left in asia's once a dominant commodities trade off. kong markets are getting set to come back online after the lunar new year long weekend. chinese markets are still away until thursday. we take a look at what is going on in the hong kong stock exchange. in terms of a handover, not much of one after that stellar performance by asia shares on a monday driven largely by japanese equities that had their second best day of the year. we saw a little bit of a failure to extend those gains in the european session. we are also seeing u.s. futures trading down as well. let's take a look at where we are moving in terms of markets. a big week when it comes to markets. it over to sophie for a look at how things are going. ie: as you pointed out, u.s. futures are declining. taiwan and a vietnam also closed for the extended holiday. the nikkei and topics snap a topix snap amb -- three-day climb. seoul, and for decline. in kuala lumpur, stocks are sliding after a five-day bend. we will see whether or not that flips the switch tuesday. over in singapore after the release of the budget, we are 1%ing the index move 2/10 of . the debt and consumer spending from a increase end of the gsp it could impact shops, restaurants, as well as hotels. the potential beneficiaries from singapore's budget could be benefiting firms from the increase in health care spending especially with elderly care. benefiting fromthe commodity trader flaggin annual loss pushing $5 billion. the states giving the heavy losses we are anticipating for today. commodities are very much in focus. let's get you to first word news . president trump has offered his support eliminates check of gun violence. the main action the president has taken on guns was to block an obama administration rolet rulee -- the signed -- designed to keep guns away from mentally ill people. the brexit team is said to have secret plans to force brussels to give the u.k. the trade till wants.s -- deal it bank of england the governor says he is already fighting the u.k.'s next financial crisis. he said the boe is increasing a more secure defense by planning back failure by providing extra liquidity. he says excepting a crisis will happen is the best way to prepare for it. singapore has announced a range of tax increases. the government also plans to raise the goods and services tax to 9%. dayoin rose for a fourth breaking through $11,000 and taking it climbed to 57%. to 57%.climb global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. hong kong, japan, south korea are back from very lunar there --break today -- their lunar new year break today. the reason why it is a crucial week is because we have a treasury hitting the market. we will see how the bond market takes the appetite as well as how steeply these borrowing costs are going to move up this year. i want is her up quickly with this quick chart on volatility. this is clearly where the story began this year. this is the correlation of global volatility and country world index. there's an argument out there for this recovery to consolidate and stocks to move higher after the crash that we had, we need drop further.ity you are saying that what we saw was a technical correction and not a fundamental one. guest: absolutely. i think were volatility is concerned is that it will be going to normal levels. i think last year was quite an anomaly. it is not mean that volatility -- that if up volatility levels pick up of the market will be over, it is just that the market is going to be a , wele more volatile certainly expect the returns to be positive for this year. how quickly are you watching the treasury options this week, you say that it is only under specific conditions that the bond market could derail of the equities rise. what conditions would those be? inflation is one concerned -- concern. inflation expectations on the market will have to readjust and therefore treasury yields on the tenure basis have to surpass the 3% to account for the gym jump in inflation. -- the jump in inflation. we've always said that inflation will pick up and it has not disappeared. it has basically just been sleeping. it will likely awaken in the foreseeable future. we have been expecting inflation for a long time, but i want to get your view on the japanese recovery. there is an argument out there that what we are actually seeing is some a short covering. is that a view you would agree with? guest: yes, to a certain extent. japanese hasthe moved a fair bit over the last six months. that is basically a reaction to where the 10 year u.s. treasury yields are. then wemove up higher, can actually expect to continue to strengthen further, notwithstanding intervention from the boj. that could actually derail some of the recovery going forward because a stronger yield is --ng to haidi: also watching the u.s. dollar as well. index --oday's yen at index. what is the more persuasive argument here? is it that we have a relentless dollar weakness and that is also driving the strength of the yen, ?nd what about these locations i think you have to deal with the question on two dimensions. dollarot because of weakness driving the japanese yen. last year, we had a whole year of dollar weakness and the japanese yen was probably the only currency that actually did not strengthen the u.s. dollar. jet --rate that the strength of the japanese yen in recent times is actually a function of the rise in u.s. treasuries. that in turn is basically moving the japanese yen toward a stronger level and not because of dollar weakness itself. of this that by the end year, the boj will probably be the only central bank left. perhaps sometime next year, we we could actually expect the boj to actually stop using altogether. at this time, the market is basically trying to price all of that in. the other question is whether you expect a reaction or a tweaking of their policy trajectory as a result of the theer dollar, do you expect boj to respond to that? guest: the boj, yes. the question is what to i knew -- do next? they're already considering some of the copper bond markets as well. there's a lack of instruments for them to further carry out the easing that they want to actually do. this point in time, they really need to rethink where the easing strategy is likely to be. we have argued that a weak yen is actually negative for the carpets -- corporate on long-term. it is one of the reasons why the japanese bond markets are flush with cash. good marginetty going forward. bitcoin,st word on there was a recent selloff showing some positive technical indicators. does that change your view on it krypto at all? guest: absolutely not. they do not have any fundamental value to them. on a midterm to long-term aces, it just is not hold water. you cannot describe a value to bitcoin. reservesse the ethics in interest rates, but for bitcoin you cannot. the supply, once it is in the market is not decrease. it is always there. can increase you or decrease interest rates. we do not think that toptocurrencies are likely overcome the current currencies in the market at this time. singaporening us from . also ahead, a noble investor is beating a long, dead horse. the next age is more than just a number in singapore. we will look at the aging demographics. this is bloomberg. ♪ haidi: you are looking at the beautiful new york city skyline. we are looking at all of those lights in commemoration of the president's day public holiday. that means that u.s. markets are closed this monday. u.s. futuresck of showing that we are seeing a little bit of a drift lower to open the week after the public holiday. the snp seeing a pretty stellar week last week and looking to get this week off to a good start. we are told 250 positions have and the number could eventually top 500. deutsche trading was up 27% last month. it pushed the business into the red. dalia's bridgewater associates a $22 billion debt. -- algebrisd there's tremendous value. of the largest investors and italian epl. we see tremendous value in some of these asset classes. the amsterdam-based exchange operator is open to links of other european bosses. says it will continue to pursue any opportunity in the industry with a view to broaden its topline. we are watching singapore and consumer stocks after the governor announced it would raise taxes and sooner than expected. expected -- was expected, i should say, but it won't be for a while now. >> it will be until 2019. if there is a big ticket item you want, now is the time to get it before the hike comes into effect. even with the hike, it will be among the lowest in all of asia. what is new? websites, we're talking about spotify, and netflix. singapore, in a way is playing catch-up. take a listen to what the finance minister has to say. decade, if we do not take measures early, we will not have enough revenue to meet our growing needs. slinda: a note of caution there. singapore sees health care spending up 3.9%. it is a rapidly aging population. lots of speculation going into the budget about what policies would be unveiled when it comes to the property market. an increase in the stamp duty, what are the details and implications? haslinda: that was a huge surprise. to 750,000 u.s. dollars. affect all toill luxurious properties. some say it is more a deterrent for a property market that is just recovering from a four-year slump to prevent it from getting too hot. increase in revenue is actually quite small. there is no cause for concern about the exuberance, no harm in being cautious. we will take a closer look at the budget and the economy pre-much in the next hour. we will have the second trade minister will be joining us exclusively here for the show. we look at details and questions galore. that is coming up. haidi: can't wait for the conversation. we will get back to you shortly. interactive function, they can catch up with previous interviews. us in the joining conversation, if you have any questions for the singer -- singapore trade and finance minister, send them in. this is bloomberg. ♪ haidi: we're counting down to the open in hong kong. workare getting back to after the lunar new year public holiday and long weekend. mainland china traders are off until thursday. we are certainly seeing some a downward tailwinds when it comes to -- headwinds when it comes to the asian session at the moment. let's get it over to a sophie is watching. sophie: given that extended break, hong kong markets had to play catch-up. taking a look at futures, we are seeing a mixed bag when it comes to hong kong markets so far. of mgm china are very much key among them. bloomberg intelligence say they .ill meet the vips hsbc earnings very much key when it comes to highlights day. sawn the increased that we in rates of the latter part of last year, that could help out it's hong kong operations. hsbcndon, we did see shares rise ahead of the results today. that. thanks for we will take a look at what investors need to be looking out for. looking at loading payments as well. getting all of the details when it comes to hsbc earnings. what to expect, up next. this is bloomberg. ♪ ♪ ♪ show me the olympic winter games ♪ ♪ like i've never seen before. ♪ ♪ xfinity x1, yeah, i always know the scor♪. ♪ triple corks in 4k... lookin' so sick. ♪ ♪ stream live on every screen, every win, every trick. ♪ ♪ 2000 hours of coverage, get your mind blown. ♪ 50 olympic channels, yup, you're in the zone. ♪ ♪ and if there's something that you want to see, ♪ pick up that voice remote and just say "show me..." ♪ experience