In hong kong it is just past 8 00 a. M. The am julie hyman and political stories continue apace in the United States where the ands today was on mexico that cancellation of a meeting with donald trump and theresa may coming over as well on earning season in the u. S. A lot for investors. Yvonne absolutely. Picture on wall street, it is mixed. Relatively leading into asia, we are seeing positive asian stocks. Positive move in asia ahead of the holiday. We do have the nikkei 225 opening higher. Extending the gains that we saw on thursday when it was higher over 1 . Trading could be choppy given the stronger dollar and the mixed picture on wall street. Tensions between the u. S. And mexico over the border wall and markets in china, south korea, vietnam closed today along with partial trade in Hong Kong Hong kong, singapore. We have stocks in wellington snapping a two day rise. Australia adding. 5 after coming back from a thursday holiday. We do have miners dragging today on the index. The likes of northern start ,etting cuts by the likes of let me check my notes, mccoury. Fallingresolute also and Evolution Mining almost 8 cut to hold. Taking a look at the mixed the material space against other sectors in australia, we have the biggest drag over 1. 6 . In terms of points, we have a luminous seeing a decline. It was cut to sell by deutsche course beings of dragged down, given that prices of aluminum falling for a second day. Thats ok. We cant find it right now. What is going on with the yen, given the data we got this morning. Japan dropping for a 10th month. Target. R off of the 2 the dollaryen study this morning study this morning. Yvonne heading higher after the inflation data. The latest on the japan inflation figures we just broke earlier on the hour. Economicsg back our editor. Justesting conversation now. He said this has nothing to do with what japan is doing. This is about oil prices. Energy prices play a role. If you are the boj, every central bank is going to factor that in. Aboutoint that we raised trying to move the dial and expectations is important. It might be energy. We are seeing some improvement. The fundamental question, if you take out energy prices, what is the core doing . You see a little less negative. On the latest report, we saw the core, which was supposed to be down. 3, it was down. 2. Thecan see the headline, white line, it brings everything back in. It is positive. Take out food, energy. It is a little flat. It is far from perfect. It was interesting you asked about dropping the target. He smiled and said, maybe they should. I do not think they are prepared to do that. Making a little bit of progress with the bank of japan. He is also putting the weight on Prime Minister abe on doing something with fiscal stimulus. The yen, which nobody can control, there is still some sense it could be weakened more especially if you get this boost in the u. S. You could get the better exports, so it is, we are talking details here and on the other hand for the bank of japan, incremental progress will be pleasing. They might not drop the target as suggested. That tot really put relieve, we are so far below the target. What might the bank of japan do . I hope they do that something because im going to be in tokyo to cover the meeting. This is one of the meetings where they put out a policy report. Was had an assessment that fairly benign. Will they change that at all . Probably not. Will they continue, is the official message to echo what governor kuroda said, answering questions that he does see a better inflation picture. About the federal reserve, so interesting the way they have their meetings almost on the same day, the fed will be meeting and we will get those results on wednesday. No change expected for the fed third the big issue, donald trump uncertainty. Presentioned he has to everything he is going to do with congress. Maybe they will get on board. Until the fed knows what is going on with fiscal stimulus, they will be sitting still. Andant to see what they say what kind of guidance we get. That is what everybody is hoping for from the major central banks. What do you see now . Not only data dependent, also trump did. [laughter] thanks so much. Lets get to first word news. First up, the Trump Administration has floated a 20 tax on imports for mexico to pay for a wall along the border. The plan was revealed after Enrique Pena Nieto canceled a meeting of the white house. Sean spicer told reporters such a tax would pay for the wall. He did not explain how it might affect consumers and businesses. Finance ministers says his debt is declining and funding for this year is under control. Officials are urging reforms following an increase in costs, saying markets are nervous. The minister says while borrowing costs are you concerned, he expects volatility to fade away. We have a cash buffer that is the year. Gh to face we are in a comfortable position. The challenges are there. We are preparing ourselves for that. Board of toshiba meets to discuss a range of turnaround options. The sale of part of its chipmaking business will be on the agenda. Mayanticipated writedown also come up. Loss may be as much as 6 billion. Theira will announce estimate on february 14. Money rich chinese soccer clubs pushed the market to a record 4. 