3 3 >> a cautious start for asian trade. lowest quarterly profit in two years as revisions are bad loans almost double. investigatelligence the president russian ties. he says it's all nonsense. break australia's latest job numbers. we will be watching for signals on its best move -- next move. >> this is the second hour of

daybreak asia. it is just after 8:00 a.m. in hong kong. betty: we are watching several developments that are going to happen this morning as you had mentioned a few moments ago the appearancend at the prosecutor's office. also the australian jobs numbers at the bottom of the hour. we will see how those two events move the market in asia. yvonne: that ever volatile aussie job number could be interesting. givingd be choppy here just the mixed signals we have seen in the labor market. we did the unemployment pickup a little bit the previous month. we will see how things go in the bottom of the hour. let's take a look at the market open in tokyo and seoul. looking atnt: we are 10,000 jobs. it is an all-important number. horribly hard to get. comes out and about nine

minutes. were looking at a higher start in japan 30 minutes back. that has been paired back. early gains. have a look at the top three and bottom three. when you look at iron ore demand and you look at world steel production. the market had a real egg party. -- big party. it should be a little better when you look at the top three. , just about every single sector is off the high of the day or is pushing farther into the red. you have a lot of the retailers here. single one with the exception of one or two on the way down. have a look at the bond market. u.s. yields up for a fifth day.

2.5%.le above we are at 2.49%, to put 5%. you have 2.82% here on the aussie 10 year highs. level for yields. i mentioned this party in australia. have a look at the -- at that. dollar-yen.ing last we checked, and about $114.10. toshiba is one stock we're watching very mostly -- very closely. on the today chart, tells you the story there. quite a session. trading at 204 at the moment. group out -- asahi with its full projections. 20 billion japanese yen.

here.a share yvonne: thank you. china's holdings of u.s. treasuries fell the most on record last year as beijing burned through its foreign exchange file to defend the yen. the fed inflation of is putting pressure on the yields. this is a big wake-up call. correspondent: the process of rising deficits, rising inflation under trump and the fed perhaps on more of a tightening bias this year. you are having the biggest creditors rethink their holding of u.s. treasuries. i will get to japan in just a second. china, their treasured holdings fell for the whole year of 2016. it is the most on record. it was up about 9 billion in december.

overall, for the first year, a ig drop of $188 billion u.s. the pboc is burning through their fx reserves pile. it was up to $4 trillion not too long ago. it is now just below $3 trillion. if they have $3 trillion in fx reserves and $1.06 trillion in treasuries. that is coming down. $188 billion u.s. the sale of the treasuries by these creditors has made borrowing more costly for the u.s. government. you can look at the 10 year yields rose to 2.6% from 1.3 percent. the biggest creditors are considering. there are domestic needs, but they are also international issues being taken into account. >> what about japan? our holdings dwindling as well? correspondent: they are. a little different domestic situation there. they are still the number one

creditor to the u.s. government, trillion. we have seen five straight months of japan's holdings of treasury's starting to fall. 1.0 $9 trillion in 2016, down another $31.6 billion year over year. watching these treasury holdings. in the meantime, let's get first word news. defense secretary james mattis says the u.s. remains fully committed to nato, calling it a fundamental bedrock of the trans atlantic community. the associated press says he also told european allies to increase defense spending this year, or the u.s. will moderate its commitment. james mattis is attending his first meeting of the alliance of month after president trump described it as obsolete. >> the european minister of defense said last week it is a

fair demand that all who fit from the best defense in the world carry their proportionate share of the necessary cost to defend freedom, and we should never forget that ultimately it is freedom that we defend here at nato. correspondent: another one of trumps administration picks has quit. andrew punter has withdrawn as the president labor secretary nomination over controversy of his hiring of an on document did housekeeper and a domestic abuse allegation. he was scheduled for a senate confirmation hearing on thursday, but he would face a top -- a tough fight as a number republicans oppose his nomination. toshiba shares fall farther. we're told it may start talks with additional bidders on selling a stake in the semiconductor business. the states being sold off may be increased. toshiba has plunged ever since it reported a $6.3 billion write-down in its nuclear power business.

