Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240713

Consumer prices beat forecasts. Shery shinzo abe faces yearend pressure. His popularity is sinking to its lowest in more than a year. Japan is coming online alongside the south korea as well. Lets get straight to the Market Action with sophie. Sophie. Sophie we are in the final stretch of 2019. Japanese stocks did manage to pull through on thursday. The topix with an eight day drop. The topix hitting ground along with the nikkei 225. Today, stocks are trading exdividend today. Lets check in on the open in seoul. We are seeing downside moves for the kospi. We will see what the index can crack 2200 points. Switching it now to check in on the mood in sydney, the asx 200 gaining some ground with gold miners among the biggest advancers. Resolute leading the pack, jumping 7. 5 percent earlier with spot gold on course for the best year since 2010. Jumping into the terminal, that momentum could make for a solid 2020 for gold as traders make attempts to carve out a higher trading range after bully and has added 18 this year and goldman is among the bulls. Prices climbing to 1600 an ounce. Guys. Paul thanks, sophie. Lets check in on the first word news with korea mitchell. Japans National Broadcaster issued a hasty retraction after mistakenly issuing a nationwide alert of a north Korean Missile launch heading over the country. It said it accidentally issued a practice alert morning a north Korean Missile had fallen in 2000 kilometers east of hokkaido. It is the second time they have made a false missile alert following a similar incident in january last year. Hong kongs protests looks at to continue into the new year with gatherings planned for friday and the weekend as clashes over the holidays, with protesters hoping to attract attention by forcing malls to close. Permission for a march on new years day. Widespread protests are continuing in india against the governors new religion based citizenship law. Crowds gathered and marched in new delhi, and other places. Thousands have been detained after the law was pushed through parliament on december 11. Speaking at a rally on wednesday, Prime Minister Narendra Modi shows no signs of concessions. A cleanup and search operation is underway in the eastern philippines after a typhoon killed at least 16 people and left thousands more stranded. The typhoon made landfall in the province on Christmas Eve and then hit another island on Christmas Day. Several people are still reported missing. Thee were prayers at vatican on thursday. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Karina Mitchell. This is bloomberg. Shery we have the latest lines from the bojs summary of opinions from their december meeting. Ae member now saying that price gold range could weaken the bojs commitment to inflation. Of course, we have seen calls for the boj to loosen that 2 inflation target to actually target arrange. One member saying a range could weaken the bojs commitment. Theyember also saying that can be optimistic about the outlook in japan. Of course, we continue to see Downside Pressure for the japanese economy after that sales tax hike. As a member saying they need to keep monitoring the side effects on banks. This talking about the ultra lose policy prompted by the bank of japan. Unchanged inicies december as well. They have the shortterm policy rate at 0. 1 for the 10 year target around 0 . The japanese yen at the moment, stronger against the u. S. Dollar by. 1 . We have seen the japanese yen within a range in the Holiday Season. Overall, it has been a banner year for stocks and 2019 globally. Our next guest questions whether it can continue. He joins us from San Francisco. Great to have you with us. A very different end to 2019 from what we have seen in 2018, right . The key question seems to be can this trend continue in 2020 if, for example, the market is a forward pricing mechanism . Are we supposed to expect Earnings Growth perhaps next year . That is a good question. It is a question that a lot of our clients are asking. You know, after 30 gains in the s p, can it continue . For now, our base Case Scenario is that, yes, we could see higher gains in 2020, albeit much more modest gains. We will still have some Earnings Growth, albeit most ingle digits , but most importantly, rates will likely continue to remain low in 2020, so those two things combined, you are likely to have a tailwind for stocks still going into 2020. Shery are there any sectors this year that have not performed as well as they could and have more potential going into next year . Siew industrials is one sector that should be performing better, especially if we have the economy continue to chug along. We will miss a recession and if that is the case, the more cyclical sectors like industrials, like materials, should do just fine in 2020. With that said, we also believe that the Financial Sector, although it had a good year in 2019, is likely to continue having a good year in 2020. Paul we have seen gold and gold stocks performing particularly well even though the outlook seems to be quite positive. Is that something you would expect if you continue . King it really has to do with the currency factor for the u. S. Dollar. The dollar has weekend a little weakened a little bit. Gold miners are more sensitive to that, by all means. I think that is the view. I think we will see low Interest Rates. People do not see as much of a tailwind for the u. S. Dollar perhaps going into 2020. The experienc of the past couple of years in terms of how the fed has been does the experience of the past couple years in terms of how the fed has been behaving give the sense that the fed will come to the rescue . That way. Eems i would say just a year ago, it did not seem as if the fed had our backs. Saying weowell was were far below neutral range, and it has been the complete opposite. The communication now is that we are willing to be very patient before we make a move, so i think there is some of that certainly being priced into stocks, which is why i think the last couple of weeks, the market has just been heading north. Shery which also means that it has become very expensive, right . This gtv chart on the bloomberg showing how european large caps are trading at record discounts versus the s p 500, so would it be the right time to perhaps go not only to europe but just to overseas markets given the rally we have seen inside the United States . King you make a great point. We are looking at the International Asset class as perhaps an asset class that is likely to see some version going into 2020. It has been a laggard for the last couple of years versus u. S. Equities, however, as you noted, valuation multiples look very attractive, and you are actually going to see Earnings Growth that is on par if not better than u. S. Equities going into the first two quarters of 20 20, so we think the International Asset class is under owned by Retail Investors and Institutional Investors alike and we would not be surprised to see that asset class performing well going into 2020. Shery are there any markets in asia that interest you at this point . King china looks a lot better to us now that i think we got this phase i deal put aside. You know, markets like vietnam, sort of the smaller east Asian Countries also look good to us. Japan looks attractive to us. Pretty much across the board, we are seeing good value in international markets. Is an expectation, and you touched on this a little earlier in terms of what the dollar is going to be doing in 2020. Does that make em more attractive . King certainly. A lot of the International Performance really does come from currency weakness here in the u. S. Dollar, for u. S. Investors at least. If we do see some u. S. Currency weakness, more pronounced in 2020, we do expect that to be an additional catalyst for International Stocks and em stocks to do well for u. S. Based investors. Paul baker avenue Asset Management skiing let lip will stilling be with us. Sergio ermotti and why he says the bank is extremely wellpositioned. Next, we will continue that conversation with king lip. Aker a chief strategist at avenue Asset Management. That is coming up. This is bloomberg. Ming up. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Paul and i am paul allen in sydney. As we have been discussing, it has been a great year for stocks. Lets get back to San Francisco and our guest, king lip. Huge runup in amazon breaking through that today 100 Day Moving Average twoday, 100 Day Moving Average. It looked like a sluggish 2019. King relative to the rest of the market, amazon was a laggard, being up 24 . It is quite amazing to say that. That being said, the numbers that they had announced in terms of 5 million new prime subscribers, tens of millions of amazon devices being sold, to us, is very bullish. It just means that there is a back intoipes going the amazon shopping ecosystem, so while amazon has been a laggard, relatively, in 2019, we would be surprised to see amazon having a very good year going into 2020. Paul is there a risk in the shortterm that some of these numbers can be subject to revision . Post holiday shopping, a lot of consumers do end up sending things back. King there is some risk to revisions but i do think that overall, it is representative of the overall consumer here in the u. S. , and even internationally, that, you know, a lot of consumers have jobs. Most consumers have high confidence, and their Shopping Behaviors are representative of that. Even though i am sure we will see some numbers perhaps hell back a little bit in terms of returns and such, but overall, it is amazon. The overall consumer is still quite healthy. Shery when looking at the tech sector, we cannot forget the Philadelphia Semiconductor index. It has been rallying more than 60 yeartodate. It is amazing to see those gains. This gtv chart on the bloomberg showing that index just rallying, searching, but then at the same time, pricing coming down, as you can see in that blue line. So what can we expect in this sector when we continue to see chip prices really not bottoming out . King the chip sector is always going to be quite cyclical. It really depends on which chip sector we are looking at. Certainly, it depends on the industry. I would say, overall, names like micron, they are doing quite well. Historically, they have been a canary in the coal mine. If their share prices do well, that means the economy can ch ug along because their chips are in so many different applications across so many different sectors. For that reason, we still think that despite the weakness in some of these semiconductor pricing, overall, the chip sector continues to be quite strong. And what the trade deal, phase one, being done, it certainly provides a tailwind to the sector overall. Shery how much does it help that we could get that phase i trade deal in january . Which of course is yet to be signed. But the fact that we are still potentially going to see a tech war continue between the u. S. And china, as we see those tensions over huawei and national security. Certainly ahat is headwind. There is no question about that. I dont think it is a headwind that is going to go away anytime soon. I think phase i of the trade deal, we can sort of put aside. Phase two, if you will, would probably tackle some of these more thorny issues surrounding technology. You know, in terms of intellectual property, in terms of national security. These issues are not going to be easily resolved, which is the reason why, even though overall, we are optimistic about stocks in 2020, we would not be surprised to see more volatility creep into the markets, especially in the technology sector, given some of these of a trade deal between the u. S. And china. Out, as the 5g gets rolled the trade difficulties notwithstanding surrounding phase two, and new generations of smartphones become available, i want to circle back to those observations you were making about the dram sectors. It is not going to be maybe it is thing that breaks is that going to be the thing that maybe breaks prices free . King a lot of samsungs phones will start to offer 5g here, starting in 2020. Apples new iphone lineups, very likely to have 5g built into their phones. What you are seeing is that the companies responsible for the 5g buildout, like siena, for example, have seen their share prices perform very well in 2019, so it is already happening. Investors are slowly pricing that in and that is why i do believe that, you know, the demand for smartphones, some would argue, have matured, but this may be sort of the second wind for smartphones in general. Paul a little earlier, shery was pointing out the big runup that the Semiconductor Index has had and we had the nasdaq breakthrough for the first time. Where do you found the find value in the tech sector right now . Is there any . King thats a good question. I am not going to be so bold as to say that there is a bubble in the tech sector, but i would say , to classify it differently. You are seeing some of these really high Quality Technology names like apple and microsoft, what have you, a few deviations away from average historic multiples. Frothy valuation multiples, so earnings need to catch up to the stock prices were the stock prices need to come back down a little bit to get more in mind of earnings. If i had fresh cash, probably would not be buying aggressively into the tech sector right now. That being said, there are some names like amazon which despite having a 24 year is actually selling in line with its historical valuation multiples. Companies like salesforce, for example, is another Company Selling in line from its average historical valuation multiple, so despite the overall tech sector looking expensive, there are still some Technology Names we find attractive from a valuation basis. Shery king lip, thank you. Chief strategist joining us from samsung systems. Lets turn to sophie for a check of what is moving in the asian market. Soph. Sophie taking a look at stock movers in tokyo, i want to highlight japan display, which is gaining ground on a nikkei news report that it is in talks to sell its plan to apple. The sales price is expected to come with a price tag of ¥80 billion to ¥90 billion. It is unclear how apple and sharp will split the costs. We have seen shares rise marginally this morning and the company is considering the purchase of japans factory and it is not the source of the pork on that. Awant to check in with Company Rising after they posted a year on year gain in thirdquarter operating profit, bringing its ninemonth profit to ¥20. 3 billion. The operator maintained its fullyear operating guidance, as did j front retail, checking in on that stock, which is jumping as much as 5 after agreeing to buy out a company in an offer which represents a 34 premium to thursdays closing price. The funds are to be raised through borrowing. They say they support the offer. Paul thanks, sophie. You can get a roundup of the stories you need to know to get your day going in todays edition of daybreak. Bloomberg subscribers can go to dayb on their terminals and its also available on mobile in the bloomberg anywhere app. You can customize your settings so you only get the news on industries and assets you care about. This is bloomberg. Paul copper jumped to its highest level of more than seven months as progress on the u. S. China trade deal brightened the outlook for the month. More on the prospects for metals. Our bloomberg reporter joins us. We had quite a bit of movement in the copper market. What is driving that . The trade war, basically. We have had trump say that a deal has been reached. We have had copper reach its highest level in seven months. Suppose,y surprised, i given that copper is very subject to the trade war, so we will see what happens next. Shery what about other metals . Palladium and nickel were the two bestperforming metals. What is ahead . Are looking very positively at both metals archly because of the push in the auto industry. Lookingladium, we are at increased appetite in europe and china due to stricter environmental laws because that helps reduce emissions from gasoline fueled vehicles. Nickel is a material and rechargeable batteries, which is key to electric vehicles, so the other part of that as well, the supply side has been quite prices. So that voids how much we are talking . Reaching, we might be 2. 5 thousand in 2020, which is a big jump, given that last week, we hit 2000 and, according to analysts, and nickel is looking like we might see a 10 increase as well. Abovewe have oil firming 60 a barrel. What is the outlook in 2020 . Sybilla you have the american suppliers. They kind of have to take whatever they can get, but with prices at that point, they are finding it hard to attract investors, so that is creating a supplybit of a finance problem for them, and we may be getting lower production because of that, which would of course have prices on that front as well. Thank you,lla gross, Bloomberg Markets reporter with the latest on the commodities front. Tesla shares gained again to close at a record high on thursday as it confirmed its lineup 1. 