8 billion. Says the chinese spend 450 million on foreign players, up from a year earlier. That makes china the fifth biggest lender in the global market. They passed france and are within striking distance of clubs in spain and italy. Global news 24 hours a day powered by 2600 journalists and analysts in 120 countries. This is bloomberg. Alphabet shares fell after fourthquarter profits came in below estimates. The result was dented by heavy spending and a onetime tax payment. Lets break down the numbers with our analyst in san francisco. Business looked strong. The shares did fall and they also closed at a record high yesterday. How do you weigh the results . Results, look at the the core ad sales business is very strong. Growth was 36 , the highest in four years. Youtube and mobile search are driving this. That momentum might continue. The Cloud Business might induce some volatility Going Forward. It is a large market. So the growth option continues to be there. The volatility might surface. Onetime saw a hardware cost and tax contributing. We call these things one time, but it sounds like you think we could continue to see some of these costs continue. Some elevateds, tax rate in the u. S. And onetime charges with respect to equipment. The equipment cost, we do not know if that volatility is going to go away. They willel is increase investment in cloud and hardware. Hardware, mentioned they are really pushing for this when it comes to pixel and daydream. What impact could that have . Jitendra the margins would dip because of the hardware business. If you look at the segments, one and the Cloud Business, the end market for the Cloud Business is very big. We are talking about more than 70 billion in sales by 2020. They are going to look toward growth and invest in growth at some expense of the margins. Measures. Ost control there are some things that are being done that could balance these things out. These guys are going to invest. Thanks so much. Chinas crackdown sending shudders through Global Property markets. We will discuss how local markets are faring. What goes up must come down. Not necessarily when it comes to markets. Some think the dow will continue past 20,000. We will ask why. This is bloomberg. This is daybreak asia. I am julie hyman in new york. Asian stocks on course for their strongest since 2010. Volumes are low as many traders have left for the Lunar New Year. My next guest is standing by, executive director are at peak asset dan richmond. I want to start with the mac ts over whether we will see a rally. One of the charts i have been watching has been the put to call ratio on an etf that tracks the dow. Even as the dow has made new highs, we have seen bearish bets go up. Is that a good idea . Should people hedge as we see u. S. Stocks move up . Thanks for having us this morning. Dow jones ist the going to surpass 20,000 points and that may continue. We have seen wage growth continue to rise. Pmi is about 55. The numbers we are getting on the macroeconomic side does support for their growth. Shouldeel investors remain neutral leading into the reporting season. Theres also a lot to digest when it comes to the various Political Developments in the u. S. A lot of ways to play it. One of them is looking at russia. We have seen investors getting into russia, looking at an etf on the bloomberg, one of the charts we have been watching is looking at the russia etf and the inflows we have seen here have been substantial since the u. S. Election. We have seen oil rebounding. That does not hurt. Do you think russia is a good that right now . Saw he expects russia to surpass and outperform all other emerging markets. We have a good conversation with a Venture Capital fund out of singapore that is heavily invested in russian funds. We do agree theres probably additional upside risks to russia and we are bullish on theia, whether oil or emerging markets. We do see some upside in etfs. It back home for you in australia. You are in earnings reporting season. We have heard some of the miners already. Given what you expect to hear from the rest of the companies, how is earnings season going to look and would you be a buyer based on what you are hearing . Look, the season has not formally kicked off. We have had a few come out. The big shining light, we expect 17 growth for the season. A lot will be underpinned by the miners. Coal is up. Iron ore around 80. Commodities are strongly supported. What is happening, we expect the miners and the materials to outperform. We would be buying them leading into the reporting season. Banks have had a good run. And the netnings interest margins and the Credit Rating will be a focus. Seems like australia is contributing