the sale of one of its most valuable units season shares demoted to the second section of the tokyo stock exchange. shares are lower after the metals and mining firm reported first-half profit. it kept its guidance for 2017 unchanged. underlying profit of $479 million beat the median forecast among analysts estimates. demand for commodities got a boost from chinese stimulus. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm courtney collins. this is bloomberg. ♪ >> thank you so much. there is a drop in fourth-quarter profit as provisions for bad loans surge. correspondent just because numbers last hour.

this is the lowest quarterly profit in two years. spot on.dent: the lowest quarterly profit in two years. net income down 9%. we talking $643 million. analysts were looking for $714 million. disappointing numbers, a lots to do with rising provisions. i spent a whopping 87%. dbs set aside bad loans for a .truggling oil and gas industry according to some estimates, energy-related companies oh to the threellion central banks. bad loans weighing on earnings, adding two pressures i a slowing singapore economy slowing lending growth. any end in sight? not really. not yet. earlier this week, oh cbc has announced earnings. we may see the situation

stabilized midyear. that does not mean recovery. the banking sector here in singapore, not just about greater scrutiny, it is bad loans as well by longer-term. analysts recommendations, we have 14 buys to holds, and nine calling for sl. fared -- fedd, chair janet yellen says the trump budget will not as silly prompt higher interest rates. >> president trump says retail executives the overhaul plan is coming soon. more on what morgan figure says. this is bloomberg. ♪

>> this is daybreak asia. agencies and the

fbi are said to be investigating contact between president trump steam and russia. back onident has his twitter, slamming intelligence leaks and calling the russian story nonsense. a spring in ramy inocencio. it is up to speed. trump hasent: donald been tweeting, talking about what has been happening about the intelligence agencies. a couple of want to bring up your you brought up the nonsense up the nonsense. it is in reference to hillary clinton losing campaign and he brought up another one saying that the real scandal is not about his aides, it is about how classified information is given out like candy. very un-american. nothing to laugh about when it comes to the allegations. basically, u.s. intelligence is conducting multiple investigations because they want

to find out who was talking to russians. this is not related just a michael flynn in terms of that leak. also, what was discussed and whether this had any impact on the white house race in 2016. one of the probes involves counterintelligence that is looking at russian espionage activities. one involves cybersecurity, looking at which political operatives and which political groups were actually hacked here in the u.s.. senior russian officials have repeated contacts with trump officials through phone records as well as intercepted calls. some of the people who are under investigation in the probe include paul manafort. he was a former trump campaign chair and has links to russia as well as ukraine's exiled former president viktor yanukovych. roger stone is a longtime republican operative.

the calls from congress and senate have been coming in fast and furious, and from bipartisan aspects. republicans as well as democrats. republicans now making calls. graham is saying that the russians have been trying to break the backbone of democracies all of the world. check wesley saying russian meddling is unacceptable. bob corker says congress needs to get it all out there to the public domain. looking ahead, the senate intelligence committee could call witnesses by the end of this month. that could include paul manafort, mike flynn and also sally yates, who was the acting attorney general up until a few few weeks ago until she was fired by president trump. she did tell the white house that mike flynn could be blackmailed by the russians. a lot there, and a lot more to

come. >> thank you so much. on this continuing fallout on the connection between the trump campaign and russia. president trump waiting on all this also, met with executives of major retail chains on wednesday. he said he would have a tax overhaul proposal soon here at the bosses of these companies include target, jcpenney and gap . they came to washington to discuss their opposition to the republican border adjustment tax plan. it would raise consumer prices. aining us now is a ceo of business development and strategies company. great to see you. of trump thatake is surrounding himself with the latest fashion? guest: all the retailers in the

house. one thing that they are obviously concerned about is being net importers with this new plan. if you look at it through the lens of fashion based, specifically. back in 2011 because of a lack of supply of cotton, we had to dollars increased amount of cotton -- two dollars increased for a pound of cotton. just that alone caused the import and prices of those clothing materials to be hugely impacted. if you think about a 20% potential import duty on everything, it could cause american retailers of all shapes and sizes not just the fashion retailers, to be affected. pretty dramatic. do think retailers are preparing for this at all? he seems pretty serious about putting this through. guest: i think they are

