to extendarkets set wall street's record run after janet yellen sees progress in the u.s. economy. softbank alternative management calling in a world-class platform. shows set to plunge further after a chaotic disclosure of a $6 billion write-down. china just can't kick its debt habit.

this is the second hour of daybreak asia coming to live from bloomberg. i'm in hong kong where it is just after 8:00 a.m. >> we knew the fed may be a factor today, and it was in the markets. janet yellen surprisingly not surprising the markets with anything different except she did not back away at all from rate rises this year. the markets as we talked earlier more hawkish that the rate rises might come earlier than expected. >> it was interesting. it was a different story anyway. it was a tell him that she delivered it. trump or not we are going to raise rates. much what has gone on here in the markets in asia, let's see how things are kicking off in tokyo and seoul. know,pondent: as you well it is not what you say, it is how you say it.

this. looking at these are the levels where we start off our trading session. .24.44 you also have inflation coming in slightly below estimates. dollar-yen, $114.50 was your high. one, a little higher than expectation. fallingr cured see i am -- currency i am following is the taiwan dollar. also have a revision. look at the currency where it is at right now. that will be a problem if you consider that taiwan is heavily reliant on exports. fromf its export comes shipping stuff outside. all the way back to may.

may 2015. it is hard to find support at the moment. the other one following closely is following equity markets. japan is basically back to the level of two days ago. -- 5800., 5800 p of we are above that. three weeks ago, five more points. a quick look at what we are seeing there early. ore, $91. that market has been very ranged this week. let me refresh this. five year in europe is where you saw a pop in yields overnight. quote was 43.

we are just waiting for toshiba to open. i have a strong feeling that will open below 200. -- a big a bill selloff in toshiba. softbank shares are up and running and they are higher. losing ground from a few moments ago when it was up almost 1.6% in the early trade. they are agreeing to buy fortress investment group for $3.3 billion. this was quite a surprise here. guest: a big surprise. fascinating deal for both sides of southbank -- softbank and fortress. fortress was one of the first alternative asset managers to go public in february 2007. top of the range, performed well, shares were up around the $30 range in 2007. fast-forward a couple years, shares are down to $.77 a share.

very difficult time for the people running fortress to convince public shareholders this is a worthwhile investment. finally, they find a buyer, a way to get out of the public spotlight and to focus on the long-term investments like private equity and real estate. softbank, it will take a while for shareholders to digest this and think about what the implications are. fortress, these alternative asset managers are difficult to ss. fortress has $70 billion in creditacross different or private equity style credit funds are hedge fund style credit funds. a lot of time and energy to look into the financials and find out how fortress makes money. what softbank is thinking is here is a way to get this investment manager at quite a

discount. softbank is paying about $8.08 a share. they see a discount and probably that lets fortress really spend its time harvesting its long-term illiquid investments. >> you mentioned how this is a very interesting marriage for softbank as well as fortress. anything fortress is going to function under the softbank family? >> we learned fortress will continue operating independently. they will still be led by three of the four cofounders. they were most recently running fortress. gentlemen have also agreed to share 50% of the proceeds from the deal. to keep an agreement

these guys aligned with the future of the business. york.adquarter in new it will operate independently from softbank. i think softbank is looking for the sort of financial gains it can reap overtime holding fortress and taking its share of fortresses profits. >> great to have you. let's get to the first word news. >> president trump has overturned on obamacare at anticorruption rule, forcing oil gas and mining companies to disclose payments to foreign governments. the oil industry says the rule a competitiveat disadvantage. congress is considering overturning other obama rules, including one that protects waterways from mining and one

stopping mentally ill people from buying guns. billion last month. that is more than the gdp of sweden or poland. loads jumped to a one-year high but were about 17% below estimates. commonwealth bank reported its eighth straight record profit after steady growth in its domestic lending portfolio. 3.25earnings rose this billion dollars through december. the record profits, they face headwinds and warns of the racing risk of economic shock brought on by political volatility. that the rate of revenue growth has come down a bit is reflected of the fact that the australian economy has

