anchor: donald trump overshadowed the fed, discussing stimulus, inflation, and the pace of future hikes. asia-pacific markets are sing tracking gains after the more dovish tones of the fed. watch out for fakes. alibaba sues vendors accused of vending fake swarovski timepieces. new role augmenting

that shopping experience. this is the second hour of daybreak asia coming live to you . i'm shery ahn in hong kong. it is just past 8:00 a.m.. i am betty liu. we have heard a variety of opinions about where shocks could trade -- stocks could trade. others are still sounding a bit of a caution, saying the fed pretty much has it wrong in terms of how many rate hikes they are going to go through. we are going to hear from one guest in a few minutes who has his own take, unique take on the fed. is interesting to me is fed officials also mentioned the headwinds stemming from a stronger dollar. our next guest also saying the dollar could surge further. also pointing that the yen could surpass 150, which is a pretty bold call.

if itof people think passes 120, you're going to see some criticism coming from the u.s.. that is something we need to watch. betty: in the meantime, stocks did advance on release of those fed minutes earlier today. this trump rally just goes on. we have a lot of analysts saying we will at least see the rally continue through midyear. green across the board. the dow back within 60 points of the 20,000 marks. it was all about cars. tesla i big riser. they are on track with their battery production. gm and ford, it is all about near record auto sales. let's talk about some of the stats. gm leading the raid to record sales. analysts are now cautioning that 2017 will not be quite as

robust. there will be some shrinking. it certainly ended in a much stronger note than anyone anticipated. betty: some big news out of the retail sector -- shares from both macy's and kohl's plunging after hours. give us an update on that. guest: a holly disappointment -- a holiday disappointment. , a bigiday sales disappointment for macy's. they were down from 2.7%. they are going to cut 6000 plus workers. they earlier announced they would close about 100 less than positive performing stores. they are cutting back on management. it is really a tough road for the retailers. pointing out a weakness in areas such as handbags and watches. after the bell, we saw kohl's stock plunge as much as 13%. they cut their fiscal 2016 forecast in a very big way.

the story not just week holiday sales, but a continuation of a trend where many of the holiday sales are going online, not into the big-box retailers. there are some retailing couldts predicting this be the front end of what could be a nationwide wave of hundreds and hundreds of stores closing. shery: not surprising how much we shop online. let's not get the first word news with courtney collins. donald trump has picked a wall street insider to be its top regulator. despitepite regular -- railing against the industry on the campaign trail. clayton has recep -- has represented financial firms, including goldman sachs during the 2008 bailout. the former bfi banker convicted in relation to the troubled fund

will appeal. he was given 30 months jail for witness tampering. he is the third bsi banker to be found guilty in singapore. he also faces charges of money laundering. two others were jailed for four -- for forgery. india has announced dates for election that could doubt the popularity of the president's narendra modi's decision to abandon higher notes. the polls will be held in february and early march. results will be announced on march 11. we are told indian favorites have deposit nearly all of the potential drive to ban benefit.

the measure has hurt growth in a country where the vast majority of transactions are in cash. news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, i'm courtney collins. this is bloomberg. betty: alibaba has become the first in congress company in china to take legal action. it is suing to vendors it claims used their websites to fail fake swarovski watches. , this is small. so why the significant? timeter: it is the first they have taken legal action against these sellers. they really want to show the public, they want to show merchants that there really serious about this. they are cracking down and will punish these fake sellers. it is an especially big dale

considering that the u.s. put them back on the blacklist. they want to show their taking real action against it. they're working with local raid thees to opposites and confiscate these fake goods. betty: this comes, go ahead shery. shery: i wanted to ask about the u.s. they listed it as a notorious market. how would this affect alibaba's business? hurts their credibility on this blacklist that the u.s. government has created. it includes flea markets and pirate bay, torrent website. they do not want to be on that list. alibaba still has not done quite enough. type of listing really will hurt their ability to work with overseas sellers and brands to list on their website.

