>> caution is the word as asia-pacific markets begin to open. traders are assessing the likelihood of a fed hike next week. anchor: president trump changes his controversial travel ban. six muslim majority countries are now on the list. anchor: the big australian lenders are back in the spotlight of lawmakers get tough on thinking conduct. >> china's new finance minister make his debut facing debt backwards well this year by the value of germany's gdp alone. >> this is the second hour of

daybreak asia, coming to you live. yvonne: i am yvonne man in hong kong. betty: i am betty liu and yvonne, i was thinking about investor sentiment these days after what we saw coming out of north korea, coming out of donald trump's administration, and of course, all that leading up to the fed for next week, and you can imagine why the u.s. wekets were lower today, and came off of our lows in the session, but we basically fell and we are off by .3% and below that 21,000 dow level. that is caring through into asian trade right now. yvonne: we are not getting support from the u.s. but it seems like china, some of the headlines coming in seem to be up the and market positive if you take a look at the china market, so yesterday, once we saw shanghai open, the sentiment improves, so a look at what is driving the markets in the

region. let us get to the market open with sophie kamaruddin. sophie: perhaps some mixed sentiment driving what is going on in market but the paralysis this week, that is questionable rban we have the ecb, policy decision. we have that much hike by the fed pretty much baked in here. take a look at how equity markets are shaping up in asia. we have korean stocks rising from monday. we did have caps on electronics -- we did have samsung electronics following the drop we saw in consumer and tourism stocks. today, korea's trade ministry is to hold a meeting to discuss issues with china as it steps up economic retaliation over the deployment of a u.s. missile defense system, so we are going to be keeping an eye on what is happening in that space. in japan, the nikkei 225 down about .3%, falling for a third day, and this morning, we had abe confirming that a threat

from north korea has reached a new level. korea on the highest possible alert amid provocations from pyongyang. the nikkei reports this company bendable screen capacities of the stock up 2.3%. today. a board meeting what they are due to announce, potentially changes at the top. yesterday, reports that the president was to be exiting. the stock down about 2.4%. taking a look at what is going on in australia, miners dragging in sydney. gold stocks falling. prices -- bullion slumping. yvonne, there were some news for positive-- outlooks.

cleaning services spotless group up 2.5%. one of the gainers today in sydney. betty: thank you very much. filingmp administration that new executive order banning entry to people from six muslim majority countries and this one fingers intove survive court challenges that stymied the first ban. ramy inocencio is here with the details and i just want to mention, you know, as trump seems to be roiling the markets again and relationships in several countries coming out in the conversation with deputy prime minister abe saying the u.s. is 100% behind japan, so it has been interesting to see the different levels of relationships. ramy: right, especially between domestic and international roiling. seeing one thing with japan and looking to the mideast in this case with these six

predominantly muslim nations, they are in effect closing the door on the folks and refugees as well. let us go into the details because this is what we know so far. while the first ban talked about seven majority muslim nations, this is six. iraq has been dropped from the list in part because secretary of state rex tillerson has pointed out that iraq is an important ally in the fight to defeat isis and iraq has agreed heavier security measures. it looks at refugee admissions am a process, freezing it for six months here. when it does restart, it is supposed to have a number of refugees that come into the country from more than 100,000 to 50,000 for this fiscal year 2017. in addition, it is also looking at those people who already had your documents in hand, the people who had the says and green cards and dual citizenship very those people will now be allowed to enter the country here. admissions, jeff

sessions spoke about that and the reason for cutting them in half. let us take a listen. jeff sessions: today, more than 300 people are going to the fbi who came here as refugees are under an fbi investigation today terrorism-related activities to our allies and partners around the world. >> please understand, this order is part of our ongoing efforts to eliminate vulnerabilities that radical islamic terrorism scanned and will exploit for destructive ends. ramy: they are talking about national security for the reason for the travel ban to come into place. this is against what critics are saying, that this is discrimination. it isa prototype -- supposed to take effect march 16. the attorneys general of both massachusetts as well as washington say that they are

going to look at options. washington state been one of the state to push back against the first travel ban. we are reviewing it to determine the impact on the state and our next legal steps. alan saidchlitz -- he expects this to stand. u.s. legal teams saying there is going to be a lot of digging to do among the court. as theyg news revealed the legislation to repeal and replace the affordable care act. ramy: that was the aca. this one is turning out to be american health care act. the details will repeal the rule for everyone, requirement for everyone to have insurance. it proposes age-based tax credits.