nbcuniversal's coverage of the olympic winter games like never before with xfinity. proud partner of team usa. -- 9:29 a.m.nine in hong kong. this will be the first trading day of the year of the dog. getting ready for the striking of the gong to get trading underway there. looking for a red open if you will. stocks hoping to start the year on the right foot. when it comes to the euro the rooster, we had a 37% increase. if you wanted to know, that was the best performance during any lunar new year since the year of the ox back in 2009. from a cynical's was one of that he gave to us. alive features of their of the hong kong stock exchange. this is the countdown now. we are seeing activity there with the chief executive speaking a little bit earlier. they hope that the year of the dog will be just as prosperous unprofitable for stock investors as the year of the rooster was gain.hat 30 plus percent the first time that the market will function without a trading home. let's get over to sophie. but -- hong kong investors may want to put their best foot forward in the year of the dog. consumer discretionary shares are gaining. real estate stocks are also on the up and looking nice on the first day of the lunar new year. another potential catalyst today that be the latest showing futures from china to hong kong rose. reportedly posting a double-digit growth in sales during that time. take a look at some of the movers in the discretionary space. china waiting on mga in -- mgm china. hsbc -- hangng and seng and hsbc. imax chinaok at which is on the rise. moveyou take a look at the in the index, it is snapping a three-day rise. china petroleum is leading the drop. haidi: a bit of a mixed bag when it comes to the year of the dog trading there. us thatone of the key we are watching. it could show that it is finally emerging from years of restructuring and scandal. our chief correspondent is at the bank of asia's headquarters right there in hong kong city. what are we expecting? if a rain is coming down as it is right now, it is supposed to be auspicious for the year of the dog. the last few years for hsbc have not been very good. this is stuart's last day on the ceo.s group they have really shrunk the for print over the last five years or ceo. so. that term of the stuart was focused on reining in the footprint of the bank. 25,000 jobs were cut, and they have made the bank a little bit more nimble. we are expecting full-year profits likely rose about 1.5%. on the back of a higher interest rate environment. u.k. willes in the lead to higher net interest income. we are also seeing and waiting for is the cost performance. keep in mind, revenue versus cost is a big thing that the analyst are looking at. jaws.called the it is considered a good sign that the bank is keeping costs under control. we are expecting full-year revenue to increase and have increase in the single digits. we are also going to be watching the potential for some provisions. a lot of banks around the world are having talks with a couple -- shocks with a couple of failures. investors today will also be looking for any possible plan of a possible by that. -- buyback. there could be another buyback. bloomberg intelligence says they do not expect a buyback in the near term. haidi: looking at provisions as well, what kind of write-downs or one offs could we be looking at? we will be looking at that because we have already had some banks announced that they have exposure to the likes of steinhoff. hsbc is one of several european banks and u.s. banks that have credit losses, or expected credit losses to that company. carillion, $2.2 billion worth of debt. what exposure does hsbc have their? -- there? u.s. tax cuts will make it harder for other banks to deduct losses from future tax bills. we will be watching that. do we know about their expansion or growth plans when it comes to the chinese markets? steve: the chinese market is obviously a big one for many different banks. we will have to listen to see the are going to be announcing, if anything. john a flight is the incoming ceo and he will take a different spin. most analysts we have spoken to do not expect him to have a big say, at least in the conference calls today. this is stuart gulliver's swansong and exit. management had at the bank, what direction does he take in relation to what happens north of the border here in china? haidi: on the lookout for hsbc earnings today. we have been breaking the bank's learnings live here on bloomberg. tuned. the filipina central bank -- the governor says the central bank will rely on data to determine the annual prices over the next two years. he also says the policymakers will is -- analyze volatility. authorities in sweden are increasingly concerned that the cash economy is moving too fast. the rise of digital and mobile is increasing. jpmorgan has expended his it rains as the best paid ceo on wall street. the total package last year was -- $29.5ion dollars million. morgan stanley ceo came in second. created by london-based newest building is covered by a new material called phantom black. he says the building symbolizes purity, the universe, and a sense of positive opportunity. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: there is a smaller some of that is likely to keep the company afloat. the loss was a bit of a shock, even for a company where we have come to expect all of the negative headlines. the loss was a bit of a shock and it takes the losses billion.to almost $5 a lot of these were write-downs. that is an important factor to bear in mind. having said that, what investors will be focusing on and creditors is a fourth quarter, where from the continuing operations in commodities, trades, and liquefied natural gas, they had a loss of as much as $100 million. the company has also said that it had a negative asset position in the fourth quarter. the restructuring deal that was renegotiated, that is up for grabs at the moment. haidi: the question is what happens from here? first of all, the company will come out with its earnings on february 28. make it more clarity there. in the meantime, we have had a top shareholder and also bondholders who have opposed this deal. they may be some kind of legal challenge going forward on that front. in the meantime, noble group has been saying that it is satisfied. based on legal advice, it can operate on a growing concern, artillery structuring is completed. the final restructuring is probably going to take months. what will really drive it is whether they can turn around of those continuing operations and make a profit from them instead of a loss in the fourth quarter. that will be closely watched by the creditors. much forank you so that. coming up, the outlook for . this is bloomberg. ♪ is "bloomberg markets: asia." credit where credit is due. the last time we spoke to, you said you were very concerned about positioning in the market when it comes to the speculative net long positions in the oil market. to some extent, those chickens have come home to roost. we talk about the risks facing this market, and i know that you have written at length about positioning. is it still the key concern that you think is a temporary uplift when it comes to passes? it is still on our radar screen. back in january, prices were very elevated. market as a three legged stool and one of the schools was the positioning stool. we explained that it was a little wobbly. ance then, we have had about billion dollars of links coming out of the market. this is brought the price down to about seven dollars or eight dollars. positioning is still very lessted and has -- is a extreme than it was in january. one of the things that has surprised us is the resilience of the positioning. -- givent that giving that the right catalyst, we would have seen a more links exit the markets. structure in a this givesded shape, investors a positive role yield. this has been a comforting factor and offsetting factor in the length. it is still on our radar screen as something to watch as we move through the year. haidi: the other two legs in the stool in this lovely visual analogy being weather, both in the u.s. and asia. resolutions or failures to either of these in the short-term? the uplift at the beginning of this year was boosted by temporary factors. whether was certainly one of them. geopolitical risk is calming down. i think the next point on the horizon is that we have to watch may 12 when donald trump has to sign the waiver of sanctions in iran. he always talks a lot about that. the bullish momentum that we had iss year, in our view, starting to drift and dissipate a little bit. we are realigning back to the fundamentals. we just increased our fundamental price outlook for this year. we have wti at $62. is aundamental landscape strong and getting a little bit stronger. one of the could to reading factors to that is the supply deal between opec and russia. there -- the decline in thezuelan produce is largest we have seen in the country on record. it is a massive decline, and that is helping the compliance in terms of opec supply and offsetting the rise in u.s. supply growth that we are seeing in the shell business. the fundamental landscape is a strong but is temporary factors are starting to dissipate as of now. i want to talk about the longer term or fundamental issues. 8881 on the bloomberg. it strikes me as unusual and outwardly raised when opec comes out and says that they are not concerned about u.s. out that undermining what they are trying to do. you can see essentially that u.s. output is making up the of ground and keeping apace when it comes to opec cuts. do think behind closed doors they are concerned about the fact that u.s. shell is still the swing producer in this market? the u.s. a is definitely the swing producer in these -- u.s. shell is definitely the swing producer in these markets. a backward aided market also makes it difficult for producers to hedge. they would have to put a short position in a market when you're out. but short position as it rises up the curve comes a cash loss on their books. any profit that they make in selling oil and the spot market and then goes to fund the hedge. that is one offsetting factor and i think they lean on that sometimes to say that this might slow down the potential supply in shell growth into the market. in terms of bond numbers, we have opec supply and u.s. supply balancing the global demand outlook with a pretty much perfectly balanced market for this year. this beckons the question, as are start getting into the end of the year, what is going to have to happen with the opec and of the russian deal, and how are they going to adjust themselves out of it? to bringo doubt going excess volatility, positioning and again is going to be important at that point, and we will have to see exactly what they have in mind and what their plans are for the markets at that stage. just quickly, we are seeing reluctance to talk about any exit strategy at this point. the most important factor to bear in mind for the market is that they need to know, and the market needs to understand that opec and russia are managing the market. it is not like the end of 2014 and 2015 at there was no one in the driving seat. that is a compassing factor. a $60 or happy with $70 price range. that seems to be a range of the are probably going to look to sort of subtle the market in. we think that the adjustments deal is simply going to be at -- an increase in supply, probably from saudi. it will just be a measured increase to match the rising demands that we have around the world so that we do not overshoot to much. drive more shale production back into the markets, which is something that opec and russia do not want. it is going to be a measured response and a thought out response. be important in shaping the price outlook at the end of 2018 and into 2019. haidi: thank you so much for that. more on commodities coming right up. this is bloomberg. ♪ haidi: this is "bloomberg markets: asia." to double it'sit a stake in mitsubishi motors. mitsubishi heavy are expected to extend their shares. the telecoms unit of india's richest man is squaring up in the supreme court. the claims it has exclusive .urisdiction on the sector the court says it will start hearing the case later on tuesday. a look at property stocks in singapore and they are on the way down. it comes after residential prices climb for two straight quarters. morgan stanley says that while the tax hike is not enough to derail of the ongoing recovery and home prices, it could weigh on sentiment of development stocks in the near future. taxeding services will be in singapore from 2020 as a nation starts trading -- treating pharma services the same way it handles locals. products affected include consultancy and marketing services as well as apps and video music streaming. we will have an exclusive interview with the trade and industry administering -- minister of a singapore. -- of singapore. we do have asian shares trading lower for hong kong and it's a first trading day of the year of the dog. this is bloomberg. ♪ p.m. here inalso 1 sydney. 