preparing for it. depending on different courses for different races, the luxury guys will be ok. they have a margin to play with. when you look at the bottom of the spectrum, people working with far thinner margins. even walmart. with that is something they have to worry about. there is a potential for the dollar that could counteract some of this. that come point to even though it is not a flat tax across all products come in opposite depends on the product. >> let's talk about the retail sales numbers that came in this morning. much better than expected. what kind of era are we entering into with retailers? guest: we are entering into an

era where the consumer is actually well-off. think about housing promises -- housing prices, the stock market at all-time high. tax benefits are coming through. >> despite was going on in washington? guest: i think they're feeling relatively good. what kind of retailer are you? best-sellinging experiences, restaurants, hotels, you're getting a big uptick. the biggest uptick across the board has been hospitality. if you're doing it the same way you have always done before, americans have a lot of things. it is an interesting problem that retailers face now. it is not just about selling products, they have to sell experiences. >> that is why companies like apple are -- there stock is beginning to hit records highs

here. but then you have the department stores. macy's. you have the struggle. what is going on on that in? guest: you have the struggle. people have been calling for the demise of department stores sinceyou have the struggle. what is going on on that in? the 80's. every five or 10 years. you have to remember these companies control some of the best and most powerful real estate in some of that greatest cities in the country. a you want to take a store on street come in's 15-20% for sales. change and pivot to be more asian or european model, which is more concession, there is actually quite an opportunity for them to repurpose some of that real estate and recognize they are not just in the retail game. i found it interesting to kind of flesh out this battle between the net importers versus

exporters in the u.s. a lot of ongoing talk about ge versus walmart. should i be concerned about this type of tension? guest: the truth is whether you are an american retailer or a japanese retailer, at the end of the day, if you are bringing things into this country, all the americans are also manufacturing in the far east. regardless of the providence of the brand, products are mostly being manufactured overseas. 20 or 30 years ago in new york state, you had a few hundred factories. over time that has changed. of particularly fashion retail -- but many others as well -- has very much a big reliance on eastern sourcing. it is an issue that is really relatively important for them to focus on. >> focusing on the asian market, kind ofseen this

slowdown, anticorruption campaign having a very chilling effect towards consumption in this region. we are hearing little crack so that raking through. product saying they are seeing a little rebound in our we heading bottom when it comes to luxury demand? guest: interesting you say that. i believe the big luxury conglomerate out of europe referenced asia in particular, the china comeback story for them, which happened almost violently. it just snapped back the second half of last year and is still continuing. i think even burberry and people who have been concerned about burberry and whether they were losing momentum. they also had an interesting push recently. i am bullish for what they are doing. the united states is not actually per capita the greatest

luxury market in the world. is only 20% of the luxury industry. there is a push here as well. it has been an interesting boost for them all. >> appreciated. we will have more with mortimer singer. this is bloomberg. ♪

>> this is daybreak asia. betty: i'm betty liu in new york. singer with us is more t -- mortimer singer. i want to piggy off of what yvonne was talking about. you are saying that more and more here in the u.s., they are wrecked rising the development's areg on in asia -- they recognizing the development that is going on in asia. -- mall,ibaba's small

it effectively allows you to create your own shopping streets , but with the universal shopping cart. you can shop directly from each brand. is somethingtion that is increasingly invoked here. -- in though be here. monetize theo retail market. each of those phenomenon is helping. others, if you put them together, such as the micro companies that are on the long tail, the new david's as we told .hem that we call them a lot of it started in asia.

the rise of these direct to consumer companies, particularly with the mobile activation. the ability to create things for people to use on their phones and design things on their phones, and also the proximity to the sourcing. if you are in china come even happens things made in china very quickly. i think that in fact the americans and western companies are way behind what is happening in china, particularly when it comes to convergence of mobile and commerce. uninteresting take on currency volatility. is a stronger dollar to touring tourists from shopping in the u.s.? guest: absolutely. the europeans need more tourists. certain terrorist attacks in france, it really did affect tourism.

americasay a historically has not had the kind of retail tourism that europe is had. >> appreciate your time.

