♪

shery: welcome to "daybreak: asia cutting down to asia's major market opens. paul: australia has just come online. the top stories online. fed officials continue debiting rate cut optimism. oil jumps as more ships over the red sea over militant attacks. the yen seeing high risk of a policy surprise when the boj wraps up its meeting. and a takeover of u.s. steel to greater industry's second-largest player is angering some lawmakers as well as a key union. shery: paul, u.s. futures coming on line and a bit of pressure after stocks gained ground in the new york session, boosted by more than $40 billion of mergers and acquisitions being announced, not to mention the stock managed to shrug off.

fed officials continuing to push back against the of early rate cuts. we had the vix hovering around multiyear lows. but with the treasury space that was interesting because that rally we have seen recently, that took a breather. we have the 2-year yield rising to 4.5%. 10-year yield pushing back towards 4%. a lot to do with the fed rate expectations, right, we will have clues of that next week when we get expenditures danger. -- expenditures data. treasury yields rising and crude prices pushing upwards. oil rising to the highest level in two weeks, really more ships avoiding the red sea to the violence linked to the israel-hamas war. we know, paul, about 10% of global crude flows to the red sea, so that could have a meaningful impact on the energy space.

paul: let's look at how we are urging up this tuesday morning in the asia-pacific. australia just opened for trade and have a staggered open, so perhaps unsurprisingly we aren't seeing a huge amount of action. of the features indicated we might be setting up for a quiet day. not a lot of movement in the bond space. the 10 year kind of going sideways, just about 4%. the aussie dollar, not a lot of change either, $.67 u.s. level. and we are waiting on minutes out of the reserve bank of us truly are for the december meeting where rates were kept on hold -- for the november meeting. we will have business confidence numbers out of new zealand in a little while. japan is ground zero for the big macro event of the day. nikkei futures are currently flat could not a lot of movement in the yanda either. traders are perhaps cautious, shery, about what we might hear from the bank of japan.

shery: especially how the boj has tended to appraised markets. the expectation right now is more than 50 -- from more than 50 economists surveyed by bloomberg, is no change, especially when it comes to tweaking the last negative interest rate in the world. remember, paul, there was a lot of speculation in the last few weeks, because we heard from governor ueda himself and the deputy governor musing about how his job would become more challenging from your end. that led traders to think, are they going to change something in the rate settings and in the ycc mechanism? but right now, at least for today, not expectation for change. paul: there is one flightline -- flatlined in the graphic in terms of rate. but governor ueda is not averse to springing surprises. we have seen him in the leadership do this before, not

least when it comes to the yield curve control. we saw a tweet to that a couple of times early in the year, so traders perhaps are positioned that we might see a little girl at that as well. whether or not we are getting towards the end of the ycc policy. but we shall wait and see. this is perhaps why we are not seeing a huge amount of activity in japanese assets right now, not quite sure what we will hear from the boj later. shery: iesco let's delve into the markets and what to expect with a guest. she thinks it will continue to see momentum in japanese markets. joining us now is belita ong, chairman of dalton investments. this is coming after an incredible gain in 2023, the topics is that level since we haven't seen the asset bubble burst in the 1980's. what makes you think we might still have momentum upwards? belita: thank you for having me

back. we think there is already of momentum in the japanese market, because even after the strong year it had this year, the market is still pretty cheap. it is still between 14 and 15, compared to the u.s. which is that something like 24, 25. you have the tokyo stock exchange being the most aggressive activist in japan, and having made some very significant changes that affected a fair amount of revaluations through companies buying back stock or increasing dividends. and you also have a very strong economy that has been boosted by a weak yen. so if you go back further to recent developments, if you go back, say, 12 years, dollar-yen was at $.78. it has taken all this time and this amount of depreciation and declining interest rate to get the economy going again and to get some inflation, as opposed

to this inflation, back into the economy -- as opposed to dis inflation back into the economy. so even though governor ueda has a habit of surprising, still with wage talks in the spring, i will think nothing will happen and they will take a slow course to words changing the level of interest rates. vonnie: not just where there is surprising, but kurodasan too. this chart shows traders are paying the most to head yen volatility at least since the summer when we saw the boj policy tweak. to the point of how the currency has supported the markets, not to mention inflationary pressures, given that we might be pricing in a change from the boj at a time when the fed pivot is towards rate cuts, what is the risk of a stronger yen of

really dumping the marketing 2024? belita: i think the stronger yen would definitely dampen the growth prospects for exporters. at the will make cheaper imports that they need from materials. so it's not as though it's all bad. on balance, i would say that it's not good for growth. at the same time, there is a mitigating factor which is that if you look at most japanese companies' financials, they have factored in dollar-yen weaker than the yen stronger than rarities right now, when we do our calculations for where we think the yen is right now, we can see it appreciating without doing to damage to companies' prospects. i would imagine it will not be good for exporters, but it will not derail the growth in the

economy. shery: and other asian currency that has been really pressured has been the korean won lately, around 1300 levels at this point. how much has that held the korean market? can we expect more upside in 2024? belita: we are quite bullish on the korean market, which final is not a common view. but two are korea is very much like japan was, say, with a two or three year lag in its efforts to make its market more attractive to foreigners. it is to the case, but it is transitioning. as a foreign investor in korea, you had to get registered with their financial authority first. you couldn't do your own fx with local banks. you had to pay taxes on things that typically a foreign investor would be exempt from. and most of the korean companies would have their reports in korean, not in english.

recently they have changed everything that i have mentioned so that is more attractive and easier for foreign investors to get into korea. at the same time, the korean market is actually cheap, there are great companies which are ignored because they are conglomerates. similarly to japan, the biggest holder of korean stocks is the national pension service which has every vested interest in improving the returns on korean stocks because they have to pay their pensioners who are aging as well. so there are many reasons to think that korea will follow the path of japan in having better governance on their companies, which will make the stocks more attractive to foreigners. so i believe that there is plenty of upside in just seeing the beginnings of the changes. it will make a significant impact on korea. shery: are you seeing more reform with those conglomerates having their very complex holdings of their company structures? belita: we are. you have to look at it singly, one-by-one. we think as -- has made

significant headway in improving their structuring. we have even been invited to talk to their management about how they should position the company so that they are more attractive to foreign investors. so it is happening. it is happening slowly, and it will probably take many, many years. but i think it is going to happen. shery: china has also tried to really attract foreign investment and businesses. how big is china a risk in 2024? belita: china is really interesting. we are seeing a china that is caught between a rock and a hard place. the domestic economy is weak because of poor consumer sentiment, i would say. that is probably the driving force behind the weakness in the chinese economy right now because the consumers actually have money. they are not spending because they feel insecure with jobs,

about real estate in particular which represents a bulk of their savings. so the challenge is for government to focus more on the economy, and we haven't seen that happen for a long time. but recently xi jinping has appointed premier li qiang to head a new committee, i think it's called central financial something or other. he has also attended to -- two meetings of two of the commissions charged with improving the economy. so clearly the focus is now on the economy more so than it was in the past. we just have to see what they are willing to do in terms of policy and pulling together a more complete picture of policies that can help the economy grow. because, leaving it to the market or the forces currently or making these small steps they have taken will not be effective. we will see if they are able to make bigger, sweeping changes to improve the economy.

