♪ >> asia-pacific markets expected to follow wall street down as investors look ahead to the fed decision. >> oil under pressure as saudi arabia ranges outlooks. some say the kingdom is losing patience with several producers. >> theresa may will trigger exit this month. but the european union might make her wait for talks. an annual policy meeting wraps up. beijing is tied on its list of problems. let's bring you breaking news

out of south korea. the jobs report for february is a miss. unemployment at 4%. the estimate was 3.9%. it raises the question of the youther labor market, unemployment seems to be a trend here. we will see how that plays through when korea open than an hours time. february,ed to last some murky outlook for the labor market. let's see how the rest of asia is performing. wall street ending the day lower ahead of the fed. the dollars slightly lower. kiwi, we did see that deficit billion, stocks down 1/5 of 1%. a wild ride for oil, tensions in the cartel.

we did see oil bounceback to $48. really flat at the sydni open, still in a tight range for the aussie dollar. dollar-yen, do not expect too much. it may stay in this two-month trading range. into haven status. it could be a down day for stocks in tokyo. i guess you cannot be surprised by this performance because there is a lot of risk of ahead of the fed. i am sure these traders had an early day because of the storm of yours. >> the storm not as bad as we were expecting. the forecasthat will be more accurate on the fed then it was on this winter storm. we still got some snow.

mentioned, did decline. nobody buying ahead of this said it rate decision. coming out from bench chair, janet yellen. >> it was a down day. dow, s&p 500, nasdaq, trading lower. s&p 500 had its worst day in two weeks. vix spiked higher. will we be getting the fed wrong? we will see it when we take a look at an intraday chart of the 10 day yield. it is lower on the day. at the second day that happened over the last 10 sessions where the 10 year yield has changed. bonds rallied ahead of the fed decision. this is somewhat status quo. 6784 in the bloomberg.

stocks a been rallying and bonds selling off. excuse me, i misspoke. it is a reversal of that. investor nerves ahead of that fed decision wednesday. it will be interesting to see how it goes. >> that is the reflation trade. but is a asset going the other way? it is puzzling what happened with saudi arabia. >> we had an opec supply cut at the end of last year and all the members were on board but now there is a report that saudi arabia production for the month of february was not cut as much as has been expected. that has been weighing on oil. over the last seven trading days, it was down. there was a supply glut. not surprising, today trading lower for oil. including marathon oil, devon energy, pioneer resources. it was the worst sector on the

year. the question about what can be ahead for this sector are in oil could be, i stress, the technical. this is a one-year chart of oil. the 60 day moving average has worked as resistance. in yellow, the 200 day average. that is when the buyers have been stepping into support oil. they have been doing so religiously over the past year. will we see that action again? will buyers step in? it was looking bearish. but now it appears oil is trying to recover a little bit. it will be interesting to see how it does play out. it would not be surprising if the fed decision, the language about rate hikes, if it outweighs on oil. >> we talked about stormy weather.

i think you guys saw more rain than snow. but it was a big, wintry mess. >> coming in today, i was pelted sleetyface by a sleep -- mess. there were delays for all airlines, including delta, jetblue. united continental holdings worst day since august of last year. they canceled at least 1000 flights. flights were canceled. that could affect the bottom line for those airlines. investors selling those shares today. valiant pharmaceuticals down 10% on the news that bill ackman, the famed hedge fund and activist investor of pershing square sold that firms entire position of 27 million shares. he had been a long time bowl. the stock -- bull.

the stock down from its august peak. tesla up 4%, its best day since june. positive chatter about the model y suv. otherwise come up bearish action ahead of the fed. abigail doolittle, joining us live from new york. >> the european union may force the u.k. to wait until june 4 exit negotiations, despite prime minister theresa may confirming she will trigger the process this month. e.u. sources say 27 other are waitinghem bloc to begin the two years of talks. may is talking about power shifts to them e.u. we remain on track with the

timetable i set out six months ago. i will return to this house before the end of next month to notify when i have formally triggered article 50 and begun the process through which the united kingdom will leave the european union. >> french presidential hopeful fillon has been charged with misuse of funds. he has been under investigation over claims he paid his wife and children to carry out fictitious jobs. he denies any wrongdoing and will meet judges later tuesday. he also said he would with draw from the race if formally accused. funds from itsed money markets for 14 straight days. the longest stretch since it started tightening in august. they pulled $5.8 billion from the market operations over the past two weeks. the weighted average shows the rate has fallen 13 basis points this month, too much liquidity in the system. higher food prices saw inflation

