Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240711

Talks have been delayed until thursday. Diplomatic and trade tensions between australia and china formed the backdrop as the rba prepares its latest statements. Economists see no change. Shery we will start with breaking news out of south korea. We are getting the final Third Quarter gdp numbers. When it comes to the year on year numbers, a contraction of 1. 1 . This is coming in a little better than expected. The quarter on quarter numbers also rising more than expected, 2. 1 , and beating estimates of growth of only 1. 9 . We have seen some pretty positive ratings especially when it comes to the south korean export numbers. They have seen a lot of external demand, especially in china and the u. S. , despite the fact we continue to see virus infections accelerate in those economies. Again, thirdquarter gdp numbers for the final numbers now beating expectations and coming in at growth of 2. 1 quarter on quarter, haidi. Haidi lets take a look at where we are sitting when it comes to this tuesday session, first trading day of the month for the asx. A new to start. U. S. Stocks falling from record highs. Investors taking a breather to assess prospects following the recent rally, Global Equity seeing their best month on record. The s p, asx 200 opening flat at the moment. Watching treasury lines to see if it will be a third day of losses given the tw deterioration in relations. But we are looking like we see further dollar weakness ahead. We are seeing a little bit of weakness when it comes to the kiwi dollar. Shery we are seeing weakness when it comes to oil prices. Brent coming online now and really pressured to the downside. We have seen consolidation after questions of what happens to the opecplus plants when it comes to delaying the output increase later for january when it comes to futures come a lot of positivity after u. S. Stocks fell from record. The japanese nikkei is higher despite the fact we have seen some strength in the japanese yen recently. Haidi all right, lets get more on the market moves. Where does the market had from here . Our next guest says an effective vaccine rollout is less priced in despite this months rally. Is lewis. Now i want to talk about this chart, taking a look at valuations and emerging market stocks in asia compared to the global peers. Clearly, there is still more scope for gains and opportunities in this part of the world. The msci emerging market index and the purple, lowest part. Where do you see the opportunities in asia, particularly when we will see sustained dollar weakness driving the dynamic . Louis i think there are couple of areas that look interesting and have not been affected by the vaccine rollout. You look at the value sectors in financials, energy and real estate in asia, they have appreciated some but we dont think they have reached their full potential. Within the asian country context, we do like the countries that have been less effective in controlling the virus. Indonesia, philippines, thailand. Thailand could benefit from a recovery in tourism. Plenty of hope for these companies to catch up with some of the countries in north asia. Haidi when you take a look at the virus scenario, are you concerned about any of these countries . Because north asia, we have seen better handling of the pandemic. That is part of what has been driving the rally in that part of the world. Are you concerned the pandemic will continue to be an issue as long as we dont have the rollout of a vaccine in this part of the world . Louis i think when you look at north asia, according to valuations, i think a lot of the Earnings Growth has been priced into korea, taiwan and china, going out as far as 2022. If you look at indonesia, philippines and thailand, one big risk would be a delay in the vaccine rollout. Because these countries have lessdeveloped Health Care Delivery and distribution systems. I think one risk you have to bear in mind in 2021 is some of these countries may be slower to receive the vaccines but i think the valuations have already discounted for quite a big part of that risk. The price could be on the upside. Shery what about markets like china where we have seen economic and market outperformance . But we are starting to see signs from policymakers that they may not be generous with stimulus support anymore. Cautiouss, i think about credit stimulus being withdrawn would be banks and infrastructure and construction. I would also be cautious about the real estate sector in china. If you look at where policy is going, the council will unveil measures to stimulate domestic consumption. I would be looking to areas like home appliances, insurance, as areas where there could be some stimulus as well as autos. I think definitely on the consumer side. If you look at the fiveyear plan, the next fiveyear plan, china plans to pick up the ecommerce penetration from 25 to about 40 on sales. A good fiveyear runway for a lot of the ecommerce and technology companies. Shery when would it be a good time to start getting into those Entertainment Companies like Casino Gaming Companies . Louis yeah, i think you have seen them come up from their lows, but you still have not seen a brought opening up of travel between china and macau, for instance. The border between hong kong and macau remains restricted and authorities are very careful about letting large numbers of visitors come in from china. I think you can start to position in some of these companies, and you do have to differentiate between companies that are more exposed to premium gaming. That is part of the visitor spectrum. It will come back faster than vip for instance. I think there are wellcapitalized positions. Asia, look to southeast there is some opportunities in malaysia and singapore and you can also take a look at. Another travel bubble between singapore and hong kong has been delayed but i think that gives you some room to position before so to the catalyst like that we go forward. Lau joining us. Lets get Sabrina Mitchell for the first word headlines. Karina joe biden has rolled out his top economic picks, announcing janet yellen for his choice for treasury as well as heads of other departments. Picked for the office of management and budget. Cecelia ruth would have the office of economic advisors. Thekrock executive at National Economic council. A senior climate advisor to president obama. Jay powell is warning lawmakers the u. S. Economy remains in a damaged and uncertain state, despite progress in developing covid19 vaccines. He told the Senate Banking committee that he has positive for the mediumterm, but significant challenges remain including production and distribution. The lending funds expire at the end of the year and Officials Say they should continue. Thailand says it is ready to take further action on its currency which is on track for a second straight month of gains. The vaccine progress boost optimism about the return of tourism. Previous say the measures have had a limited impact. The bank of thailand meets next week to explain the strategy. Stepat is only the first and the outflow. There will be further strict measures on that. Karina bitcoin on the move again, jumping more than 6 to almost 20,000. Its rise has echoes of its search three years ago which was followed by an equally dramatic plunge. Thbitcoin has gained more than 170 this year. Shares of companies to exposure with cripple currencies also jumped. Global news 24 hours a day on air and on the bloomberg quicktake, powered by more than 120 countries. This is bloomberg. Shery opecplus talks are delayed as members need more time to reach a deal. That exclusive insight, next. Plus, jp morgan plans to boost some bonuses by 20 , but payouts are set to decline across the board. This is bloomberg. Haidi deep divisions in opecplus are becoming more apparent as the output is without a deal. Further discussions have been delayed and ministers will meet again on thursday to decide whether to keep the current output cuts or increase production in january as originally planned. s Energy Editor joins us now. Looking pretty dramatic. How unusual is it to see these meeting so tense . Thank you for having me. This is definitely not unusual for opec. Not the first time we have seen a postponement like this. It feels like forever ago now but back in april, opec delayed gathering because of reduction cuts. And then it up taking several days then an intervention by donald trump himself to broker the deal. We pointed out that some of opec meetings back in the 1980s went even longer with one meeting in geneva that lasted 17 days. Opec is no stranger to these prolonged talks, for sure. Haidi right. So what is the heart of the latest disagreement . Lynn it is clear that the debate centered around what to do now that oil prices have rebounded. We have come a long way since Oil Prices Fell below zero in april. We are well above 40 a barrel now. While