Daybreak asia. It is just after 7 00 in your. We were just discussing, it looks like the markets in asia are taking up on the rally we have seen here in the u. S. On the back of real estate stocks and retailers. The reflation trade seems to be back in the spotlight. You have consumers feeling pretty good despite all the turmoil we have been hearing about washington. Yvonne absolutely. About the most talking how you can keep it off the table. Take a look at the odds, we still at 34 were a rate hike. December ifago from you compare it, it was 100 . This market is not ready for a move. Betty far from a given right now. But lets see how the market open is playing right now. Sophie we are seeing Risk Appetite come back somewhat. With the yen weakness poker it thats filtering through. Take a look at the nikkei 225, it is higher. 01 there. An eye on stocks like toshiba over the cost of the day. Over on the kospi, that is extending gains for the third day. On tuesday, the kospi did raise the highest since july 2015. Transport equipment stocks as well as korean airlines. Elsewhere on the board, were looking at weakness in sydney and in wellington. We had a lot of earnings out of sydney today. Betty toshiba has been in focus this week. That is set to start on friday. What is the latest . Sophie lets take a look at toshiba shares. We didnt see a climb in the early part of tuesday and then a close in the red at the end of the day. It is not quite trading just yet. To give me some idea about toshiba, we do have a focus set tohe process is start this week. The shanghai newspaper said toshiba may select a buyer in may. A timeline semiconductor maybe throwing its hat in the rain also rain also. Sell estate of the medical finance business to canyon. That can be settled in march. We check in later in the show. Yvonne thank you. Chinas financial regulators are said to be working on new rules for the Asset Management industry. They want to rein in risk in a sector work trillions of dollars. What more do we know . This is an interesting story that is exclusive to bloomberg. It is something to look at in more detail clearer i will outline it right here. The chinese government, central insurancebanking and sector are all working together to draw new rules for Asset Management products. They want to make it clear, there are no government guarantees. They want to dispel a protection that Wealth Management products will ultimately be guaranteed by the government and banks that are issuing them. This is not the case, they say. This includes Financial Institutions needing to set aside 10 of fees for managing client assets, also investing proceeds of Asset Management profit products like loans and beneficiary rights. Nothing has been set yet. Nothing is been made clear to us by the people telling us about this story. Once it is decided, it will be phased in regularly. It will only be applied to new issues. Betty it sounds like china has already tried to tighten rules on the Asset Management sector. They have tried before, what is going to be different this time . They have tried before, but it is still a popular sector. The pboc starting this year as required the banks to account for assessing risk. The idea being that it would curve lenders ability to raise more Wealth Management products. Managementth products are invested in bonds. The risk is a concern because chinese bonds have been tumbling and they are worried about what might happen if it starts to trickle down to the rest of the sector. Productsth management are invested in each other. That is where the house of cards could come tumbling down. Chinese households and companies have been pouring into these products as of late. This is something the government is keen to get a handle on before things start getting a little bit dodgy. Betty very important. Thank you rosalind. Lets get to the first word news. Administration has issued memos outlining sweeping crackdown on undocumented immigrants. The department of Homeland Security does the u. S. Will no longer exempt categories of removable aliens from enforcement. It would allow swift deportations of many more people without Court Hearings and target migrants charged with crimes or those thought to be dangerous. Outlines the steps the dhs will take to secure the nations southern border, prevent further illegal immigration, and to repatriate Illegal Immigrants swiftly, patiently, and humanely. The bank of england governor is not providing any specific guidance on rates beyond februarys reports. Could be faster or slower than the markets expect. Mark carney also expressed frustration about the criticism of the response to the exit referendum. In terms of financial stability, the bank did take some serious steps in order to mitigate those. If we had not done that, there would not have been the consequences. It was important that we did it. I think that we have to accept that we are not going to get any credit for it. We should expect a run of historically low Interest Rates to continue. Newsletter, he says the low rate world will be laggingd as productivity pulled down growth. Those factors make it harder for Central Banks in wealthy countries to prevent recessions. They meet again in midmarch. Global news. 24 hours a day. Powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Stocks in the u. S. Rising two records again. Now is su keenan with the record rally. Su the big message is that the consumer is back and spending. Layer on the fact that we had proof of Global Growth moving higher. And we had records all around. The nasdaq at least, the dow is on its 18 days since crossing 20,000, now on its way to 21,000. Lets go to the movers. Train s a popular chain said it agreed to be bought out for 1. 