A fresh week for a lot of markets. Asian equities off to a stronger start. The handoff from the United States in terms of the s p 500 was fresh record highs again. Take a look at global markets. Index up, a selloff in new zealand. Markets in tokyo are closed for a holiday. We dont get much indication there. Australian bonds lower, tracking moves in treasuries. Take a look at the south african currency, downside on the back of comments from authority saying they will take actions to stem moves in the currency. Commodities space, pressure on the metals. We did have that supercharged rally that has ground to a halt in metals. The first weekly drop since december. Aluminum and copper under pressure. Here are some other risk assets to take a look at, including brent crude. We had a rig count showing american rigs falling for the first time in three weeks. Some upside as we speak. , some inflation figures out of the United States , relatively unchanged at 2. 48 . Gold currently at 1320 an ounce. The cable trade at 1. 35. More investment banks are getting behind to the bullish position, and that includes ing and nomura. Some are saying there are positives despite the uncertainty with brexit. Lets check in on first word headlines. Aramco has joined the kingdoms Biggest Companies in paying saudi staff more money. The salary hikes extended workers to public ease discontentment over rising prices. , otherng to local Media Companies will hike pay. Foreign exchange of official has told bloomberg the country will take stern action in the won as the dollar weakens. Koreas human of account surplus was over 45 billion, spurring demand for the currency. Chinas Foreign Exchange reserves posted an 11th straight monthly increase. The reserves climbed by 21 billion to 3. 14 trillion. Largest foreign currency stockpile has been rebounding since january, when it fell below 3 trillion for the first time in six years has the central bank propped up the yuan. Australians government says iron ore is in for a bumpy ride in 2018. The Worlds Largest exporter says prices will average just above 52 a metric ton for the full year, though they may be higher in the first half as china relaxes curbs on steel output. It also sees gold prices dropping in the next few years as treasury yields rise on the higher u. S. Interest rates. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. I am debra mao. Thank you. Lets get back to one of our top stories, President Trump saying it is open to join talks with north and south korea, saying it would be a win for humanity. If we can come up with a peaceful and good solution, we are working on it with a lot of people, if something can happen and something can come out of those talks, that would be a great thing for all of humanity. Jodi schneider is here with more on this. From the change president after a tense year between him and kim jongun . Tryingoes seem like hes to reduce the level of confrontation between the u. S. And north korea. In recent months, we had the fire and fury speech in august. Last week, he was saying he had a larger Nuclear Button on his than kim did come and he chided his secretary of state, so this seems to be a softening of that position, although President Trump as a candidate said he would be willing to negotiate with kim over a hamburger, so we will see. They are not committing to any talks, but being open to this. Part of this is not wanting to be let out of that relationship with south korea, something they are having to balance in the u. S. And south korea in terms of trying to talk with the north. Controversya lot of around the conversations over the weekend in terms of the book from michael wolf, fire and fury. What can we expect next in terms of staff shakeups . Resonated deeply with a lot of key figures in washington, hasnt it . It has. This has been the talk of washington and other places in the world as everybody is trying to get the book and read it. It has been a distraction for the white house. This was a time when they should have been taking a victory lap over the passage of the tax bill a strategy toout get ahead of the 2018 midterm theirons, how to sell accomplishments. About the all talking book and these allegations of ands in the white house, really calling into question the president s fitness to hold that office instead of talking about the tax bill and other legislative and executive actions, so this is really a distraction and something the white house is obviously concerned about because they sense some many people out to talk about the president in the glowing terms over the weekend. You mentioned the president s fitness for the post, the representative for the United States to the United Nations made comments. Take a listen. It was 200know if interviews with steve bannon or with himself, but i know these people. I work with these people. I work with the president and speak to him multiple times a week. This is a man who did not become president by accident. Is this another chapter in what has been a presidency more by consistent noise and anxiety, or is this an Inflection Point where we can say this would do lasting damage to this administration . It is obviously difficult to tell. So much of what has come up over the past year seemed to be significant at the moment, then people move on and Something Else happens, but beastly the fact that the president has had to send out members of his cabinet like nikki haley to talk about his fitness for office is not something that is useful in terms of moving forward his agenda. Anytime you Start Talking about fitness, even to defend it, it raises questions. Excellent reporting. Thank you for that inside. Lets widen the conversation and talk about the federal reserve. The december meeting showed of a boostere unsure from the republican tax cuts. While investors expect the central bank to leave rates unchanged in january, they are placing bets on rate rises after that. Lets bring in our guest who joins us from hong kong. Good to have you on the program. The white house chief Economist Says the tax reform does not warrant any change in terms of how the president goes about 2018. You agree with that . That statement. I think the fed has to keep its own head. My concern is that trump will try to bully yet again, saying he wants lower rates going for because of the midterms. I hope the fed stays its own course. Inwe are looking at a chart terms of how the u. S. Dollar has performed. This is for 237. 