>> we have some breaking news out of australia. the latest jobs data. haidi lun is out of sydney. correspondent: i want to caveat this. these are to play some of the most volatile data numbers to come out of australia. it does look like a very nice beat. we are expecting 10,000 jobs to be added to the australian economy in january. they got 13,500 and that matches the 13,500 that was added in december. that is a fourth straight month of positive jobs growth. take a look at the unemployment rate. that also take lower to 5.7%. we are just we were looking for

5.8%. pretty close to the low we saw last year of 5.6%, the lowest since december 2013. taking a look at some of the other details. was down employment 44.8 thousand in terms of the number of jobs. part-time employment, 58 point 3000 was added to the economy. a little bit of a mixed picture on that front. the participation rate coming 64.6%. at that is a little shy of what we were looking for. u.s.,h the fed in the economists have been confounded about where this participation rate is going. that is going to feed into wage

growth. of wage growth we have seen here in australia is going to be the spanner in the works when it comes to hitting the inflation target. we are getting wage growth index coming out and about a week's time. that headline number, 13,500 jobs added to the economy. we are expecting 10,000. unemployment taking down to 5.7%. when it a mixed picture comes to part-time versus full-time employment. >> still watching for that wage growth. thank you so much heidi. let's get to the first word news with courtney collins. sources say u.s. intelligence agencies and the fbi are investigating the contact between president trump's associates and russia. includes communication

during and after the 2016 campaign. those being examined include former national security adviser michael flynn, paul manafort, and michael page. republicans have joined democrats in calling for a look at a deeper connection. president trump has confirmed the u.s. is open to a middle east peace agreement which does not include separate states for the israelis and the palestinians. a has underpinned more than decade of failed negotiations between the two sides. israeli prime minister benjamin netanyahu he is happy with whatever works for peace. malaysia police have arrested a woman in connection with the apparent assassination of kim jong nam, that north korean leaders exiled half-brother. she was carrying vietnamese travel documents. she was arrested at the kuala lumpur budget terminal where he was attacked.

officials believe he was poisoned with either a needle or a chemical spray. huawei is said to be playing on taking on amazon's alexa and apples siri. the third-largest smartphone maker is beginning to enter the -- using its own voice powered service. it is said to be in the early stages of developing the technology which could communicate in chinese and target domestic users. global news power 24 hours a day -- i'm courtney collins, this is bloomberg. bank of japan governor kuroda is speaking right now in tokyo at a conference. he is talking about about the japanese thanking sector. he is saying you cannot deny that a different type of financial crisis could arrive in japan. in presenting a challenge. a soft approach to banking regulation may be the most

effective. he says banks in japan actively taking risk is a positive influence on the industry and also the economy. those come with some risks, including different kind of financial crisis that could arise in japan. we will be watching his speech for more headlines. >> asian markets are shipping out so far. it looks like we're hopping around $114 on the dollar-yen. look at that.t me we were around $114. a little stronger at the moment. just to put those numbers into context. you had negative interest rates. now you're trying to steepen the yield curve. it is a very tricky situation.

a soft approach is the key take away there. finally within eight standard deviations of the estimate. we are seeing a little bit of a pop when it comes to the aussie dollar here. i fifth of 1%. the other market i'm following is this index. it was the out performer. i'm using that generously. this one is also hitting a special note. that being said, we are keeping that market sort of a float are the big three. they are the heaviest weighted --cks on the cost be index kospi index. let me wrap things up with a look at the currency index.

i want to watch very closely of the most dependent economies on exports. you have taiwan, south korea. as a chunk of output. one, strongest it's been since the election. of course, my taiwan dollar. this is basically straight down. all the way back to may 2015. fourth quarter was revised higher yesterday. reports are also looking at a better projection for this year. what happens when this continues to strengthen? have a look at futures. this one i am watching very closely given the sort of levels. taiwan, last quote. might be seven downside because of a loss of momentum across markets the past couple hours.