if it fails to boost the domestic economy, than their only other option is to just devalue the currency, and i don't think anybody wants to really do that, but that is an option they have. shery: the lack of confidence over china has led investors to really go elsewhere at i think i heard that japan was also one way where investments were flowing but, of course, another one is perhaps india. i heard an earlier guest from vaneck saying that that will be the breakup story of 2024. what do you think? belita: we have been bullish over india for long time. when that occurs, i don't know but india is certainly primed to do well here. it didn't have to tighten as much as other countries because the inflation rate was not as high. you have a growing middle class and a government that is spending on infrastructure which is very good. you have increasing exports because of china plus one. you have increasing investment

from foreigners, also because of china plus one. it is just the sweet spot geopolitically because india is large, it can feel that it can take the place of some of the large-scale manufacturing that china has done. india is also now becoming the representative of the global south, if you like. it is taking its leadership position with great gusto and pride. it is really making the most of things right now. i see very strong returns ahead for india. it is in emerging market with very strong -- with high levels of volatility. shery: as many emerging are, right? belita ong, good to have you with us, chairman at dalton investments, with her views of the markets in 2024. still ahead,, we will get some top stoc picks in the u.s. in the new energy space with scott

darling of haitong international. but first the u.s. and allies created a task force as conflict builds around the red sea. details around that shortly. this is bloomberg. ♪

at cdw, we get the importance of clear communication. and when your teams are spread out,

that's not always easy. our experts can help by implementing poly audio and video solutions to keep you connected. from headsets to collaboration tools, poly solutions offer simple setup and eliminate distracting background noise, so the people you're talking to only hear you. to collaborate with quality, trust poly and it orchestration by cdw. people who get it. vonnie: an alert on the bloomberg's, hunter biden will be arraigned on january event. joe biden's son was indicted in a california court earlier this month, prosecutors alleged he fails to pay at least one point $4 million in taxes. he is expected to plead not guilty in the tax case. this is another threat to

president biden's reelection bid from the latest round of criminal charges against son hunter biden. paul. paul: a major deal in the steel industry is now official, u.s. steel accepting napalm steel -- nippon's bid after rejecting an earlier offer. we are joined by our guest, su keenan and argus from tokyo. this will create the second largest steel company and now the biggest outside china. su: it is absolutely a major deal at a blowout price, nearly twice that of the u.s. rival. and again, this is a deal that the metals industry was watching for months. it ends a lot of uncertainty over the future of u.s. deal, an iconic steelmaker. you saw the shares for more than

27% on the announcement. as did cleveland cliffs which had its bid rejected in mid-august. adrs of napalm --nippon sale, unsurprising given the price of the deal which is significantly higher than cliffs offered at the time. it is a 140 2% premium on the u.s. share price. for nipon, it provides a large american foothold in the u.s. steel industry at a time when it is priced to benefit from rising infrastructure spending -- we should point out at least three u.s. letters and influential steelworkers union are opposed to the sale, with one u.s. senator from pennsylvania -- john fetterman -- bowing to use his influence to block the sale. there is concern this may be negatively impacts u.s. american workers, and that it also is a combination with a foreign or

japanese buyer. they are demanding, at least the union is, scrutiny of this deal. shery: just mentioned that napalm steel would gain a foothold in america, how does this play into the broader strategy for japan's largest steel producer? guest: it's a surprise deal with it comes to the japan side. nippon steel during the 1970's and 1980's was the world's biggest maker of steel. they lost out to that in the 1990's and 2000's as chinese production grew significantly and at the same time, japanese demand has shrunk. so this is part of japan started you to expand outside the united states. i have the nikkei here, the japanese business newspaper is screaming on the front page that this will essentially be a deal that makes nippon steel the

third largest, according to their calculations, steelmaker in the world, overtaking one chinese company. at its a matter of business for japan and the reputation of japan going forward because this company has a lot of history, a lot of meaning. they are trying to stay alive and going to a growth market. . and especially in energy transition, the need for steel in vehicles, they expect to continue to increase, which is why japan is willing to pay a huge premium, over 100% more than what the stock price was when it closed before the deal was announced. paul: is there any opposition to this deal? stephen: we heard before there was opposition in the united states which the u.s. steelworkers, obviously they have opposed a foreign company taking over. here in japan we have not heard anything yet. that is something we want to see, because as mentioned, this is a large premium.

so will shareholders look at this favorably? will they say, hey, nippon steel got a good deal here? because it sure looks like they are paying a lot of money for a lot of really old assets in the united states. when you look at the energy transition, especially, what are they going to do with these very units? will they closed them or retrofit them to make them cleaner? or is that something they don't care about at all and they just want increased production? all of those things will be key questions from shareholders going forward for nippon steel. shery: so this nippon steel deal that the way in this flurry of m&a's announced on this merger monday, the last one of the year. su: yeah, it likely the last day of announcements. talk about ending the year with a bang. this is a huge day of mergers and acquisitions, more than $40 billion of deals hitting the tape as mentioned. napalm's $14 billion takeover of u.s. steel -- $40 billion

takeover of u.s. steel tops the list, but there are a lot of deals showing that equity is still pursuing deals after they were in a clear trough. one group confirmed a bloomberg news report that they are taking out another company in a $4.4 billion deal. koch industries' 3.6 billion dollars acquisition of an iowa fertilizer is nice. and ibm in a deal to buy a data integration platform from germany's software companies. all of this, again, is a big difference to what we saw this time last year, which was a final merger monday of $10 billion in 2022. of course there is a little antitrust regulatory authority. grinch in this pre-christmas tally. although they did say on monday they are scrapping a $20 billion deal to take over a design software company after

opposition from both you and u.k. authorities. shery: bloomberg's su keenan in new york and stephen stapczynski joining us from tokyo. you can get a roundup of all the stories you need to know to get your day going in today's edition of "daybreak." terminal subscribers, go to dayb . also available on mobile, on the bloomberg anywhere app. you can also customize the settings so you only get the news on the industries and the assets that you care about. this is bloomberg. ♪

paul: the u.s. and allies have agreed to create a naval task force to counter attacks on ships in the red sea. shipping activity in the area is slowing due to the israel-hamas war. let's get more of our energy and

commodities reporter. kevin, how much of an effect as is happening on the oil and gas trade? kevin: a huge effect so far. it's an area that handles about 12% of global trade, sort of the main route between europe and asia for oil, gas, lng. it has the potential to have a really big impact. oil producers in europe say they will stay away from bout route because it will force them to send their ships to southern tip of africa and that add two weeks to the journey. we have heard these announcements rippling across different markets today. brent and debbie jack reed were up, spiked as high as -- brent and wti crude spiked. even shipping stocks were up since longer voyages will increase demand for their

services. so there is definitely a significant development. shery: kevin, just quickly, houses tenable is the price spike when we have concerns about supply? kevin: we saw the spikes stayed at the end of the day. you are right, the market has been grappling with concerns about oversupply so it remains to be seen how long this disruption will last and whether the u.s. task force will bring more stability back in house theplay and demand shakes out in the weeks ahead. shery: bloomberg's energy and commodities editor kevin orland with a picture of the energy space as we have seen crude prices dropped about 20% from their september high. more to come on "daybreak: asia." this is bloomberg. ♪ so... i know you and george were struggling with the possibility of having to move. how's that going? we found a way to make bathing safer with a kohler walk-in bath. a kohler walk-in bath provides a secure, spa-like bathing experience in the comfort of your own home. a kohler walk-in bath has one of the lowest step-ins

of any walk-in bath for easy entry and exit. it features textured surfaces, convenient handrails for more stability, and a wide door for easier mobility. kohler® walk-in baths include two hydrotherapies— whirlpool jets and our patented bubblemassage™ to help soothe sore muscles in your feet, legs, and back. a kohler-certified installer will install everything quickly and conveniently in as little as a day. they made us feel completely comfortable in our home. and, yes, it's affordable. i wish we would have looked into it sooner. think i might look into one myself. stay in the home and life you've built for years to come. call... to receive $1000 off your kohler walk-in bath. and take advantage of our low monthly payment financing.