go up more than expected in february, jumped 3.55%. they may support the rbis position before the expected fed hike. says that they must be ready to raise rates if pressure picks up. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. trade pickt trump's has been questioned at his confirmation hearing. he said he agreed with the president's assertion the u.s. could do better at negotiating deals. and he mentioned china as a key issue for the u.s.. he has had plenty of business in china. a country which accounts for half of the $500 billion trade

deficit. he shares similar views with trump about china and things trump will shake things up. here is what he said. i between now and the time leave, you will say, bob, you were right. he really is going to change the paradigm on china. i believe he will change the paradigm on china. if you look at our problems, china is right up there. >> on the topic of china as a currency manipulator, he demure. here is what he had to say. judgment past it is my that china was a significant currency manipulator and we lost honest jobs because of it. whether they are doing it right now is another question. that is up to the treasury secretary. >> that hot potato, firmly in the hands of someone else now. he says the u.s. needs imaginative solutions on trade litigation. set up to deal

with china's industrial policy. aluminum is very troubling. as a tough negotiator, a very experienced one. it will be an interesting argument between him and china in terms of trade. >> an understatement, right? about nafta, another trade issue the president wants reviewed. what did he talk about their? nafta president called the worst trade deal, maybe ever. a priority there. we know trump really wants to change nafta in about a year or so. the u.s. is undecided if nafta should be bilateral or trilateral. there is also been controversy over myanmar 's pastzer --lighthizer

work. what exactly is the controversy? >> this hinges on the work he 1990's for the china, the china chamber of commerce. and the 1980's, the sugar and alcohol industry of brazil. thet in the u.s. prohibits president from appointing a u.s. trade representative that has directly advise the foreign entity in trade negotiations or dispute. the white house believes his work does not violate that role. but democrats say they may seek a waiver from the senate before he could take up the role as u.s. state representative. >> thank you so much, rosalind chin on lighthizer. china's political up and comers. who stood out at this year's national people's congress. >> is three the magic number? a fed hike this week is all but

certain. but analysts expect another two. ♪ >> this is daybreak asia, i am

betty lou in new york. >> i am in yvonne man in hong kong. reports from japan say sharp is considering resuming dividend payment the next fiscal year. there was an interview with the company's president for the story. -- since the fiscal year ended in 2012. asahi reports ending the production for next year. >> amazon japan is to attract union pay to attract business from chinese shoppers across asia. union pay has more than 6 billion cards in circulation and is a strong rival to visa and mastercard.

they will be allowed for payment at the amazon website in japan. it is catering from booming demand from the mainland. >> alibaba's plans to raise residents in the u.s. faces a challenge. weeks after a bid for moneygram, they are tabling a higher bid. billion, 20 a 20re, which tops it -- at .25. a takeover plan has been issued as a done deal. >> it sounds like the u.s. fed hike is a done deal. they are expected to have a rate hike later wednesday. what can they expect for the rest of the year and beyond? up our favorite chart these days, or bloomberg -- wirp. which is work

i want to look at four columns. one and five, 19.4%. one in five essentially is the odds that we will see four rate hikes this year. is that sound right to you? >> probably not. we think it is on track for three this year. we do not think necessarily it will be a significant tightening in the next six months after the march announcement. the real question is, what will happen in 2018? of foure 40 whispers rate hikes in 2018. afast pace of the fed over normal tightening cycle. that is where the yield curve comes in.

it is not bought into the story of a fast pace of rate hikes. that is where the adjustment process has to come through. yes, there are bets being placed in the short-term. the u.s.he long end of yield curve. i think that is the focus the next six months. >> why do think that is? what are bond investors seeing that equity investors are not? >> that is a very good point. i think the bond investors do not believe trade pressures will remain as strong as they have done over the past quarter. secondly, i think there is a feeling that perhaps the u.s. economy is not as strong as people imagine. lastly, there is still a lot of buying on the long end of bonds, buying insurance and pension funds that have been desperate to grab yields. we have a slightly forced market. 2018, how does the

long end of the market adjusted this change? it seems hard not to crack, to convince them of this reflation trade. i want to pull up this chart. you mention this in your notes, the correlation between u.s. markets and bond yields. what is interesting, is that correlation had been pretty close, tracking each other. now, diverging. i am curious to hear your opinion on this. >> it is a really important chart, thank you for mentioning it. late 1990's, the positive correlations between bonds and equities have allowed allocators room to run fully weighted portfolios. but that could break down and maybe reinforce a longer inflation cycle. if that happens, that correlation breaks down. volatility will also start to move up.

