♪ >> china, lowering expectations for growth this year. the emphasis will be on reducing risk. >> the premier delivered an unmistakable message. he is firmly in control. rate rise,fed sheet janet yellen warning there is danger. abe tightens his grip on power and may become the longest serving prime minister in japanese history. we are covering all of those

stories across the globe from beijing. i will break down the work ul and china'so travel curbs on korea. >> we will look at how shinzo abe is strengthening his grip on power, giving him a shot at becoming the larger -- longest serving prime minister in japanese history. and talking about the rate hike, seems to be all but certain. this is daybreak asia, coming to you from the u.s. and asia. i am betty lou where it is just after 6:00 p.m. in new york. rishaad: it is -- yvonne: it is after 7:00 in hong kong. we are not talking about just beijing raining in its growth target, but when it comes to the looming rate hike that the martin is -- market is certain to price in, how will china's stem the offset? betty: you are right. the biggest risk for china and

hitting the report on track is going to come from the united states and how fast and how far rate hikes are going to go. what does that mean for the dollar? and then of course the chinese currency? we are the wildcard it seems. we will take into that throughout the hour -- dig into that throughout the hour. yvonne: it will be busy with the jobs report. let's take a look at the asia-pacific. pretty subdued on monday as we kick off with the anzac 50 flat, -- kiwi dollar at 7027 $70.27 u.s. we saw a move up with commodities futures on friday, which could lend some support to the currency. let's take a look at the aussie right now, 75.85. we are having resell cells that are meeting made in decision on tuesday.

-- sales that are being made on decisions on tuesday. japan is close, barely above the 114 handle right now, but the open in tokyo is pretty subdued as well, the nikkei 225. that is a look at what to expect in the region. betty, we talked about the optimism from yellen, but we could also see some risks to china's growth outlook, spelling out a net-net mixed open. betty: we did not get a lot of momentum on friday when we closed barely above the waterline. barely into the green. but staying on china, the chinese premier delivering the government's economic target for the year, saying the emphasis will be on civility and reducing risk. he sent a message about who is in charge of china. tom mackenzie is watching the national people's conference. give us the key takeaway from

the premier's speech. : of course it is a soccer gdp target of about 6.5%. and the optimism is possibly higher with what they added in freezing around the gdp target. we had other targets like cpi, 3%.net gdp around renewed money supply, brought down from an increase of 30. greateryuan, liberalization and the changing of appraising, signaling the currency. the context is it seem to isgest the foremost debate reformers have the upper hand. we have seen them put in regulating for the bank and security, and the focus on reading in these risks even if it means slightly slower growth. we know there is this gap

between rhetoric and what is actually happening on the ground. we notice of the jet -- the debt .f gdp is around 260% we know banking assets are three times the value of gdp. gap, butthis reality the rhetoric is now firmly on raining in the financial risks and stability, and a neutral and prudent policy. yvonne: it seems like the rhetoric has been a far cry from the all cost language we use to hear, but how likely is it china will hit that gdp of 6.5% or higher this year? they are pretty good at hitting their target, and the economists said 6.5% is a likely end of 2017 gdp number. ppi,ve had a pick up in

factory engaged inflation, cpi picked up as well, and export numbers and pmi numbers going to stabilization. but there are some key risks. the auto sector is not benefiting from the tax cut like last year. the property sector is at risk. and there are still a lot of financial risks in the nonperforming loans. shadow banking, online financing, key risks. then there is the internal environment. the fed rate hike, which is looking more unlikely, that will -- more likely, that will add pressure on the yuan. the fx reserves will stabilize it, then you have trump and trade. there is a more difficult sell on environment with the protectionist sentiment, a swipe

at the u.s. presidency. did we get any insights in terms of the political machinations before this crucial party congress leader in the year? tom: going through this work and xi the words core jinping were mentioned number -- numerous times. when theyimes than had their work report when the other man was still president. it suggests that people, policymakers have coalesced against the -- around xi jinping. it was interesting to see the premier talking about xi jinping being the core of the party, the core of the country, saying all of the positive things that happened in 2016 were all down to xi jinping. so with this power around him, that is what we will see between now and when the crucial already

congress at the end of the year. yvonne: tom mackenzie, our china correspondent. first word news now with paul allen from sydney. paul: the former director of national intelligence has denied president trump's count -- claim that there were wiretaps on his tower during the election campaign. they claim the at breitbart news. it was formerly run by's steve bannon, and there are calls for a congressional investigation. james clapper denied any wiretap was ordered. shinzo abe has strengthened his grip on japan with his liberal democratic party changing its rules to allow the leader to serve three consecutive terms. this came from a conference in tokyo, and he could stay in office through 2021. he came in power late 202012 -- 2012 and is the longest-serving

leader after angela merkel. tensions rise over the deployment of a u.s. missile defense system. beijing has said to have stopped of the selling of holidays to korea, and four industries were shut down in china for safety violations. north korea is said to have deployed a missile in the last half hour. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. a look at the week ahead, after economic data sales past forecast, shares of financial companies rose with higher bond yields. joining us is su keenan. su: we thought financials and health care lead the pack, but it was a small gain. take a look at the close to unchanged look. stocks that lot of

were moving on friday, deutsche bank down friday but could have a big turnaround because john cryan announced less than two years in his strategy, and overhaul of selling, i have billion in stocks, part of asset management, and integrating postbank. you have exxon, they had an analyst day on front -- the $5ay, note seeking million guy on a project. project. they expect stocks may job, it is overvalued. 4479, copper is a surprise. it was up and away. on the trump trade, they are rebuilding, but it could drop with higher interest rates, elections in europe, and where the demand is coming from. yvonne: $31 billion evaluation for snap.