10 p.m. in hong kong, i am haidi lun. this is bloomberg markets asia. ♪ haidi: the yen setting after retreating from a 15 month high. we are looking at markets trading much lower at the moment as we get into the first trading day of the year of the dog. bitcoin breaking through $11,000. another critic raising doubts. the bank of england boss calls it a failure. singapore matches more problem with more money. we speak to the minister of trade and industry exclusively. taking a look at markets here in asia, it does feel like we are losing a bit of steam at the moment. that recovery from the previous session failing to pass through to europe. u.s. futures are also trading a bit lower. u.s. markets are closed of course, for the presidents' day holiday. we will take it over to sophie who is taking a look at the markets. sophie: the hong kong market is very much in focus right now, not an exuberant start to the year of the dog. below the 31,000 point level. financials are weighing the most . we are waiting for ages be see report earnings and we will take a look at the stoxx now. we are waiting for results from the casino operator as well, and seeing pressure when it comes to the financial ace. checking in on some other movers in hong kong, we have alibaba the and imax china rising by a half point, probably given a boost by the holiday. we are seeing pressure for after there rusal has been word released about the billionaire owner wanting to sell a stake in the company. haidi: japan is leading the decline. the previous session, we had the second-best day for the kospi all year, so why are we seeing the decline now? seeing a strong yen, and exporters and banks are now weighing on the nikkei 225. 1% so far losing over this morning. this week we also have the upcoming treasury options, which could be another negative for the dollar and a boost for the yen. at the two-year yield for treasury, we have them climb into the highest level 2008.september of if we look at the currency markets, we want to highlight what is happening with the greenback, which is gaining ground along with treasuries. the philippine peso is a outlier right now, after the central governor said a rate hike is on the table but they remained data dependent. we are looking at crude building andains above $62 a barrel, keeping in mind of course haidi, this is a key week for oil traders. you have opec's head saying that the market rebalancing is gaining traction, ahead of the industry gathering in london. we are definitely keeping and i on that space this week, haidi. adam: yes, oil. haidi: we are looking at commodities, the hang seng declining by 1%, the hr index in hong kong extending its hold. look at how we are trading in terms of the u.s. futures, as i said, president -- presidents' day means the equity markets are shattered for the week, but hopefully it will be getting better was the markets open back up tomorrow. the s&p 500 is also looking to potentially give back some of the recovery gains from last week. i would like to bring the cross reynoldsovernor mr. here to talk about this. the you feel like it was too good to be true? reynolds: last week was definitely too good to be true. there was talk of a healthy correction, and if it was healthy, then he would've , measured reasonable recovery. instead, we had this v-shaped, and everything went up. happened,that had given the rise in volatility and the rise in yields, one of the concerns out there about other mother mesh other matters that came before with the investigation into russia's meddling in the elections, and the u.s. trade sanctions potential, all of its signal that we should not be getting this thrown about. now, we are pulling back and that is raising concerns the we're going to see more pain, more pain coming. we were looking at the chart before, at volatility, which has remained elevated. until we see that come back see, i don't think you will a sustainable recovery in stock markets worldwide, because people are going to think that we been to adjust our long-term valuations, to dig account for where volatility is. sort ofe go back to the low volatility that helped drive the long gains that came throughout . haidi: 2017 i am just bringing up the chart you are talking about, talking about needing volatility to come down further. --t of that will attend part of that volatility is extended to come from the asian markets. these monster of auctions? reynolds: a quarter of a trillion dollars, that is something. the u.s. usually sells a lot of bonds, but this is unusual. a lot of it is on the short end, there are plenty of reasons for the yields to be high, i think quite possibly the actual options themselves will go quite well, because the yields are so high. though,and of itself will build in more concern going forward of the sustainability of the deficit, and where the sustainability of the current valuations you have across asset classes. we are talking about the world's deepest market, in treasuries, often sets the tone for everything else . haidi: to me, it is like there are two separate conflicting stories. you have the inverse correlation of equities, and on the other hand you have the geo bay -- the boj reappointing kuroda as its head. same time you have an economy that is performing so well, that is resulting in a stronger yen. what do you feel when it comes to equity sentiment? reynolds: ultimately what ends up going on a broad is what happens in equities. i think perhaps tokyo traders came in this morning and were rather shocked to see just how concerned europe was. because, europe has been seen by many people as eating a key driver for the next step in the global economic recovery, so when you have the sort of day that you had yesterday in europe, it casts a lot of doubt on that. europe has been a laggard over the last few months. if you look at american equities, japanese and asian equities, they were a bit lower. if the europeans or lagging behind, than the expectation would have to be that the global a cow if it is going to is momentum, then you need to have europe catch up. i think that is causing some disconcert to some people. at the other big question that is to be answered is china, and were china will go. of course, we don't know that until china gets back after the year of the dog celebrations. i think that makes it easy to see why you would want to take some risk off the table, especially when the hang seng might have rallied at the start to catch up with what it missed in its 2-day break. catching done. so, there is plenty of reason to be . ofdi: concerned yes, a lot uncertainty this week. thank you, garfield reynolds. his musings and those of his team on our market live on bloomberg.com. let's get you the first word news now, paul allen is here in sydney. thanks, haidi. president trump is offered to take on -- since he came into presidency, the first thing his did was to take on the issue of guns being available for mentally challenged people. terry's amazed brexit team is said to have sigrid plans to may's brexitheresa team is apparently discussing the idea in case of failure to agreement, for laying out a path for negotiations. singapore agreement has announce of tax increases including a surprise hike and property levies in a bid to cope with rapidly aging population. residential properties goes up from 3% to 4% on tuesday. the government also plans to raise the goods and services tax to 9% some time from 2021-2025. theoin broke back through $11,000 marks, for the fourth day straight in a row. cryptocurrencies have been recovering since then, on feeling the fact that they will not be regulated out of existence. one of the experts does say that cryptocurrencies will be struggling for acceptance until regulators can finalize their roles. global news, 24 hours a day, powered by more than 2700 in over 120 countries. this is bloomberg. ♪ i am paul allen, this is bloomberg. haidi: we will be joined by the trade and industry minister of singapore coming up soon. but next, the outlook when it comes to that yen and the currency headwindshaidi: we wile for equity investors in japan. we are joined by eurasia group's callum henderson. . this is bloomberg. ♪ haidi: this is bloomberg markets asia, i am haidi lun in sydney. the yen was 2018 top performer, and the rally is set to extend. where do we go from here when it inverse this correlation this is bloomberg ms that is traditionally seen between japanese equities and the japanese currency? we have callum henderson here, global market's editor from the eurasia group. let me start off with this chart . this is the yen index showing traders bullish from the levels positioning that we haven't seen since a major geopolitical seismic event such as brexit. where do you think is driving this? against the backdrop of having kuroda continue as the boj governor? henderson: that is exactly right. obviously in the short time, we have seen significant volatility both in japanese stocks and the yen. we have seen a short rally in the yen, a traditional safe heaven of buying. from here, we would expect some degree of consolidation in the yen, as volatility comes off, and as investors refocus on things like yield spreads and evaluations in japan. economic a positive story, as you just heard, mr. kuroda reconfirmed by the bank of japan as the governor, or at least renominated. obviously that has to be approved by parliament. also some interesting picks for deputy governor such as mr. waka tabe, and mr. amamia, those monetaryso just more easing to come, or at least the maintenance of a lot of this monetary policy. that is a pretty positive backdrop for japanese assets and japan as a whole. once the dust settles, certainly my view is that investors will start to take another look at japan . haidi: why do you make of the correlation, when it comes to the yen and equity sentiment. traditionally, we have seen a story