that is one thing you might want to know. the other thing i was talking about, and this concerns hong kong, have a look at the hong kong dollar. it does seem that is a big spike up. don't forget, two things. it is a pet -- fed currency. we export monetary policy from the fed. from them hong kong monetary lookrity earlier, when you at these rate differentials, expect this to start moving towards the weaker part of the trading range. if i take this back to 2004, you will know what i am talking about. unless the fed continues to normalize, expect the slide to move closer to 785. into how all of the central bank action we have seen, i am joined out of --gapore by mike cudmore mark cudmore. so far, a fairly eventful day, given the fact that we were expecting the fed to do it anyway. what stood out to you? dovish fed,e seen a a dovish reaction. some people in the market were betting that with so little priced, it is expectation that there will be a rate hike yesterday, three hikes for the seemed like2018, it a cheap pet to put four in the dot plot. are have confirmed there only three hikes next year, but all it weaken a little bit, a slightly dovish reaction and that should have been positive for stocks in asia, but they have traded poorly. it hasn't helped them. we have this chinese tightening, marginal, but it was unexpected. it slightly crimped the atmosphere. it is holiday week, it is quiet, there is not too much going on. david: when it comes to the hikesstory, we get three this year, three hikes next year, the dollar doesn't seem to be budging because of inflation. where do you feel the 10-year yield wellhead? -- will head? mark: probably somewhere near 2.25% or lower. i know that seems bullish treasuries compared to consensus. the consensus is around 2.7% for next year. muchnk yields will be lower. it makes sense for the curve to continue to flatten. this is a normal part of the economic sisal. a lot of people think this has been extended, but flattening is quite normal. next year, we will start getting to a flat curve or inversion. we get inversion towards the second half of next year, that is implying recession in the u.s. towards 2020. the curve should continue to flatten, so yields would come lower but in volatile fashion. david: i can't let you go without asking about the bank of england later on tonight. inflation is passed their target. what should i could watching the? re? the bank of england can't do anything too radical at the moment. people will be wondering about the forward guidance. the market isn't really expecting another hike until the possiblyof next year, the earliest. there is a chance given the data, the bank of england might want to prepare the market and move it forward. an uneven linew because they don't want to prepare the market for a definite hike next year, they want to leave the options open that they might accelerate if things go well on brexit. that is the uneven line they have to work out. there is a chance they mess up that delivery, it might be a hawkish surprise. it would be a mistake to interpret it that way. ofid: mark cudmore, live out singapore. over to sydney with paul allen. the latest jobs reports from where you are. paul: australia is on track for the biggest full-time employment gain since records began in 1978. record low interest rates spur hiring and the market created 61,000 new positions last month, smashing forecast of 19,000. full-time jobs rose by 41,900, taking the 11-month total to 340,000. dissipation rate ran to 65%. new zealand says budget surpluses in the coming years will be smaller than previously seen and economic growth will be slower as the new government tries to reduce inequality and raise productivity. treasury updates its surpluses in 2018 through 2020 will be less than forecast in august, while the economy will expand 3.3%, below the 3.5% previously forecast. theresa may suffered a serious blow to her brexit plans as pro-eu conservatives defied the with in parliament. to change the government's bill in -- enshrined eu law, so parliament is guaranteed a vote on the final brexit deal. this gives mps the potential ability to veto if they don't like the terms of the deal in 2019. president trump says the senate and house are "very close to tax legislation" as republicans try to sign it into law by year's end. congressional negotiators met and he said it would be legendary. vote on thent a bill delayed until doug jones is sworn in. global news 24 hours a day, powered by more than 2700 journalists and analysts in more .han 120 countries i'm paul allen, this is bloomberg. david: thank you. i brought this chart up at the top of the show. the pboc raising interest rates in open market operations. it was a little more surprising this time around. there you go on your seven and 28 repo. five dips. let's bring in our correspondent here to flush out this story. for you surprised? >> -- were you surprised? >> i was a little bit. they were doing it at the letnning of the year and the market rates go back. it is important to recognize what happened here. they haven't mirrored the fed's move. they have done