commodities are focused what is the story? su: first the direction question for oil. it is a big question because the stock oil -- stockpile is that records, and that means shale could cut into the positive effects of the opec cuts, and i could have prices at -- that could have rises at a standstill. oil is rebounding a bit from a drop last week, but $53. still looking to see where we go from here. gold also under pressure. this in particular is a rate hike as the commission is surging. there is not as much turning to gold for a safe haven as there was. betty: all right, thank you. janet yellen has all but confirmed a rate hike this month. it appears only a disastrously weak jobs report could perhaps

put it off. a reporter here with more. i am looking at work. 94% now. reporter: a month ago it was like 20%. not even a month, 34%. that was last week. of the fed all speakers, and she capped off an entire week of one after the other signaling of march was on the table. she paved the way, no will should drive her car down that road? >> at the meeting later this month, the committee will evaluate whether employment and event -- inflation continuing to evolve in line with our in which case, a further adjustment of the federal funds rate would likely be appropriate. kathleen: i would say maybe that is like being invited to a party

and i say, my car could break down, my kids don't get sick, of course i will be at your party. so it is a lot of yes's. -- if's. .he jobs report will be strong payrolls are up $190,000 for the month of february. this was out on friday. of payrolllast year gains, almost 200,000 in january. that is the average on the double line. you are seeing the six-month average, that should be a great rate hike. and the unemployment rate is supposed to be 4.7% from point -- from 4.8%. and average hourly earnings, that is supposed to be up 2.8% year-over-year from 2.7% the month before. that is not a huge number. certainly aut it is

trend that the fed would say it is moving in the right direction. yvonne: seems like we have to see a terrible job report to actually derail the fed. another big focus, how many rate hikes there will be this year. will there be a trump impact? kathleen: you were talking with what isenzie about happening in china and the speech and the 6.5% growth target and how the fed might be a challenge. this is where we are also looking at the bigger picture. it is not just one industry increase, it is how many this year. janet yellen said from adding accommodations to scaling it back. this process is in trade. how will it move ahead? none of what she said about the economy is a response to potential fiscal policy changes. the governor of the new york fed said any slight risk is to the upside on growth.

let's take a look at this. this will show us what more times that just the left, that diamond shape, in december we see three rate hikes. the question is, with the fed consider moving to for? -- four? and nikkei leaving at baron berg securities said the fed may be facing a important regime change, which will change the fiscal policy environment. and when you speak about the dollar, bond traders were up. janet yellen might give a potential blessing on the next rate hike, but they are giving the fed not speeding it up there the dollar did not have a big move. that will be a big question. yvonne: thank you. joining us from new york. a softer growth target as leaders in beijing seek to maintain stability. we will have that and more with

j.p. morgan chase next. this is bloomberg. ♪

♪ this is daybreak asia. i am betty liu in new york. yvonne: i am yvonne in hong kong. let's do a flash of the business headlines. standard life is in talks to buy aberdeen asset management. that would create one of the biggest pools worth of $800 million. life shareholders would own two thirds of the combined group. betty: china's biggest copper refiner expecting prices to fall on high as u.s. interest rates and risk in europe. they received a boost that president trump would spend heavily on infrastructure. they see prices addicts -- averaging 6.5%, but production up almost 1.4 million tons. yvonne: the world's biggest

pension fund posted its biggest quarterly gain on record. japan's company was $3 billion for january. stocks surged during the time, the yen boosted overseas investment. has 80% of that stock. back on the top story in china, outlook for 2017, our next guest expects gdp growth to slow in the target of 6.5% this year as relations with the u.s. are the biggest external risk. we have the managing director jane aldridge. it has been a while. mindere any doubt in your that china can hit the 6.5% target? >> in a politically sensitive year like this one, they will do everything possible to achieve

the target. i don't see any problems, because now the economy is doing very well. you have the property market booming, the industries are recovering, service is growing at a rapid pace. the ground -- growth target can be met him up at the most important thing is what about reforms, structural reforms in the financial sector, sme, when will this take place? betty: there was a good new york times article about that as well , which is several years, and i believe five years in now that president xi has to really start walking the talk. he has already promised to deliver these. he is taking steps toward it, but people are finally saying, moore show, less tell you jing: people are expecting some structural reforms to be rolled out in the first few years of

him being in office. he has been focusing on consolidating power, but also laying the foundation for reforms. so far, the paramount concern has been making growth and stability. this year we expect that to be the number one priority, which is to maintain stability. in the long run, we need to deal with some of these long-standing structural issues, otherwise growth rates stall. betty: what is the biggest structural issue they have to deal with? jing: the number one issue among investors' minds is capital outflow, capital flight, as well as stability of the exchange .ate, rmb but in the longer term we have the allocation of capital issue, because so much capital has been going to state owned sectors, not enough capital has been left for the private sector and private entrepreneurs.

for the economy to really regain the vibrancy, we need more efficient allocation of capital, not just the soe's but more of the private enterprises. we need to structure the state-owned banks, the state owned enterprises to give the private sector a lot more room to grow. yvonne: and you mentioned a little bit about the yuan's stability that the premier had reiterated. how will the government do this with a possible rate hike of the u.s. in about two weeks or so, and how will they take this dollar revival? jing: this is a major risk facing china, because we do have a big interest rate differential between the u.s. and china. in a year like this with the u.s. hikes three or four times, because the economy is really booming, inflation could be heading higher. that basically puts a lot of

pressure on the chinese yuan and also other emerging market currencies. so the chinese leadership will continue to contain capital outflows. they have already introduced a lot of measures in the recent months to take capital outflows. we expect those measures to stay in place for the time being. same, butch of the there is a lot of other factors. stay with us. j.p. morgan chase's person. this is bloomberg. ♪

♪ betty: this is daybreak asia. i am betty liu in new york. in hongi am yvonne man kong. let's go back to our conversation. thank you for sticking around. hopefully you can see this chart out of new york, but talking

about the sentiment we do see in the shanghai composite these days, it has been quite subdued. you can see it based on the blueline, the 90 day historical volatility on the benchmark. we have seen better data. it is reflected in the market at this point. it is powerful moving the sentiment forward, whether there be the external challenges from donald trump or even north korea. jing: what is driving the asian market is domestic liquidity. as you know, chinese investors don't have a lot of choices to invest their money, so they have the property market, the asian market and basically cash. so in the last nine months, the property market has been booming. we have seen a lot of capital go chinese market, and the government contains the volatility in the asian market the last 18 months. it has been very, very stable.

many invest in china the last nine months or 12 months has been focusing on the property market, hence the stock market has been relatively stable and the performance has lined -- lagged other markets and the u.s. market. betty: there was another news event in japan with a rubberstamped the whole idea of letting politicians and the premier extend to a three-year, three consecutive term. this would make the longest-serving prime minister. you see a leadership contest knowing on between china and japan? japan is on the road to recovery. jing: japan is on the slow road to recovery. growth has been stagnant for many years, and prime minister abe faces a lot of challenges in terms of getting inflation up and getting the growth rate of. .apan is -- growth rate up

japan is fighting an uphill battle. in china, the leadership in transitioning in october this year, we see interesting dynamics in the asia-pacific region. betty: thank you so much.

