>> welcome to break asia. >> australia online. a weaker open after volatile session on wall street. tempered that's on a rate cut in march. joint military strikes in yemen to deter attacks on red sea shipping. >>, mliv from taipei, a day before an election that gives investors the first major geopolitical test of the year. >> peru's central bank has cut its rate to 6.5%. it was 6.25% before. this is in line with what most

where expecting. -- it was 6.75% before. policymakers will maintain that cautious tone and reiterate the move for cuts at every meeting. future decisions will depend on new information. heidi, i wonder if there is reaction in markets but we will see that in the next latin american session if that happens. >> yeah, we continue to watch the divergence between emerging markets, fed expectations, and that will play out in the potentially interesting way this year given that these markets might be in a different space than developed markets but we are watching the market open here. australia coming online.

just a little softness at the margins. a pretty flat start to trading. we are looking to set up a big session in asia. implications for fed expectations and taking march off the table if they expected that. failing to knock market expectations throughout this year. markets in asia set up for a muted friday open. contracts benchmark futures and hong kong looking softer. we are seeing upside when it comes to currencies in asia with the currency at that level as we saw the fullback muted as it was when it comes to the u.s. dollar. starting trading in japan come the nikkei 225 is poised for the best week and months despite some parts of the japanese

market are looking overbought. >> exactly. we will see what happens did today. u.s. futures look lower. they are pointed lower after a choppy session in the session after we got the cpi print that showed a little firmness and cpi and jobless claims were low but the cpi print was higher than expected and some elements would not have please the federal reserve and of those were getting news that a person familiar with the matter says rishi sunak has had his cabinet approved strikes, having an impact on the market. you see the haven trade in the united states continuing in the futures for bonds as well with the 10 year yield finishing at that level. crude oil in the united states is up a dollar from where it closed. that is likely on rising tensions in the middle east with

brent crude rising as well. let's get to that story and bring in our correspondent from washington, d.c. a person familiar with the matter saying that a decision has been made. can you tell us more? >> we know that prime minister sunak has authorized strikes that could come at any time. we have been told by qs and u.k. officials that essentially there would be consequences for a repeated string of attacks against commercial vessels in the red sea. yesterday you had the biggest barrage to date where they fired 21 drones and missiles at ships swatted down by u.s. and u.k. warships, forcing the hand of the u.s. and u.k., but obviously they want to restore deterrence to get commercial shipping flowing through the red sea rather than having to go around the southern tip of africa. haidi: there was speculation we

could hear from president biden but we are hearing no more public appearances from the president expected today. this is a joint operation. what are we expecting in terms of potential retaliation because the leader of the group has already spoken out. this would be a live debate in the u.s.. [please stand by] so you are getting in the stance

where they say they want to bring down those attacks by launching more attacks against an opponent who so far said it is threatening only more, so that is basically the definition of spiraling and that is on the minds of those at the white house tonight. vonnie: it is playing into their hands because they said they are ready for this. what kind of action could they take assuming action is taken that would not make enemies out of everybody? >> what you would see is something probably very careful, obviously carefully targeted, and limited in a lot of ways in targeting those assets that are aimed at ships, so taking away their ability to launch those attacks on ships i don't think

you would see a broader and deeper set of strikes to take them out, which would be virtually impossible given how entrenched they are in yemen and that they have resisted for saudi arabian attack for years, but it would be degrading their capability to go after these ships and restore some sort of confidence that it is safe to go through the red sea. haidi: certainly so early in the first few days of 2024, the global geopolitics docket looks full. taiwanese voters head to the ballot box for an election that carries serious implications for trade and investment. joining is now, our correspondent there to cover the election and there are plenty of reasons for global interest in this. >> yeah, there might be a difference between what global investors are looking at and

what the local community will be voting for, but as you say, this is one of the most hotly contested elections in decades. we are just a little over 24 hours away from when polls will open tomorrow to kick off this election, and certainly a lot is at stake as we have been talking about all we can out. and really the high level of interest in what we are seeing was what it comes to cross strait relations, china relations, taiwan's positioning key supply chains like advanced semiconductors, that is a reason why there are lots of implications and not just what it means for cross strait relations but the global economy, so this is a chance for taiwanese voters to decide what taiwan's future will be. will it be one that will lead to heralding more ties to china, which is what two parties are

vowing? or democracy, which the u.s. is backing, which would give the dpp a third straight term, something we have not seen before. vonnie: any signs of beijing trying to meddle in the election or do anything that might impact the results saturday? >> yeah, there has been several things we have reported. you talked about the chinese balloons. there have been signs of china trying to interfere with economic coercion. they have suspended pair of concessions on titan weenies products. -- taiwanese products. we have seen video surfacing online, fake videos of the president. of course we cannot verify where those videos came from, but it certainly does show you the anxiety that we see leading up to the selection.

then of course just a few days ago, that sort of missile air raid alarm that certainly sent some panic across the ground here was felt alert came on people's phones. it turned out to be a satellite launch from china but it was a bad case of translation as well because the english translation was a missile launch was of that led more of why we are seeing this fever pitch leading up to this election now, and how far beijing will go in response to this election in meddling is still a key topic here but certainly there is a lot a lot at stake here so far. haidi: that is such a great chart we showed. the stress index. i want to look at expected heightened volatility. you have seen this when it comes to taiwan dollar versus the u.s. dollar and over the next week it is expected to be iraqi ride.

at the moment, we're seeing traders trading the currency option, the most bullish and 16 years, so how are we expecting the market impact to be expressed? >> yeah, i think it is interesting. we have been talking to our guest about this and people say this election might just be noise at the moment, right? this is just the first major geopolitical test for global investors this year. we still have a lot of elections to come with the u.s. election in november. that might be the more important matter in all this but when you look up local markets, you're seeing volatility in the currency, but that analyst our colleagues have been talking to, this might look more like a slow burn in some sort of drastic volatility that could ensue. obviously if it is a shock sort of win from the opposition parties, either one, that might

surprise the market. it might help sentiment for closer ties with beijing, but we have the taiwan stock benchmark very heavy trading your all-time highs right now. this is one of the leading markets last year and that was not because of geopolitics but there is trade that has helped markets like taiwan and south korea. we spoke with a guest this week who said that ai craze could continue this year and could potentially overshadow some of the geopolitical concerns. haidi: the latest. still ahead, top u.s. banks kicking off her earnings season coming off the best quarter since 20 21. we get a preview of those numbers. vonnie: next, we are live at the global output investment conference in hong kong. haidi: this is bloomberg. ♪