given how alibaba is wanting to expand overseas, that is crucial. looking ahead, take note in india. on highe minister's ban for bills might not have had the desired effect. next, we talked to one of wall street's top economists comeau ranked just behind warren buffett as the best market forecaster. ♪

betty: this is daybreak asia. i'm betty liu in new york. shery: i'm shery ahn in hong kong. we have seen the dollar was just dragged down by those fed minutes. that is affecting currencies across asia. let's get a check of how markets are shaping up. i think it really

highlights how quickly markets can change. thatrt of reminds you happened a few days back. when you did not have a big dollar move overnight, that quickly was reversed. we are seeing a lot of dollar strength coming through -- dollar weakness, rather. a big spike here. we're still trying to understand what is happening. a few days ago, the liquidity disappeared after a certain point. 104.80 on tng at euro to dollar. of i'm guessing about 65th on the euro. this is your level at the moment. session atout the 117.25.

a lot of dollar selling came through and we are currently at these yelp -- at these levels now. the yen is currently stronger by about half of 1%. this basically takes that to levels -- let's take a longer-term look at this. ,uickly checking into markets we are still seeing some gains in australia. you is your level to take back to may of 2015. the nikkei since some pressure because of the sudden strength in the japanese currency. south korea is flat. have a look at these moves. gmm obviously. south korean yuan up 3.1% against the dollar. dollar in the aussie terms of the magnitude. a lot of this coming through as far as the yen and the euro.

in the meantime go all yours. betty: thank you so much for that. has littleest respect when central banks cut their reference rates to 0% let's bring in gary shilling. thank you so much for joining us here in hong kong. let's talk about growth, the potential of growth for the u.s. , and the fact that you think the fed will probably once again fall short of interest rate target. guest: they have been overly optimistic on inflation and how many times they were going to raise rates and when they are going to. they've been doing it throughout this economic expansion. they obviously are way ahead of themselves in terms of the strength of the economy. oft will probably fall short

the three rate increases they have indicated their planning for this year. shery: the environment seems to be different with the election of donald trump. the fiscal stimulus coming through. guest: the applications are there, but not the reality yet. voters in europe and north america are mad as hell. really are calling for action. that is what got trump elected. this is a universal situation. i think we're going to have massive fiscal stimulus. it has to get through congress. all of these so-called shovel ready projects, they haven't even made their chuck that -- have not even made their shovels. they'll be made in china anyway. i think the markets have jumped the gun on this whole situation. , his other big measure

is protectionism. that is something the president has a lot more power over. fiscal stimulus, congress has tremendous control. we will see what the president does on the protections front. he is interested in particularly going against china. shery: you know how vocal president-elect trump has been so far. sayingrprised that you it will take the end has 150. they were saying there would be some backlash from the u.s. guest: oh sure. this hurts u.s. exporters and it hurts u.s. multinationals because of the curncy translation losses. the whole worlis currently trying to devalue against -- and the dollar is an international currency. japan once to devalue, the ecb wants to devalue. everyone wants stronger economic growth.

the quickest route is cheaper currencies. shery: i don't think that necessarily means that will happen. what is your timeframe for ¥150? guest: a good forecaster should forecast when it could happen or how much could happen, but not both. it is possible. shinzo abe wants that. that is one of his three aeros that has any chance of working. structural reform has not happened. fiscal stimulus, they did decide not to raise the sales tax again. this is the only thing he has got. i think they're just cheering on a cheaper yen. shery: do you think japan has any chance of balancing their budget by 2020? guest: no, but i don't think that matters. ago,u look back until year fiscal austerity was the rally

cry in u.s.. now that is gone by the board. the whole point is you just have not had the growth. it didn't do anything. creditworthy borrowers did not one of borrow. quantitative easing push-up stocks. the people who benefit from , institutions and high net worth individuals, they do not increase spending as the portfolios go up. policy, it doesn't work because they are working for meant -- for fiscal stimulus. central banks do not want to see higher rates. speaking about fiscal stimulus, i want to get back to what is going on here in the u.s. what is interesting, we may

-- actually see the debt load get bigger here under a trump administration that under obama, even though both have been calling for expanding fiscal stimulus. it wahard for president obama to get that through a republican congress. donald trump might actually see that being an easier task, in which case we might actually see dead exploded under his presidency. guest: i think it will. we had deficits back with the recession, and the big fiscal stimulus and 09. i think we will achieve that. anyone in congress who want to get reelected, and they look around and see voters are and as hell -- mad as hell. you know that old movie network. that is where voters are in europe and north america.

