Philippines down quite substantially today, around 1. 4 . Not really feeling your sort of risk on mood we had several days ago as well. Not to mention in case you missed it, the tie chin pmi numbers a little soft. I mentioned dollaryen. Dollar, the loonie was actually under a lot of pressure. Dollar, dollar, dollar, canadian dollar. Pressure on friday given the move we have seen here. The aussie dollar dipping below your . 70 level. As promised, very quickly, have a look at brent which is now back above 70. You have gold pushing 1600 an ounce. The entire crude your futures curve, you can look at it almost by the hair from the floor on friday. The longer end, and the reason i am pointing, the longer end of your japanese bond market seeing a substantial lift and the move back into haven place. These. Track all of yvonne our top story, the fallout from the killing of a top Iranian Military commander is widening. Lawmakers have voted in iraq to expel american troops and iran says it will no longer abide by the nuclear deal agreed to in 2015. Our editor joining us with the latest in singapore. Tell us how this topic is going to be evolving in the coming days. Trump just landed in washington. He spoke with reporters on air force one and made some somewhat incendiary comments, as you all have shown, impacting markets already. He said he reiterated the threat in very stark terms, that if iran does anything, the u. S. Will retaliate. He said over the weekend that he reserves the right to attack to retaliate disproportionately. The other one, and i think it adds new risk we have not seen before, is following the iraq vote you mentioned, President Trump threatened to sanction the u. S. Ally iraq if they kicked out u. S. Forces and did not reimburse for costs spent on base construction, which is billions of u. S. Dollars. Billions plural of u. S. Dollars. Iraq is a very fragile country just generally in that space. One the u. S. Has spent billions and billions of dollars and hundreds of lives to prop up. Ask tod be a very big sit there and say, well, u. S. Troops are going out and you have all these foreign allies as well. David why is it a big deal on iraq . Second question first. Do we know what he is threatening . No. President trump said sanctions would be a degree of magnitude larger than those put on iran. He did not say exactly what sanctions might be, but did quantify them to say they would be quite large. New . Rms of why is that iraq is a u. S. Ally, quite frankly. It is in a tough position, cut theeen iran on one side and u. S. Is its principal western backer. U. S. Has from the early days , the u. S. Am hussein has done everything from send advisors to tell iraq how to run the government to throw money at the situation to have troops there to keep the peace to every single time that iraq has started having stability issues, sending more troops to keep more of the peace. A lot of what iraq has been able to do so far has been with u. S. Support. If that changes materially, it adds a very big new risk in an already volatile region. Derek, thank you. Our Senior Editor joining us out of singapore. Michael, you mention in your notes, you have a reputation for being bearish about geopolitics. We are seeing a hit when it comes to risk assets, but not a lot of panic out there. Why do you think this is misplaced . I think the panic, or the lack of panic we are seeing, because if we are talking about equity markets down around 1 , i dont see how that sets alongside the headlines im seeing in the Mainstream Media talking about risks of world war iii. Those do not sit comfortably aside one another. 1 . Hould be down 10 , not the market is being driven by this belief the central bank will bail them out over absolutely everything. The Central Banks continue to keep that support in the background. The market misinterpreting the fact that Central Banks cannot protect us if anything bad does happen on the geopolitical front. Ironically, and as someone who is bearish on geopolitics, i think it is more noise than significant action. What trump did in assassinating soleiman, pressing a redline as it did, is upping the ante with iran so significantly that we either go to full on war, which i think is unlikely, or iran is going to have to back down and realize the u. S. Actually has the trump cards to play here. Iran cannot possibly fight back against that. They dont have the physically ability the physical ability to do it. Even though we are seeing headlines about world war iii, i actually think we are further from that scenario now than we were before. Yvonne Michael David michael, you mentioned the Central Banks might not be there to salvage the markets this time around. I wanted to bring up donald trump. He does not like markets selling off as well. He would strike a balance i imagine between the iran story and also keeping Market Sentiment in an election year. Your thoughts about that . I agree. This is trumps one great achilles heel, if you will. He is trying to shake everything up. If you are looking at china, with iran, with north korea. At the same time he expenses he expects equity prices to rise and thinks the market is a reflection of whats going on on main street, which of course it is not. That is a real quandary. We have seen him be incredibly aggressive and then suddenly do something completely unexpected to put the markets up. I will say if he continues to rattle sabers like this, you are going to see the Federal Reserve cut rates in 2020, something we expect them to be doing. That will give markets a lift. The key points i want to underline for viewers is that a push comes to shove and something terrible were to happen on the geopolitical front , god for bid it should and i dont think it will, but if it will, forget Central Banks. They are irrelevant. Look at the fires in australia. Do you think anyone choking on smoke cares what the cost of borrowing is . It is irrelevant at that point. Yvonne how do you price that risk, then . Are there tools in the market to hedge those risks . Goldhad goldman saying seems to be the better hedge than oil. How do you see that playing out . Michael i