the story is not over yet for the rate cycle. i think it will get played out at the long and rather than the short end. >> you mentioned volatility so i wanted to bring up another chart. , aroundd about the vix 11, 12, fading for u.s. stocks. but it is not just contained in the u.s. this is the blue, linking europe and asia. based on the biggest loss on monday, the line in yellow is a similar story. why have we not seen volatility pick up? >> that is a good question because local global equities posted 30 year lows. on the whole landscape we have seen a huge collapse in equity volatility. i think it is two things. the markets believe the central banks have stopped the system, they have introduced too much liquidity. secondly, it has been

complacency, over inflation. late 2015, early 2016, there were reflation fears. nobody has put a scorecard on the reflation surprise. equity volatility moves up. we think it is linked to the long end of the yield curve. they are also advising equity volatility. >> could the next risk be volatilities? we are seeing oil below $50. we saw a low base in commodities contributed to the reflation trade. if we continue to see pressure on that front, what we ceos rise? >> the rise in producer prices has been quite broad. prices,ve been paper steel, a fairly broad base reflation trade. a large number of products have seen price rises over the last

nine months. we are in the camp, that the ppi numbers remain more resilient. in china, a surprising up site. not fully linked to the oil price. buy frenchsaying, stocks now? italy, france, benevolence, they have elections in some form over the next six months. belowuity markets trade 1.25 times. there is an earning cycle appearing even in france, the most desperate economy. it is so unloved, they could have one of the best performances over the next 12 months. like china 18 months ago. no one wanted to open it, then it suddenly produced better economic data, and they joined. >> great to have you. coming up, pump up the volume. raising oil production.

♪ >> this is daybreak asia, i am

betty liu in new york. kong.m yvonne man in hong oil has opened higher in new york after slumping upon news saudi arabia increased production numbers last month. that increases those imposed at the start of the year and suggests tensions inside opec area let's bring our reporter live from houston. in the oil price. what he do learn about digging through the headlines? >> it looks like you have saudi arabia leading the charge here. just a little pullback, quite a large pullback.

the free rate will not last forever. of veiled shot at the other players in opec who of not fully complied with cuts. is moree, saudi arabia than at pace, complying with production cuts. even with a rise in production, they are below their ceiling for what they agreed to for production cut. they are still within the bounds, but they are trying to signal that, everyone get in the game. saudi arabia is serious about rebalancing the oil market. >> i want to pull up this bloomberg g chart that we have. it shows you how oil has dropped below $50 a barrel. what is interesting, the blue line represents the production cuts, a very sharp slide here. that has meant a gradual rise in crude futures. what is so fascinating to me is

how quickly crude futures have declined as production cuts have leveled off. they were down, but have leveled off. are futures that sensitive to opec cuts? >> i would say definitely so. >> that is the only game in town right now? yes. people in the market are waiting on, what can opec do? it is one thing for u.s. drillers to rise and fall. but opec has the power. whether they all agree or not is another thing. but they are a big body that can agree on moving the market in a big, giant way. people are looking at what opec does, for sure. opec and saudi arabia. thank you, david in houston. with the rate hike uncertainty, is the fed meeting going to be a drama free zone?

we will dig into it. ♪ ways wins. especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. live-streat the airport.e sport binge dvr'd shows while painting your toes. on demand laughs during long bubble baths. tv everywhere is awesome. the all-new xfinity stream app.