>> i think march is too early in my estimation for a rate decline, because i think you need to see more evidence. i think the december cpi report shows there is more work to do. vonnie: loretta mester after commenting following the latest data showing u.s. inflation take up in december.

for more, we are joined now from washington, d.c. you said don't throw a bucket of cold water over the great but it adds a sprinkler affect. does that mean rate cuts later or what exactly? >> it shows you the u.s. inflation story has not totally gone away. airline fares are up. the cost of used cars are up. the cost of auto insurance rose by the most less years since 1976. then you get the big ticket items like energy costs and shelter costs all up. it is a reminder that for all the dis-inflation in the u.s. and the pressure coming of goods prices in particular, there are pockets where it is proving sticky, a complication for policymakers. one of the core readings the fed looks at came in where they

wanted to be suggesting inflation is headed back towards to percent but the numbers do give pause that may be the disinflation will not necessarily be a linear line but a bumpier path back towards the target. haidi: that is a recovery for you. we have more today. what are you watching most closely? >> the inflation story is different than here. both consumer and producer prices are expected to contract together, a standout. on the trade side of things, imports are expected to be weak speaking to weak domestic demand and underscoring that the chinese economy has not come back, even though were heading into the holiday were consumers are gearing up for spending. exports are supposed to be weak, speaking to weak global demand,

we can global trade and will not be helped by ongoing developments in the red sea, so the net take away from today's numbers will speak to the idea that we can inflation reflects weak demand in china as does the week exports for the chinese export story with chinese trade in a slump and no turnaround soon. haidi: enda curran in washington. the morgan stanley conferences taking place in hong kong. we have our next guest. >> thanks. kicking off with that theme, the chinese economy, we still perhaps have not seen the lowest point yet, one of the key things discussed today at the conference. let's bring in the head of apac wealth management. last year you were bullish on

china, hong kong, the reopening. how are you feeling this year? >> good morning. last year was constructive of opportunities brought to us. as far as our industry is concerned, it did pretty well in most of the private banks have done pretty well catering to the wealth and investment needs of the wealth climates in china and across asia. in terms of the investment opportunities, depending on whether you put it in chinese mainland stocks, but a lot of the wealth and investment needs are global. i think you will be pretty happy with your money in the u.s. >> you are catering to ultrahigh net worth individuals. where are they putting their money? not chinese equities? >> the u.s. is a significant destination of wealth right now. a few years ago, the robustness

of the sector in china, there was a lot of money in that sector, but right now the u.s. is a massive destination for everybody, so there are questions going forward and not exactly a lot of markets of that size where people can put money into it. >> when it comes to diversification, are you changing bad investment thesis, still seeing u.s. exceptionalism, or recommending people go into alternative areas or regions instead? >> >> we are constructive >> and bullish on japan. when it comes back to the size, most of the clients and asia, the u.s. remains the main theme. you think about the sector and the magnificent seven in the u.s.

it is the size factor. >> japan is one key reason investors prefer the geopolitical element pulling out that china and taiwan. how are your clients navigating those tensions in the region? >> the most important thing is everybody has their need depending on where your wealth is concentrated. if you are not in china but in taiwan, your need is different. as far as japan is concerned, yes they benefit from geopolitical tensions in this part of the world but ever since it took place, there is a lot of restructuring and transformation in japan already, so there is a lot more than geopolitics. as far as clients in this part of the world are concerned, if my business is in china or indonesia, how do i try to diversify as a business or wealth. >> where are your clients basing themselves?

we have seen the money laundering scandal, for instance , family offices and singapore, hong kong, and a new ordinance law taking effect this month that would make it easier to enforce civil court proceedings in mainland china and hong kong, so a bit of concern there, how are clients reacting? are they looking for other markets to base themselves? >> i think that most of our clients, the ultrahigh net worth people still prefer to be in asia. most still want to be active in their business, so in theory many could move to countries outside asia but i think most prefer to have a significant base or domicile in singapore or hong kong, in different countries offered different schemes to get into, australia is one. so everyone is different. >> you also working with the

hong kong government to look at ways to boost it in the city here. we don't have a strong ipo pipeline. what measures are you looking to introduce? >> i will speak about that in half an hour or so, so i will leave it to them to talk about the details, but in terms of market turnover, two things. the competitiveness of the market itself. i'd think that is something we can change. it is up to the market where to list the start and whether you have sectors and stocks where clients are focused on. hong kong is not exactly a big tech market. in terms of the technical area, hong kong remains the most transparent, most open, most liquid stock market. most of the last passive funds in this part of the world are very crucial and i think some of the measures contained in the task force recommendations

addressed them and they should be as they are fully embraced and later on you will hear about that. >> in terms of headcount plans, how many are you planning to hire in the region this year? how much are you planning to grow assets under management? >> i think every firm is different. i think some here are sizable. it is never about large size in terms of down. we have about 140 in hong kong and singapore. if we increase it by 10% i would be very pleased, but we care a lot about cultural stability, so i'd rather not have a target but i would say i would be happy if i could catch that. >> quality over quantity. thank you for your time this morning. that was the head of morgan stanley apac wealth management. vonnie: thank you.

we will be back with more coming up from the alpha investment conference. the bank's head of equity advisors joins us in the next hour. this is bloomberg. ♪ thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh

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it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. we have been able to reach over 100 million people impacted and affected, and at risk of hiv. the rocket fund takes all of the work that we're doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> cpi hotter than expected. >> they are complaining about

inflation and say the cost of business is higher. >> it is sticky from wage inflation. >> wage increases. higher interest rates. >> the market is rebalancing. >> it is not a sprint. it is a marathon. >> we think the fed will not start cutting until june. >> they will have to be patient. >> puts back the timing of the interest rate because. >> not likely six cuts. >> it will be the course of inflation. >> we see less rate cut starting later because the fed needs more data around inflation easing. haidi: weighing in on the inflation data and implications for fed policy but ultimately does not seem to markedly change expectations of the trend of lower rates right, at least as we get past march. this is the picture as we get

trading underway for half an hour in the sydney session for friday with a bit of downside. we also c8 little bit sort of resilience when it comes to the currency. the dollar in particular briefly raising that droplet pretty muted trading with the aussie dollar and the kiwi holding most of that resilience. when it comes to kiwi stocks we are down .25% with nikkei futures looking flat. we are coming on in japan for the nikkei two to five is position for the best week in 22 months with a hefty gains this week with the trading day ahead. this and the topix and sydney according to the rsr that we are close to overbought conditions. and potentially if we see a repeat of what we saw in september they could see a bit of a correction for pullback japanese equities. u.s. futures at this point is looking a bit to the downside. vonnie: if you can believe that

we are back in earnings with u.s. bank set for an earnings shutdown after the best quarter since 2021. major banks kick off the reporting cycle on friday. they gauge of u.s. bank stocks gained 23% last quarter. looking ahead to u.s. bank earnings of a jp morgan is a bank of america, wells fargo, citigroup do to report friday in the u.s. let's discuss this with our guest. we got warnings from jefferies group and also citigroup on trading revenue. broad strokes is tomorrow going to be a positive or negative day for the banks? >> it is great to be here. there is a lot of cleanup, a lot of one-time charges we saw was citigroup pre-releasing that for the fourth quarter of 2023, but market investors are forward-looking and we think we

will see validation that the u.s. economy will have a soft landing. there will be loan growth but it will moderate, and importantly on the dark side for banks that will be less of a conversation as it relates to credit risks or the risks that there will be significant loan write-offs, so putting that in the backdrop, the opportunity in 2024 is to see some upturn, although perhaps not early in 2024 four investment banking, and also the durable businesses of asset management doing fine. it is up to analysts to sort through what is important. overall, the economy looks fun. there are expectations on earnings that are low, so there is room to do better, but the real conversation which will be more subtle is talking about capitol building.

generally you would build capital or shareholder equity for a rainy day or something wrong. unfortunately it will be tighter regulation coming later at the end of the year which we could discuss further. vonnie: absolutely. let's go there right now. >> they, well, many of the ceos were in front of congress in late december saying any solution which is the basel three endgame of having higher capital requirement by 15% to 20% will hurt the u.s. economy. when you think about it though, one of the worries of regulators, whether it is in europe or in the u.s., is the black swan or the unexpected

event, so a lot of the increases capital requirements, it relates to the worry for areas in trading that the more complex, longer duration instruments. credit suisse comes to mind, but there are so many in the past, and that will be the difficult area for banks because investors look to banks to invest because of dividend increases in share buybacks, so i think you will hear the diplomatic term capital build both by management and analysts. vonnie: yes, i think there will be some frank discussions on those calls about what it all mean to the banks. we know that the fed is worried about commercial real estate and things percolating under the surface at some banks. any ones we should be watching in particular in that regard? >> we watch it closely, along with quite honestly credit risk and all the areas, but

commercial real estate is specific to office real estate. it gets to be more magnified for some of the regionals or smaller banks. the global u.s. banks really do not have any material risks to commercial real estate. it is what i call something idiosyncratic and not systemic to any banking crisis. vonnie: i know you think jp morgan and morgan stanley have the best chance to deliver a better-than-expected performance in 2024. what about general valuations? are pes reflective of fundamentals for most banks right now? >> they can move up either because of improved earnings or expanded multiples for evaluation, and right now we think in 2024, 60 economy remains strong, the banks may have over reserved, so they may have releases of reserves in the

second half of the year which would boost earnings. not the best way to show quality growth, but that is true. additionally, banks are trading at a significant discount to the s&p 500. most accept citibank card trading slightly above par in terms of net tangible book value. we are staying with the quality names, which right now have underperformed in the last 13 weeks, jpmorgan chase and morgan stanley with buys. citigroup has captured the bullish view of analysts, mostly on the transformation but by jane fraser. but when you hear transformation, that is a multi-your process with a number of bumps along the way to really figure out what is the earnings power of a bank like citibank. they are in the right direction but we went through this journey with wells fargo over the last three to five years.

vonnie: yes, we did. and we did it together. we will do this together. thank you for joining us. and you can also turn to your bloomberg for more on all the bank earnings to get commentary and analysis from bloomberg expert editors. this is bloomberg. ♪

vonnie: you are watching daybreak asia. u.s. transport regulators have open investigation into boeing following last week's midair door blowout. it says boeing needs to comply with standards they are legally accountable to. it prompted airlines to cancel hundreds of flights. airbus set a sales record in 2023 with more than 2000 net orders in one of the most active purchasing periods in aviation history. the sales were driven largely with mega deals with multiple outlines. airbus beat its annual delivery target by achieving 7500 and

overs. tesla will suspend car production at a factory in berlin to february 11 due to a lack of components because of the armed conflict in the red sea. we are getting a helpline on that now. the u.s. and u.k. have launched airstrikes on targets in yemen. once again, the u.s. and u.k. have launched airstrikes on targets in yemen. bloomberg has been told the u.s. national security review of the takeover of u.s. steel is likely to last into possibly 2025. su keenan has been looking into this. that is longer than publicly stated. >> it defies their forecast. we heard from both companies at the time of the deal and then went u.s. steel at its earnings conference that they expected the deal to close by the end of summer at the latest, but sources close to bloomberg said

a national security review is unlikely to conclude until late this year, as the earliest, and that not the stock down almost 4% before pairing those losses. sources tell bloomberg that the deal now under the scrutiny of the secretive committee on foreign investment in the u.s. and the review is in its early stages. this is a special enter agency panel led by the treasury department that has the power to amend a deal on national security grounds or send it back to president biden for a decision. while the precise timing of the review remains unclear, people for mayor with the process expected to take one year or longer and that the process can move ahead and sometimes pauses during legal wrangling, given the scale of this in the scale of the company to a major japanese corporation.