some opec members are really keen to start ramping up production and make the most of the price rebound, others clearly still see the market as too fragile to accept more oil into the Global Market and some are thinking the most prudent course of action would be to just maintain the production cuts that are existing for another few months. Its clear that is where there is still a deep division inside the cartel as to what to do. Shery what is the price outlook . Clearly, if todays move down was an indication on the postponement of the opec meeting, the price outlook remains incredibly uncertain. All of this, at least a large art of it will hinge upon what the outcome of this opec meeting will be. Any failure to reach a deal will undermine this recovery. Regardless of any vaccines being developed and oil demand in some parts of the world like asia. Even more than oil markets, what we need to watch for as well as opecs longerterm credibility and what is at stake. There are deep divisions that are being exposed during this meeting and as a result of these postponements. That is something to watch on top of the oil market output will be. Doan, as we continue to watch for that delayed opec meeting. Stay with bloomberg tv. We will have analysis of opecplus tensions and implications to the oil market. We will get more later on. Moderna is requesting clearance for its Coronavirus Vaccine in the u. S. Afternoon analysis showed the shot is highly effective at preventing covid19 with no serious safety problems. The ceo spoke about the results and how the Company Plans to distribute the vaccine. Had initial ago, we analysis of phase 3. Today, we are announcing the final analysis. Most important for me is the serious cases. 30 cases of serious on placebo and zero with those who got the vaccine. Happens, about what serious cases leading to hospitalizations, leading to icu, leading to death. This is a big moment in the fight against this pandemic. To get our goal is vaccine approved in the coming weeks. In europe, the u. K. And many other countries. Hoping to get approval in the next few weeks. In the u. S. , for example, the fda informed us they are likely on december 17, the advisory committee. Then, i will expect within 24 to 72 hours. We are working very closely in the u. S. Within to make sure that 24 hours after approval, product will be out the door and vaccinations can start so we can help protect as Many Americans as we can. We are still on track to deliver up to 20 million doses in the u. S. Before the end of the year. How do you imagine it actually working . What does it look like with this starts to get rolled out . When people start to come forward and say they want the vaccine or being offered the vaccine . Stephane it will be a typical flu vaccination, just that a scale that has never happened in the world in terms of the number of people to be vaccinated at the same time. It is like a regular shot. You go into a private room, you show your arm to the nurse or doc. Antiinfective to clean your arm, they inject the product. You need to get your boost 30 days after. A lot of systems developed by the government to track which vaccine in the prime injection. We get the same vaccination by the same manufacturer. That is how it will look like. Youou go back to the data, have 94 chance of having no disease if you get infected. He vaccine and 94 chance of not getting it. In the small chance, it will be a mild disease. We got zero severe disease. That is why i think vaccination will be so important to stop this pandemic. We can save lives and go back to normal. Can you help us break down the data, older than 65 . Any sort of effects that youve noticed in your testing . Stephane we have not disclosed. We do that when the fda meeting meets. We literally got it yesterday. The team is looking at everything. Tudy, was the elderly above 65 years old. The elderly data is similar to other age groups. People with diabetes also very high efficacy. By the time we meet with the fda on december 17, the Advisory Board, we will roll out all the details and those will likely be put online by the fda a few days before the Advisory Board as it is usually done. Guy is there anybody that shouldnt get the vaccine . Stephane today, the study has only been done for people above the age of 18. We are going to start very soon, this year, studying teenagers. Teenagers should not get vaccinated because there is not data that is reliable yet. Shery that was the moderna ceo speaking to bloomberg. Next, chinas economic offensive against australia. Why it could end up backfiring and pushing the powers closer to the u. S. Camp. This is bloomberg. Haidi ties between australia and china jeopardizing billions of dollars of exports at a crucial time in the recovery. Demanding an apology for a controversial tweet by senior chinese officials, featuring a fake image of an australian soldier threatening an afghan child. Tom mackenzie joins us from beijing. How is beijing reacting to this demand for an apology . Tom well, they have failed to issue an apology. In fact, they said scott morrison, the question whether the Prime Minister has a sense or has lost a sense of right and wrong. Beijing in that they will apologize for a tweet sent out by a Foreign Ministry official. It was a disturbing image. A mockup of an australian Soldier Holding a knife to an afghan child. Officials in beijing, when they were questioned yesterday, they said it is australian that is 100 to blame for the state of relations between these two countries. They said australia took rod measures on issues touching on chinas core interests so they have refused to issue anything close to an apology for a very disturbing tweet. Weve had a number of very strongly worded editorials in the state back to global times. The front page talking about the relationship between australia and china plunging into the abyss. Morrison is to blame. The blame game is taking bilateral relations into the abyss. An editorial in the same newspaper calling australia people. Another editorial by the editor saying that morrison, the australian Prime Minister, should neal dunn on the ground, slap them safe in the face. Saying the administration has made us fairly provocative and wanting a spanking. Those are editorials. No sense of this relationship is anywhere close to being repaired on the margins. Shery how long will this strategy last for beijing, especially when you have a Biden Administration coming in that prioritizes alliances . Tom that is the key question. The sense we are getting from experts we have been speaking to is this strategy could very much backfire. From the chinese perspective, this is about essentially keeping those middle powers in check. The likes of australia, new zealand, canada, the European Union and japan. It is about sending them a message not to cross chinas core interests. Not to be too vocal. You will feel the economic pain if you go down that route. Of course, as you say, biden is coming in with a pledge to rewrite these relationships with the u. S. With its allies and to build out a coalition to push back on china on some of these key issues. You have seen in the last few years a revival of the u. S. , japan, india. The five is have been much more corrective as well. We have seen new initiatives being discussed in the u. S. And amongst allies. For example, about providing alternative to chinese 5g networks provided by huawei. You have the Financial Times reporting the European Union has written up a document that they want to get into the hands of the incoming Biden Administration. Calling for a once in a Generation Opportunity to forge a new Global Alliance to counter china. This strategy by china that is very hard line on australia and canada and others could certainly backfire. Shery Tom Mackenzie there in beijing. A quick check of the latest business flash headlines. Tesla jumped in late trade on news it would join the s p 500 in one shot, given the companys massive market cap. The index has sought consultation for investors over adding the stock in one part or two, which would have been unprecedented. Tesla will be the seventh biggest name in the s p 500, between Berkshire Hathaway and visa. The stock is sort about 580 this year. General motors has scrapped plans to take an equity stake in clean energy nikola and dropping the building the new badger pickup truck. That sent shares of nikola tumbling by more than 27 . Gm will allow nikola to use its Hydrogen Fuel technology, but it wont be taking the 11 equity stake it had proposed earlier. Top u. K. Retailer arcadia has filed for insolvency amid fallout from the coronavirus, putting 13,000 jobs at risk. The company has appointed deloitte as administrator to allow the brands to seek protection from creditors. It will be the u. K. s most notable retail collapse since the pandemic struck and a further blow to a sector that has already lost 125,000 jobs this year. Next, traders that jp morgan sent to benefit from a record year, but not such bonus news for many of their colleagues. This is bloomberg. Its down to the wire, the teams been working around the clock. Weve had to rethink our whole approach. Were going to give togetherness. Logistically, its been a nightmare. Im not sure its going to work. Itll work. I didnt know you were listening. I hope my insurance pays for it. Can you tell me how much this will be . [cashier] 67. Sorry. Wait, have you heard about goodrx . Goodrx finds free coupons to help you save up to 80 on your prescriptions. Wow, i had no idea. [announcer] goodrx, stop paying too much for your prescriptions. Haidi lets take a look at the latest markets. 