Blockchain is shaking things up at oldschool giants. Inis now creating new life the stalwarts like ibm and oracle. Betty david, bitcoin was up, apple down, right . You saw some of that in asia yesterday, the apple suppliers getting hit on speculation about the numbers coming in far short of forecasts, in fact to 10 million shorter than what some analysts had predicted. I want to pull up a chart that you are familiar with. This is a 254. It shows you the Revenue Breakdown 8254. It shows you the Revenue Breakdown by segment and shows you how important the iphone revenue is to apple, but that decline we have seen a bit worrisome. This replenishment cycle really going to turn out to be the way apple believes it will be with the iphone x come or is 1000 the breaking point . David that is a lot of money for a handset. Betty yeah. David you look at these numbers and forecasts, you mentioned 10 million short. Coming out, may be shipping 35 million handsets in the First Quarter, still a big number, that coming from 45, that is a problem, and could be a problem for suppliers in the asiapacific. The one that puts together your iphones, hon hai precision, a sevenyear look at the stock, 27 drop that has taken the share price to a key support level. Things are where when they open up later on. Betty in the meantime, apple was the big mover in the u. S. Market. Lets bring up the u. S. Boards. 1 , the dow barely changed, but the nasdaq off by. 3 , the big culprit again is apple. That is setting up for a down day for you in asia. David 2. 5 drop in apple. Have a look at new zealand, also australia. There we go. 1 , nothing exciting. We will see tepid postchristmas bottoms until the new year. Kiwi dollar weaker against the u. S. Dollar. Have a look at australia, 2. 71 yield. There we go. , sideways trading there. The big story come oriole. Have a look at where we are. The big story. Have a look at where we are. A problem for india. Japan might get a boost as far as inflation concern. Libya, an explosion there, one of its pipelines, the biggest export terminal, pushing up the price. In the meantime, lets get to first word news. Copper rose to its highest in three years as chinas is in clients. Futures gained in new york, the longest winning streak in a year. Futures ahead for the highest close since july 2014. Chinas leading producer was told to halt output for a week while pollution investment is carried out. Bull whoy anian forecast the yuan says it has further to go. Said it would strengthened by the end of 2017. That call is looking like the most accurate. He expects to see 6. 45 in 12 months time. A newhas announced barometer of the health of its provincial economies based on greenrelated indicators. The green index gauges the quality of the environment, the utilization of resources, and cleanup efforts. Beijing tops the list despite airquality being near the bottom. Cap shanghai population of 25 million to limit the number of people who call the nation home. Roomlan offers little to move with the population of 24 million. Urbanization has been key to growth, but spurred pollution, ho housing shortages, and a widening wealth cap. Hundreds of thousands of people were evacuated from the mequon in moved in. Rm temb in 1997, Tropical Storm linda killed 770 people and 2000 missing. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. I am jessica summers. Back. Bitcoin is at least today. The cryptocurrency rallied strongly after plunging 25 in the previous five days. Has the charts we need to know. Lets see where bitcoin and futures are trading. Asiapacific trading lower. Bitcoin down. In u. S. Trading, it almost hit 16,000. Cme futures closed up, but taking a leg lower their. Cboe futures also trading down. I want to point out the premium between the spot and futures. That was getting smaller and smaller as futures started coming online, and were seeing the trend continue here. Lets look at volatility. That is the name of the game. Love volatility because it is a good way to see profits, but also losses. You want volatility, you got it. Take a look at the yellow line. 127 volatility points is where bitcoin is. Waslast time we hit that september, august, july, but we are seeing this leg up because tothe false to falls 11,000. 7099. T chert, the top part of the chart is Bitcoin Futures for both exchanges and bitcoin itself. , boxing day, up by 14 , 15 , that we are taking a look at the low it hit over the past five days when it hit 11,000. Weis now up 44 or so, and can see there possibly might be ofloor ins terms in terms december 22. These blues and yellows are volatility spikes, so as prices fell, investors didnt come in thinking there was a floor there , pushing it back up to where we are now. We are talking about bitcoin, but there are many other bitcoin options. This is chart 465. Bitcoin here is in white. 4. 8 over the past 10 days through december 26. You can see it is the laggard among cryptocurrency rivals. Oin downw, that is loiec coin down 4 . Etherium. E is the theor so there are options here. One thing i want to note is Bloomberg Intelligence said bitcoin is not the best representation and he says Second Generation bitcoin, reptile currency rivals, could be the bitcoin of the future, taking the place of bitcoin right now. He says look to this purple line, because that could take the place of bitcoin moving ahead. Those are your three bloomberg charts you need to know as we continue our conversation about bitcoin. David thank you for that. Is shaping up to be all about blockchains. Thee talking about technology breathing life into old school firms like ibm, oracle. Our reporter out of los angeles. We know these companies are investing heavily in blockchain. The