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the trading day in sydney. you can see the stocks lower than futures had indicated, down 3/10 of 1%. we are getting breaking news from australia on consumer confidence from the index, rising a touch, a slight bump here, to a reading of 99 .7. at that is a gain of 1%. last month had risen, as well. although it was a smaller rise this month, the month of march. cannotcation perhaps, read too much into these

numbers. an indication of growing worries and uncertainties proposed on many of the things we talked about, brexit, the fed rate hike. >> looks like it was much of the same. business confidence had a nasty drop yesterday. i see a little diversion spare, but not much on the aussie dollar. let's check first word news. >> president trump's trade negotiators says china is high on the list of things the u.s. should worry about. robert lighthizer spoke at his confirmation hearing on capitol hill. he says it is not sure china is manipulating its currency. he is waiting for treasury department review do next month. rex tillerson arrives in japan wednesday for a nation tour of asia, providing clues to the trump administration policy agenda.

he was concerned about u.s. protectionism. moves on ton beijing for the weekend where he will discuss a likely presidential summit. saudi arabia has told opec it reversing one, third of the cuts introduced in january. crude fell on speculation the kingdom has lost patience with producers who are lagging to meet their promised cuts. saudi data shows it is cutting data more than required. it is in talks to return to the corporate bond market next week in what would be its first major offering since the omissions scandal. it also shows the company is trying to draw a line under the crisis, which has led to billions of dollars in fines. vw was typically the biggest issuer of corporate debt in europe through 2015.

>> i do hope so. we have made good progress. but, let's face it. there is still action pending and quite a number of disputes and investigations going on by the authities that are .mportant to our image we have to regain trust. that requires a lot of work. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> how the asian markets are shaping up, 24 hours away from the fed decision. gearing up fore that fed decision. the dollar is in demand. hoveringtreasury deals around the 1.6% mark.

we do have oil prices back above -- it did slide below that level when the latest opec data showed saudi reversed one third of its output. datae seeing the vix rising. thursday's boj decisions say, europe rates are fueling that. the pound is trading near an eight week low. they are giving the green light to trigger brexit. we are looking at a weaker start across the region. shares in seoul after a three-day advance, the south korea joblessness rate rising to 4% in february. japan's industrial production for january. checking in on the market action

in sydney we have utilities leading the charge in australia. we are seeing the index fall one third of 1%. the aussie is looking steady. seeing gains after the housing deficit narrowed more than expected. cue in the fortes lead. let's look at the money state in australia. cue --vue -- fortes valuations and prospects for attractive returns. now the markets have fully priced in a fair rate hike. could there be drama around the policy meeting? global economics and policy editor, kathleen hays. everyone is going to be on

tenterhooks, waiting for what gender -- janet yellen has to say. >> after the policy decision comes out at 2:00 eastern. we know the fed rate hike is completely priced in. it has so much to do with fed officials themselves. let's jump into the bloomberg. it is ready to raise. look at that hyperbolic move. , over the last three weeks, some good jobs data. but mostly, a torrent of the fed case for saying that the rate hike was not compelling, in march the rate hike would be appropriate. why does janet yellen think a rate hike would be appropriate now? let's look at another bloomberg chart that tells a story. you are looking at the turquoise line.

down 4.7%. at that is right in the middle 5% van into unemployment this year. pce, the fed the main inflation measure is at 1.7%. that is why janet yellen says if we keep moving in that direction, the hike is appropriate. that is not the drama. the drama is, how many said hikes the rate signals for this year. know one in five seems to be the chances for getting four rate hikes this year. what is the consensus the people you are talking to? >> i am so glad you mentioned wirp. day anday one thing one then different if evidence changes and officials say different things. fed'sn december, the

consensus was for three rate hikes in 2017. tomorrow, the summary of economic projections revised every three months for growth, unemployment, reflation. that is where they get their dot. let's take a look at what the dots look like ahead of that revision that could boost the number. that diamond shape to the left. the mediandots, consensus forecast for three. someone who has changed his forecast that jpmorgan says he does not know if it will go for hikes.ur a lot of people say the fed will not do it, and here is why. first quarter gdp is well than -- well below 2%.

that is not a worrisome number. wages are not accelerating very much. why not wait to see what donald trump can get through congress when it comes to actual fiscal policies like infrastructure spending and tax cuts? look to 2019. they say may be the fed will be hawkish by showing rate hikes in 2018, showing that median of you. a lot to watch tomorrow between plotscision between dot and janet yellen's conference. -- theresaminister may came from the parliament to talk about brexit, but they might delay formal talks. >> so important to get the parliament to give her a clean bill to trigger brexit. once it is triggered, the e.u.

