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>> welcome to "daybreak: australia." i am paul allen in similar markets have just come online. annabelle: i am annabelle droulers in hong kong and we are counting down to major trading opens. our top stories this hour. china to hold lending of some shares for shortselling in a bid to support the country's slumping sports markets. the spotlight turning to japan's big banks, whose treating income probably fell as traders await any boj moved to end negative interest rates. plus, intel's boss calls the chipmaker's worth stoxx elephant three years overstated. . we will hear from the ceo pat gelsinger. taking a look at how oil is coming online, monday is the start of trading, we see brent crude, wti coming online at the same time. we are seeing prices jumping modestly, just over 1% for each

of those contracts. still the move really is a reflection of those events over the weekend. we had three u.s. troops killed by what is believed to be iran backed militants. traders are recalculating their red sea risks of tobacco that because we had the response from the u.s. so far, saying they are bound to retaliate. vowing to uphold all of those responsible to account for the time and on the manner of our choosing. those were the words of president joe biden in a statement. but that is the market reaction we are seeing today. brent crude and wti, both moving to the upside. let's change on, we have u.s. contracts coming online for futures and it's a big week ahead. we have the fed rate decision on wednesday. a focus is when we can expect the start of rate cuts, xavier becerra to be signaled to the market as well. and a big week ahead for earnings not just in asia, but we have more mags seven numbers

on the docket -- microsoft, apple, meta, google, really big wins ahead. paul: just getting going to australia returning to trade after the long weekend. we had a staggered open here, so let's wait and see what the morning brings. meanwhile, not a great deal of change in the treasury space in australia. the 10 year still hovering at 4.2%. the aussie dollar still below $.66 u.s. we will have japan opening at the top of the hour, top of the next hour. make a futures in modestly positive territory. the yen turning, 148 against the greenback. take a look at futures for china, modestly in positive territory as well. we saw chinese equities closing out the week a little bit better than they began. some of that rally deemed to be losing a bit of its shine.

annabelle: certainly greatly tracking how long it will last. we are still getting further steps from officials in china to support the slumping stock market. the latest is they are halting the lending of certain shares for shortselling, let's get more with our chief medina jacqueline and stephen home -- let's get more with our chief north asia correspondent stephen engle in hong kong. stephen: we know what the chinese markets have done so far this year, the msci china index is down about 60% since its february 2021 peak. last week was a good one in retrospect. in comparison to the rest of these year, it was a game the msci china index. they are trying to put a floor. this latest step you just mentioned, agains chinese regulators have not been too kind towards shortselling anyway. but what we saw in october,

essentially, limits were put on the lending of shares that executives and other strategic investors, or employees, i should say, could get. other curbs were put in place. the csrc, the security regulator said, these particular stock that were lent by strategic investors have dropped about 40%. so now what china has done is essentially hold the lending of these particular certain shares for shortselling as of today. strategic investors will not be allowed to lend out those shares as well during this agreed-upon lockup period. so it is just another step to try to put a floor on the falling stock market, restore confidence. we will have to see how well it works, as follows alluded to, some of these steps to petering out throughout the end of the week. paul: we had industrial profits from december out of china injuring the weekend, still in contraction.

what are they telling us about the health of the economy in china? stephen: there is a deflationary environment, week internal demand and external demand. those of the fundamentals, but the trends seem to be improving for industrial profits even though the numbers for the full year are down 2.3% overall for the largest industrial giants in china. that is a year-over-year basis. but you saw it cap in november, particularly with the 29% gain in industrial profits and in december, so there was a late year search for industrial profits. i think december was of 16.8%, november, 29.5%. overall for the year it was lower, down by 2.3%. the reason? base effects. year-over-year in november and december, we had covid spreading through china in late 2022, factories were closed.