rishaad:; -- a.m. in hong kong. we are part -- 30 minutes away from asia's major open. betty: winter came back for us p.m. sunday. 6:30 mark is closed on friday just a little bit higher -- markets closed a little bit higher just a little bit higher. yvonne: let's get the first word news with headlines right now to check on what his first going on. fired andof korea has intercontinental ballistic missile. the launch comes after china

curbs travel to the south that shut down several stores in what is seen as retaliation for souls decision to deploy an american -- seoul's decision to deploy an american system. betty: china is targeting growth of 6.5% or higher and will focus on stability ahead of the leadership translation. premiere your -- the outlining his claims, going .ooking at 6.7% china has proved resilient, and leaders want to reduce the danger of excessive borrowing. yvonne: lawmakers were told china will cut coal output this 2016after beating the target. they lowered coal capacity 100 million tons had over 50 million less yield. social cost as hundreds of thousands of workers stand late being laid off -- stand being

laid off. fillon has again rejected calls to step down, saying he is being attacked by those wanting to block france's recovery. he is accused of using public money to pay his wife and children for carrying a fictitious just jobs -- practices jobs -- fictitious jobs. has warned ofoosa economic chaos if the freedom party wins the election next week. the liberals are virtually tied with the anti-euro-anti-islam party. catchs your first major since the u.k. opted to leave the e.u.. russo wants to stop the election from continuing -- >> for the netherlands, to vote

for a policy, which i want to deliver, of continuity, of making sure that the successful policies of the last 4.5 years will be into blended -- will be and prevented. betty: we are getting breaking news the ballistic missile reportedly fired by north korea. south korea saying they will hold a security message on the north korean ballistic missile. they will hold this at 9:00 a.m. local time. this is according to the acting president. saying in the text message, they in holding security meeting response to the ballistic missile fired by north korea. yvonne: we will count down to that meeting, less than 20 minutes away. and let's look at asian markets so far. sophie kamaruddin has more. we are watching stocks. sophie: a little bit of ground,

but markets, given south korea's upcoming national security meeting, we had janet yellen also pushing the case for a fed meeting. take a look at the nikkei futures up. this is despite the yen trading at the 114 mark. the kospi also higher. out of take in that south korea regarding response to the alleged ballistic missile launch by north korea, and after the gathering on sunday, shares in china and hong kong pointing to a higher open. the fed goes into a quiet time, we have an r&b meeting on the agenda. consensus is for a whole. cautiously optimistic start. yvonne: ahead of the r&b meeting, we are waiting on aussie retail numbers at the bottom of the hour. sophie: it is for a monthly

gross of 4.1% in january. that is an improvement from december, but we are seeing a weak system when it comes to consumer sentiment over australia your looking at data out of new zealand, it felt 2.98. approvals have fallen in four of the past five months, stocks up 1/10 of a percent. looking at sydney, a weaker start, but now gaining 0.1%, and materials leading the rise. we have this company falling 16%, funding the most since 2014 after saying it may lose contracts for australia's migrant english program. stability you know, as we were discussing, will be the focus for china's leadership , but has the recently hawkish

fed speak worried beijing when it comes to the chinese currency? sophie: that was not the message .e got from the pboc they said the currency market that is steady, and any you want volatility could be norv -- yuan volatility could be normal. check out this. markets are watching for the calm in yuan trading as the dollar strength aims ground. with yellen reporting the rate hike, the dollar turnaround could protect the pboc. j.p. morgan spoke about this earlier, and as economists see it, the pboc will be faced with more rate rates, or accept pressure on the yuan. the working report could be interpreted as a sign that beijing may be ready to accept

flexibility in the exchange rate. yvonne: we will watch dollar-yen reversing the trend, seeing some ahead of the south security -- security meeting in south korea. deutsche bank is raising capital and not selling off the post unit. let's bring in ross with the story. do you see a u-turn in strategy? rosalind: the man himself did not say anything, because he had had change of heart when it into positive bank strategy. initially they wanted to sell, now they are trying to keep it. the problem was that deutsche bank struggled to find a buyer. the problem is to integrate postbank, offer $8.5 billion in shares, and reduce that to $23 billion for 2018. deutsche bank will raise another $2 billion or so by selling a minority stake in asset management and ipo.

they will dispose of assets at the investor bank. we can see this is likely to economictsche bank tear ratio to more than 14%. of last year, it was 11.5%. you saw that on friday as the news came out with bloomberg first reported this. u.s. even lower in the betty: what about the cost issues at deutsche bank? rosalind: it is rate at $24 million in expenses last year, trying to cut back to $2 billion 2018, another $1 billion by 2021. they have been facing net losses in the past two years, so the have scaled back debt and trading and they had missed misconduct investigations. even though the debt is not going to well, after we saw the

settlements with the u.s. justice department on that inquiry, mortgage securities regarding the bank and national crisis, it was not as high as people expected. so deutsche bank shares have doubled since then. it is trying to focus on stability and corporate climate, investment banking and it has scaled down operations. it is trying to move forward. we will see what investors say about that today. yvonne: thank you so much. property mayiggest be considering the sale of australian shopping centers worth billions of dollars. let's get over to paul allen. what is blackstone planning? a big sale if local media reports are anything to go by, getting rid of 10 australian regional and subregional

shopping centers, and local media estimates the deal could be worth -- or the sale could be worth about $4 billion. this would make it the biggest estate offering in australia in 2017, would raise funds to fulfill blackstone's aims of fulfilling the property portfolio. different companies in australia may oversee the sale, and we could wrap it up in the second half of this year. yvonne: on the subject of shopping, we are less than an hour from the retail sales on your end. if the market expecting a turnaround? paul: yeah, expecting and hoping because the figures for december were pretty low. you think for christmas you get a good boost, but they contracted 0.1%, way down by the household goods sales, that metric down 6.6%. the theory goes that number was really hurt by nervous retails offering deep discounts in the

weeks leading up to christmas. so what we are expecting for january is estimated 0.4%, and we will find out at the bottom of the next hour. betty: thank you. coming up next, the e.u.'s antitrust, u.s. companies not being targeted. we will talk about fair competition. this is bloomberg. ♪