a modest move through the money markets. it is more of a signaling effect than anything else. this isn't a very jarring out right move that will hurt the economy overnight or anything, but it is saying that deleveraging campaign is happening and will probably remain our dominant team heading into 2018. it is a signal to barrios -- bar errors -- borrowers. the tilt is obviously to the tighter side. >> it is to the tighter side, but there are conditions that are needed for the pboc to do and out right tightening of the benchmark rate. they need to see inflation take off. inflation has been subdued in china. ppi is cooling. need to see economic growth accelerated. i don't think there is expectation the economy will take off anytime soon. it is more of a stable glide. the near term, things can change. especially externally. we have to keep an i on dollar and yuan. have: at the moment, we prices up. retail sales, industrial production and risk asset investment. take away their? a good takeaway. it is worth remembering where we were at the beginning of the year. talk of trade wars, dollar pressure on the yuan, and just wider growth. instead, we have had an export boom. we have had the numbers today, which are so-so. they are not gangbusters, but not showing any sharp slowdown, either. an economy on something of a moderation or gentle glide. overall activity is slowing and will in the first quarter of next year. would imagine we would be here with these kinds of stable numbers? ,hank you so much, enda curran live in the studio. coming up on the program, we discuss central-bank policy and the effects on the currency market. from mr. evans. japan has gone nuclear, if you will. sending stocks tumbling. this is bloomberg. ♪ ♪ bloombergs is markets: asia. i'm david english. by macro strap -- a macro strategist. move, but the inflation story, that is a bit fluid. we are getting pockets of it, but in the u.s., none. >> we are not talking deflation anymore. we are somewhere around target in terms of the headline number. beyond thelooking headline number at more at court. the headline number is being influenced by commodity prices. look at the core numbers and it was probably disappointing for the hawks and for the dollar and everyone who was expecting the possibility of interest rate hikes being more aggressive next year. we arery is one where waiting for inflation. it doesn't seem to be generating the extent we were expecting given the strength of the labor market. david: but the risk is to the upside? continues the dollar to weaken and at some point, this comes to fruition? on monetarys partly policy, but also fiscal policy, as well. strictly from a dollar perspective, if you are arguing next year, at some stage there has to be a pickup in inflation because of the tightening of the u.s. labor market, the pickup in growth we are expecting out of the u.s., all of this is inflationary. it will keep the u.s. on the front foot in terms of being wary of the long-term trend in a pickup in inflation. what that means for the dollar, we are looking at three, possibly four hikes tops next year. that means the dollar gets a bit of a firm footing on the back of an upside surprise on inflation. last night, it is vulnerable to disappointment if inflation doesn't come through. the offset is that the tax reform policy is there or thereabouts. david: four hikes, is there into a the fed hikes us stoppage of momentum? dwyfor: jerome powell is coming at an interesting time because this is an issue. with the flattening of the yield curve in the u.s., the argument is that if you hike aggressively at the front-end, you are possibly causing a recession. however, you might need to hike in order to have ammunition in your back pocket in case of a recession. there is a causality issue the fed has to deal with, which probably means it won't be an aggressive in hiking over what it sees justifiable based on inflation. they are in a bit of a pickle, because you don't want to cause a recession. you can argue you need the interest rate hike so you can offset a future recession, but you don't want to cause one. this is where tax reform is important because that is meant to expand the economy. david: who is in a bigger conundrum? mark carney or the new guys at the fed? dwyfor: the u.s. is in an ok spot right now because they are reacting to a strengthening economy and signs of a pickup in inflation, as tentative as it is in terms of core. the u.k. is in a different position because inflation clearly has exceeded top of the target. carney has to start writing letters to the chancellor. the weakness of sterling could well have further to run. there are complications there in terms of brexit policy. 