so those numbers are skewed. . over all the general trend since of tovar has been an improving trend of industrial profits. . we sell factory output expanding 6.8% in december, the fastest pace since 2021. so that is an encouraging sign. year-over-year decline in the ppi, producer price index, also slowed from november to december but, again, the overall background is a deflationary environment, weak external and internal demand. but industrial profits are starting to wind up the destocking process that many of these big industrial giants that will start helping to improve profitability. paul: chief north asia correspondent stephen engle there. that have a look at how the oil price performing. your seeing moves at greater than 1% upwards for both brent and wti. wti just above $79 a barrel. brent at $84 a barrel. this on the news of that drone

strike near the syrian border that killed three u.s. troops. president biden has vowed retaliation after that attack. it was tied to iran backed group. three u.s. troops killed, over 20 others wounded. it happened in jordan, near the syrian border. bloomberg's michael heath joined us. retaliation is anticipated, but it will be some discussion around the scale, right? michael: that is exactly right. will be talking about, but the tax one. of the advantages of having a president joe biden chaz has seen the list of becoming too heavily engaged in foreign policy. that brings protracted wars. phil have to do something significant. this is the first u.s. voters today since the conflict -- 25 wounded, it was a significant attack. so they were not part of this conflict, islamic state, but

will have to see something from the u.s. the republicans are pressing hard, we had lindsey graham talking about hitting iran. whether that happens seems unlikely. president biden remember, withdrew u.s. troops from afghanistan enter controversial circumstances, he is not big on getting bogged down in regional conflicts. that has been one of the hallmarks of his was most of this targeted attack, providing support, using diplomatic pressure, but not having boots on the ground. obviously everyone in the u.s. has been mourning, that has been a lot of anger and desire for revenge, but biden is that we to be very careful in what he does here. annabelle: i guess it comes against the backdrop of the u.s. hoping that we see some sort of hostage deal in place. michael: that's right, very interesting news coming out, in paris on sunday, there was a meeting between the intelligence chief of the u.s., of egypt, of

israel, we had qatar's prime minister there. the talk is that we are getting closer to a deal between hamas and israel. the length of period discussed is two months. the idea is to bridge the gap where two months is long enough for hamas -- for israel to sell that it hasn't stopped the fight, but it gives an extended period for when these hostages could be potentially brought out and more aid brought in to the catastrophic civilian situation there in gaza. both sides, there seems to be a degree of optimism. how long it takes? there is a talk of days, talk of weeks. still over 100 hostages being held at the moment. but this is the strongest news we have seen that thing could be a foot. it was november 30, the last truce that lasted for about a week ended, so we have had a

long period of conflict. there was increasing worries, there has been a lot of pressure on the israeli government to do something about the hostages, in this is to be the closest we have gotten. until we actually see a deal in place and hostages moved, you would not want to trust it but these are very positive signs. paul: the birds michael heath there. other geopolitical stories we are watching around the world, north korea fired several cruise missiles on sunday as kim jong-un wraps up his -- ramps up his rhetoric about potential conflict with south korea and the u.s.. south korea's military says multiple projectiles were detected. kim has ignored u.s. coastal return to long stalled nuclear talks which of her economic aid in exchange for disarmament. the u.s. assets top officials have discussed scheduling a call between presidents joe biden and xi jinping sometime in the next few months, in the latest effort

to maintain high-level contacts that were revived after the presidents met in california in november. . we are told u.s. secretary of state anthony blinken is also expected to visit china again this yearm still to come, that focus on chinext property sector because, ever grant once again, trying to fend off liquidation. your tracking the court proceedings. but first, evergrande will share its outlook on u.s. stocks as traders await mourning from the magnificent 7, we will hear more market strategy, next. 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 paul: you're watching "daybreak: australia." ." here is a look at the week ahead. the fed will make its first rate decision of a year. bloomberg economics says while

the fomc will hold this week, the stage is set for cuts in the march meeting. and then the jobs report and the jobs print are both due. in asia we are less than one hour away from the first decision by the monetary authority of singapore, since it switch to quarterly meetings and also the departure of longtime chief. out of the u.k., pakistan, brazil and chile as well. chinext pmi's are expected to paint a slightly less bleak picture ahead of the lunar your holiday. annabelle: also the peak of asia earnings season with 152 firms reporting including japan's megabanks. nomura, and mizuho. in the u.s., aia investment, regulatory challenges, winning demand in china will be the focus as five of the so-called

magnificent 7 post results -- microsoft, alphabet, meta amazon and apple. boeing is supposed to have faith fifth grade quarter of losses but they will answer questions about the quality of their aircraft. that is your week ahead. let's discuss that now with our guest, managing partner at evans may wealth. it's a really important week for u.s. tech stocks in particular. it's already a very crowded trade perhaps, but do you expect to see more earnings growth out of these numbers? brooke: we do. we are still big fans of big tech and we think they will continue to be leadership in the market. but there is a bifurcation going on now where you can't just buy the broad market, you have to be very selective in the names you are picking and big tech are some of the names that we think will do well. annabelle: are there any specific names as well? microsoft, for instance, the