basically, the order you get, the more tax credits you get to pay for your insurance, but one sticking point right now is that with regards to all of this, so far, we do not know the cost or the coverage estimates of people who would fall under this. that is because the congressional budget office has not even seen the bill yet, so we are not sure about spending as well as revenue or how many people are going to gain or lose their insurance. with that said, that is coming from the house here, yvonne. u.s.enate, four republican senators have already come out against the new health care act. senators rob portman of ohio, shelley of west virginia, and of alaska, they are saying they are against this because it winds down expansion of medicaid for the poor and the disabled as well as the elderly. in a quote and letter to senate leadery -- majority mitch mcconnell, they said "we will not include stability for medicaid expansion, populations,

or flexibility for states. at thishould not come russian of access to health care for the vulnerable and our suggest individuals." the senate has 52 republicans on it's a with these four republicans out, that would be 48 and that is not enough to pass this bill, so the blueprint is here, but the support is not. yvonne: still some hurdles ahead. ramy inocencio, thank you. that is get to the first word news with rosalind chin. haslind: the white house refused to explain donald trump's allegations that president obama was spying on him. websiteervative breitbart was run by steve bannon. they would not say if he was accusing obama of breaking the law. sources in the u.s. say progressive groups are being

attacked by russian hackers attempting to extort thousands of dollars. investigations were launched by the fbi and security firms after at least a dozen groups -- accompanied by a data. to man's ranged from $30,000 $150,000, payable in untraceable bitcoin. theboard members say central bank will maintain a loose policy as a try to reach a target of 2% inflation. the boj meets next week shortly after the fed. a u.s. hike could weaken the yen and put pressure on japanese inflation. the boj has a way to go to reach the target. it price gauge rose .1% in january. .-20 finance they plan private -- to drop an explicit pledge for protectionism.

the new link which comes after president trump entered the white house, saying he will prioritize u.s. interests. labonte's, 24 hours a day, powered by more than 2600 john and analysts in more than one journalists and analysts in more than 120 countries. a muslim chen. -- i am rosalind chin. get to our correspondent tom mackenzie, joining us from beijing this morning. is he going to make a big impression? yvonne, hes right, will be taking to the stage in a little under one hour behind me. he is a relatively unknown quantity. this is the first time the international media will get the chance to put questions to him. he was a known reformer. he comes from the text bureau. tax bureau.-

he has already laid out plans to swap out business taxes, something that has been piloted and he wants to see that ruled out further and they have announced the ministry plans to cut the corporate rate on and they wantsses to increase tax incentives for r&d research. for 2017t has been set of around 3%, mi with the 3%. last year. bloomberg intelligence says that in reality, that deficit is likely to be closer to around 10%. policymakers may will need that wiggle room, that fiscal spending, particularly on things like if the structure because the pboc is taking this more neutral and prudent policy stance, edging towards tightening, so that is the fiscal picture. we heard from the finance minister and they plan to impose caps on local government level debt and they want to have contingency plans in case there

is a debt crisis. the new finance minister, to address the new debt question and u.s.-china trade relations, and cases tensions exacerbate. donald trump and xiao jie going to the g-20 next week. >> we are checking to see another reduction in china's foreign exchange reserve piles later this tuesday, below that level, so what is the government going to do? are they running out of options when it comes to supporting the chinese currency? it is definitely getting more difficult for them. as you say, the fx reserves pile edged down the low the 3 trillion dollar level in january her inexpected to follow february. a challenge facing the pboc is the fed and any possible rate hikes which would likely put further pressure on the yuan.