6 billion dollars in financing from local banks for shanghai factories. Tesla is preparing to begin deliveries of model three sedans to local consumers. The cars are set to start at 60,000, a slightly cheaper than imported versions. Paul japans second largest brokerage is looking to hire more bankers specializing in the Health Care Industry and have in a bid to bolster its midcap mna unit. The firm is still short. On 131ms advised mediumsized deals so far this year, well behind the rival, who has been involved with more than double that amount. Plenty more to come on daybreak asia. Stay with us. This is bloomberg. This is daybreak asia. I am Karina Mitchell with the first word headlines. Israel is awaiting a vote to see if Benjamin Netanyahu will lead his party into the governing party held a leadership vote with netanyahu facing a challenge from veteran politicians. The country is set for in unprecedented third an unprecedented third election. It is the second time in two months that beijing has sent the carrier through the strait. Taiwanese voters are set to vote at the polls to elect a new leader and lawmaker on january 11. Large crowds across Southeast Asia gathered to watch a rare socalled ring of fire Solar Eclipse thursday. It causes the sun to transform into a dark aura for more than two minutes, plunging the sky into darkness. It could be seen along ace pas. The previous Solar Eclipse was in february, 2017. Japanese Prime Minister shinzo abe is facing a tough and to 2019 amid allegations of corruption. The latest poll finds his popularity rating has sunk to its lowest level, dropping below 40 . To deflect able scandals in the past. The latest allegations pose a serious threat to his chances of fourth term. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Karina Mitchell. This is bloomberg. Shery staying with japan, we have mixed to data with factory output falling again and retail sales growth coming in lower than estimate, but Consumer Price gains as forecast. Lets bring in chris anstey in tokyo. You have to take all of this data with a grain of salt because we have a consumption tax hike. There is seasonal distortions as well, right . Chris thats right. The picture we are getting from the november data really match the broad expectations of economists for contraction in gdp this quarter because of that thatrom the sales tax hike kicked in october 1. The question is how much momentum is there going into next quarter . The answer is not a heck of a lot. We had a little bit of a bounce back and retail sales in november after the big draw in october. This is a key reason why Prime Minister abe has been compiling a fiscal stimulus package so that the economy can hopefully get back on a firmer growth track in the new year. It is also, you know, it underscores why Prime Minister abe and bank of japan governor kuroda yesterday were calling on japanese employers to boost wages next year. Obviously, Economic Growth would be a heck of a lot easier if employers were granting wage gains, giving households more money to spend, helping them, you know, incorporate the hit from the sales tax hike. In that regard, Prime Minister abe does have a point, doesnt he . We have seen jobs numbers come in much better than expected. Unemployment rate of 2. 2 . The labor market is very tight. Why are we not seeing wage increases in japan . Chris yes, you know, you look at the japanese labor data, and it is quite remarkable. We see this in some of the other developed economies as well. You know, rockbottom unemployment rate, 2. 2 matches the lowest since the early 1990s, back before japan sank into economic stagnation. You also look at the number of people working in japan, and that is at a record high. It has actually increased by 5 million since Prime Minister abe took office. You know, the effort to get more women in the workplace, more elderly people in the workplace, is really paying off, but what is not happening is employers, you know, still are spooked about the period of stagnation. They are spooked about the financial crisis a decade ago, stills that the yen could strengthen again, so they have been very, very hesitant about lifting wages. They have been happy to hire people on contract, happy to occasionally dole out a bigger bonus, but increasing base wages is something that Japanese Companies have been very, very cautious about, and this is exactly why we had, you know, the tagteam approach there yesterday by Prime Minister abe and governor kuroda, calling on employers to finally start using some of their record cash piles to boost the wages of their workers. Shery could these businesses get spooked by potential Political Risk arising in japan . Polls showing the voters are growing dissatisfied with Prime Minister abe and the series of scandals he has faced this year. Asis yes, as you said you suggested earlier, Prime Minister abe has successfully stared down some of these corruption scandals, kind pan Campaign Financing scandals, over the past seven years, and there is no real threat to the ruling party, the liberal democratic party. It does not have any real domestic opposition. Do the other faction bosses in the ldp who have been getting antsy over this length and period of leadership by Prime Minister abe, do they start maneuvering in the back rooms and say, you know what, abe, it is time to move on . That is the question. That is the thing we are going to need to keep an eye on as the year turns. To what extent are the party bosses behind the scenes comfortable with abe continuing on . Theres been suggestions that maybe he could go on for another term, a decade in power. Its unprecedented in modern japanese history, and you can imagine that there are some who have been national there teeth gnashing their teeth about the scandals. Shery chris anstey, thank you, joining us from tokyo. We are seeing a mixed picture across markets in asia. Thats turn to sophie for another check of the markets. The asian equity benchmark fluctuating between gains and losses in the postchristmas session, looking very quiet indeed with momentum petering out for the nikkei 225. The topix being led higher with softbank and toyota, the biggest boost. The yen trading slightly firmer in the wake of the japanese data dump this morning that showed tokyo cpi picking up. There was a mixed picture for retail sales and industrial outlook. Checking in on the kospi this morning, we are seeing pressure for the benchmark resuming losses for a third session, slipping away from 2200 points with financials among the biggest drives. In sydney, gold miners providing a lift. The index coming off the morning sessions low and bhp, the biggest boost in terms of index points. Commodity currencies, the aussie and kiwi dollars holding your fivemonth highs in the face of a softer greenback which is set to wipe out 2019s gain. Paul. Share it. Paul jerry. Paul sheri. Paul David Solomon says he is hopeful for progress. He spoke at the new Economy Forum in beijing about business in china and the need for a solution to the unrest in hong kong. Obviously, one of the most important economies in the world what Goldman Sachs did in china for 25 years. It is important that the opening up continues because we would like to own our business or take control of our business, so economic control of our business. So we are watching what is going on in the trade discussions. At this point, it is talking about opening up to the financial system. If that occurs, we will be able to own 100 of our business and i suspect we will make more significant investments. We were in front of our board, the team over here, with a fiveyear plan for china. Assuming we could own 100 of our business, that would lead us to put significantly more capital into the business and significantly increase the people we have on the ground. How much more capital . David not to be set specifically, but a significant amount. Hundreds of millions of dollars of capital potentially. We have 200 people in beijing and we certainly could see over the next five years that that number could grow materially. That would be for what, World Management . Client franchise. We serve a very broad array of clients across china. We do think that the Wealth Management opportunity could be a very significant opportunity over time and we are starting to think about ways that we could partner with people here to build our management presence, but it is a business we are only nascent in at this point in time. Are we going to get a phase one . Do we care . David i think we care a lot. One of the big issues when you think about Economic Growth in the mediumterm and longterm is the u. S. And china finding a way to coexist more productively economically. I think there is a good chance that we will see some progress in the trade discussions. I have been fortunate to speak with policymakers on both sides, and i am encouraged. I think we can probably expect the progress to be in stages, but i am hopeful we will see some progress, and i think it is important here in china, the chinese realize it is important for them. I think the u. S. Realizes it is important for the u. S. , and candidly, for Economic Growth around the world, given the size of both economies. It is important for everybody. Does the phase one deal lead to a phase two, or is it just the status quo . David we have to hope that over time, in a world where both these economies are super important to Global Growth, that we can find a way to make progress on all of these issues, so certainly, a step in a positive direction is a step in a positive direction, and i am a glass halffull guy. I am going to assume that chinas interests and the u. S. s interests are in the Global Economy at large. It is in its interest to see it progress and we should see progress over time. How