been slower more recently. we have great faith in the longer tomb -- longer-term strength of the economy. south korean prosecutors are once again seeking the arrest of since as leader, citing new allegations of bribery. investigators will outline the case for wednesday. courts will decide whether to arrest him on wednesday. the allegations lie at the heart of a scandal that has already led to the impeachment of the south korean president. samsung denied any wrongdoing. day andews 24 hours a more than 120 countries. this is bloomberg. we just got toshiba shares opening in tokyo, down 11% right now. continuing the losses we saw yesterday. this after the can you share in

around the company's earnings release. this $6.3 billion write-down. now fresh questions about the company's future. talk about chaos. >> there was a lot covered in that press conference yesterday. we also saw this $6.3 billion write-down. what some people may be concerned about going into the future, the plans that toshiba may have or may not yet have but for its shipind units. this is what the president of toshiba had to say. foro secure resources growth, we are a five small stance on the memory chip is miss. we don't insist on securing a majority stake in this business. >> toshiba could sell a majority stake in the business would it it wouldy had said

have control over the business. moment, companies like toshiba and even samsung. they are driving profits and doing pretty well. toshiba, the chip unit generates profits in the first half. accounting for more than half of the total operating profit. it did not give any results for that unit in this last quarter. according to intelligence, the chip unit could be worth nearly $14 billion. we're looking at what some analysts are saying. goldman sachs has defended their toshiba ratings. the cheap -- chip unit could wipe out growth next year. it is difficult to price in the businesses potential. >> difficult to see what toshiba is going to look like in a couple years.

if you are hauling out the core businesses, is it going to be a shadow of itself? >> another one i could be targeted is the nuclear business. the nuclear and chip businesses forg two key pillars toshiba. also saying that it might scale back some of that. engineering, saying it right down of the nuclear business at a $4.4 billion loss through december 31. they did one of this back in december. share prices have been falling since then. $8 billion wiped out of the market cap since december. exist as some of the core industries are no longer there? shareholder equity, tissue is

warning this forecast to drop to negative the current financial year. not looking good for toshiba. >> that stock is still down about 11% in the early trade. toshiba. profits plunge after desponding results on the jaguar land rover unit. says standby for a rate hike eventually. the fed chair gives little away in her test might to congress. this is bloomberg. ♪

>> this is daybreak asia. a quick check of the latest business/headlines. less damaging than estimated to the bank has today

fourth-quarter loss of $2.3 billion and will cut more than 6000 jobs this year. the ceo said the settlement was a game changer. he also said markets should not underestimate global uncertainties. i like many people worry there is too much comfort right now. get closer to some of those moments, you are likely to see -- shares tumble and mumbai after the company's i-97 percent drop in profit. net income fell to just $14 million in the last quarter of 2017. margins of the land rover unit narrowed. from potential

follow-up of a proposed u.s. border tax on imported cars. they do not have any factories in the united states. ingoldman sachs said reference to its underperformers that they are better off elsewhere. they denied investment bankers a bonus. employees that missed out on a bonus in recent weeks is higher than a year ago after goldman's takeovers and securities division had a mixed year. >> janet yellen has signaled rate hikes are on the way. we have been trying to figure this out. kathleen hays here with more on this. it is the number of time and the timing of all this. correspondent: timing is so important. you think they're not going to hike until june and they hike in march, janet yellen was clear in thatemarks and her answers if the economy keeps growing and

inflation moving higher, this is what is key to those moves. some think about what donald trump could do with business. speculation is not affecting the feds outlook at this point. if they wait too long it could be unwise. they have to work quickly to stop falling behind the curve. , yellen think they might be signaling a hike. it is a g chart. thatan see the white line is the 10 year note yield. we're looking at the first two weeks of february. you canth going up, and see how that was a fast and furious response. here is what janet yellen said with a little smile. >> we have eight meetings he

year. course,s remain on act.ase our target and not precisely when we would take an action whether it is may or june. i know people are focused on that. a you get the feeling that patient mom talking to her kids. thinks --f mitsubishi jp morgan says they're going to wait until june. janet yellen is basically saying i don't know when we are going to hike. that is what we have so far from janet yellen. what does this mean for the markets? atlet's start by looking industry projections.