8 billion by a private company. Walmart blown out. Earnings thatg sinceprices are up 50 december. Lets going to the bloomberg at 6134. It is been awfully calm with all of these highs. Call, the opposite of betting on volatility. You can see the white line shooting straight higher, it has been a winning trade at least for now. Betty quite clever. About the shot in the arm for the retailers and what that means for the broader economy and market. Su lets start with walmart. Wall street wanted to see how the critical december Holiday Season was. Her walmart, it was a win across the board. The stock shooting up by better than 3 on the day. If we dont in on the numbers, walmart said they beat on bricks and mortar and online. A big surge in online which is making them a big competitor with amazon. Com. That is u. S. Growth their best u. S. Growth in more than four years. A good sign for the economy. Theres a lot of fixerupper spending going on. Chart, you canhe see it is up 8 . Listening to the interview with a opec secretarygeneral, he was reiterating that 100 compliance on curves. Oil, ishe lake up in the above 54 question mark 54 . Su that was a big question. Lets take a look at the fact that oil is at an eight week high. What you see here is the output, thersus the blue is the u. S. Buildup in supply. It is near an alltime high. The white line sharply drop, the output. In termse big veterans is thatrading tells us we are seeing record bets in hedge funds betting on a long position. That it is going to go higher. A lot of that has to do with the expectation, is not the demand that opec extent their agreement for these cuts. There is an indication that is going to happen. That is where the smart money appears to be placing their bets. We are seeing a big move higher by almost 9 last week in the number of net long bets on oil. Yvonne thank you. Speaking of moving higher. Lets look at the tokyo shares. As 128back as many million of its own shares for up to 880 million. The shares up 10 right now. Talking about the price tag, that is a significant discount from just 20 months ago. 8. 5 ll be purchased around for the next 12 months. That is starting wednesday, today. In june 2015, the Company Almost sold 100 million shares to earn 500 million. That theny reporting ceo said the buyback was because those shares he thinks are undervalued. Shares are searching this morning. China is set to release its latest property pricing. Well be live in beijing for a preview. Lift plus, china could curbs on equity futures despite the commodity bubble. We will discuss that and more with a ceo. This is bloomberg. Yvonne this is daybreak asia. Betty investors will be looking for clues on the feds next move when the minutes on this months meeting a released tomorrow in the u. S. Lets get more from our executive editor. Looks like we are flipflopping backandforth on this march rate hike. What do you think we can expect in march . Unlikely toes are rule a meeting in or rule in meeting out. The minutes will reflect what policy makers have been saying. This is an economy that is approaching the feds goals, we are getting up for the 2 inflation target. We have employment, close to levels historically associated with full employment. Marches on the table. So is june. Importantly, they are not walking away from the 23 increases they projected. At this show last year at this time, it was about the abandonment. Now it is the embrace. March is live, the question is if they wait till june, you start to reach this situation where the arithmetic starts to box you in if you really do believe. There is a flexibility issue at play here. There is. There are only so many meetings. Lets move on to china, a story that you have been telling us all morning long. There is. Ending four years of decline, now there are assigned to manufacturers passing the higher costs along to their customers. What is the significance of this change . Chinas Economic Team deserves a lot of credit because they been all over this. They started to get above zero in september, we went to the trade fair. A number of manufacturers were aware of this and contemplating what to do. Do we swallow the increase in take a hit to the bottom line or do we have to start on . Now there are reports that some of those trade fair exhibitors are passing on. The Worlds Largest exporter, there is a correlation with what is going on with china inflation and export prices. Unambiguouslynger a source of deflation in the World Economy. That is the overall message here. Yvonne what is that chart suggests . Is it the reflation trade is being fueled with what is happening with asia more so than donald trump . President trump is getting all the headlines. It is hard to look at a headline anywhere without seeing his name. We have not seen any flesh on the bones of fiscal policy, or tax policy, let alone infrastructure policy. If