important is it to be one of the first big banks present in china . We have been here for 25 years, as i said, and i do not know how this license process there are a number of firms applying to take economic ownership of their entities. You know, i would hope, given the commitment we made to china, that we will be earlier first, but i think what is more important is the longterm investment we have made, and that we continue to make here. Talk to me about hong kong. You were just in hong kong and you postpone the party there. Postponed a party there. David we celebrated the 150th anniversary of Goldman Sachs and we have been having events in cities to celebrate or commemorate that with our clients so we did postpone an event in hong kong, but i spent some time in hong kong, and it is a very complex, multilayered situation that we are watching very, very closely. I was not to be in hong kong and spend some time with our team. We have over 2000 people on the ground, and i would say that when the routine that people experience in a city like that is disrupted, it is tense. I would say it was quiet. There were not as many people out on the streets. You could clearly see the impact on the economy, and so, we are watching this very closely and hoping for a resolution because i think that is good for everyone. What are your clients and hong kong asking for you . Are they diversifying . David i dont see any change in the behavior of clients that are significant financial players in hong kong. What i would say is that hong kong has always been very, very important as a Financial Sector across the asiapacific region. And i think china recognizes the importance of that. I think the rest of the world recognizes the importance of that so it will be important that we find a resolution to this in the near term. Can it actually lose its status as an engine Financial Hub . David i do not see that as likely. I do not see evidence of that, but the situation needs to be resolved in for the people that live there and are affected by what is going on, you know, this is a challenging time. Paul Goldman Sachs ceo David Solomon speaking at the Bloomberg New Economy Forum in beijing. Global investment banks are scaling down but chinese brokerages are bucking the trend. They have been hiring for a fourth Straight Year and have a Record Number of analysts on it. Oining us now is charlie why are chinese firms adding more people . Thats partly because china is a Capital Market and is getting increasingly open to foreign investors. Foreign fund inflow has been expanding as part of, you know, partly because china has been china stock market and bonds have been included into the global stock indices. Is other is the issuance stocks and bonds has been increasing steadily. Of stocks and bonds has been increasing steadily. Brokerages have been hiring analysts to meet the rising demand. Shery most things in china happen with the governments blessing, right . How much of this has to do with policymakers pushing for brokerages to become more competitive . Of chinas, as part negotiation the trade negotiation with the u. S. , china is gradually opening its Financial Services industry. Banks arevestment having greater access to the market. Some of them are setting up whollyowned ones. It also meets the growing competition ahead. The chinese brokerage needs to expand. Of hiring analysts is part the measures to address the competition. Paul what sort of impact has this had on salaries for analysts . Are havein china fallen a bit in the past year. Industry, thehe salaries of chinese allies has theeased partly because commission pool has been shrinking. It does not mean star analysts are still very. A starid in china analyst in china can easily make 1 million a year. Shery globally, we are seeing this huge cut down when it comes to these brokerage jobs, especially with new european rules, mifid ii. Have chinese brokerages been completed shielded from all of these changes . Unless chinas brokerages have not been affected by the rule unless you are dealing with european clients. Most brokerages are not subject to the regulation. There is no impact. Shery charlie zhu, great to have you with us. Thank you. Shanghai bureau chief. Our tvorget, if function is tv. If you want to watch us live and also catch up on past interviews, and dive into any of the securities or bloomberg functions we talk about. Also become part of the conversations are that bottom of your screen on the left side. Ask the guest. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. Mberg. Throughve seen it going. Those are difficult moments. Confident about hong kong. Paul this is daybreak asia. I am paul allen in sydney. Shery i am shery ahn in new york. The Christmas Holidays offered no respite for protest that has gripped hong kong for more than six months as demonstrators targeted Shopping Malls over the past three days. Daniel joins us now. So how targeted were these demonstrations . Dan protesters went after Shopping Malls, as they have done repeatedly throughout the past six months. The Christmas Holidays upon us. You know, there was some hope that things would be more peaceful. They were not, of course. Shopping malls in the Retail Center have been hit hard over the past six months. In october, retail sales were down 24 , and the economy has been in recession. Carrie lam accused reckless protesters of ruining christmas, so the government is keeping up the intense language. This is leading up to new years day, january 1, where we expect a major rally downtown. Paul yes. To that end, starting the new year with another rally, these protests have been quite enduring. Is there any indication they ebb a little in 2020 . Dan no. There are signs of the protests dying down or taking a break. They are not as intense as they were maybe a month ago when we saw them taking siege over universities and some really dangerous scenes. That said, the underlying reasons for the protests have not been addressed. That includes universal suffrage. That includes an inquiry into police abuses. And so, you know, we have seen this throughout the six months. It gets really intense and then it dies down. We are in a bit of a lull period. Momentum is still there. That theno sense public really is letting any of this go. I mean, there is still strong support, as we saw in the District Council elections last month, for the prodemocracy movement. In 2020, we will see the election as well, so this will ebb and flow throughout but there is no sign of it ending. Shery you mentioned the record contraction in retail sales that we saw in october, so what does this spell for the hong kong economy in 2020 as this gtv chart on the bloomberg shows we are already in recession . Dan yes, thats right. You know, the government has introduced a few measures to try and boost growth, but you know, a lot depends on whether a deal can be struck, peace can return, tourists can come back, shoppers can become more confident. As long as this uncertainty persists, that raises longterm questions about hong kongs economy and the future of hong kong as a financial center. So far, we have seen not much evidence that money is flowing out of here. Some money is flowing out, but not in drastic levels, but you know, it is unclear whether that proposition might change over the longterm. Do expats want to come here . With they rather go to singapore for example . Would they rather go to singapore, for example . How intense does it get . How violent does it get . Theres a lot of unknowns heading into the new year, although it is quite clear that there is no resolution right now, and that this could go on for the foreseeable future. Paul asia government managing editor dan ten kate in hong kong. Thank you for joining us. If you have not seen it yet, you can head to bloomberg. Com or youtube to catch bloomberg televisions special report on the protests, called hong kong on edge. This is bloomberg. Quick check of a the latest business flash headlines. Tiffany reported a sales rebound in the runup to christmas, with choppers and Mainland China responsible for much of the growth. It rose between one percent and 3 . Shery sales in mumbai have jumped to the highest in four years as Property Developers switched to building cheaper apartments. Research showed a 22 sales jump this year despite a persistent credit crunch and economic slowdown. A bit of a mixed picture across markets in asia. Lets get a preview of what to watch. A half hours time, we will get Chinese Industrial profits. The pace of decline expected to moderated, supported by a slower pace of inflation, falling 1. 