haidi: tell us about the impact the deal could have on the presidential election. su: there was opposition initially from lawmakers on the steelworkers union. we know that u.s. steel is located in pennsylvania, a battleground state for the 2024 election in the state president biden was born in comes a we know that nippon's plans touched off a call saying the deal deserves serious scrutiny. haidi: su keenan there with the very latest. and speaking of developments we are watching, particularly the geopolitics, we have heard now really confirmation that the qs and u.k. have -- u.s. and u.k. have launched airstrikes on houthi targets in yemen into

cities. we are hearing reuters reporting of those strikes taking place. this as of course we heard from that authorization of joint military operations the airstrikes against the houthis from the u.k.'s rishi sunak. we have not heard from president biden. we are not expecting him to speak today but now confirmed that u.s. and u.k. launching airstrikes on houthi rebel targets in yemen, potentially risking further escalation of the conflict with an iranian proxy in response to what has been really an elevated string of attacks that have disrupted commercial shipping in the red sea that has been ongoing. u.s. official who has asked not to be identified before a formal announcement has confirmed the strikes have taken place and to hit a source of the militant groups attacks coming after the biden administration warned there would be consequences for a barrage of drones and antiship missiles that has target ships

and that vital trade waterway. we have spoken about the escalatory spiral rewrite because we know the leaders of the houthi group said there would be retaliation if the u.s. was to take action. vonnie: yes, exactly. adding to the turmoil, bet tanker of the coast of oman thursday was attacked and it sent prices higher adding to turmoil in oil markets. houthi thehouthis launch their largest assault yet in the key waterway, having had that morning and several warnings, in fact. secretary of state antony blinken in the region even repeated that there would be something to deter the houthis from continuing these attacks if they did not stop. and they were taking that rhetoric and saying, bring it on. they had reiterated they would not attack anybody involved was shipping that did not stop off at israel.

they said they would only target ships that were going to have truck with the likes of israel, because of course their goal is to identify with the gazans in the gazan cause, so there is a path out of this but not the current one that is ongoing, and certainly qatar saying no strikes, no strikes will lead to anything good in this will lead to a vicious cycle. haidi: we are watching that reaction when it comes to energy markets in particular. we see oil climbing on rising tensions in the middle east, the confirmation now that the qs and u.k. launching joint airstrikes in yemen. we have much more to come and will get you the details of this breaking story as they get to us. this is bloomberg. ♪

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vonnie: the u.s. and u.k. have launched airstrikes on houthi rebel targets in yemen according to a u.s. official who asked not to be identified before a announcement confirms the strikes, however the official told bloomberg they launched airstrikes on houthi rebel targets in yemen, escalating a conflict with an iranian proxy in response or string of attacks that have disrupted commercial

shipping in the red sea and you can see the reaction in crude oil markets up another 1.75% at $73.27 for a barrel of wti after iran seized a taker of the gulf of oman and sent prices higher earlier. haidi: we will continue to watch for the market implications. there are a lot of geopolitical risks. we are monitoring this widening conflict situation in the middle east. we have the taiwan election this weekend. we have been watching these levels for japanese shares continuing to surge on bets they will benefit from the goldilocks situation of the global economy, neither too hot nor too cold, and attracting funds fleeing china stocks slump. a reporter has the details. going into the new year, we listed some of the challenges right for the next leg higher for this japan equity rally. so far we have seen 5% for the

nikkei 225 looking like the best week in 22 months and technical indicators looking like we are pretty much in overbought territory. >> exactly. so, at the beginning of this year, investors expectations were basically after such a big rally last year that the upside might be limited for the time being, especially given that the central bank is likely to tighten its policies in the future. the chances of boj tighten have receded sharply. in the time since the deadly earthquake that happened on new year's day -- one reason is the expectation of the goldilocks economy globally is helping japanese

stocks because japanese stocks are considered to be one of the cyclical shares in the global market. [indiscernible] haidi: that is our senior asia stock reporter. we will continue to see if we do in fact have those further gains when it comes to the nikkei 225 after that 5% rally so far this year. we do have some data when it comes to japan balance of payments, current accounts which is crossing the bloomberg. when it comes to the adjusted current account surplus at 1.885 trillion yen. the current account surplus adjusted at a level of little

lower than expected. the trade deficit ¥24 billion. a lot of this feeding through with each incremental,, particularly -- read, particular those levels but were focusing on what we are seeing when it comes to developments on the geopolitical front. vonnie: yeah, exactly. just to recap, bilateral action on the part of the united states and united kingdom launching airstrikes on houthi rebel targets in yemen. that has happened. we know this from the u.s. official who asked not to be identified because presumably there will be of formal announcement at some point to confirm the strikes, but the official has told bloomberg that the u.s. and u.k. have launched airstrikes on houthi rebel targets. we are seeing reaction in oil markets because this could be

quite serious escalation in the middle east conflict depending on what happens next. we know that several nations were against this action and had been looking for another way to calm as it were quite literally in the red sea, but secretary of state antony blinken warned repeatedly there would be consequences and this looks to be what the consequences are, this bilateral action that has taken place. haidi: yes, the u.k. and u.s. launching airstrikes on houthi targets in yemen. we now have the latest. this puts in place the likelihood of an escalatory spiral now. >> look, this is no question and actionable escalatory step the u.s. and u.k. had warned there would have to be some reaction if there were strikes that were continuing. we have seen shipping

disruptions, ships try and go around africa rather than utilizing those normal routes. those attacks have not stopped in the main shipping lanes in the middle east. and so, this is a definitely a reaction, and escalation. there had been concerns that you know, you start escalating, where does that escalation and? i think that has been a concern that has been playing here. i also, it is very clear from some of the reports we are seeing that these strikes have begun but the case was made in both london and washington that the risk of an escalation beyond where they are escalating to write out was worth taking, so this action taking place right now. again, the headlines crossing over right now is that the u.s. and u.k. have launched airstrikes on houthi rebel

targets in yemen. we have reports of explosions around the country, very very preliminary right now i'm so this is just the beginning and stay with us we will have more information that the story develops. haidi: we will bring you the latest on those developments and market reaction as it gets to us. we have the orchid opens in seoul, korea and tokyo and will be watching for reaction in the energy markets with crude trading higher on this developing for the u.s. and u.k. launching airstrikes on houthi rebel targets in yemen escalating the conflict with an iranianesponse to string of attacks in the red sea. ♪

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vonnie: this is "bloomberg daybreak: asia." we are counting down to age's major market opens. haidi: it is a lot for for investors to contend with, we are heading into a weekend if that holds the key vote in terms of the taiwan elections, the first test of geopolitical appetite for these remarks so firmly trained on fed easing. inflation data set that expect you back a little bit, but at the moment of and center we are looking at the escalation when it comes to iranian proxy conflicts in the middle east with the confirmation of u.s. and u.k. coordinated airstrikes, retaliation given the number of attacks we have seen in the red sea, but these concerns of an escalatory spiral are brutal. vonnie: exactly, and we are seeing reaction in oil markets, crude oil up 1.7%, but have a look at how asia is open.