3. 1 g in on expectations, for october, picking up slightly from 3 . The jobs ratio coming in at 1. 04, slightly higher than expected but pretty much on expectations. We know we are expecting Going Forward the labor Market Scenario to continue to flatten into the end of the year. We are seeing elevated new virus cases in japan that will limit sectors. Fficerers in the other virus related efforts continue to hurt demand for workers and demand general in the economy. Bloomberg economics expecting we will see unemployment reach a peak in the First Quarter of 2021 and come down gradually over next year. Assuming a vaccine and the handling of the pandemic there. The jobless rate for japan at 3. 1 . Lets take a look at reaction on the markets and go to sophie in hong kong. Sophie little reaction in the yen which is back above 1. 04 after dropping below that level overnight. The yen gaining against the greenback. More dollar weakness, especially via the euro. Going into december, broadly speaking, looking like a mixed session in asia after the regional index managed to post its best month since may. Nikkei futures in singapore coming online, in the red. Kiwi stocks under pressure, but gaining ground at the start of the session in asia. Fallingy, the asx 200 for three Straight Days through monday. We have seen the weakness continue. Energy stocks remaining under pressure. We are seeing oil prices in focus. Crude stalling above 45 a barrel. Opec has been delayed over negotiations of outputs. Checking the aussie dollar the head of the aussie policy decision. Back below 74 this morning. Aussie yields are climbing ever so slightly. Want to highlight some stock movers. Treasury wise, extending declines after ubs cut the stock to neutral. The stock has been under pressure given the terms from china. Also want to highlight 12 higher this morning. This after it approved the developments. Shery lets turn to jp morgan. Traders are set for a bumper bonus season. The bank is planning to boost annual compensation by up to 20 for sales and training staff. Employees across the rest of the company macy payouts fall. Michelle davis joins us on the line. Yearhad a record revenue so what is going on with compensation here . , as you yeah, so mentioned, jp morgan is boosting the pool for traders by 15 to 25 . That was after the trading business generated a record amount of money in the first nine months of the year. It has been a tale of two cities year o for the banks. Even though traders have done phenomenally, the other side of the banks, consumers and wholesale lending, those businesses are preparing for massive losses. Reflectsrsions in pay the last thought it lopsided way the pandemic has impacted banks. Revenue is at a record this year but the trading revenue is. Traders are going to benefit from that but they also arent going to get as much as some of them anticipated because the bank, jamie dimon, he loves protecting their balance sheet. He calls it the fortress balance sheet. Hes going to be focused on cutting costs and that is part of why they are going to be smaller payouts for the rest of the firm. Shery as well as salary freezes. Michelle exactly. Arenderstand executives preparing smaller payouts for across the board at the firm with average bonuses expected to be down from last year. Are expected to be frozen for most people that are at the Vice President level and above. That actually mirrors something we saw out of wells fargo a couple weeks ago. We reported they were also going to be freezing raises first some higher top earners at the bank as they prepare for an uncertain 2021. Haidi what does it signify as a trend for the rest of the industry . Michelle you know, other banks are going to want to stay competitive, but they are also dealing with some of the same issues that jp morgan is dealing with. With many are dealing possible consumer losses, wholesale lending losses, depending how the economy shakes out next year and at what point we get a vaccine. So, the fact that jp morgan is freezing some raises, that could provide cover for other banks to do something similar. We know that bank of america is discussing keeping the bonus for traders close to last years levels. That surprised people across the industry because compensation says wall street was going to get generous raises this year. The fact we have bank of america saying it will probably be bought. Jp morgan, which is the top trading firm out there, is generating record amount of revenue. Boosting pay 20 for traders is great, but its also it pales in comparison to the 48 jump in revenue that jp morgan traders saw. If this is the cream of the crop, they are expecting a 20 increase, then the expectations for others could be lower. Haidi Bloomberg Finance reporter Michelle Davis with the latest. Citigroup ceo michael corvette spoke exclusively to David Rubenstein about the decision to nominate janet yellen as treasury secretary and why the u. S. Needs more targeted stimulus. Michael i would say not just citi, but the Banking Industry had a Good Relationship with her elected into or voted into the seat, i think she will do a great job and i would expect that relationship to continue and i would also shout out another Glass Ceiling broken in terms of her then becoming the first female secretary of treasury which would be another great one for the books. David lets talk about the economy for a moment. There are many people in washington and around the country who think the economy could use another stimulus bill. We couldnt get one so far before the election, but may be in the lameduck there might be want, and may be the early new congress. Do you have a view the economy needs a stimulus bill until we get a vaccine distributed and widely used . Michael as you point out, it is unclear whether we will get the new stimulus package between now or late january. But, i think if we dont get something done right now, i think we will get something done in fairly early 2021. I think the question is not going to be the if, but i think it is going to be more about the size and what could get passed. I think that will be largely determined by the outcome of the senate races in georgia. Right now, with covid19 cases on the rise, additional stimulus through unemployment checks, all helpful tools to bolster the economy. While also helping individuals to recover from the Economic Hardship of the pandemic experience. What we know is while we are in the same storm, we are not all in the same boat. I think if we can get these moneys targeted at those most afected, i think it would be very good thing in terms of helping restore the economy, otherwise quicker than it would. David lets talk about lets say we have a stimulus bill. Some people have said we could use a stimulus bill but on the other hand, we cannot ignore the fact the debt is rising rapidly. 27 trillion of federal debt. A budget deficit of 3. 2 trillion a year. Barring about half the money we spent each year. How much longer can we keep borrowing this money without people in wall street or the general economy saying this is too much borrowing . Are you worried . Michael i think we should all be worried about it. We have been talking about deficits for a number of years and what is sustainable. I think the consequence and the prospect of lower for longer in terms of Interest Rates obviously significantly reduces or holds down the borrowing cost but we cannot believe rates will stay necessarily where they are forever. Weve got to be mindful. That is why i believe it is very important we are targeted in terms of getting the moneys to those that are really in need. We know that the longer this goes on and the more small business, the more individuals, certain geography neighborhoods get affected, it makes the comeback from that much more difficult. I think we have seen that and that has been proven from a historic perspective. Shery that was Michael Corbat speaking to David Rubenstein. You can catch that full interview on friday at 11 p. M. In hong kong, 10 00 a. M. In new york on bloomberg invest. Hear how citibank is managing the covid19 crisis and potential impact of bonuses. This is bloomberg. Karina this is daybreak asia. Iran has buried its top nuclear scientist, blaming israel for its debt on a remotecontrol attack on its car. The scientist is seen as the founder of the Nuclear Program in the early 2000 speed the uae and bahrain is contempt the killing as a threat to middle east peace. Two countries have strained ties with iran. As talks between opec and its allies wound up with no agreement on output. Ministers pushed a final decision into a second day and delayed those talks until thursday amid signs of division over keeping supply cut at current levels or increase output as planned next year. The Saudi Energy Minister is threatening to resign as cochair of the opecplus committee overseeing production. U. S. Air travel numbers climbed to the highest and eight months as flyers ignored Health Advice. Passengers at domestic airports total more than 1. 