hang it saying, 24,000 is the number we are watching closely. sank, 24,000 is the number we're watching closely. a busy morning for earnings. profits beating estimates. let's get over to paul allen for all those details. good numbers for the dhp spin off. >> that's right. a very solid set of numbers here. $479 million underlying profit. that is more than $100 million better than median estimates. course, commodity prices, coal prices helpfully up. manganese also up. the ceo acknowledging that, saying stronger commodity prices

underpinned significant improvement here. an interim dividend for the first time. >> we have more earnings out the last hour. tell us more about them. expected after yesterday's developments. no dividend there. low energy prices weighing on this results. that is a huge write-down you heard on wednesday. $1 billion on a joint venture. about $500 million. the idea of some upstream assets will reduce debts. not a great result from the big

energy providers today. telstra,there is also the company that does not sell as many mobile headsets as expected over the christmas period. how does that impact earnings? , i love this quote -- customers are hanging onto their phones longer than anticipated. that is weighing on telstra's results. dollars -- $5.2 billion. it will be toward the bottom end of the range for telstra. >> shares down 5% in sydney. guests onve some big those australian earnings. to start things off with telstra. time..m. sydney you will hear from telstra's ceo .

half an hour afterwards, ceo graham kerr will be joining us for the first on bloomberg live from perth. you also hear from evolution p.m.g chairman at 2:40 sydney time. fed's policyof the achieve? we ask that question. this is bloomberg. ♪

>> this is daybreak asia. they: a quick check of latest business headlines at this hour. jet airways is trying to do or more indian passengers. five indian cities were given more access. the german carrier has also deepened it partnership as it

competes with middle eastern rivals. they hold a holistic in jet airways and air italian. they say they're open to cooperating with them. >> management and workers on strike at the world's biggest copper mine have agreed to talk. not on when to hold them. have agreed to a meeting with labor officials. they could be friday when the talks happen. the sec's interim chief could make it harder to investigate corporate wrongdoing. he isting chairman says reviewing autonomy given to senior attorneys which allows them to investigate and issue subpoenas without approval from superiors. india's cabinet has approved

state bank event india's plan to restore five of its units. the proposal could reduce cost and boost operational efficiency. they are expecting cost savings of $150 million in the first year alone. >> our next guest is an outspoken critic of the federal reserve system. fedress should release the from the bondage of its mandate. joining us is one of the closest incisors to -- have a book out that is perfect timing here. >> you could not have time did any better. you say basically the fed has been bad the economy, and that

the dual mandate should be gone. how does that even happen? an act of congress in 1977 expanded the mandate to be a dual mandate. you could just as easily get things done and you could reduce it. if it is an act of congress, so be it. have never let desk said to let the fox in the henhouse. i come to janet yellen's defense. i actually felt that some of the people in congress today were borderline rude. it was kind of embarrassing as an american to see them literally attacking her. practitioners. people who are on the receiving end of fed policy. it is the pension fund manager who has been backed into a

corner. against interest rates. you are saying people who have worked in markets and managed money should be the one to run monetary policy, even though they don't have experience doing it. >> if you look at the original federal reserve act of 1913, it specifies that the president is obligated to choose people from a diversity of backgrounds in different industries and backgrounds as well as geographic regions across the country. that was what was originally conceived. now we have really one way of making monetary policy. >> it is interesting. rather healthy inflation in those retail sales overnight in the u.s.. you have rage growth and productivity. there are key issues the fed cannot quite get that momentum

growing on that front. is that something the fed cannot tackle? back to why ius would suggest reducing it to a single mandate. au have seen the fed push on string the past few years. i think what they are trying to do is in still wrong medicine with the patient. you cannot follow what is going on in the labor market with the interest rate. it is too blunt. >> down to -- down to one mandate, which one? >> inflation. >> what's wrong with jobs? what's wrong with them focusing on jobs? that i think that is what has caused mission creep over the years. if you look at the era of low and falling interest rates under to allan, you also get of the jobless recoveries we have had. be on a think it should fiscal priority, that of