4 . Letsead of that data, get a quick look at the offshore yuan. Pulling up the board, the Currency Holding onto recent gains, trading below seven a dollar, set for a fifth weekly advance. When it comes to stocks to watch in hong kong, holding up the board, we are keeping an eye on Shopping Mall operators and retailers, with the city bracing for more protests, leading up to a major rally. Flipping the board, ready for more in 2020, targeting 11 growth in liquor sales, 34,500 of liquor. Guys. Paul sophie. Shery that is it from daybreak asia. Our markets coverage continues as we look ahead to the start of trade in Hong Kong Shanghai and shenzhen. Standby for Bloomberg Markets the china open. This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone wifi up there . Uhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your local xfinity store today. 9 00 a. M. In beijing, shanghai, and singapore. Welcome to Bloomberg Markets the china open. Im selina wang. David im david ingles. Lets get a look at your stories. Struggling to rekindle the christmas cheer in u. S. Markets. Japans ecodata does little to raise spirits. China promises to improve handling of bond defaults to restore investor confidence. David protests continue through the holidays in hong kong, with clashes at Shopping Malls and more antigovernment demonstrations planned in the coming days. Selina china markets remained open over the christmas holiday. Policymakers were busy making announcements about reforms to the state owned enterprises, relaxing the Household Registration System. The question is as markets open in hong kong and china, can they follow those positive tailwinds of the u. S. Market . David when do we feel all of that . Seeing how markets have run up, and have a look at the open, it does pose a question at one point what point do we deal with the reforms announced over the past few days . A couple of markets opening up right now. Malaysia, singapore, taiwan. Extremely thin. We are about 40 lighter than usual. Not unexpected. We are tracking these other things. The currency market, the dollar is flat for the year, if not, already underwater in the bloomberg dollar index. A lot of these trade cyclical high data currencies. The taiwan dollar going from strength to strength. The highest levels against the u. S. Dollar. Going back to mid of 2018. Pay attention to the commodities. Quite a runup in price. With 68 for the first time. In late september, it takes you back to may. Puts the a 50 future on the point to do marginal gains. We are looking ahead to industrial profits. Strain coming through in the chinese currency these past few sessions. Thats the states of markets. Ins get to Karina Mitchell new york with an update of your first word news. Karina japans National Broadcaster had a a reaction after initialing an alert of a north Korean Missile launch heading over the country. It exit in the issued a practice alert warning a north Korean Missile had fallen 2000 kilometers east of aikido. Its the second time they made a similar alert since january of last year. Protests in japan look to continue with gatherings planned friday and the weekend. That follows clashes with police and protesters hoping to attract attention by forcing most of. A widespread protest widespread protests are continuing in india based on the new citizenship law. Crowdstered gathered and marched. At least 25 people have been killed and thousands detained since protests began. Speaking at a rally on wednesday, the Prime Minister showed no signs of concession, and criticized protesters for vandalism. A cleanup and search operation is underway in the eastern philippines after a typhoon killed at least 16 people and left thousands more stranded. It made landfall in eastern some are proud and hit the islands on Christmas Day. Rescue teams say several people are still reported missing. Pope francis lead prayers on thursday for the victims and affected families. Day, onews, 24 hours a air and at quicktake by bloomberg, powered by more than 27 hundred journalists and analysts in more than 120 countries. Im Karina Mitchell, this is bloomberg. Lets get more on the Market Action across asia with mark cranfield. We saw the s p 500 test new records. Consumer confidence data out of the u. S. Global geopolitical concern remains weak economically. Our markets running ahead of reality are the markets running ahead of reality . Not too much. China,a we expect out of the industrial profits will be a backward looking piece of data. There is no forecast for it. The previous numbers were pretty horrible. Even if the numbers come out Something Like that, it will largely reflect the period before people were much more confident that the u. S. And china would be doing this phase i trade deal. Most traders will look at it as something in the past that doesnt tell us much about where we are going in the early part of next year. They will be much more interested in the overnight report from amazon saying it was a good season for them, in terms of selling to the consumers. Other reports indicating the tech sector is doing well. We saw the nasdaq closed about 9000 for the first time. The uptodate indicators are much more positive for equity markets and some of the backward looking data. Thats where people will be focus, especially in asia, where it is sensitive to move in the tech sector. That will be good next year for korea, taiwan, and other markets. Its about where we go from here, not so much where we have been over the last couple of months. I had a look at the data out of the nasdaq. One third of the gains were simply down to the contribution coming out of amazon. I want to shift the attention to commodities. We had quite a price runup. Everything from gold, copper, oil. What do i read into that . You people areg much more optimistic in the beginning of next year than they were at the beginning of this year. When we started this year, we had people like the imf and world bank downgrading Global Growth, with some good reason. That is pretty much how the first half of this year played out. It was certainly weaker than many people would have helped. The situation has changed. Theres reason to be more optimistic. Japan has a fiscal stimulus coming. It looks better for china than it did 12 months ago. The u. S. Is stabilizing now that the trade affects are beginning to wear off. We have a trade agreement with mexico and canada, as well. Theres more positives on the table that suggest global trade is in much better shape going into the beginning of next year than it was at the start of next year. That will be reflected in people putting money to work. Probably more in equities than in bond markets. You will see that. Not all of the money will have flown in yet. A lot of people wait until the new year, the first quarter. We could see a flood of money in the first couple of weeks of january continuing to support markets. They may look a little expensive right now, but theres no reason they cant trade a bit higher at the beginning of next year. David great stuff. Our strategist out of australia. Just a reminder of global stocks, they are at a record high. You can follow all of the Market Action. Scroll up, scroll down, look at the analysis on everything or the absence of the action we are seeing across global markets. Our next guest believes equity markets have run up quite a bit, ignoring a lot of the global headwinds. Joining us is the president and founder of srikumar Global Strategies inc. Very nice to see you, happy holidays. This bullish tone has swept across global markets. Why not . Bullish take all of the signs at face value. That marketsnt out were at a bullish high in december of 2007. The s p 500 reached a record. Consumer sentiment seemed to be very high. It feels like today, in terms of changes. At the same time, the bond market, the treasury bond market was signaling something was wrong. If you are looking at signals, you see the 10 year yield, they cannot push it up to 2 . Currently it is trading at less than 190. That and the fact that we already had an inverted yield curve says to me all is not well. Manufacturing,al especially u. S. Manufacturing, is in a recession. We have issues with the trade side. Despite the phase one having been discussed with china, it has not been signed. If you go behind it and see what is there, china has agreed to buy more u. S. Farm products. Thats it. They need the port, they need the soybeans, and that will happen. It doesnt seem like a trade accord to me if that were to happen. The question is do they really end up buying all that much if u. S. Prices are not competitive, lets say compared with the offers from argentina or brazil for soybeans . Selina you are saying that when it comes to this phase i trade deal, we should not expect it to translate into real Economic Growth and not expect all of those purchases to come to fruition . Im not saying they will not happen, im saying only that there has not been any concrete information from the beijing side as to how much they are going to purchase. The optimism has been coming from President Trump and his advisors. You can see the chinese announcements have been more cautious. It has not yet been signed. When the signature takes place, will they tell us what the concrete terms are . Guarantee 40 to billion worth of Farm Products purchased . I doubt that will happen. If