>> the trump of fact -- fiat chrysler is the latest to come under pressure from the president-elect. >> china's currency reserves slumped as the yen site the best slide into decades. that china backed asian infrastructure bank is open to u.s. membership. we will hear exclusively from the president. >> to samsung executives face prosecution under the influence

scandal that brought down the president. bloomberg's daybreak asia where it is just asked 6 a.m.. yvonne: what a week. i missed the price action we saw on dollar-remember he. nimby.ar m feels like another spark on this dollar rally. rise we did see markets for the entire week and we came within a hair's breadth of that psychological 20,000 mark. if we don't get there sometime during the course of this week, we have u.s. retail numbers as well as bank earnings coming out by friday. yvonne: things are set to open

here with new zealand starting things off already and stocks pretty positive. the kiwi dollar at 69. we are expecting some building approvals data. putting much unchanged at the open. the us at 72.98. aussie dollar at 72 .98. let's head to korea. japan is closed today for coming-of-age day. they are celebrating the 20-year-old who officially become adults -- they are old enough to drink, drive and gamble. maybe they are outspending with their yen right now. to expectook at what in the region this morning. how does that set up for wall street this week? the scheduled trump speech is coming up. for the first part of the

week, it is political heavy. we are looking ahead to january 11, wednesday, when mr. trump does his first general news conference, his first since he was elected president. let's stick with donald trump because fiat chrysler is saying it will invest a billion dollars in making three jeep models in the u.s. president-elect donald trump has been pressuring the auto industry to hire workers. su keenan has the details. : this is not just about three cheap models, it's not a truck made a new mexico -- made in mexico, likely scoring points with the new president. areautomaker announced they adding 2000 jobs in the midwest and will make the ram heavy trucks in the u.s. right now, those are made in

mexico in addition to the three forms of jeep. this is a big infusion of money into two separate plants and this is likely viewed as a victory for trump. campaign theme he has carried through as the countdown to his administration taking over. he has been pressuring automakers and fiat chrysler shares were rallying into the new year and this likely puts as the good stead transition to president from takes place. let's talk about the timing of this announcement. a similar story from florida and rival gm. afford last week announced they were canceling production of automobiles in

mexico and would instead invest in a mixed -- in a michigan plant. that happened, the company said, independent of pressure from the trump transition team but trump threatened general motors with an import tax -- if you don't ache in the u.s., you will be paying a tax. come -- trump's confidants will hearingstions in their in the coming week. add toyota you could to the mix of those caught in the fire. now it's good to first word news with heidi. heidi: at least 19 people have been killed in the widespread fighting across southern thailand. --provinces are underwater widespread flooding. rubber plantations have also been damaged. holiday resorts in the gulf of thailand have been badly hit with fairies and their services canceled. storms are forecast to try out this week.

four israeli soldiers were killed and more than a dozen wounded when it houston he and truck driver ran his vehicle into a patrol in east jerusalem. they were hit as they stepped off the bus. the initial inquiry shows the driver supported the so-called islamic state militant group. president-elect donald trump's team says neither he nor any other transition official will meet the taiwanese leader as she passes for houston on her way to central american -- central america. she did meet the texas governor and senator ted cruz. complained when trump braced years of protocol and took a phone call from her. the world's biggest venture fund says the going disparity between rich and poor is fueling the rise of populace around the world. the fund is watching developments that led to events such as brexit then the election

of donald trump and will act as it sees fit. they will remain a largely passive investor, but it is keeping a close eye on the markets. i.s. has been managing funds for over 100 years. our managemente style each time an unexpected event shocks the market. rather, we like to focus on the reason behind the event. brexit have a trump presidency are due to rising in equity or other world and we prefer to watch a these gaps are being corrected. heidi: global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: let's get to our top story in asia this morning -- foreignpile of exchangers are lost another $41 billion last month. let's bring in steven with more on this. we were able to keep it above beijingk how willing is

going to be to continue this? that is the interesting question. you get down to the level of reserve adequacy, but let me get to the numbers and we can go through the ramifications. by another 41 billion dollars in december, in line with forecasts, but it is a fresh five-year low. but in lot of reserves, 3.99, $4014, it was trillion, so it has come down by nearly a trillion dollars but much of that is in defense of the yuan to make sure it does not fall as fast as the market pressures have been putting on exacerbated by the theht of capital, which is

cart leading the horse and the horse leading the card. they are in tandem right now. right now, it has fallen for 10 consecutive quarters and a record 4 trillion in 2014. that is the situation right now. one china economist says that number might fall below $3 trillion, but how much of a psychological level is this for confidence? guest: most economists say 3 trillion is adequate. it is enough to meet china's needs. however, if you fall beyond that down to two and change, it is a psychological level that could produce more currency outflows and a lack of confidence. ubss reading a note from and most fx reserves are liquid china, but not for defending the yuan long-term.

she says the adequacy ratio to $1.75 trillion to $2.8 trillion and we are starting to get to the level where you cannot defend the yuan at these levels. yvonne: the latest on the chinese reserves continuing. executives from samsung are set to face prosecutors in seoul on monday. the company's co-vice your and president will be questioned over the widening political influence scandal surrounding the president. we have been following this story. what do you know now? guest: we know that one of the co-vice chairs of samsung and the president will be questioned by lawmakers and the special they are expected p.m.. they're going in to testify,

which means they are not accused of any wrongdoing. but that could change depending on how things go. this is important to this influence peddling scandal that has been surrounding the now impeached south korean president. she was impeached exactly one month ago today. the co-vicemonth chair of samsung electronics and the defect ahead of samsung among many other leaders taken in for questioning over a month ago now. he denied allegations samsung .ave donations accused of pressuring company's to donate tens of millions of dollars to her foundation but she has denied

this and remained in a detention center. developments have we learned since she was impeached? she has been questioned by lawmakers and refused to go to the national assembly. they held a questioning session at a detention center because she would not come out. colluding ind extracting business favors and says she did not ask for money. je business newspaper says woww i.e. was among other legislators slapped with a travel dan. a reminder about some big guests coming up today. later this hour, we will begin exclusively with the ubs group chairman and about half an hour and we will hear from the director of china's national comic research institute and