story last week was it hitting $3 trillion. we brooke: like microsoft. we have it in a portfolio. we really own all of the magnificent 7 companies and believe they all should have stronger earnings going into the 2024. but we are also picking up on some companies that didn't necessarily do as well last year. one is taiwan semiconductor. when you look at chip sales, they were down 9% in 2023. we expect them to be at 13% this year. taiwan semiconductor being one that we think is dominant. they are very large and have economies at scale that will benefit them. they're also getting into generative ai and lucille like most investors, that is the place to be, so we are looking forward to seeing good results out of taiwan semiconductor in the months ahead. annabelle: are there any other names you are watching in particular in the chip space?

for instance, we had the results from sk hynix indicating this revenue they were generating from their own ai potential. brooke: we like nvidia. i know they surged and there were one of the best performing companies in the s&p 500 last year. they are still our top experiment we have a large dedication to nvidia inova growth portfolio we think they are a dominant player and have quite a bit of an advantage when it comes to ai chips. they are our top picks that space. paul: one of the features of this rally so far has been quite narrow, confined to a lot of big tech names in the ai space and we have seen small caps really underperforming. you see this rally broadening out, or are there any names in the small-cap space that you would consider? brooke: right now we think we have to be careful when you look at small caps. they had an amazing rebound off of the october lows but they have given some of that back in the last few weeks. small caps we think it'll be hit and miss in the near term.

if you look at the russell 2000 and small-cap companies, 30% of their debt is that variable rates. s&p 500 companies, only 6% of their debt is at variable rates. 70% of small companies aren't profitable and they need that debt to upper it. that will be quite a hindrance on earnings and be able to grow as a small company. so while there is an 80% probability that the fed was going to start cutting rate in march now that is a 40%, probability. that impacts small-cap companies. we don't think it will be until the summer or the second half of next year when we see rates start to come down and smaller companies benefit from a bit of easing. paul: let's talk more about that. the fed decision this week, no one is expecting any movement from their rate, you just talked about expectations around march getting scaled back as well. but in terms of the timing and also the number of cuts, have

you changed your expectations? brooke: we have been in the camp that it is going to be higher-for-longer. we would expect the first rate cut to come in may or june and, may be three rate cuts this year. again, investors were expecting rate cuts to start early in the year and potentially six or seven rate cuts through the year. we don't think that will be the case. if the labor market remains very strong, we think the fed will be patient. the fed was predicting 4.1% unemployment rate in 2024 and if we stay below that number, there is no urgency to start cutting rates. paul: the data has looked pretty strong out of the u.s. how comfortable would you be in saying that the recession risk is now all but gone? brooke: we think -- we think a

significant impact to the economy is off the table at this point, assuming nothing unforeseen occurs. it's more kind of a rolling recession where we have seen manufacturing decline. we have seen housing decline. different pockets of the economy are being impacted at different times. we are starting to see the consumer take down their savings. but we believe they will operate on credit. and as long as they have an employment, they will still comfortable spending. so that will keep the economy strong. . we don't see that changing anytime soon unless unemployment starts to take them up. really economies being driven by the consumer and we see that being the case for the foreseeable future. paul: thank you for joining us, brooke may's, partner at evans may wealth. plenty more "daybreak: australia." this is bloomberg. ♪

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paul: you're watching "daybreak: australia." sources say the u.s. is aiming to announce major chip grants aimed at supercharging domestic production. the awards are slated to go to intel and other u.s. makers as well as foreign firms including tsmc and samsung to help them build factories in the u.s.. money from the $39 billion bill the president nine into law more than a year ago has been slow to trickle out, with only two small grants announced so far. intel ceo meanwhile is trying to reassure investors that the company is on track to make a comeback. first-quarter sales and profit forecasts fell short of estimates and that sent shares tumbling the most in years, but the ceo said the market reaction went too far. >> first we finished a great year. we had q4 beat in the top and bottom lines, finishing a year that was comfortably ahead.