is a terminal function. march 15, upper left-hand corner. make him a look at that. it is about 50% for odds of a rate hike. whalen and heris -- that bondss could rally again. bank lending is snow -- is slow. one of the issues for the fed is couldy hike rates, that cause the dollar to rise. that could be problematic. rates as fed raises chair yellen has suggested, that could get the dollar even stronger. would it be ironic if she was the cause for a trade war? she doesn't want that. if the dollar were to appreciate

much more against the asian currencies, i don't know how you avoid it. >> interesting to come it is complicated. be careful what you wish for. governor kuroda might be happy that we're helping him out. chris whalen for joining us. that is certainly an important part of the story. >> can't exclude the fed just yet. guest says the risk of a display but remains high. this is bloomberg. ♪

>> this is daybreak asia. i'm in hong kong. >> i'm betty liu here in new york. as janeteing seen

yellen's more hawkish testimony. joining us now is the global strategist at a private banking. aey do have you with us very lot of focus on something you have on your notes. you mentioned that it looks like the u.s. arc it may be too expensive right now -- u.s. market may be too expensive right now. i want to put this chart that we have on the bloomberg terminal. i much of you had a chance to look at it. it basically shows you the yellow line where the s&p is on a forward twelve-month ratio. you can see that it is certainly a lot more expensive than europe. kind of up there when you are looking at japanese stock. what makes you say it is too expensive right now? there are ank couple reasons. first, we think there was talk about the fact that the fed

could speed up the pace of rate hikes. this is one of the reasons for which u.s. equity market could suffer. good news has been priced in by the market. they have already recovered quite significantly. we also need to recover in terms of earnings growth. there is more value outside of the u.s. equity market, in particular in the eurozone equity market. >> where in the eurozone? >> in the eurozone, i think there are two or three to consider. rallied over the past

12 months. we think there will be additional upside for the banking sector. also, consumer related stocks are very likely to continue to do well. declining trade. also, returning consumer business. all this supports domestic related stocks are in. >> the new polls are showing marine le pen 20%. we have heard this story before with brexit as well as the u.s. election. eventually, economics will take over politics in the eurozone. when you look at the polls, you can be worried by the outcome.

we have a string of general elections in europe. presidential election in france and germany. is not thet outcome most likely outcome, and this is where we feel confident. demand for seasonal the chinese new year holiday. what is the net effect here? it seems they are responding to liquidy conditions -- liquidity conditions. net effect here, are we doing tightening? >> there is tightening in the sense where you look at the money market trade in the past few months. not so much policy tightening per se. it is more sometime of gradual cooling down, especially for the

funding. >> great to have a. more to come here on bloomberg television. stay with us.

[ alarm clock beeping ] weather. ♪ [ laughter ] cartoons. wait for it. [ cat screech ] [ laughter ] ♪ [ screaming ] [ laughter ]

make everyday awesome with the power of xfinity x1... hi grandma! and the fastest internet. [ girl screaming ] [ laughter ] >> 8:30 in singapore. we are half hour away from trading there. looking therenous in singapore. i'm betty liu in new york. you're watching daybreak asia. you betty.nt: thank softbank has agreed to buy fortress investing group for three point $3 billion best $3.3 million. is a 39% premium to the company's last closing price. cofounders will stay on, with the company operating independently within softbank.