2018, sterling for us on the g10 basis is one of the currencies that is vulnerable to the downside. if that causes a continuation of price pressures in the u.k., you are left with the bank of england possibly being forced to hike in an environment where the economy is slowing. it is not a great environment. it really is not. this has political consequences because it implies real wages are lower, standards of living fall and that ♪ david: this is bloomberg markets: asians. -- markets: asia. dwyfor evans is still here. china, why did they do it is the question? theor: i guess stability on currency is first and foremost on their mind. the concerned they would have is that as rates hike elsewhere, they may be success bubble -- susceptible to outflows. that is not too much of a story because it is something we were expecting in the rate hikes, they want to maintain some type of sick -- stability on the currency. they also want to send a signal tightening fed are because of growth conditions in of inflationause conditions and normalization policy in the u.s., we are tightening as well because firstly, we don't want to pursue the policy of stimulus we have over the past 18 months. we are removing liquidity from the market. they have done this for weeks. ofondly, it is another way saying our economy is doing ok, as well, and our inflation has picked up in recent months. tocan also normalize policy a degree, which is important because if you look at the u.s. and china, they are basically saying the emergency stimulus in the last three years in china and the u.s., that is all slowly coming to an end. . point, one of the other things you brought up his credit impulse in china, how that is trading lower. we have our own metric of this, we are calling this less bang for your credit buck. 2009, theyded to, saved the world. 2018, why is this important? because this has been seen over the last few years to be a close leading indicator of global pmi's. when you look at the marginal growth contributor globally over the last maybe four or five years, it is china. look atn global growth, the largest contributor of global growth and it is china. it doesn't matter if they have come to 6.5% on growth, they have been the marginal contributors. if you see a slowdown in credit impulse, it is telling you the knock on effect of the global economy will slow. i will put some context around this. what the chinese are also doing is they are adjusting credit from the off-balance-sheet back the formal banking system. that is to be seen in context, as well. it is fair to say that in 2018, this will be a key theme. gradual slowdown in chinese credits. david: top conviction trade? dwyfor: on the subject of stimulus and liquidity, we have to realize that back to the thing we spoke about which was inflation, europe, japan, we are not really seeing signs other than a modest pickup. the ecb and bank of japan will maintain their policy stance in the first half of the year. the liquidity story will still be supportive. for emerginge good markets. there are stories of global growth taking a hit, but when we look at the revised upside revisions in terms of global growth and the likes of the imf, all of that plays out well for the export driven emerging markets. e.m. looks quite well set by the ed osan craddick -- idiosyncratic risks. em equities look very cheap. japan also looks very cheap from an equity perspective. less so for someone like europe. playing some of the japan risk versus europe risk makes sense. on the fixed income side, we like some of the higher-yielding markets. we like mexico, for example. we like some european markets on the basis of fixed income. currencies, a little more difficult. we are quite neutral going into the dollar. as to david: what should i watch in my currency exposure? europe will be interesting because the european central have to shift policy. it will not be early on in the year, but that is the next adjustment among major central banks. europe is still a interesting place for next year. sterling on the downside, there is still a lot of political risk in 2018 that mrs. may will struggle to offset. so much.ank you we will see you next year. dwyfor evans from state street global markets. let's get you your bloke -- latest headlines. japanese mobile carriers face more competition. attract 15 million mobile subscribers if the green light is given. rakuten says it will spend as much as $5 billion to invest. new to his condemnation of has less saying elon musk's car company is heading for a brickwall. speaking in detroit, he said every bull market has its trophy child and tesla has a bad one. he says for more than a year, recently told bloomberg tesla is structurally i improbable. uber is returning to the taxi sector in an attempt to return former enemies into allies. it is bringing a whole fleet into its app to offer a quicker more convenient ride. last week, they agreed to sell 51 percent of its singapore rental units for more than $200 million. uber has also teamed up with three taxi companies inmore tai. minutes, we will look at markets opening in tokyo. we get the latest there. when you look at the broader context and texture of markets in the asia-pacific, currencies are slightly to the upside after equities are mixed. bond yields are steady so far. this is bloomberg. ♪ wha is this a phone? or a little internet machine? [ phone rings ] it makes you wonder. shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. so all you pay for is data. choose by the gig or unlimited. and