you look at the moves in began iney moves september. They are now up to 7 for the month of january. Something is going on there while we are waiting for the flesh on the bones of these Administration Policy pronouncements, or should i say policy assertions. Yvonne thank you. Joining us live from washington, d. C. Lets get more with this now. He is long on u. S. Treasuries and short on the dollar. Jason and gross is a ceo. He joins us live from singapore. Great to have you. The chart that we just talked about the reflation. Not so much trump, because china is a deflationary source no longer in the global economy. These the deflation in this part thehe world offsetting uncertainty with the Trump Administration if he over promises and under delivers . What you are asking is a complicateds dory. The deflation story was much talked about last year. I would argue that the deflation story was never really that serious, it was led by oil prices. I think where markets were confused was where they were trying to make a story of u. S. 10 year treasury yields going down for the sake of negative Interest Rate policies, not inflation. And then calling it a deflationary world and trying to suck china into that. What is more important is, how do you make money from that . Fromo you make money whether john is going to export deflation or inflation, that is more important. Yvonne you mention what to do with those figures. Hearing ise been that the mainland funds have been flowing in and are sustainable. But you cannot Earnings Report like hsbc and triggers a decline on the hong kong market. Is this an isolated case, or will we get an earning momentum as we see the earnings season kicking soon . It is a good question. Yet have to right get two things right, policy, which is pretty close. Yet to try to get that right. The second thing is positioning. Positioning in china is net margin loans. What is the retail guy doing. That will be the guy that drives flows within china, not like most markets internationally. The question is, what is going to drive china higher . For me, we are more interested in the commodity bubble and how long that chinese authorities will allow the margin of trading that is going on in commodities to continue to take Commodity Prices up to where they are. We are in some sort of bubble. Our view is that they will deflate this bubble. When they deflate the bubble of the commodity market, they will probably release a little equity or equity restrictions that you have seen the last couple of years now. They will release some of that valve. So the commodity flows will flow straight into chinese equities. Lets not forget, chinese money cannot leave, it can only go three places real estate, commodities, and equities. It rotates between those three. Im expecting there to be movement in margins on commodities that will be captured in equity markets. Im pretty bearish. We want tock around, get more analysis from you. That is the ceo of a security copy. This is bloomberg. Is daybreak asia. Betty lets get back to our guest, jason. He is joining us from singapore. I want to show this chart to our viewers. You have seen it already. Quickly explain it. Volume s how much liquidity volume there is in the total number of stocks that are being held by hedge funds. It shows that the liquidity is at an alltime low. You can see next to the third circle on the right. It raises a concern. Im curious to hear your view, selling fund start their shares, will was see market voluntary volatility because of the selloff. What is your view . I will go as quickly as i can. A few things. Is a fearlls you this of missing out rally that youre seeing in equity markets. Liquiditys are going down, volumes are going down. They are not sure, nobody wants to know nobody knows what to do following trump. Everybody is following performance. Hedge funds underperformed in afford tond they can have that happen in february. That is what is taking a s p higher. And i concerned by liquidity in general, absolutely. I am more concerned with liquidity and what the regulators have accomplished in terms of investment banks not being able to take risk in their books anymore. That concerns me more. Betty why is that . What do you or shadow there . What you will get is a series of flash crashes. This could be the year of the flash crash. Youre going through some really big transitions in terms of policy. But more importantly, positioning. We are positioning experts, that is our business. But i look at the short basis around u. S. Treasuries, it is massive. That tells you a certain story, that people based off of one trade, and the correlation of u. S. 10 year bonds on other assets. Everyone is in the same trade. Im seeing this positioning asset. Betty they are all shorting treasuries. Either treasuries or long banks. There are long cyclicals come along industrials, and any can are taking people defenses. The big point is that there is only one trade at the moment that everyone is focused on. Whether they know that or not, they are playing u. S. Tens in disguise. Everybody is a macro nowadays. What is driving u. S. Tens here and now are lots of Different Things other than economics. It is really being driven by policy and positioning. Where we are right now is that the short basis is extraordinarily