paul: bloomberg opinion columnist and former new york fed president bill daley, says the market may be getting ahead of itself when it comes to expectations for rate cuts. he says the u.s. economy is looking strong. >> we have had pretty steady growth, year inflation rate is coming down. so the prospects of a soft landing have gone up. that is all really good and positive. but i don't understand is why you want to add fuel to the fire and cause financial conditions to ease substantially which is what they provoke last week. stocks are up a bit, bond yields are down, the financial condition index was up by-percentage point at a time when the economy has been growing. i believe the fed is not going to finish the job. >> let's build on that attach more. do you think you're seduced by the prospect of a soft landing? do you think that sucked him in a little bit?

>> i think that is certainly what he is trying to achieve, i would do the same. the conflict is about how to think about monetary policy,'s policy tightly because rates are high and inpatient is going down? or is policy not so tight because the financial conditions have eased significantly and that support the economy? you look at gdp for the fourth quarter, it is tracking 2.6% after a 4% growth rate in the third quarter. so it's not clear that the economy needs more accommodation to support itself. >>. >> do you think jay powell understood what he was going to do to the markets? >> i think that he -- certainly i hope he understood he was coming across in a very optimistic framework for the market to digest. had they done this a little bit earlier -- this was the forecast and the forecast does that materialize, then the fed rate cuts materialize either. so the market may be getting a little bit ahead of itself. this is how powell thinks the world will evolve.

he thinks the fed will be cutting rates in 2024. but it is possible that inflation could be more stubborn and the cuts may not turn out to materialize. >> the reason i ask is because powell had an opportunity to push back against financial conditions and the easing we have seen. he had a chance to say this is problematic and moves counter to our goal of bringing inflation down. he didn't. you are saying that financial conditions still matter? why do they matter? is it becoming inflationary, or not restrictive in a way that is problematic for the fed to see inflation easing? >> the problem here is that financial conditions ease a lot, that provides impetus for growth, and if the economy grows faster, the labor market is tighter and inflation is higher. that makes it hard to achieve your 2% target. the question is does the economy need more fuel? does it need to grow faster? i would say no. wage inflation is of a with 2%

inflation. i am not sure why you would want to put more fuel on the fire. shery: bloomberg economist bill dudley speaking with lisa abramowicz and jonathan ferro. take a look at how asian markets are shaping up early in the session, we are seeing that asx 200 reversing yesterday's gains to losses. today's ground be a lot higher by health care and energy sectors. energy, not surprising given the spike in oil prices, on ships avoiding the red sea on violence linked to the israel-hamas war. take a look at kiwi stocks, a bit of pressure after again, losing ground in the previous session. a bit of a mixed picture. not really clear direction when it comes to asian markets, especially since we have u.s. stocks rising. momentum fading a little bit while treasuries fell, the rally taking a breather in today's session. of course, everything on this tuesday is about the boj.

bloomberg economics believes that 2024 will mark the end of the boj's yield curve control policy, but probably will not happen until the second half. of a senior japan economist joins us from tokyo. before we get to 2024? what will happen today? taro: i don't think the boj will move today, but i think it will be all about signaling went to end the negative rates and probably the yield curve control. what we are seeing now from the boj's communication is that they are having a stepping up approach to understand the market. in the middle of next year, my bet is that in july, markets have priced in it will happen in april. but i think the boj wants to do smoother communications that it will not be a sudden exit. rather it will be starting

communication for what will happen in the next year. shery: i thought the signaling came a couple of weeks ago when we heard from the deputy governor and the governor himself which is what really sent the yen and yields all over the place. and the boj hasn't necessarily been that straightforward in the past. so tell us a little bit about this change in the communication style, perhaps, that we are seeing from the bank of japan. taro: right. probably, bank of japan officials are also surprised by how the markets are surprised by their communication. [laughter] what i mean by that is, for example, the deputy governor, what he talked about was basically a what-if scenario. so that if you didn't broach anything about the timing of the exit or the fact that the boj is thinking about the exit, he didn't. he just broached on what if scenarios.

it is a strategy for them to start talking about an exit gradually. but the boj having talked about the exit scenario -- not having talked about the exit scenario for a long time, the market took it as a signal of change. paul: so the boj has a huge balance sheet. some interesting communications challenges as well. what are the risks for japan's economy? taro: whether or not the boj can make a smooth communication without spooking the market, my bet is that given the condition of the real economy, achieving the sustainable 2% inflation target is still distant. that is why probably the boj will end negative rates, but my bet is that they will keep the rates at zero for a while, until they can secure 2% inflation. i think they will provide some

dovish communication. but if the boj fails to communicate it that way, that will probably spook the market by rising -- with a rising faster yields and appreciation of the yen. that will probably damage the real economy and hurt more prospects of that 2% inflation. shery: i have to say, some of my friends in japan would be so happy to have a stronger yen. they really can't go anywhere. let's talk a bit about the implications of having the said potentially turn dovish with rate cuts next year. what would be the implications when it comes not only to the japanese currency, but, of course, rate differentials? taro: i have to say, firstly, since my call is that the boj will end negative rates but keep it zero for a while, the change on japan's side would be just 10

basis points, at least for short-term yields. that is why the movement of the yen and also probably to be yields will depend on u.s. rates or rates in other economies. and given that other major central banks are kind of signaling about rate cuts probably early next year, that will mean that for rates also, did you be yields can be curb ed. the current level is 0.7, zero point eight, given u.s. yields and also the little potential of growth and not-that-high inflation. i think that level is comfortable. that is my bet. paul: bloomberg's senior japan economist taro kimura there. you can also turn to your bloomberg for more on the boj decision coming up later on. go to tliv . . you can get commentary there and

analysis from bloomberg's expert editors. this is bloomberg. ♪

vonnie: we are seeing the information sector bouncing back from pre-pandemic levels. so far, up to 3% of global carbon emissions that are accounted by the aviation sector. but that percentage could rise given the rebound in travel. as bloombergnef notes, the industry is also ramping up efforts to reduce emissions. if he asian analyst from bloomberg -- our if he asian analyst from bloomberg joins us now. how is the ignition sect -- aviation sector capping emissions growth? >> it's not sufficient enough to reach net-zero emissions by 2050. so the most activity by the airlines is around sustainable aviation fuel.