they can go for a one-off devaluation. we heard from the vice governor -- the other option they have is raising benchmark interest rates. that is likely marginally increasing, or on bloomberg intelligence, they say this is the most likely scenario. they muddle through and continue to impose capital controls and raise rates in the money market, and they continue to burn through those fx reserves. certainly, the pboc is under pressure, particularly if these fed rate hikes come to pass, as many expect, in march. betty: tom mackenzie reporting on the npc session. still ahead, find out why producers in australia are locked in legal battles involving billions of dollars in liabilities. plus, our next guest remains cautiously optimistic on asian markets this year despite risks. more on allianz global investor.

this is bloomberg. ♪

asia,"this is "daybreak i'm betty liu in new york. yvonne: our next guest says he's cautiously optimistic this by one key risk out there. the unpredictability of president trump. joining us now is raymond chen. raymond, always good to see you. we are struggling to find out why things are so quiet in the market because it seems like the fed rate hike is all but priced in. easy be is not expected to do much. the fomc, so is the news flow out of china the only thing supporting markets right now? guest: if you look at this year, the asian markets have done well, surprisingly, and i think the key essentially is not so much about all the political noises. the key is the fundamentals are

improving. so if you look at the economy, essentially, around the world, it is better than expected, and if you look at the corporate earnings growth, the earnings better than expected. we are seeing more upward revisions, especially from certain key sectors that we look at, so overall, i think this is the most important. the equity markets agree with you. they have come down in some of the markets, but i think the key is actually to continue to focus on the fundamentals. >> focus on the fundamentals. i was taking a look at china, and what is going on in the national people's congress. there is a focus on 6.5% growth, which is higher in china. it seems like an upbeat tone was market positive for china, which ended up supporting most of the market. how realistic is that for them to maintain that type of growth target? does this mean reforms are going to take a backseat once again? raymond: actually, the economic growth, the numbers are not that

important, and actually, i was very pleased to see the government tried to have a softer tone on the growth. shouldnese economy deliver slower growth going forward, and that would be andtive news to the country economy. the key is to continue to create jobs for employment. continue to focus on supply-side reform. i think this is the key. if they can reach secure this, i think this will be the future. talk about dollar-yen as well. he said he wants to liberalize the yen, change the tone when it comes to maintaining the stable level versus the stable position, but what about if we do see a more hawkish and aggressive fed? witht to show you a chart the valley and volatility versus the moves we have seen against with the dollar

and volatility versus the moves we are seen against the renminbi. hikes arenterest-rate going forward not only this month but also most going forward. yvonne: is he more tolerant of depreciation now? raymond: i think beijing will implement a few measures here. remedy tolerant of the the rmb weakness, how much money can leave the country, and number three, i would not be surprised if the next 12 to 18 months, beijing is going to implement a tighter monetary policy. if the growth continues to be receding, it is time to think about whether china needs to take a monetary policy going forward. versus easing. now, tightening, talking about that. now, raymond, back here -- betty: not just the effect on

china and other emerging markets, but just the fed in general, and how it is perceived here in the u.s., you know, former fed president charles plosser joined us and said basically that the fed is running out of reasons not to raise rates. raymond, i want you to hear what he said. charles: i have been pretty creative the last couple of years at times coming up with reasons they cannot raise rates. i think they have just about run the gamut of those, and i think at this point, particularly given the signals they have already sent, they would do their credibility a lot of damage if they did not do it now. betty: it has been such a well telegraphed in the last few weeks, rate hike, do you expect it to be a marker moving event -- market-moving event? raymond: yes, the market already should be a rate hike. the key is how many more rate hikes we are going to expect to see going forward, so i would

expect actually, you know, inflation is a key theme this year in the u.s. and asia, so if inflation continues to be the focus, it would hopefully be more rate hikes coming soon. youust really quickly, do think some of that would be dependent on where oil prices go and where that affects inflation? key is: yes, the actually whether the inflation comes from the commodity prices or from the wage front. if it is commodity prices, it is more or less expected, but if it is from the wage front, i think the fed may need to be more serious about interest-rate hikes. >> thank you so much, raymond allianz global investors. what can markets expect from governor philip lowe?