advisor to the pbs the. guest.er on, our special don't miss the greater china conference in shanghai. still ahead, we are looking at indian stocks have soared since the cash crackdown on why they may have further to rise. and up next, the key themes to watch over the coming 12 months. this is bloomberg. ♪

yvonne: you are watching daybreak asia. ramy: a quick check of the latest is no/headlines -- australia' when of industry says metallurgical coal will average $186 a ton as prices cool on rising output and slowing demand. the government sees overseas purchases following 251 million

tons. alphabet andne: fiat chrysler are planning to expand their a taunus fleet, the vehicles being a clipped with -- equipped with a new at-bat company formed under the google car project. china is one step closer to its drive in thomas cars. the collaboration is close to its debut with a model equipped with baidu technology, expected to break cover this april. the companies plan to conduct road testing of a vehicle that will drive itself and limited environments by the end of this year. the north american international auto show opens in detroit on monday and we will be there live at 7:30. gm'sll be speaking to chairman and ceo. to fordalso talk

chairman, will ford. yvonne: potential candidates to head the fed criticized the central bank for doing too much to helping a problem monetary policy cannot solve. now fromguest joins us sydney. great to have you and happy new year. tell me about some of these potential candidates speaking about this. what is the role they are going to playgreat to have you and haw year. given the fact we could be seeing more stimulus from the trump administration. could they be taking a backs that or more of an aggressive role? i think the message from the trump campus preclear -- what they want to see is a more balanced that her was her, one less focused on achieving short-term inflation targets and one more focused on structural

issues and focused on the various monitoring policy can deal with. i don't think it really upsets the current buyer at a moment. that thelding picture u.s. economy continues to look good even with trump coming in and sounding grading at times, what he's doing economically is tending to reinforces existing forces. what does it mean for countries like china that have been hit by the trump affect? we saw the fx reserves for december and other significant drain. can it stay that way given the fact that it seems the focus in defending the yen has shifted to capital controls? reserves will continue to

come down and i don't think we should be alarmed by that. reserves at 3 trillion are still ample. is issue as to what extent this occurring in an orderly way and to what extent is the extent on chinese markets limited? in recent months, things have been much better than they were around this time last year. the first week in january, we had a substantial destabilizing in the currency, so i'm not particularly worried about it. emerging markets, currency cycles are not symmetrical. appreciations tend to be fantastic and deep stand to be more destabilizing, so they are adjusting policies to address that. i don't think we should view that negatively. we have seen some

sizable moves and we've just shown the spread between offshore and onshore and it is the widest in six or seven years. do the bears avail given the fact we might see continued dollar strength? i think we will see continued dollar strength. i would not expect the spread to remain at those levels. the fundamental reason is this time, the dollar rally is different from what we saw. and the previous dollar rally was about economic divergence between the u.s. and other countries. we were deflating in economy bubble and this time, certainly the u.s. is most advanced in the cycle, so the fed is hiking. this,nchronous nature to expectations have generally gone up and not down and policy in china has shifted toward a

slight tightening. depreciation, yes, but not destabilizing, and i would be cautious about assuming it is anywhere more rapid than we've seen in the last six months. larry summers is blasting donald trump for wanting to deregulate the financial industry and it could hearken back to a financial crisis. i want to get your thoughts on whether you agree with that. i think broadly that the regulatory steps that have been taken to make the financial sector more prudent and raise levels of capital i think have been good and if we had them in place before the crisis, the crisis would have looked very different. anyher dodd-frank or particular regulation is appropriate is a whole other issue, but the point about trump more generally is that he is

shaking up the system and that feels uncomfortable. he's going to reverse some things that may have only been recently introduced but that doesn't mean they are bad. it just means they are different. thank you for your time. up next, why investors shouldn't worry too much about china's moves to control capital outflows. this is bloomberg. ♪

yvonne: the president of the asian in the structure bank says capital control should not worry investors. he says the economy faces a number of challenges, but nothing beijing can handle. i think china is faced with a number of challenges and particularly the restructuring of the economy, moving from excessive dependence on external

sectors to domestic consumption and improving the official -- the efficiency of the chinese economy, not aiming them play at the number of the world. >> is it time to drop the growth target because it seems to many to be a contradiction to talk about attempts to rein in some of these high debt levels while having this target, that you can't have both at the same time and something has to give. in my views, it is high time for china to address the complicated development issues now that china is moving into the middle income countries category. if you look at some of these issues like domestic debt, you will see it is not much different from the debt situations of other countries which happened in the last

century. 's debt is basically domestic debt. china does not have external debt at very high levels. growth can solve some of these problems and china's government would be able to address these issues step-by-step. what is most important is to make sure we and china were to go ahead adhering to the fundamental issue of restructuring and to address the structural issues. >> on the question of capital controls we've seen rolled out, does it suggest the imf was including the yuan in a basket? the imf made a good decision to include it in the currency basket.