1 million on sunday. That is the most since march when the coronavirus began to devastate demand. U. S. Officials urged people to stay home over the holiday to prevent a surge in covid19 cases. Global news 24 hours a day on air and on bloomberg quicktake, powered by more than 120 countries. This is bloomberg. Shery lets turn to geopolitics. Chinas escalation with trade tensions with australia has seen as a warning to the world, particular the u. S. , not to oppose beijings interests. How might this strategy play out as joe biden prepares to take office . Joining us is melissa hathaway, president of Hathaway Global strategies, and a leader of the cybersecurity initiatives. It is great to have you with us. The incoming Biden Administration seems to be multilateral estimated will we see in ephesus on alliances, could we see more costsharing among socalled likeminded democracies in their push against beijing . Melissa good morning. I think the Biden Administration is assembling a team that believes in rebuilding the alliances. You have seen overtures from europe and india and australia that are looking to have more of a coalition of the willing to really block the retaliatory actionsy or retaliatory you are seeing if you dont comply with chinas interests. Shery what does it mean in terms of what the United States does next . Can joe biden actually unwind some of those tariffs, tech decoupling moves we have seen . This pressure on tiktok, pressure not only also won companies that are listed in the u. S. Could we see some unwinding of those actions . How much leeway does he have . Melissa he has leeway. I think there has to be really deep study of what happened under the Trump Administration. And here, the Trump Administration is getting ready to put a number of companies, more than 80 Chinese Companies and more than 20 russian companies. On the entity list for export controls because they are or could beilitary used to support the military buildup or capabilities of those countries. Youre also going to see a unique one for the department of defense. Companies that can support the chinese military, using the section which refers to a National Defense authorization act. I think the challenge is the tech decoupling will continue under the Biden Administration for many reasons, but principally over market access. And some of what the americans would consider and many would consider unfair trade practices by china. I think you will see the mood or the tenor and diplomacy will be much more measured. It will be more predictable. I do see the decoupling continuing in the Biden Administration. I do believe they may unwind some of the terms, but i wouldnt expect a significant retreat from the current position of the United States. How successful can the u. S. Under a binding administration along with its allies be in containing some of these Tech Ambitions . Areknow companies cornerstone, longterm ambitions that beijing is pretty determined to pull resources into and succeed at. Melissa that is right. The fiveyear plan that was Just Announced by china a few weeks ago highlights it wants to become a technological tech nology is a key pillar of the strategy. It specifically called out semiconductors pickup semiconductors are needed and so many of its industries. It also says it wanted to really become a quality innovator versus quantity, which has been one of the things that has been Holding China back. It is not known for its quality of its products. It is known for the cheap production. If this is the strategy, it will take them some time to build out because right now, they are still dependent upon u. S. Desi gns and manufacturing, etc. For the semiconductor market. So the new entity list in particularn it will delay how beijing can move forward. Thisi do think i think will accelerate other industries and china from Artificial Intelligence to even just the next generation of telecom. You will see some of its think given a lot of leeway to drive that innovation agenda. I think five to 10 years from now, you will see china leading in these areas if they can focus and Building Industries out that they dont have right now. Haidi is there a way out for these allied countries like australia that the pencil heavily on china, but find themselves in the situation that camera finds itself in . Melissa when you look at the asiapacific rim, their number one trading partner, all of them is china. They are all in a very, very difficult position. Australia was the first really challenge the technology the 5g, the huawei technology. They were the first to experience misinformation and propaganda from china through we chat and other technologies. They have been the victim of industrial espionage and parliamentary disruption. The have a risk for retaliatory diplomacy. China has put wine, beef and barley on the highest tariffs and then trying to get there companies the block importing coal and timber and other things. Theres a lot economically at stake, but australia feels very violated by the actions that china has taken an very sensitive. They have a very high population. This is something they have the response billeted to protect the core interests of their state of australia. I know this is part of the dispute that china believes that australia should keep quiet about chinas core interests. Nobody should comment on human rights. No one should comment on taiwan and no one should comment on hong kong and the National Security lock. Many of us have different views on those areas. Haidi great to have you with us. Melissa hathaway, president of Hathaway Global strategies. We have more to come. This is bloomberg. Haidi the wto says south korea broke International Trade rules when it a series of tariffs on japanese stainless steel and 2017. The ruling could inflame a trait spat between japan and south korea. Bloombergs east asia editor joins us with the latest. How significant is this decision when actually questions the value is relatively small . John it is only a few billion dollars involved in this decision, but the Immediate Impact is that south korea is planning an appeal that vetoes the decision. Because the wto appellate body has been dysfunctional since december 2019 with new members for the panel. On the greater scale, south korea and japan have been fighting a battle over their shared history in japans 1910 rule of the peninsula which spilled over to trade. Some of these disputes have wound up at the wto. This is it is going to inflame the simmering tensions between the two countries. And the amount is small, but it feeds back into this dispute about whether south korea sees japan as fairly compensating south koreans for colonial rule, whereas dependencies these matters has settled under the 1965 treaty that established diplomatic relations. Haidi what are the other fights japan and south korea are having when it comes to trading in particular . Aboutne of the things is two years ago, south korea court says Japanese Companies were responsible for south koreans working during colonial rule at japanese factories and mines. Japan was very displeased with the decision. Korea onlly, put south a list of export control, some sensitive materials for their tech industry. South korea saw this as politically motivated and took this to the wto. In a simmering dispute between the two of them over the past two years, it is really intensify the animosity between the two countries. It has spilled over into other things. South korea straight minister was trying to trade minister was trying to lead the wto. In october, the government was effectively blocking her nomination to take over. It was not official but because of the wto process, a powerful country like japan effectively giving a veto to a candidate dashed the hopes of the south korean candidate to take over the global body. Shery how does this trait spat complicate the picture for the United States . Wanting its allies in asia to work together. Jon exactly. Japan and south korea are the two biggest u. S. Allies in asia. They are key for the u. S. In managing threats posed by north korea and china. A coordinated response is indispensable for actions, like the north Korean Missile launch. When a missile is launched, the u. S. Relies on japan and south korea to be on the same page to prepare defenses and make sure whats going on. So its having these two allies together with the u. S. Is one of the most important things to maintain security in the asiapacific region. Haidi jon there in tokyo. Lets get a quick check of the latest business flash headlines. Exxon mobil has taken the largest in its history, the rally of Asset Classes by 20 billion. Exxon is also slashing longterm cap explants which will not exceed more than 25 billion a year through 2025. The 10 billion reduction on precovid levels. Zoom fell after hours despite recording another blockbuster quarter. Revenue was up more than 350 for a second straight quarter. Adjusted earnings were 11 fold. Zoom pulled in more than 718 million on the fullyear forecast to more than 2. 