pretty much exactly nothing to happen. we will be live from sydney next with perspective on that. this is bloomberg. ♪

>> this is daybreak asia. i'm betty liu in new york. yvonne: i'm yvonne man in hong kong p are one of our top stories and is a pacific -- in hong kong. our top stories today in the asia-pacific. what are you going to be watching out for? sayeah, very psyched to that. the u.s. fed has been telegraphing an increase as the rates in the u.s., rba has been telegraphing they are not going to do much. we are on the was watch to see any commentary on the dollar were around unemployment or wages growth and more particularly, household debt and

house prices. this is one of the things causing the rba to hold off. the governor saying he does not think the risks to the economy in terms of household tde and house prices are worthb it for just what he calls a bit more growth. debt and house prices are worth it for just what he calls a bit more growth. do not see any change for much of 2017. bank -- tell me about the questions he is being asked and some of his answers. paul: it is pretty similar to what we had from the national australia bank ceo when he gave his testimony late last week. there has been a lot of discussion around conduct, particularly in terms of some of the scandals that the set commonwealth's wealth unit, and particularly accountability. he was pressed on his reluctance to remove senior executives who

were tainted by the cases. also some discussion around the idea of open data. that was a theme that came up as well. excepted open data will happen but they want any moves on that front to be industry led. betty: thank you so much, paul allen in sydney. if you want to follow the us trillion banks facing the follow thery -- banks facing the parliamentary decision, -- some of the events you may have missed earlier. it is your gateway to finding out and staying on top of the news. yvonne. yvonne: always good guidance from our folks. just ahead, will the u.s. declare a trade war against china? the five potential flashpoint. this is bloomberg. ♪ ways wins.

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>> 8:30 in singapore this morning. half an hour away from the open of trading in the lion city. i'm yvonne man in hong kong. betty: dark skies. i'm betty liu in new york and you are watching "different asia." gloomy in the markets in the u.s.. first word news with rosalind chin. u.k. perimeter theresa may is being urged to take the country back into a european trade body it left in 1972. britain was one of the founders of the european free trade association, but quick to join the body that became the european union. the group is made up of norway, switzerland, iceland, and the

the editorcame from himself to president trump has signed an order restricting people from six muslim majority countries in the u.s.. it was turned over last month in the courts. the vote will be march 16. they removed iraq from the list. people already issued visas, green cardholders, and dual citizens will not be denied entry. jenna's credit engine will keep coming this year, adding the equivalent of germany's annual gdp to its stock on social financing. isnomists at ubs say that $3.2 trillion. they based their estimate on a cut in the official growth target to 12% from 13, adding equity financing. ubs puts total expansion closer to 16%. howard davies said the credit growth is the biggest risk to

economies globally. a disruption in the chinese banking system would be "very worrying." he is confident beijing is equipped to manage the risks. >> ultimately, the finances of the chinese state are very strong. worrying is low. there are probably more bad debts in the banking system then we are currently seeing in their accounts. rosalind: global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. >> thank you. with cloudy picture outside, we'll see how the markets are feeling this morning. we go to sophie kamaruddin with an update. sophie: i want to focus on what is playing out in north asia. we have china using its economic power to express its displeasure with south korea. china has suspended approvals for gains made by south korean companies. stocks socks -- gaming

falling. the kospi marginally higher here. we have seen that shadow of geopolitics play out in south korean markets. let us pull up this chart on the terminal. we have seen defense stocks benefiting from the tension with south korean neighbors. korea airspace in the purple line outperforming china sensitive stocks in yellow. we are seeing signals there is a significant rotation among sectors as investors are looking beyond risks to pick winners and losers. past two years, it is hard to see -- check out this chart on the #btv 6526. south korea has dealt with a domestic turmoil during this period. the lesson here perhaps for