anybody was to get reelected realizes they have to do some ink. balancings big land, the budget, you go back to the end of 2015. they went to do a big highway spending bill. austerity is gone. it is now stimulus. betty: that does mean higher rates. it could. i think it is helicopter money. i think the feds are going to finance it. that is what they did in world war ii. 25%y supply was increasing annually. back then it was a shooting war, now it is a war on slow growth. betty: i don't want to confuse fiscal stimulus. helicopter money is from the fed. that would naturally lower rates. if you're talking about pouring expanding fiscal stimulus, that might possibly mean faster growth. that may mean higher rates.

fornder what that means let's say the housing market in the u.s. guest: all i can say is the treasury issues those securities and the fed buys them. in other words, they just cash through the markets very briefly and any effect on interest rates is nil. we are in an excess world. when you have more supply than demand, prices go down. you look at what globalization has done to open supply in china , and moving on to bangladesh and vietnam. 800 pound growth coming up is india. the world is awash in supply. possibility of inflation in the future. seeing signs of more stabilization in the chinese economy. i am puzzled by the possibility still of an upheaval in china,

more coming from the political side than the economic side. is notpresident xi embarking on this completes top-down control. he is big brother, 1984. he is not doing that just because he feels like he wants to be the -- beat up on people. he is doing that because the chinese economy just doesn't have the growth. they are trying to move from an economy led by exports and infrastructure to consumer spending. the expert market is in decline. you go back five years and more. they are declining. the experts go to north america, europe, slow growth. they don't buy much of anything. in terms of infrastructure, you get ghost cities, excess capacity, but you also get debt, which is about 20% of gdp. china has a serious problem. one thing i think chinese leaders realize is that a lot of ,heir predecessor dynasties

they got tossed out because of civil unrest because of high unemployment. that is the one thing these guys cannot tolerate. what do they do? they clamp down on things. was theract in china government delivers reasonable growth and pushes people had. that has happened for 20 years. the populace in turn keeps the nose out of politics. that is being challenged. the growth is simply slowing down. china, 6.7%, that is probably twice reality. you look at railroad activity and power generation and steel output, it is probably more like three or 4%. probably always been overstated. it is more likely to be overstated now that it is slow then back when it was when it was faster, and that is a matter of saving face. true. that could be well there is always doubts about the severity of china's data.

provocative thoughts. the president and founder of a gary shilling. from weird tod wonderful. the gadgets that could generate a buzz at the consumer electronics show in vegas. this is bloomberg. ♪

betty: the consumer electronics show in las vegas opens doors to the public on thursday. while auto tag is set to dominate, augmented reality is also sent state. that's also center stage. our tech reporter joins us. tell us the vision behind it. debt it iss quart of sort of like a baby step into the future. it is like the smartphone apps that were using the digital overlay.

google has the capability they're starting to put in the bones. they're testing this out with bmw and gap. you could look at a virtual image of a car in your garage or drive way before you buy it. shery: one of the limitations? reporter: it is while to go. there on two different android phones. a lot of sensors and cameras are involved. betty: certainly there is some predecessor? who could challenge google in this market? google has tried with google glass, and that was a failure. --rosoft has hollow lens hololens. apple has not announced anything publicly. the ceo talks about augmented reality and making it a consumer technology. plenty more is happening

at ces on bloomberg television later today. a you johnson talks to caroline hyde at: 30 p.m. eastern u.s. time. tomorrow, i will be speaking with garlic going. that is that 8:00 a.m. in hong kong, 7:00 p.m. thursday eastern. ceo on joined by a friday. t-mobile letter from will be unveiling his next on carrier movement in the u.s.. the fed minutes and why policymakers could be facing a new problem. this is bloomberg. ♪ with the xfinity tv app,