it doesnt happen, the question is what are you getting in this phase i of the accord . Right now,t the case since its a holiday, i will try to crowbar a holiday analogy, isnt the trade story like a hangover, can i at least assume we dont know when we get back to normal . Can i assume the worst is over . You can assume that the worst is over, but i dont know what you would call the worst. There has been a lot of sabr rattling that began in march of 2018 on the u. S. Side. We have had several announcements of trade accords being reached then backtracked. December 1 of 2018, more than one year ago, president xi jinping and President Trump were said to have signed an accord when they met. This is more than one year later that we dont have the accord. Inl we have an accord january, will a president ial tweet from the u. S. Side unravel parts of it . Thats what i mean by saying it may not be the worst, but the question is which was the worst point . We just had a series of ups and downs. Selina you are not convinced about this burst of optimism when it comes to the fad phase i trade deal. Given it was the low hanging fruit, as we look into next year and phase two and phase three, what are your expectations for where the u. S. And china can go for the future rounds of negotiation . Thats a great question. I think phase i, assuming it is indeed signed in january or february, do not expect anything more to happen before the november u. S. President ial election. You are not going to have an accord, in terms of technology transfers, nor is china going to 2025on the made in china industrialization program, because i can understand why. It is an inherent part of chinese economic policy. You cannot have that dictated from washington as to what that is going to be. More about can talk it, there will be announcements that a phase ii is nearby, then they will announce it is probably going to happen after the november elections, but that may be it. Nothing will happen following that. Bringing us back to reality when it comes to this burst of optimism. You will be sticking around with us. Still ahead, we speak to the ceo of wpic about his outlook for the chinese ecommerce sector as the trade war poses a risk. This is bloomberg. Watchingoure Bloomberg Markets the china open. I want to take a look at the numbers coming in stronger. Strongerthanexpected, 6. 9879. We have seen it come in stronger on Christmas Day and the day after. Strength in the offshore yen as we have more positivity in the phase i trade deal. We will see when we get the industrial numbers in a few minutes. What do you think . David it is backward looking data, but that being said, it should add to the evidence out there. We slowly started to see it build up, in terms of the stabilization storm. Surprised. The highest level, not going back to may or april. That being said, i want to bring in the president and founder of srikumar Global Strategies inc back. And with us today as we try map out what 2020 looks like. How you are not convinced the trade story, or the worst is over, but does that mean the equity markets i should stay away from the equity markets . The equity markets have run up at least partially because of the expectation a trade deal with mexico and canada is already done and that the phase one is going to be signed, and it will be a relatively peaceful period in 2020 on the trade front. Happen, thent prices that have discounted such a development have to back off. Second, if you dont have a trade treaty, it will increase the uncertainty for Capital Investments across the world, especially in the u. S. That is a negative for Economic Growth. Keep in mind, u. S. Economic growth, after rushing up in the second half of 2018, after the tax cuts the economy got toward the end of 2017, has been slowing since. The last two or three quarters have been slowing compared with previous one. When you put this on top of a trade treaty not being achieved, i think the impact is likely to be negative. Thats what you see reflected in the treasury yields. Still remaining relatively low. We are low in treasury yields now that we started the year. Selina if yields do break past 2 , can it go higher, or does it mean it is a buying opportunity . If it goes above, and it well hasd, because every time it gone above, i have always said it will go below, you are not going to be sustained at over 2 , but if the goal is over 2 , it is a buying opportunity. I see the 10 year going toward the 150 mark. Selina what about the yield curve we have seen steepened significantly . Recession has a been averted . Thats a great question. Look back at the 2 recessions, the one in march, and the one from december 2007. In both of those cases, the threemonth to 10 year, and the twoyear to 10 year, both of them inverted. Here is the crucial point. The reversion was gone and the steepening of the yield curves took place the recession began. In phenomenon you are seeing 2019 does not mean the risk of a recession is gone, it actually is the same pattern we have followed the 2 previous recessions of this century. In 2019,at we also saw almost 3000 basis points worth of rate cuts from pretty much every central bank in the world. A good majority of developed and emerging market central banks. You dont think it is enough for a tail wind thats about to hit global economies next year . Said, after the passing is u. S. Fedker, he chairman in the late 1970s with very effective pulling on the strings of monetary policies, restrictive policies that brought inflation down. Monetary policy does not work the same way, in terms of pulling on a string. You cant lower Interest Rates further and expect Economic Growth to search. If that were to happen, use third you should have seen growth surging. Instead, the manufacturing has been at a deep recession in germany. Monetary policy is one part of it. The trade war is affecting your up in a big way, especially the tariffs put on german automobiles. Old,d, germany is getting and there is a reduction in population in many countries. As we saw in the news from japan, for the first time, we had the population go down by 500,000 in a single year. Monetary policy cannot reverse these demographic and structural factors. Thats the reason why you have this growth malaise, it has little to do with Interest Rates. David this is nothing personal, but every time i speak with you, i feel like i lose a little bit of myself. I hope on some level, you might be wrong. Of course, yields have gone nowhere. Thank you so much for joining us. Thank you for having us. Thank you for having me. David you can find indepth analysis on the days big newsmakers on Bloomberg Radio. Now broadcasting live from our brandnew studios in hong kong. Listen on the Bloomberg Radio app, or on bloomberg. Com. This is bloomberg. Watchingoure Bloomberg Markets the china open. A quick check of the latest business flash headlines. Apple shares hit another record high in thursdays session. It remains on track for its best annual performance in a decade. The 2019 rally has seen a gain of more than 80 , adding about 530 billion in market value. Investors remain positive on stocks, thanks to strong data on Holiday Spending for key products, such as air pods and the latest iphone. Tesla shares gaining again to close at a record high on thursday as it confirmed it lined up 1. 6 billion in financing from local banks for its factory. It is going to deliver chinese models to consumers. Its set to start at 50,000, cheaper than the imported version. David just minutes away, just to complement what you are talking about, the record highs. Msci global stocks at a record high. At the same time, you are looking at the same rsi, highest level going back for about two years. Keep that in mind into the new year. This december, i want to flip this seasonal chart. On track to be the best december, 3. 5 for global stocks going back to 2010. About double the 30 day average. Also keep in mind, ahead of the open, we may also be getting the industrial profit numbers out of china. That should be on the other side of the break. Stay tuned for the open. It looks very much in place for hong kong. This is bloomberg. David good morning. A beautiful winter day. Where did the decade ago . Slaps flat on the a 50 futures. Very thin volumes. 40 lighter than usual. Thank you for joining us. Your market stories coming. We are waiting for data out of china. It can come out in the next 20 seconds or so. Selina thats right. We are looking ahead to that. Expecting the climb to be more moderated from last months record. I want to point out the weather is not as pretty as in shanghai. We have had a smoggy christmas. The Market Reaction yesterday was a busy, positive day as a result of some policy adjustments from the Chinese Government to relax the system, chinas Household Registration System expected to improve the movement of labor and workers that could be boosting the property sector. More people buying houses in lower tier cities. Thats where we saw the shanghai Property Index jump more than 3 . I want to point out the industrial profit. Rising. In november Industrial Company profits rose 5. 