high, we are talking about 34 standard deviations. We are really in quite dangerous territory if you want to be hawkish year. Dangerous territory if we look at u. S. Financials. It is the same trade, and they have been long around three standard deviations. It is all about course correlational positioning and how they all aligned. Betty thank you for joining us. Yvonne we had rain in hong kong this morning. We are half an hour away from open in the lion city. Betty you are watching daybreak asia. Lets get to the first word news now. Officials say they have yet to formally identified the body or cause of death of a man believed to be the halfbrother of the north korean dictator. South korea says it is sure the man poison is the brother. The Health Growth the Malaysian Health minister says they want something to come forward to identify him. No evidence of heart attack or wounds on the body. Hsbc shares so the most after missing Fourth Quarter profit no evidence of heart attack or wounds on the body. Expectations after a surprise drop in revenue. They want earnings could fall again today. This year. The bank also claimed to buy back 1 billion of stock from the first half and signal they made purchase more later this year. I certainly would not encourage any investor to read too much into the one billion we ate clearly a strong ratio 13. 6 . That is well above the top range top of the range that we targeted. Oncontinue to focus investing capital and the growth of our business. As the opportunity arises, we will contemplate Share Buybacks. A threatn is getting to 50 million discount on its yahoo s internet properties. At 41 5 billion in cash and set to close in the second quarter. They will share any ongoing legal responsibilities related to the data breach. Ecommerce provider is buying back when the 20 million of its own shares. That is a significant discount from a share issue just 20 months ago. They said they will repurchase 8. 5 of outstanding stock over the next 12 months. In june 2015, the company sold 100 million shares to raise 500 million. The stock has fallen since then. Global news. 24 hours a day. Powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Yvonne thank you. Lets see how the asian markets are shaping up so far this morning. Just taking a look at the regional benchmark, we had a pretty good leadin with the highest on wall street. We are seeing things lower in south korea and japan. Sophie that seems to be the case. Earlier we did have a stronger start. The we are seeing the yen pick up some pace. That is dragging on the nikkei 225. One is surging in tokyo today and leading gains on the index over 8 . I want to highlight toshiba gaining over 4. 5 today. They are focused to begin the process for sale this friday. Toshiba may select a buyer in may. Semiconductor may be throwing their hat into the ring. Toshiba has agreed to sell its 65 stake in toshibas medical finance to canon. I want to take a look at another stock. Kospi, aeing it on the Electronics Company up about. 03 today. Sent to bejay y. Lee selling again by the special prosecutor this wednesday. He was arrested last friday. Formal charges had thats have yet to follow. Future, wesamsungs do have a newspaper reporting the company does plan to set a 0 million fund for an in a a because samsung has been actively seeking a high makers in terms of what they want to buy in the future. Personre, we do have a looking at australia. We have a bunch of earnings in that market. Betty we do indeed. We are on the lookout for chinas Property Price numbers for january. What should we be expecting . Sophie we are expecting on extension of the decline in prices and home sales that we saw december. That will mark a Third Straight month of slowing. I want to pull up what we have on the charts for you. Take a look at the Bloomberg Intelligence china real estate index. You can see how 22 Mainland Properties have been rallying earlier this month, climbing the most in early february. We do have Country Garden leading that advance. This as equity of violations are seen as fairly cheap in this sector. Securities are expected to rally another 34 months. Were looking at the data drop at 9 30 a. M. Out of china. Betty thank you so much. She just showed that australia stocks are mostly lower. Shares of metals are down by 2 . Miners announced a stronger than expected result. What is going on . Fortescue is have a huge runup over the past 12 months. They push through the seven dollars per share mark. That is possibly accounting for some of the selling today. It was a strong set of numbers. 1. 22 billion. Fortescue maintaining guidance for the rest of the financial year. The dividend was also a nice surprise, though higher than expected. With fortescue there is always the question of debt that is being paid down. Gross gearing is down near 40 . Debtfreebecoming within a few years. It is all at the mercy of the iron ore rices. As long as iron ore stays high, they will continue to do well. Yvonne plenty of earnings for australia today. Looking at would site in particular. Are is the story of them enjoying the rebound in oil prices woodsideturnaround for. A big turnaround from the 26 million from the same time last year. Of 49 points per share, it is much in line. Revenue was down. Woodside is considering the option of mid to large scale expansion of its plant in western australia. Good news. Te to give you a bright spot, woolworths is up 1. 