wouldinese government adhere to the principles and keep chinese currency as a convertible currency and being increasingly a currency in the basket. but healing with the hard money that flows in and out, some measures to address this issue in my view is probably necessary i hope things will stabilize very soon and panicking on the part of investors will disappear. up next, positive on pay -- we will look at the tv takeaways from the latest u.s. jobs report and what it means for the fed. this is bloomberg. ♪

yvonne: good morning. it is 7:30 a.m. monday and hong kong. we are just minutes away from the first major market open. probably much colder where you are. yvonne: it is much colder here in new york. markets closed up nominally, but we were just a fraction away from that psychological 20,000 mark. it seems clear now but it was snowing yesterday. very cold. i'm ramy inocencio in new york. you are watching daybreak asia. let's get to the first word news. heidi: india says growth will

slow to a three-year low in the 12 months through march. that is before the effects of the cash crackdown are known. the forecast is not include data from november when the nation was shocked by banning high denomination notes. this is compared to the previous year's 10%. north korea says it may launch a long-range select any time and from any place. north stage, a spokesperson said the military has developed nuclear warheads. the north is in the final stage of preparing to test fire an intercontinental ballistic missile. beijing is taking new measures to tackle pollution after days of choking smog. from next month, the city will shut down high pollution factories to clean up their act

and restrict inefficient, dirty vehicles from the road. level insecond highest china's air quality system. an iceberg more than 5000 square kilometers is about to break away from and are go. grew by 18 kilometers in the mass is expected to split in the coming weeks. it's breaking up as a result of warmer air temperatures. of loss of such an amount eyes will make the remaining area more honorable. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. ramy: she doesn't have to worry about snow anytime soon. let's look at how asian markets are shaping up. good morning. looking light on the data front

today. what are you looking at? >> we do have a strong of morning andfor this we are looking out for china trade data. it could be released as early as today. we did get china's foreign reserve data on saturday, holding above the $3 trillion mark. take a look at this chart showing the decline in tandem with yuan depreciation. falling .9%the one in december, casting a 6.5% drop over 2016. intoll see how that feeds market action. let's take a look at what's going on with the markets that are currently open. health care and i.t. stocks leading things that hire. aserial stocks in the red

australia says they anticipate the commodities rebound taking in 2017. on the new zealand benchmark, up .4% after closing marginally lower on friday. let's take a look with going on with futures -- asian stocks widely expected to follow u.s. stocks higher. .hinese stocks pointing higher let's: let's -- ramy: talk about dollar strength. we saw the rise on the side of the world. guest: the dollar snapping a two-day drop and we do have mohamed el-erian cautioning about the dollar strength. but we are seeing the euro dollar steady around the $1.05 mark. the dollar-yen opening this morning above the 117 mark.

a quick check on what happened with 10 year treasury notes, jumping after falling nine basis points. gold retreating from a four-week high given the case for higher interest rate has been altered and new york crude snapping a three-day rally. this is how we are set up for the asian market they. ramy: back in the united states, forget the number of u.s. jobs created in december, it was the acceleration in wages many economists seized on as key for the fed. kathleen hays is here with more. wages rose more than forecast. what does this mean for the fed? guest: you know how there were several fed members fretting over under employment undershooting too far and too fast? that could stir up inflation, so

wages are rising at their fastest pace since 2009. let's jump into the bloomberg and look at 240. there's theine, employment rate. look how it comes steadily lower. one has risen as well but look at average hourly earnings. they are definitely on an up trend. it's the fastest since 2009. a number of fed officials speaking there. forecasty the fed's for the fed funds rate economy are consistent with what he sees. he made it clear it's time to start hiking rates and one thing he was clear about was full

employment and the fed and economy getting close to that. the thing we will be debating is the rate at which we should be removing accommodations. i think the sep that came out a sense of where we are and a sense of my views. at least three other fed officials signed on and was split between three and two. ramy: the december jobs report came in a little lower than expected. what is the fed taking away from this? i suppose they are going to watch it. up over payrolls november. this one and you can see payrolls on one line, a yellow line with a three month

moving average and a turquoise -- will that continue? that probably did not surprise everybody on the fed. rob kaplan of the dallas fed where he is president told michael mckee pcs some labor markets flat but if this continues and donald trump doesn't fire things up as much as people think, it's going to play a bigger role. he said the economy is rapidly moving toward that will employment. what does that mean? he said labort market slack maybe downplays the extent they -- the extent labor market slack could slow. because peopler working part-time cannot find full-time work, it's almost 10% of the u.s. population that is

underemployed. come a formerower monetary policy maker from the bank of england pointing up to the main wage number and look at what they are making. that theyy right now have the upper hand among the economists. australia has warned its miners at the party for commodities will come to an end this year. david stringer joins us. it seems like we could be making a peek in 2017. david: the surge we saw in commodity prices last year is forecast by australia to lift its earnings from energy and resource exports to about 204 billion australian dollars. that will be a record. peakt is likely to market

and what it forecasting is that prices are likely to retreat. from china likely to contract. steel demand takes a hit and some of the supply disruptions we have seen in various markets, that has been a key factor in lifting coal prices. temporary andas likely to ease, so it is forecasting prices for those key materials to come and even as volumes rise in australia and will be exporting more lng over the next couple of years. it forecasts the earnings to bytract and season falling mid-2018. ramy: iron ore and coking prices soared last year, but what does that mean for minding -- four

mining? does australia see new mines and projects coming up? david: what we are not seeing from those producers are a response in terms of bringing on new projects. minersnings for the top rise quite rapidly and we will see that next month when many of them publish their own statistics. what we are not seeing is any rise in plan projects. about 100 95 billion australian dollars worth of projects that are ready for construction. that's 12% lower than one year earlier. the minersseeing raced out to build new projects and that's probably a good thing. it may show some strength on the supply front. the: looking over to india,

country is offering incentives to help grow its digital economy after banning large denomination banknotes in a bid to expose dirty money. what are the incentives and how possible are they going to be working? slew of incentives. we're talking discounts and rewards for those who make electronic transactions and set of cass -- -- transactions. if you look at the actions so far, they suggest plastic taking the place of currency use. at the data, it has helped to boost the stocks of electronic cash companies. makers have gained

20% to 50%, providing a boost for the index and companies are expecting double-digit revenue growth over the next three or four years. there is we will see growth in digital payments, but cyber safety is strong and the jury is still out there. yvonne: the money ban has impacted those areas the most. they are probably better now. haslinda: they are not quite adapting. according to one electronic paying startup, rural india prefers cash transactions. cash is king because they have limited access to technology and this is what india needs to address.