nikkei225 on track for a third straight day of gains, up 1.6% roaring out of the open. we had foreign travel exceeding expectations in november as well as other data out of japan that will help things. topix up .8%. 10% weaker versus the japanese yen. 10-year yield at 59 basis points. we will keep in i on wti crude, up almost 2% at $73.42. haidi: energy stocks are one of the few modest outperformers if you can call it that comes to trading in australia where we are seeing materials and energy tracking higher. the rest of the market, one of the underperformers of the session. taking a look when it comes to oil markets, given that we are

seeing these first developments when it comes to the situation in the middle east, it will rising as we see the u.s. and u.k. launching airstrikes on houthi rebels in yemen. we are seeing advancements of 2%. militant attacks on ships in the red sea have become an increasing issue when it comes to the u.s. a reaction to be more likely. above $73 per barrel is where we are trading at the moment. earlier this week we saw the biggest assault in the key waterway despite the presence of the u.s. naval force supposed to deter such actions. we have seen a series of warnings of retaliation from watching to now confirmation of u.s. and u.k. airstrikes in yemen. we have seen rising tensions despite the fact that oil has been buffeted since the start of

the year living two dollars each way without a clear direction. we are seeing more support given the ongoing tensions in the middle east. there are those concerns about rising non-opec bus supplies, deep writing cuts by saudi arabia as well play here. let's bring in a professor at the department of war studies at king's college london. great to have you with us. joining us at a point where we are still monitoring the breaking news situation. how deeply does this risk a spiral of retaliation now? >> i think the first thing to stay at a starting point is these actions need to be put into the context sent by the warning, the statement led by the united states and joined together by 11 states about the

concerns of freedom of navigation. why that is important is it contextualizes why these actions are taken and very much framed the types of targets selected for the actions to be taken. here the focus is not to expand the conflict but degrade the cap abilities that houthis may or may not have too continue to threaten shipping lanes. i would be very surprised if these actions were not to be highly tailored to address these specific issues provided sensitivities of wider risks in the area. haidi: you talk about the need to contextualize when it comes to the statement we heard a couple of days ago. is it possible for this action to specifically just address this risk? we have already heard from the

houthi leader that there would be more retaliation, more outsized reaction other than the text we have a scene. how much does this widen the conflict in so far as it relates to iran back proxies in the region? >> they are more than a proxy of the iranians. at they have their own mind and agency, and the narrative will be an inflammatory one, but at the same time if we assess the context of base on the types of action thing of undertaken right now, there are three fundamental challenges that have been presented and actually a fourth one if you take attacks carried out against shipping over the last few years since around 2015, 2017, so we have got missiles, drones, raids and

mines. the actions can easily address the questions are these boats might be located and certainly the launch sites of missiles, because of us is the beginning of missiles being launched against shipping targets and more recently naval vessels you can always reverse engineer with a certain high degree of position whether -- where they are launched from. in this respect we can be confident that provided the buildup of tension and intelligence gathered in the fact that this is not an unknown challenge, the houthis been attacking on and off shipping for quite some time. limited capabilities in terms of what they can do at sea, we will see actions primarily degrading their capacity to continue to escalate in that context. vonnie: it would depend on what

you term capacity, right? because they can always get more of if he it is just stuff you were talking about. does this risk alienating allies, not just european allies, but golf -- gulf allies? >> it is interesting that it had some sudden partners, partners that did not want to be on the letterhead but joined the statement, because it does present the problem for shipping, which is a wider challenge to gulf states, egypt as a result of that. it is also part of the calculation and how these actions have been coming together of a constant working and exchanging of diplomatically engaging in order to ensure the result of the action will be something that would keep if you want the spirit of the statement

going in the targeted participations going. what houthis are doing is a harm to prosperity for shipping, and that is a problem that goes way beyond these two actors. it is an international problem. the real question is where is everybody else? this is not just a u.k. actor, a united states actor, and the fact that we should see over the next coming days based upon the reaction where also the very common used reference to having stakes in international stability when it comes down to proving that is where everyone will follow on that part of the fence. haidi: this is about the global world order in so many ways. this is happening in parallel to and conjunction with the continued assault in gaza, and we have seen secretary blinken in the middle east this week

trying to push for a more targeted strategy from israeli forces. we have also seen opening arguments for south africa's case from the international court of justice. it is -- is it likely we will see a change in taxes that might result in less humanitarian turmoil? >> i think the humanitarian drama that is unfolding in gaza is certainly something in the minds of policymakers. if we go back to the specific case of the red sea, so far the actions taken were very defensive, reactive, focused just on ensuring things can carry on, and escalation has communicated as being laid out clearly, so this is symptomatic of the fact that there was a clear sense that you cannot turn

toward the houthis because that would harm the process that would reduce the humanitarian impact of the military actions taken place at the moment, but at the same time it is going to take longer, certainly more time to find a different approach in terms of military strategy, and the israeli government has been very clear at the moment this is a course of action that they are committed to, so i think from the humanitarian perspective there will continue to be an incredible amount of challenges for the international community, and i would not be surprised if the united states as to continue to remain highly engaged to improve the situation. vonnie: it does not seem like it will help the fight of the israeli hostages given that qatar was the intermediary and their hands might be tidier. what kind of responses do you

anticipate from global leaders? >> the role of the qatari is important, but for the hostage situation it is been very clear in so far as the israeli government is concerned that it is a matter of absolute medical concern. if you want the broader interest of the international community is truly to continue the diplomatic front if you want to remain quite wide, including on the one hand a broadening of negotiations to ensure the release of hostages, which continues the possibility of conversation with the israeli authorities in terms of adjusting and modifying military behavior in gaza in order to facilitate addressing humanitarian element the way they are conducted at the

moment. vonnie: thank you so much for joining us, allessio, professor of war and strategy at king's college joining us on the news that the u.s. and u.k. have lunch strikes on the rebel targets in the red sea. the oil reaction as well. voters in taiwan preparing to pick their necks leader on saturday in the election that could change the course of u.s.-china relations. an analysis coming up. this is bloomberg. ♪