has to take over. they have to set conditions for how it will work. theresa no longer controls the agenda. she has two years to get this done, so it is more of a concern. is's review where the u.k. with regards to the e.u. theresa may is looking to trigger article 50 of the lives bond by late march. that is where the e.u. takes over. there is talk of an april 6 meeting with e.u. officials to set that framework. if not, maybe may. on, theer this goes more leverage theresa may loses in these talks. we know for example, with uncertainty, what will you do? if you are bank of america merrill lynch you may move your european headquarters to dublin if the u.k. loses access to the

e.u. some of scottish government is looking at an independence referendum. influence set.ld a former first minister of scotland says theresa may is just not listening. -- theresa may has not shown flexibility or sensitivity to scotland. she seems single-minded, determined to go ahead with brexit. that is not what scotland voted for in the european referendum, it is not the inclination of the scottish people. contention of the scottish people. bottom line, theresa may has a lot of her plate to deal with. she may have won a victory, but she has a lot of bottle -- battles ahead. >> thank you, joining us live

from d.c. one party, two weeks, and 3000 lawmakers. what have we learned from china's national people's congress? ♪ >> this is daybreak asia, i am

yvonne man in hong kong. >> i am betty liu in new york. likely to face questions on the economy and regional tensions when he wraps up the national people's congress in beijing. tom mackenzie joining us from tiananmen square. this is the one time he comes out to speak. what are we expected to hear r?om the mere -- premie eventis a relatively rare to hear from him. hiseconomy is a key part of portfolio. many would argue a lot of the

power making has shifted to the president, xi jinping. he will be asked about the gdp target of six point 5%. he will be asked about this emphasis on tackling iranian financial risk. he comes in to this press conference with the data points in here headed in the right direction. that has a data strengthened. we have industrial data that has picked up. there.a points are bloomberg intelligence says growth momentum in china is looking robust at the early part of the year. he is relatively confident. there are key concerns, there is the real estate sector. investment could fall from 7% last year to 1% this year. you have a rate hikes, the

pressure on the renminbi. these conferences are part of the npc, this 10 day event. 2015, premier li keqiang saying like stay reform is like slashing your own wrists. that brings a back to the issue of trade. we heard from president trump's nominee for trade representative today in the senate hearing. already making headlines about china. are we likely to hear anything about u.s.-china ties? >> it would be surprising if we did not get a question on that. china was aaying top problem, as he said, for the u.s. if he wouldot say be pushing to label china a currency manipulator. from a chinese perspective, they

have tried to play this in a calm manner. they have tried to have a measured approach to what is happening in washington. we do not expect any fireworks from keqiang when it comes to u.s.-china relations. there is a good relationship with the secretary of state, rex tillerson. he will be meeting in beijing in china on the 18th. trump said he will be sticking with a one china policy. and you have the meeting between the two presidents, likely to happen in april. we will see if li keqiang says anything more about the relationship with china. >> breaking news the yahoo! hacking situation, the 2013 case. the justice department will plan to issue indictments related to the hacking attacks, accusing for people of participating in

this security breach, several years ago. authorities will arrest at least one of the people in canada as soon as today. three of the others are currently in russia. this is according to people familiar with the matter, the department of justice is going to be issuing indictments related to the hacking attacks against yahoo!. this situation for yahoo! and others continues to grow. >> absolutely. we will continue to follow that breaking news. let's bring the conversation back to that npc. we have a senior consulting fellow joining us in hong kong. great to have you. i cannot help but here, speech after speech at the npc. a lot of mentions of resident xi jinping, of the party. where are we in this leadership

shuffle? clearly the key figure in chinese politics and has been for a number of years. i do not think that will change. he cemented his position institutionally, state institutions, the military, and in the party. figurehe coordinating across the policy issues facing china today. sitting here in march, we are in the run-up to the 19th congress party which will probably take place in november this year. that is the end of the first five-year cycle of xi jinping's leadership of the communist party. it is an important point because we are expecting a highest -- significant reshuffle at the highest party. there are people that should retire, according to the traditional speculations.