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wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. a: 30 a.m. in singapore. it is a clear day. we will see and markets continue to rally. we are a half-hour hour from trading. i'm shery ahn in hong kong. you're watching daybreak asia. let's get the first word news. u.s. automakers enjoyed another record year. discounting the last two months pushed the industry towards its seventh straight annual sales game, with all major

manufacturers beating estimates in december. total sales are expected to top the previous record of $17.5 million. the road is rocky. they will see the first a significant sales decline in years. the firsts become e-commerce company in china to take legal action against sellers of counterfeit goods. it is suing to vendors it says used its website to bet that's to sell fake swarovski watches. it intends to seek similar legal actions against other vendors. this comes after it was placed on a notorious markets list. according to bloomberg data, the eight-year-old currency bitcoin on 1001 hundred $40 and $.64 wednesday. ont's 1001 hundred $40.64 wednesday. to its popularity in

countries with capital or currency restrictions. indonesia says it will allow jp morgan to continue to do private business despite cutting official ties with the company. the finance ministry says the bank is still allowed to operate, but will not have a contract with the authorities. jp morgan was suspended as a primary dealer of government bonds after the bank downgraded indonesian stock. global news 20 for hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. markets across japan feeling a bit of the downward pressure right now. the topics gaining 3/10 of 1%. after getting almost the most at the open of 2017. c what is moving -- let's see

what is moving in the japanese markets. reporter: we have been watching shares for four days. this. look at we were up by double digits earlier. let's take it back further. what we doing over the past week. it is hard to imagine. before the u.s. election, that was trading well below ¥400 up top. -- a pop. they may be putting that airbag issue behind it. that is that. the other big market story is what happened in the forex markets. dollar-yen. some traders now telling bloomberg that this drop you are seeing in dollar-yen is down to the fact that you had a lot of these positions getting liquidated. that may have triggered some

stop losses. are saying, you look at dollar-yen and you look at the unwinding of those positions . is atser extent, the euro 105.24 for the currency. across the major, this is how those to look. cable, 123.40. we are seeing broad dollar weakness. will be talking about this in just a moment here. 687 is your level. we have seen a bit of an increase, but nothing to write home about. take a look at commodities.

about 3.5%. there is a lot of trading going on here with bitcoin. it is not apples to apples, but at some point this might overtake the price of gold. not really sure what that triggers. wti crude is flat after successive days of gains. traders and china are bracing for tighter liquidity. demand for cash surges before the start of the lunar new year holiday. oney markets were extremely .ight bonds is acai selloff in december. where are we now? reporter: money markets did have a con start to the year. .ou had a purchase rate part of that is a seasonal tightness. another part of that is if you

remember, the pboc kind of started this liquidity crunch. there's also a bit concern about the situation. who is injecting the most cash. ,he most on record last month the pboc itself wants the situation to get a bit better. betty: can we expect the relief to continue? reporter: there is still some factors hanging over the markets. there is chinese new year coming up. it actually falls a bit earlier than usual, at the end of january. the other point here is also the yen. the depreciation pressure is mounting. april are worried there will be more capital outflows. thing is that if the u.n.'s week, people are worried the authorities might want to

keep rates high. betty: much more ahead. president-elect donald trump plans to boost the economy with tax cuts and influencing the fed rates decision last month. we have the latest on the fed minutes. what did you think of them? i was just speaking to bloomberg radio in hong kong. these minutes a very banal. i say they are always very banal. the fed spends weeks writing these minutes. they are very precise. is the federal reserve was weighing the real possibility that donald trump or a republican house of sedatives and republicans senate is going to get spending hikes and tax hikes through. -- tax cuts through. because of this, almost all of are seeing for

economic growth increasing as a result of prospects for more expansionary fiscal policies in coming years. that is clearly a reference to donald trump. the minutes go want to talk about an undershoot on unemployment. if you think about inflation undershooting, this is the other side of the coin. you can have more inflation. you look at the t-shirt -- g chart, look at where was at the top of the recession. it is back down to 4.6. if you look at what the fed is expecting now for 2017 unemployment, it is already almost as low as they expected for this whole year. let's look at something else the fed said based on this whole concern about unemployment. many participants judge the risk of an undershoot increased somewhat, and the committee might need to raise the federal funds rate italy been

anticipated to limit the degree of undershooting. does that sound a little hawkish maybe? minute, the fed is waiting to see what's donald trump actually does. they reiterated they are on a gradual rate hike half. they are clearly on guard now. shery: hawkish, doggett, what is this me for rate hikes in the market? reporter: stocks rallied after this. the bond market actually dipped a little bit then came back. the fed itself is looking to do three rate hikes this year instead of two. traders are still doubting they're going to work. go to the left-hand side, june 14 is the first fed meeting where traders see the rates of a fed hike up about 50%. they are still not on board with this idea of more rate hikes.

