 3 , but we all know that in an Election Year it is unlikely to have been given that it is a time vested formula of previous governments that have increased the expenditure and fiscal deficits, the targets usually go in Election Years. Haslinda what other prospects for reforms in Public Finance, is that on hold . The shortterm, yes, very much so. We had the bank of india last week warned the government that this kind of pause in the Public Finance reform process will only lead to higher inflation and higher borrowing costs. The risk of a higher fiscal deficit obviously means that the government will probably borrow more by the end of next year, and it is not good for the private corporate sector, already struggling in a subdued investment cycle. Higher borrowing costs, higher Interest Rates, and the risk of fiscal slippage does not mean good news for india in the coming year. Haslinda subsidies always an issue, we saw it in indonesia as well. Thank you. If you are a bloomberg subscriber you can catch up with all of her interviews by using our interactive functions. And to the conversation by sending instant messages to our team and our guests during our live shows. Check out at tv. This is bloomberg. David you are watching Bloomberg Markets asia. I am david ingles. Haslinda i am haslinda amin. A check of the latest business flash news, china boosting subsidies on a legend vehicles that can travel longer distances on a single charge, and also raising the bar for those cars to qualify for incentives. Subsidies for vehicles with a range of at least 400 kilometers 7,900, now0 to cars must travel at least 100 kilometers to qualify for payments. David iconic guitar maker gibson says it is foreign all options for deals that the company gets. The ceo says any deal would probably involve new money but would not be in normal bond offering. S P Global Ratings for moody has posted warnings about gibsons ability to pay back creditors. Credit suisse says at least the two parties are interested and they hope to make an announcement comes bring. Come spring. Haslinda did you know that it is valentines day . I know that you know because you are a romantic at heart, rate . Right . David i know now. That is it. [laughter] haslinda i want to bring this chart up. Ok . If you are wondering what to buy your valentine today, it could just be chocolate. When you take a look at where cocoa is now, prices have gone south, prices down, but having said that they are still at historical highs. Take a look at the chart. I mean, you will pay a premium for chocolate despite the prices having gone down. David everything is at a premium during valentines day. Take a look a hong kong and how much they charge you for dinner. The other thing we want to bring up, since we are doing romantic charts, the bloomberg wine and cheese index. So this index actually, just to be nonromantic, it tracks wine and cheese producers, i would call this making love more expensive since 2009. That is my response. Do i know valentines day . I have come up with a chart. Haslinda who cares how much anything costs on a day like this, it is about showing your love. You can show it in any way at all. [laughter] david my plan is, it is only valentines if you have a plan. Lukewarm,and, inflation data is coming out. That is my valentine plan. More is coming up. You are watching bloomberg technology. Is director Christopher Wray providing new details that call into question the white house timeline leading up to the departure of former staff secretary. I would say that the Background Investigation process involves a fairly elaborate set of standard guidelines, protocol agreements, etc. That have been in place for 20 plus years. It isuite confident that particular since the fbi followed established protocols. Porter left the administration following Domestic Abuse a gala