where the yen goes up and equity goes down. that is not what played out for the most of last year, and it started to pick up over the ne past few sessions. is it a true correlation, or is it relevant given the change in offshore production that we are seeing from some of these japanese majors? henderson: it is still an important correlation, but the level of the correlation has faded. if you look at the weekly correlation between the dollar as and the nikkei, typically you say, it is inverse. a correlation of about .6 on a weekly basis since the start of 2010 until now. if you look at gradually shorter period, the time it has been until the lasten week or so, it has been actually negative, which is the complete opposite of what you would think. you would think that as the dollar yen falls, so does the nikkei fall, that is a typical correlation that we think of, but as i said, since the past couple of weeks, that has not been the case, the nikkei has picked up since we have seen the correction and equity markets. the reason for it is, twofold. onealso,one is that japan has oe and a lot of production, both to other places and to china. diversification of the manufacturing base that you have seen, and the resulting diversification of japanese investors and international investors, in terms of the hedging and so forth. overall, the correlation is so important, but not as important as it was . haidi: you focused very closely on political risks and trade risks. you say that they remain very much in the u.s., and in the shorter term, what is going on in italy. the new address both of these impacts? i am wondering if the u.s. risk is part of the recommendation that we see, some form of protection of the terrorist measure when it comes to steel and aluminium from the u.s. president? henderson: in the u.s., the risk is twofold. tax reform first of all will yield stronger growth expectations which will weigh on u.s. treasuries and in turn on other asset markets. in terms of protectionism, there is a heightened risk this year, that we see trade tensions between the u.s. and others countries, not just china, but other countries in asia. investors will of course, be watching closely. is a foreign exchange report in april, and we will see who is mentioned. as for italy, the best case is roughly a benign one in italy. the head of -- ahead of march, investors will take a cautious approach, which is why you see the performance in the european equities ahead of that justin case, thest in parties want more radical policies. whether they're left or the right do better than expected. haidi: very quickly, what is , greylack swan or say swan, which we be looking at that we should -- what are we not looking at that we should be? henderson: the markets have taken the korean peninsula off the radar because of the olympics, but after the olympics are done, we would expect to see tension between north korea and south korea and also north korea and the u.s.. also for the time being, the prospect of trade tensions between the u.s. and china, and does not seem to be priced into the market at all. those are the things that we would suggest watching. haidi: callum henderson, we always appreciate your views. global markets aipac managing director at eurasia group in singapore. i would like to bring your attention to the interactive tv function, tv go on bloomberg. you can catch up on previous interviews with mark keenan were, or the functions that talk about here on bloomberg tv. the function there is tv . do check it out. this is bloomberg. ♪ haidi: this is bloomberg markets asia am haidi lun in sydney. we are expecting to hear response from activist investor elliott management's latest corporate change. we are joined by david springer from melbourne. what are we expecting? guest: it will be a strong p, we areain for bh expecting about $4.3 billion, in earnings, about a third over the same period a year earlier, and up from the previous six months. that is largely the story of stronger commodity prices. 7.5%w the index rise about in the second half of 2017, so we are seeing stronger prices feet through the prophet line. the outlook remains good as well. banks like goldman sachs group, they expect continual gains through this year, for things like copper, iron or, petroleum the main ingredients produces. that translates into higher returns for shareholders. boosted dividends, and we are expecting a more modest increase in the hp, but they will definitely be handing more cash back to investors. haidi: we will be looking for response to elliott management. what is the hp saying so far? guest: in short, they are saying nothing so far. elliott management had a renewed call for the bhp did to disk -- to dismantle its structure. theott have asked them to again and study publicly, the merits of becoming a single company based in australia. they commissioned research that said that benefit upside could be as much as $22 billion for shareholders. the company had previously disputed that saying that the costs are likely to outweigh the benefit. plenty of market investors and analysts are looking for a response today. haidi: alright, asian metals and there, david springer. bhp boss andrew mackenzie will be with us on them but markets america's later on this evening. -- on number of markets america's later this evening. let us get you a quick check on the headlines. corp. has received an offer to double its stake in mitsubishi motors for more than 20%. the company will spend more than $1 billion to turn its carmaker into an equity affiliate. the boj is expected to tender shares. mitsubishi motors was rescued by nissan after a fuel efficiency scandal which cause shares to .rop the modern 20% this companies trying to tear down its report which says that engineers questioned the legality of its commission's report systems. thiser has said that report has been released to harm the company and its employees. daimler says it is cooperating with authorities and has been asked to conduct a internal inquiry. report has been released to harm the company and its employees. daimler says itthis company is s around the world to keep up with expenses. the number could top 500 jobs. deutsche bank is taking action with its investment arm after trading slumped 27% last quarter, combined with a generous bonus scheme pushing the business into the red. coming up next, we get the latest on bitcoin. ♪ 10:29 in hong is kong, 1:29 p.m. here in sydney. this governor says he is our defining the uk's next financial this, while submitting that no theral bank can eliminate crisis, he says that the boe is mounting for a more stronger defense by ensuring higher capital levels. the crisis, he sayscarney says thata crisis will happen, is the best way to prepare for it. the philippines central bank says that a rate hike is on the table, as inflation threatens to approve the system. the central says bank will rely on data to determine the outlook of prices in the next two years. policy makershat will manage volatility in back we markets but he has no target. jamie dimon has extended his reign as the best paid ceo on wall street, for the second straight year. his total package last year was $29.5 million, and five 14% rise -- at a 5.4 percent rise, it was one of the smallest. authorities in sweden are increasingly concerned that the no cache economy is moving too fast. the reichsbank is carrying out a review of how the physical money is retreating in the rise of cryptocurrency. the committee has a ready said the demise of cash good make it hard to maintain the infrastructure for handling money. the winter olympics have seen the creation of the world's darkest building. , the block isdai covered by a new material called black which can absorb light. here today -- hyundai says the symbolizes austerity. global news, 24 hours a day, powered by more than 2700 journalists in over 120 countries. this is bloomberg. ♪ i am paul allen, this is bloomberg. haidi: let us get the latest on the market. trading muted start to today, a weak hand over from the european session and u.s. markets not providing much help, with the president's day market closures. here is sophie. sophie: haidi, i would like to focus and what is happening in japan, the nikkei 225 closing lower. 187 decliners on the benchmark. energy and industrials are weighing the most when it comes to the sectors. yamaha motors leading carmakers and electronics makers are also under pressure. the likes of fujitsu, which are one of the biggest decliners on the nikkei 225, after being downgraded to under reform, on the concerns of profitability. this has speculators picking the yen over the euro to rise on the dollar's weakness. as you can see on this chart, the line in blue, that is the yen and the line in white is the euro. it has slowed after 2017 proved to be the best year in a decade euro, given the speculation of the ecb paring its stimulus. you have traders betting on the yen its self the this year. the long-term trend according to mizuho, they suggest a trend formingyou have traders bettinge yen its self the toward 1.01 foe dollar-yen. last week you had a in the capitals analyst adding to his long position on the yen as well. haidi: thank you very much, sophie. bitcoin claimed for a fourth day today, accelerating four-day rally. this is our chart here, g #the tv 615. hadcing up to 50% since we began the rebound from its 200 day average on february next. beating its closest rivals on the bitcoin space as well. in one of to bring our bloomberg reporters, eric land, for a bit of analysis on what the road ahead is. is it clear skies from here after the selloff? guest: yes, it looks like we have bounced off the level as you pointed out. investors have been -- for a while they felt like it was no good news for bitcoin, and for a while it felt like there was no bad news. there was nothing necessarily pushing prices down, so hopefully prices will just come back of. it looks a little more steady from here. nothing negative at the moment that would maybe spoke -- spoke .nvestors to we have seen a pulling back and rhetoric in south korea, and the u.s. seems like it is looking at ways to coexist with cryptocurrency, rather than basically regulating them out of existence. it looks like pretty clear sailing ahead at the moment. haidi: except when it comes to institutions, regulators, the latest of course being the bank of england's mark carney, with strong words about that coin. -- on the traditional aspects of money, it has no value because it is all over the map. nobody uses it as a medium of exchange. he clearly has a point. but like other regulators who have asked rest the same view, with proponents say that he is missing the point? that it is not a digital currency, that that is not where its value lies? guest: i think when it comes to bitcoin as a digital currency, i think he does have a point. you cannot use it quite in very many places, and as we have seen in the price charts, it has made a lot of people some money and then gone up and gone back down. not what you want in a currency. you want to have more price stability there. i think for a lot of proponents at this point, they are thinking that we have held bitcoin long enough, we have seen these cycles over and over, and it is not anything new, that we had the big drop, it's is more to be a difference of an opinion. when you compare it to traditional currencies, it certainly does not behave like one. a shorter lifespan or ofeframe to make those kinds comparisons, so