250 million of them have feature phones but another 250 million people have no phones at all, so india needs to roll out a strategy for a different section of the population. yvonne: it has been one year since ubs announced plans to double its staff in china. ♪

yvonne: you are watching "daybreak asia." the ubs greater china conference kicks off in shanghai j. .om mackenzie is there for us take it away. tom: very pleased to say we are joined by the chairman of ubs at

the china conference here in shanghai. thank you for joining us. let's start with your china business. over the weekend that you may be increasing your stake any securities business in china. can you give us more details on that? i can't give you many details because talks are still ongoing. interest inrong increasing our footprint in china. we set a couple of months ago that we will increase our had gone -- our headcount over the years to come. that's part of our strategy. we like partnering with local partners, so is all about shifting other ways, so they talks are still ongoing. tom: what does it say about where they see opportunities in china and opportunities in the capital markets? bankinghe investment

business is one we are continuing to build in china. china is the fastest-growing economy around the globe and the largest growing world market and we are a number one manager globally. china fits us very well and investment banking and wealth management come a supplement by other businesses will be what we bring to the market here and we want to build an onshore presence. tom: we have heard a lot in recent weeks about increased capital controls implemented by policymakers as they try to stem the capital outflows we know about. is that having an impact on your is this? how is it affecting your security businesses? guest: we have had no problems repatriating dividends. the real issue is that china is opening up and the capital

account is being liberalized. process that has gone itough it, you can't just do -- it is a steady process of liberalizing and making monetary policy. the authorities so far has been doing it in such an orderly process and they are committed to doing that journey. i think it is good to do it in a controlled and steady fashion. tom: there's also the corporate debt and structural imbalances and what happens to the yuan reduces the key risk. the first one is the

leadership change we are going to see any policy priorities. current administration and current central-bank leadership has been in control party long. he's the longest-serving central bank governor. he is still there today and the chinese monetary policy is following a steady course of opening up and becoming a member of the international community. of the special drawing line and that requires china to become part of the international community. tom: the internationalization of the currency has taken a big step back some hasn't it? guest: these processes are never smooth. things areimes when easy and when things move in a

more rocky way. what we are seeing is a large number of political uncertainty materialize. we are seeing outlook for a totally different policy and it is a risk for u.s.-chinese relationship and the global relationship. we are seeing more political risk than we used to and it's going to shape markets and economics a lot more than it has. in the past, it was an emerging market feature and now it has become an international feature. we are facing huge clinical uncertainties and those have an impact on economies in the process like opening up china. tom: stay with us. the chairman of ubs, we will get

more on his thoughts and insight after the break. this is bloomberg. ♪

tom: welcome back to the conference here in shanghai. i'm joined by the chairman of ubs and we are going to continue our conversation. risksuched on the medical that have unfolded in u.s. with trump taking over as president in less than two weeks. what are the chances now of a u.s.-china trade were given the nominations? he has nominated a number of vocal anti-china critics. how are you planning to reposition yourself in light of this eventuality? guest: i think there are going to be some initial hiccups and rocky roads ahead for the global

you look at what economists expect from the sheer, i don't think the u.s. election or brexit has a big impact. for the u.s.-chinese relationships, it's going to go through longer discussions that we have seen in the past and ultimately, since china has opened up this account, there's much less the central bank can do to drive the exchange rate. the exchange rate is very much driven by the market and continues to be more and more driven by the market and that was always a key u.s. concern. when i was in politics, people were concerned about a 10% surplus of the trade account and current account. now they have come down and it has been 3% last year, less than 1.5% this year and it is continuing to go down.

some u.s. concerns about the imbalance in china have been addressed by the authority, including the opening of the currency, and that has to be recognized. they've done a continuous job to become part of the community. they have been a big exporter over the years and it's much less driven by policies and more driven by the workforce and the size of china. tom: one impact has been the rating of the financial industry. how do you expect it to benefit? almost 10 years after the crisis, we have raised capital and provided our institutions with much better culpability, so we have done a lot. many banks have seven to 10 times more capital than they had before the crisis and most of the banks think the additional benefits of further regulation are starting to be outweighed by

the cost this has to the real economy. governments have not been invested in the regulatory process are taking a new look at whether further regulation is needed. going to see are is that enough has been done and we are in a better place than we were before. now, it's about gross and we need a functioning financial sector. be any think there will rollback. nobody should hope for that. in terms of a cost-benefit analysis, everyone is going to take it. tom: are you ready to ramp up your have in brexit should things with the brexit go against what you hope? guest: option lt is everything everyone needs. has not been us driven by the brexit discussion. it was a reorganization of our onshore business.

tom: thank you very much. stay with us. lots more in the next hour ahead. this is bloomberg. ♪

♪ >> asia-pacific markets extending wall street highs, sterling falls. a effect, fiat chrysler the latest automaker to pressure from the president-elect. >> china's foreign currency reserves slumped $320 billion last year. backedyear on, the china asian infrastructure bank is open to membership. we will hear exclusively from

the president. >> this is the second hour of "daybreak asia" live from bloomberg's u.s. and asia headquarters. i am in yvonne man. >> it is just past 7:00 p.m. in new york. i am ramy inocencio. we are looking to gains thanks to a good jobs report for december, some dow drama come -- by maybe we will get it this year as well. a hairs breath from that 20,000 line, but in asia, stocks trending higher and following wall street on friday after that jobs report. it was the wage growth that we saw that was the headline there. korea just coming online. here is sophie. given the china

reserve data and the u.s. jobs, asian markets saw their best start to the year since 2006. japanese markets closed today. up .1%, at second day of gains after closing higher on friday. australia and new zealand stocks on the up. draggedussie space, i when it comes to materials stocks, fortescue down. anticipating are commodities rebound to peak this year given the way iron ore and coal prices are anticipated to move. the government did raise their forecast for energy and export by 16%. we do have data from australia this morning when it comes to

building approvals for november. we are seeing a nest rent for a monthly improvement of 4.5% on year drop, better than the 25% drop we saw in the corresponding period. any weakness in building permits and retail sales will likely not demand another cut from the rba as long as the terms of trade continue to improve. onafter that jobs report friday, we talked about the reversal in the dollar, picking up again, but how big was it? that rallydid have in the dollar early last week, a 14 year high, some softening, then picking up following that jobs report, mohamed el-erian cautioning on that strength, but feeding into the action in asia, some weighing on the u.s.