think oil is a good shortterm move. That spike today has taken us beyond where we were on friday. At the risk of sanctions on iran, a major oil exporter, saudi and iraq and iran in different conflict, it gives you nearterm upside even if demand is weak in the background. That may come back down going further forward. In terms of gold, i am bearish. I think what trump has done by killing soleiman is dollar positive. I dont want to say that in any flippant way. But you have to remember the u. S. Dollar is top dog in terms of ethics because it is top gun in terms of the military. Use had you just had the u. S. Showing if you tweak their nose continuously, which is what iran has been doing for decades with its asymmetric warfare, eventually the fist is going to come down. Remind everybody the dollar is top down top dog for a reason. David we will continue the conversation with michael every. In the meantime lets get it over to new york and su keenan with an update of your first word news. We are going to start with the latest on two prominent central bankers warning the u. S. And the European Union face daunting economic challenges in the world of low inflation, saying policymakers cannot that is the message from mario draghi and janet yellen. He said the euro zone faces the well sheapanification said the u. S. Is struggling with stagnation. China is pledging more support for Small Businesses this year while vowing to stick to prevent Monetary Policy in the face of its slowing economy. Make it says it will easier for businesses to gain access to financing. To diffuses also aim major threats by focusing on longterm regulation for real estate lending. One u. S. Service members and two defense contractors have been killed in an Al Qaedalinked to raid on a military base in kenya. The group says the group that theied out the attack u. S. Has used kenya as a key base for fighting alshabaab, which it calls a terror organization. Ceos of the largest u. S. Companies take three days to earn the salary of the ordinary worker. A report from the High Pay Center finds the typical ftse 100 boss would only need to work 33 hours to reach the average yearly paycheck. It is based on the average ceo earning 3. 5 Million Pounds in 2018. Global news 24 hours a day powered by more than 2700 journalists and analysts in 120 countries. This is bloomberg. Ahead, a closer look at the longer term effects on the oil market. David and we discussed whether Central Banks should be worried. The strong part of the economy is the consumer side. Labor markets are strong. Wages are growing. That consumer site has offset the weakness on the manufacturing side. The economy has been moving in a good direction. Im surprised by the week number. Number. Manufacturing has been struggling and contracting recently. Trade policy uncertainty has been part of that. The gm strike was part of that, but that is over. It is a bit surprising. Yvonne that was Loretta Mester and Charles Evans sounding a cautious but optimistic tone on the economy. David still with us out of bangkok is michael every, head of Asian Financial markets at rabobank. I guess you are not cautiously optimistic . Michael since when am i ever cautiously optimistic . As i made clear in the previous segment, when you contrast headlines saying world war iii all over the place, i look cautiously optimistic by comparison because i think they are overblown. The risks are there of Something Like that happening at some point, but i dont think it is going to be started by the issue in around. In iran. I hope that is not going to be a historically famous silly statement. I am cautiously optimistic. Risk isdo you think going to be more geopolitical or more on the economy side of things . Michael they interweave, really. The trade war issue with china we only believe will come roaring back at some point. That will affect the real economy and the markets and geopolitics all at the same time. Taking king away ticking away in the background. The economy in most parts of the world is limping along. The consumer is doing ok in the u. S. , but that is about all. In asia it is slowing down even if we get a temporary pickup. Geopolitics is what worries me particularly, but i must admit, i dont think 20 20 is likely to be the year all those chickens come home to roost. I am more concerned about 2021 after the u. S. Election. David it is so far away. 12 months where people can be investing. I would imagine staying out of risk assets in this window, the opportunity cost would be quite high. Well, absolutely. That is logical. To be a little flippant at the same time, if you are reading between the lines and thinking, dont worry about 2021, that is when you will have world war iii, enjoy the next 12 months, you can sit on that stockpile when everything goes up in a Mushroom Cloud 12 months from now. What you have said is correct. There is still going to be a wealth of opportunity out there. I think the current risk off move we are seeing is not going to last that long. When it does come back, it will really come back, but i think this is a false signal at the moment. Yvonne you mentioned dollar strength. In light of this crisis we are seeing in the middle east, the dollar seems to be the long play. What does that mean for em . Is em going to be vulnerable this year . Michael we think so. We think it is going to be a volatile year for emerging markets. Pretty rocky start, isnt it, for 2020 . We expect other emergingmarket currencies out of the middle east to have continuous periods a really severe volatility similar to what we saw in 2019 and previous to that. The dollar is going to be the driver along with local video sink receives that might undermine a particular currency at any given point. David where would value be . To sayare going treasuries, do you think treasuries are set for a better year compared to last year . Last year was already a pretty good year for them up until the end of the year when we had that sudden reversal. We think 20 20 is going to be another excellent year for 2020. We think the fed is going to be completely wrong and will be cutting rates aggressively in the second