the deal needs improvement by shareholders, and is expected to close in the second half. toshiba's future is under question after a chaotic day that saw its chairman resigned. flagged a six point $3 billion write-down. shareholder equity will drop to -$1 billion for the current fiscal year. toshiba may now scale back or even selloff its nuclear business. shellingo considering -- selling a majority stake in its chip unit. >> to secure resources for further growth, we are taking a very flexible stance on the memory chip business. we do not insist on securing our majority stake in this business. >> tesco has fired for its first -- they will20 issue up to $6 million of three

year and five-year bonds. pricing is expected as early as march 3. fed chair janet yellen has five rate hikes ahead if the you as economy -- of the united states economy stays on course. appropriate ifbe the u.s. economy meets the central bank outlook of gradually rising inflation and tightening labor markets. investors see in 34% chance of an increase in mid-march. yellen gave no clear schedule on exact timing. >> we have eight meetings a year. at some meetings, we would remain on course. act and others. precisely when we would take an action, whether it is march or may or june, i think people are focused on that. global news 24 hours a day powered by more than 2600

journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. time to see how the asian markets are shaping up so far this morning. >> as you can see bottom of your -- 144.21.0 421 getces are we are going to -- briefly went above the early january high which took you all the way back to may of 2015. you have been day on the way up. that is going to cap the gains. more stocks in the way up in south korea. we had the unemployment data come out from south korea. a little bit higher than estimates. it has been stable.

taiwan dollar, that is your latest quote. we are expecting a revision upward. it is back to a two-year chart. the fibonacci on your terminal, it is a five-year look. this takes you all the way there. right smack at a critical level for the taiwan dollar. we are pushing high enough to session price. this is over two days of course. inching ever so closely to that section. watching you are also some japanese stocks as well.

suffice to say, toshiba has been on our radar since it started trading. low.on you have several analysts who have basically said they are not going to rate the stocks at the moment. 12% drop their. consensus rating of three. looking at a target price of about 300. and as k, which is a ball and bearings maker getting an update. 42% drop in nine months income. .ot a lot of demand let me disrupt things up. >> thank you. no signs of abating.

a record last month. i thought the whole point was leveraging, but that was just a curb credit. there is this intoxicating cocktail called debt that china is addicted to. they are trying to deleverage and stand new credit and mop up liquidity and really reduce the financial risk or they want to keep that steady growth of around 6.5%. they're going to have to do some ink lending and in the shadow market as well. that is what we saw the pboc crackdown on new bank loans. aggregate financing soared through the roof. that includes shadow lending. aggregate financing. record 3.7 4a trillion yuan. 545 billion u.s. dollars.

no disrespect to the economy of poland or sweden, but that is both that more than both of that is more than both of their economic output. december, it was 1.6 trillion. it is apples and oranges to compared to december. banks and lenders and china frontload at the beginning of the year. january is always high. 3.7 4 trillion is a record high. the pboc has had a number of different measures to kind of curb the excessive credit and the risk, including restricting the drawdown of loans. keep in mind, january was really only open for about three weeks in china. still, new loans and a one-year high. 2.4.ast was

a kind of moved into the shadow realms. china is learning that while other central bank around the world have learned decades ago, trying to control aggregate in a modern financial system is next to impossible. >> what does this tell you? is there a resurgence in shadow financing? >> absolutely. that is exactly what is happening. they're fighting other avenues to get that much needed cocktail. the bloomberg terminal. we can see the resurgence in shadow financing. it kind of gets a bad name. borrowing behind the dumpster. it is used on many different levels, including but a called bankers acceptances. these have soared in january 2 613.1 billion yuan. an independentis

analyst. he is also the former president of bank of china international usa. is restraining loans but allowing private credit to flow through shadow banks. this is not a policy designed to conquer china's debt burden. the balance continues. financial problems, shares in commonwealth bank are higher in sydney after posting its eighth consecutive record half-year. numbersstrong set of from australia's biggest bank. 4.1 9 billion australian dollars. that is the eighth consecutive half year record profit. narrowly beating estimates. you see share is going higher.

