Forecast in the second month in a row. Sot is because jobs are weaken the economy is not picking up as planned. Thats the good thing because tapering is a concern. Congress will speak twice this. Eek. We look forward to that u. S. Up by almost two percent. China prepares in for more volatility when it comes to market, there had better be. The swings we have seen are likely to persist. Going to happen i guess. We have been looking at the Market Reaction today. As a positiveen move coming from the central bank. They do recognize a need to go higher. China does want to let free market dictate. They said that at the last forces doingmarket more in china. It is priced were the risk should be. What they are saying is the market does need to tolerate reasonable movements in rates. Where are we now . As far as today is concerned we are a little bit higher compared to friday, but if you look back three months or 10 years. You going to use this quote. Resources to be allocated properly, there you go. Massive roi has certainly increased risk massive has increased risks. The take away if you look back isough the last 10 years that the spike in market rates have become more futile. Some of these were up, and some were not. Thisnk if you do compare to four years back they are much higher. The range for november and december was four percent. We havent gone below that this year. It couldof economists cause some stress. In corporate china this goes up, but in time it is not a oneway street. Some industries and some companies where you have Growth Prospect you could see these cost of capital actually go down, so it depends on the risk profile. That is where you want to see china go eventually. Thank you, david. Lets take a look at other stories we are following. Htc and nokia have agreed to explore a collaboration after a patent dispute. The terms of the settlement have yet to be disclosed, but the u. S. International trade commission was to announce whether it would impose an import ban on htc devices. One million i Bank Employees are expected to stay away from work, call for higher wages. They have an offered a 10 rise. Unions are also protesting reforms that would allow private companies into the banking sector. The strike is expected to continue tomorrow. The latest trade figures showed japan even more out of balance as the deficit widens. It puts more pressure on Prime Minister all they Prime Minister abe. Were taking a look at these numbers. We are talking a record deficit for the month of december. Billion yen. That translates to 6. 2 billion. This matters because it is the broadest gauge of the rest of the world. It counters trade in terms of services, goods, tourism, and Foreign Investment and return on foreign and. You are looking at the end. The yen has been depreciating since late 2012. Costs, using up import pushing up import costs. You have to take a look at the reliance on imports, in particular Energy Imports since the tsunami has caused japan to import energy specifically in the form of fossil fuel. That is why the equation is higher when you take a look at imports to give you a chance of how you a view of how you calculate. The reliance on energy has been the predominant reason we are at record now. According to an analyst he says these are temporary factors laying a wider role in pushing up the deficit, but it does pose a bigger question. How is Prime Minister shinzo abe this and challenge get the industry back on track, as ashley since an april we will see an increase of sales tax rate room five percent to eight make it even worse as the thirdlargest economy looks to go back on track. We look at the session in shanghai. John is taking a look at what is going on. What is happening . Hashe Chinese Government actually expended a subsidy plan for vehicles beyond 2015 to promote the use of new energy vehicles. We are seeing these stocks. That is the key portion. It explains partly why the shanghai composite is up by almost two percent. Two and a half percent gain. Shiny new year sales better than forecast in jewelry. A upgrade the price target because of it. Falling. Stocks home sales have been damp amid concern of of. 6 following the most. The carmakers are seeing significant gains. Look at these. Seeing be gains in shanghai, arent we . That makes a change. Tell me who is leading the charge. If you look at the benchmark, we have telecom up by one and a half percent. Basic materials, consumer goods, health care, it is using every single sectors seeing a big gain. Breaking down to automobiles, already covered that. Personal goods up by two incent. Stocks are rising leisure goods. Not one is declining. 5. 