4 yearoveryear. Significant jump after october saw a record drop in industrial profit by 9. 9 following septembers 5. 3 decrease. There we are seeing some profitability. We are still seeing factory deflation, but this reflects that. A moderation in terms of deflation. Bloomberg economics expects the downward pressure on profits to continue as a result of weak domestic demand. I want to look at the china 10 year yield. We have seen government bonds rally for several consecutive sessions as we have traders hoping for more monetary easing. Talk aboutpremier more signal for reserve ratio cuts. Liquidity moves for several consecutive days. One quick look at the offshore yen, coming in slightly stronger, a touch strongerthanexpected for three consecutive days. Strength as we have seen more movement, in terms of where the u. S. China phase one negotiations will go. China reiterated they are in close talks with the u. S. On signing. We also got data from china showing very high imports of u. S. Soybeans, which looks like a bit of a goodwill measure as they look forward to the signing in the offshore yen trading a touch stronger. David lets have a look at the open in hong kong. A couple hundred points. Volumes on track. Average,al day, 20 day we are on track for about half of it. Are, theok at where we hong kong dollar trading on the stronger side of your trading banners. I think we are up. We should be up for the year. 7. 5 , 8 . You dont see it on your board. The hang seng index, the twoyear lows. We are up 3 . Last time it traded up 4 . The surprise, rebound we are seeing in industrial profits, heres a bloomberg chart. 5. 4 . Withve put that together the Producer Price index. Still turning in negative numbers. Whether it is seasonable, we will break the numbers down when we have more analysis. We will take it at face value. Certainly encouraging numbers. Backwardlooking of course. Perhaps related to this story another record year, in terms of Corporate Bond defaults. China reflecting the new normal for markets that could depend on the lifeline at one point at one point depended on the lifeline from the government. Frost, ouro richard managing editor for china markets. Hes talking about why the d word is becoming more prominent this year. It does seem to be the season for defaults. We have seen in the last couple of months a rapid increase almost on a daily basis. Another default event, missed payment, or concern about the company, it may be spending, trading in their bonds. Behind this,ctors china wants to see this happen. It was only a few years ago that we had the very first default. They want china to be a market that has a proper functioning debt market where risk is equity priced. That Means Companies should falter and bondholders will suffer as a result. On the other hand, as you were talking about, we have had a slowing economy. A different part is suffering, whether in the private sector, estate sector has better access funding, and we have seen a much sharper increase in defaults in the private sector because of the higher costs of funding they get. Clearly inicy makers beijing are becoming more comfortable with the defaults. How worrying of a sign is this . Hand, it is something they will want to see. I think the devil is in the details. Thats why we saw senior policy makers coming out yesterday and urging much more transparent process when it comes to companies defaulting. While they may want to see Weak Companies pay higher costs for funding because of difficulties they face, what they dont really want our bondholders to face every opaque and protracted process getting their money back. Sometimes there are complaints about restructuring not favoring them, or not allowing them to contribute, there are companies that will also privately arrange to extend their bonds. Theres a lot of different Ways Companies are trying to get around this process. What china wants is as we see more defaults coming, a much more predictable process for bondholders will now occur. Selina richard frost, thanks for joining us. Lets get the first word news with Karina Mitchell. Domesticallys made Aircraft Carrier sailed through the Taiwan Strait thursday, weeks ahead of the president ial election. It is the second time in two months beijing sent a carrier through the street. It described last months maneuver as training. Voters are said to go in the polls to select a new leader on january 11. Israel is awaiting the results of a vote to see if Prime Minister Benjamin Netanyahu will retain control of his party and lead it into the next election. Voteheld a leadership thursday with him facing a challenge from a veteran politician. They are set for an unprecedented Third National election in less than a year in march after 2 inconclusive votes. Japanese Prime Minister shinzo abe is facing a tough end to 2019 amid allegations of corruption. His popularity rating has some to its lowest level in more than a year, falling below 40 . He is the countrys longestserving premier and has been able to deflect scandals in the past. The latest allegation pose a serious threat to his chances of a fourth term. Large crowds across Southeast Asia gathered to watch a rare socalled ring of fire Solar Eclipse thursday. It caused the sun to transform into a dark orb for more than two minutes, plunging them into darkness. It can be seen along a path stretching from india and pakistan to thailand and indonesia. The previous annual Solar Eclipse was in february 2017. Global news, 20 hours a day, on bloomberg on onair powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell, this is bluebird. David thank you so much. Lets have a look at what happened in hong kong. Story yet again. The holidays really offering no break from the protests. The better part of the last half year, demonstrators targeting Shopping Malls these past three days. Lets bring in our asian government managing editor. He is with us right now. Day, and the malls all around, it is still continuing. No risk from the demonstrations we have seen since june. Malls and the Retail Sector have been targeted before, specifically mainland chinese businesses coming under attack by protesters throughout the months. We are expecting more in the coming days. Theres another scheduled this evening in hong kong. Then some stuff over the weekend. All leading to a big rally downtown on january 1. Selina how much worse can things get . Largerh more violent or do we expect the new years eve and new years day protests to be . Protest isyears day organized by the civil human rights fund, which has organized some of the biggest rallies over the past six months that have seen the streets of hong kong flooded with protesters. That group wants their protest to be peaceful. They filed for a permit. They are still waiting to get that approval. Even when the Police Reject those permits, demonstrators will hit the streets anyway. As far as how violent it can get, it got pretty bad in november. It could still get a lot worse. We have seen Police Make Arrests with weapons, bombs. Thankfully nothing like that has gone off here. That is really the worry going into 2020. Will we see a real big step up in violence and a lossoflife . So far there has been dramatic scenes weekend after weekend, but if we look at india, where we have seen 25 people die in the past couple of weeks, hong kong has had a handful of deaths by comparison. These protests have persisted and could get a lot worse. We will see what happens. David not to mention chile, another hotspot. Thank you very much. Trips course, plan your accordingly. In case you havent seen it yet, head to bloomberg. Com to catch bloomberg televisions special report on the protests. We are calling it hong kong on edge. This is bloomberg. You are watching Bloomberg Markets the china open. Welcome back to the program. Lets get a quick check of your latest business flash headlines japan. K things off in the second largest brokerage is looking to hire more banks who specialize in the Healthcare Industry and are bidding to bolster their midcap unit. The firm ist says still short of hands in that business. They have advised on 131 mediumsized deals so far this year, will behind rothschild, who has been involved in more than a couple. In india, a home sales in mumbai have jumped to a high of four years as developers switch focus to building apartments. Research from a property consultant showed a 22 sales jump this year by a persistent credit front and a slowdown in the economy. Last month, the government announced a 3. 