it is jet fuel which does not need major changes to the airport infrastructure. while the airlines reduce greenhouse gas emissions. we have countered about 120 records of sustainable aviation fuel kermit the airlines which amounts to a total of about 37 billion leaders so far. but this amount is not sufficient yet -- 37 billion litres. paul: low carbon jet fuel seem to be promising. but quite expensive and limited in supply as well. how is industry addressing these supply challenges? >> so right now, we have seen that airlines based in the u.s. and europe are leading procurement of sustainable aviation fuel. we are seeing three key factors to address these challenges. first is the demand from corporate customers of airlines. , for example, corporate customers based in europe and

the u.s. especially have high demand to reduce their emissions contributing to payment of the premium cost of saf, for example, companies like microsoft and google are doing that. in asia we have seen this trend. the second is investing in new technologies. third and most important is the government policies. in the case of the u.s., for example, the government offers tax credits under the inflation reduction act that it has incentivized sustainable aviation fuel producers. thanks for that, the price of saf has come down. this is mostly happening in the u.s. so far which are close to refueling airports. these airports are easier to be accessed by u.s.-based airlines, so that is why u.s.-based airlines are doing better than airlines in other regions.

shery: aside from government policy, what about the private sector and perhaps other technologies that can help the industry shift towards net-zero? takehiro: we don't believe that only sustainable aviation fuel will be the solution for decarbonizing aviation, because of the challenges of the volume of fly and price. other examples of options or technologies to tackle this challenge is next generation engines which can improve fuel efficiency. it also hydrogen. it is still in development stage but it has the potential to reduce emissions significantly for short to medium haul flights. certainly, the aviation sector is still key. , for example, investing in carbon removable technologies such as capturing co2 from the was here and store it. these technologies are also important to decarbonizing the

aviation sector as well. paul: alright, bloombergnef aviation analyst takehiro kawahara there. our next guest says 2024 is a year to buy u.s. new energy, but investors have to be selective. let's discuss the outlook with scott darling, managing director at haitong international got, be selective on u.s. new technology, what do you mean by that? what are you avoiding, and what do you like? scott: u.s. new energy has underperformed china and european you energy and also underperformed fossil fuel-based energy. think next year there will be much better earnings growth, you have the inflation reduction act benefits coming through. you probably will have improvement also in demand in terms of certain sectors like solar. our preference is to focus on quality names, so we like bloom energy which is linked to the green hydrogen value chain. we like next track companies,

companies linked to the solar value chain as well. paul: what is the way to get exposure to new energy? the you just look at the lithium miners, or ev battery makers instead? scott: that is a good question, paul. haitong's view about lithium prices next year is they will be done another 30%, that is definitely a benefit for ev battery makers. costs are down 50% or so this year. having said that, some of the lithium producer equities are actually treating a very large value discounts to historical averages. so value investors who are looking for a medium-term view, and let's face it, the market is already very bearish lithium, we would actually look at having exposure to some of these lithium equities. paul: so do you expect more consolidation in that lithium's race, and by extension --

lithium space and by extension, potentially the better spaces as well? scott: we are not clever enough to pick the bottom of the lithium cycle, but one thing we know is that there has to be some kind of some flavors once the pricing. and whether that is actually cutting back on supply or, as you mentioned, innovation. one of the companies that we cover, levant, is in the process of a merger. you could see further acquisitions in this area. with rare earths, we are positive with rare earths prices. we think prices next year are actually up 20% or so. you have seen on the rare earths equities being beaten down this year, so be selective on some of those. we are positive on mp materials and linus in australia as well. paul: a lot of the rare earths space is tied up in china at the moment, particularly the manufacturing side.

do you look at any other opportunities to diversify in geographical terms, in rare earths? scott: yes, we like a lot of the china rare earths names as well. it also depends on the government's views on the production quota next year, which will be broadly in line with demand again. and we also reasonably positive outlook on the demand side obviously, for evs in china and also on the wind turbines as well. , i want to talk about one of the more legacy energies. oil. it is having a rebound in the past few days some of the tension we have seen with militant action in the red sea. give us a sense of your outlook for oil in 2024. scott: haitong's brent forecast next year is $74. we are around 15% below your bloomberg consensus. look, it will be a sluggish year for demand.

global oil demand growth might be one million barrels a day, versus 2.5 million barrels this year. you are gradually eating a supply response to price, vertically from non-opec. it is possible that opec+ would extend their production restrictions from beyond march. but fundamentally, unless there is a big geopolitical event which impacts physical supplies, it is difficult really to make a case why oil is materially higher than what we have seen this year. paul:. paul: alright, scott darling, managing director at haitong international, thank you so much for joining us. you can watch us live and see our past interviews on our interactive tv function, tv there you can also dive into any of the securities and bloomberg functions that we talk about, and become part of the conversation by sending us instant messages during our shows. this is for bloomberg's subscribers only. you can check it out at tv . this is bloomberg. ♪

shery: welcome back. apple will stop selling the latest versions of it smart watch in the u.s. due to a patent dispute. the move comes ahead of the busy holiday season. bloomberg's chief apple correspondent mark gurman joins us now.

mark, we are hearing they will be putting out a rescue mission for this $17 billion business? mark: so the apple watch is often marketed as a device for its own rescue missions help customers in car crashes or being stranded on a hike or something of its sword. now apple is launching its own rescue mission. the company believes it has a softer mixed that can mitigate these patents that the itc is saying are in violation of assets held by a company out of southern california. we believe this software fix can work around the other patents and get apple watches selling again in the united states. obviously it would have to submit its new software design. it is a u.s. customs that makes the decision if the case is to be approved or not approved. if approved, they would be able to resume sales at retail stores . paul: is there a potential

political solution to this? could the white house possibly save apple here? mark: that's right, the white house could step in. the import ban goes into effect on december 20 fifth, actually christmas day here in the u.s., so if the biden administration steps in, they can veto this. there is some precedent, i should add, important for those who have been following full phone in the last decade, samsung had a similar situation here where apple was found to have violated those assets. president obama in the last minute issued a veto. now we are talking about two completely different situations. on the one hand, apple is an american company. on the other, south korea is home to samsung. it would have to make a decision at the behest of a foreign competitor. it would be stopping selling phones made by an

american company in america. here is what biden is up against. he is up against issues related to american companies. obviously apple is based in cupertino, california. and 354 miles south of apple headquarters, is the headquarters of this company in orange county, california. perhaps it wouldn't be a good look for the u.s. president to pick one company over another. whale headed easier picking an american company over a south korean company. paul: bloomberg's correspondent mark gurman on the apple dispute. apple stocks will be in focus when trade opens in korea and japan very soon. bloomberg intelligence says that apple watch battle as to problems the company is facing internet from greater wealth competition and bans by state agencies on the use of foreign-made phones. keep an eye on nippon steel after cher slip following its

$40 billion deal to purchase -- shares slipped following its $40 billion good to purchase u.s. steel, creating the world's second-biggest player. shery: shery: the biggest being in china. look at today to watch the developments. let's look at how markets are setting up in the moment, a mixed picture. asx 200 led higher by the energy sector, of course, oil touching a two-week high. kiwi stocks under pressure as we are seeing nikkei futures holding steady. it is boj day. no change expected. we could see fireworks in the japanese yen. the market opens in seoul and tokyo are next. this is bloomberg. ♪ ♪