3 with a firsthalf net profit of 700 play 5 million australian dollars. Woolworths has been improving after years of difficulty beating estimates. It is coming in ahead of its key rival in australia, kohls. Bhp as wellfor thats on jump in profits. Billion which did beat estimates. We spoke to the ceo and asked him about the miners tone on Commodity Prices. The caution is based that some prices are a little higher than we would have expected them to be around now. Particularly iron ore and coal. Are heavily invested in things like petroleum and copper were we see some of the prices on the upside. The other caution is it is an uncertain world out there. I was listening to the previous part of your program, we are not quite sure where the 20 Trump Administration is going to settle down and what that might mean for World Economic growth. We are alarmed by all of the sentiment around protectionism. Ultimately, that will have a bad impact on world trade. Business economy so we flourish when the World Economy grows. Highlights copper and iron ore. They have a very different story. Iron ore prices, even you are skeptical about i rally. Analysts think we are going to see lower prices. How do you protect your cash flow . We dont hedge it. The way we protected as we protect our margin. We already have driven our annual production costs quite low. We believe we can drive them lower with some of the things we have underway. That is the best way that we can protect that. At the same time, our productivity agenda will reduce increasedost but also volumes. Even though prices are falling, we can look after our gross margin. So volume over the price. So copper is very different. They see if these and dollars 8,000 and time or more for copper. D. C. That kind of massive rally do you see background kind of massive rally . It is certainly capable in the next decade. The growth and demand for copper exceeds what we see as the new supply that will come on to match that by 2020. Thatr is one of the metals even as china is moving into more of a consumption phase, they will want to use more electricity. Most of the electricity will go down a copper wire. That is why in our Investment Program going forward, it is much more biased to adding corporate production to our annual production. At 57. E the bti at 54 44. Is now a good time to sell . I do not believe so. I think the price could go higher. We are workingt very hard to continue to drive down our costs. By driving down our costs at the same time as we see the price rising, we are getting ready. We are doing some experiments. We are fracking are uncompleted wells. Will start to put more risk back as the price improves and is a cost go down. I do not think we would get that kind of value if we were to rush to assail right now. At least for our core assets, which we value very highly. We also have a number of offshore conventional Petroleum Investments underway with bp. We are investing in a big project in the goal. In the gulf and we won the competition to be the firstborn company back in mexico. I will be going to mexico to sign a deal. That is another investment we make you grow our oral conduction. Oil production. We are counting down to the latest property numbers out of china. Is the sectors growth losing steam . We will look at what to expect just ahead. This is bloomberg. Betty this is daybreak asia. Yvonne a quick check on the latest is this flash headlines. Wells fargo has fired for managers as its board continues to investigate and accounts scandal. The bank revealed ahead of the Consumer Credit card business and three other senior managers were fired. The bank did not specify what prompted the decision. Wells fargo has been reviewing how more than 2 million retail Bank Accounts were open without customers permission. Reliance gl will start charging for its services. Indias newest white house byeless carrier is owned somebody who started to the market. It began operations in september. They also forced rivals to cut prices and expand their networks. Saudi citizens could be offered discounted shares as part of the worlds biggest ipo. The oil company has been discussing allowing retail to buy shares through international exchanges. The kingdom plans to sell shares and set up the worlds biggest sovereign wealth fund. That will reduce the economys reliance on hydrocarbons. Secretary opec general says the cartel supply cut should stabilize oil prices where the Industry Needs them. 100 compliance is only satisfactory. He will be aiming for that when opec officials meet in vienna later on wednesday. First things first. The preoccupation of all the 24 participating countries and the declaration of operation in terms of december indiana is the full and timely implementation of the obligations of the participating countries. We had just received the preliminary numbers for the first month of this. Numbers are very january numbers are very encouraging going forward. Therefore, it is premature for us to talk of what will happen in the next five months. All i can tell you is that the level of commitment we have received from opec member countries, tomorrow we are meeting in vienna in the sub