half of the year. Yvonne you are still thinking the fed could cut this year . Are people starting to price out the possibility that the fed could actually hike next year . I am wondering, how many cuts are we talking about . We have seen three we were not expecting last year. How much more room is there . Let me just qualify, we think we are going all the way back to zero. Happy new year, everybody. We think rates are going all the way back down to zero in the u. S. That is going to be a necessary step for the fed to take. They are wrong in thinking otherwise at the moment. I dont think iran is going to be the trigger. Would youy quickly, be willing to shave until the fed cuts to zero . Michael i will take you up on that. David ok. Live tv. Yvonne we are live. David is it qe five or six or 10 . Thank you very much. Very quickly, check of commodity markets. Brent topping 70. Gold in play. Palladium, we were trading around 2000. We are lower when it comes to futures. 70 a barrel for oil. Sooner ahead, we will drill down. This is uber. Bloomberg. David lets get your latest business flash headlines. End its Office Equipment Sales Partnership with xerox, turning companies from allies into rivals. ,ujifilm made another move spending more than 2 billion to buy out their joint venture. It will now rebrand that operation as fujifilm business innovation. Yvonne test ledger over tesla delivered a Record Number of vehicles in the Fourth Quarter and is projecting record growth in china. Tosays it will soon be able triple production at its shanghai plant to 3000 cars a week with the sock the stock soaring to an alltime high on friday. The market cap is now more than double that of ford. David samsung says it will launch new products in san francisco. A Teaser Campaign shows a rectangle and a square, prompting speculation of a potential new galaxy s series and a clamshell foldable smartphone. Firstg launched its galaxy phone 11 months back, but only went in sale in september because of delays caused by design effects. Competition is heating up for banking licenses with two more groups saying they have submitted bids. It includes one of asias largest massage chair makers and a storage value card company. Singapores also teaming up with a group of chinese partners. Lets have a look. Yvonne risk assets in the red in the region. It really is going to be the oil here with brent hitting 70 a barrel. Highs we have not seen since may. Miners given ald risk off move into bullion. Gold up 6. 3 . On the flipside, the airlines are taking a big hit. Like korean air down 4 in south korea today and China Southern airlines down more than 4. 5 . Certainly geopolitics dominating a lot of the moves here today. David the backdrop of risk pointing out here, your leftmost column, equities in japan worse off by 500 points. Several market openings in thailand and india in 19 minutes or so. Dont expect to see a lot of green on your screen except when you look at sovereign bond markets as well. As we get underway this monday, risk assets getting a mauling. We will get you more of your top stories coming up next. This is bloomberg. I am su keenan with the first word headlines. President trump is threatening iran with major retaliation if they do anything to avenge the u. S. Killing. He had threatened disproportionate strikes of American Interest were targeted. Iran has already said it will no longer be bound by the nuclear deal on enrichment of uranium. President trump is threatening sanctions on iraq if troops are forced to leave the country. Says baghdad can expect sanctions like never seen before if u. S. Forces are expelled. Hospitals have admitted seven more people in hong kong with flulike symptoms who had recently traveled to china. A total of 15 to the patients suffering who have pneumonia like system symptoms. The cause is still unknown. Tokyos famous tuna auctions have come close to a record sale with a giant loop and setting its the second highest price ever. Fish was bought by a corporation for about 1. 8 million u. S. Dollars. The sale up makes the fish second only to a similar move. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. David tokyo is just going into the lunch break. Futures continue to trade in singapore. Take a look at where we are. Lets change things up and look at the bond market. You have china there as well. The japanese 20 year is down. Your measures of volatility across the region on the way up. Thes not surprising given news flow out of the middle east and washington. Talk us through the price seen here for much of the day. The question your brain to viewers is about the geopolitical threat. Seems like at this point we are seeing some pain but not a whole lot of panic. How should assets price geopolitical risk . Looking for ae few issues. Oil prices and the outlooks growth. Inhave been used to spikes oil prices over the last few years. They have not usually lasted long. The effects of u. S. Shale gas seem to be quite quicker. See a lotly expect to more supply from the u. S. Side in the coming weeks. That will probably help to cap oil prices. What we are seeing now is probably relatively shortlived. It will not last that long. History tells us that those things dont tend to equate so much in asia. People are probably looking at the whole set of china pmis. This is a temporary jolt to confidence. It is the start of the week. What else are you guys cut tracking . Mark we have a few other bits of data. U. S. Employment as an this week, which will give us another read of what is going on in the u. S. Economy. 