dollar-yen, opening at 116, now above 117. that is coming through in the won and aussie dollar as well. ,he daily fixing for the pboc so again, how regulators will be looking to defend the yuan in the wake of that drop in reserves, we will take a look at how that stance is looking. >> thank you. reserves slumped by $41 billion last month as the currency tumbled. we have more on that. they were able to defend it. how much more can they let these reserves drain? acknowledged that in the reserve statement that they did use their foreign exchange pile to defend the currency, but also

increasing capital controls, so you can expect more capital controls so they don't have to train as much of the reserves going forward, but you can only go so far on both fronts. >> without hurting confidence. pile fell by 41 point $1 billion in december, in line with forecasts, but getting down to that 3 trillion threshold. it has come down by $1 trillion to a five-year low. the yuan has posted its steepest light against the dollar in two decades. total drop in fx reserves was $320 million.-- capital tightening controls, tougher household requirements on remittances overseas are in place. beings despite eco-data

fairly robust going into the end of the year, that not necessarily offsetting the declining sentiment still on the how china is handling the slowdown. >> china's reserves have not fallen below that three trillion dollar threshold, how much is confidence? >> this is a psychological level. , $3ave heard from cicc trillion is enough. it is the reserve adequacy for their needs, however, below $3 trillion, it starts to erode confidence as well. ubs put out a note yesterday , most fx reserves are liquid and usable, but you are getting to a level that is a bit dodgy ,ecause in defending the yuan

60% of their reserves are in u.s. dollar assets, one $.1 trillion invested directly and u.s. treasuries, but that reserve adequacy, you need a buffer to defend the currency long-term, and that figure is somewhere depending on capital controls. if you have capital controls, it we are already down to $3 trillion, so you can use it, but you can only use it for so long defending the currency. >> thank you very much. let's get the first word news with haidi lun in sydney. four israeli soldiers killed and a dozen wounded when a palestinian truck driver rammed his vehicle into a patrol and east jerusalem, hit as they stepped off a bus.

initial inquiries showed the drivers supported the islamic state militant group. trump'st-elect donald team says neither he or any transition official will meet the taiwanese leader. anddid meet greg abbott senator ted cruz. china had called on washington to bar her. the world's biggest pension fund to says the growing disparity between rich and poor is fueling the world. ibishead of japan's yo said it will act as it sees fit. it says they won't remain a largely passive investor, but is keeping an i on the market. f have been managing

funds for over 100 years. we don't change our style each time some shock affects the markets. we see brexit and trump presidency are due to the rise and populism from economic disparity around the world. we prefer to watch how these gaps are being corrected. it maynorth korea says launch a long-range missile at any time and from any place and what is being seen as a claim that has mobile rocket capability. speaking on state-run television, a spokesman for the foreign ministry said the military had also developed nuclear warheads. in theg-un is said to be final stages of testing an icbm. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ramy: thank you very much. in the u.s., fiat chrysler says

it will invest $1 billion in three new jeep models. president-elect donald trump has been pressuring the auto industry to hire workers and produce vehicles here. su keenan has the latest. su: it looks like automakers are getting the message of they want to be in good favor with the trump administration and avoid heavy tariffs to build their trucks and autos here in the u.s.. they will add 2000 jobs in the midwest, three different jeep brands, and the heavy ram trucks , in the u.s.. those heavy ram trucks are now being made in mexico, so that is a very big change. is it a victory for trump? many will perceive it that way. fiat chrysler is saying they will be retooling plants in michigan and ohio, more jobs, and trump has been pressuring automakers to build in the u.s., a clear message.

fiat chrysler shares had a strong rally into the new year on near record sales, and that certainly puts them in good stead for the coming year and with the new administration. >> what does this mean for the timing of this announcement. announcementsummer by ford and criticism by trump on rival gm. su: we are two wakes away from the new trump administration taking office, and this issue was front and center. ford announced it was canceling a $1.6 billion mexico plant investment, where they will be producing cars there. instead, they will redirect $700 million to a michigan plant. toy said this does not have do with trump pressure, but a shift in consumer taste. with was threatening gm import taxes. he aimed his criticism at the mexican-made chevy cruz, saying gm will be paying a heavy tariff

if it is not made in the u.s. gm has been under pressure in recent weeks, the stock has. placedrump himself pressure in the coming weeks in addition to his speech, planned, hearings begin on his cabinet picks and there are some questions about conflicts of interests on those closely advising him. >> lots to look out for this week after that week of tweets from the president-elect. still ahead, australia warning minors that the party for commodities will come to an end this year. details from melbourne later. ramy: we asked the china-led asian infrastructure bank on whether the door is still open for the u.s. to join. this is bloomberg. ♪

ramy: you are watching "daybreak asia". i am ramy and sincerely new york. yvonne: reports from japan say

sharp has asked suppliers to cut prices. the company has asked for prices to come down by 20% across-the-board, calling for suppliers to lower costs. supplye telling the chain to keep prices down or risk losing future orders. ramy: twitter has suspended the after hef a former ceo harassed a female journalist online. she posted several unwanted digital advances by him. she asked twitter to intervene. he will be allowed to appeal that band. chairman hasbs confirmed the bank is in talks of increasing its stake in its china security business. he said discussions are ongoing and said ubs wants to raise its stake from 33% to maximum 49%.

talks,stanley is in such signs of banks growing confidence in the profitability of their china operations. more big guests coming up on bloomberg television. , an advisorng gang to the pboc. later on on bloomberg markets: middle east, our special guest. you don't want to miss those. the china-led asian infrastructure investment bank says it remains open to the u.s. on becoming a member. speaking to bloomberg, the president said the bank has a big list of projects and would welcome u.s. involvement. we approved a lending program of nine of projects worth $1.73 billion.