- if i told you something extends your life span, improves your sleep, makes you more empathetic, and reduces stress and cognitive decline, you would think it was a miracle drug. but i'm talking about reading. reading every day does all those things and more, which is why i started my book club, read with jenna. so start a reading streak, even if it's just a few minutes every day, on the way to work, your lunch break, before you go to bed. every little bit helps. the more you know.

shery: ths daybreak asia. we are counting down to asia's major market opens as the japanese yen hold study. this on boj day. really exciting to have the bank of japan's policy decision today. there was a lot of excitement just a couple of weeks ago because of speculation that they would move on the negative interest rates. the expectation for today, no change though. paul: that's right. no change expected but maybe a change to the language. we might get a sense of the path going forward. and of course governor ueda has surprised us before with tweaks. all sorts of possibilities on the table and that is possibly why we are not seeing a lot of action in terms of the currency or equities. shery: we saw overnight volatility in the japanese yen jump because of that tendency to surprise always coming from the boj. so we had the overnight volatility in the dollar-yen at the highest since july. and remember, that was a time

when the boj tweaked its policy a little. take a look at the nikkei, not a lot of movement, even for the topix too. japanese yen also holding study. there was a little pressure in the new york session given we had riser he -- rising treasury yields and expecting that the boj will not do anything today. but next year the medium forecast by economists is that the yen will be at the 135 level by year end 2024. but today, the boj expected to keep its yield curve control and negative short-term rate unchanged. the jgb 10 year yield also holding steady at the moment. take a look at the kospi, because we saw it gain ground previously, not a lot of movement on this space either. the korean won though, weakness against the u.s. dollar. that 1303 level. we have seen the dollar marginally higher in the new york session. treasury yields rising, and really, the dollar trading mixed

again, given we have seen also more pushback from fed officials when it comes to that dovish pivot. paul: yeah, that we have. and that dollar weakness seeing the aussie being one of the main beneficiaries of that, push through that $.67 barrier at the moment. we have got regional positivity on the asx, energy stocks leading the way. perhaps a function of that higher oil price we are seeing, $72.42 for wti. this is mainly due to increased militant activity we have seen in the red sea in connection with the ongoing war in gaza. as we take a look at u.s. treasuries, you mentioned some of that pushback coming from the fed. we have heard from austan goolsbee and lorraine mester telling the market, hang on a minute, don't get carried away by that dot plot. it certainly does not mean that

easing is imminent. so the fed really pushing back on that speculation from the market that there are going to be if you rate cuts in 2024. we will just have to wait and see, but yields creeping up ever so slightly. our next guest says it is going to be a close call whether the boj will change its forward guidance after tuesday's meeting to lay the path towards policy normalization. so let's bring in cio at bnp paribas's wealth management asia. let's start with the bank of japan. you're not expecting anything to actually happen today apart from potentially some change around commentary, negative rates. what are you anticipating? what do you think we are going to hear? prashant: that is key, will they or won't they. i think it is all about the forward commentary. it is really about the path to getting out of negative interest rates and will that start to be signaled now. we think on balance it is a close call but more likely the

springtime. why? because they want to make sure that real wages are increasing, which are under a bit of pressure right now in japan pre- of course inflation is above target and we know where yields are going globally. so that stage is set. it is really about the timing and it is more likely march than january but it is a close call. paul: the expectation is that those easy policy conditions are going to get a little less easy. the consensus is we are going to have a stronger yen from here. so what does that mean for japanese stocks? i know you still like them, but as the yen strengthens, are you going to be tempted to take some profits or add to your positions? prashant: we would buy on weakness. i think if you get a very large yen move, of course the exporters will get hit versus domestic companies, or companies actually hurting from oil companies going up. so sector allocation is key. when you think top down about the japanese market, and when we

upgraded in a contrarian way in november of 2022, is that corporate governance is increasing, roe is increasing, stock buybacks are increasing. the cyclical uptick of the economy reopening, travel is above pre-pandemic levels, and valuations are still reasonable. while positioning is not nearly as underweight as it was last year. there is still upside from positioning as well going forward so we would be buyers of that dip if there is a big yen move. paul: of course the fed, there seems to be a disconnect between what the market thinks is coming in terms of easing in 2024 and what the fed is actually saying. where do you stand on the potential for rate cuts from the fed in 2024? prashant: yes, and the markets moved all over the place recently. we had about 125 basis points of rate cuts. we had that for some time. in the second half of the year

beginning from june. now, the recent meeting was definitely dovish. it was goldilocks. fed chair powell did not pushback on loosening financial conditions. he also said he would lower interest rates before inflation got to 2%. so of course that caused a big snapback rally in yields. our forecast on a 12 month basis for yields to be lower around 3.75% for the 10 year. but since we upgraded u.s. government bonds in september when yields were 5% and the market was worried about 6%, we moved back to the 3% level, 4% this morning. so we would expect some consolidation of the yields lower in the medium-term. but they are trying to walk back the amount of easing, probably that is in the market right now. but the trend is your friend in terms of looking forward. paul: so where are you looking at putting money to work at the moment? what are your favorite picks? prashant: we're still overweight

equities, and we are also overweight government bonds, corporate bonds, high quality bonds. so, that is still the case. clearly we are in the sweet spot now at the year end, the goldilocks environment. of course there will be volatility again. 60, 40 years back as an asset class this year after the worst leader -- year last year in 70 years. if we think about the broader market conditions, easing liquidity, rate cut second half of next year, there are pockets of value. of course within the u.s. market, the magnificent seven stocks are more expensive now. but if you x out those stocks, the market is around five times cheaper, 18 times current earnings. we like health care, materials, energy. so we need to be more selective. paul: in terms of pockets of value, there is a big pocket of value in china at the moment, valuations looking very appealing there. do you expect to increase or

decrease your china exposure over the next 12 months, or do you have any at all right now? prashant: the key with china will be the property market. it's 70% of household network, and indirect and direct 20% to 30% gdp. we need to see a bottom in that. we saw beijing cutting some downpayments recently. the key is the pace and timing and property lags the broader economy. we expect more reserve rate cuts next year and more policy easing, but not bazooka style stimulus. right now, china equity market is priced for a slowdown, growth below 4%. so expectations are very low. we would be gradual buyers as the property market bottoms into next year. paul: all right. prashant bhayani, bnp paribas wealth management asia cio, thank you so much for joining us today. shery: take a look at this big move in the japanese market. nippon steel having its worst

day since may. they of course are going to buy united states steel for $14.1 billion. they are paying $55 a share in cash, that would be 140%-plus premium to the u.s. steel share price. we have seen nippon steel trying to grow overseas and this will really provide that large foothold in the american steel industry. today when it comes to the trading session, it is downside pressure more than 5% for the company. we will be discussing more on this deal and why not everyone is happy about the move. plus, we will be discussing when the -- why they expect the boj will put off scrapping negative rates until the end of next year at least. this is bloomberg. ♪

(sfx: stone wheel crafting) ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf

that inspired the world to invest differently. it still does. what can you do with spy? ♪

shery: the pound steel under pressure in the japanese session after they announced they will buy united states steel for $14.1 billion, paying $55 a share in cash with a premium of about 142% to u.s. steel's less closing price. su keenan joins us now. this creates the world's second-biggest steel company and the biggest outside of china. su: biggest and a blowout price, nearly double of what the nearest rival. this was being watched closely in the metals industry here in the u.s.. it ends a lot of uncertainty for an iconic american steelmaker. the deal now combines the japanese steelmaker with a u.s.