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where some risk assets are trading on the news that u.s. and u.k. forces have attacked houthi targets in the red sea. we are seeing a bit of a reaction from crude, probably the most of the asset classes we are seeing the most money flowing to add 73.35. 10-year yield down just a little bit it 3.9621, but it is needed so far until we get more details and international reaction. gold up .2 of 1%, and the yen is strengthening, although it is half that size of the day. let's get more on global risks. annabelle droulers is at an investment conference with our next guest. annabelle: let's bring in a morgan stanley investment managers had of applied research andrew joining us this morning.

we are hearing about these strikes on houthi rebels in yemen. how much is that risk of further escalation priced into u.s. equities at this time? >> i do think geopolitics always affect equities, but to the extent that there are other things going on that i think will drive the market a more significant way, and i do notice that oil and oil stocks have really not responded in our rally sort of way if you thought oil was going to. that would be the biggest risk to my outlook for the year would be if will would substantially increase, and that would jeopardize their self lending scenario that i think is quite likely for your. annabelle: in terms of a substantial increase is there any percentage or putting on that? >> we look at it will closer to $100 per barrel. he was starting to see consumer spending start to slow his

people have to divert their spending, and that would materially affect the economy. as long as oil stays maintained, i do not think it will affect the equity market are the economy. annabelle: the other big theme is the u.s. inflation print that came out. how does that factor into your thinking of the fed and equities over the course of the year? >> people perceive that when the fed cuts that would be good for equities. i am not sure. if you look at the history of when the fed cuts equities tend to weaken. there is a fear of why they are cutting? is there a problem of the economy? and that usually creates short-term anxiety when you get a 10%, 15% pullback, so when many ways i went the fed to be on hold, because it says to me inflation is coming down, the economy is strong enough to withstand where we are in terms of fed funds. i think the market will really during this.

event -- this period. i'm concerned when they cut. annabelle: a lot of traders have been agitating for her cut is in his march, so what is your expectation when we would see some sort of reduction? >> you heard a couple of fed a member today i am not so sure. i think it will be later. i am not an economist. i am a portfolio manager. i think it would be better later rather than sooner. annabelle: something else that will play into performance will be the earnings season. a lot of optimism was baked in last year. we saw the rally into year-end. it now it will be tested, so what are you expecting? >> usually, if it is going to be a weak earnings seasons, we started to get indications from companies during the quarter that may be the numbers are too high or they will pre-release and so forth, and we have not

heard that yet. very little, so i expect the earnings eased it will be ok, but the question is how are stocks doing going into that earnings season. the financials are about to report. at they have been very strong the set up is not great coming into earnings season, stocks are very strong, i expectations. that worries me, but i do not expect material cuts to earnings for this year coming out of fourth earnings reports, and if you think about the market last year, we had flat earnings for the s&p last year, but that is why the market was off the year before. so it anticipated that this year earnings were going to recover. annabelle: when you think about the market last year, it was driven by the magnificent seven. do you expect that trend to continue this year? >> i would not necessarily say those darks -- stocks are going

to go down because their earnings have been strongly the revisions for the seven have been excellent, and they will buyback a lot of stock, but what is interesting is if you look at fund outflows, net cumulative flows, they turned positive in november of this year, which was a year after the low. when those flows turned positive that is where other stocks are to participate. the echo s&p outperforming the s&p 500. i went to get more involved in equities and they start to search around for other things that have not participated, and that is when the magnificent seven started to underperform, and erasing it to date. i expect the market will broaden out this year, and there will be other areas that will participate, not that those talks will go down. i do not think of a performance. annabelle: if someone came to you and said i have $100,000, $1 million to events, what is the

percentage they are putting in the magnificent seven and other sectors? >> in terms of the s&p 500 and s&p equal-weighted i would have more readings -- weightings and other areas. the magnificent seven or 30% of the s&p cap right now. some of them i think will do well. there will be a divergence of how they do this year, but i think there are other areas like financials, industrial, semi conductors, i think there are other more cyclical areas that will do better. and do not forget, it is an election year, and in an election year fiscal spending ramps up, and you are seeing infrastructure. we have the chips act, the inflation reduction act. those will help more cyclical areas of the markets, so i expect those areas will do better than that mag 7.

not that they will go down, but the differential not because much, and that is what started happening in november. annabelle: and the conference today. that was andrew joining us today at the morgan stanley investors conference. haidi: you started the conversation up with the latest geopolitical developments. we have more interviews lined up from the sidelines from the investment hong kong -- investment conference in hong kong yesterday -- later today. in terms of the latest that we know of authorized airstrikes that have now been launched on houthi rebel targets by the u.s. in u.k. we are cheering from pentagon officials saying the u.s. and its partners have conducted these strengths on yemen, u.s. struck more than a dozen targets in yemen including radar sites as well as missile launches it.

we continue to watch this were more details on these operations at where we go from here as we had the u.s. and rishi sunak confirming his authorization on these joint strikes. let's bring in our analyst jennifer welch. we have kicked off 2024 with quite a high degree of geopolitical risk. what is the risk that we see retaliation now? >> thanks so much for having me on this morning. i think we are in the process of determining what happens after this. this is not the first time u.s. forces have interacted with houthi forces. there was also an exchange of strikes back in 2016. this is an important marker of where things are headed in the region. certainly one that has been signaled for some time. both the exchange of fire of forces and a stark warning to put out just a few weeks ago,

but i think it is too soon to say whether this will lead to a major regional conflict or if it can still remain relatively contained, but something we will be watching closely. vonnie: the pentagon confirming the u.s. truck more than a dozen targets in yemen including radar sites and missile launchers. the other huge geo-political news going on this weekend is the election in taiwan. what is the outlook at the moment? >> we are headed into the polls tomorrow with the very tight race, one of the closest races we have seen in taiwan in several election cycles. we have the ruling party candidate facing a split opposition led by two politicians. generally speaking impasse election cycles when the ruling party has faced a split opposition that tends to lend them some favors, but this

election cycle is unique in a lot of ways. at the ruling party faces the disadvantage of having to represent incumbency, which is always a challenge, and motors are interested not just in issues like cross strait relations about domestic issues, the economy, cost-of-living, etc., and the doubles done on the disadvantages of being the ruling party at that time. we will be looking for the results. hopefully we will get them soon tomorrow night, and up until then there will be a lot of watching because there was a huge potential for surprises here. vonnie: thank you for your analysis. our special live coverage from taiwan continues in the lead up to saturday's vote. we have full results and analysis on monday. this is bloomberg. ♪

haidi: a picture when it comes to trading across the region, we are monitoring to breaking news in the market direction to the airstrikes on yemen's houthis by the u.s. and the u.k., a pentagon official confirming the u.s. has struck more than a dozen targets in yemen. we are seeing when it comes to the reaction wti and crude futures trading what higher. dollar-yen a little lower as well. treasury futures looking firmer, so not a huge reduction but certainly more supportive when it comes to crude prices, but it will prices lower than where they were a week earlier. thhi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician.