5 each. Media, up electric companies, they are also driving the performance with the carmakers. Coming up, a lot more coming up. Children Building Block is a legol hit. We will look at s journey from playroom fun to bigscreen success. We have heard many say the worst is over for an emerging market, but our next guest remains bearish when we return. Stocks in this part of the world have the longest winning streak. Investors should prepare for the beginning of a downturn in equity markets. Withinur 2014 outlook site of the summit, our messages old market can still run further, but we are certainly within the summit, and it is important to recognize the downside is greater. We dont have the same margin of safety. What are the alternatives . There are opportunities in the u. S. Treasury. The u. S. Is doing a solid growth pickup. It looks like it is going to be sustainable. Therefore, around the 250, 260 area. We still see the rates this year edging up to around three and a quarter, three and a half. To us this is an all an opportunity, not a dangerous look at markets. There is still plenty of risk when it comes to emerging markets. Act and forth across emerging markets where risk is going to go up and down depending on what investors feel is a hot potato right now, but you arent going to see this rod movement anymore. Lets get more on asia markets with our next guest. That is a mouthful. Us live thisd morning in our studio. Good to see you. Bearishlk about this look you have on emerging markets. A lot of people said the selloff was overdone. Now it is time to get back in and pick up some bargains, but you say, not so fast. I am not sure about it. The view is almost always happy. We are in the minority that believe asia and emerging markets are highly likely to deliver either flat or negative returns this year, and the reasons are pretty straightforward. When the Federal Reserve changes its monetary stance and we are tapering by the end of the year, normally emerging markets tend to have trouble. We have already seen some weak links with the ukraine, argentina, venezuela already beginning to break. I think that might spread to other countries that have debt,t deficits, external and i think in latin america and also in korea the earnings expectations are massively high. I dont know why, so i am expecting some downgrades from those two. Of globalecause recovery. I think Global Recovery is good, but emerging markets have two ways to deal with the issues. One is to let markets devalue it and to raise Interest Rates. Money in both circumstances, so yes, there may ifa Global Recovery, but your company is raising Interest Rates, those numbers are going to come down. They describe it as risk love. Would you say there is too much love in the developed world that sentiment is basically neutral but at panic levels . Why . They are at proprietary indicators. They want to step back. Were inember people love with risk. Then people got ahead of themselves. I think people got ahead of themselves. Even what has happened that risk is back to neutral. I want to see it in a panic. What about the u. S. Growth story . I think in december people were pricing in too much. They are probably realistic now. As a house we are very bullish on u. S. Growth, especially the second half. He has done a great job. This is the first year he has gone above consensus. His view is the consumer is in pretty good shape. Of housinge effect stabilizing. There is a pick up in energy production, so the usual list, so we are actually pretty positive in the u. S. Recovery. The developed markers probably went up because multiples went up, not because of earnings. All you are seeing is these multiples coming in a little bit. Ofwe heard from the cio Goldman Sachs saying this u. S. Equities story is very bullish, but it does little more nuanced, because while we have valuations at a level where you have to be a little more careful. Valuations so sure are huge problem in the u. S. The u. S. Equity strategist manytt that it did different ways, and she comes to the conclusion the market is moderately undervalued. Equity thatost of is about eight or nine percent. That gap is very positive, so in other words, you can just compare our ray versus the emerging. You have to look at cost of. Apital it is really apples and cockroaches. I am not going to answer that question, although it is interesting amongst your pessimistic view there is another one sharing an equally pessimistic view and not really traditional, but mark mobius is also down on emerging markets as i would listen closely to what mark mobius has to say, given that he is one of the groups in investing. Wehe is worried i would say should listen very closely. What do we agree with that he is seeing and you are seeing . Isthe reason of my pessimism produced straight forward. Whenever Monetary Policy is tightening, i think the starting point is we have had a fiveyear credit boom primarily fed by qe, so a lot of money came in, almost four and a half trillion dollars. That has led to massive property bubbles, massive credit booms, and what the fed giveth, the fed take up. Take us away. That is probably by the end of this year. Please stay with us. We are going to get the rest of the gang. B of a merrill lynch. X, the race for space in the Company Helping tourists next, the race for space in the Company Helping tourists. A new space race is underway with private enterprise leading the way. Richard ransons Virgin Galactic is set to make its Maiden Voyage this year, and a Company Called zero g is helping tourists prepare for the real thing. We take a look at the business of weightlessness. I am cory johnson, and right now this is one of the most enjoyable moments of my life. Not always that way. Just a few minutes ago i looked like this. I am down in Cape Canaveral to experience zero gravity. I am exactly the wrong person to be doing this. They have recently partnered bransons Virgin Galactic for passengers who