it is a little different. i think you have a point, it is still an emerging asset class, s&p pointed out early this week, very smallstill a part of the financial market, and not necessarily something that would cause instability in the larger financial system, because it is really quite veryl part of small relative to the existing larger mainstream currencies. so there are still a lot of moving parts. it is still an emerging asset class. it would be better to evaluated on its own merits at this point. not knowah, you would it, with the way that we talk about it, but it is worth the reminded of that. coming up, singapore is much more problems with more money, that is that a long-term solution? our budget was his next. this is bloomberg. ♪ haidi: this is "bloomberg markets: asia," i am haidi than in sydney. let us look at how markets are trading here in the asia-pacific, not a great start when it comes to trading on the year of the dog. the hang seng is a little bit lower, by about 2/10 of a percentage point. -shares also a little bit lower, about .3%. japanese stocks seen a two-week of thehe second-best day year, in the previous session. the nikkei 225 is seeing the loss of losses, over 1% there, despite the news where getting about the renomination of the governor kuroda, not helping sentiment in tokyo. the kospi is trading lower by mainland china markets are still off until thursday due to the long weekend after the new year celebrations. singapore investors are digesting the implications of we are seeingd property developers and of these consumer discretionary names getting hit as well,. singapore has announced a range of tax increases, it is looking to boost savings to pay for its rapidly aging population. our correspondent haslinda amin this.re on this. the surprise levy there was unexpected? haslinda amin: it comes in the form of a higher stamp duty for property levies. the budget was released yesterday, and the second minister for trade joins us this morning. good to have you with us. we heard from the finance minister that we cannot keep relying on results for the development of the country, why not? guest: i think in the singapore context, it has always been an emphasis on taking the long view and having a sustainable financial climate, which applies to the national adjective in particular. we also encourage personal discipline as well. the reserves are an important store of value, because in the poor does not really have any other resources it can call upon in terms of natural resources. haslinda: but our reserves are world?he highest in the indeed, but you hate --? iswaran: indeed come a but you have to take into account reserves. we have always emphasized that to have a prudent management of our reserves, and we do draw on them, in terms of the returns. over half the returns are used, and it is the largest contributor to our budget in terms of revenue. haslinda: the reserves have come mainly from the likes of the state owned investment firms. going forward, the returns may not be sustainable and hence will hurt the returns of the country? iswaran: i think the financial markets are the way that they are. i think the singapore framework for drawing on the reserves works off a net investment returns framework, which relies on the long-term projection. for variability and taking lessons from the past. it is not really affected by this volatility in the market, because all the agencies involved and the government in particular, is clearly aware that it's returns profile is based on certain projections. that is affected by the net investment returns, and the frameworks, the estimated long-term rate of return framework. haslinda: we are seeing a slew of taxes being implemented. we saw higher stamp duties for housing, is that concern perhaps about the signal that you may be sending that singapore may lose its competitiveness as it has higher stamp duties for more expensive place to do business and to live? iswaran: first, i think yes, taxes have gone up. the we do not compete on the basis of cost and tax alone, but on the basis of value. more expensive place to do businessthe kind of place weo business and to create value. on that score, i think if you look at various indicators, we are still well-regarded. even bloomberg's innovation index rates as very highly. the other point is relativity. when you look at singapore, we remain competitive relative to other markets, when you take into account of the whole scheme of taxes. including corporate tax regimes, personal tax regimes -- and believe singapore remains a competitive tax destination. all that said and done, we always keep an eye on our relative competitiveness and it is a point that we have emphasized. so whether it is any other form of revenue raising measure, that is competitiveness. haslinda: is this an indication that the government is concerned -- it mayde the become a pre-hot sector? guest: this is more about progressivity in the tax system, rather than a property cooling measure per se. we are it he have tools in that regard, in terms of the taxes, ensuringis more about greater progressivity, as part of a more equitable tax structure in singapore. property taxes a couple of years back, and income taxes, so this is another measure in that direction. we should look at it in that context. what it means is that if you buy a $2 million property in singapore, you will pay and other $10,000 in tax. haslinda: so you are not concerned about where the government is right now? the government is comfortable with where we are now? measures have had the desired effect of the the last few years and that is how we see it. if there was any concern, you would've seen far more significant measures. haslinda: what are your views, measures have had the desired effect of the the last few years and that is how we see it. minister, on the biggest risk for the singapore economy, which is pretty much exposed and export-dependent. more ramblings of u.s. protectionism. are you concerned about that? iswaran: i think asia is increasingly effective for global growth. because we are in asia, it is an opportunity for us. the technology trends to pose a challenge, but every sector has technology impact, this is a global phenomenon. whether you are an accounting firm, even doctors. that is the context. i think we want to ensure that we remain plugged in as an open economy, and we remain open to the flows, whether it is capital flows, talent flows, knowledge flows. i think the sentiments that are rising in terms of anti-globalization, that is always a concern, but even if you hear some rhetoric on that score, you also hear some sentiment. singapore just signed a bilateral trade agreement with sri lanka. and other measures. in that direction. britain notwithstanding, brexit is also finding new pathways to engage with the world. i think we should look at these trends in totality, but there is always concern when there was rhetoric and perhaps even policy, that reflects a more inward looking stance. haslinda: there is also rising financial turmoil, we saw that happen two weeks ago, when the global market lost about $5 billion. what is your take on it? -- sentiment is after all, important, especially to investors? iswaran: you characterize it as turmoil, some of us call it healthy correction. i will not venture there, but what i will say is at the end of the day, we need to start with fundamentals. our fundamentals strong? they project growth? i think that if you look at most of the economy's in the world, world bank and imf for injections, they remain strong for this they year. having said that, sentiment do play a part, which is why we need to take a look at how financial market flows. i think our assessment as of now, is that even though financial markets have had some recovery, which suggests that the perception is wary -- i think we should let the treads -- we should let the trends play themselves out. the context of asia and the growth that we have come i think our prospects remain strong. aslinda: singapore imposed carbon tax, it is forward-looking. what are your plans for green going forward? iswaran: we are already working on several measures to improve electric -- to introduce electric vehicles. we are trained to make sure that the infrastructure -- we are looking atgreen 2.0, the electricity grid and making sure that it is able to cope with renewables and more electricity usage. to accommodate these trends. haveybrid vehicles, they all become very competitive and environmental friendly in terms of energy efficiency, so our approach has been to allow the technologies to flourish, and let the market decide the patents. but we are open to electronic vehicles and other forms of new solutions. haslinda: thank you very much, iswaran. if you are going to spend in singapore, now is the time to do it before the tax rate hike takes lace. haidi: absolutely. that was haslinda amin there, in single or, speaking to the minister for trade and industry. coming up, is it a case of eyes wide shut? the indian government wants to know if the reserve bank of india had any evidence of fraud in the owned banks. this is bloomberg. ♪ ♪ counting down to the market open in mumbai, india. this served a nifty futures trading in singapore, we had a down session in single for. of a percentage lower. we are seeing nifty futures trading lower, about 14 points. stocks have been taking a hit after fraudulent action of punjab national bank. now, the government wants to know if the bank of india new of any wrongdoing. let us get over to mumbai and bring our asian finance editor, jeanette rodriguez. jeanette, what do we know about this? jeanette: authorities are focused on two big questions right now, first, how did the scam go undetected for seven years? what the regulators are doing? india,king regulator in which employs within the bank the billionaires alleged to have masterminded the fraud, they're asking how auditors missed the signs. who will bear the brunt? if the billionaires alleged to be behind the front, how -- if they don't pay up, how will the banks account for these losses? will it fall on the shoulders of the punjab national bank, or will other banks help with that. we are waiting for regulators and from the government to hear more on this. haidi: while we wait for that clarity, how could this layout in terms of implications to india and its banking sector? essentially, banking stocks are falling. investors are looking increasingly suspicious at don king stocks, they do not know where the next fraud will come from. overnight there was another fraud coming from eight 10 company in india, but much smaller in scale. remember, it is not just the frauds at the tanks, they also have rising bad loans, tightening regulations, and the fraud comes as a last hit for these banks. while the government has recently put in additional capital to a bunch of best state-run lenders, if regulations continue and frauds continue, the indian banking sector are could be running on much less capital. they would need much more assistance than the government can provide. we are waiting to hear from regulators to see whether this fraud was systemic, and these are all unanswered questions. haidi: thank you so much, jeanette rodriguez, our asian finance editor there. day will be around to update you on the big stories of the day so far. dave, a pretty in a spacious start to the year of the dog, trading wise. dave: yes, it could've been better. here is a silver lining, i was looking at some