37. Y analysts 42 pain,nalysts seeing more but some are predicting a dollar rebound, and that could send jitters across the world, the market underpricing the likelihood that we might see strength in the dollar after all despite the noise from the white house . The dollar is undervalued. I think the incorrectly rising bond yields will in fact push the dollar up because the dollar is such an undervalued currency. You will get this argument it is cheap, lets buy. I think the dollar will strengthen again off the back of three fed rate hikes this year. In terms of the must trade events, january 12, inflation data from the United States. Everybody is on the edge of their seats. What is your outlook for those figures and how does one position oneself to make a buck out of that . Buy onn market dips market dips. Technology, demographics, globalization, three key forces that have not to the guts of union power to price spirals, but off the back of that you will find bonds get oversold because people get worried about inflation rising, and that is exactly when you want to pick them up, when they get oversold. You are sticking around. We still have plenty to get through. Here is a preview. We talk bond issuance is from the gcc countries as they look to be in for a big year. More on the outlook in more detail on this program. Also, asian markets on a record themand many analysts see heading higher. How much truth is there to that story . We will bring in the analysis for that. This is bloomberg. This is bloomberg. Show you what happened with some of these equity markets in the middle east. Over all volumes in line with the three month average. Interesting what is happening is saudi arabia after the series of news around government handouts to offset some pain from the ongoing reduction in subsidies. Investors reacting positively. It is not the surge that history would shown us would usually happen. We will break that down later on. Off the back of expectations on new dividends. Lets cross over to the asian equities story. They may be at record highs, but it could get an additional boost this week. Estimates for asian stock sectors have been raised for the last three months. Cyclical shares seeing the steepest upgrades. Our equities reporter joins us now from singapore. We are seeing a justmans from analysts. Give us some context adjustments from analysts. Give us some context. This was the Fourth Quarter indexhe msci asiapacific was up. It was the first year to see earning upgrades that a yearly level in the last four years. So it accentuates itself. Been led by cyclical stocks, which formed the bulk of the index. Thisis happening because synchronize Global Growth is strengthening the World Economy and feeding into domestic demand. That in turn is easing the demand for goods, which is reflected into the expectations for earnings, therefore cyclical all of these sectors are leading the upgrade cycle in the msci asiapacific index. What stood out to you . You have been analyzing those valuations. What else would you highlight . Things look good for asia. We have talked to fund managers. Revisions to the upward side are and msci asia is trading 14 times 12 month ford earnings estimates. Ard earnings estimates. So asia looks good. Upgrades are flowing in. It looks like 2018 so far looks like a good year for asian equities. If you go deeper into which sectors are leading in these earning upgrades, technology ,tocks are topping the charts and a lot of energy names from hong kong and japan are also seeing upgrades. Good speaking with you this morning. Lets widen out this discussion and bring back in our guest. Chart asut this on a well. Is 4479, a key chart that lays out the groundwork in terms of profit estimates for asian stocks ticking higher, the best level. S per share, 12. 5 how sustainable is this rally . You havestable because a confluence of cyclical and Structural Forces that underline a good economic time in asia. There is excess demand for money and goods because of the trend of urbanization and democracy. Those are two powerful trends that will continue propelling earnings upwards despite downward pressures this year. How investors should be positioning themselves for what will be happening, and you say the rally is sustainable , but what about the geopolitical risks, north korea, perhaps the market not pricing in a possible scenario of a breakthrough in those talks . I think you are right. One could be surprised on the upside youd in terms upside. Gorilla on theg block, and the one we focus on the most. I do think you will find the geopolitical stuff is a lot of background noise, and not much happens actually. Thisill find then the thing dies a quiet death. It does not go away because why should kim relinquish his weapons . You will not find an attack, so i think things will improve here. Lovely talking to you this morning. Thank you again for joining the show. Lets get you some breaking lines from one of the Key Companies on the dubai index. They are getting new credit lines and working with capital facilities and saying they will refinance and restructure debt in saudi arabia. They say they are in advanced talks with creditors. This company has a total return of 1. 