and there are about 11 people on the same calculations that should move on. we will see new faces at the top of chinese politics around xi jinping. >> what is at stake? could it undermine his ability to do reforms? >> i think the chances of this not going smoothly are very small, indeed. the party has had a good record over the years. five years ago in 2012 when we had the scandal and excitement around that, the party managed to deliver a transition on schedule and pretty much in line with what we would have expected in terms of people moving up the hierarchy. the chances of this going wrong are very slim. what does that mean for policy?

i think the policy framework has been set after 2020 and beyond. we have a five-year plan, that was approved last year. that takes the government to 2020 in terms of government and social politics. not think we will see anything very new and that stanch all in the way of policy contents. the bigger question is, what happens in reality? what is implementation like on the ground? that is tougher to predict. >> you are so right about that. they have their ducks in a row, they want to execute it, but you never know what is going to happen. somebody named trump may foil all that. i cannot help but notice the positioning of robert lighthizer in the senate confirmation hearing at a moment like this in china where he says, china is

one of the top of the u.s. concerns and it should not be. what is likely to play out here? external environment, the global uncertainty we are facing at the moment about what the new u.s. administration is going to do, clearly complicates this for xi jinping and the other leaders in china. there is uncertainty over trade and alsover currency, more widely. there was a phone call that took place toward the end of next year, in response with trump's restatement of the one china policy. it indicates to leadership in beijing that all sorts of things could happen over the course of this year. it was striking that li keqiang

used strong language about uncertainty and the danger that china faces. >> tim, thank you so much. we are getting breaking news right now back here in the u.s. another goldman sachs executive, former executive, trump don -- trumponomics donovan. goldman sachswo folks. james donovan as deputy treasury secretary. ♪ >> investors are betting a rate

hike is a sure thing when the fed announces its decision wednesday in the u.s. let's bring in ramy inocencio with a deep dive into our bloomberg charts to explain why. >> that is right.

it is decision time for the federal reserve. we have seen support for the hike has been building the past few weeks. ata has been strong. there have been hawkish comments. let's take a look at fed funds futures. this is the odds of the hike. look in the blue. a dramatic increase from 50% to 100%. this is the rally in the stock market. it is a record high in the white ever since the u.s. election. that is been supported by better than expected economic data -- i am sorry, that is the white line, the markets are in the orange line. the hard data, employment, core inflation, we are getting improving numbers here. the fed is closer to getting its isl mandate, full employment the orange line falling to that 5% mark. the white line, core inflation, rising to 2%.

there is more good data on wage growth. average hourly earnings rose 2.8%, year on year. rated this weeks expected hike, investors will keep looking at this behind me. plot is the infamous dot that forecasts future rate hikes. our focus is on the white dots, and whether the expected move from thejumps to four three. of the orange line implies it will hike gradually for now. starting at 1:00 p.m. in new york time on wednesday, 1:00 a.m. hong kong time, we have full coverage of the fed decision. you do not want to miss it. not want to miss it. for the markets it is like a box office opener. this is what we are watching.

janet yellen will be talking to the media. yvonne, we have major markets about open in a

♪ betty: wrapping up china's annual policy meeting as washington's is beijing is high on its list of problems. theresa may says she will trigger brexit as much -- this month. dutch voters hold the key in the latest test of nationalist politics. special report from amsterdam. is the second hour of "daybreak asia. ,'m yvonne man in hong kong where it is just past 8:00 a.m.

can you imagine traders are taking a whole lot of risks to 24 hours away from that said decision. -- from that fed decision. first, let's get the first word news. haslinda: the european union may force the u.k. to wait until june for brexit negotiations despite prime minister theresa may confirming she will trigger the process this month. eu sources say the other 27 members are looking at a number of two years to begin talks. when she invoked article 50 of the treaty, power shifted to the eu. proceed in the coming days, so we remain on track with the timetable i set out six months ago. i will return to this house before the end of this month to notify when i have formally triggered article 50 and begun the process through which the united kingdom will leave the european union. host: french presidential

hopeful has been charged with misuse of public funds. this casts doubt on his continued presence of the campaign. he is under investigation over claims he paid his wife and children to carry out fictitious jobs. he denies any wrongdoing and will meet with judges wednesday. he says he will withdraw from the race if formally accused. --di arabia says it raised it took back oil production. that they have lost patience with fellow producers. saudi data shows it is cutting out more than required under the cartels november 30 agreement. us the u.s.telling is planning to issue indictments related to the hack attacks at yahoo! four people are accused up its paid in the breaches that compromised hundreds of millions of users accounts. one person may be arrested today

in canada. the others are in russia. the hacks came to light last year, and bring to derail the sale of yahoo! web operations to verizon. the fed has drained funds from its money market for the longest stretch since it started tightening in august. the pboc pulled $520 billion from market over asians -- market operations. falling 13te has points this month, a sign of too much liquidity in the system. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. let's take a look at how asian markets are shaping up its morning. seeing a little bit of pressure here.