to this revival in asian stocks. Really roaring back this year. It seems like the underperformance we have seen compared to the s p, there seems to be a turnaround after a couple of years. Do you see this as a sustainable Inflection Point . Niv absolutely. If you look at china, the data was strong last week. Productiontrial is up and the chinese have discussed additional stimulus. We agreed that is probably going to be the case. We are bullish and the whole relationship with china and the u. S. Turns the trade numbers. We see some upside as well. The fact emergingmarket such as the peso and the ruble and the turkish lira are at those alltime lows, it does bode well for export growth. If you look at the export growth , the numbers coming out of emerging markets, we see some upside risk in our vision in the shortterm. That is right. When you hear the president about building a ball in mexico, it could impose a 20 tariff in the country, he wants border taxes for these multinational companies. For em are we overlooking that risk right now . You are bullish. Why . Niv look at the mexican etf. Rising by over 2 . We feel a lot of the geopolitical risks are factored in. The market is far focusing on additional stimulus. There is further upside revision in emerging markets relative to u. S. Equities and we are biased here. Real quickly, i know we are expecting this meeting between theresa may and donald trump on friday in the u. S. What do you expect out of that . May and think Theresa Donald trump will form a strong relationship. We saw the pound have a rally last night and we saw the export numbers much better than expected. The focus will be on health therm and we believe theresa may and donald trump will be a positive rather than negative for both economies. Great to have you. Executive director at peak asset management. Thank you. A quick check on the latest headlines now. A mine is threatened by environmental projections. Closed since 19 people were killed. Now a local mayor has refused to authorize the water from a nearby rivers. Amarco cant complete an official study. A lowertarbucks has annual sales forecast. It expects revenue to rise this fiscal year, having forecast doubledigit growth. A shift to Online Shopping and low grocery prices may be keeping customers away. Momentum is slowing as Howard Schultz prepares to leave. Caterpillar retreated after a forecast fell short of estimates. It blames ample supplies a of used construction equipment. Cala pillar says any benefit will not be seen until sometime in 2018. Coming up, microsofts Cloud Business is making it rain. More customers are signing up for data services. This is bloomberg. S daybreak asia. The streetosoft beat on strong sales and gains in cloudbased services. Su keenan has the latest from new york. Take us through the numbers. The stock was up in afterhours trading. Investors are very happy on the latest news. Secondquarter sales and profit beat the street. Rising customer signups a big part of the story. 84 Cents Per Share versus 79. They beat on secondquarter sales targets. The azura Cloud Service doubled and that is showing the investment in data centers are thing off. The ceo is revamping the company to be a seller of Corporate Services and again that also seems to be paying off. Not a bad year for the company. The stock is doing well. Lets talk about forward. They reported losses. The ceo was optimistic. Su he thinks he is heading into a good year. The losses have a lot to do with the mexican plants. They canceled their plans. They took a 200 do 200 million charge and there you have the loss. Otherwise the adjusted numbers were in line. The ceo is optimistic. He had a big meeting with the new president and is happy about reduced regulations and the year ahead. It was a very positive year for us and the cash liquidity is strong and we distributed 3. 5 billion to shareholders. A very good year following a record year we had in 2015. Optimistic about indications theres going to be some tax restructuring and also lightening of the environmental regulation. When asked about the mexican import tariff, did not think it would be a problem. Week. A big m a on start with Johnson Johnson and their buyout of actelion. Su they finally sealed the deal and they do it in dollars. A 30 billion deal. 80 a share in cash for stockholders. It finally finalizes what has been a longterm process. It has been a gain for johnson the french leaves company at the altar. Verizon is another big story. The ceo said to approach the ceo liberty regarding charter communications. This is according to people close to the matter. Charter has not been approached about a murder merger. They are studying a number of options. This one could possibly result in the largest Internet Provider in the u. S. A lot of speculation. Charter is up 10 on talks. Back to you. Crackdownve chinas on capital outflows is sending shudders through the Property Market. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Yvonne we are counting down to the Lunar New Year holiday. Trading today. I am in hong kong. Julie you are watching daybreak asia. Lets get the first word news with courtney collins. Courtney japans Consumer Prices fell although the pace of decline supported expectations for a return to inflation. Core cpi was down. 2 . Oil pricesn and likely to drive up inflation. Questions remain over flow wage growth and lackluster consumer spending. Chances are rising that bank of japans governor will stay on in ministerwith prime abe saying he is doing a terrific job. Kuroda is now 72. His radical Monetary Policy program has been the core of abenomics. Revisefailed to inflation or the economy. A wave of Senior State Department officials have quit as the Trump Administration exerts control. They are mostly Career Foreign Service officers and held positions that require president ial appointment. Sources say trump is keen to shake up the state department and make a break with what he sees as decades of failed foreign policy. Quite apocalypse now, beenhe tuesday clock has murder moved 30 seconds closer to midnight with scientist saying americans are at peril. The threat to the planet is seen at its worst since 1953 during the height of the cold war. Global news 24 hours a day powered by 2600 journalists and analysts in 120 countries. I am courtney collins. This is bloomberg. Thanks. The Doomsday Clock is interesting because even though it is developed by scientists, it is not a scientific measure. An opinion measure, how dire the world is with regard to things like Nuclear Weapons and climate change. That is why they moved to the clock closer to midnight. Yvonne doomsday, when you hear Nuclear Weapons, those are buzzwords when it comes to an incoming trumpet administration, which they did site. The markets are not seeing a doomsday situation. Lets take a look at how as and markets are shaping up. Asian markets are shaping up. We do have stocks on course for the best january since 2010. We do have a bunch of markets closed ahead of the holiday, including china, south korea, taiwan, and vietnam. With what is going on today, rising after coming back from thursday. Helping stocks, banks while miners are on the decline given the drop in gold and industrial metals. Stocks in wellington snapping a two day rise and the nikkei 225 up over 1 . We are seeing some fluctuation on the cpi data. Take a look at what is moving on the index. Yesterdays losses reversing. It did fall the most in 11 weeks after the contract for a power plant was canceled. We do have a bunch of earnings out of tokyo. We did have Fuji Electric dropping after results. It is now rated at neutral. It did raise its fullyear target above consensus on a more optimistic outlook. The Company MakesSemiconductor Testing devices. Giventher equity movers, the earnings slow, we have the likes of hitachi metal falling. S much as 5. 5 on a 13 drop Internet Services players also falling today, as much as 7. 1 after posting profits. Medical companies delivering stronger numbers for the january period, shares jumping as much as 11 . Julie thanks, sophie. Two foreign leaders figure prominently, theresa may and Enrique Pena Nieto. For the former, an effort at bridge building with the white house. And bridge burning, one could say. Lets start with mexico. There was a lot of rhetoric on both sides about a canceled meeting. Via twitter. T, one it was actually Enrique Pena Nieto. That this a tweet morning we have informed the white house i will not attend the scheduled meeting on tuesday. Of course this is a continuation of the rocking is between the u. S. And mexico. I want to point out mexico is largest trading partner. Interesting about the meeting, the nonmeeting, is trump later claimed it was a mutual agreement. A little bit of a difference in opinion. The president of mexico and myself have agreed to cancel our planned meeting scheduled next week. Unless mexico is going to treat the United States fairly, with respect, such a meeting would be fruitless and i want to go a different route. No meeting is set to happen as of now. It turns out mr. Trump was talking about the tax reform is trying to push in order to make mexico pay for part of the wall. Spicerelopment is sean floated the idea of a 20 import tax. He talked about it on air force one. The 50 billion at 20 , which is a practice 160 countries do, right now we tax imports frolet freely in. By doing it that way, we can get 10 billion a year and pay for the wall. It the big take away i would actually hit u. S. Consumers and u. S. Companies. A big caveat to that. Yvonne moving onto the bridge building. We heard from theresa may a couple of hours ago. It was a mix of charm and warnings. She said offices attract when it come to her and trump. Saiden though she opposites, it was on the same page from the u. K. , saying we are with you for the most part. We believe in bridge building and we believe in comesvativeness when it to finances. She is holding out her hand. It has been americas