5 billion. Gamestop rose for a Third Straight day amid Strong Demand for xbox and playstation consoles. Up more than 20 on monday. Much more to come. This is bloomberg. Shery welcome to daybreak asia. I am shery ahn. Haidi i am haidi stroudwatts in sydney. Asias major markets have just opened for trade. Our top stories this hour, asian markets look set to drift lower. A november to remember. Oil falls as talks within opec and its allies wind up with no agreement in output. A final decision has been delayed amid signs of vision on supply strategy. The fed chair welcomes positive news on vaccines while warning the virus economic fallout remains uncertain. Moderna says its shot is effective. Shery we are getting trade members with exports now rising 4 year on year for the months of november this is a smaller gain than was expected. The expectation was for a gain of 7. 5 . Induced holiday contraction in exports for the previous month so this is a little bit disappointing. Imports year on year following less than expected, 2. 1 percent, slightly less than the expectation but thats leading to a trade surplus that is smaller than expected and coming in at 5. 9 billion dollars from november. Inhave seen external demand the United States, europe, china , strong, but still, the virus cases really dampening sentiment arnd the world. We are seeing exports rising less than expected. Only 4 year on year. As you can see on the chart, it is still a gain and those contractions since the coronavirus pandemic, now easing as you can see. Lets bring in Sophie Kamaruddin in hong kong. Alongside the trade data that we got just now from south korea, gdp numbers, which phase growth at commercially respected. Market reaction to the wto ruling on years imports on japanese steel. We are seeing green issues. Kospi up over 1 this morning. This after we saw monthend losses. Still likely to cap the best gain since 2001. Slightly under pressure but goldman seeing more potential upside for the currency next year along with the ringgit and the rupiah. Lets turn to the open in japan. The Third Quarter in japan shrank less than expected. The yen little changed in the wake of that data. We are seeing the nikkei 225 adding after the benchmark caps the best month since 1994. We are keeping an eye on softbank. The stock gaining ground, rising to a march 2000 high after they listed price targets to ¥7,700. Lets check in on some other assets of note. U. S. Futures little changed, just a slight nudge higher,. 4 percent on the s p eminis right there. With the aussie dollar back below 74 ahead of the rba policy decision, aussie stocks fluctuating this morning, but Energy Stocks are under pressure in sydney as we are seeing Downside Pressure for new york crude, extending losses this drag on. S negotiations goldman thinks the winter headwinds for crude, including this resurgence of virus cases, those are merely speed bumps on the path to balancing in the oil markets. Goldman penciling in brent at safety five dollars a barrel through 2021. Chief lets bring in the Global Market strategist. Give us your take on what you think is happening in the oil markets because of course, we have all that uncertainty over opecplus but at the same time, we have an economic rebound happening in china and perhaps a vaccine coming up soon. The Biggest Surprise really was the announcement suggesting they will give up cochairs. That caught me by surprise coming out of the meetings and what it stresses is a level of disharmony thats going on. I think its a lot higher than what people thought. This is probably part and parcel to the uae wanting to pump more oil in. Obviously, the issue with the iranian scientists getting assassinated over the weekend is really that it changed to the narratives. Cooler heads will prevail as they will extend the quotas for a shorter duration as the markets are expecting. All should be able to lift. We need to bridge the gap until the vaccines, otherwise, we could have a 10 collapse in oil prices in december. Shery we still had a really good month when it comes to commodity prices, right . The bloomberg Commodity Index around those levels that we have not seen since february early this year. What happens if we do today collapse in oil prices or in the broader commodities space . Where in the markets will you see the biggest impact . Stephen its very interesting. Fortunately for the commodity markets, they have that China Consumption to lean on so im not ask acting a huge dropoff in the broader commodities markets. Oil is a little more delicate because it really gets pushed on demand and that is the biggest concern we have got right now is the covert scares are forcing people inside notwithstanding the fact that governments have been reimposing lockdowns. The problem im seeing for oil is just christmas. People will not be going out much and thats really going to crimp a lot of the natural oil demand that comes into the andday season via driving travel. Nobody is getting on planes this year. Thats for sure. Even internally inside their own countries, let alone traveling externally. Seen record highs for gold, gains when it comes to copper and silver as well. Int is the dependent factor terms of these rallies going beyond 2020 . Do we need to see the start of some inflation . Stephen i really do believe that that is what has to happen here. Throughook at the end the covid tana, green lights are flashing but the problem is we dont really know what that landscape is going to look like on the other sign, especially as far as inflation is concerned, and thats a big problem in my view for gold. We have seen money not really driving inflation. The Federal Reserve easing policy. We have seen it from the bank of japan able to raise inflation. The markets are really piling into the u. S. Dollar debasement story, hyperinflation narrative. Its going to take hyperinflation to drive gold higher. I dont see it coming back to the markets anytime soon. Haidi i want to get your views when it comes to fx. So much of this hinges on whether we continue to see dollar weakness. We are all pretty close to these when itompared comes to the dollar, right . Do you have expectations that this is something that will be sustained depending on whether we see the growth diversion story with the u. S. Divergence story with the u. S. . Stephen i have never flipped my story so much. We had a big set up. Absolute downpour of u. S. Dollars. Failed to breach the 120. That was surprising. We saw volumes. Here we are again down at 119. I think ultimately, the market wants to sell dollars but i think they may delay until they get a clearer signal from what the feds are going to do. I personally dont think they will add accommodation with stockmarkets up towards 3600 now so im not really looking to sell the dollar super aggressively. I was looking for more shortterm supply and demand. I think it will be an interesting climate because ultimately, i view the dollars fortune really getting driven less so by interestrate policy and more so by the gross narrative so if the global gross narrative starts to pick up, countries start to recover significantly, then i think the dollar will tend to sell up but not as dramatically up to 125 and the euro. On the euro. Haidi Stephen Innes with some of his fx and commodities calls. Lets get you to Karina Mitchell for the first word headlines. Karina thailand says its ready to take further action on the vaccine progress boosts optimism about the return of tourism. Ministers say they are unlikely to impose capital controls all the previous measures had only a limited impact on the currency. Bank of thailand meets next week to explain its strategy. That is only the first step. I think its followed by further measures on that. Karina u. S. Air travel numbers climb to the highest in eight months as flyers ignore Health Advice for trips around thanksgiving. It totaled more than 1. 