♪ we are counting down to asia's major market open this morning, and japan futures looking subdued. the thing to watch is dollar-yen, reversing the losses we saw this morning as we wait for more headlines coming out of north korea over a fired projectile into the east sea. i am in on man in hong kong. -- yvonne man in hong kong. .etty: i am betty liu

reports from india say kingfisher airliners are expected to sell off company property to recover money owed by a carrier. ,ingfisher housed in mumbai they will be auctioned with asking prices lowered 10% after previous attempts to sell them came to nothing. kingfisher is now $15 million. yvonne: the promotion of electric cars in china may be dialed back after feedback of the targets are overly ambitious . automakers were supposed to reach a new credit score of 8% next year, the company's feeling to do so would be fined. average energy use may have been half that figure with the target now seen as unrealistic. bety: xiaomi says it will five or 10 years before virtual reality is truly popular. they spoke on the sidelines of

the national people's conference, saying it will be sometime before humans are completely comfortable. artificial intelligence will be widespread by 2020 and cause -- called for fees across the tech industry. yvonne: u.s. companies are under no specific fire because of their nationality. investors are told the e.u. is trying to ensure their competition. important it is very that we see businesses grow, create value, create jobs, and in europe of course, we are not , but wegainst success need to make sure that we have the right tools in the toolbox to ensure fair competition. >> do you think tech giants have something to discern from you? is it being misinterpreted what the e.u. is trying to accomplish? >> one of our very, very basic

values is equal treatment. we don't see the flag, we don't see the ownership. we also have property owned businesses. what we are looking at is fair competition. we do want to see the successful companies, that they allow for others to challenge them. that is basically sort of the cases, of the now three to allow them to be charged. we are still in the process of looking into whether our objections are correct, taking on board of course the other views. reporter: the search case is now seven years old for google. do you have any idea how long that will take, or is it process and that things take years, and you have an idea when the search case might be confirmed or wrapped up?

margrethe: i think that some of my staffers find i am obsessed with this, but the thing is, no matter how much we work on we alwayss more lean, are held back by the fact that the quality of the casework, that is what ensures the rule of law, that you have the full right to defend yourself. that can never be compromised upon. so we have to make sure that we have sufficient time, but we are always pushing to make our lean,ures quicker, more to get better access to make sure we are working as professionally and properly as possible. it is very difficult to give any because something may come up. we will have to take the on board. reporter: talking tax now, because it was what everyone's

was pricked up to, that with ireland, but there were other companies like amazon, luxembourg -- how do these countries react? do they worry about how power efficient there tech hubs could be if the policy was not changed? margrethe: that is difficult for me to say. we have a large degree of --eign entities in tech member states. one thing we agreed on, 60 years back by now, is that taxpayers shouldn't support one company or a group of companies where no one else can enjoy these benefits. and that is basically the ups and downs of this tax case, this very old and fundamental principle that selective ,dvantages paid by taxpayers that disturbs competition. that is a tool that is specific

to europe. i don't think you have anything similar in the u.s.. betty: th was the e.u. competition commissioner speaking to bloomberg. staying with europe, senior e.u. officials say president donald trump's protectionist stance may push other people to working with the european block. speaking to the vice president, he said the e.u. once a trade relationship with the u.s., but they await details. >> we don't know the substance of this policy yet. we have just read the tweets and heard the speeches and statements, but there is very little on paper yet. as everybody knows, the e.u. is a trade superpower, and we have to make the largest supermarket. it it is an hour's dna to support -- it is in our dna to .upport this rule trade

it is a big part of our well-being. what they want to do with the administration in the united states is to settle down all of the attention and try to create a smooth trade relationship as policy -- possible. reporter: you want to see the detail of the policy. are you hearing it is harder for european businesses already to do business in the united states with the dialogue around america first policy, even before any new trade barriers are put in place? is it harder for american businesses to sell into america? jyrki: i have not heard any feedback. heard it, thisas has been said by the administration that it has not materialized yet. they hope to be, that we could

continue fruitful discussion. we are looking at the opportunities to deepen our trade relationship. ttipve been talking about for years, and we achieved a lockean in the negotiations. in theare -- a lock in negotiations. yvonne: that was the commission vice president speaking exclusively to bloomberg. and one feature on the bloomberg we would like to bring to your attention is the interactive tv function. you can find it at g-v go. you can see previous interviews like the one you just saw, dive into any security functions we talk about, and you can be a part of the conversation by sending us instant messages during our shows, live on our programming. this is for bloomberg subscribers only, so check it out at tv .

shinzo abe has a shot at becoming the longest-serving prime minister in japan's history. we will take a look at his chances of breaking that record. this is bloomberg. ♪

♪ betty: this is daybreak asia. yvonne: i am yvonne man in hong kong. more breaking news, comments from japan's chief cabinet secretary, speaking about this missile launch coming from north korea. we wait for more details, and he said for missiles in total were fired, three of which did fall close to japanese waters into this economic zone. he was also saying they will launch a firm protest against north korea, and this is unacceptable. no reports of damage from these launches, according to the chief

cabinet secretary. a little bit more information as we look ahead to this national security meeting happening in seoul and a couple of meetings. we also learned the prime minister protesting this launch as well. plenty of headlines coming through from north korea as well as japan. let's stick with japan. the prime minister could become the longest serving leader after the liberal democratic party change its rules to allow leaders three terms. let's bring in the government reporter joining us from tokyo. -- as about how has he managed to keep it stable for so long? reporter: what is a good question, something that would have been most incredible 10 years ago the first time he was in office. he stumbled for a whole year and then fill out here nothing worked out. this time, the first thing that went right was the won an upper house election. he had a good hand on both

houses. he did not bump into the issue that he had every policy to pursue, the other house would block it, getting nowhere. that was one thing he did write. another thing is without him having to try some of the opposition has really failed to regroup after falling from power in 2012. they have that rates of less than 10%, no threat whatsoever. the third thing is the economy is not exactly going great. it is relatively good though. in terms of employment, it is at its lowest -- unemployment is at its lowest levels since the 1990's. pretty much everyone has a job, and that is contributing because of the support. betty: how likely is he will make it to 10 years? reporter: that is another very excellent question. the main thing you have to look at is winning two national

elections before he can achieve that. you have the upper house election in 2019, then you have to hold the lower house election sometime be the end of next year -- by the end of next year. that will be a very delicate issue. slightly unpopular policies that you try to push through, for example, a law on anti-conspiracy, which could damage his support. he faces the threat of some support being stolen by the group set up by the tokyo governor, proving to be very popular. one key issue will be the timing of that election. the third issue is, does he want to stay on that? what we saw from the convention yesterday was he wants to change japan's constitution. betty: thank you so much. i will stay on prime minister abe, who is making comments in tokyo, saying in addition to examining this morning's missile launch like yvonne mentioned,

there are planning to hold a national security council meeting. we will continue to watch -- launch a formal

♪ and japan whole defense talks after reports that the north has fired more strategic missiles. >> china lowering expectations for growth this year. a rate rise seems all but certain. janet yellen warns danger and the fed acting too late. >> shinzo of a tightening his grip on power and may become the longest serving japanese prime minister in history. >> this is the second hour of