programof the lending of freestanding projects compared by our professionals, 75% are cofinancing programs. than017, we can do more 2016, because we have more people and we have collected consider, so to the pipeline is getting bigger. in 2017, my priority is not just ofdeliver a lending program $2 billion or 2.5 billion dollars, what is most important is to have a better balance across the country through regions and sectors. do you expect the election of donald trump to see washington reconsidering its position regarding the aiib, and crucially, does the door still

remain open to the u.s. joining? >> the door is open and will remain that way. occasionst on many that regardless of membership of the nine at states, we can work well together. for instance, we engage the american financial institutions. the business sector companies. we encourage them to dissipate in international competitive bidding when we finance infrastructure projects in our member countries. as you know, we have american nationals working in this institution. tom: you must have been encouraged by some of his advisers? >> i am encouraged i the very positive comments on pboc --aiib . expressed by very

senior officials in the u.s. government. i heard about the comments. both democrats and republicans who served in various senior positions in the u.s. government. think the consensus is forming in washington that it or atmistake to ignore least turn a skeptical eye to the aiib? a i don't regard this as mistake. mistake is something you did and cannot take back. we have 30 countries waiting to join. they did not become members for various reasons. you can not tell me they made a mistake. how concerned should we be of a potential china-u.s. trade war, and what steps will you take if trump goes ahead with some of the policies he is

talking about on the campaign trail. >> i think it is important for china and the united states to work together. ramy: how concerned are you about that relationship? >> i am by nature an optimist. sense china every opened its door in 1980, i was involved in the bilateral dialogues between u.s. and china, and i and the witness to a huge amount of benefit accruing to china, the united states, and other countries when china and the united states work together. yvonne: that was the aiib president speaking to tom mackenzie. they receive political favors in return for donations, more on the scandal and south korean next. this is bloomberg. ♪

yvonne: you are watching

"daybreak asia". the iranian president ross and johnny dies. yvonne: india says growth will slow to a three-year low through march. that is before the affects of the cash crackdown are known. not include data from november when prime minister narendra modi shocked the nation by banning high denomination rupee notes. entity 7.1% growth. ramy: beijing tackling pollution.

shutdown high polluting factories and order 2500 to clean up their act and remove inefficient, dirty vehicles from the roads. beijing spent nine days under an orange alert for smog, the second highest level. yvonne: japan's prime minister is not thinking about an early election while his government works to pass a new budget. shinzo abe said he wants to submit a bill soon on limiting overtime. wants to meet as soon as possible with the donald trump to impress upon the new president the benefits of the u.s.-japan alliance. no date for a meeting has been fixed. executives from samsung electronics set to face prosecutors in seoul, korea. the co-vice chair and president will be questioned over the widening political influence scandal surrounding the president. what is the latest? the co-vice know

chair and the president are expected at 10:00 a.m. they are appearing as testify or's, meaning they have not been accused of wrongdoing. the special procrastinators -- prosecutors office said that could change. this is in relation to the widening influence peddling scandal, leading to the president being impeached a month ago. you saw the defect oh head of co-vicegroup, also chair of samsung electronics, to appearor officials in front of lawmakers to be grilled about political donations said to have been made possibly to foundations controlled by a close friend of president park.

at the time, he denied allegations that gave donations to the foundation in return for political favors. yvonne: we did see that hearing, which was pretty ugly. what developments have we heard sense the president's impeachment? rosalind: there has been a spotlight on samsung. this investigation as a got started before christmas, we see they have been looking into the national pension service. they are looking into questions, links, about the pension service and its support for a controversial merger between two samsung units. there has been speculation about well, soand that as

the special investigators searched the national pension service in december and arrested its chairman. he was suspected of pressuring the pension service into supporting this merger. also reported that the president park said she denied colluding with anyone are having any intent to help anyone in the samsung merger. reports that she has denied park, to, president extract business favors, and also she did not ask samsung for money. the criminal trial goes on, at the same time, special prosecution into president park and her political influence can't ongoing at the same time. yvonne: samsung up 2% today. are doinghow markets in the asia pacific, solid gains. coming up, after six years of job gains, america's labor

market is as tight as ever, what it means for the fed. this is bloomberg. ♪

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♪ grace and frankie, hemlock grove, season one of...! ♪ show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. yvonne: it is 8:30 in singapore. half an hour away from the open of trading there. i am yvonne man in hong kong. ramy: you are watching "daybreak asia." haidi?" >> kreisler is the latest automaker to invest in the united date, pouring $1 billion into plant in michigan, expanding the jeep lineup and adding 2000 jobs. says it willer include the dodge ram truck produced in mexico. donald trump has but have you

pressure on the auto industry to bring jobs back to the u.s.. they plan to set up t manufacturers inw latin america to make button -- two manufacturers into latin america. they expect the foreign electric bus system to turn profitable and it is pushing into the production of electric monorail. at least 19 people have been killed in widespread flooding across southern thailand. 10 provinces are underwater with three quarters of a million people affected. the interior ministry says plantations have been damaged. holiday resorts in the gulf of thailand have been hit. the storms are forecasting dry out this week. an iceberg more than 5000 square kilometers is about to break away from antarctica. rift grew by 19 kilometers.