ask how to get a $200 prepaid card when you buy any new samsung device with xfinity mobile. a new kind of network designed to save you money. click, call or visit today. >> it is 11:29 in hong kong. news.test it china's retail sales and factory output came below estimates amid attempts to rein in borrowing. it indicates continued momentum for the nationwide pollution. pboc raised borrowing costs just hours after the fed hike. bank of indonesia is expected to leave its rate unchanged at 4.25%. comes after a subsequent plunge. the philippines meanwhile is forecast to leave the overnight darling rate unchanged at 3%. the bank of japan must boost before the next sales tax hike. price momentum will not be strong enough leading up to 2019. most economists expect the boj's next move will be top end. one of two top candidates. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. lots to consider. first, significance coming out of australia. take a look at the blue big chart. 5239 on your bloomberg. this is blown past estimates. in previous months, we have seen a massive amount of job creation , let us put it that way. this is the other one, of course. 36. we will be talking about this in 10 minutes or so. company. the high court in hiroshima told the company you cannot restart your nuclear reactor, one of which of course in the south of the country. essentially what the court is theng, with all of volcanoes around, it is not a good idea to have nuclear division taking place. that becomes a problem other nuclear reactors cannot then restart, because as you can see, we have had trade surplus in japan. this massive. of deficits was essentially caustic because of the earthquake in 2011. they had to import everything for energy. restart, butted to if you cannot read do that, we will talk about this later on. now back to one of our top stories. policy makers continue with the three european central banks getting ready to debate policy. one of them caught in the crossfire. one of the biggest political battles in decades. kathleen hays joins us right now on this superk thursday trifecta. get startedave to with the brexit mess and what this means for mark carney and his migraine. kathleen: all i can think of is, poor theresa may. the big story was the border with northern ireland and hammering something out amongst tons of constituents. theresa may finally came up with a solution that she thought would settle the bill. she could then move on to trade. that is what the u.k. is really concerned about. the u.k. parliament voted 309-302 that they want people to veto any brexit deal. the member how at beginning they wanted that, and theresa may was able to push through a deal where she could just forge ahead? her it turns out that biggest challenge may not be with the eu, but members of her own party. autumn line, she is not expected to lose her job, but people are saying it points to a soft brexit. in other words, she does not have the power to forge ahead with the deal they want. she will have to negotiate this soft ranks it. they are essentially downplaying the defeat, and are ready to move on. the european union has issues to deal with. but what will happen, is that for banks will move ahead taking away a lot of privileges and putting themselves in a different position. there are a lot of moving parts, but this is something that has been difficult for ms. may. david: what does it mean? can mr. carney take a look at this and sit pretty? kathleen: it is hard for him to ignore it. as the committee wraps up, he needs to talk about what is going on. had 3.1%.nflation, we that is the highest since 2012. v5339 gives us two chords. look at the white line, which shows inflation rising highly. economists expect it to pull back a bit as the economy gets through it. meanwhile, look at the blue line. that is wages. faster thaning wages is not good for people working or paying their bills. mark carney will have to give an assessment of the brexit impact. they expected to be fairly neutral. at this point after the rate they may holdh, in see how this plays out. economists are saying that late-2018 will be the next time they move. and mr.r. draghi jordan, what will they do or not do? kathleen: no big changes for the ecb. the question is, will they give us more details? they extended bond purchases until 2018, but will they refer further details? will they get them lower? this remains to be seen. 87 to seeick look at 11 why mario draghi is so cautious. it is so far from the ecb's target. let us take a look at that really quickly. you can see that they are supposed to be just under 2%. the court is really around 1.5%. so, give them time to be patient. they will keep that key rate at 0.5%, but they may raise their forecast down the road from a less negative rate to something closer to zero. one of the most interesting ones is the bank of england. kathleen, thank you so much. just a flurry of central bank positions. this leads us into the next year. lots of data to consider. does this all play out when it comes to the markets? haidi lun is in sydney. heidi, i am looking at the jobs. 300,000 