of my charts, the hang seng index is basically trying to raise all those low losses. features have started to turn around, and we will be talking with our guests at the top of the hour. -- where other opportunities here? a lot of treasuries are coming back into the market this week, and will be joined by a guest pretty soon to talk about that. also coming up, we have alex , a relation to malcolm turnbull, and they will be talking about noble's surprise loss that they are not projecting, even on the most optimistic side of those projections, it wipes out all the capital of the balance sheet. we will ask him whether there are potential perks there. about in more to talk the next hour of bloomberg markets: asia. they with us. ♪ -- stay with us. retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. here in almost 11:00 the lion city, 2 p.m. in sydney, i am haslinda amin. david: and i am david ingles here in hong kong. welcome to bloomberg markets, asia. ♪ david england's equities of -- david:fter retreating from a 15 month high. haslinda: bitcoin breaks through $11,000, although another critic raises doubts. the bank of england boss calls it a failure. david: struggling noble, we will see if there's any value left in asia's once dominant trader. ♪ david: will be live outside h is ec -- there we go, outside hsb c's headquarters with stephen standing by. their earnings report will be coming and we will be live with what to expect and also them analysis in regards that from bloomberg intelligence. the silver lining, we are coming off the lows from today with the nikkei 225 on the sway back up. let us look at warmbier seeing across assets here. currency markets are going down a bit. the story, that is driving markets, rising bond yields and treasuries. two-year at its highest level, and we are approaching 2.93%. haslinda: it changes so quickly, dave. i would like to point out a stock that we are watching, a company that has been in the headlines for ever, noble. the stock has gone down 90% in the last month. btv 31, there you have it, going, going, on. facing revolt from its largest shareholders, and announcing thousands of losses -- billions of dollars of losses. it is now battling to survive, and initial debt restructuring of $3.5 billion, will it happen? that is the question. we will be looking at it closely later on with one of our guests. first, the first word news with paul allen. paul? paul allen thanks, has. governor of the philippine central bank says that they will rely on data to determine the rate hike over the next two years. makersthat policy will manage the volatility in the markets, but they have no deadline. also, cryptocurrencies have been recovering on the feeling that they will not be regulated out however, digital money is said to be struggling for accept terms. the bank of england governor, mark carney says that it is a failure of a currency. to resume a is said to have a plan to with hauled aliens of pounds of eu payments to force brussels to give the united kingdom the trade deal that it once. to resume a is expected to set out a post-brexit vision next week, in us each seems to be aimed at her domestic critics. -- theresa may. has extended his reign as the best paid ceo of wall street, taking the title for a second time this year, after earning $29.5 million last year. morgan stanley's james gorman came that can come up with a 20% hiske, $27 million was total compensation. global news, 24 hours a day, powered by more than 2700 journalists in over 120 countries. this is bloomberg. ♪ haslinda: thank you so much for that. hsbc has made sure that it is finally emerging from years of restructuring and scandal when it reports fourth-quarter earnings results later on. our correspondent is live at the headquarters in hong kong. steve, what are we expecting in the stuart gallagher's last set of results? day onthis is his last the job, a lifetime and the banking industry, mostly at hsbc. ceoseven-year tenure as culminating today with a set of the bulk of really, those seven years were concentrated on getting the company -- getting the ship righted if you will. exiting from over 100 different businesses, cutting 25,000 jobs, so it was not necessarily a prideful tenure, except for the fact that stuart gallagher is leaving the company with perhaps the bank heading in the right direction. a lot more nimbler. the current results we will get at midday here in hong kong, reflect that improved bottom line perhaps, and the full year are expected to increase slightly by 1.5%. remedy for the full year is also expected to tip upwards. however, order by quarter, it is expected to be a deep in revenue. analysts are looking to make sure that revenue growth is significantly above growth in the cost by at least 1-2%. that would be a good indication that the bank is indeed keep an cost under control. post athe bank likely to tick upwards in earnings? the rising interested environment coming from the united states and also from the united kingdom here in hong kong, which follows the fed. stuart gulliver i think was the one who said that running up bank in a negative interest rate environment around zero, is like shale oil companies with oil prices around five dollars. this increase and normalization of rates is expected to help banks like hsbc. david: we have to talk about provisions here. thiswhat should we be expectingm hsbc? stephen engle: this is a company down, like thete one that happen a couple of years ago after the sub term fallout. there is some exposure this time that global banks have with the credit problems. for example in south africa, hsbc was one of the banks with credit losses due to the retailer having problems in south africa. also, carillion, the number to build are in a u.k. had a collapse with more than $2.2 billion in debt, and we are waiting to hear the extent of that exposure, to what extent the damage will be to full-year profitability. david: steeves, our north asia correspondent, stephen engle there out and that hsbc headquarters. thiss are up 1.3% ahead of numbers coming through. i would like to bring out the bloomberg intelligence senior analyst covering asia purges and exchanges. francis, when you look at net interest margins, steve was looking at that and say that we are no longer in a negative interest rate. what key drivers should we be expecting5 as steve has already mentioned? guest: high rates in hong kong and the united kingdom, as he mentioned, many of us should be eyeing not only the results to time, buted in our also in 2018, bloomberg thatligence estimates there will be $2.4 billion in there will be $2.4 billion in income due to the interest rate hikes. at the same to, we expect this increment come a numbers coming from the u.s. units, 1/5 of them coming from the boe has raised their rates as well. these are some of the drivers. long holdover trajectories, we believe that mexico, hong kong and the united kingdom, will be the key lending drivers for the bank. 3-4% hike lead to a in 2018. haslinda: francis, capital is another area that people are looking at. are you expecting share buybacks, dividends perhaps? guest: i think it has been expected by the market, and bloomberg intelligence has estimated that there will be about 14.1%, similar to what they reported in the third quarter. december, and of lasting through 2018. there is a factor our lead to bring your attention, that there could be some additional capital needs comedy to the accounting changes. reviseds also been rules announced in december, which could sway the decisions in the share buybacks or dividends payouts going forward. as thenot as optimistic street in terms of share buyback decisions, but obviously that is widely expected. haslinda: francis chan, bloomberg intelligence senior analyst, thank you so much for that. we will be bringing you those numbers once they break. stephen engle will be at the headquarters. we look at how a recent fraud at one of the top indian bank lenders could affect the wider indian economy. david: up next, yields are up, rates are up. what to do? we speak with our guest about that next. this is bloomberg. ♪ ♪ >> the growth overall is tracking well in terms of consistency, and i think they should be happy with how it is traveling. obviously that is a factor in corrode as redenomination. the yen has been strengthening sharply, and there is a huge break down with the correlation in a yields. >> that decision is not so problematic because japan's economy has been very strong and can absorb that negative influence of the yen appreciation. the boj started normalization policies, which could cause the yen appreciation, and could push under.flation rates moneythink due to the tree policy expectations, for five we see three to hikes. this could be further downsides it shows.s. five dollar, are only about two hikes being priced in. of thethat was some voices that we were listening to televisionbloomberg on where they see the japanese currency headed from here. this is our chart here on the dollar yen, and we can see the rally continuing for a lot of other reasons here. one of them perhaps, could it the him us understanding? are we just interpreting with the boj policy should be? what he think, haslinda? one of them perhaps, couldhaslit about the yen strength, david. we heard from our guests saying that. but as get insight from our guest, good to have you, eric. t is a dollar weakness story, essentially, isn't it? robertson: yes, a dollar negative narrative, we had last month were the dollar-yen was presumably on dollar weakness. we had a slight bounce on u.s. interest rates but you to equity weakness, the dollar-yen continues to trade lower. but then equities recover, and dollar-yen does not recover. as the previous speaker mentioned, we have seen significant breaks in our relations, so we are watching that. see yen weakness or relative yen weakness as something that can play out over time, relative to other currencies, largely because we expect the bench of to remainapan committed to its control policy, and we do not see that as much of a dollar-yen story, but more a a euro-yen story, or emerging-market story. david: i am just wondering, when the the moves down in a dollar-yen, you mentioned that it could just the eight dollar weakness story. but there are parts of this policy which might seem to work, when you have global yields on the way up. eric: i might take the other side of the argument there. the way it is meant to work over a longer a road of time, what they are trying to do is lift inflation expectations. in an environment of rising yields, the bank of japan might -- might haveore to buy more jgbs, which could push yields down. that is a fancy way of paying that ultimately they want a weaker yen and lower real yields as a result of yield curve control. i am not saying it is not working, i am saying that it is taking quite a bit of time for the yen-weakness story to play out. david: do they need to adjust their policy? or do you think it is just hanging around, waiting for this december, basically? becomes,: the question how would they adjusted? we have seen speculation this year that they would perhaps reduce the amount of bond purchases or perhaps shift the point on the yield curve where they are targeting yields for maybe 10 years to five years. unfortunately, i think that if there were any shift in their ocus, the market would interpret that as an indication of tapering, only exacerbating the yen's strength. careful witho be their communication, regarding