destiny to bear the leadership of the free world and to carry that heavy responsibility on it shoulders. My country, the United Kingdom of Great Britain and northern ireland, has been proud to share that burden and to walk alongside you at every stage. A very happy and smiley speech there. As we look ahead to tomorrow when she meets with donald trump in the white house. She would be the first foreign Prime Minister to actually meet him. Yvonne all right. Thank you. Banksso home, shares have risen 45 since november. Lets bring in our correspondent joining us from tokyo. Another good day for the banks in japan. What are we expecting . It is kicking off her this afternoon after the market closes. Analystseen serving this week and if you take the average estimate of their forecast, the three banks are on track to meet the full year guidance. What is driving that is the yen, which means profits will be larger when they report. There are some headwinds as well. He had bond yields rights, which is a double edged sword. It creates an Investment Opportunity with yields. Equities have been well up and the banks have been the recipient of that. They have Large Holdings in other companies as well. Of course they have pledged to offload some of those holdings and improve corporate governance. Thefactor could be how much equities they have taken advantage of. The negative Interest Rate . Is that causing some pain for lenders . Absolutely. Negative Interest Rates are still there. They adjusted policy to build move to a yield curve control. Some success. They are tracking toward zero. Which is good for the banks. Of risk of Going Forward further deepening of that Interest Rate is looming, albeit a little bit lower. Particularly for banks which dont have the options to go. Verseas interest margins are getting squeezed. It is still a headache. They are going to focus on its origination and distribution business. What is behind this . Gareth origination and distribution. When we spoke to be president last month, he said they are going to make this a pillar of their business, formulating a new Business Plan to start in april. That is what theyre doing. Taking overseas loans and Aircraft Leasing to highyielding loans to repackage those, offering them in the yen and selling those on to investors, regional banks, Life Insurance companies. Business. Nwin it allows regional banks to get some exposure to these overseas spaceand it frees up some on the Balance Sheet and allows ank to limit how much they can raise. They can go out and make some more loans. It is a winwin all around. All right, thanks for joining us. I want to mention something coming out from shinzo abe talking about the Inflation Numbers we just got. Of negativemonths territory for those prices. Abe said we cant say we have emerged from deflation. That is his comment. Meantime, the shift to china now. Housing market. Dont expect chinese demand to wane. It is to turn firsttime buyers who lack offshore accounts. Lets ring in our correspondent. Us what is driving the chinese demand for overseas properties. It is mostly because of this bubble . That is right. Chinese buyers have been unstoppable in the Property Markets. Yuanis accelerated as the has continued its depreciation and investors look for places to put their money and protect themselves from the impact of a declining currency. That, apart from other needs, like education and access to other markets worldwide, has sent chinese investors on a buying binge the likes of which we have never seen before. There are these new curves that were introduced. Give us the details and why they were introduced. O as outflows accelerated from china, we did see the Chinese Authority stepped up some of these crackdowns on how china. Ney is leaving it is not just in property we have seen it. We have seen other crackdowns on purchasesnal m a, on of insurance and property is one of those things the authorities are looking at closely as they stem the outflow. They have explicitly had chinese buyers state the reason for their purchases overseas. That is spooking investors. Thank you so much. We will talk more about this. More on the Global Property market and the chinese Property Market with a developer. He joins us next. This is bloomberg. Asia. S is daybreak i am julie hyman. Yvonne Hong Kong Based property developed hang lung reported a jump in profit with revenue nearly doubling. The Hong Kong Market outstripped demand in china and it is focusing on driving rental growth in the city. The chairman also see signs of office andn the industrial sectors. We got the man right here. Joins us in the studio. Happy new year. What do you make of this result . A bit of a saving grace for a challenging year for the Property Market. Can that continue now that we see these hikes in hong kong and these capital controls . More, a little bit perhaps. The land supply has always been a problem in hong kong. That is why the Property Price has been up. The administration is trying to supply