"daybreak asia" live. >> it is just after 7:00 in new york. i am betty liu. we are watching this story, reports confirmed, north korea firing at least four missiles. the japanese prime minister speaking in tokyo moments ago, saying they firmly protest this missile launch and will be holding a national security council meeting to discuss this event. we are watching some of the , nervous about this growing political uncertainty. yvonne: that's right. both those meetings underway at this hour. taking a look at market sentiment, we have turned risk off given the dollar-yen move since the headlines have been breaking. openingok at the market

in seoul, korea was sophie kamaruddin. sophie: some nervousness given the latest signs out of korea and japan. we learn more about that launch. there was a selloff in hotel, cosmetics, the worst performer down 5%, and losses extending this monday down .3%. hanjin shipping falling. lotte also shopping falling over 2%. hana tour also getting hurt.

korea investments pointing out there is no industry and korea that is free from risk due to the decision to deploy that missile system. this is korea's biggest cosmetics company. chinese officials have ordered the destruction of 700 kilograms of the companies imported products. we sell reports that china is curbing tourism travel to south korea. down over 2%, so we will keep this in focus given that the developments around the korean peninsula. in the region, the nikkei 225 falling .4%. checking in on some movers, sumitomo mitsui leading the dropped about 2% there. thank you. back to our top story. south korea urging talks as the

north korea fires another round of missiles. we are getting some more lines. rosalind: north korea fired multiple missiles and flew around 1000 kilometers. that is from south korea's joint chief of staff to bloomberg. we are also hearing from japan's chief cabinet secretary yoshihide suga, who said at least four missiles fell into japanese waters. yoshihide suga and shinzo abe have said japan will launch a firm protest. right now, there is a security meeting on this issue and south korea. wash korea said the missile fired at about 7:36 local time. they are also reporting that they could be icbms. are analyzing the details

of the projectiles, including distance and type. tests to do, as south korea and the u.s. go through their annual military drills, and north korea have called those a prelude to an invasion, came toe kim jong-un power, north korea has been launching a series of missiles and three nuclear tests, steps towards a missile that could carry a nuclear warhead as far as the u.s. those are amongst of the concerns. will this continue to affect them further damage relationship -- the relationship between north korea and china? rosalind: china has been putting pressure on north korea. for example, they banned coal imports from north korea. north korea relies a lot on china for access to hard currency, and coal is one of its key exports to china, so that

will hurt north korea fairly hard if it goes through. while china is putting pressure on north korea, it has its eye the thadkorea and missile system. thaty, news was coming out tour agencies from selling packages to south korea because of that. thank you. speaking about china, the chinese premier has delivered the government's economic targets, saying the emphasis will be stability and reducing risks. he also sent a clear message about who is in charge and china. mackenzie is in beijing. give us a big take away from the premier speech? we are talking

about a tonal shift in terms of the politics, i crystallizing of support for xi jinping, but also the economics. 6.5% target of about speaks to that, giving flexibility to policymakers who have been obsessed by hitting this target at all costs. we had other targets laid out for us, 3% budget deficit and come a new money supply will be increased by 12%, and then there were comments on the increased liberalization of the yuan from prime minister li. that really speaks to this shift to focusing on reining in these risks we heard from analysts at commerzbank saying they expect monetary policy to tighten in china. of course, the words we have heard from a listing makers have not always match the reality. in january, credit hit record

gdp is 260 debt to percent, so some big challenges, and it is unlikely they will make significant moves this year so they don't rock the political boat ahead of this congress towards the end of the year. betty: they don't want to do all, so how is it likely they will hit the gdp target? that is the crucial question, and bloomberg has been speaking to a economist who expect that 6.5% will be hit by the end of 2017 them a but there are a number of key risks that need to be factored in. arestically, they say they focused on things like the rising nonperforming loans, bond onlines, shadow banking, finance. policymakers have been talking about these concerns for some time. the autolly, we have sector which boomed last year

due to tax cuts. those tax cuts are not as generous this year. the property sector is another risk. externally, there are forces of anti-globalization and protectionism, something of the swipe of the likes of donald trump, and then there are the fed rate hikes which put pressure on the yuan. capital controls are already in place, but it would make the dilemma for the pboc that much more difficult. they say they will continue to cut back on overcapacity steel, cutting about 150 million tons come and cutting 150 main tons and the coal sector as well. betty: we got some more insight in terms of the political maneuvering going on before this crucial party congress later on in the year? it was interesting. we turned to one of the pages in the work report with the list of priorities and at the top was

acknowledging xi jinping was the core of the party. there have only been four presidents and china's modern history. one has had core and the presidency mentioned quite so many times as xi jinping did. it is interesting. it seems like a political forces are coalescing around the president, but he would have put a number of noses out of joint in the last few years, about a million officials punished, jailed, so there will be divisions within the party. the question is will they bubble up to the service before this crucial party congress in october or november where xi jinping is expected to shuffling the leadership. 2022, andstep down by there are suggestions he could aboutn, but this is

legacy and the mechanization's leading up to the party congress. yvonne: let's get to first word news with paul allen. has: fed chair janet yellen left little doubt that she will raise rates this month, telling an audience in chicago that there are dangers in being too slow to move. she all but declared that the rates will rise at the march 14-15 meeting. she also suggested that it would not be the only increase this year. later thiseeting month, the committee will evaluate whether employment and tolation are continuing evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate. former director of

national intelligence has denied president trump's claim that the obama administration ordered wiretaps on trump tower during the election campaign. the claims came via breitbart news. there are calls for a congressional investigation. however, james clapper nice any wiretap was ordered. the french presidential n has againillo rejected calls to step down, saying he is been attacked by those who want to block france's recovery. he is accused of using public money to pay his wife and children for caring out fictitious jobs. he denies the accusations, but his campaign director and spokesman and dozens of right-wing politicians have abandoned him. prime minister shinzo abe has strengthened his grip on japan with his liberal democratic party changing its rules, allowing three consecutive terms. the vote came at the parties annual conference in tokyo and

allows the prime minister to potentially remain in office through 22021. he came into power in 2012 and is the longest-serving g-seven liter after it chancellor merkel after chancellor merkel. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. i am paul allen. ahead, fraserg how we joins us to discuss china . up next, how investors are reacting to the announcements in beijing. this is bloomberg. ♪

betty: i am betty liu in new york. this is "daybreak asia". yvonne: standard life is in talks to buy aberdeen assess

management -- asset management. have shareholders owning two thirds of the combined group. aberdeen has had three years of redemptions, leaving the ceo to cut costs. the world's biggest pension fund posted its biggest court again on record. if return to billion dollars in the three months to january, stocks surging, and a fall in the yen boosting overseas investment. has 80% of stock investments and strategies that track indexes so it benefits when broader markets are rising. yvonne: china's second-biggest copper refiner expects prices to fall this year because of interest rates and risks in your. speculation of

president trump's infrastructure project. a senior eu official says president trump's protectionist stance may push other countries into working with the european block. interview, the european commission vice president said the eu wants a trade relationship with the u.s. as soon as possible and awaits details of trump's policies. know thewe don't substance of this policy yet. we have just read the tweets and heard the speeches and statements, but there is very little on paper yet. , the eu is aknows trading superpower and the world's largest single market, so it is in our dna to support freer world trade.