really pulling the whole index along with it. commonwealth bank makes up 9% of the aes ask. a lot of tailwinds to the market. they have done it to domestic lending. hundred 9 billion dollars in new loans have been written. the net interest margin has fallen to 2.11% from 2.15% a year earlier. officerf financial spoke to bloomberg a little earlier and was not too concerned about that. >> this. -- this period went down. in the same period are other banking income and other things with clients went up. we tend to balance the thing off. we are not totally concerned about margin. we have been dealing with it all through the global financial crisis and beyond. our margins have been recently stable. >> the commonwealth bank ceo has

said trends in the australian economy remain positive. >> a big earnings day in australia. this is pretty strong for numbers as well. >> we have this huge conglomerate for everything from department stores and supermarkets to coal mines very it was coal mining in the price of coal that really drove this. 1.7 5 billion at the half. that 10 billion higher than expected. from dividend of the dollar three per share. store really the hardware and the fountain -- all strong performers. westbound was said to be considering the potential office works ipos. that might be something to watch in the coming months. thank you.

up next, toshiba is on thin ice with shares plunging again after a $6 billion write-down. could a once mighty industrial giant and a worthless? this is bloomberg. ♪

>> this is daybreak asia. >> i'm betty liu here in new york. as 2004, toshiba was worth more than apple. soon it could be effectively worthless after earnings on tuesday. the company announced a $6 billion write-down. for more, let's bring in our analyst. talking about toshiba's troubles, it was just a humiliating turn of events, when you talk about what happened.

earnings, then they delayed it, then they asked for a one-month extension. we actually saw this provisional earnings figure. we have more analysis on this. how deep of a whole is toshiba in now? >> it is a pretty bad look. it needs one definition of insolvency. i should stress it is not as bad as that might sound. quite a few companies are in the same position. they all have more liabilities than assets. philip morris international has been in this situation for about five years now. payingys you can keep your interest bills and keep your creditors happy, no one is going to call and the administrators. what we saw from the nikkei report that the company may add

a going concern notice, which is a warning from the auditors that a company may go into ministration during the next month. it is a precautionary warning, but i think what came out was on audited results that auditors have not signed off on these. they are the people expected to issue a notice of going concern. >> his bankruptcy a possibility? this going concern was not really addressed yesterday. that is precisely what is meant to be addressed. there is a risk. should bear in mind that it is a precautionary thing. toshiba has ¥1 trillion of cash equivalent. that is not perfect. to trya lot of levers

and stave off that sort of eventuality. the sale of the imaging unit to cabin -- canon brought in more cash flow than their operations brought in the past five years. have a lot of other stuff they can sell. they may sell a majority stake in that business. previously they were only looking to sell 20% and of course 50% is a larger amount. you are getting control. there are a lot of other things you can do before that happens. thee have to talk about corporate governance issue in japan. what does it collapsed in toshiba me for the rest of corporate japan? >> it would be huge. if you look at the liabilities and we're talking about a bigger balance sheet than some of those

big 1990's collapses you saw. it would be huge. equivalent looking at total administration to about the last two years of all the bankruptcies in japan. toshiba is a company of 200,000 employees. japan's general electric with a similar history. i think we have to watch this quite closely. you're not allowed to have negative net assets for more than two years as a listed company in japan. >> thank you so much. the two should may have vanquished uber, but the right hailing giant -- government regulations have forced millions of drivers off the road leaving them jobless and saddled with debt. placesondent: few symbolize the unfulfilled

promise of china's ridesharing revolution quite like this village, with does what this gritty corner of beijing has become known. they speak to aspiration. the mounds of rotting garbage the grim reality. mr. yang moved here at the peak of the uber didi goldrush. they lavished drivers with generous subsidies as they competed for market share. some made up to $4000 a month. the inflated fares have dried up and the government has cracked down, banning the vast majority of drivers. he has been forced to go back to his old job in the kitchen. didi because i want to wear kinko's and stay away from the smoke and oil. it only proves to me that this driving job was even worse than being a chef. biggerr drivers have