larsen c is breaking up due to see currents. currents.he -- sea it makes the remaining area more vulnerable. more than 120 countries. i am haidi lun. this is bloomberg. asian markets shifting up to four this morning. let us go to sophie kamaruddin with more. given what we saw last week, we have asx into sydney and new zealand stock continuing to make gains although the kospi, flat also, reversing the gains made earlier this morning. taking a closer look at what is moving on the asx, we have what is going on in the material space, given what we have with the us chilean forecasting the commodities rebound, peaking this year. looking at what is going

on in the currency space, given that dollar strength we thought returning after that jobs report on friday, we are seeing weakness across the board. the dollar-yen staying a bit above the 117 handle and the won leading weakness, a second day of loss for the korean one. the aussie dollar, strengthening for corporate or this ahead of the november building approvals data due this morning. ramy: we are less than one hour a day from the yuan's daily fixing. this is the first since we have seen the china's currency fall. sophie: we are seeing the implied spread skewed to a stronger offshore yuan after last week's rally. we did see currency trade just shy of seven. best weekly- its

gain in a week. the strut on the terminal, we are seeing traders are betting the yuan volatility will be limited this week. swings over the next month, that is noted by the white line in the top half of the chart. it is looking to be somewhat higher. trekking bets on volatility over six months, the purple line. a second in the bottom half of this chart, volatility over six month had fallen and is now near a low. we are less than one hour away from the yuan daily fixing. we will be keeping an eye on that given the drop in reserves we saw in december. ramy: the december jobs report seals the deal for at least two fed rate hikes, but officials are calling for three or more. that is raising red flags for bonds and the dollar. kathleen hays is here with me right now. every artie seen a bid bond

market selloff. why is it saying it might be picking up steam here? says the catalyst for a bond market selloff will be the 10 year note yield, breaking to 2.6 or moving higher. he did say, it is interesting. he characterized the december jobs report out friday as a decent jobs report. the ridges grew. job creation fell short. said this mean gdp will grow to 2.5%, but it seems it is really this technical aspects that has impressed bill. when he spoke to bloomberg television on friday, fiscal steps will be taken between donald trump and the republican-led congress and foreigns what central banks will do but he is watching it closely. >> we will see it and know it if the 10 year breaks 2.6% on all

weekly or monthly basis because it is so strong and so important in terms of technical analysis that if and when it is broken on the upside, it is a bear market and if it is not broken on the upside, we stay where we are. if we really pull this chart out over the past 30 years, we did have a mountain ahead of this in terms of 10 year yield. we have come so far. bill says that 2.6, we hit it, we pulled back. if it goes above, hits above, we could get a real their market bond. question you have to raise, u.s. asia, u.s. bond selloff, bank of japan governor kuroda trying to keep the 10 year yield down. that could make it more challenging for him and his colleagues. onnne: another dire warning the dollar. is that something that is similar sounding from what we heard from mohammed as well? kathleen: he also spoke to

bloomberg television on friday and we did see u.s. dollar -- he was reporting on extending its gainson friday, break -- on friday, breaking the today losing streak. we heard a lot of that on friday from several fed officials. report this latest jobs will encourage the fed to go ahead and hike rates this year and he says the dollar could derail us. >> the number i look at every morning is what the dollar is doing. i think that is the critical aspect and what the market should worry about is the dollar strengthening to quickly and too much. that is what could derail us. bloomberg columnist mohammed to a chart, you are seeing a dramatic purple line. this recent three-week move, dollar against the yen, and you can see the dollar has strengthened so much and the yen has weakened.

and 21he biggest move years. this has implications for central banks around the world and for traders and the boj in particular because the boj has welcomed a weaker yen, exporters, and moving too fast, low,too sharply. it is something that could cause some issues for the bank of japan and might raise some question on their part that they need to do anything about it. reported on are friday, the dollar could move up more than 10% against the yen and euro if we get a huge stimulus. and donald trump get together and do that, we could see another big move in the greenback. yvonne: will move there -- bull moves there. the party for commodities will come to an end this year. joining us now is david stringer.

so, what a year it was for iron ore, david. what will end the party in 2017? david: good morning. that is right. what australia's government has told us today is that they say surgeon commodities last year's likely to push earnings from energy exports to a record high, to 204 billion australian dollars in the year to june 30. that is 30% higher than the previous year, but it will mark a peek. they see prices for a key material softening into next year. that is various factors including chinese steel demand and they see that as likely to the demandiven for the residential construction sector is likely to soften. they see supply disruption in key markets like coal. constraints really pushing

prices last year. they see those constraints as likely to be temporary and prices to come down in those markets as well so what that means is that even as volumes of exports rise and they see those rising through 2018, the overall earnings will decline a touch brought to about 202 billion australian dollars by 2018. so yeah, this should be by midyear, a peak for those commodities. yvonne: what does it mean for prices? they soared last year, really being the forecast. what is the outlook for australia for this market? sure. stellar performances for both of those commodities last year, and of course, australia's outlook is really important, the against exporter of both of those materials. if these prices as likely to be flat this year and to decline next year. there is more low-cost supply hitting the export market and it

sees demand as likely to remain subdued. for coke and coal, some of those supply disruptions, likely to contract prices, about $186 per ton. an average for this year, about one third lower than prices for this quarter. both of those materials are likely to moderate. ramy: what does this mean that in terms of having a knock on effect for mining and energy projects? david: you expect those higher prices last year as likely to push producers to rush out and start building new mines or energy projects. that is not the case. the value of projects in australia that are sort of ready to go, the ones that have financing and approval, they total about one hundred 95 billion australian dollars. that is 12% lower than a year 195 billion

australian dollars. that is 12% lower than a year earlier. we have seen what oversupply has done to prices in the past so perhaps this is a good signal. ramy: caution is prevailing for now. thank you very much, david ringer, in melbourne. we hear from robert kaplan, who thinks 2017 should see the u.s. central bank end its accommodative policy stance. this is bloomberg. ♪

yvonne: you are watching the "daybreak asia," i am yvonne man in hong kong. ramy: a quick check on the latest business flash headlines. eight shareholder in australian ae baby food maker -- shareholder in an australian baby food maker saying he would back the proposal but want to see md laura mcbain day.