have already purchased tickets to get acclimated to the feeling of weightlessness. They have charged up to five grams for the privilege. Here is how it works. Of her into a series bolick parts. Parts. Bolic it nearly pinned passengers to the floor, and it against to dive at an equally extreme angle thatalf a minute. At moment passengers experience weightlessness, and they do it again and again and again. There is a reason the plane is known as the vomit plane. It is very rare. Denise is one of our zero g guides. Now that this is becoming more of a reality these companies are starting to talk tout training customers experience microgravity, so it is really a wideopen market heating created with commercial space. That brings us to where we this experience comes at a price. A Virgin Galactic ticket costs 250 grams for six minutes of weightlessness. They are charging five grand ahead for seven and a half minutes. T is only 11 boxes second 11 a second. They have more than thrill seekers. There is big money moving. Several companies are buying for contract from the increasingly outsourced space agency. It is all going to be private companies now. And lift up. Now they are paying 70 him they are tarred and 70 million each time a u. S. Astronaut hitches off from the International Space station. There is only room for one passenger at the time. The amazon ceo says they are still in the testing phase for his company blue origin. He hopes to take three astronauts in the new capsule. The odds of that working are back on the ground. Paying 5,000 might seem like a lot of coins. Think of the extra parts. Then there is a set of twitter pictures making the envy of your friends. Can you put a price on that . One small step for me. One giant leap for bloomberg television. It looks like a lot of fun. That was greg johnson on the race into space. To there cutting down start of the trading day in india. We have future is in the mix. Futures indicate they are going to be going up alongside the wider asiapacific. This is what is happening. Currently the situation is like this in sydney. Of 6 10 of one percent. What we have is some data coming out of china and also japan. We have hong kong vacillating between gains and losses as far as the hang seng goes. Generally speaking equities are moving to the upside. The regional index heads to its longest streak of daily gains we have seen. The hang seng down by one quarter of one percent. Currently at record levels and widening. We have got the open in tokyo next. Backs airbus or boeing. Indonesias biggest carrier ready to place its next order. More gains for asian stocks, and brick i brick, how lego has become the second largest toy maker in the world. Lets get a brick by brick look at the latest in the markets. Mixed hang seng has a picture. One of the reasons china is highest is because the chin ese new year. Only two or three industries seeing gains. It is really quite different in shanghai. Hong kong has been closed for two days, and look at this. Shanghai was closed the whole week. Every single industry will see again. Consumer Goods Companies are thely seeing a big drive. Chinese government is looking to extend. You ideas seeing big gains. Byd seeing big gains. More or less for the week. One designer. 34 gainers. Seeingthese Companies Big gains, and Consumer Spending rising in china. The chinese new year, and enormous amount of people are migrating back and forth. China is seeing the gains. China is opening up at the lunch break. What effect is the weak yen having . Clearly the yen is weaker. Out. Have figures that is the picture. Actually 10252 before. Ofis the Biggest Record december. Imports driving even higher. China is ahead in that. We have also individual stocks they are driving up exporters. Big gainers. Huge exporters in japan. These companies have earnings that are quite encouraging. A torrid year last year. Misting missing estimates. Shares down the most in six months. These three seeing declines. They are the Nuclear Reactor stocks. They could see a drop in the need for nuclear energy. Thanks. Looking forward to tomorrow. To meet up with Goldman Sachs chief executive, lloyd blankfein. We will be talking exclusively here on bloomberg at 10 past nine hong kong time tomorrow morning. Singapore air show getting underway with Research Showing the second strongest overall growth in the world last year. Here is moved by. The numbers show how the industry performed in 2013. The chief executive of the carrier expanding rapidly, but not as fast in asia as elsewhere. We asked why. Some countries like . I dont want to go into that, but in china and india. We have made it easier. E are asked bending if there is a problem here, we are improving. A quick look at some of the headlines going on at the air show. Twokorean expected to take superjumbos this year. Saudi arabia plans to create a hub for china and flights in the middle east. 121 dreamliner flying, 88 in asia. They expect another 110 this year. Set to order 100. We are going to be joined tomorrow by the chief executive of garuda indonesia. That is at 20 till late in the morning. One question we are going to be putting to him is the report to increaseis ready its fleet. Elliott is standing by. Good to see you. The big stories we are focusing on right now. On withion is going