it is a significant part of our economic strategy and well-being, so what we want to do with the new administration in the united states is to settle down all the tensions and tried to create a trade relationship. the detail of see the policy, i understand. are you hearing that it is harder for european businesses to do business in the united aroundwith the dialogue an american first policy, even before new trade barriers are put in place? has it gotten harder for european businesses to sell into america already? heard any feedback yet, but everybody who has heard what has been said by the new administration has some concerns , but it has not materialized yet, so we could continue fruitful construction and conversation with the u.s..

also we are looking for opportunities to deepen our trade relationship. we have achieved a lot in these negotiations must so we are now just waiting the response from the u.s. side, what we could do more in order to open up our markets. again, speaking exclusively to bloomberg anna edwards. plenty more to come on bloomberg tv. matthews,lk with mark discussing where do you make money next. that is the question. you are watching "daybreak asia" . ♪

.vonne: this is "daybreak asia" i am yvonne man in hong kong. betty: i am betty liu.

mark matthey you joins us now from singapore. -- mark matthew joins us now from singapore. reportd begin with the of at least four multiple missiles being fired by north korea reminds us all of that instability that north korea & sin asia and and in the rest of the world. and in asia presents to the rest of the world. well, i can't answer that. it must be priced in and some way. about once a year, they send a missile vaguely in japan's , and south korea has historically been a much cheaper market than the rest of asia, don't knowblem is we if and when something were to drastically change in north ,orea how drastic it would be

and i can't give you any additional commentary on that. betty: doesn't seem any different you than what we have seen in the past? >> the only thing notably different is that china has banned north korean coal exports into china, representing 10% of chinese imports of coal, so that is an important signal, and of course were it not for china, the north korean economy would probably not be able to survive. they do to a certain extent control the future of the country. right, otherwise that economy would completely collapse. moving on to the broader investors minds, where do you find returns these days? i was reading through some of the notes you sent us before this interview and you said the question is where do you make money next. what do you mean by that? well, i think the thing is

that everything has gone up a lot that people like, so the thing that looks kind of interesting right now is the bombed out cyclical stocks like and companies related to the energy sector, and my sense is that there is no light at the end of the tunnel in terms of earnings, so you won't see many analysts upgrading them , but we have probably reached them, and the year for now the analysts will call them buys, so i suspect the cyclical stocks of the interesting ones. betty: you have upgraded your output when it comes to singapore, which is interesting because we do see an earnings rebound where you are, investors pricing in a cyclical rebound in the market right now.

do you think we are seeing the end to some of these multiyear earnings recessions? matter ofdo as a fact. of course, what better example is there than singapore, a country whose economy is totally open and reliant on the global economic cycle? look at thef you fourth quarter gdp and singapore, it was quite a bit higher than what anybody had been looking for, and the market is only up about 5% over the last five years, where is the global market is up 10 times more than that, so there are lots of cheap stocks that have good yields, in the banking sector for example. have been ignored for a decade now, but if we have a rising interest rate environment , and of course janet yellen was talking quite hawkish over the weekend, as was stanley fischer come and do you have an obvious

turnaround in inflation in the is., europe, and japan, then think banks, including here in singapore, will see margins expand. janet yellen all but put the cherry on top when it comes to that march rate hike, but what does a march move signal for the fed? could we see more rate hikes and sooner? >> well, she did say so. she did say -- i wonder if i can find it here -- the process of scaling back accommodation likely will not be as slow as it was in the past couple of years, so i am quoting her exactly what she said on friday, so to answer your question versus singly, yes, there will be a faster rate hike cycle, and that is good for the cyclical stocks i mentioned earlier and the insurance companies, the banks, in other

words, finance. if you run a correlation of the andear treasury yields various sectors in the stock market, the ones that have the best fit with rising interest rates are cyclicals and financials. what do you think has change really fundamentally in the last two weeks for the fed to now suddenly go from may be a 20% or 30% of hiking rates to what now seems like a must 100%? 80%, betty,ually according to the chicago mercantile exchange. to quote stanley fischer, he economicst no indicator has been a bad one in the last three months, and he is right, so the economy was already recovering before the election last november and we can see that in the statistics up until then, but since then, ofald trump has released

these tremendous animal spirits into the economy. the best indicator is the small business confidence. you so much. fed fund futures have it at 94%. we will be back. ♪

>> it is 8:30 and hong kong, 11:30 in sydney. the aussie dollar is heading lower about .20%. we just got breaking news about the latest retail sales figures from sydney, bank in line with in line withbang estimates. paul: no nasty surprises, january retail sales .4% rise, what the market was expecting and reverses the rather surprising decline we had back in december, of all months, where retail sales were off .1% despite the christmas period. if we take a look at the dollar reaction, not a huge amount.