showing a transformation journey we are on. and we believe we are putting points on the board for a long-term transformation of this iconic company. in light of that, q1, at the low end of seasonal. so we think the market reaction is a bit overstated in that respect. we understand it, but our company, our employees are doing an equitable job at delivering a process technology, restoring product leadership, defining new categories like the ai pc. we are on a multiyear journey and will not be judged by the 90 day shotclock, we are out to rebuild this company. we had a great 2023 and i am confident in a great '24 for this company. >> there were many questions on the call about your foundry business, it's sort of the contract manifest your business where you make chips for others -- manufacturing business where you make chips for others. you said you didn't get as many committed dollars as you thought you might.

i wonder what is standing in the way of that, customers committing to backing your foundry business? >> we are very comfortable with the progress. our leading edge node, we delivered 4 for the year. we also found there was a lot of momentum in our packaging business where we now have five major customers on our advanced packaging technology. and we said, hey, it went from 4 billion to $10 billion a lifetime deal value, so good momentum, but, most importantly, is the process technology itself. our way back to a leadership technology? we are hitting all the milestone. these audacious five nodes in a four-year plan of the, tracks are on plan to have us back to process leadership in'25. the foundry company, they want to know that if they design on us, they can build the best products. that we are getting momentum on delivered on that.

so proud of my teams for delivering on such an audacious plan. we are on track. >> what about track for ai absolutists, not just ai on the pc, but i put it bluntly, nvidia has run away with this. when can you regain any sort of leadership in that space? >> clearly that has been an area of strength for them. we appreciate that they have focused on that for years in the market has come their way in a strong way. but our roadmap is getting momentum too. we are seeing a significant expansion in the customer pipeline. we are ramping up supplies, we are chasing to have enough supply to meet market, and we are well underway or no next-generation, with 4x the compute, 2x the network. in the lab, gaining really early good debug in bringing the market to -- the product to

market this year, we have a lot of work to do. but the market is building and looking for alternatives, and our roadmap is strengthening as we go through the year. but, more importantly, is the idea that last year was the year of high-end trading. this year it's about how do i use those models? that is much more about the enterprise strength where intel is at the edge, in the pc and in enterprise data center. so we see the market,-in ai in '24 and'25. annabelle: that was intel ceo pat gelsinger speaking to bloomberg tech's ed ludlow and caroline hyde. coming up,, desko lai property developer china evergrande is facing a new liquidation in hong kong. we have more on that and china are pretty you can make money the hard way as a bullfighter or a human cannonball... or save money the easy way, with xfinity mobile. existing customers can get a free line of our most popular unlimited plan for a year! not only will you save hundreds

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annabelle: we are watching

"daybreak: australia." let's take a look at the bottom space. futures online, we are seeing them climbing across the board. it tells us perhaps there is a bit of a move into haven trades. also seeing oil prices rising after the u.s. said irani unbanked militants killed three servicemembers near the syrian border. we are perhaps recalculating those red sea risks and what it means for tensions in that part of the world. it is perhaps that sort of move. the other part fling into it is more traders rethinking around expectations for the fed. we are due for another rate decision later this week and mohamed says the u.s. central bank's job isn't over yet even as inflation begins to ease. >> we are in the sweetest spot of the inflation reduction act now. it is going to get tougher going

forward. we have already seen from europe that it is not out of the question that not only does insulation stabilize, but once in a while, you get it going up and that will impact. >> the white house is assented to lean into this soft, very soft landing expectations. the timeline may be on their side. so when you look out to november, where are the vulnerabilities to the soft landing? >> there are three of them. one is with the external world, what it is imposing on the u.s. it is getting harder to grow in this global environment. we have disruptions of supply chains, would have cost pressures in the pipeline, we have delays in shipments. all of that has a impact. two, the consumer will be under more pressure. you have talked about debt levels in the previous hour. earrings have come down. we no longer have the pandemic savings being used utilized to

the extent that it was before. so there is a real risk that growth slows to the 1% to 1.5% level with downside that we may slip into a negative quarter. thirdly, inflation. we need inflation to keep on going down. the market expects that it will do so in a much more orderly way than i think has materialized unfortunately. >> deutsche bank said we will get reality check later this year, 10% downside on the s&p 500 food are you expecting that given that stocks art all-time highs, mobile credit spreads incredibly tight? >> john, i am not in the business of predicting whether it happens and what happens. where people have been wrong in the past including last year, is ignoring the technicals. the technicals right now are incredibly verbal. so the question for me is --