any tweaks or triggering their policy. haslinda: how much more yen strength can the boj tolerate? at what level do you see them intervening? robertson: i have no insight as to what level they would intervene at, but i think that the way the yen, i believe is thinking about this, is not dissimilar to the way the ecb or the people's bank of china thinks about it. in an environment of dollar weakness, as long as the yen is transcending along with a basket of other currencies, it looks strong against the dollar. on a trade-weighted basis, it is more drawn out or we are that is what the boj is trying to tell us, that intervention would only come to play if there was a scenario where not only was a dollar-yen down at 1.05 were below, but the yen would be struggling against other currencies in asia. then the boj would get concerned. haslinda: so in terms of range, would they be more comfortable or --5 >> i think so. i think they will be conscious but if they start down the path of verbal intervention, they know that it some point the market will expect action to follow the words. has become market quite aggressive or assertive in terms of challenging central banks who wants to verbally intervene, but do not necessarily follow up with action. haslinda: ok, eric, will be joining us for the next 10 minutes. standard chartered bank head of global markets chatterjee and research. -- global markets strategies and research. if you are a bloomberg member, with ourheck in interactive function, tv at bloomberg. ♪ ♪ haslinda: this is i am haslinda amin. david: and i am david english. this is "bloomberg markets: asia," we are joined by head of global markets strategy at standard chatter, -- standard chartered eric robertson. we are now looking ahead to the out march 1. is is there a number of that you think might spook markets again? robertson: i think we've had a couple of data points over the two or three weeks, between and cpi, which have done best which have put the market on a lark, so the trend in a disinflation israel nursing it self. core pce is the fed's preferred measure, and it is still stuck at 1.5%. seeink that if you start to a move back to 1.7 or 1.75, the markets would take note. the markets have been resolute -- they said that three rate hikes by the fed was the planned number this year to react but if it moves back some of the market might start to think that the fed may need to act more aggressively. david: as far as the 10 year yield is concerned, obviously it will not go up in a straight line here. what is the new range you think we should get used to? robertson: i think the new ranges something along the lines -- 2.70 to 3.10. interestok at the fed back six months ago, when they were expressing interest in the flattening yield curve, i think what we have seen in the last month is at best, a normalization. long-termen we get yields back into a range that the fed is comfortable with, that looks more normal to them, -- if we look ahead to jay powell's first push the market. i don't think so now. with 10 year yields where they are now, andpowell's first big o ask ourselves, is or anything he would want to say to with two-yr yields at the highest level in 10 years. we think that there were certainly a trajectory toward higher yields here. the way that we think about it, in terms of our e.m. outlook is, as long as higher yields are in a slow and that he pays, from 2004-2006, it should not read that disruptive. if they move at higher levels, it might make the market nervous . haslinda: 250 million and options, coming this week. what are you looking out for? robertson: we are expecting a fairly big increase in supply year.st of this the bulk of that is coming in the front end of the curve and the belly of the curve, one of the drivers of our yield curve flattening view. we are also seeing things like and that widening out, has taken place over the last month and we had a think there was a bit more upside, but in terms of the reaction to some like, i think a lot of it is nearly a price. david: david, where should i be positioned. i look at tapes, but that is looking at it fraught as well? robertson: the tips trade, or what people like to call the long inflation break even, i would probably agree that it looks well populated. if we go back to the comment amid a few seconds ago, we are -- theonstructive on comment i made a few seconds ago, we are still focused on a e.m. and a number of em currencies which are leveraged or geared toward global growth and global equities. markets ande currencies like brazil, russia, korea, thailand -- again, we are ,onstructive on e.m. selectively so. trade, but an alpha trade. we are comfortable with that view. haslinda: eric robertson, standard chartered bank head of global strategy and market research, thank you. still to come, we look at the noble's debt restructuring deal. this is bloomberg. ♪ we use our phones and computers the same way these days. so why do we pay to have a phone connected when we're already paying for internet? shouldn't it all just be one thing? that's why xfinity mobile comes with your internet. you can get 5 lines of talk and text included at no extra cost. so all you pay for is data. choose by the gig or unlimited. and now, get a $200 prepaid card when you buy an iphone. it's a new kind of network designed to save you money. call, visit, or go to xfnitymobile.com. haslinda: it's almost 12:30 in tokyo. quite a beautiful day there n the land of the rising sun. we have the yen trading at 1.06. ur next guest, 1:05, looking at the -- trading 1.2%.at >> lots to talk about. i should also mention hsbc looks.ch in the the financial index up 1/3 of 1%. minutes to the release of its earnings. ots to talk about, their revenue growth and interest margins. a hopefully it gives little bit back to shareholders. kong.avid here in hong haslinda: i'm in singapore. bloomberg hing markets asia. let's get more from paul. paul? paul: thanks. the governor says he's lready fighting the uk's next financial crisis. eliminate the risk of future crises. is creating a more secure defense by planning for bank failures, providing and ensure ity higher capital levels. accepting a crisis will to en is the best way prepare for it. president trump has offered his support for a discussion a limited strengthening of checks on gun buyers. since taking office 30 ago the main action the president has taken on uns is to block the obama administration rule designed to keep weapons away from mentally disturbed people. resident trump has repeatedly stressed support for gun rights and the national rifle association. sweden are in increasingly concerned that the no cash economy is moving too fast. carrying out a review of the pace at which physical money is retreating digital the rise of and mobile payments. a report is expected by the middle of the year by a committee has already said the demise of cash could make it hard to aintain the infrastructure for handling money. the winter olympics have sporting records and the increase of the world's darkest building by london-based -- he block is covered by a new material which can absorb almost 99% of all light hitting its surface. the building symbolizes purity, the universe and a of positive opportunity. global news 24 hours a day owered by more than 2,700 journalists and analysts in more than 120 countries, i'm allen, this is bloomberg. haslinda: thank you so much for that let's talk about a we've been talking about for years. commodity available noble ssued a new profit warning saying quarterly losses $2 d almost reach -- $2n billion u.s. dollars. our guest says he doesn't see why they should take the deal. ith me is alex turnbull, a managing partner. good to have you with us. when you take a look at this loss, it's huge. you make of it? it's shocking by any standard. guest: it's shocking. less shocking if you have read a lot of the research. t's less shocking -- haslinda: anonymous research. guest: even less shocking if interact with last ment over the couple of years. it's what you kind of >> what do you expect? it's an interesting structure. essentially, the steering committee decided to pay fees for doing their jobs. fees would come out of others. it would require -- to me it strikes me as a not particularly good offer. if they don't get that consent then they have said they will transfer all he seats of noble to another company. but there is a problem with that in that if i were to i owe you some money, and i said i couldn't pay me and you said, give shares in a new vehicle, and then i transferred it to another vehicle but then myself 20% of the equity which is exactly what the management are doing in his case, you may not see that as an arm's length transaction and i would be shocked if many of the reditors in the perpetual securities and the common equity holders like goldilocks do not see it the way. haslinda: if this doesn't go through how will it play out eventually the shareholders will want to ee a viable interest even if the structuring goes through. guest: they will. there are many ways to restructure this business to provide creditors which have a priority claim or are more in the capital structure a better recovery and that's not what's today.ly presented so it may be that some might say that given it is clear the management of this company are not very good at trade be cruel t would and unusual to give them so much equity and keep them in their current position. if, you be like know, us three had to form an olympic curling team and living. it's cruel to them. haslinda: not my favorite sport. david, perhaps. >> yeah. you know what? alex, just for disclosure purposes, do you hold any of this debt? guest: yes. david: what do you hold? guest: i would rather not disclose that. david: okay. well, board has basically come out and said, and you earlier, this they believe they don't need persons, nt of perpetual bond holders to proceed with the restructuring. put that together for us. that's not intuitive. can they proceed with one the other? guest: they cannot. scheme of do a arrangement -- the majority creditors, depending on the jurisdiction, there are a bunch of specifics on your jurisdiction but all classes have to vote and you have to bid and get a majority and well, we said, don't need their consent. then they changed their mind said, well, we'll just switch the assets to another vehicle and then you come gainst this issue of fraudulent conveyance and whether that is an arm's length transaction and when engaged in act, a transaction to avoid certain creditors, i can't intent, but r certainly that's one possible angle of attack. the per petuals may have. david: for argument's sake and say this proceeds management essentially gets what it wants. eventually this becomes a creditorsw junior are treated. do you think the courts will then stop this and say, hey, fair?s not guest: i would imagine they robably should, but the interesting thing about noble is that it's essentially tied up, all the great and good of hong kong, in such a manner that there is a lot of institutional bad to go away. so if you think about, members he board current and former, anagement current and former, underwriters of the 2022 bond, there are a lot who would really love to knock out a discovery and formal court workout. it's an interesting test of nstitutions in the jurisdictions in which noble operates. haslinda: alex, i'm wondering, what's your take whether there is a functioning commodities business at all at noble? these