very important, all the more reason to look at this jobs report. we know that the bloomberg consensus survey psalm 180,000 jobs. after this emphasis on the unemployment rate, as you go down your screen to just about a .hird of the way down unemployment rate is the very bottom. the survey now is looking for a slight uptake of 4% -- 4.7%. i think we're going to pay a lot more attention to unemployment that may have in the past. a lot to watch, including donald trump. he may be driving the fed in the bond market. shery: nearly all of the high denomination notes dan india have been deposited in the banks. that is according to bloomberg service -- sources. 500 and 1000st rupee bills.

this is a huge move in order to fight corruption. in order to get that black money out of the market. where does prime minister modi stands now in his anticorruption drive? reporter: let's take a look at the numbers. india has something like four 2.9 7 trillion rupees -- 14.9 trillion rupees. that is about $20 billion worth. that is 97%. 15.4 trillion rupees were taken out of circulation. the government has estimated that about 5 trillion would remain undeclared. that means that is black money or money that has illegally escaped. what they're looking at is that most of the money, what's the government thought was maybe black money, has been returned. certainly a lot less black my

floating around. that is what the figures are implying. gets modi's credentials in the way of the person to drive that anticorruption issue, and also to get more tax credit in. it was issued on november 9. we still have some money coming in that could still be floating around. we also know that there are still some provisions for those were living outside of india and abroad. untilners and india have june or 30th to deposit notes. indians overseas have until march 31. indians living overseas have until the end of june. there may be a bit more money still floating around. of these opponents have criticized the move. economists, don't they see it as a positive step in the long-term? reporter: if you look at the figures initially, it could add

some firepower to those who are criticizing the move to remove these notes. the economy has of course been impacted. yearmic growth for the according to bloomberg data is six but i'm percent -- 6.9%. economists do say yes, and the long-term this will be better for india and also it is a one-time move, so it should not have to happen again. thise the ruckus over whole note issue. what you want to do is go long with the rupee. it is attracting investment for work in india. that should give india a lot stronger case to stop capital outflows. betty: thank you so much rosalind chin.

still ahead, the fed's unexpected challenge. a u.s. economy running hotter than predicted. the possible policy claim of the economic cycle institute that is next. this is bloomberg. ♪

betty: this is daybreak asia. shery: a quick check of the latest headlines. holding backs been claims that it misled its investors. a sanmpany had asked francisco federal judge to dismiss the hearing over its emissions trading. ailed in hisirman attempts to have the judge blowout shareholder claims against him. haslett has flipped the switch on its china battery

plant in nevada. sales produced its first the power storage products and the upcoming model three-car. aremostly thousand people employed at the site. bmw will put its self driving cars to the test as it prepares to introduce a fully autonomous vehicle by 2021. 40 self driving cars in cities in europe and the u.s.. they will help the production of the so-called imac, which will replace the seven series of the bmw production model. betty: the fed may be facing a challenge it has not seen in years -- the economy is running faster than policymakers predicted.