2019 was americas year. 2020 will be emerging markets in asia. We have already seen a soft ism number. We will see relatively better improvements. That will play out across securities markets. We will see that transformation taking place. That is the angle we are coming from. The crisis should be a shortterm shock. Beyond that, we are posed for a weaker dollar. Context and great perspective. Thank you so much. Just taking in some live pictures. Morningeaking here this. Saturdayt that news on from the government here. They did not elaborate on the changes when it came to hong kong. He has been known as a strong bringd perhaps the man to some more law order back into hong kong as these protests continue on for months. A lot of questions on what he will do moving forward. David for our bloomberg clients, you can continue to on youris story bloomberg terminals. We will pivot back to the oil market, which continues to be our top story. Good morning. Thanks for joining us on the program. What do we need to know about oil . There are a few things happening now. The middle eastern tensions. We cant discount that. The next few weeks, depending on how iran retaliates, things could really take shape. We have u. S. Production growing. Yvonne a lot of questions on what kind of form retaliation will take. Looking at history, what has happened in the last few years, we have seen iran doing that. We definitely see something similar happening in the next two weeks. The u. S. Is quite aware of this. David the word war has been tossed around since friday. I would say the possibility of a fullscale Ground Invasion is at a very low risk. Terms ofou think in the oil supply that is actually at risk . What is realistically at risk right now given the options you laid out . We dont think a full lawn war will happen immediately. If that happens, we could see oil supplies at risk. What is realistic . At this juncture . Think there will be a big shutdown. Yvonne where will be the greatest risk to supply be . Who will be impacted the most. We might expect some supplies to be cut down. We know there have been protests in libya. We do aspect supplies will increase by another 2. 3 million barrels. That is a lot. We could see a price surge. Yvonne you had a forecast averaging 65 a barrel for this year. Have you had to make any changes to that forecast in light of what we are seeing now . Clearly this was done before last week. It could go up to 80. More supplies could come on board in the coming months. David absolutely. Withins of the factions opec and opec plus, how do you them . This affects an they should be fairly compliant in the coming weeks. If prices surged by a far amount, we could see nonopec members like russia and others backing out of it. Yvonne thank you so much. Admit the fallout from his dramatic escape. That is next on bloomberg. Yvonne lets do a quick check of the latest headlines. Competition is heating up for Digital Banking licenses in singapore. It includes one of asias largest massage chair makers. David mercedes is going to recall three quarters of a million cars in the u. S. For potentially faulty sunroofs. These were models sold between you have there bonding between the glass panel and the siding could deteriorate. It could lead to the panel breaking free. The recall is expected to begin on the 14th. Chairman ofousted indias sprawling company says he will not seek a return as chairman despite winning a legal case against the company. He does not wish to return in a formal capacity. The family owns about 18 of the company. David speaking of former executives, the fallout from ghosns dramatic escape from japan will become clear this week. The government announced new measures. Yvonne lets bring in our Global Business editor in tokyo. We did just hear from the Justice Minister here coming out with a statement that they are aware of the criminal Justice Systems criticism. Anything new we learned here today . There is not a lot the Government Action knows about the conditions of his departure. Know exactly how they will proceed with this case. They have tried to get some cooperation in lebanon. He is planning to have a press briefing breathing in lebanon. They vowed to have stricter enforcement of immigration procedures. David that leads to changes in the Justice System in japan . To be anye were changes, they would be a long time coming. The process for that would move very slowly. The likely path forward for them is to insist that he has escaped justice. That he needs to be brought back to japan. They will be making that case and trying to avoid any discussion at all of the Justice System here. Be callingkely to for reforms as are other possible executives. People will be watching this very closely. The government usually does not make any moves like that. They have to take some kind of steps to show they are capable of controlling movements within their country. That they are taking steps to improve that. It is difficult to imagine what those steps might be. It is an already pretty strict regime. Much. thank you so our Global Business editor in tokyo. We are looking ahead to the opening of the session in india. Less than an hour away. Mumbai. Tanding by in what are you watching from your end today . It will be globally driven. Last week it was very short. The large caps are not holding up. Markets weroader should gather. Aside from that, it will be interesting to see what happens with a few banks. David any other thoughts and focus . We will have some data coming in from titan industries. This contributes about 80 of its revenues. They have a stock price target of 485. Yvonne thank you very much. Australias struggles to quell bushfires raging across the country. We will have the next latest, next. This is bloomberg. Yvonne taking a live look out of sydney. Like things are looking slightly better. This has been a dreadful weekend. David terrible pictures coming out of australia. Some flights have been canceled. We are look at some of these miners. Yvonne authorities are saying the devastating bushfires have created one of the worst weekends in the crisis so far. Hundreds of properties were destroyed. Firefighters are still trying to extinguish about 200 fires. David lets bring in our managing editor for australia and new zealand. He has been tracking developments there. It was another terrible weekend. It was a blistering 48. 