south korean companies is to diversify the space of geopolitical risk. tourism related sectors, those are dwarfed by industrials, which remain the key growth driver in south korea. yvonne. yvonne: sophie, thank you. commerce trump has his secretary sworn in. his administration is in position to make good on his trade threats against beijing. malcolm scott joining us now. the big question here in asia is if he's going to do it. far, we have not seen any concrete measures. there has been lots of talk and speculation here it all of that bombastic talk during the campaign. some of the prerequisites that maybe would precede any actions are now in place. we have wilbur ross who has been confirmed. he was speaking last week in a bloomberg interview saying that they are preparing the case, and we had last night peter navarro

reiterating his views that there needs to be some kind of balance brought to the trade relationships not just with china, but also singling out ireland and germany and other countries. >> so you are seeing at least five potential trade flashpoints, so maybe pick out a couple of them that are the issues right now. malcolm: number one is steel. china exports a lot of steel. it is exporting a lot and inused of causing a glut steel. wilbur ross made some money back in the day in the steel industry. he knows it well. he knows where the target -- to target steel. this has been a thorny issue for havele, and the europeans taken -- those are high on the hit list potentially. we have got other industries , where chinaparel

has had such a dominant influence on its exporting and manufacturing prowess. apparel, back in 1997, about two thirds of u.s. consumed apparel was produced domestically. now, it is down to one third. the problem is if the u.s. does take actions against china, it may just find that someone else steps into the place, maybe then --, vietnam. it is not as clean-cut -- maybe bangladesh,e -- -- maybe it was china. >> how will china react to this? malcolm: when china gets hit with tariffs on tires, it will hit back elsewhere and to look at some of its biggest imports from the united states, don't

forget while it runs a trade deficit, it is a major importer of goods from the unit states. aircraft is one key area. electrical machinery and equipment, all of the machines and equipment that feed the chinese factories and equipment, much of that comes from the united states and we have the a close other than railway, and china, might japan, does import some u.s. cars and has joint ventures with u.s. automakers, so china can definitely hit back in these areas. you so much,hank malcolm scott, and staying on that, president trump decision to pull the u.s. out of the transpacific partnership has left the remaining countries short. australianormer ambassador to china and we asked him if the tpp needs to be completely rethought. >> a lot of work has gone into tpp, many years, and i think

countries have taken themselves to a much higher level of openness and preparedness to adjust regulatory standards to facilitate and promote trade. it would be a shame to see all that work be lost. it is a lot of work. theakita tpp has been engagement of the u.s., given the size of the u.s. economy. geoff: i think it is possible to pursue it and continue, but a big problem for japan because it is a difficult political issue inside japan, not having the u.s. in makes it worth so much lesser the japanese. >> anything is possible, right? it is possible to continue with it, but is it wise? geoff: i do not really see the downsides. there is a a will, way, as they say in the old cliche. there ision is whether the political will with the absence of such a big economy from the tpp. having the u.s. in made it very

attractive. having countries take that step further in liberalize asian than they would have done otherwise. >> in 2017, you have china stepping in and making these comments defending free trade, liberal trade. it is fascinating because there has been a lot of talk about whether their leaves a vacuum in retreating andps becoming more isolationist that there is a space for china to step up. geoff: it is ironic when you see xi jinping's speech at the rates devos, beingt the champion of globalization, it seems unbelievable. china has been the single biggest beneficiary of the openlization and markets we have seen and it has

brought china into the international system. china has a lot to lose if we have a return to protectionism. can they show leadership, i think they have started to show leadership in a number of example, areas, for the investment bank, the bricks bank. fta are quite active in negotiations, so i think they realized that the times come for them to be more active internationally and to show a degree of leadership, but that is a long way short of what we are talking about filling the vacuum that the u.s. might leave if it were to become more introverted and inward looking. >> that was the former aunts trillion -- australian ambassador to china. we will be at the asia-pacific investors corporation summit in tokyo and we will speak to the ceo of japan. hong kong time.