1 million flights on sunday, the most since march, when the coronavirus began to devastate demand. U. S. Officials urged people to stay home to prevent a surge in covid19 cases. Air Canada Airlines plans to reintroduce its 737 max to commercial service by offering staff a series of flights to help old confidence. American is planning five ships. Customer confidence will be boosted of crew members happy with the plan. The max has been grounded for 20 months after two fatal crashes. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. I am Karina Mitchell. This is bloomberg. Shery. And saidill ahead, senior commodities strategist daniel hynes joins us to discuss the oil market as opecplus remains debt knocked on supply. Moderna shares jump as it becomes the second vaccine candidate to apply for emergency approval in the u. S. This is bloomberg. Haidi moderna shares jump yet again as the companys hoping to get fda approval before christmas. A new analysis confirms preliminary findings that the vaccine is 94 effective. Thats get more from michelle cortez. How much confidence do we have in this recent data . Astrazeneca are conducted more trials but it looks like moderna could be pushing ahead for prechristmas approval. Data is the moderna looking better every time i get a new cut of the data. We saw that none of the near cases and coronavirus occurred in people who got the vaccine and the number of people who got the vaccine who got any type of infection was very low. Fewer than a dozen people. So the idea that the virus is incredibly effective at preventing serious infection and even transient, milder infections, is really important, and it should help encourage people to get the vaccine once it becomes available. And we are looking like that might happen at the end of this year. Shery very important that we are seeing record hospitalizations here in the u. S. And infections rising with new highs around the world as well. Michelle absolutely. ,e are at this incredible Pivotal Point in the coronavirus outbreak. We are just getting to the point where we will start seeing the light at the end of the tunnel at a time when everyone is staying exhausted by inside, isolating, wearing masks. People are just done with it. But the bottom line is if we can just hold on for a couple more weeks or months until we can get this vaccine to start helping us get the virus under control, we will all be so much better off because at this point, honestly, there is not anything we can do to stop the virus that is currently circulating until the vaccine becomes available so its just tragic. We are seeing numbers continuing to increase, hospitalization rates across the country are hitting devastating numbers, overwhelming hospitals, and the number of deaths we will be as we areso tragic starting to get to the vaccination period. Haidi with the latest on everything to do with the coronavirus pandemic, our health care reporter, michelle cortez. Actually, novavax rising and they trade after saying it is making progress with its covid19 vaccine. Ceo and president says he is expecting to see initial results from a u. K. Trial in the First Quarter. Think a real important announcement was the final enrollment. 15,000 plus people in the u. K. , 2400 people 4400 people in south africa. Those are really great executions of Clinical Trials and now we wait and collect data to see what the efficacy levels of those who trials are. It is a really important milestone we achieved in the teams did a great job. In the u. S. , the u. S. Announcement was merely that we weeks, abe a couple few weeks, because what we are doing in the u. S. Is we are scaling up the process so when we get approvals, it will have a robust, commercial Scale Production process, and it takes time to get from long scale, 50 to 2000roduction production. We have to have all the assays in place, had discussion with the fda. Its going along fine. It just takes longer. Takes longer for manufacturing. Why did you perhaps think that it would be sooner than what it is turning out to be . We are always aggressive on our timelines and optimistic that snafus wont occur so we run into these. It has never been done before. You learn some things along the way and thats what we are doing. What is the level of efficacy you would be happy with given the results from other vaccine makers . Stan our expectation is we will be in that ballpark. What you can do is all you can do is when you try and compare across vaccines is look at how we did in preclinical studies. Of efficacy and immunity. Same thing in the phase i trials. Our vaccine came out equal to or ahead of these vaccines so we stand sidebyside with them and i expect our data will be quite good. The expectations in the market are that the data will be good. Im curious if you could provide more insight into the manufacturing process and whether novavax is going to have the capability to scale this product out there to market, assuming you do get fda approval for it. Stan theres a couple issues and one of which is scale. Another is stability. Been able to show is scale. We put together a Global Network of manufacturing partnerships that go all the way up to scale 6000 liters, 2000 meters, and leaders, and multiple bioreactors in each of these plans and we are doing this in several different countries. We cannot just make products in the United States and then expect it to be shipped globally so we have the capability of so, we expect supply with our partnerships, particularly with the institute, we expect them to supply a vast segment and not just the high Income Countries but the low and middle Income Countries. We also need a product that is stable and our product has shown may be the best ability of any of the products out there where we think we could have storage in two degrees to eight degrees centigrade and perhaps Room Temperature storage for some period of time so that is a big breakthrough as well. Ceo stanas the novavax erck. ,oming up next, bitcoin is back 20 thousand again. Supporters say this time it really is different. We take a look at why or why not, next. This is bloomberg. Shery bitcoins climb to another record level, rallying as much as 8. 7 on monday, has surpassed the highest seen in 2017. Thats get to our team editor in singapore. One has to be skeptical because the last time we reached these levels, bitcoin lost about 70 the following year. What are we expecting this time around . More to is a lot witness time. One person i talked to said people are not curious about bitcoin anymore. They know what it is. More institutions are coming into it. Concern, is still this particularly about the volatility, just a few days ago, when it got to around 19,000, it then lost about 1000 of that within a little more than 24 hours area so it is still quite volatile and it remains to be seen exactly what it is going to do from these alltime highs. Say things like this is the bitcoin moment. What are some of the potential obstacles to that and an extension of the rally . Joanna one thing could just be that people who have been holding it for a long time, if they bought in december 2017, might say now is a good time to cash out. Another is that there were a lot of momentum traders in there. Wassome of that froth taken out of the market but j. P. Morgan was saying that unless bitcoin can keep its momentum higher, it might be vulnerable to pullbacks because some of those momentum traders might have further to go in terms of selling. What happens to other cryptocurrencies . Will they benefit as well . Joanna one thats important to keep an eye on is ether. Thats decentralized finance applications. People are talking about it a lot. Its undergoing an upgrade soon. Its highest levels since june 2018 so it isnt just bitcoin that is doing well. Some of these other coins are looking pretty good. Also, as we go through pandemic times and people look for things other than the fiat currencies to put their money into. Much of a concern is the concentration of ownership . Something like 2 of the accounts that can be tracked, they own 95 of Bitcoin Holdings . Joanna that is an issue because you figure most people are just very small holders and you know, it could be that they are able to do things with the price. At the same time, it has been able to keep going higher and it has had these drops back so it does not necessarily seem like they can just keep pushing it higher and higher, the big holders can keep pushing it higher and higher, but it is definitely something to watch and something to be aware of if you are going to be investing in Something Like bitcoin. Haidi crossasset editor Joanna Ossinger in singapore. You can read about the bitcoin rally and other stories you need to know in todays edition of daybreak. Bloomberg subscribers can go to dayb on their terminals and its also available on mobile in the bloomberg anywhere app. Lets get you a quick check of the latest business flash headlines. J. P. Morgan is set to reward sales of up to 20 even as other employees face declines. The biggest u. S. Bank saw traders lift revenues to a record 23 billion dollars