5 billion fund to revise a residential project in a bid to reverse slowing growth. Have a look at luxury sales. Tiffany reporting a rebound, christmas with shoppers in china responsible for much of the growth. Revenue rose between 1 and a 3 from the start of november up until the eve of christmas. Sales fell in the nine months of before october. Tiffany was acquired for just over 16 billion. A big corporate story overnight. Itzon shares surging as touted its Holiday Season success. More people tried prime than ever before. That was a recordbreaking Holiday Season for independent thirdparty sellers. The Holiday Season generates about 1 5 of retail each year, according to the National Retail federation. With onlineing shopping, ecommerce is booming in china thanks to widespread mobile and online payments. For more insight, we are joined by jacob cooke, cofounder of a tech consultancy that helps china and japan. We have seen chinese ecommerce giants stay resilient, despite the ongoing u. S. China trade war. Now that we are close to a signing of the phase one trade deal, how does the ecommerce industry in china stand to benefit . The u. S. Portion of the benefit, we will expect a larger portion of those goods being sold online. So far over the last year, 20 yearoveryear growth, u. S. Brands have not really been keeping up with that. Hopefully with lower tariffs and increased goods we have been talking about, we would expect u. S. Companies to benefit greatly from that. Selina you mean more of those u. S. Companies joining the likes of alibaba . That, butot so much more u. S. Brands participating in those big sales days. The contributions we are talking about, 100 billion over two years, it is a considerable increase in whats being sold to the u. S. And china. Selina when it comes to brand sentiment, the impact of nationalism on the desire of chinese consumers to buy u. S. Goods, do you see that changing . We have been watching that all year. It is something we were watching very closely. We never saw any decline in u. S. Brands or the sentiment through the entire year. Even when we looked at singles day, we were keeping a close eye on sentiment. Nothing was down this year at all. We dont think it will weigh against u. S. Brands. The laggingite retail sales in china, the Macro Economic slowdown, the likes of alibaba have been not outpacing only growth in china, but online growth. Theres no reason that wont continue into 2020. We will probably see 18 to 20 ecommerce growth, as well. David nice tcu, merry christmas. Nice to see you. Merry christmas. Do you think the market, and we had a debate whether it was big enough to accommodate that type of growth from alibaba, do you year . That continues next is the market big enough for those players and others . Yes it is. Mainly what you will see is growth in 2020 from the lower tier cities. It will be a continuation of 2019. There is no reason to think the growth can continue. We think theres a lot of space to go in those lower tier cities right now. Back, i wasg a step a student in china in the mid to thousands. Back at that time, companies were just trying to familiarize themselves with the chinese consumer. Do yourward to today, think just understanding the theces and familiarity with chinese consumers on the part of Foreign Companies is now on par with your big, local players . It is not on par, but they are doing a better job of understanding the culture in china. The local players are doing a good job at injecting sales data and feeding it into production cycles for products developed for the chinese market. Foreign brands are getting better, but the local brands are doing a fantastic job ingesting all of that consumer data. Selina when it comes to a platform like pdd, im already inundated with these companies, the list goes on and on, can they reach a consumer like me in tier one cities . That remains to be seen. Theyve done a good job at getting ahead of the lower tier trend. They have done fast growth. They have made the other companies play catch up. Now we are seeing the growth in those markets, as well. Pdd will have a tougher time in first tier cities. Theres a lot of auctions for us. They have carved out a pretty big nish for themselves. Selina what is it that these platforms will do to make conception even easier consumption even easier . From a technological perspective, what they have done really well is logistics network. It was amazing to see that after single data, they had 70 to 80 of their orders fulfilled the next day. Thats a totally different situation than what we saw five or six years ago. The warehouses were filled up with packages from the floor to the ceiling, sometimes going out the doors. That has improved. I. Has improved at suggesting better products for consumers. Before, they were based on what you bought before. Try to get you to buy similar products in the future. Now we are good with livestreaming, being able to suggest things to consumers they would not have thought of before. That will increase Consumer Spending a lot. You, final question for what are people missing, industry watchers missing next year . Keeping ani would be eye on suing. One of the things is a bigger convergence between offline and online, with image recognition, facial recognition technology, peoples purchasing behavior and how people are purchasing online is going to be a big story in 2020. Selina thank you for joining us, coming all the way to the west side from wpic. He is the cofounder and ceo. Coming up, Global Trading houses are holding back on hiring, except in china. More on whats behind the rush for analysts. This is bloomberg. Global investment banks are scaling back on hiring, but in chinese brokerages, that is bucking the trend. Theyve been expanding recruitment for a fourth Straight Year, and have a Record Number of analysts. Joining us is our china financial regulations reporter. Why are these chinese firms adding more people bucking this trend . There are a few reasons. First of all, some of the reasons Global Growth and analysts have been slowing is because of the rise of passive funds, automation, and mifid ii rules. They had tied china to a lesser degree. On the others, it is chinese brokerages in the midst of a transformation. Not everything is rosy for them. I was at an analyst contest recently, and they said according to their poll, 45 had seen their salary drop last year. I i think what is happening is the Research Houses are focusing, thinking of new areas or income streams. Some of this might be these new Asset Managers coming into the pool in china, which includes bank Wealth Management firms, even foreign into solution will investors. David its kind of a bummer. Seeing your firm hiring, but you are not getting a raise. It is going to the new person. You mentioned a little bit about the new fortune, some of the results. Tell us more about what is ahead. What that had in it. This was basically the contest for south side analysts. They called it the finance geeks oscars. It was very much like that. I was there about two days ago. The winners basically walked away with a trophy, even a solid gold pain. Usthe past, people have told that while your average runofthemill analyst might get 75,000 a year, someone who ranked very highly can easily walk away with one million. This contest has gone through some scandals. Last year it was canceled. Analysts are now telling us their compensation structures have also been adjusted slightly, so its no longer as big a focus as before. David i think i will take my chances. Thank you so much. In case you missed it, here is some very encouraging data out of china. We were expecting a drop. We got a rebound in industrial profits in november. Bloomberg charts illustrates that clearly. It will not collapse the bottom panel. Which we werent expecting, but we will see if it continues next year. Selina but we cant get too excited, because we have the National Bureau of statistics saying volatility and uncertainty in industrial profits still remain. And this is backward looking data. Across the area when it comes to the mainland. More than 1 . About. 6 percent. Looking positive after the christmas holiday. We also had great news about the Chinese Government relaxing this system, which is great for the Economic Growth and migration of labor and talent for property and those lower tier cities. We also have plans to revamp the state owned enterprises, so good news today, we have more market coverage on bloomberg. This is bloomberg. Blooomberg markets asia. Welcome to welcome to blooomberg markets asia. A rally lists u. S. Benchmarks to new record highs. And china promises to improve handling of bond defaults to restore investor confidence. And clashes in hong kong, there we go, at Shopping Malls across the city and more. Demonstrations are planned in coming days. Welcome to the second hour of the program. Its a very quiet session, volumes 40 to 50 thinner than japan outail sales in today, industrial profits in china surprising a little bit, to the outside as well. Australia, there we go, 60 800 and the hang seng index and poweringseng index, 300 points, up 1 , levels last seen in 2018. We will get to the protest story later in the show. In the meantime, lets get to Karina Mitchell in new york with your first word news. Karina japans