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haidi: checking risk assets,

crude oil futures holding steady at the range, 10 78. the 10-year yield is flipped around but at the level we saw earlier on. gold anyone .1 of 1%. again unchanged at this point after we learned that the u.s. in u.k. lunch airstrikes against houthi wearable targets in yemen after a string of warnings from various diplomats, including the secretary of state antony blinken telling the houthis to stop working them and attacking with drones ships and vessels on the red sea. let's bring in bill, who joins us in our studio. we will get to bill in just a few moments, just recapping once more. we have had attacks in the red sea from the u.s. in u.k.. let's get to taipei for the moment as we look ahead to

saturday's elections. yvonne man is standing by with our next guest. yvonne: i am joined by manda. it is great to talk to you in person. obviously it seems like there is so much global interest in this taiwan election. can you tell us why? >> the next leader of taiwan is really faced with quite a challenge. she will be facing an extremely complicated external environment in which he will have to deal with the china that has shown itself to be much more assertive on the question of taiwan, and in a situation where it has been evident is willing to move a lot of resources in creating everyday headaches for taiwan.

they will have to do with deepening china competition, and it will be a difficult road to navigate. yvonne: the frontrunner is the dpp. i am wondering if we will see a third term? what does that mean for u.s.-china relations? could it deteriorate further? >> it is possible. the race is pretty tight right now. if lai does win eight will be an unprecedented third term integral sign of staying power in terms of the dpp party. there was a real concerted attempt to if not entirely de-escalate to at least hit the pause button on escalation, including on the issue of taiwan. the two leaders use the opportunity to send signals to each other that neither want to change the status quo around these elections, so i think both sides understand and are gearing

up for this transitional period, but it is probable we will see an uptick in tensions should lai win. yvonne: we see indications of beijing interfering into this election and saturday, whether it is chinese or balloons or economic coercion or the like. at what is your take on the beijing response we could get after this election if the dpp wins? >> i think in the case of a lai win it is likely we will see china increase pressures in a more discrete or less threatening ways, so they can very easily enact more economic punishments on taiwan, increased military activities in a weight that are more low-profile. you mentioned the balloons, and

they have been suggesting they are willing and capable to do so. a big milestone to watch out for in a lai win is around may 20, which is the inauguration. he is not going to say would beijing demands, because that is not what is party believes. at that point we might see a more overt and forceful response, potentially including a military exercise. yvonne: he first described himself as a pragmatic worker for independence and he has walked back on those comments aligning more and saying there is no need to declare independence because it is defective sovereignty already. is there a chance you might strike a harder line onc ehw -- once he wins. >> he is been following on

[indiscernible] i think he has every political interest at the start of his term to continue to maintain. we see he will probably win with less than 50% of chinese voter support, and he will to commence washington, d.c. that he will be a stable leader in a fairly precarious moment for u.s.-china relations. yvonne: the former president has led to a lot of headlines over those comments he made talking about taiwan would lose if they had to fight with china, you should just reduce your defense spending and trust xi jinping. the campaign doing a lot to distance themselves from the campaign -- from these comments

right now. >> if ho were to win, they have been campaigning on a platform of increasing defense reform are pushing for defense reform at a time when the administration has done. for me, what this suggests to me is that within the party there is still amount of their debate and division as to how quickly taiwan should be pushing for their defense reform, so it raises questions about how exactly they administration were to govern despite his campaign promises. >> cross of trade tensions might still be there. it might not be in 2024, but something more mid to longer-term. >> the assumption is if ho were to win, the cross trade dialogue would resume at some point. at some point beijing may feel some domestic pressures and

pressures that it puts on itself to deliver some outcomes as a result of dialogue, and when that happens, when they seek more economic integration or a more conciliatory political stance at that point we will see pushback from the time when these people, and it is possible tensions will reemerge. yvonne: there is more on this ballot as well, these parliamentary elections. al important is it for any elected president to have a majority in the legislature? >> it will be helpful for the ruling party to also have a majority. it is not looking likely that any of the parties will gain that majority, so they will be dealing with the divided government. we can expect the legislative -- will serve as a legislative check on power.

perhaps the most significant implication is that it means the taiwan people's party will have quite a bit of say potentially and how taiwan pursues things like defense spending going forward. yvonne: amended there, senior china analyst joining us here in taipei. haidi: there is so much going on all along geopolitical risks being heightened so far early in the new year. we are hearing a statement in president joe biden on these coalition airstrikes in yemen. president biden saying u.s. military forces together with u.k. as well as support from australia and canada and the netherlands have successfully conducted strikes against a number of targets in yemen used by rebels to endanger freedom of navigation in the is a vital waterways.

we are also curing president biden in that statement saying they will not hesitate to direct for the measures as necessary, going through some coalition supporting partners and calling these strikes successful in a to quite unprecedented houthi attacks. president biden making the statement after where the authorization been confirmed by rishi sunak saying it follows extensive diplomatic campaigns and the rebel's escalated attacks against commercial vessels. let's bring in bill farris with more analysis. does this set us on a path of retaliation and escalation given that we have heard from the houthi's leader saying any u.s. aggression will be responded with operations bigger than what we have seen so far? >> right, that is the big question. we are still in the early hour

or two of this conflict between this allied said in the red sea and yemen. we will have to see how much damage was done, what ability the rebels have to retaliate. this is not a huge surprise of an attack. at the u.s. and its allies have been signaling something was likely to come. the u.s. it says so far there have been 27 attacks on commercial ships in the red sea since the israel-hamas were started in early october, and those attacks have been escalating, so we know in the last few days people on both sides have been expecting some sort of action. it really the big question is to what degree can the houthi rebels respond to this in the coming hours and days. vonnie: and to what degree can they replace the radars and very expensive infrastructure that the u.s. and its partners, which seems to be the u.k. with support from places like the