technical committee. We are going to go for much higher levels of compliance. Because of the very high level of stocks that we have brought over with us from 2016. When we get to 100 compliance . Achieve 100 in due course. Im hearing opec members are exporting more in the month of february. Can you al a market fears on . This is the first month of of limitation of this decision. The numbers we have received so far confirmed that all the participating countries are struggling very hard to ensure that they implement their obligations 100 . Thent to align myself with ,xpectation of saudi arabia that anything less than 100 is not satisfactory. Betty we are expecting the latest Property Prices out of china in the next hour. Lets bring in a bloomberg economist. What are we expecting to see . The early signs are pretty negative. Theres been a tightening in chinas property sector since the middle of last year with the policy regime shipping toward controlling bubbling prices. demandthe supply imbalance. I look for property sales prices and investments heading into 2017 is negative. Early indicators for january, we have private serving data, it suggests the first month of the year could be soft with fails in prices and a slowing path. Betty what is that mean for the Growth Outlook for china . Is the elephant in the room in chinese economy. If you had in the contribution directly from property, taken factors like steel, cement, furniture, and Home Electronics it is 20 of demand. We can see a splintering in sales, prices, and investment as we expect, that will take a chunk at a gdp growth. Betty thank you so much. Well watch out for those numbers. Adelson says his Singapore Casino was just a warmup or what is coming in japan. We will look at Las Vegas Sands big plans for the land of the rising sun. This is bloomberg. Betty this is daybreak asia. An update on one stock in tokyo we have been following. It is surging. The japanese ecommerce provider is buying back as many as 120 million of its own shares up to 880 million dollars. It will repurchase a. 5 of outstanding stock over the next 12 months starting wednesday. In june 2015, the company sold shares to raise 1. 5 billion. The stock has fallen 40 since then. 8 ares are up by 80 and headed towards 10 based on that news. Yvonne some of the analysts were saying the buyback was a surprise. Rakutene quoting the president , as he was saying these shares were undervalued, that is right was buying them back. Moving on, lets talk about australias labor market. The economy would like to grow ine quickly, and a pickup which growth would help me inflation targets. If the Unemployment Rate is high and rising, it would pursue a quicker return. They we are satisfied that market is headed in the right direction, if not as quickly as we would like. Speaking of the timing of Central Banks, the rba is one mystery. But so is the fed. The interview will be live from singapore with the fed president. That is a couple minutes from now. We will be very curious to hear what just to say. So much confusion and guessing on where we are in terms of the march meeting and whether we are going to see a rate hike. Have to see how the asian markets are shaping up so far this morning. Rakuten and some other big shares we are following. Sophie the equities rally is losing steam in asia. We are seeing the yen pickup straight best strength. Above 113. Lets take a look at how equity markets are shaping up. Nikkei 225 is up about. 05 . Is now in the green following a morning primarily lower here. Take a look at what is moving on index. One group has supplanted fairfax media. Fairfax announced its latest profit numbers today. We do have fletcher, a building player, down 7 . We do have the likes of fortescue, woodside, and will work also reporting in australia. The kospi up. 02 . It is expended the game we saw on tuesday. 2015makes trading around july levels. Buying in heavy transport Equipment Industry as well as korean airlines. All in all, this is the way things are shaping up. A meandering kind of you in asia today. Lets look at what is going on with stocks in focus on japan given the movement we are seeing there. Rakuten announced a Share Buyback plan. The stock is up for a second day. Other stocks, we have what is going on with toshiba. , given the no slower ingnd, has the sale start this friday. Yvonne before we go on with to get your take on this. In terms of how she is going to or janetpectation, yellen is going to manage expectation, there is a long way to go for it convincing the market that we are going to see a rate hike next month. If you compare to the december rate hike and before, those chances were at 100 . You can see that at the white line. The blue line is far away from the goal right now. It is interesting how it is interesting how is been going backandforth. Him itat we can tell looks pretty comfortable with an Interest Rate hike. We will see how those comments are going to be coming up in the next hour. That is it from us. Markets ages up next. It is 9 00 in hong kong. This is Bloomberg Markets asia. Haidi asian stocks made cautious games after asia leads wall street to new records. We will be looking at expectations of falling prices and sales. Underlying profit doubles from a year ago. Dont miss our big interview with head