full-time jobs have been created in 2017. you moved there in january, so i have to thank you as well, right? haidi: keep in mind that this is one of the most unpredictable indicators coming from australia. it can be pretty wild, but it is up to the upside. we did see a huge jump in the aussie dollar. to be fair, it had been boosted by a number of factors, including consumer sentiment. the dollar hits the five-week high. sustained u.s. dollar weakness. we had it snap that long winning on the count of what was seen as a dovish hike from the federal reserve. in terms of some of the other movers, it is a pretty lackluster section. let us bring up the function in terms of movements on the bloomberg. what you see perhaps surprisingly is not the goldilocks reaction, but we did get one dovish hike. the idea is that growth looks sunny, but it is still all sluggish enough to keep from movement to click the pleaded -- movement to quickly. we are seeing a pretty mixed session here in australia. asia, rather. but when itg gains, comes to materials as well as energy, and especially gold prices, we are seeing strong gains. in fact, the top gain is resolute mining. you touched about the japan nuclear story. keep in mind, we have a resurgence again. that is weighing on sentiment in tokyo. i want to bring up one of the movers here, which is 9507. this is she in cocoa electric. shinkoku electric. this blocks the start of nuclear reactors for this company in japan. a lot of energy analysts say significant because of the impact of the restart strategy for nuclear power. what we are seeing when it comes ikoku, just come into the bloomberg and check out the relative value function, see other energy players in japan. with a couple of exceptions, they are all trading to the downside because we have this one, including 137 legal cases unfolding in terms of attempts to try and thwart this attempt to start nuclear energy. take a look at the projections finance asg energy to the implications for energy supply. day. david: heidi, thank you. to her point, we will continue the conversation here on japan's nuclear ambitions. hot risk ofhe red restarting those reactors. that is next. this is bloomberg. ♪ ♪ "bloomberg markets: asia." we start in china. reports say that geely is finalizing a deal with mercedes-benz. is not been made, and the amount of shares to be bought has not been determined. be worth $4.7 billion. we are watching shares of shikoku electric. this is nine years after the court banned a restart of the nuclear reactor near hiroshima. nuclear efforts back online. the fukushima earthquake, of course, disrupted it. we will be talking more about the story in a few moments. in the meantime, the pursuit of vietnam's leading ruler will see local units to sidestep laws of foreign ownership and seek controlling ownership. it makes it eligible to pay majority holdings. is the sole bidder for sabeco. to do it.ught as promised, back to japan. plans to restart the country's nuclear plants has been derailed. a nuclear that reactor must remain off-line means that shikoku electric will challenge it. it cannot restart according to volcanic activity. shares tumbling sharply for a second straight day. the energy report. more background with stephen. just watchingo is this, help us understand how we got here. stephen: the background started with fukushima. there was a meltdown that caused the closedown of all reactors. now, some reactors are coming back online. , theew regulator in place reactor you mentioned before, restarted last year after 13 months of service. while in planned maintenance just yesterday, a high court decided that the regulations put in place after fukushima were -- strict enough specifically, they mentioned that the volcano nearby, which is active, could pose a threat. the regulations and assessment of that threat was irrational. right in, they put it the crosshairs of the nuclear regulator right there after fukushima. with this in place, the injunction to stop the service of the reactor which was supposed to get out of planned maintenance in january means it puts a huge burden on shikoku electric's earnings. is that why we are looking at this slightly different from the other court decisions blocking other nuclear restart? because we talked about the since 2011 when we wanted to see more of these off-line, and japan perhaps not wanting to import as much. is that a factor here? the bigger factor is the high court. before, there were district courts. whole,look at japan as a the district courts are local. they do it they want. the high court's, on the other hand, are full of people have been in the system for many years. they want to follow the central government. so basically, that is the big difference. time a highfirst court has come forward and said you have to stop a reactor because of a volcano. other reactors have been stopped because of the courts, but not at this level. shikoku will, of course, appeal it. will they have to take it to the supreme court? this opens up a new bag of worms that could affect other courts because a high respected courtney this decision. you