problems. loans many took out heavy to buy a car, which they are now struggling to pay back. >> you have to pay back the money to the banks every month, so they have to take the risks. this group of drivers is really caught in a dilemma. this is one who is taking his chances. a nonresident technically banned from driving, he still works 10 hours straight six days a week, and says he is likely to break in $1500 a month. that is if he does not get fined by the police, or have his car impounded. >> the government wants to protect the interest of state taxi companies. it does not want the industry to grow so large that it loses control of it. that is what the government fears most -- a loss of control. >> he says he will keep driving until he gets caught. he has no other job to go to. onesiggest victim are the seemingly unassailable.

without a doubt, dd has suffered its biggest loss because of this. they are even more anxious. they said they were optimistic about working with the authorities to obtain licenses. the days of freely -- freewheeling rideshare is over. the question is if db can successfully navigate the government's roadblocks. before we go, a new feature we'd like to bring to your attention. interactive tv function. you can find it on tv on your bloomberg. there will be some previous interviews and deep dives into some bloomberg terminal charts on the right side. also the left and the blue here. you can take part in the conversation and send us some of your messages and questions. this is for our bloomberg subscribers only. check it out at tv .

a 97% drop in profit. coming up next. this is bloomberg. ♪

>> this is daybreak asia. >> i'm betty liu here in new york.

time for a quick look at what is coming up over the next few hours here on bloomberg. rishaad, what are you watching? >> we have some of these themes which continue. let's start with toshiba. this then herbal company coming to the end of the road. -- this venerable company coming to the end of the road. a highly respected analyst will be joining us in about an hour 15 minutes. we will get his take. a look at what is going on with janet yellen. she was speaking to congress. getting some convinced there will be of move in interest rates sooner rather than later. she was sending a note that she was defiant, yet says she was perhaps in baffled. embattled.led -- that and more. >> we will come back in a few minutes. a 97% plunge in quarterly profit

after margins in its luxury jaguar land rover unit narrowed. that is even before brexit and a proposed u.s. border tax on imported cars. we are joined live from singapore. how vulnerable are they right now? >> it is a worry. if you believe what tata motors is saying, better days are ahead. it is launching new jaguar models. that is expected to boost sales and profit as well. in q3, whichwe saw was pretty dismal. contributed by the 62% slump in its jaguar unit. despite some optimism, there are concerns about the changing is this environment. firstly, we have trump and his

proposed border tax on imported cars. jaguar may be a victim of that tax. it does not have factories in the u.s. and sells much of its output overseas. if jaguar which to make money, it has to sell its cars at a much higher price, much higher. we're talking $17,000 higher according to some calculations. a big amount if you compare to ford motor. $280 more. would you pay more for your jag? >> not sure. what about the stock? saw, what does this say for the market now? >> investors were disappointed. they dumped tata motors. results were announced one hour before markets closed. that was enough to send the stock down as much as 8% in the last few minutes of trading. the jaguar unit has been a cash cow.

until recently, it was the most profitable units by far. it compensated for losses from tata motors india operations. it is this operation in india that has been so contentious. thank you so much. if someone wants to give me a jaguar, that is ok. that is it from us. plenty more still to come with rishaad. bloomberg markets: asia is up next. china is going to be the big one after we did see credit surged to a record high. we are seeing a risk on the markets after day one of testimony from janet yellen. this is bloomberg. ♪

rishaad: it is 9:00 a.m. in singapore, midday in sydney, 8:00 in new york, i am her shots alum it in hong kong. this is "bloomberg markets: asia ." ♪ rishaad: softbank shares dip after alternative asset manager called it a world-class investment form. furthershares plunging after a chaotic disclosure of a $6 billion write-down.