8 this year. It is one of the key stocks to watch as you head into your trading day. Here is what is up on the show, china. They have eased Market Access for foreign banks come a so is that really the case . Banks, so is that really the case . Dont go away. This is bloomberg. Ubs expects robust Economic Growth in 2018, although the u. S. May be less of a strong driver. Exclusivelyti spoke to bloomberg about the opportunities and challenges for investors over the year ahead. We continue to see a robust Economic Growth, 3. 8 in 2017. Hould be repeatable we will probably lose some momentum from the u. S. , or at least not as strong as we had in 2017. Some from the rebound of Commodity Prices in general, some from the property in china. Brazil and india to continue to develop well, and we need to watch on the other end what are the repercussions Monetary Policy by Central Banks. In the u. S. , europe, are they starting to look frothy . Is that synchronize Global Recovery underpinning goes for you asians . Those valuations . We feel equities are still a , at least in be terms of other Asset Classes, but also on their own. We do believe it is the place to be. Valuations across all Asset Classes are high, and therefore there is a focus on quality and diversification. What are you seeing in terms of trading activity from your clients in terms of volatility . Are you starting to see a pickup and few more bullish . January is too early to talk about the quarter. January in the First Quarter are usually more active. In terms of market volatility and realized volatility on financial markets, equities, fx, it is still low. Therefore i dont see a change. Expectok into 2018, i probably a more normalized environment for volatility than what we saw in the last few quarters. How do you factor in this move to normalization from the Central Banks . How will that play into markets . To a large extent they are anticipated and discounted in the markets, therefore i also look at the positive side. A normalized rates environment will create some benefits to general, aalso in normalized rates environment should have positive effects on the rest of the economy. That was the ubs group Ceo Sergio Ermotti speaking exclusively to bloombergs tom mackenzie. Are said to be discussing a large plane order from china during the french president s state visit this week. Sources say talks are focused on 30, although the a3 the size of the order is not final. Has approachedup brokers about the sale of two Office Buildings as it seeks to cut its debt word in. Tots missed payments due chinese banks, prompting lenders to freeze the borrowers unused credit lines. Impact forbuying 1. 1 billion upfront and payments contingent on Regulatory Approval for new medicine. Impact is developing a drug for treating blood cancer and bone marrow disorders. The company has been under pressure to replace revenue from its Cancer Treatment before copycat drugs eat into sales. Your Bloomberg Business flash, a quick preview of what is still coming up, the saudi government and the salary hikes. Citizens should have plenty of cash to spend in theory, but will they use that money to buy stuff . We will break it down in terms of what it means for corporates. How will investors price this in an terms of keebler chips . Key blue chips . Dont go away. This is bloomberg. We are 90 minutes away from the market open in the emirates. You are looking at a live shot of downtown manhattan. It has been a busy week for the white house and United StatesUnited States. Equity futures higher. , quite a bit of interesting positioning around key Asset Classes. We will get into that shortly, but now first word headlines with debra mao. Stephen bannon has issued an apology to donald trump and his family over comments in the book fire and fury. Van and told the political website that donald trump, jr. Is both a patriot and a good man. The president s allies have been speaking out against the book, which raises doubts about his fitness for office. Said the president engages with an understands the complex issues before him. The two koreas will hold talks on tuesday for the first time ance 2015 come a signaling possible break in the crisis that has escalated under the trump presidency. It includes whether the north will send a delegation to the south for Winter Olympics and over all ties. U. S. Ist trump says the open to joining the discussion and is willing to speak directly with kim jongun. Saysellor Angela Merkel germany needs stable government as she begins talks to renew her alliance with the social democrats and open the door to a fourth term. Her christian democrats led bloc and the spd began talks on sunday. Europes biggest economy has had three months of postelection stalemate after Angela Merkel failed to win an outright majority. An Iranian Oil Tanker is still on fire off the coast of shanghai after colliding with a cargo ship saturday. South koreas coast guard said rescue teams are searching for 32 missing crewmembers. The tanker was carrying one Million Barrels of natural gas. X has successfully launched a classified payload into low earth orbit for the u. S. Government and northrop grumman. Blastedon nine rocket off from Cape Canaveral in the companys First Mission of the year. Itn musks company says plans to launch roughly 30 missions in 2018 after a record 18 last year. Global