airbus, an garuda is planning to purchase as many as 10. The price has risen to 241 million dollar. Have an offer to buy more. Garuda is planning to buy up to 200 city aircraft 250 aircraft. Other than that we are assessment ofe foxconns investment in indonesia that has finally seen the light of day. They discuss a plan for foxconn in jakarta. The plan to invest in indonesia has been doing the rounds in wendy 12, but the minister said fox, is delayed due to an issue with a local partner and a tax incentive issue. They have expressed jakarta posterior is this in providing infrastructure support for foxconn. Close going to keep a watch here. That is the latest. Back to you in hong kong. Thanks. Whether or not your business is working out, fitness is a fast evolving industry. We will take a look at one player muscling his way in. In 2002a single studio to more than 20 facilities in 2014, they are flexing the expansion muscles. They are setting out to beat the franchise champs. Here first expanded outside of hong kong in 2005 with the studio in singapore. Next came taiwan. The new york. Last quarter they expanded. I would like to see is in shanghai. Once we cracked the code and are confident we can then start moving on to another city. Within three years the next city could be the birth ways of yoga. Youre probably near the top of the list because it is a huge middle class that is growing. There are other countries in asia lick the philippines or thailand or malaysia that are halftime on the radar. The spending is not as high. From a financial point of view they wont make anywhere near the kind of money we can make in hong kong or singapore. When they decide to break into a new market they do local research to cater their market. Focus on ae they suspension training class that uses ones own body weight for resistance. In shanghai it is universal yoga, a class that offers multidirectional poses and sequences. I actually took it up about a month ago. I love it for a couple of reasons. Number one, it builds up core strength. Stressedo, if you get this is a great way to do it. You just relax. You take it easy. It is a mix of everything. The branding specialist says they need to be careful about marketing around the world. I think the hong kong origin, the asian origin is quite a you look at that, and they dont tell that story at all. Consumers are more interested in where things come from than the back story of why, and if you can tell that story in an interesting way you can do very well. For the time being, the hong kong heritage is not part of the strategy. Like a coach guiding his athletes, his pep talk is straightforward. I am a believer in slow and steady wins the race. I want us to be really good. That is the game plan, working hard so more people can work out all over the world. Come, chinas january exports expected to slow , nearly winding to a halt. We are going to take a look to the trade data with merrill lynch. Stay with us. We have got david and our guest from bank of america. We talked about the u. S. Earlier. We talked about emerging markets. Play in thechina strategy, which you are very negative on . I think it is critical. I look at a lot of High Frequency data coming out of china to see what is going on. Rolling over or slowing down. If you look at luxury goods, they have corrected quite sharply. Fine wine they are coming down. The extravagant spending. That is one. I think the Discretionary Spending is slowing down. I was reporting on luxury stocks looking at how Chinese Companies were doing this when swisses to export of watches. Not only is china slowing down, but firms are going abroad because it is cheaper to buy these products in the u. S. And the middle east and here in hong kong. Thats right. The company count for only seven percent of global spending. Globally it accounts for 30 . It is not just anticorruption drive. I think the slowdown in spending power there. At creditue looks rates carefully. He is getting increasingly worried about potential defaults. You said it. China credit trust has avoided default, but i heard somebody say that might be Lehman Brothers next. I think that might have been then, my colleague. We have a diversity of opinions and my firm. My colleague david choi is negative. As a strategist, i look at this and say it is very levered up. Reporting the bond yield, especially in the highyield spectrum is beginning to rise. I think it will probably get refinanced at a higher price. That is not good from an equities standpoint. They want to have exposure in china. What would you tell them . To stay away from it . It is a very interesting question. It is a very bifurcated market. I love that word. What is going on is the enterprises in china are trading at low valuations. Whether it be banks or oil companies, telecom companies, these have really fallen in the last two months. On the other hand, our clients are highly focused and fully committed to growth stocks. Sector, the solar sector. They are expensive, but they are also growth stocks. Having said that, they are growing at 25 ebs, but they are doubled. Isarge part of that expansion. Aile you think youre buying gaming stock or an internet stock, you are buying the said value she. We think that is going to taper out by the end of the year. We need to be careful on