question is why. The short answer is it plays to their strengths, ibm, oracle, microsoft, companies that built their business on massive Computing Power and selling companies the resources they need to drive large transactions, many transactions in a day. They also provide Business Consulting and helping companies to redesign their businesses to take advantage of new technologies. Blockchain plays to both areas because it is about redefining transactions and how you record things over time to make your business more efficient and eliminate sticking points in your supply chain, etc. It is thereasons perfect convergence for them. David we know they are doing it. The other question is how are they doing it. A lot of these oldschool Tech Companies are adapting to blockchain. Past two years, these companies have been getting into Cloud Computing, the idea is you dont want to store data and applications locally. You want to store them in the fast Computing Resources of Companies Like ibm and microsoft. What they are finding is blockchain is taking up a large part of the cloud, so ibm for example things this coming year that blockchain will be one of the biggest a mans on their biggest demands on their Cloud Computing ability. It is interesting given how nascent the technology is. Wayother is changing the they compensate Sales Professionals in their workforce. In the old days, you get compensated on how much ibm stock you sold to a client. Are getting, they compensated if the client recruits other companies to be part of their blockchain and comes to ibm for services. It is like a mary kay cosmetics model. Betty what has it been like elsewhere . It has been all over. The people who are advocates for it,kchain, enthusiast of say it is almost like a new internet in the technology world. We will see fast applications we could not have dreamed up over the next few years, so a lot of companies are in extreme and implementation phases, but it is anything where you need to track things moving through your system over a long time is a natural fit. Food safety is another example, but were seeing all sorts of things. Record label copyrights that have smart contracts that you can sell the rights to use your song in a movie without having people involved, very interesting stuff, so it will be fun to see how it evolves. Betty it will be. Everything with bitcoin is fun to watch. We will have much more on and how the cryptocurrency is shaking off its holiday hangover. We have the outlook for the cryptocurrency. Next, japanesep households are finally opening their wallets, but will that spur inflation elsewhere. We will be live in tokyo next. This is bloomberg. This is daybreak asia. I am betty lou in new york. David over to japan. Shinzo abe and governor kuroda have delivered their indent your message, saying japan is improving, but still has a long way to go. Abenomics has strengthened the economy and beaten back inflation, but prices are not ideal and wages remain weak and japan remains short of this revolution shinzo abe pledge to deliver in 2012. Conditions have improved, not just for large firms, but also smaller companies. The labor market has picked up all over japan. An upper course, and we must continue this trend into the new year. I am asking Business Leaders to wage raises 3 at the next pay talks in the spring. Japan has remained relatively sluggish compared to Economic Growth and a tightening labor market. Annual cpi inflation excluding fresh food and energy has remained only slightly positive, and there is still a long way to go to achieve the target of 2 . The boj will pursue monetary easing under the current qqe with yield curve control. Our next guest says the increase in wages and consumer inflation will be key factors to watch for the japanese economy next year. We are joined by the chief economist from japan Macro Advisors out of tokyo. A good morning to you. We heard from the Prime Minister and boj governor, so assuming the economy continues to expand thingscurrent pace, all equal, exchange where it is, oil prices where they are, so when do we get to 2 inflation . The boj is saying 2019. I think our market has more or less given up hope for reflation. I think market start to think however low unemployment gets, there is not going to be inflation, but there is no theory behind it. Yes, it is a puzzle why there is no inflation, global puzzle. It falling from , andto 2. 3 next year along the way there will be inflation. David we are at 2. 7 . Of fullhink the concept employment is now much lower than it was in the 1990s . They have opened up Something Different with abenomics, havent they . I believe there is more flexibility in the labor market. The labor market is more competitive. There are ways that companies can squeeze more labor out of the labor force, such as , sofemale labor force especially in this area, they have been rising. More than 23 of people over the age of 65 work in japan, one of the highest rates in the world, have a limit,s and i think 2018 may see the finally having to rage wages to attract more workers. Betty what do you think if you were looking at this governor combination, where would you give them the most credit . IsPrime Minister shinzo abe a guy who picked governor kuroda , so he has to get the credit for what the bank has achieved in the last five years. Governor kuroda is the hand that has implemented shinzo hobbies policy, but the Prime Minister is the ultimate authority. Abes policy, but the Prime Minister is the ultimate authority. Betty this is chart 4491. We have seen the rise of both debt as ajapans percentage of gdp, both pretty troubling. When it comes to japan, have they stabilized the debt problem in japan versus in china, which