netherlands, australia, and canada have done. can they replace these pretty easily? they seem to be undeterred? >> that is the big question is whether they have been moving some of their critical equipment to more secure locations. early reports are that perhaps more than a dozen sites have been targeted by this u.s.-u.k. led action, but we will not have a real damage assessment for a while and the houthi s have promised to retaliate in a big way. we know that they have gotten a lot of supplies over the past decade from iran. we do not know what kind of stockpiles they have that might survive this initial attack, so those are all of the big questions. it will be much more difficult to get fresh supplies into the houthi rebels with such an arm's presence in the red sea right

now, and it will not be impossible. we will have to wait to see the extent to which of this is a setback to them of their efforts to disrupt the shipping of the red sea, but it is almost a foregone conclusion that that shipping is going to be increasingly routed in other ways for the time being. haidi: how much of a setback is this when it comes to the foreign policy efforts when it comes to the likes of the u.s. and the u.k., but the u.s. in particular? senator blinken was just in the region the last few days. it does this complicate an already complex and intractable situation when it comes to manage what is going on in gaza and how the regionalization of the conflict might be prevented? >> a big focus for the u.s. and its allies has been preventing the israel-hamas war from spreading too much of the region . that is up into little bit on israel's northern border with the back between hezbollah and

israel. this is another step the u.s. did not want to see. it raises the risk of bringing around further into this conflict. -- iran further into this conflict. it seems to be headed in that direction at this point with no end in sight. vonnie: asian shipping stocks advancing after those airstrikes on houthi rebel targets in yemen. you can also turn to your bloomberg for more on this. team live has excellent commentary and analysis live from bloomberg's expert editors. we will continue to keep you updated on this story anymore. -- and more. this is bloomberg. ♪

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haidi: take a look at the market reaction given the news flow when it comes to geopolitical developments, the u.s. and u.k. coalition airstrikes that have been successfully conducted when it comes to houthi controlled the parts of yemen. it is interesting, the reaction has been very muted, so as far as investors are concerned this is not a big enough escalation

at this point to warrant a large pickup in any kind of risk of sentiment, but if it does continue to escalate we are looking to the dollar in terms of more flows and potentially a move in the yen. aussie dollar sitting similarly under the $.67 u.s. level. we had the inflation picture change a little bit, but ultimately expectations for easing from the fed not too dramatically moved. she we dollar trading at 62.39. we did get the statement explaining the airstrikes and president biden says there is no hesitation for further measures as necessary. from the middle east to the other major economy we are watching, china, economists expecting traded it to show demand remaining weak both abroad and at home. falling forrester -- for a third

straight month. let's bring in jill disis. let's start off with the press picture because there is this brother concerned we are starting to see significant demand spiral from these inflationary pulses. >> we will be getting those numbers on and just about 45 minutes or so. at this point broad expectations that both consumer and producer prices will have fallen into deflation in tandem with each other for the third consecutive month. after we get prices, those have been in deflation longer, but the story here is when you look at these consumer prices, these deflationary pressures that exist, this is the symbol of how weak demand is in china right now. confidence has been under major pressure for the past year after the reopening from the pandemic.

indicating these widespread concerns about china's ability to revive demand and confidence. the numbers expected to show for cpi figures they headline figure that food prices to december were not as much of a drag on prices, transportation, it is winter so people are not traveling as much of their. it is spelling to broader concern for the economy when you look at what the government can actually do to help things, we were widely expecting there to be a key policy rate cut to stimulate demanding combat inflation pressures on monday. it does signify there were a big concerns on deflation as we gear up and get into 2024. vonnie: what are we anticipating in terms of the mlf? will be definitely see action? >> at this point most economists

are expecting there to be some kind of policy rate cut there, 10 basis points. we have not seen that since august when there was a surprise cut to the policy rate. at this point it would be a big shock if there was not any kind of rate cut once we gear up into monday. we may also see the bigger note injection of liquidity to help with demand for financing. at this point there were broad expectations that the government as to do something more than it is been doing to help the economy, help revive activity here, support credit growth, but at this point the results of this understanding that there is only so much policy rate cuts can do, so once we get past monday we will see what happens there, but the attention it is going to turn to what are the types of targeted measures the pboc, other government agencies can actually do to stimulate growth. does that come in the form of

targeted lending programs. is that something else. we saw the easing of mortgage rates last fall to stimulate property sales, but ultimately it is going to be something that has to be more comprehensive and holistic to actually get this economy going. vonnie: thank you so much, and much of that data coming in the next couple of hours. we just got some word from tessa about china as well, tesla cutting the price of its revamped model three by 5.9%. it is down about 1% in the after hours trade. there is also aligned earlier that it had to hold most of its output on the red sea conflict, which continues. plenty more to come on "bloomberg daybreak: asia." this is bloomberg. ♪

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lines up more than 1%. korean shipping stocks moving higher than japanese shipping stocks. let's take a look at defense stocks and see how they are trading. several defense stocks in korea and also japan on the move, higher for the most part. there is one down about .25 of 1%. haidi: take a look at the futures picture as we are getting into what was already setting up to be a pretty mixed picture across asia now with decided geopolitical overlay, and we are seeing more caution. sydney futures down .2 of 1%. taiex futures, taiwan unsurprisingly risk aversion going into the weekend's elections will be key in terms of the geopolitical test.

even though volatility expectations are higher for the next week, we are seeing traders the most bullish on the currency in about 16 years. watching ftse a50 futures on the china side. we are getting key inflation data as well as trade numbers, export-import numbers as well. dollar china holding steady at 7.16. take a look at what else we are watching when it comes to some of the elements of markets that could be more sensitive to these rising middle east tensions. oil has been the only beneficiary there is we have seen quite a bit of support when it comes to new york crude trading close to 2% higher. we have seen lack of direction characterize screw trading since the end of the year, and so much of that has been on the pricing situation when it comes to saudi arabia and some of the supply

concerns among non-opec members, but new york crude outperforming as an si class a reaction to the strikes. we have seen more of a muted reaction when it comes to other haven demand elements, gold higher. dollar-yen on moved, but if the escalatory nature of this news flows develops we will see more moves when it comes to the yen and the dollar as well. that is it for "bloomberg daybreak: asia." our markets coverage continues. we are looking ahead to the start of trade in shanghai and shenzhen. this is bloomberg. ♪

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