asia looking to follow drop on wall street. oil is now trending above that mark. that drags down energy, materials, stocks. we have the yen picking up momentum. nikkei down the 14%, extending losses for a second day. kospi snapping a three-day climb. take a closer look at what has been going on with the oil price. in the newalmost 3% york session to almost $47 a barrel. this opec data shows saudi arabia increased output in february, although it is still blows -- still below that feeling. take a look at what is going on with toshiba shares after tuesday's closed management out a presentation. the odds are rising for the

earnings delay. today we find out if the company is at risk of delisting. a plan to to submit improve internal control to the tokyo stock exchange. today we are seeing shares open -- i'm sorry, red it hasn't quite traded just yet. take a look at what is going on with samsung stock. we are seeing it still trade near the record high that it hit trillion, about 2.0 6 down by 3/10 of a percent after planning on tuesday. it is reviewing a shift into a holding company. there is speculation an announcement to be made in may on that front. local media reporting the company is to invest in a new production -- chip production line, with production taking about two years. chinese career likely to

face questions on the economy and regional tensions when he wraps up the national people's congress in beijing. let's go to our china correspondent live from tiananmen square this morning. good morning. we're looking for some color from the premier. what are expected to hear? the premier is very much in control of the economy. he has sent his portfolio. has takenxi jinping away some of that, but he will be quizzed on some of the things like his gdp target he laid out for the nbc 10 days ago. how they will reach that with a grave domestic and international pressures china is facing. there is emphasis on these financial risks. how will they do that when credit in january hit record levels? there are some key questions the premier may be asked. a bit of a with spring in his step because the economic data is pointing in the

right direction. we had yesterday that industrial output number. we had that fixed asset investment number. the pmi's have been in the right direction. a bit of optimism, confidence for him, no doubt. he is also probably going to be asked about some of the geopolitical tensions in the region. top of the list, north korea, that intractable problem that is pyongyang and its missile tests. they hold at 10:30 beijing time. yvonne: north korea definitely one issue. also looking at possibly president trump and president xi meeting next month. our lesley to hear anything when it comes to u.s. and china time? reporter: it would be very unlikely if he wasn't asked. ,e do submit these questions and is up for the foreign

ministry to pick which ones he answers. the u.s. is clearly front and center in terms of issues that have been discussed at the mpc, whether in the halls of power or the big meetings and discussions by the ministers here. like kaiser has made these lightts -- like kaiser -- haiser has made these comments. the chinese and communist party have been taking a very powerful prose -- approach to how they respond to the comments out of washington. clearly, this meeting between the two presidents in april is going to be key. what they want to do, the chinese, is to have some role as washington firms up their asia policy. let's see what we hear from atme minister -- premier li this press event. thene: do we get any sense

last week of the political chess game going on behind the scenes? been a very has tightly orchestrated affair. what we haven't seen are any of the likely contenders coming and hogging the limelight. it is a very different pictures what we saw five years ago. you might remember in 2012, party secretary who is a very ambitious politician, seen as potentially a candidate for some of the top leadership here in china, he was dethroned fairly dramatically. the premier at the time made a comment about him. he was then purged from the party and got embroiled in this corruption scandal and was jailed. none of that drama has happened over the last 10 days. everyone has been on script. this is a key political leave -- political year, as you say. xi ist she -- president

likely to shore up his power base, and everyone for the moment seems to be an line. we mentioned the call that was read out by the premier, and that is central to this. they are trying to build him up as a strong international leader. -- on, everyone on strict script here in beijing. yvonne: thank you so much. live from beijing as we look ahead to that speech from the premier. toshiba to started trading in the tokyo session, falling close to 6% right now. this is after we learned yesterday, they delayed their earnings for a second time around. they are mulling the sale of this controlling stake in its westinghouse business. now the company risking being delisted from the tokyo stock exchange. we are learning a little more

about this post market briefing from the tokyo stock exchange. we will get to those headlines in a bit. more trouble ahead for toshiba. the trouble is deepening after missing that deadline to report earnings. let's look ahead now. the eu faces a big year of elections, with the netherlands first. we will get eurasia's view later on in the show. drill down on how protectionism may affect one of home depot's biggest suppliers. this is bloomberg. ♪