steelmaker which will have a key role in supplying u.s. manufacturers and automakers. we see nippon shares down as it opens in asia. u.s. steel shares soared 26% on the announcements as did cleveland cliffs, which had its bid rejected in mid august. what we know is they are offering $50 a share, significantly higher, almost double the $7.25 billion offer from cliffs which was rejected in mid august. it is a whopping 142% premium on the last trading day before it announced a strategic review. what has neap on gained? a large american foothold in the american steel industry at a time when the industry in america is poised to benefit from rising spending. at least three u.s. senators and

the steelworkers unit are opposed to the sale, with senator fetterman vowing to use his influence to block the sale. the influential u.s. steelworkers union also concerned and asking for scrutiny of this deal. they are very concerned how it may affect u.s. workers. paul: meanwhile, the deal will be the last major deal of the year? su: yes, this is likely the last one just because of the holidays coming up anyway wall street typically shuts down. the fact we had the nippon/u.s. steel deal make for a $40 billion deal day. if you compare that to the last merger monday a year ago, is quadruple the amount. it was a $10 billion merger monday right before christmas in 2022. now, most of the deal action was

the big steel deal. however, certainly there are enough deals in the mix that show private equity is still pursuing deals. there was capital and inside partners both confirming a report they are taking out a $4.4 billion deal. coke industries, acquisition of it iowa fertilizer business was also made official. ibm confirmed they are buying a data integration platform from a german software company. also right before christmas we often talk about the grinch. adobe is announcing they are calling off their $20 billion purchase of design software firm fake meth. -- figma. the opposition insurmountable in their view in terms of the concessions that would have been needed to take the deal forward. paul: all right. su keenan there.

the u.s. and its allies have agreed to create enabled -- create a naval task force in the red sea. shipping activity in the area is slowing due to violence from the israel-hamas war. lloyd austin speaking before the announcement. >> these attacks are reckless. dangerous. and they violate international law. and so we are taking action to build an international coalition to address this threat. i would remind you that this is not just a u.s. issue. this is an international problem entities are -- deserves an international response. paul: let's get more on this with bloomberg's stephen stapczynski. how much of an effect is this militant activity going to be having on the oil and gas trade? stephen: it is having an effect. the size of it right now is still pretty small. there have been several ships, both that carry oil and natural

gas, that have diverted away from the red sea, which of course is a vital chokepoint for the suez canal, which transports about 12% of global trade a year. looking at prices, the market of course is concerned. oil prices rose a bit and trading around the highest level in two weeks. i want to temper that by saying this is not a blowout. prices are not surging like they saw last year after russia's invasion of ukraine upended global commodity systems. the market is still digesting this. while there is a risk premium appearing, they are still well below the higher levels of last year and there is no indication there is a panic. ships are still using the channel now. bp is a big shipper and said they will avoid the canal. right now it is unclear if there are other big energy companies

that will make a similar move. the market expects them to some degree. i want to note that the largest exporter of lng from the middle east, they are continuing to use the red sea and traverse that area. again, it is a bit of a mixed picture at the moment. shery: didn't goldman just cut their brent price forecast for 2024 by $10 or so, given we are just seeing u.s. shale production rise? what is the supply picture looking like right now? stephen: that is a really good point. that is the picture. the oil market is a story of course of supply and demand and there is a lot of supply. especially coming out of the u.s. u.s. shale production continues to surprise people. even though opec-plus, which includes saudi arabia and russia , some of the biggest oil producers in the world, they are cutting back production through the end of the year and looking at continuing their cuts into

next year. it really is not doing much because there is so much supply and the demand is not materializing to the degree the market had been expecting just a few months back. so when you see price rise increases like what we are seeing for brent and european natural gas, it does not really reflect the fundamentals which is supply and demand. it more reflects this risk premium. which can easily deflate if the situation in the red sea were to be resolved. paul: how is this going to fit into larger trends? until this point, the market had been taking the conflict in strawser -- in gaza very much in stride. is that going to change? stephen: yeah. this is the biggest sign that the israel hamas war is going to disrupt, or is disrupting energy trade flows. so this is a bit of a turning point.

but it is still early days. we are not sure exactly how much supply is going to be disrupted. we are not sure if there will be delays, cancellations of shipments. will the lng and oil get to the places on time? it is still quite early, but yes, people are taking note of this like before. but just to emphasize, that risk premium is coming into prices and will be reflected, but this is a situation that is changing every day. it is very unpredictable. so if it does turn out that more of the red sea is shut, if there are more shipments diverted away, if more companies come out, then you could see prices continues to rise. that is something traders will be watching very closely. shery: stephen stapczynski there with the latest on how those attacks by houthi rebels on the red sea are actually spooking energy markets. one reason why we saw in the european session shipping stocks outperform a because of the disruptions to red sea routes

pushing up freight rates. we also had energy companies outperforming because oil prices also gained ground. broadly speaking european stocks fell because we have fed officials also pushing back on aggressive rate cut expectations. you are taking a look at european futures pointing to the upside. paul: all right. got some spectacular pictures for you now out of iceland. yes. remember that town that got evacuated in early november? 3700 inhabitants moved out because of intense seismic activity. that was a smart move. this started happening a few hours ago. obviously a very intense eruption. the university of iceland saying those lava fountains that you are seeing are 100 meters high, up to 330 feet high. that is happening on the outskirts of the town in iceland. there is good news. believe it or not. this eruption is not affecting

arrivals or departures at iceland's main international airport. not a lot of ash coming out of that, although it is definitely spectacular to watch. plenty more to come on daybreak asia. this is bloomberg. ♪

hey, brent! if you had to choose, would you watch paint dry or compare benefits plans? compare benefits. gusto makes it easier to find the right plan for my team. i think i'm going to need new glasses. no problem. you're covered. choose benefits without the mess. paul: bloomberg opinion columnist and former new york fed president bill dudley so the market might be getting ahead of itself when it comes to expectations of fed rate cuts. he says the u.s. economy is looking strong. bill: we have had pretty sturdy growth and yet the inflation rate has come down to the prospects of a soft landing have gone up. that is all really good and positive. what i don't understand is why you want to add fuel to the fire and cause financial conditions to ease substantially, which is what was provoked last week. bond yields are down, stocks are

up, financial conditions. the index leads by a full percentage point at a time the economy is growing. i am worried the fed is not going to finish the job. behaving more like paul volcker. >> do you think he is seduced by the prospect of a soft landing? bill: i think that is certainly what he is trying to achieve and if i was in his position i would do the same. his policy tight because real rates are high and policy is going down, for his policy not so tight -- when you look at the atlanta fed gdp through the fourth quarter, it is tracking 2.6% after a 5.2% growth rate in the third quarter. it is not clear the economy needs more accommodation to support itself. >> do you think jerry -- jay powell understood what he was going to do to markets?