9 degrees celsius. We saw temperatures scoring. Two people lost their lives. Island has been scorched. Elsewhere, a person died in new south wales. The scale of this crisis was unimaginable. That absolutely dwarfs the scale of the California Wildfires in 2018. It is really quite extraordinary. Thank you so much for the update. We will have questions on what the government can do. Is this a Tipping Point to talk more about simon change . We will continue to assess. This is bloomberg. It is almost 11 00 in singapore. Yvonne we are entering the last hour of the morning session here in hong kong. Here are the top stories. Highop 70 in gold hit a as iran abandons the nuclear deal. China sends a party strong man to oversee its interest in hong signal that beijing wants to restore law and order. The ousted chairman of an indian conglomerate says he does not want his old job back. Haslinda bond markets on edge as tensions in the middle east persist. Trump saying he will impose sanctions on iraq. Saying it is no longer tied to the nuclear deal. It is also promising retaliation. Not surprising that Market Sentiment is pretty low. Take a look at where we are. The asian index down by 1 . Geopolitics will be a major driver of markets in the shortterm. Just as everyone was getting comfortable that 2020 would be a better year. Kicking off a frustrating day and 2020, down by 2 . Playing catch up. Taking a look at they hung seng. G hang tencent leading the declines. The yen rising, hitting a three month high. The focus is on whether or not iran will retaliate. Take a look at gold. We had oil jumping best 70 a barrel. There is room for further increase. Yvonne that move up and oil will hurt markets. Overall it is that macro picture that will really hurt the session in mumbai. Take a look at what we are seeing on futures. We see this strike up in yields. R. B. I. Is conducting this today. Take a look at the rupee as well. This hour. Haslinda on to our top story, the fallout from last weeks killing of a top Iranian Military official. Lawmakers in iraq have voted to expel american troops and the u. S. Says iran says it will no longer abide by the nuclear deal. If iraq does put out those u. S. Troops, he is saying he will impose sanctions. This is a real addition of geopolitical risk. We see it across the markets. This is a real, new escalation. The sanctions on iraq. Let me put this into a little bit of perspective. Since the u. S. And Coalition Troops invaded and throughout saddam hussein, the United States has been propping up the government in terms of security. They said this is how you start a democracy. Iraq is geographically located next to iran. They are a little bit caught between iraq and a hard place. One of the difficulties is if you are talking about that major ,ponsor of money and security if you actually go through with this, they will demand repayment. To the tune of billions of dollars. Or we will sanction you. Trump did not say what he will sanction. But he gave a magnitude. And he said it will be more than that which the u. S. Has sanctioned the rock. That is quite a threat. That is not nothing. Trump started his presidency riskaverse. He pulled troops out of the middle east. He looked past north koreas violation of sanctions. What exactly is the endgame for the Trump Administration in the middle east . That is a really good question. I think we need to hear more from the president on that. So far he has basically said that his current game is no additional escalation. He told reporters on air force , if iran does anything, we are going to respond. It mightr said that not be proportional to what iran does. He is leaving open the option of a disproportionate response. He said he was looking at 52 target. Some of which might have cultural significance. He reiterated it. That was not a throwaway line. Now, you are looking toward additional red that have gone in. Is this a situation like north korea where there was a lot of bellicose talk and then it kind of needed out petered out . Newt now we are seeing a risk on the horizon. An escalated risk. When it comes to iraq, iran is a neighbor. Thank you so much for that. If oil becomes a weapon of choice for iran, where could we see oil and what does that mean for the Global Economy . Clear that oil prices are likely to climb again. On the other hand, we know that the u. S. Has an ally in the middle east, saudi arabia. Can balance the oil shock. We know that trump is very difficult to predict. He will say one thing today and overnight could change his mind. There is a lot of opportunity from here. India will be hit hard. At what oil price will inflation be a problem for asian economies . Looking at 100 oil before inflation comes an issue . We see that oil prices have gone to 100. It has already happened. If this trend continues, we will see inflation projection. The Inflation Expectation will be totally different from what we have objected. Everyone is talking about we will see the cyclical rebound. Does the rise in oil here hurt or if asked that recovery . The cyclical rebounding is probably because of the trade fear in china. On the other hand because of the relatively low. That Economic Data crashed at the end of last year. Should see some kind of improvement or stabilization from that kind of affect. Probably we will see the socalled stabilization will be under pressure. And it will be delayed or postponed. With china in particular, we do see some kind of data improvement. On the other hand, the market sees the growth is the most likely scenario for china. Stabilization does not change the market. China will still be struggling in the coming years. That is probably the case for now. Fx. Ne you also cover em i wondering, which em currencies you look at her most vulnerable now . You mentioned korea. If tensions continue to escalate. That is the most vulnerable in asia at this moment. Yuen will still be relatively stable. A trade deal will be signed. Agree to a lot of things to ease tension. Put the market at this will bethe yuan relatively stable. Yuan bewhy would the stable . Is yet to be deal signed. And phase two might be impossible to come to an agreement. After the announcement of the socalled phase one deal in december, there was only appreciation by 1 . We know this is a managed currency. Even though that deal would be it would be kind of an invisible hand. It would be relatively stable. What trump wants. Word get the first headlines with su keenan. Su we will start with the