there is money in the sidelines that can be put to work. no dips will be viewed as buying opportunities. the thing i worry about most is the sense that growth is going to disappoint with a downward risk. this comes against the universal romance with the softest of all soft landings. secondly, a recognition that the fed is not going to validate what is being priced in right now in terms of cut. >> was the first rate cut coming, mohammed? >> might win feeling is that it will come -- my gut feeling is that it will come in the beginning of summer, colic june, maybe july. in that it will be 25 basis points. not only do i think that is what is going to happen, i think that is what should happen. paul: that is bloomberg opinion columnist mohamed el-erian speaking bloomberg's annmarie

hordern and, in farah. time for some morning calls ahead of the asia trading day. one of last year's best majors in emerging market debt is getting a fresh boost, the federal begin cutting interest rates. the u.s. investment manager gmo is bonds are already attractive in e.m. with, cheap currency valuations and the ongoing disinfection process. bassy headset when the easiest article is likely to start could be -- a catalyst for even -- they say that hints of when the using cycle will start could be a catalyst. that is on the back of bets that the ecb will cut interest rates in april ahead of the fed and the bank of england. they say that the euro's emergence as a popular funding currency might have far-reaching consequences -- austria is already looking for alternatives to bill young of their funding currency of choice. let's look at how we are doing in australia, the asx has been treating 35 minutes now.

we are flat, coming back from the long weekend, we did of course, a public holiday here on friday. new zealand stocks in positive territory, up 0.4%. nikkei futures looking pretty good. futures for the s&p has started treating, off by 0.25%. u.s. markets were a little flat, a little bit mixed at the end of the trading week as well. they can use in oil, brent right now is up by more than 1% after, of course, that attack in the middle east. three u.s. troops killed, 25 wounded on that drone strike near the syrian border. the oil price rising today. china evergrande group will once again, tried to fend off liquidation under court hearing that is happening there on monday in hong kong. this comes after they won a surprise reprieve in one of their long-running lawsuit eight weeks ago. for more, let's bring in asia investing editor russell ward. what can we expect today?

russell: that is the big question. whether this will finally be the hearing that results in an order for a windup of evergrande. this case, as you know, has been dragging on for 18 months now and the judge has been losing patience with evergrande on the lack of progress towards a restructuring plan. remember back in september, its main plan collapsed and its chairman was detained. he has been questioned by authorities. since then, the judge hasn't really been saying, look, evergrande, we need to have concrete details on this plan. . in last month's hearing, it was supposed to be the final hearing, the one where, it would be a last chance for evergrande. the petitioner decided they didn't want to pursue immediate liquidation so there was one more adjournment. so one of the questions is what

is the petitioner going to do, whether they will still hold back, or whether another petitioner might step in. we are hearing that one of the major critics to the group of bondholders is considering switching sides and has been very cruel restructuring, but is also running out of questions -- pro-restructuring. it is also running out of patience. so the need to convince the planned that this restructuring plan that actually go ahead and for the trigger on a windup order. annabelle: we know that case is scheduled to be held in two hours from now, but it's not just that hearing and focus, there is a separate one later this afternoon. this one is a regulating order. what exactly does that mean? russell: it's out of an extra layer of intrigue to today's proceedings. this is a so-called regulating order hearing which is very rare, it has not been used much

with similar proceedings involving chinese developers in hong kong. it gives the court the power to appoint a liquidator. so really this is not a good sign ahead of this morning's hearing, it could indicate that there leaning towards the winding up. it just adds an extra layer of question over what is going to happen today. annabelle: russell ward, certainly something move the tracking closely after many weeks and months of interest issue. that was our asia investing editor there from tokyo. . we take you now to a live shot of that hong kong courthouse where this court hearing will take place later this morning. it is agile for 9:30 a.m. local time, under two hours from now, watching if we see any sort of progress on the restructuring agreement that it has been trying to agree on with creditors. but no word on that as yet

either. more ahead. this is bloomberg. ♪

paul: it is time for "japan ahead" on "daybreak: asia." ." here are some of the stories were watching. approval ratings for the japanese prime minister's inch

higher in polls, just as the minister continues to deal with the fallout from the funding scandal. meanwhile the nikkei reports that japan is considering adding truck drivers to the job immigration list. tokyo metro might also be listed under this year. , we have also got japanese markets at the top of the next hour, 20 minutes out from the start of trade. so far we are seeing futures pointing to modest gains at the open. perhaps supported in part by that japanese yen, continuing to treat around the 148 mark. the context for today's session will very much come downtown middle eastern tensions, because you are seeing bond futures, for instance, gaining. oil moving up 1% in the early part of trade.