is still a very big risk for the economy . Call the last five years of disappointment. So thereent is down, are almost one million more people employed in japan, so more than one million happy families. As a Prime Minister, he did contribute to the Greater Happiness of the japanese population, so i would not call it a disappointment. It is a big achievement, and they say they will continue on the policy part. David if only inflation was measured through happiness. The other thing i want to ask immigrationclearly is a big issue in japan and easy to say looking at how crippling bad demographics are for the economy that opening up immigration is the way to go, but help us understand them a shinzo abe virtually controls parliament. Why can he get meaningful reform through when it comes to immigration . Well, politicians have to make a lot of balancing factors, and in Prime Minister abes case , he needs to gain support from his nationalist, right wing part of his supporters, and that right wing part, they definitely dont want immigration, so Prime Minister abe does give lip arvice so they were open up little here, a little there, but in terms of numbers there has not been much increase in immigration because one of his es isrter bas nationalist and right wing. David it is political when it comes to shinzo hobbies fragile, if you will, approval shinzo abes fragile, if you will, approval rating. I cant see a single challenge to shinzo abe. Why do you think politics is the biggest risk next year . Prime minister abe has been popular, but this year was a low , the year his popularity plummeted because of scandals. ,hen you look at the polls people do still support Prime Minister abe because they feel there is no alternative. The support for Prime Minister oblique is not particularly positive, so when another , his support ratio may plummet and people might start to think about replacing him. When he goes, there goes governor kuroda and is economics out the window. Betty as you mentioned, we are still looking at stimulus. Lets not talk about taking away that stimulus yet in japan, but do you think that might start to arise by the end of 2018 . When does the boj join the other Central Banks and start looking at taking away stimulus . Pair, primes the minister shinzo abe and governor kuroda, so long as they are in their current seats, i dont think there is much risk they will change this reflationary policy next. At will ber corrode up for reappointment this march. That would be one of the first important issues to look at in 2018. Betty thank you so much. From japanconomist Macro Advisors in tokyo with that outlook on japan. Dont forget our interactive function tv. You can watch us live and die into any of the securities or bloomberg functions we talk about. You can become part of the conversation by sending us instant messages during our shows. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. T out at tv. This is bloomberg. Check ofts get you a the latest business flash headlines. Toshiba, one stock to watch, has 97firmed it is being sued by Institutional Investors seeking damages for its inappropriate accounting scandal. This suit was filed in Tokyo District Court in september. Of case brings the number cases to 34 come up for a combined 1. 5 billion. 30 , selling assets in a Debt Restructuring Program and cutting borrowing by 6 billion in comes after to the collapse of merger talks and a failure of the planned tower sale. It has been hurt by a price war that has hit profits. Coming up, apple, not so Merry Christmas with analysts cutting their forecast. David it is 7 30 wednesday morning in hong kong. It is warm as we approach the new year. The function on the terminal for the fiveyear mean, 17 degrees celsius. We are 30 minutes from the open of major markets. Betty it feels like 17 fahrenheit. Closed deep in the red, at least when it comes to the nasdaq, tech shares taking a hit, but still a beautiful skyline, Empire State Building still celebrating christmas. I am betty liu in new york. David you are watching daybreak asia. The china beige book says recent data offers a warning for 2018 now that president xi jinping is less motivated to prop up growth. There is an incentive to ensure the economy was harming a long, but fourthquarter results show a shift to Slower Growth. China stepping up scrutiny of overseas deals. Reform Commission Planning punishment for Companies Engaged in unfair competition and illegal financing. Only approve projects in line with development plans. Chinese companies have announced 145 Million Dollars in offshore purchases this year. Hasa stock regulator ordered the founder of a Video Streaming Service to return home to deal with the companys financial problems. Src wants the leshi founder to come home. The stock has been suspended since april. Imports of liquefied natural gas jumped in november as beijing ordered record amounts. Shipments surged to 4007000 tons from nothing, making the u. S. Chinas thirdlargest supplier behind australia and qatar. China is using more lng as part of its campaign against pollution. Blockchain earned a boost with china using it to buy oil from the middle east. To digital applications and smart contracts helped sinochem cut costs by 20 , 30 . It adds it will help improve transparency and risk management. It is being touted as saving the commodities sector 100 million hundreds of millions of dollars every year. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. I am jessica summers. This is bloomberg. Looking at crude prices now, close to 60, levels not seen in 2. 5 years, after a pipeline explosion in libya. We are joined by our deputy Sydney Bureau chief to tell us more about this explosion, what hap