in the first nine months of the year as they cashed in on volatility. Bloomberg understands that the payouts fall widely in the plan could still change. U. S. Bank stocks fell after Morgan Stanley analysts shuffled ratings including double downgrades for both jp morgan and bank of america to underweight. It shifted preference to Consumer Finance firms and lifted price targets across the from attract to attractive to inline. Unicredit bonds. He told the board said he will not be the bank has put his future under review amid a growing risk of a potential takeover. The board held an unscheduled meeting to discuss unicredits strategy and governance with some directors said to be unhappy with the ceo. Coming up next, an exclusive chat with thailand finance minister. He says the government will likely ask again to iranian the search of the thai baht. Surge of then the thai baht. This is bloomberg. Hisoe biden has rolled out economic choices, formally announcing janet yellen as his treasury pick and heads of other departments. Neera tandem at theeese is wanted economic council. He was a senior climate adviser to president obama. Fed chief jay powell is warning lawmakers that the u. S. Economy remains in a damaged and uncertain state despite progress in developing covid19 vaccines. He told the Senate Banking committee that significant challenges remain including production, timing, and distribution. The lending funds expired at the end of the year. Officials say they should continue. U. S. Air travel numbers climb to the highest in eight months as flyers ignore Health Advice to avoid trips around thanksgiving. Passengers of domestic airports totaled more than one point one million on sunday, the most since march, when the coronavirus began to devastate demand. U. S. Officials urged people to stay home over the holiday to prevent a surge in covid19 cases. American airlines plans to reintroduce its 737 max planes by offering staff a series of flights to help build confidence. American is planning five charter trips and this month before the max returns to schedule around the new year. It says confidence will be boosted of crew members are happy with the plane. Max has been grounded for 20 months after two fatal crashes. Iran has buried its top nuclear scientist, claiming israel caused his death in a remotecontrolled attack on his car. The scientist is seen as the founder of the islamic republics Nuclear Program in the early 2000s. The uae and bahrain condemned its killing as a further threat to middle east peace. The two have strained ties with tehran amid tensions between sunni and shieh faiths. Shia faiths. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. I am current mental. This is bloomberg. Karina mitchell. This is bloomberg. Haidi private pmi readings around asia and the last few minutes or so so lets go to the Business Sentiment edging higher in south korea, taiwan, and indonesia, seeing weakness when it comes to vietnam and malaysia. The banks posting their final results of the manufacturing pmi survey. Sentiment improving slightly when it comes to the month of november. Our senior economics reporter joining us now. Taking a look at the numbers we just got, what is the general trend you are seeing . What stood out to you . It is hard to cast the whole region with one brush but we are still seeing sort of a gradual but uneven theme across the region. We see a lot of economies flopping on either side which we know is the dividing line between contraction and expansion. Othereally blew all the ones out of the water. South korea, 52 point nine, also pretty strong. Indonesia about 50 for only the third time this year so those stood out to me. We have a number of them below 50. Japan inching up at 49 versus 48 last month. Malaysia, vietnam, and the philippines, all below 50. ,hen you headed into this global trade really picked up over the past couple months, and our bloomberg trade tracker is at its healthiest in its more than two year history so we see signs that exports are recovering. There is demand. Factories are pumping out production and that is reflecting some strength in asia so we would expect to see pmis continue to improve, at least to have some stable demand at factories. Shery is this a story still of diversions . China divergence . China versus Southeast Asia . Ofhom there is some that theme still. Indonesia, even though they had research into the virus and have been dealing with elevated cases for sometime, that was pretty good news for them to be above 50. We have been looking at north asia leading the charge, posting such a robust rebound this year. We have seen that recently, even this morning, in the trade data, semiconductors climbing 60 so we see that electronics demand across the board and that is helping economies like south korea and taiwan. China certainly stronger. We will wait to see the data later this morning but we did have the data yesterday show manufacturing at a three year high. Index climbed last month to more than an eight year high and we had the china pmis at a three year high so certainly a lot of acceleration in that recovery spreading to the rest of the region. Our reporter there. Officials are likely to do more to stem the thai bahts strength. Arkhom termpittayapaisith told bloomberg exclusively that the easing of rules on capital outflows will be followed by further steps. Arkhom that is only the first step. Will look at the capital. Outflow rules and regulations. Furtherbe followed by on that. Extinguish ill they can manage that. Possibility of imposing capital controls . Arkhom no, we would not see that. We would not see that. Would you do that under any circumstances at all . Arkhom we have not discussed that yet. What is the fair value for the thai baht in your opinion . When we talk to industry players, they are looking at 32 versus the dollar, but currently, 30 to the dollar. What is your sense of what would help tie exports thai exports . Arkhom we could not tell. There is some reference in mind. I think we can manage. Are there other targeted measures the bank of japan can do to weaken the currency . Arkhom other measures . Thats right, measures that can be adopted by the bank of thailand . Arkhom we cannot say right now. Im sure we will do more on that. Do you thinktent the bank of thailand can intervene to weaken the currency without being deemed as a currency manipulator by the u. S. . Thailand is on its watchlist. Arkhom as i said, you know, we would not talk about what kind of measures they are doing. Are you confirmed about escalating debt . Household debt is surging. Public debt to gdp ratio is also rising. How can the issue be addressed . Arkhom many households, particularly in the rural areas, they are doing business in agriculture. A lot of them are doing good. I would say that for the agriculture, they are not affected much. Going to be very short for the Household Debt that we can handle. If you talk about the public now,to gdp, i think right our public debt is 49, 49. 4 of gdp. What we have to do is, you know, we have to expand our gdp base as well. Our economy is not growing. That even though we 1. 9 trillion, you know, it will not be at the same time. Distribution will be covering for years or five years. Not exchanging the gdp at all. Optimistic pretty about the prospects of an economic recovery for the thai economy. Could that recovery be prolonged if the protests arkhom the protests limit themselves in certain areas. Rally, normally, they are andg it in the evening within a few hours, so that would not have done much for the economy because we have to look , thee production side factories outside bangkok. That would not affect the economy. But the thing that you mentioned , are we too optimistic . I think we also have to look for a better future. Pessimistic, then you have no power to work anyway, so please believe in thailand. Financewas the thai minister, arkhom termpittayapaisith, speaking exclusively to haslinda amin. Coming up next, opec talks were delayed after a long and tense meeting broke down without agreement. We will be discussing the prospects for a deal later this week with the a and said strategist, daniel hynes with the anz strategist, daniel hynes. This is bloomberg. Haidi lets take a look at how this first trading session of december is headed after what has been coined a november to remember with Global Equities at the record best months we have seen. In the nikkei 225 looking like we are seeing some pretty convincing gains. That is despite data coming out weaker. We are looking at the kospi just reporting another 400 or so new covid cases but still gains when it comes to south korean stocks up by 1. 