. brent crude and wti, after the u.s. and iranian-backed militants killed service members. it is perhaps the most lately into the safe havens. japanese equities on a tear so far, over the course of this year, also key to watch for their direction this week will be earnings. we have japan's leading lenders due to report after the doj governor left little doubt that an increase of the world's last negative interest rate is in the pipeline. bloomberg breaking news editor garth allen joins us now from tokyo. what can we expect to see this quarter from the bank's phone operations, do you think? >> we have two of the three meta's reporting this week. looking at what analysts are estimating for them, it seems that the corporations, the lending profit e income has been relatively solid, but they're looking to hit a slightly lower

net income this quarter as treating operations have been fairly -- trading operations have been fairly difficult. paul: we also have japan's biggest brokerage, nomura this week. how is their performance looking? gareth: looks like they will breakout of three years of declining profit that they have been mired in for the last three years. they are forecasted to grow by 5010% according to estimates for the full year. we will have to watch how their renewed focus on renewed investment management business helps them and helping them contribute ¥100 billion by 2030. they are also still constantly restructuring their wholesale business and cutting costs, so we will see how that is progressing. the net income figure in the third quarter should give us an indication of how they will progress through to the end of the year. annabelle: annabelle: we have seen bank stocks whipsawed a

little bit in japan with these changing expectations around what the fed was going to be doing next, so how do you think the boj policy infant will play into those numbers? gareth: so last week, the boj's boj stood pat. given the impact of the earthquake and still the boj wants to get more data around how wage increases are going. of course, the expectation is now that suddenly in the first half of this year, a lot of economists are saying probably april will be when it is lifted, and that is going to be a big boost for bank earnings as funnily we get out of this negative-interest rate world that has been really hard for banks and they will be able to raise rates on lending which will give them larger margins which will be positive for profits going forward. they are bullish on banks at the moment.

if the boj starts to move, it will help earnings for japanese banks going forward. paul: breaking news editor garth allen in tokyo. this company predicts the bank of japan will scrap the world last subzero interest rate policy in march after hawkish science emerged from the boj's outlook report. economist takeshi yamaguchi from morgan stanley joins us in tokyo. i want to talk to you more about that call, you are not alone in seeing the boj ending negative rates in march. it is one thing to get to zero. how far beyond zero d.c. the boj going, if at all? -- do you see the boj going, if at all? >> we expect it at the march policy meeting. the impression from governor ueda's press conference and the

outlook report is that the boj is increasingly confident about the sustainability of inflation and wage growth. after getting rid of the negative interest rate policy, we expect one additional rate hike in july by 25 basis points from 0.25%. that is as far as the boj can go in our forecast. paul: with inflation, though, we did see a miss from tokyo cpi last week, how sustainable do you see that 2% inflation target being, and do you see a scenario where they could have to ease again? takeshi: tokyo's cpi is a bit misleading in the sense that it was affected by the decline in energy prices and inflation. but also a pivotal factor played a role, volatile charges. i think the boj intends to get

rid of these temporary factors. and look at the underlying inflation trend. especially the service component. if you look at the ppi services, it still remains high on the back of solid wage growth. the underlying inflation trend is still resilient. and we don't expect any additional easing measures in the near term. paul: you mentioned wage growth, of course, a critical piece to this puzzle is the shinto spring wage negotiations. what do you expect? takeshi: the first results will be released in march in which we expect around a 4% headline wage increase versus 3.6%, 3.7% wage increase last year. this is merely for the large companies. but, governor ueda already made

it clear that the boj will be able to make a decision without waiting for the results of the spring wage negotiations. that is where we expect an early move by the boj in the march monetary policy meeting annabelle: can you give us more context on that? because a lot of -- the majority of economists are actually expecting april, following the outcome of those wage negotiations. what is it about march that you think is the reason they should be lifting rates at that point in time? takeshi: the boj published its quarterly outlook report in its april policy meeting so april is also a risk scenario. we attach a slightly higher probability to the march meeting because the spring wage negotiation results will be released before the march meeting.