it is great to see you and interesting, because you follow after our interview with gary shilling, who has a terrorist take on thearish global economy, especially in the u.s. he believes we are just one step away from a possible recession, and the fed will fall far short in promising their rate hikes. where you stand? cycles. am looking at lking at cy and focusing on cycles, we can see what is happening in the near term. what will happen of the next few months of quarters. there is no recession imminent. in that regard, i think we would differ from mr. schilling. by seeing what is cyclical, you can also look at what is left over. it may be structural. for many years, especially since the great recession, equity has been pointing out there is a

long-term problem with growth. i think that is what mr. .chilling is keying off of i would agree on that point. within the structural slowdown in overall gross, there are still cycles. cycles have not gone away. signal had a very clear on our leading indicators of growth and our leading indicators of inflation. they both turned up, and they turned up before the november 8 election. that is important. there has obviously been a lot of turmoil, and a lot of upside volatility in the market. toot of that is attributed the election. i think that is a misread. is not that there is no trump the fact. i think it is actually piling on top of a cyclical upturn. perhaps accelerated by

the sentiment after the election. some do say that this rally we have seen, we are right near dow 20,000. is it because animal spirits are coming back to the market and truly just a momentum sentiment at play? i think we could look at market prices to say that is actually not true. when you look at 10 year yields come you see they bought in august basically globally. in yields inove the u.s. occurred before the election. some more afterwards. something was going on, and i believe it was cyclical upturns in inflation. cyclical upturn in industrial growth. subsequently, some upturns in overall growth for major economies. is a fundamental

move that is not related to the election. shery: if inflation doesn't fact past 2%, what do you buy? if i say buy gold, would you get into miners in order to hedge for inflation? speaking about growth outlook and inflation outlook over to markets, i think there is a lot of other issues going on. obviously monetary policy, the banks are wondering what to do. .he fed is confused what do we do? there might be some fiscal upturn and we have this inflation that we did not necessarily -- maybe they're asking that question. typically they overdo it. maybe they get a bit scared by inflation. the concern about structural issues comes back into play.

that is where the fed can make a mistake. in terms of equity valuations and things like that, it is little trough to draw a straight line from what we are doing to what is going on there. , we have a yields cycle upturn in growth. we have a cycle upturn in inflation globally. we are talking about inflation in china. we are talking about inflation even in japan. and then in europe and the u.s.. shery: thank you so much for joining us. cong u donald trump takes a wall street insider to oversee wall street regulati. is it a case of the fox guarding the henhouse? this is bloomberg. ♪

asia. this is daybreak i am betty liu in new york. shery: i'm shery ahn in hong kong. a quick look at what is coming up over the next you hours on bloomberg. our eyes on china. rishaad is joining us. what are you watching us? reporter: we're going to be joined by betty liu coming up and about 55 minutes from now. everything should point to more

stability and a sort of reentry -- sort of reorientation of the chinese economy. the chief investment officer of ocbcvate bank of oh cbc -- sees donald trump's election increasing the risk greatly for a recession in the united states. least at about 12 minutes from now, we're going to about the french railway company and if it is threatened by china's high-speed railway programs. is it a threat or something which presents an opportunity? more to come in the next couple hours of bloomberg daybreak asia. betty: thank you so much. take a wall has street insider to be his top regulator despite railing

against the industry on the campaign trail. there is some tension surrounding this combination. reporter: definitely from progressives. a lot are saying this is in fact letting the fox guard the head house. topas basically represented wall street firms. he will be potentially regulating them. planning on dismantling the dodd frank act. the frenzy have represented include archer hathaway and goldman sachs dazzles bear stearns. mr. trump has said his praises -- sang his praises. he says we need to undo many regulations which have stifled american businesses. senate need confirmation, and he is likely to be grilled very hard. he is the latest of wall street insiders were surrounding trump and.

his own wife is a current banker over at goldman sachs. she has been ever since 2000. some ethics lawyers say that could be a potential conflict of interest. for us.hat is it putting more still to come. bloomberg markets: asia is up next. we are counting down to several more market openings in asia. sherry? shery: we're talking about hong kong in just a few minutes. market is gaining again. withll have the latest rishaad salamat on bloomberg markets: asia. that is next. ♪

david: did you think you would grow up to big the ceo of a large company like pepsi? indra: it is a dream come true. david: when you get advice do you ever listen to it? indra: you never know if a nugget can translate into a success for the company. david: not long ago an activist showed up. indra: my job is to make sure the company is performing very well. david: suppose somebody has a product from a company that is based in atlanta and you see it in their refrigerator, what do you do? indra: i let it be known i'm very unhappy. >> would you fix your tie, please? david: people wouldn't recognize me if my tie was fixed.