fears of conflict in the middle east. Philippinerompted president Rodrigo Duterte to evacuate Filipino Workers in the region. He called an emergency meeting with defense officials amidst the widening standoff between the u. S. And iran. The latest count says there are more than one and a quarter million filipinos working in the middle east. Japan, the Justice Minister says an investigation that former Nissan Foss Carlos ghosn left the country by illegal means. The Immigration Agency will strengthen its controls to avoid similar events in the future. This is the first time a japanese official has commented after news emerged on new years eve that ghosn had fled to lebanon. As the case is currently under investigation, i will refrain from making specific comment. The investigation has no record of his departure. Countryear he left feet unlawfully using illegal means. Two years after his arrest, Harvey Weinstein is finally facing court. Felonyacing five accounts, including predatory Sexual Assault and rape. Jury selection could last several weeks with the trial itself lasting up to at least six weeks. Accusations against weinstein metoo movement. Listed the largest u. K. Companies took about three days to earn the annual salary of an ordinary worker. Finds that a boss would only need to work 36 hours to reach the average yearly paycheck of 29,000 pounds. The estimate is based on ceo earnings in 2018. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Yvonne still ahead, we take a closer look at the longerterm effects on the oil market. As tensions raised threats to the Global Economy, we discussed the central bank and should be worried. This is bloomberg. Watched gaugeely of u. S. Factory conditions has put up its weakest ratings ands 2009. At 47. 2, down from the previous month at oda. 1. Still in contractionary territory. Slowing growth and trade tensions are weighing on the sector. But u. S. Economic fundamentals remain strong. The fundamentals are still good. There is slow growth abroad which affects our manufacturing numbers. And uncertainty surrounding trade. Affectedrtainty has Business Confidence and their spending plans. On when the trade wars we were toldat up, it just gives us some pause. It is a concern. But we are still on plan with our spending. As it has gone on, now they are rethinking their plans. We have seen that in the numbers. I think the manufacturing numbers, obviously a better number wouldve been good. But it is consistent with what we are seeing. The strong part of the economy area is consumer. That has offset the weakness of manufacturing. The economy has been moving at a good direction. Do you think it is time to see the business side react . As you know it is in equilibrium. There is a lot going for the consumer. Labor market strength has really helped. Incomes are up. Wage growth has accelerated. Even at the lower end of the income distribution. Businesses respond to that. We will have to see how the economy plays out. The weakness in manufacturing and Corporate Investment could be a selfinflicted wound. There is some uncertainty out there. That uncertainty has clouded the outlook. They did not pull back on spending early on. They were on plan. As it continues, it did affect some of their investment. Especially some International Firms who had a significant. Rade exposure how that plays out remains to be seen. The phase one trade deal with china would alleviate some of that. Firms have incorporated that in some of their going forth. But we dont expect it to end anytime soon. They could reduce expectations. Clevelandat was the fed president speaking in san diego. The fed will signal a rate policy pause this year. That means asian banks will be patient. For Asian Central thanks at this moment, excluding the pboc, the other Central Banks that are not under pressure. They have room to cut. For example, indonesia. They will be more patients than projected. Yvonne you touched on the pboc. It is under a lot of stress because of the credit default. What can it do . What will it do . Thinkingis widespread for the central bank. Marketpast few years the has been experiencing deleveraging. Part of thate best outcome of the deleveraging. Pauseoc needs to take a on the deleveraging process. To be engagede into more aggressive Monetary Policy support to the economy to avoid too many cases in the economy. Manage an orderly default. That is the most likely scenario and most favored scenario by chinese policymakers. You have your forecast for emf banks. We will fired up for our viewers to see. How much are your forecast base are more policy easing from chinese officials . Could we see it in the form of more rrr cut . Perhaps the central bank and take a backseat. If you look at china in particular, more rate cuts could be expected. Hand, we could see more weakness in currencies in asia. Because of the pressure to depreciate. The other hand, if the Monetary Policy could help stabilize the economy a little bit, the markets will be ready. In general, we still see a moderate depreciation across the board against the u. S. Dollar. Balancing all of these factors ofl probably see some kind e. M. Effects going forward. Overall, depreciation will be relatively limited given that china is a supported economy and the pboc always tries to manage its currency in a stable manner. Yvonne thank you so much. Some images coming through live from australia. The Prime Minister Scott Morrison speaking in canberra saying the government is committing 2 billion over two years to wildlife recovery. This is after we saw a calamitous few days in southern australia as well as parts of victoria as authorities are now also warning a return to dangerous conditions later this week. We will continue to watch those images coming through from australia as we update you on the situation on the bushfires. This is bloomberg. Yvonne a look at Chinese Markets as it gets closer to the lunch break. Things are turning to a positive now after these difficult sessions we have seen. Oil very much in focus today. This is bloomberg. Whether youre out here on lte or here on a wifi hotspot, Xfinity Mobile has more coverage to