bill: i hope he understood that he was coming across with a very optimistic framework for foreign markets to digest. i think that is true that this is a forecast. so if the forecast does not material, then the problems will not materialize either. market might be getting ahead of itself. this is how paolo thinks -- powell thinks the fed will be cutting rates in 2024, but it is possible inflation could be more stubborn and the rate cuts might not materialize. >> i ask because fed chair powell had an opportunity to push back against the financial conditions and easing we have seen. he had a chance to say, this is problematic and moves counter to our goal of bringing inflation down. he did not. and you are saying financial conditions still matter. why do they still matter? is it becoming inflationary, or not necessarily restrictive in a way that is problematic for the fed to see financial conditions

easing as much as you pointed out they have? bill: the big problem is financial conditions easing provides economic growth impetus. then it is harder to achieve 2%. does the economy need more fuel, does it need to grow faster? i would say probably no. the labor market is already very tight. inflation is above a level consistent with 2%. i'm not sure why you would want to put more fuel on the fire. shery: bloomberg opinion, must bill dudley speaking -- bloomberg opinion columnist bill dudley there. seeing a little bit of a pickup after the rally paused in the new york session. we are seeing the 10 year yield added towards that 390 level while the two-year yield is around that 4.5% level. of course we have seen the fed push back on expectations of early rate cuts, which is why we saw that treasury rally take a breather and a two-year yield

rise towards that 4.5%. but we're not necessarily seeing that in the asian session. the moves still pretty muted. paul: let's take a look at the currency space as well. dollar weakness continuing to be a theme. the dollar spot index tight sideways at the moment. not a huge amount of action in the yen. we have seen a lot of yen volatility overnight ahead of the boj decision. no change expected but we are closely watching for commentary around the future of yield curve control and negative rates. kiwi and aussie dollars, most beneficiaries against the u.s. dollar weakness right now. the aussie gaining ground, $.67 against the greenback. more to come. this is bloomberg. ♪

paul: getting some breaking news out of australian.

just minutes from the reserve bank's december meeting. reaffirming what we kind of knew anyway. rba did consider a rate hike but then decided the case for a pa use was stronger, but underscoring that tightening bias the rba has. of course australia has not tightened as much as major central banks such as the fed or new zealand. however, inflation does remain sticky. the rba noting cpi seen heading the top end of that 2% to 3% target banned by the end up 2025, not the midpoint. the possibility of larger rises in unemployment than forecast as well feeding into the rba is thinking also. the rba did stay on hold 4.35% at the last meeting of the year although it did consider tightening. decided to go ahead with a pause. that is the last time we are going to hear from the rba until early february and of course they will just be eight meetings a year going ahead instead of

the usual 11. let's take a look at how we are doing on the currency front. not a lot of change to the aussie dollar on the back of the minutes. it did strengthen a little against the greenback. the yen of course, very much in focus as we await the bank of japan decision. shery: yeah. we have seen so many surprises coming from the boj, whether it is the -- traders are hedging the yen. could see a high risk the bank of japan will take another significant step on tuesday toward policy normalization. our next guest who is a former boj board member thanks negative rates could possibly remain in place until 2025. current executive economist at the nomura research institute. it is really great to have you with us. why do you think the boj would not necessarily be in a hurry to move? takahide: the possible rate cut.

the boj never increases the interest rate before the federal reserve cuts the in chris -- [indiscernible] it could damage the economy and the financial market. i expect the boj will wait until the federal reserve may complete the rate cut next year. as a result, i think the timing of the boj's move could be postponed until the end of next year even the year after next. shery: what are you expecting to see from the wage negotiations? takahide: that is important for the boj. financial markets, i expect a higher rate growth rate could be

the catalyst of the 2% goal and increase interest rates. but i myself expect the wage growth rate could be disappointing. because the constant steady decline of inflation rate could be a headwind. another thing, declining to below 3%. i think the inflation rate could be around 2% at the beginning of next year. at the end of this year it was 4.2%. this kind of decline of inflation wage could reduce the incentive for companies to increase the wages. as a result i think the basic salary growth rate could be 2.5%. that could be slightly higher than the 2.2% this year. however, it is not enough for

the increase interest rate spring of next year. paul: yes, we will get cpi for the month of november of course at the end of this week. and as you note, inflation in japan is slowing again. but do you think it is going to stabilize around that 2% level in 2024 or not? takahide: i think it is unlikely. [indiscernible] i think the level in japan could be 1%. it is very unlikely the inflation rate will stay at 2%. in the 1990's we had a 2% trend but the potential of the economy is very strong. the growth rate was 4%.

but it is unlikely the growth rate stays at a high level like 2%. paul: do you think we are going to see any changes to the yield curve control today? because that is something governor ueda has surprised us with in the past. takahide: i think mr. ueda has the most complete normalization of the ycc in the previous two actions. so mr. ueda will recognize the side effect. now that the ycc is a very flexible framework, i don't think they need to take on further action. because mr. ueda has mostly

completed making the ycc flexible, he is not necessarily in a hurry to take the next action. shery: then what was all of the speculation and rumblings we heard from the deputy governor? and even governor ueda himself talking about how do your could become more challenging for his tenure. traders took it as perhaps signaling the boj could do perhaps something. is it a communication misstep? what is going on? takahide: i think it is a kind of communication mistake. i think the challenge he mentioned, i think that he said it is kind of, how to say, intentional to make best effort for his assignment as governors.

i think the financial market misunderstood his statement. even today i think he is not likely to change. [indiscernible] it is not likely the boj will move before checking the wage growth rate for next year. shery: so next year if we are expecting some signaling from governor ueda, what will you be watching out for that could feasibly signal that something is coming? if this time the traders mistook the governor and the deputy governor's intentions, what would be the right signal that we should be looking out for?

takahide: i think the statement by the governor is not necessarily a clear signal for policy change. but mr. ueda has argued he will send a clear message to the financial market before the change of monetary policy. as for the other change, i think he is likely to send a signal to the market. but he has to check that the wage growth rate next year and he is concerned about possible downside risk of the u.s. economy and chinese economy and a possible rate cut. once the financial market has increased, the fed may cut interest rates in the near future, the boj cannot change because it could accelerate. now the boj is concerning of

sharp appreciations caused by the boj. now i think the boj has to wait before the federal reserve may complete the interest rate. however, i think he has some intentions to change that monetary policy. even if the 2% goal is not achievable, because he has a lot of side effects. so i believe the boj -- however he is likely to change monetary policy maybe the end of next year. paul: we are hearing that japan's economic policy minister is going to be appearing, or attending today's boj meeting. this is quite unusual, the first time it has happened since 2020. what do you make of this? takahide: it is difficult to

interpret this decision. but one possibility is the government is stopping premature tightening. the second possibility is the government recognizes the timing of the boj move is approaching. in that case i think the government wants to appeal that this possible change of monetary policy is a kind of coordinated action with the government and it adds no friction between the government and bank of japan. two ways of interpretation. but i think the government is recognizing it is approaching. so that could be in the background. shery: you have talked about how the japanese yen is becoming stronger because of all of this speculation.

because it has already been priced in by the markets we have seen a lot of volatility. when the boj actually moves we might see even more strength. what does that mean for the japanese economy? takahide: i think that the yen could appreciate in the coming years and reach 130 to 135 at the end of next year. but it will be a very gradual appreciation of the yen. and it will not damage the economy and the financial system. if not the yen appreciating very sharply, that could cause an impact to the equity market and also the economy. and bank of japan could put off the decision because the boj respected the stability of the currency market.