half an hour later, neil slater. that is on bloomberg markets so be sure to check out those interviews. former fedext, the official says the data supports a rate hike next week. here our conversation with chart -- hear our conversation with the previous fed president. this is bloomberg. ♪

yvonne: this is "daybreak asia." i am in hong kong. betty: i'm betty liu. the euphoria did not last for snap with shares falling below the ipo price of $24. shares surged 34% on the first of trade last week. on friday, the stock climbed 11%. on monday, five of the seven analysts who followed the onpany celebrated, while two

hold. saudi arabia may be overvaluing its oil company aramco. almost 40% of respondents to a poll valued the energy manager considerably less the estimate than 2 trillion. they saw aramco's value at more than 1.5 trillion. csx has appointed hunter o, giving him a shot at turning around america's least efficient railroad. onreholders should vote whether to accept his pay request of $32 million per year plus 84 million to cover lost income from his previous job at canadian pacific. stock has jumped or than 30% since he was suggested as the ceo. than 30% since he was suggested as the ceo. a rate hike is almost certain. ont of wall street's big

trading firms are on board for the rate hike. .athleen hays joins us now we heard charles foster saying they have run out of excuses and they have to do it. kathleen: i thought it was interesting that he said that if they do not move now after sending these signals, they would face a major loss to credibility, and 22 of 23 of the feds primary dealers are basically the wholesalers for the treasury department when they sell their bonds, but all the big houses are included and up until a couple of weeks ago, almost all of them were looking for the june rate hike. they got ahead of them to a certain extent because they said -- he is behind them because he's holding onto it. they have to wait and get more certainty on donald trump policies, what you can get to congress. the implied probability now according to the hedge fund futures is up to 96%, and here is what is driving people and what charlie foster was talking

about three jump into the bloomberg with me and look at #3476, the fed's dual mandate. an employment down, in the middle of the range between 4.5 and 5%. it is a very official target, the white line. the -yellow line at 2%. -- the yellow line at 2%. chart,put cpi on the other measures of inflation, you can see that inflation is definitely back, and for all these reasons, the primary dealers are looking for that rate hike now. >> they are. looking ahead, so they are looking for that rate hike, but a lot of look ahead to other events. in the next 24 hours, will the bank of england this whole brexit debate that is being held at the house of lords? kathleen: i think it is so interesting and, located because we know the pound, which has weakened so much from june of last year, and that created

inflation and also is boosting exports. the economy is held up better. it is so complicated because the house of lords is now looking like it may defeat theresa may, the u.k. prime minister, in a vote on her draft law to trigger brexit. this is happening later today in europe. they want to rewrite the bill to new guarantee that parliament overall will be able to veto any final brexit agreement, and this would be -- it would stop her from walking away from the deal. the government in the u.k. is -- saying may's side -- is it was set up the european union to hand us a bad deal, but it has gotten a lot more complicated for theresa may and this is going to be watched very closely in the next 24 hours. >> the ecb meets this week. we have seen this rising euro area inflation. i'm sure the germans are waving their hands right now. mario draghi is not

just looking at german inflation. he's looking at german across the entire euro area. a key measure of euro area confidence hit a pre-financial crisis high. that was out today, but inflation was really the main focus so let us take a quick look at #2116 on the bloomberg because it shows you exactly what is happening and why mario himhi has got his heel set not to move. cpi is up to over 2% for the euro area, but look at the core. half that. it is at 1.1%. that purple line jump is mostly due to energy prices. services, the blue line, moving higher as well. that is why mario draghi is not going to move. finally, the european elections. markhas a big question hanging over the euro area, another reason mario draghi is going to resist the german's call for another rate hike. kathleen, thank you.