keep you connected to what matters most. Moooo. Thats because its the only Wireless Network that automatically connects you to millions of secure wifi hotspots and the best lte everywhere else. Save up to 400 a year when you switch. Plus, unwrap 250 off our best phones. Click, call or visit a store today. Yvonne you are looking at live pictures of the lion city, singapore. We are middle of the trading today. The sti down by half a percent. We are tracking conditions in hong kong. Hong kong parents are now eyeing singapore schools for their children. Sizing up options. One school says it has seen applications from hong kong rise by 25 . Lets get the headlines with su keenan in new york. Su thank you very much. We will start with President Trump, who is threatening iran that there will be major retaliation if they do anything to avenge the u. S. Killing of a top military general. Threatenedarlier disproportionate strikes if American Interests were targeted. Arad has said it will no longer be bound by the 2015 nuclear deal on enrichment of uranium. All americanng for forces to be expelled. The u. S. Is threatening sanctions on iraq if troops are forced to leave. Has spent billions of dollars in iraq and would demand reparations in return. He said baghdad could expect sanctions like never seen before if u. S. Forces are expelled. Australia has suffered the worst we can since the bushfires broke out. Strong winds and high temperatures stoke the flames. At least 23 people have died so far. Have a billion animals of paris. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Yvonne lets take a look at markets here at the moment. We are down some 2 and tokyo. We are down about a third of 1 . Australia is committing 2 billion over two years to wildlife recovery. Futures are having lower by 42 points. The rise in oil prices. Lower by about of third by the rupee. Traders are very much weighing that third option. Central banks will be selling some shorter debt. Take a look at your energy futures. North of 2 . The natural gas futures are slightly higher. Rising on the back of a 4. 7 4 increase. The question is where oil goes from here. The 23 rgue that after rise last year it is limited. What you are looking at at the moment is a situation where a lot of folks are worried there could be more tension in the middle east. We are currently in a situation where folks are worried. They will not be able to get risk off at the moment. This is causing the crisis to rise. Forward, it is a supply and demand situation. Opec has worked hard over the last few months to lower production. From a fundamentals point of view, the market is balance. In that view, maybe you will not be able to see as much upside. Depending on what happens with the ran going forward, it could move prices further. We are in a state of wait and see. When you take a look at supply, if there is something saudi arabia can compensate for. They have the ability to produce and boost output. That is not something that saudi conflicts quickly. Haslinda how much risk has been factored in currently . That is a really good question. That is something that every trader and everyone who is looking at well at the moment wants to know. Now, just showing the price of the rise today, it is 100 factored in. When you talk to analysts in the market, they see more upside. That is really the situation at the moment. Thank you. Our energy reported bringing us the news out of singapore. Lets welcome our next guest. Thank you so much for joining us. Tell us a little bit more about what we have seen in the last 72 hours or so. Are we getting closer to the brink of war . Headline suggests we could be seeing further escalation. The markets at this point still seem to be quite muted. We are seeing some pain but not a whole lot of panic. Are in very volatile situation. We have really been underselling the risk on the oil side. We have seen the unrest in iraq disrupt this briefly. They lost 1000 barrels of production last week. One risk is that the u. S. And iran and military interaction accelerate. There is a risk separate from that that it becomes more and more unstable inside iraq. It could be oil workers themselves participating. Therefore production shuts down. We have had a exxon mobil exit. That will slow down some big water injection and other technical projects. There have been sanctions. If things go badly, there is this quasitrade made between iraq and iran. It probably helps the iranians out. They can move some oil into iraq. Who knows when the other oil get sold. If the u. S. Makes an effort to crack down on that kind of smuggling, that could take some oil out of the market. Markets are a little tighter now than they were three months ago. Do you think iran will target oil as a type of retaliation . Could they attack saudi energy . You can take them at their word when they said they will attack military targets. That would not necessarily be going back to attacking Oil Facilities. It is hard to say. Do we think the irradiance control all of their proxies . Will there be revenge actions that are not even directed from iran . First it was the proxies, then iswas the death here, now it in control of everything. We have seen these different narratives. You could have sabotage. I would remind viewers and listeners that i started writing about this titfortat proxy attack on Oil Facilities in january of 2018. I still think there is some risk. It is unclear whether that has been the first choice. Haslinda as tensions escalate, is there any lesson from the gulf war that the u. S. And iran should bear in mind . I think the lessons are d iraqiran war. That is one warning right there. The second thing about the gulf at how thingsok have transpired, maybe the thought iternment was clever to put out on social media these films of the u. S. Embassy being burned and this would be an embarrassment to President Trump. There is a lot of commentary in the u. S. Whether that was a smart or bad action. The bottom line is that it is probably not what the iranians were expecting for a reaction. It is the president more volatile or apt to take action that maybe they thought he