have to remember, nuclear power is still very unpopular. people inhalf of the japan opposed nuclear restarts, according to local media polling. david: and i guess on that line of reasoning, now we have legal precedent here. what does this mean for upcoming cases? even reactors that are already back online? right.: i think everyone is scratching their heads. i am not a legal expert, but people have been talking to have said that this definitely sets a precedent. it could hurt the operating reactors. there are currently four out of the 42. it could affect them. you're seeing their stocks tumble. reactorsalso affect planned for restart next year. there are four plan for the first half of 2018. maybe those will get court cases that could fumble it going forward. at least 21% of the next by 2020. with all of these court cases years, itext 15 throws it all in the air. looking at this for the medium-to long-term, it puts the future of nuclear reactors and research in japan into uncertainty. david: it is hard to imagine that we are already seven years from those events. we are still talking about the aftereffects of it. steve jasinski there. the marketsack to and look at the opening minutes and india. there we go. the story is just the dollar eaxed.g poll a a little strength coming in through the rupee. it is then again busters market. equities,ook at all-time highs with hovering around historic lows. though i should point out, look at this. btv5448. youhis version of the vix, track that back 10 months and that puts us to the level we were at last year. when you look at things that are politics forup, example, it could turn the bullish time. grow chart is with us. we are talking about state polls, including one in gujarat's. why are these so important? india, there has been enthusiasm. the the next 12 months, depose.on will so these state elections are being reviewed. especially the big-tax overhaul. the nationwide tax has become a source of anxiety for people. these elections will help us gauge whether or not mr. modi is grounded before the next election. david: what are we expecting from equity markets? i think it is the worst kept secret. does that mean the bull run is almost done? >> one thing we can be absolutely sure about is that it will cause volatility. as we speak, the stock implied volatility index is near sustained highs. another factor could be social spending by the government. if they feel the people's vote is not favorable to them, they may resort to more social spending. they may become populist. it is big question for the market. david: what is expected to come? like cricket, this is a game of uncertainties. the results are out on december 18, that is monday. we can surely see that this looks like a closer contest than people had earlier anticipated. david: and that could be a problem, as you mentioned. thank you so much. talking about the state of play across the markets in india. let us see how this goes. stay with us. this is bloomberg. ♪ ♪ now a look at how the markets are trading. beautiful. we are talking about sydney. at 6024. the emc is getting a more decent bid. a look at tokyo and how we are doing in the markets. basically feeling pressure on the stronger japanese yen. a look at how we are doing on seoul, south korea. there we go. 1% from the likes of industrials , from the likes of tech. there. in korea, a look at how things are shaping up here in hong kong. not too well, although it is a beautiful day out there. the hna coming out with some comments. they simply have to implement the monetary policy. look at the spread, the rate differential, and you might see something different when it comes to issuing liquidity. speaking of the federal reserve, a bloomberg chart. 4502 here. when are we nearing the end of the tightening cycle? this goes all the way back to 85. cycles.cates the yellow lines indicate where the spread usually is as we approach the tightening. we are not quite there just yet. bloomberg markets: middle east is coming up at the top of the hour. yousef, i am guessing the fed is very much center the. good morning. i am digging through the notes as we speak. will be talking about the reaction, the weaker dollar. also, tax cut plans. fixed income will way into the conversation. we have, of course, tim fox. he will take part in that discussion. the stories coming out of saudi arabia, and also what is going on in crude markets. currently trading a bit higher. there is so much more still to come. stay tuned. this is bloomberg. ♪ >> you are watching "bloomberg technology." president trump spoke to middle income americans and young republicans at the white house to pitch the tax overhaul plan working through congress. trump said he is just days away from delivering a massive tax cut for "every day, working americans." final votes could come next week. alabama's election chief says uncounted ballots are unlikely to force an automatic recount in two states panel -- special senate election. roy moore refuses to concede defeat to doug jones, who won in the deeply conservative state.

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