that is continue our conversation we had earlier on the fed. the rate hike is almost certain. one out of 23 primary dealers saying the fed will wait until may. a former philly fed president told us janet yellen and her team should just get on with it. >> well, you know, they have been pretty creative the last times coming up with a reason they cannot raise rates. they have run the gamut of those and i think at this point, particularly given the signals they have already sent, they would do their credibility a lot of damage if they did not do it now. >> what happened? this is really something. i do not know in all the years i've been watching the fed under janet yellen, which you have pretty recently seen what appears to be such a concerted move, such a decision to say we are now going to all signal that this is a very strong possibility, if not a likelihood. what do you think happened? charles: i think that what

happened, i'm guessing now, how i wasn't there, obviously, i think people are pretty sure that if nothing on foretold happened, they knew in january that this was going to be a serious meeting, and i think the markets just kept discounting it. i think they discounted it because of the fed itself, which is that the fed has signaled these things over and over again , and then pulled the rug out more than three times. when they do that, the market says, ok, well, they said this, but i do not believe it. that is problematic for the fed if the markets do not believe it, so i think they took this as a serious meeting. the data kept coming in good. they decided they better get the markets ready for this, which is what i think we saw happening the last couple of weeks. >> the other very important part meeting is-day the fed comes out with its

summary of projections, the famous dot plot. consensus inarrow december for three interest-rate increases in 2017. do you think that consensus might get bigger or moved to four rate hikes? what would you be voting for? what would your dot look like? on the: mine was noise high end. i think there will be more of a consensus closer to the three. i think they are going to be very cautious. what they have seen since the elections and the markets, the economies, is that, in fact, the s gone up, the forecast looks better, and there is more uncertainty around it. in other words, what policy the trump administration is going to deliver, how effective. nobody really knows for sure. what the fed sees is that there is a lot of uncertainty, but in fact, what they call the risks are to the upside.

kind ofwhat they see, how to interpret what they are doing even though the forecast may not move very much. >> so there is certainly some higher risks there on that and for that data, but what about inflation though? are they going to find themselves behind the inflation curve? charles: they are back. [laughter] >> it rears its ugly head? charles: i could not pass it up. this cpi inflation now both core and headline is about 2%. the pce is just under 2%. how can you say the fed has not met its targets? i mean, it is super said. it is as close as we can measure it. i think it is closer to the target, it has come back to target sooner than they thought it was going to. >> it's back! [laughter] way to makeffective

that point. up next, legal battles on the rise in australia, especially among lng producers and contractors. this is bloomberg. ♪

yvonne: this is "daybreak asia." i'm yvonne: in hong kong. betty: i'm betty liu in new york. with cheap prices, delays,

and ballooning costs, many are fighting over who should bear the liabilities. here is perry williams with more. tell us the scale of this problem. how big is it? perry: look, it is turning into a bit of a monster, it is there to say. everyone has had their head down time to get these projects up and running, and now that they have come online, everyone is turning their attention to some of the dispute, so citigroup estimates there has been about $55 billion of cost overruns on the australian lng projects, and that has led to probably at least three or $4 billion in cost disputes covering quite a few of the project here. >> what has caused these disputes? has beenah, look, it

a really overheated market. we have seen probably half a dozen different companies all gasng to build the massive export plants at the same time, and of course, it has been a rush to get the best contractors, best service companies, best laborers, so that has caused a lot of competitive tension to these t e things built on time and the inevitable fallout in terms of who deserves what and who should pay for what. onwill it have any knock impact on the success of these product projects? a year ort is still two away until we get that kind of detail, but certainly, the capital returns on these projects, particularly like big chevron, ande these disputes, depending on

whether they win or lose, will have a big impact on that. >> perry williams, thank you. that is it from us on daybreak asia, but plenty more to come with bloomberg markets up next. we are indeed. and of course, back in the u.s., we are going to be counting down to the fed meeting. it seems i the only thing that might spoil that party, yvonne, might be the jobs report on friday. we will be counting down all this week, looking towards economic numbers. yvonne: looking ahead to the new finance minister of china, his press briefing, coming up next. this is bloomberg. ♪

>> it's 9:00 a.m. in hong kong, 8:00 monday evening in new york. i'm richard solano. >> and haidi lun in sydney. this is "bloomberg markets: asia." ♪ >> dealing with china's new on day three of the national people's congress. >> trump and the republicans lay out their new