that and. Gaming stocks arent you also buying in the lack of ability of chinese mainland to diversify their portfolio . It is a story. I love the stories. You get 20 growth. I think it will continue. There are no new consumers this year. We get a load more coming. I love the dpr stories. My concern is the other 75 , which to me came out because of the expansion. What do you make of the pvoc saying you are going to expect more volatility. It seems to me this is just a deleveraging accident that has. I think it is very smart they are telling us what is likely to happen. It is very transparent. I think whatguage they are saying is we want to slowdown the shadow banking system. This is going to create higher Interest Rates in certain areas, and we are prepared for it. It is going to affect corporate. To haveions are going to hold onto their hats. If you have are owed too much money, it is going to be tough. I like the clarity that they are not really hiding anything. They are telling us what is going to happen. How does it play out . I think it was number who came of 580 an estimate billion, and we get a small percentage of them. Play out on the banks because it is shadow banking . Its not clear what the impact on the bank is going to be. It is going to have an impact on the fixed income market and earnings growth. Gives higher Interest Rates, especially in a highgrowth area that slows down. The numbers are going to be coming down pretty quickly. A quick word. A schoolmate of yours, how do you think he is handling things right now . I think he is awesome. What do you make of what is going on, especially as we have this Election Year . I think he took office on december 4 around the time the. Uby bottom out i think he is being careful about being an inflation fighter. I think he has raised Interest Rates. I think it is the right ink to do, the responsible thing to do. I think our Clients International investors have responded positively. I think he did the right thing, which is raise Interest Rates and try to get inflation down. We are going to see a lot more. The volatility will continue no doubt. Thanks for joining us. Also my neighbor. Coming up. He got some at home. Lego is building a wider future. We are going to check in on some of the stories making headlines around the world. Released from prison in bali. She was convicted of carrying in 2010. To the island she appealed for clemency and cited her poor mental state. The later reduced the sentence by five years, and she has been granted parole. She cannot go back to australia until 2017. A garment factory fire killed dozens of people. Charges andrder were denied bail by the court. At least when the people were killed in the disaster. The emergency exits were supposedly locked. Wildfires outside of australias secondbiggest city are said to be the worst for five years. It blazes out of control across victoria state. All of them threatening rural towns on the outskirts of the capital. Authorities say the windy conditions have created a highly dangerous situation. 100 73 people were killed and homes destroyed i fires in a single 173 people were killed and homes destroyed by fires in a single day. The Winter Olympics is barely underway, but already we are looking to the next games. They will be hosted by south korea and the opening of a yearsl pavilion marks until the game comes around again. The city will officially take over as olympic host at the end of the sochi games. Popularof the most childrens toys is number one at the box office. Took 69 million in its first weekend in north america. The animated film based on the famous Building Blocks and many figures edge doubt the monument moved. It is also showing across most of asia. Lego has gained Enormous Growth torecent years, building become the secondlargest toy maker in the world. Is probably the most popular toy in the world. More than 550 billion people have been produced since the first. Largest toysecond company. Only mattel is larger. Lego is still owned by the family. The word is a contraction of a word that means play well in danish. After carving wooden planes and buses for children, christians and bought the first plastic molding machine in denmark and began making multicolored ricks to snap together. The design was a success. And he lego brick made after made any lego brick after 1958 will still work today. After suffering a major loss in 1998 and teetering dangerously close to bankruptcy, the company bounced back, in part by appealing to girls and adult fans of lego. Lego profit grew faster between 2007 and 2011. By 2019 there will actually be more lego people than real people on earth. I know you have a box of these at home. That is pretty incredible. It is the last week of the Lunar New Year celebration. Have you done that yet . My aunt lives are performance related. In any case, bloomberg is sharing its tradition of Lunar New Year celebrations. We have a dragon dance coming through this morning. Thats right. The following is a paid presentation for focus we focus t 25 raw to you by beach body. Its about time. The number one reason people have for not working out is they dont have time. I have four kids. I work 60 to 70 hours a week. I dont want to work out for one hour. Are you kidding me . No time to work out, no problem. Introducing focus