congress and that of the private sector to handle the unemployment side of the economy and leave inflation to the fed as well as supervising the banking system. >> i want to ask you a question from the book. you're a special advisor to richard fisher for eight years. he worked on wall street. richard were birds of a feather. what are those off hot moments for you as this person working inside the federal reserve system that captures the kind of things that were happening at that time and what people are going to learn about? >> i think one of my eureka moments came in the aftermath of the crisis. there was a broad recognition within the fed that the inflation metric we were using had not helped them detect all the asset price inflation, detect what was going on in residential. there was a recognition that

they were using the wrong inflation gauge. what did they do? nothing. that was when the book was actually conceived inside of may. we have a tremendous opportunity to effect change in the institution and we are going to ignore it. >> richard fisher was on inflation hawk. inflation has not -- >> he and i did not agree on that. there's one thing he and i did not agree on consistently and that is that if you continue to held up debt levels, you by definition have deflationary impetus is in other areas of the market. he and i did not agree on inflation and deflation. instabilitynancial can bestow by keeping interest rates too low for too long. if you look at the bottom markets, the stock market, any acid market, that is indeed what happened. >> you think of the fed as behind the inflation curve?

>> several years ago, this is really her baby. that12 it was suggesting the labor market was gaining sufficient -- we should have been moving on to normalized interest rates. major advocates that we should not be talking about the taper. you're talking about years ago now. we will have more with danielle. funny more to come on bloomberg television. -- plenty more to come.

moment, some headlines are coming through. --sees the u.s. gradually u.s. inflation gradually moving back towards the fed 2% objective, noting also that the policies of the new trump administration are not yet clear , but that the fed will be raising rates a little further in the months ahead. kathy coming you and i will looking at these headlines. looks a little like dialing back these expectations of a march hike? >> especially if you look at the contrast. we were talking about that earlier. ,aybe even raising rates faster and what this could mean.

would you put yourself in that? >> i think what the fed has to move quickly. so many indicators are suggesting the current economic cycle is starting to exhaust itself and started to peak. they need to put march on the table. there are only four opportunities anyway. >> paul krugman said they're going to make mistakes. say central bank started raising to quickly and took the wind right out of the economy's sales. what is the rush? why do you half -- >> you're not at 2.5 percent. 2%y are both above the bogey. it looks like the core pce that the fed favors is going to hit that target. i'm not sure what dudley is saying here. i would be much more in the

camp. he is a vocal advocate in worrying about commercial real estate. i'm a big fan of his. risk about waiting too long versus letting the economy run hot? apparent thatis they have waited too long. this is a very past tense type thing. they're trying to get in in front of a recession, they will have to go in march, in june. they could even go so far as to ponder starting to shrink the balance sheet, which clearly, the bondthey could even go so mg in that kind of possibility. >> do you predict they will go three or maybe the next four? >> i don't think they will get to four. if you look at how the yield curve is behaving, we're seeing a flattening out.

rates comeing short up but not as much of a reaction as you should be seeing. that is kind of a mystery. look at foreign sellers who are going out long on the curves and starting to shed their treasuries. the problem of the u.s. economy, is it going to be a problem for markets? >> i have been sharply have not seen more bloodletting on the part of multinational corporations. you would have expected suzy a lot more -- expected to see a lot more. i'm not sure where that strong dollar effect is lurking. it is there. again, if the dollar strength is too much, if the yield curve begins to flatten, i think that we could be on our way to the fed only being able to raise rates a few times at the beginning of the year. >> on a quick note, the fact

donald trump is so erratic, it is either very hidden or erratic on economic policies. do you think that is hard to forecast? had yellen that you up on the hill today's in a row and the first fed meeting under trump, it kind of indicates to me that they don't know what to do. >> thank you so much for joining us. fed up, anet up -- insider's take on why the federal reserve is bad for america.

♪ it is 9:00 a.m. in singapore. this is bloomberg asia. ♪ >> global stocks rally, fizzling out in asia. with the today slide. >> china notches a record for law, with its reserves. gas,oans in oil and fighting the banks. how