had ampany's stocks dramatic downward revision with the price plunging. isnne: fiat chrysler planning to expand the partnership, adding 100 more minivans. vehicles will be equipped with the technology developed by the new alphabet company formed under the global car project. a plan to use the minivans for a commercial ridesharing service to be launched later on this year. they are talking to honda. ramy: china is one step closer in its drive towards autonomous cars. betweenaboration beijing automotive and baidu is close to its debut. it is equipped with vita technology, expletive to break cover at the shanghai auto show. they plan to expected -- expected to break cover at the shanghai auto show. a programming note. the north american international

auto show opened in detroit. we will be joined by volvo's president and ceo. we will speak to gm's chairman and ceo at a: 40 eastern time. -- 8:40 eastern time. ramy: we will hear from the ceo afford. stay tuned -- of ford. stay tuned. yvonne: interest rates should be lifted gradually over what he sees as a current accommodative stance. debate in the coming weeks will be over the pace of tightening. think we should be removing accommodation. a higher fed funds rate in 2017 it will be more appropriate and the thing we will be debating is the rate at which we should be

removing accommodation, but i think the scp that came out in december, the economic productions, gives you a sense -- projections, gives you a sense of where we are and my views. we should be removing accommodation. i think we can do it in a gradual and patient way but i think we need to be on that kind of path to be removing monetary accommodation. follow the consensus of the three rate moves this year, how would you see the timing? what criteria would you use as a voter to decide this is the meeting at which we should go? >> the framework i always use, is are we making progress on meeting fall -- full employment? the other thing i look at is wonky.what is the neutral rate ? the rate at which we are neither stimulative or restrictive and i want to see us moving toward that neutral stance. >> what is the number now?

>> it varies over time. there has been a lot of work in previous conversations with you that there is a good argument that the neutral rate has been up to now around zero and if you onethe inflation rate of and three quarters percent, you get a neutral rate. something below that means we are accommodative and something above that means we are restrictive. policy, andscal other actions, you could see the neutral rate drift up further, but it tells you that when i say we should be removing accommodation, i think it may be appropriate to remain accommodative for some period of time, but i as other policy take hold and as we meet our dual employment objective inflation, we should be moving closer to a neutral stance and we have got a number of moves to get there and we should do it patiently, but i

think that is where we should be heading. >> does the process of politics intrude on your calendar in that there is this uncertainty about what fiscal effects there might be but you are not going to know for many months because it takes a very long time for anything to go through congress? >> i think it means certainly we pted to be at that and -- ade and nimble and cognizant of broader economic activity. i have been saying for the last year i think some of the structural issues we face as an economy require economic policy beyond monetary policy. we have been encouraging it. we ought to have it publicly so now that we are going to get it, we have to assess its allies it unfolds. ase of the paul -- assess it it unfolds. some of the policies, i want to monitor to see what kind of effect they will have on gdp and that is part of our job. we need to continue to be vigilant and process that and adjust our stand as policies

become an active. said that was the dallas president robert kaplan speaking with michael mckee. up next, cashing in on the cash than. of india's electronic companies surge as paper money is forced out of fashion. this is bloomberg. ♪

yvonne: you are watching

"daybreak asia," i'm yvonne man in hong kong. in new'm ramy inocencio york. first, we had over to cindy. the asx 200 is up three quarters of a percent. we did get building approvals month on month, better than expected, 7% there. meantime, on over to seoul. because the flat right now. we are looking at executives being taken in for talks in regards to what has been happening in the political upheaval and the impeachment of president parkepark. taking a look at futures point to a slightly lower open. time for a look at what is coming up over the next few hours here on bloomberg. rishaad: economicrse have got advisers to the people's bank of

anda and when thinking -- when he talks, people listen. aboutl be joining us in 50 minutes from now talking to tom mackenzie in shanghai. look at the foreign exchanges as well. eric robertson to do that. looking at the top offense and what has been going on and what happened with that massive surge when it came to the chinese yuan at the end of last week. putting that all into context as we get -- looking at what is happening on the coal when it comes to china and the jobs situation. people distrust some of the economic situation. executive whof will be talking to calm the -- tom mackenzie in about one hour or there about.

looking at what is going on when it comes to recruiting. how is the job market in china. creating jobs or not? an indication of the economic welfare of the country. with all that in mind, yvonne? yvonne: india is offering incentives on it electronic transactions to go with digital economy after betting large denomination banknotes in a bid to expose dirty money. let us go to have haslinda amin let us go to has haslinda amin. haslinda: all sorts of events, yvonne. tax rebate, discount, rewards, for those who make electronic transactions instead of cash transactions. the government says it will spend millions on the various measures. data on transactions so far suggest plastic is taking the place of currency use at a much faster pace. .igital payments jumped

that is helping to boost electronic companies. e-commerce, intense technologies. 50% inve gained 20% to the last month, providing a boost for the index you are seeing right now. the companies expecting double-digit revenue growth over the next three to four years. we see growth in digital payments, but that provided, we see cyber safety becoming are cut.and charges the jury is still out. it is too early to tell. ramy: this is interesting. the money ban has impacted india's rural areas the most. are not quite adopting. we are seeing little or no transactions. few economic activity according to one startup. rural india prefers cash

transactions. cash is pretty much keying because they have limited access to technology and this is what india needs to address. it has a population of 1.2 billion people. 250 million of them have smartphones, but 350 million of them have phones. another 350 million have no phones at all. india needs to all out a different strategy -- to roll out a different strategy for each part of the population. the d monetization program -- some say the democratization itizationas -- demon program was not properly done. most strikingly, the idea is to exchange the old bills for smaller ones. he had not printed the new bills. so he got rid of the old cash without replacing it with the new cash.

haslinda: it was done in a hurry. 350 million without phones. they need to be integrated quickly to her cannot remove 90% of cash in speculation without giving them another viable way to buy and sell and be part of the economy. the program was well-intentioned but not well developed. ramy: i haslinda amin, thank you very much. that is it from us, but plenty more still to come. counting down to several more market opens. yvonne: the focus will be on china. the pboc has a pretty strong fix on friday. it will continue to sell off. ♪

♪ 9:00 a.m. in singapore, mid day in sydney, 8:00 sunday night in new york. i am rishaad salamat coming to you from bloomberg's headquarters in hong kong. this is "bloomberg markets: asia." ♪ foreign china's currency reserves slumping by $300 million, the yuan saw a it's a steepest slide into been decades. two samsung executives face prosecutors as part of t u