3 . A couple hours out from the rba decision. We are not expecting a change in policy but certainly looking for language given we are seeing increasing pressure on australian exports going into china due to the bilateral tensions. Kiwi stocks, the languard in this region laggard in this region. Volatility, as we get these deep divisions at opecplus, are becoming more apparent as output talks roundup on monday without a deal. Further discussions have been delayed to give ministers more time to reach agreements after a long and tense meeting. Lets discuss those implications with daniel hynes. Great to have you. As we have been looking back in unusual,this is not this kind of horsetrading we see going into an opec meeting, some of the sideline discussions that take place and delays. Are you expecting an agreement will be reached . [no audio] haidi all right, that was daniel hynes. We seem to be having some issues with the audio. Let me try again before we give up on you, dan. Just wondering if you think opec will eventually get to a deal . We know this is not exactly unusual, the to and fro, the gamesmanship, as you know, with these negotiations. Daniel [no audio] haidi so it does not seem that dan can hear us. We will try again, daniel hynes back with his views on the opec meeting, which has been delayed. Lets get you to a break now. We will be back with much more on daybreak asia. This is bloomberg. Shery here is a quick check of the latest business flash headlines. Tesla jumped in late trade on news that it will join the s p 500 in one shot, given the companys massive market cap. The index sought consultation with investors over adding the stock in one part or two, which would have been unprecedented. It will be the seventh biggest name in the s p 500, sitting between Berkshire Hathaway and vsat. The stock has soared 580 this year. General motors has scrapped plans to take an equity stake in clean Energy Startup nikola. That sent shares tumbling by more than 27 . Gm will allow nikola to use as Hydrogen Fuel technology in semis but it will not be taking the 11 equity stake it had proposed earlier. We will be marching makes the company at the open. The Worlds Largest Food Delivery Service posted 5. 5 billion as chinas economic recovery boosted restaurants and fueled demand for takeout. It is chinas thirdlargest tech company and is considering a secondary listing in the mainland. Gamestop has been on a tear, rising for a Third Straight day amid Strong Demand for xbox and playstation consuls. The stock was up by more than 20 on monday before paring gains at the close. Microsoft says its latest series is out of stock at gamestop. And at best buy, target, and walmart. Gamestop has more than 5000 stores globally and shares are up almost 200 this year. Lets get back to oil, Holding Losses as you get deep divisions at opecplus becoming more apparent. These talks on monday roundup without a deal. We have further discussions that have now been delayed for two days to try and give them more time to get to some kind of agreement. Lets bring back in daniel hynes from anz who can hopefully hear us now. Thanks for sticking around. This kind of gamesmanship is not entirely unusual when it comes to opec. We were pretty close over the weekend to getting that threemonth extension. Does this surprise you that it did not get done . Has saudi arabia surprised you . Will we get a deal this week . They were confident a couple of weeks ago that, you know, the group would come to some sort of agreement, but clearly, with the rally in prices, the continuing good news around the vaccine front has certainly shifted thinking by some of those producers. That started to put a damper on some of those that have obviously been suffering under these current conditions. And clearly, you know, up to this point, you know, it has delisting by certain producers who have done most of the cuts with others really trailing behind, even though overall, the adherence to the close has been good. Its starting to weigh on some of them and we are starting to see those cracks emerge and patience being tested. It is so more than likely that we will see some sort of agreement. Of ts going to be a lot oing and froing. Some producers are really pushing for stronger adherence from some of those members who have not lived up to their 2020 period. Haidi what about the demandside . The demandside recovery is pretty nascent. Does this derail the price trajectory if we do not get a consensus from opec . It is certainly on the knifes edge. In 2021ise of a vaccine has raised hopes that demand will recover, but certainly, the highfrequency data we look at continues to show some strong headwinds. Traveled about u. S. Remaining relatively strong, recovering around the thanksgiving holiday, but colloquially, we are still seeing a lot of weakness, travel. Arly their opecs, if we did not see extend those cuts in at least the First Quarter, we could see 1. 5 million, maybe even 2 Million Barrels a day during know, itsso you quite important for the market and for prices if, you know, this extension is agreed to, but certainly, i think in the back half of 2021, looking much more positive. It will be a comfort to producers that the extension will be relatively shortlived, come back in march, reevaluate where the market is, and hopefully, they can boost output as demand recovers. Is u. S. Shale a player at all in the broader Oil Market Given how badly they have been hit during the pandemic and the oil glut . You cannot rule them out. I certainly think they are going to be, you know, a significant player in the medium to longer term, but certainly, they are severely hamstrung by the capital constraints. A lot of companies have put in place with prices so low, but also, the ketchup they had to do as prices did recover quite significantly. Drilling activity has been cut back quite significantly, and certainly, a bit of a black hole appearing now, which will take some time before we could see a rebound in u. S. Shale, so in the shorter term, they are not really a major factor, to be honest, but over the medium to longer term, it will be an important part of markets. Haidi i want to turn to the metals. Sorry, shery. Shery i was going to turn to metals so thats great. I want to talk about the shiny metal, gold, because of course, we have seen it being one of the favorite trades out there but now we are seeing pressure given the vaccine optimism. Is there still some upside here or not . Daniel i think so. You will have to be pretty patient, and certainly, its going to be a roller coaster ride. You know, in the shorter term that Risk Appetite is buoyant and we are seeing that after a strong position over a strong rally over the past six months or so. When you look at other things like real Interest Rates with the u. S. Dollar, it points to a fairly positive backdrop and i think when you look back on the period, finally enough, the stronger global it has not resulted in a selloff in the gold market. When you look back at some of ,he rallies in equity markets we saw gold actually push higher quite strongly after that period as well, so its a period of readjustment and i think the positioning has been washed out. You know, that rally will continue. Ofo think the likelihood another 20 rise in gold is certainly a lot lower now, but we still expect to see above 2000 an ounce in 2021. The outlookuch is depending on the inflation outlook . You take a look at the idea that does strong growth that not seem to be happening in china. Is this a position we will find ourselves in next year . Have been asking ourselves are in a while, havent we . It has not really come through. Gold tends to be driven by those expectations of inflation rather than inflation itself, and may, the view is that the huge boost to liquidity across the markets, with the promise to that of that to continue does boat relatively well for expectations and should stay relatively high. It is certainly an issue, which you know, could certainly take the wind out of the sale is a little bit, but i still think when you consider rates, for example, nominal rates, will stay at virtually zero for some time to come, even a small amount of inflation will tend to put real negative rates, real rates, in the negative territory. Shery daniel hynes, always great having you on. Thank you. Coming up in the next hour, as we count down to the china open, do not miss our exclusive interview with a Company Founder on investments in china after the pandemic. Thats it from daybreak asia. How markets coverage continues. Open is next. Na this is bloomberg. Its moving day. And while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. It only takes about a minute. Wait, a minute . But what have you been doing for the last two hours . Delegating . Oh, good one. Move your Xfinity Services without breaking a sweat. Now thats simple, easy, awesome. Xfinity makes moving easy. Go online to transfer your services in about a minute. Get started today. 9 00 a. M. In beijing, shanghai, and hong kong. Im Tom Mackenzie. Asian markets struggle. The slide on wall street returning to risk assets. U. S. Futures trade higher. The dollar dips. Oil falls as opec plus talks produce no output curbs