also, the boj can take the aggregated profits of smaller companies by the ministry of finance's corporate statistics report which will be released in early march. also, ueda has a track record of releasing earlier than market expectations for for example, last july the boj adjusted ycc. we had expected an adjustment, but at that time there was no policy change. ueda did it again in october. our question is that the boj is ready to act already -- our impression is that the boj is ready to act already, so that gives a slightly higher probability to the march meeting. annabelle: i am curious what you think about kazuo ueda's performance so far, given he is about nine months into his term there. do you think his communication style has changed at all? takeshi: yes, there is some

uncertainty. some debate among investors about the way ueda san communicates. especially his challenging commentary last year. but i think he clearly laid out how the boj normalized policy at the january monetary policy meeting, so i think -- our impression, judging from governor ueda's press conference and also the outlook report, i think the boj is ready to act right now. paul: i want to quickly get your view on the yen as well it is looking pretty weak, at 148.13 but this week and it has been pushing up the price of imports. can you foresee the direction of the year and changing as monetary policy for japan and

the u.s. begin to diverge? takeshi: yes. the house view of the yen is 140 at the other this year, that is forecast by our fx team. we expect the boj to get rid of the negative interest rate policy followed, by the 25-basis point hike in july. so the focus seems in-line line with the boj call. annabelle: that was takeshi yamaguchi, chief japan economist from morgan stanley. you can catch "japan ahead" every week on monday at 8:48, at at 7:40 p.m. on sunday in new york. bloomberg subscribers can watch as live on the terminal using the tv function. this is bloomberg. ♪ were you worried the wedding would be too much? nahhhh... [inner monologue] another destination wedding?! we just got back from her sister's in napa. who gets married in napa?

my daughter. who gets married someplace more expensive? my other daughter! cancun! jamaica! why can't they use my backyard?! with empower, we get all of our financial questions answered. so we don't have to worry. can we get out of here? i thought you'd never ask. join 18 million americans and take control of your financial future with the real-time dashboard and real-live conversations. empower what's next.

paul: we have got to talk about it, annabelle, the aussie open. all over permit we have in you champion, yannick center. you must have watched it. coming back from two sets down to defeat daniel medvedev. you have to feel for poor old the new medvedev. six grand slam finals, and he has lost five.

annabelle: that's right, and it is actually his third time in the australian open where he has unmanaged to clinch a victory. but yes, paul, to answer your question, i watched every single set of that very thrilling game. he came into it and medvedev convincingly took those first two sets. he was laying a lot better than he had in his prior performance against zverev. but last night it was not decider that shifted the third set, sinner taking that. you saw him come back in the fourth that a lot more convinced of his capabilities and really drove it home. it's been an incredible, incredible start to the year for sinner pop, who caps off then end of last year some really key defeats against the likes of djokovic, for instance, a lot of people didn't realize he defeated djokovic at the australian open. but actually the last three times he played djokovic he had

already beat him as well. paul: yeah and that semifinal was also critical in this victory. but he has a long way to go, doesn't he, before he beats djokovic's record at the australian open. i think he has to collect nine more titles to equal's djokovic's record of 10? could be worth seeing a change of the guard in men's tennis. annabelle: that's what it seems like. at 22 years old, he has quite a lot left in the tank, joining the likes of alcaraz. an interesting two weeks at the australian open. in the next hour, more on markets. bloomberg audio tells us why they think china's latest stimulus measures are not game changers. and we discussed the mainland banking on operating sector with jeffries. the market opens in seoul and this is bloomberg. ♪ tokyo are next.

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>> this is "bloomberg daybreak: asia." the sort of dredges upon us for japan and south korea, that is not just the focus on equities today because we are having to watch a residual base in singapore kriti gupta k-swiss -- singapore putting out its first policy decision. paul: the monetary authority during quarterly meetings, but we are not expecting any change today. we will have the decision immediately. one area we are seeing movement is in the oil space on the increasing tensions in the middle east and energy start sketching a bit today. annabelle: certainly going to be expected to watch and track the demand we are seeing for havens this morning, we are getting the