the boj recognizes that sharp appreciation could undermine the stability of the economy and financial systems. as a result, i think the boj is very cautious. it may cause a rather slow pace of yen appreciation over next year. but anyway, i think the yen is entering long-term appreciation trend. paul: all right. takahide, thank you so much for joining us with your insights. takahide kiuchi, executive economist, thank you for your time. you can also turn to your bloomberg for more on today's boj decision. go to tliv , get your commentary and analysis from bloomberg's expert editors. ♪

(adventurous music) ♪ ♪ ♪ be ready for any market with a liquid etf. get in and out with dia.

shery: take a look at how cryptocurrencies are trading at the moment with bitcoin extending gains by .3%, headed toward that $43,000 level. we have seen a revival of this currency. it has added more than 150% so far this year. there have been lots of speculation about where the coin could go, from anywhere from

half $1 million to $50,000. there is a lot of volatility in the crypto space. but suffice it to say that people have been really optimistic about that exchange rated fund that directly holds going that could soon be approved here in the u.s. paul: yeah, the clock is ticking down towards the potential launch of bitcoin etf's. grayscale ceo says multiple issuers should be allowed to launch their products at once. he also laid out the planned changes for their bitcoin trust, gbtc. >> we will lower fees upon conversion. i feel like, as optimistic as i have ever been about getting closer and closer to the gbtc listing based on the conversations we have been having around the mechanics that underpin etf's. but we have to wait for the regulatory approvals before announcing. >> i take it to mean it will apply at launch, that lower fee?

michael: the first day we see it uplifted to the new york stock exchange should carry that lower fee. >> why wait? why not just lower fees right now? michael: right now our main focus is on the conversion itself. so, one of the things i think is so important in this conversation around spot bitcoin etf's coming to market is the conversation has graduated from really only focusing on that underlying spot market, which is really where we were spending our time with the staff, to now focusing on the underlying guts in mechanics of getting the sec comfortable with how these products would actually function in markets. this is priority one for my team and hundreds of thousands of investors. >> jp morgan in a recent research report wrote that speculation that it will convert into an etf has converted a lot of inflow and as a result $2.7 billion could exit after the

fact as investors take profit. that is the jp morgan view. what is your response. michael: the arrival of gbtc as an uplifted spot listed bitcoin etf is actually the beginning of opportunity for the advised wealth market of the united states. that is about $30 trillion of wealth that by and large has not had products that they can go into to obtain spot bitcoin exposure. as you said, gbtc has been a very mpox -- very popular investment vehicle to get regulated bitcoin exposure and many of them are doing so today. we have seen the discount on gbtc narrow considerably this year as investor optimism has continued to take place. but i think for us, we certainly see that there is a lot of pent-up demand about advised community and we think gbtc as well as other products will experience a lot of that inflow upon conversion. >> are you preparing for the

possibility that the jp morgan hypothetical scenario plays out, you do see substantial inflows after conversion? michael: there are multiple bitcoin future etf's on the market and we are prepared for a world in which there are multiple spot bitcoins on the market. i think investors should have choice when it comes to that and the differentiators that i already know will be in play for gbtc are its 10 year track record, its billions and billions of dollars of size, and its liquidity. there are hundreds of millions of dollars trading in gbtc already every single day. paul: the grayscale ceo there. some corporate stories we are watching. just days away from the u.s. ban of its smart watches, apple is planning a rescue mission for the $17 billion business that includes software fixes. engineers are racing to make changes to the device that measures the user's blood oxygen level. the sales ban follows and international trade commission

ruling in october that apple's algorithms violate patents held by maximo corporation. bloomberg has learned billionaire carl icahn plans to launch a new proxy fight to take control of alumina's board, coming in the wake of the company terminating its acquisition of grell. ichan believes the board should be held responsible for pursuing an responsible transaction. adobe is walking away after clashing with regulators. adobe will pay a $1 billion termination fee. the acquisition would have been one of the largest takeovers of a profit -- private software maker, but it is another example of a tech giants nothing out a buddy can put it there. abu dhabi national oil company is prepared to increase its takeover offer for materials manufacturer covestro. adnoc will submit a fresh proposal of about $65 a share, valuing at about $12.3 billion.

it's also planning job guarantees and about $8 billion worth of investment. shery: of course another m&a story we are watching right now, nippon steel, which continues to tumble and see its worst day and seven months. this coming after they announced they would buy u.s. steel for $14.1 billion. they will pay $55 a share in cash, with a 142% premium to the u.s. steel share price. this is really to provide nippon steel a large foothold in the american steel industry. we know the company has been trying to grow overseas. you can get more of all of these stories that you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb , also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on the industries and assets that you care about. this is bloomberg.

♪

shery: some global headlines that we are tracking, chinese state media says over 110 people are dead after a 6.2 magnitude quake struck northwestern china late monday. the majority of the dead came from gansu province.

hundreds more were injured. chinese president xi jinping has urged officials to go all out to conduct search-and-rescue operations. it's one of the poorest regions in china. a storm tearing up the u.s. east coast has knocked out power to more than half a million customers and grounded hundreds of flights. the heaviest rain was expected across eastern new york and western massachusetts, with as much as five inches expected. two low pressure systems are specter to combine, bringing wind gusts of 50 miles per hour or more to coastal areas. over half a million homes in argentina also have no power after a storm hit the central eastern region of the country over the weekend. a natural gas processor says it's struggling with the outages. several grain silos in the area have also been heavily damaged. paul: let's take a look at how

we are doing on markets at the moment. seeing a little bit of a rebound in the oil price at the bottom of your screen. $72.52 for west texas right now. energy stocks performing the best on the asx, up almost 1%. the broader index better by .5%. seeing some modest gains in japan. the nikkei up by .1%. the kospi just a few points in negative territory. the market really going sideways in japan at the moment as we await of course the boj, shery. i want to bring up possibly the flattest chart we have ever seen in history. shery: i know which one you are thinking of. paul: that is the one, it is basically a straight line, indistinguishable from the x axis. are we ever going to have hike trades in japan?

we are all holding on for us perhaps commentary on when that might change. because of force japan, the home of the last negative rate regime in the world. shery: you never know with the boj. we have seen governor ueda surprise us, we have seen governor kuroda surprise us. so currency traders heading. we saw overnight yen volatility surging to the highest level since july, which was the last time we saw the boj tweak its policy. not expecting much when it comes to yield curve control mechanism. perhaps a bit of an insurance policy given we could see a surge in global yields. of course we are expecting to be jose -- the boj policy decision. bloomberg markets china open is next. this is bloomberg. ♪

hey, doc, if you had to choose, would you give yourself a root canal or run payroll? oh, run payroll. paying my team with gusto takes just a few clicks. they automatically file my taxes for me too. can i run payroll too? choose payroll without the pain. i don't want you to move. i'm gonna miss you so much. you realize we'll have internet waiting for us at the new place, right? oh, we know. we just like making a scene. transferring your services has never been easier. get connected on the day of your move with the xfinity app. can i sleep over at your new place? can katie sleep over tonight? sure, honey! this generation is so dramatic! move with the xfinity 10g network.