look, businesses can work. they can't work with nose leverage. they need to make money. i'm not sure if that's an accurate description of senior current management given the numbers they posted in the last couple of years. yeah, it's a real business. those ve met businesses in equity and fix income, they are competent culture.od and that perhaps hasn't been a great description of noble years but st few perhaps maybe changes at the top is what's needed, not the nching further management. david: alex, just to build on what she was asking you, look at even the most optimistic of these loss projections, essentially the equity portion of the wiped out.s the board still says they can continue as a going if i remember my economy class correctly it's the auditors who determine that. does that nt ongoing being an concern become -- i would suggest given the write downs that appear to have been taken over the 12-18 months, which have had -- management have unwilling or less to answer questions in any depth, that may have been an time. for some who knows. i don't get to audit the accounts. ut, you know, if you do reduce the debt load and -- reequity the business, able to be function. david: thank you. let's turn now to indian banks here. through s coming here, broadest story, when you look at the equity market, stocks of banks have and quite hard by -- wiped out about a million dollars. now, government wants to see the rbi really -- if they any wrongdoing, they will be expecting the books. a few minutes ago, they came out and said we have enough eighths to meet any liability decided by the law, so i know it's a bit confusing but it would help get more clarity. we're joined by our daily bureau chief, it's been what, about a week since this fraud came to light. e heard about the latest from pnb. talk to us about where we are as far as the entire game is concerned. good morning, you is shifting us to the probe. essentially to answer two questions. one, how did this scam go on almost seven years? these en't transactions unearthed. external nal and audits, external audits onducted by the banking regulator, and that's exactly what has been asked. find any sort of rongdoing in the annual audits that it conducted on members. it one of the larger banks. essentially the focus is now how widespread has this been, and are there any ystemic risks, and secondly, limited to rbi, limited to the national bank, how did this go on for such a long time? the second aspect is who lossese bill for the on the table? cnb take it, or do banks undertake this issue? those are all involved, it's got enough assets to cover liables due to this fraud. so essentially, these two focus of are the investigations right now. haslinda: how are investors reacting? mean, there has been an reaction. they sold shares. really rward, we're unsure as to which of the out and ill come say -- yesterday four banks came out and said another anufacturing company had defrauded them, taking loans and siphoning off the money. if more banks come, there is a possibility that, you banking entire sector will be seen as suspect by the global and you would see massive selling. s of now, it's limited to and foreign ks investors. so haslinda: all right. thank you so much for your insights. today, of course, indian be in focus when india starts trading, very shortly. gains?maintain its t closed up .4% but if indications from the rest of the asian markets are anything to go by they will be under pressure. pointing have it, to a lower opening. of 1%. in e bank of india, all place, keep your eyes on those indian banks as they come on-board. this is bloomberg. >> good morning, as we head than a open less minute, in fact, in fact, we're at the open right now. we're watching a few things, banks and also the currency that's pretty much on the back foot. the lowdown here. >> bucking the original trend. two-day drop adding .2 of 1%. nifty under advance but the rupee under pressure. tracking the rise in treasury yields but we're about what we're seeing, bears against the etf.an equity the latest concern, the potential contagion from an bank fraud. let's check in on some among lenders, chief it says it , assets to cover liability. in the wake of that news. uco bank also under pressure. did see its steepest drop announcingy upon it was exposed to the $2 billion bank fraud. seeing pressure from banking stocks. nifty re seeing the lose some. david: building a 4% now. there.mage is hong kong, 30 minutes to the lunch break. the dogs are out. driving trade? >> the dollars are out. their bestt have path forward yet. we've seen some swings. you have financials dragging all the way. we've seen -- when you take look at the green, it's come down to the movements that you're seeing in the discretionary sense. comes to discretionary space, let's the board to check in. mgm china, that will give a check of how operations perform before it launches its resort. 13.t was on february imax to check in on china and alibaba. grossed 66% on year in the first four days of the lunar so more bumpy seas across china. haslinda: snapping a two-day rise, wants to break down? breakdown here, when you take a look at the laggards, what's dragging that's the ex, property segment, at the bottom of the totem poll falling after the government raised taxes on home purchases which comes as the starting rket is to recover from a four-year group. falling over 2% so far today. but take a look at the sector. related you have singapore, we do analysts saying, from ould benefit the -- the delayed gst hike along with the hand-outs with the budget. so we do have a mixed comes to hen it the singapore's latest budget there. haslinda: all right. singapore budget playing out in the financial market, thanks so much. quick check on the latest business headlines. british re-tear billionaire denies he's planning to sell his high street fashion empire. group owns chains including top shelf and times and the sunny says it was in talks with china. last year the company agreed taylor for almost $120 million. t also just bought a controlling stake in shoemaker valley. playimler is trying to down a used paper report that its own engineers of tioned the legality software used to control iesel powered plants and documents seen have been released. the company and its near 300,000 employees." aimler says it's cooperating with u.s. authorities and has been asked to conduct an internal inquiry. haslinda: let's take a quick property stocks in singapore. there are declines in the benchmark after the government raised taxes. it comes after residential prices climbed for two straight quarters. morgan stanley says while the tech height isn't enough derail things it could way on sentiment and stocks in the near term. capitaland down. david: let's stay in theme. netflix, it will be taxed in singapore from 2020. the nation starts treating services the same way it handles local products. measure ensures the 7% the 7% gsd applies to all services consumed within singapore regardless of the supplier's location. products affected include marketing , thrown in as well as aps, video, and also music streaming. speaking of media, coming up here in the program, we'll looking at who topped, which movies topped the box weekend the long and why one film might inspire a hollywood rethink. we'll tell you what that film is next. this is bloomberg. >> you've now had to follow ill gates and steve, two legendary figures. >> don't try to be like us. do this says if you well we'll be happy. >> if you do a good job, maybe you'll have another job. if not, you won. david: this is bloomberg markets asia. english.d haslinda: well, the u.s. indonesia says jack carta is foregoing billions of dollars for companies to invest.ger the ambassador also hit back u.s.ecian criticism of trade policy. joins rg's reporter us from. about, what's the background find this? uest: donovan, he's been here for about a year. you're right, he didn't pull interview in an of mr. donovan, he told bloomberg that basically, as said, u.s. firms are eager to invest, but billions of dollars, in his ords, billions of dollars are being left on the table, specifically he was talking bout the power generation sector. he didn't name any talking , but he's also more broadly about the environment here. he cited content rules which ongoing ere an barrier to u.s. companies entering. these regulations actually caught up with the likes of apples before. these regulations require a certain o have amount of their components in indonesia. they eventually got around this by building a research facility. out, it's an ongoing barrier to u.s. firms wanting to invest in in in indonesia. they are trying to boost investment in indonesia as country struggles with its own revenue problems. haslinda: it's not just a difference of opinion in of investments but also trade deficit. what did he have to say that? guest: yeah. o this is a bit of a running battle, to just give ou a bit of background, last year donald trump, he included indonesia -- he investigation into countries that were enjoying trade surpluses indonesia.s., and was one of those countries, and trump in his words, he said, we're abusing the trade relationship. recently, indonesian finance minister has said some of the rhetoric coming was a risk .s. to the global economy and concerns of setting global economic progress back. donovan, without citing anyone in particular, he hit ack at that, in our interview with him and said, some of these countries that talk about u.s. a tectionism should have good look at their own, you now, tariff walls, and he said, for example, indonesia's average rate was that of the united states. so this is a bit of a running battle. not the last time we'll hear about that trade imbalance. carlos, let's not forget, all of this is taking place as china is looking, not really, increasing its nvestment footprint in the country. guest: yeah, that's right. and so, we have a look at the figures. and these are figures that indonesia he investment coordinating board. in 2015, the u.s. was ahead of annual terms foreign direct investment, in the space of three years, -- china robably has gone to about $3.4 billion from $2 billion last u.s. is re as the now at about $2 billion. e see just in a short period of time the chinese u.s., apfrogged the and senior indonesian official who we spoke to who s in the planning industry says the chinese are being a lot more aggressive. in his words, whereas with u.s., they have to go on road shows and go to the u.s. and try and attract investment. he chinese are coming to them and knocking on their door and coming to their trying to stitch up deals. carlos?a: thank you so much for that. looks like they could be tested in the coming weeks and months. it for an't ignore sure. let's have a look at hsbc shares. we've got earnings coming up. are we doing. .8 of 1%. .14, e as high as .15%. post earnings release, we'll be speaking to the finance director, 2:00 p.m. hong kong time. two hours from now. also turn to bloomberg, of course, to get all the commentary and analysis from our expert editors. hsbc earnings upon us now. retail. under pressure like never before. and its connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. >> asian equities snap a six-day rally as hong kong comes back online after the new year holiday. meanwhile, treasury yields are climbing again, .2 $5 trillion of options in the next few days. that's a backup plan. horses say theresa may's

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