more land and if the policies continue, prices of houses will moderate. Yvonne would you consider replenishing your land bidding in the city . Developers are very aggressive. Compete . Im not sure if i want to. We only want to make money. We can buy land in Mainland China. That is what we have been focusing on. Hong kong. Ook at if there are other people who are going to pay more, more power to them. Yvonne how long do you think this kind of aggressive buying from these developers can continue . If the yen continues to weaken, they will come to hong kong to find that hedge. This could get worse before it gets better. Possible, otherwise there is tons of money and a lot of them have done so well. Try the overseas market. This is a very natural progression. Yvonne lets look at the retail sector. Retail sales, we talked about it almost every time youre here, it has fallen again. The luxury sector trying to find a bottom. Do you see relief in sight . In hong kong, it is quite weak. Is a different story. The luxury sector in Mainland China is recovering. Yvonne ok. , have you hadto to adjust to consumer behaviors . In hong kong, we do not specialize in luxury. There is not that much of a need. We have done a lot of and as a result, we did bring in some much higher paying shops. Our rent has been very good. Yvonne you mentioned land supply. Taking a look at the market, it remains one of the most expensive in the world. Around 35 years for a median buynhold income family to apartment. 35 years. What are the best policies you want moving forward and what is best for hong kong . More land supply. That is the only way out. 70 of the land is not developed. 48 are parks. That is wonderful in one sense. Should we go to extremes and not balance it a little . The policy has always been to and bring the density high. I think the policy should be moderated a little. All a lot more supply will bring down prices. One of the root cause of hong kongs ills is the inability to causeusing and the root is the lack of supply of land. The last administration did nothing. The present administration tried to do a lot. There is limited they could do. There is no land that has been prepared. They have to squeeze all the and that can find policy should continue for 5, 7, 10 years in order to work. It is already working. If the present government did not do it they have done, prices would have been in the stratosphere. Yvonne is there anyone who can deliver on that . I think so. Yvonne who . Even during the last they havetion, advocated the selling of land. I believe she was vetoes. She was the secretary of development. She understands it. She would do something about the land prices, like the present administration. The other candidate did nothing all of these years. When you do nothing, nobody accuses you of anything. What will happen, i dont know. China,turning back to you mentioned the luxury market has been doing better. What is your outlook for retail in 2017 . Do you think overall you did see a decline in leasing of your commercial properties. Do you expect luxury to lead a recovery . Is a narrowy sector sector. I dont know if it can lead. Overall, sales have not been bad. Something like 10 in the last one year. Rent is always behind the sales numbers. So you can expect rent will be better later on. Shanghai, our luxury Shopping Centers have done well. In terms of retail sales, Something Like 16 last year. The other places where we dont have as much luxury brands, it would take a little bit more of ther the recovery consumption to flow through. We are to ask you to stick around and continue the conversation after the break. Ronnie chan of hang lung properties. You are watching daybreak asia. This is bloomberg. This is bloomberg daybreak asia. We are rejoined by hang lung chairman ronnie chan. We want to talk about china and your real estate plans. Do you plan to purchase more land and where . Maybe in smaller cities versus larger . We are looking for more land. When you say smaller cities, julie, size is relative. A smaller city in china is 5 million people. We look for cities that are at least 5 million people. Be economically vibrant. Julie what are you looking for in terms of land purchases for 2017 . The kind of project we do our huge. Can be a couple billion. How many of those can you do . Each one of those, 5 million square feet. These are very large and not just large, also the quality is world class. The Price Per Unit is going to be high. Julie ronnie chan, thanks for your time. Chairman at hang lung properties. That does it for us. To come. Re Bloomberg Markets asia is up next. Counting down to more market opens. Yvonne great to have you. Thanks for joining us. Inshaad 9 00 a. M. Singapore. I am coming to you from Bloomberg Asia headquarters in hong kong. This is Bloomberg Markets. Rishaad President Donald Trump made tax imports from mexico and use the money to pay for his controversial wall. Japans Consumer Prices are dropping for a 10 months in a row. 1 for a