was . These things will color how we go forward. Haslinda we have to leave it there. Thank you for your insight. Still to come, a dramatic turn. Ownays he does not want his job back. We will be live in mumbai. This is bloomberg. Yvonne a new representative for hong kong has been named. After almost seven months of social unrest. What sort of signal is beijing sending with this new appointment . Thatthink they are saying the time of the last guy is over. He allowed the chaos for continued over seven months. There will be a new set of marching orders in town. Chief met with reporters. He was convinced and confident that he could restore stability to the city. That is the message they are sending out. A stern new approach. Think beijing will do anything in the coming months to try to restore order . Mark it is hard to say. There could be more dramatic news. A shakeup of the carrie lam government. Could bement, there some more policies considered. Beijing has made noises about tightening screws. It is not clear whether they will do anything. Or encourage the local government to act more forcefully. For the moment, we are waiting. This more stern character seems ianpingsi j confidence. This is something that needs cleaned up. Haslinda thank you so much for that. We have the house to vote on war powers resolution to limit trump on iran. Much onhe acted pretty his own in consultation with a select few. We had the house to vote on war powers resolutions to limit him. We will bring you more as it comes in. Now turning to india. Lets get right to mumbai. We go through what to expect on this phase session. On friday we had the middle east weighing on trading. Hows it looking today . The opening session has breached the 20 day moving average. The banking indexes over down over 1 . The broader markets have come under pressure. Watch out for the indian rupee. You will see more depreciation coming in all across the markets. India is a net importer of crude oil. You are watching certain stocks. What are behind those. Some acquisition news coming in. Acquiring a 75 stake. Markets have reacted overall positively to this acquisition and evaluation. Almoststimated to be 1. 9 billion. It has come in at a discount. Maybe it was rising tide. Jewelry sales for the quarter up 11 . The stock corrected itself 15 . At this point we are seeing some positive reaction. Yvonne thank you. India. Tick to he will not seek to return as chairman of the ending conglomerate despite winning a case against the company. He was removed improperly. Lets discuss the implications with our reporter. This seems like a surprise. What exactly is being said . Does this make it easier for tata . Interesting question. Case he put out a statement saying he is not interested in the top job of tata. This is making things slightly easier. Is fighting the case. It is a landmark case. Tata is fighting a case against the supreme court. Case. A landmark though he will be vigorously pursuing his case that he has been improperly ousted, he does not want to be chairman. That makes it slightly easier for tata. The battle is tough for tata. Haslinda slightly easier for tata. What should we expect his next move to be . Tata in his personal capacity and the conglomerate has already signed a petition with the supreme court. They will be fixing a hearing date soon. This will be happening in coming weeks. Thank you. Plenty more to come. This is bloomberg. Death toll in indonesia has risen to at least 60 people since new years eve after dealing with flooding from some of the heaviest rain in 24 years. Things could get worse, with more rain expected in the coming days. Lets get more from our reporter. How much has been done to address the issue . There has been some progress. Enough to it is not deal with this kind of calamity. More needs to be done. Haslinda in terms of damages and economic impact, is there a number out there . Harry the activity is pretty wideranging for now. Stated itist recently could exceed 1 billion. Nonfinancialer problems we could see in the coming months. High inflation and things like that. Yvonne how did we get here . What really caused this flooding. Has this been the worst of it . That we have had the heaviest rainfall in 24 years. That is one trigger. The peak of the rainfall could come in the coming weeks. Oren march. We could still see the worst of it. From where we are right now. Our transport and industry reporter in jakarta. Thank you for that. Lets get a quick check of the business flash headlines. Mercedes will recall almost three quarters of a million cars in the United States for faulty sunroofs. This affects model soul between 20012011. The bonding between the gap glass panel could deteriorate. The recall is expected to begin on february 14. Tesla says it delivered a Record Number of vehicles in the Fourth Quarter after fast growth in china and beginning Factory Production there. With the stocks going to an alltime high. The market cap is now more than double. Foretition is heating up Digital Banking licenses here in the lion city with two more groups submitting a bid. A consortium called beyond includes one of asias largest massage chair makers. Sampson says it will launch new products at a new event in san francisco. There is speculation of a new galaxy s series. Samsung only put the model on sale in september because of delays. Yvonne lets check on the markets. Close to 3 g a gain. Coming back from that lunch break. 400 and 66r by points. From the chinese lunch break, they are returning positive. A chinese delegation could be going to d. C. To sign phase one of the deal. Em still seeing a bit of pain this morning. That is it for us. Our top stories this morning. President trump warns of major retaliation if iran does anything to avenge the killing of qassem soleimani. Tehran says it is abandoning the 2015 nuclear deal. Yousef brent crude hits 70 a barrel. Mrmiddle eastern markets slump. 2020 begins in serious risk off fashion. Janet yellen and mario draghi are warning the u. S. And eu of daunting economic challenges, and policymakers cannot cope alone. Yousef
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