it has moved sideways. we are just waiting for more information on the retail sales to up here in terms of breakdown but it does not seem to be giving me any data at the moment. a welcome reversal of the decline in december of retail sales. sales up .4% in line with estimates. yvonne: thank you so much. we are certainly going to be watching this. in line with estimates, no surprise, australian retail sales up 0.4% ahead of the rba rating tomorrow. let's get to the first world news with rosalind chin. has caused ann urgent security meeting after confirming that north korea launched several missiles. japan's government says for projectiles were covered and -- were launched and flew about 1000 kilometers. shinzo abe says he will launch a firm protest with north korea. china is targeting growth of around 4.5% this year and will

focus on stability ahead of the leadership transition. the prime minister outlined his aims of the national people's congress. he compares last year's goal of 6.5% to 7%. chinese economy has proved resilient and leaders want to face the danger of it -- of excessive borrowing. lawmakers hold that china will cut core output less aggressively after beating its 2016 reduction target. if they lower capacity by 160 million tons and deliver 150 million tons less deal, the slowdown could lessen the cost to workers facing layoffs. the british government is warning that it risks reducing itir worst of all worlds if tries to change post-brexit immigration roles for specific industries. it is reportedly under consideration by prime minister theresa may and what not reduce

immigration but would push up costs. may wants to start talks by the end of this month. global news 24 hours a day, powered by more than 2600 reporters and analysts in more than 120 countries. i'm rosalind chin. this is bloomberg. >> take a look at the dollar-yen right now. we are seeing it to hold strength as we await more details out of national security meetings in japan and south korea after reports that north korea had fired four missiles into the waters, three of which were very close to and in japanese waters. watching the lines that come through on the bloomberg, let's get the market reaction with sophie. sophie: we are seeing fluctuations in the yuan as we see developments in the korean peninsula. japanese officials say there will be a security council meeting for japan. this follows the south korean meeting this morning. earlier, we did see the south korean yuan weakened against the dollar but now coming back,

using some of the day's losses. take a look at the map. we are seeing stocks in tokyo and see all -- and seoul falling. taking a look at some groups in focus today. we have south korean stocks gaining over 1%. we have a military products maker rising for the fifth day, a weapons manufacturer gaining for a fourth day, and korean aerospace industries rising for the first day in three. when north korea launched a rocket last year, we did see sincesurge the most august 2015. we do have hotel tourism because of the rising tensions between china and south korea around the deployment of the system. we are seeing omar pacific -- amore pacific stocks falling.

i also want to take a look at all the retailers following the retailer number we found bang on estimates, .4% monthly gain. fl five days through friday, snapping that drop. fell nearly 5% on friday, so extending those losses, and super retail falling after friday's rise. are expected to remain under pressure this year and any gains they could make will likely, the expense of profitability as they cut prices to attract cost-conscious consumers. whereas wesfarmers kmart has been doing fairly well. yvonne: thank you. let's return to the growing tensions between beijing and seoul. to have seen china restrict travel to korea and reportedly shut down four companies operating on the mainland. let's get the latest from chris,

joining us live from tokyo. how big of a deal is this? significant,pretty as you have been reporting. there has been an impact on south korean stocks both on the upside and downside. defend shares doing better. shares of companies that rely on tourism from china, doing worse. we saw on friday that some of those shares, including hotels, one which gets 70% of its duty-free sales from chinese tourists, tumbled more than 10%. it is a pretty significant impact, especially for parts of the south korean economy catered to chinese tourists. yvonne: we are getting these fresh lines out of north korea as well. talk about the broader implications for china and its other trading partners. again thatnderscores china is prepared to use its

economy as a tool in diplomacy. we have seen this a number of times before. this is not the first time the chinese have taken action against south react. if you look back at the hotel shares, they are down more than 40% since the missile shield spatcorrupted in 25th -- incted in 2015 -- erupted 2015. china has made crystal-clear it is opposed to that shield and it is willing to use economic measures to punish those that take actions against it. talking aboutbout potential beneficiaries, if there even are, from this spat? chris: defense chairs and south korea are one.

we had an analyst on friday saying from uob that if you look at where chinese tourists are going to go instead of south korea, thailand and japan could be beneficiaries. in terms of negative implications, if you are a member of the donald trump administration, this is another reminder that china is ready to retaliate and take action if the u.s. and other countries take steps that china does not like. yvonne: thank you. chris anstey on the latest developments on the north korean missiles. back here in the u.s., the fed chair janet yellen has all but confirmed a rate hike this month. it appears only a disastrously week jobs report could put that off. our global economics and policy editor kathleen hays is here with more. it would have to be really bad for them to hold off, right? kathleen: it certainly seems that way. , ahas been a quick two weeks

series of speeches from fed officials got everybody focused on a very strong possibility the fed is going to debate the rate hike march 14 and 15 and raise the rate. week before that -- last, the chances were lower, now they're about nine in 10. let's listen to the key sentence from her speech in chicago. >> at our meeting this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case, a further adjustment of the federal funds rate would likely be appropriate. as for the markets, bonds and the dollar held the study but janet yellen giving the speech was already priced in. as for the chances of the rate increase, march 15, upper left-hand corner, on friday, the number based on the center of the feds 0.5% to 0.75% target.

it was 94%. when trading opens again on monday in the u.s., it is possible we will see those hike odds move even higher. the bets rising, i want to say. what is going to determine this? >> friday has a big jobs report. if she sees the jobs report involving the way she expected. let's take a look at the bloomberg now 2530. the yellow line is the six-month average. it is 183,000, the last report was 227,000. 197,000 seems like a green light for the fed. job rate comes down according to our survey, average earnings rise to 2.8% year-over-year from 2.5%. if that determines what the fed does, you would think they are going to move. it is asymmetrical.

if they don't move after a strong jobs report, i think they would befuddle the world. yvonne: it would be a warning signal perhaps they are seeing something we are not. it was interesting looking at 34% because it shows that prices of fed funds futures leave we will get at least three hikes by the end of this year. kathleen: that is what it looks like. i think that is going to be the debate. janet yellen had given a speech about scaling it back, a great speech because it talks a lot about the course of fed policy during the crisis, coming out, and it is a big picture explanation of what the fed has done to give you a sense of what they are going to do. she did not -- she had no comments on fiscal policy risk, whereas build that the, the new york -- whereas build dudley -- bill deadly says he sees upside risk.

the week after next, the fed is going to give us new projections on how fast the economy is going to grow, inflation, jobs, and how many rate hikes they see this year. these are the dots in december. that was the main consensus, looking for three hikes. is the fed potentially setting us up for more? thinks ify says he donald trump comes through it all on these fiscal policy changes, there could be a new regime that changes the environment for the fed. bond traders have not bought into that yet because we did not see a big selloff on friday. it would take something else to get that move in the bonds and dollar. if we see that, it would be interesting to see if they are gearing up for that. yvonne: kathleen. we have got the ecb meeting happening this week, japan gdp. what else is key this week? kathleen: china data and of course the work report and all

the things that tom mackenzie has been reporting on are being closely followed around the world as the trading gets underway hours from now in the u.s. the japan gdp report along with other numbers important to the boj, ecb meeting on thursday. mario andretti is not expected to push for a move on interest rates. that is going to set them up for a continuing battle with the germans because they would like to see a rate hike because they're inflation is rising more so than anybody else's in europe. the final debate on triggering brexit. we have got a lot of interesting geopolitical political economy things on the table that are going to be very important to investors. yvonne: thank you. coming up, we speak to an author and investor who says while president xi jinping has plenty of enemies, they are not getting up on him just yet. the latest national people's congress next. this is bloomberg. ♪

>> this is daybreak asia. i am betty liu in new york. yvonne: and i am yvonne man in hong kong. let's have another view of the national people's congress in beijing. the president is firmly in control. our next guest says he has made a lot of enemies. fraser how we is a co-author -- fraser howie is a co-author of the book read capitalism and has years of experience. i want to get your opinion on the north korean missiles. we did here, barack obama actually warned donald trump that north korea could be one of the biggest risks to his presidency. markets seem to be unimpressed by the political risk that we see coming from this part of the east see. are we mispricing this risk right now? >> the difficulty is it is

probably being mispriced, but what is the right price? we have seen this before, the , someof nuclear missiles successful, some not successful. the markets have downplayed this . it is a real problem. i think it will become extremely problematic at some point but i don't know when. wolf,: they keep crying but it is quite interesting. we did see retaliation with the sat system from china on friday, according to reports they are curbing travel from china to south korea. quite ironic since during davos the president was a big supporter of free trade. >> that is right. this is the economics of idealism. china, the world is in flux with trump coming in. , you are lacking the natural free trade leader in the states. china looks to step up to the

mark. retaliates, at least unofficially, against korean companies and stops tourist going into korea. it puts them in a difficult position. it is a nightmare scenario for the chinese. they don't want to be caught in these positions. they would like north korea to behave itself and be quiet in the corner. but that is not where we are. the fascination and malaysia as well also throws things into the mix. it is just a very uncertain picture. how do you price that risk? it is very difficult. you don't know how it is going to play out. it is symptomatic of the tensions in northeast asia. yvonne: it is so difficult, as you say, to price in the risk. our earlier guest said, what can you really do? how do you price something so uncertain? i want to go back to what we heard over the weekend with the

national people's congress and the targets that have come out and the outlook from the chinese leaders. what is the major problem that you see? even if the government says, we are going to hit these targets and we are focused on stability, what to you is the biggest issue, biggest challenge? >> the biggest challenge remains what it has been, a growing challenge, the leverage in the system. you look across the chinese economy, many areas five or 10 years ago were not highly leveraged and are now highly leveraged. across the board, growth may be holding up relatively well with official figures, but that is underpinned by double-digit growth and leverage in the economy. there is deleveraging that needs to take place. it has been postponed for a long time. there are some encouraging signs in the last week or so that there is now an appreciation not

that a financial crisis is likely but they are putting together all the ingredients of a crisis. i feel they have to tackle that if they want to get the best out of their economy and companies. >> you hear very similar comments to what we heard from aldridge and jpmorgan in the last hour. i want to play for you -- recap what she said. year like thisal one, they will do everything possible to achieve a 6.5% target. i don't see any problems because now the economy is doing very well. you have a property market booming, the old economy, traditional industries recovering. the service industry is growing at a rapid pace. the growth target can be met. >> you hear a lot of people saying similar things. is that good enough for the moment for china while they work on some of their bigger issues, which is rising debt levels?

>> the growth targets are being met and the property market is booming because of leverage. this is the huge problem. you can look at the output but you also have to look at the input. i think the worry is there is not enough focus on input. outputs are strong, not naturally strong, strong because there is an incredible amount of debt financing going into it. it's moves over the problems for this year -- he points out, it is a highly political year. we have a political transition at the end of the year so they don't want any surprises. i have to feel that just postpones the inevitable problems. those problems do not mean collapse but they do mean problem -- they do mean stress in financial sector and companies, the private sector. more so than any government, china has the will and power to deflect some of those rising issues.

you mentioned earlier, you made the interesting comment about how they have the elements of a crisis but you are not predicting they are going to have a crisis. what exactly do you mean by that? crisis? avert that >> they can, but it comes with a cost. the fact they have got a closed capital account means they are active in controlling capital flows. it certainly allows them to insulate themselves from a lot of the problems then if it was a fully open marketplace. there is a downside as well. in the past eight years, chinese debt has doubled to troubled and growth has halfed. the idea that china avoids a crisis is a foolish one. you are seeing a lot of stress and the chinese economy, even china's plan to become a global player comes under stress because the government does not

won the money -- does not want the money coming out of the country. it makes a deal harder and makes working with a partner tougher. you are going to have things playing out that way in terms of the stresses. it is not that they have a magic wand that the chinese economy can avert crisis where other economies can't. they simply play -- pay a different cost for doing so. >> always great to have you. if you want to follow the latest on china and north korea, you can go to tv by clicking on the tv . you can also watch us live and see the previous interviews and dive into charts or functions we have been talking about. you can become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. up next, shinzo abe becoming closer to being the longest-serving prime minister in japan's history.

more on the rule change that has tightened his grip on power. this is bloomberg. ♪

>> shinzo abe could become japan's longest-serving prime minister after the democratic party changed its rules to allow leaders three terms. let's bring in isabel reynolds from tokyo. you talk about longevity. how has abe managed to keep his support stable for this long? isabel: the first thing he

managed to do was win an election in the upper house of parliament, so he has managed to keep a tight grip over both houses, which has allowed him to implement his possible -- his policies. the economy has been largely in his favor, especially in terms of employment. unemployment is lower than it has been in 20 years and anyone in japan who wants a job has one. those two things have helped keep him up in the polls. >> how likely is it that abe is going to make it to 10 years? isabel: the two obstacles in his way are two national elections. an upper house election in 2019 and a lower house election he can call at any time until the end of next year. winning those two elections is going to be key to getting through to 2021. the other issue is whether he wants to stay in power that long. from what he was saying yesterday, he wants to change

japan's constitution, so that will be a motivating factor for him to stay on. >> thank you so much. certainly abe preoccupied today with the missile launch from north korea. that is it from us. plenty more still to come. bloomberg markets: asia is up next. we are counting down to several more major market opens in asia. yvonne: a quick look at equities, but they have a riskier with the south korean yuan, japanese yen rallying here this morning. with shinzo abe saying the north korean launch is very dangerous and it comes without warning. more on this with heidi and rish on bloomberg markets. this is bloomberg. ♪

♪ 9:00 a.m. right here in hong kong, 8:00 in the evening in new york city. i am rishaad salamat. sydney. am haidi lun in this is "bloomberg markets: asia" ♪ rishaad: south korea and japan holding urgent security meetings after reports the north has fired more strategic missiles. haidi: china lowers expectations for growth this year, li keqiang