♪ yvonne: this is "daybreak asia." by donaldism fueled trump's america first slogan.

joining us now is ceo joe galli. great to have you. we continue to see record profits for tektronix. the concern was earnings growth. slowlly getting this growth quest mark -- growth? are net profit was up 15 points. we showed outstanding momentum in the second half, and we are very confident about 2017. our cash flow more than doubled last year. yvonne: i thought that was interesting, as you have prided your business in asia. you started building factories in hong kong. now you might be in the potential list of president trump's for bringing jobs back to america.

are you concerned about any type of potential border tax? guest: no. i think what people miss is that manufacturing capability in the united states. we have five facilities in the u.s. ready to go. if there is any issue with border tax, it will affect all of our competitors, because we all have manufacturing and asia. we have no concern. is main capability in china structured to supply the rest of e world, canada, australia, europe, latin america. there's a lot of countries beyond the u.s. we serve. it's important for us to manufacture in the u.s., and we are ready to do it, then the team is poised and ready to go. yvonne: so you are possibly moving projection, more production to the u.s. quest mark -- to the u.s.? guest: we are ready have 5000 jobs in the u.s. yvonne: you have 11000 and

china, though. guest: if we need to rent that up, we will in the u.s. let's see what the laws are, first. the important thing is not wear remanufacture, it is our strength of new product development. our innovation is the reason why we are driving record results. our cordless products are selling like crazy. we are so optimistic about the future because of our new product leadership. yvonne: what you make of trump's possible trade policies? he's gone from saying he wants to slap 45% tariffs on china to saying he favors fair trade and free trade. what are you looking for of the troubling ministration? -- four out of the trump administration? guest: our focus in the company is, we have a team that focuses on high speed -- yvonne: you have to be concerned

about trade, right? but we can't, affect it. whatever the law is, we will respond to it. i think what our administers will see as we move quicker than our competitors. yvonne: that's interesting. you mentioned competition. your rival black & decker announced recently that they were going to be building a plant in the u.s., as well. the ceo saying this makes business sense. what make business sense for tektronix as well? or would this me more reactive? guest: it's not a reaction at all. we've been planning to manufacture in the u.s. all along. freight,f the cost of you offset that if you produce in the u.s. we have a highly automated manufacturing process so that we can manufacture in the u.s. in a very competitive way. it's not a reaction at all. we have always said we want but -- we don't want to put all of our eggs in one basket, and this

is a good reason for that. we have manufacturing and europe, as well. we have been careful not to just focus on one region for manufacturing. yvonne: if it was to move possibly production of china, europe, are there other areas you'd be looking into, as well? guest: possibly, but it depends. right now our focus is to take our manufacturing ability into the rest of the world out of china, and ramp up the u.s. as appropriate. the manufacturing is less important than the product you are producing. our products are selling like crazy because we focus on the right innovation. our cordless products are world-class. we have unbelievable leadership positions. our cordless business was up 53% last year. we think we are winning because of the right product development , and we will manufacture in the right place. we demonstrated in the past a very strong skill set in logistics. yvonne: what about trillion dollar spending for president trump when it comes to infrastructure?

guest: that's a lovely question. we are so ready to attack the infrastructure market. inchst launched a three cordless cable cutter, underground cable cutter. a big infrastructure product, and we have a way to cut it, and surveying -- instead of an archaic hydraulic product. our product is so much easier to use, and safer. that's one of 50 infrastructure products we are launching in 2017. the infrastructure news is so exciting. we are going to show dozens and dozens of cool innovative infrastructure projects. yvonne: you had success in the past when it comes to acquisitions. are you in the market for more? what would you be looking for? guest: we are always new market. we look for all sorts of thing. we are in the market for high technology companies to add some value to it. we are not looking at tired

companies that have been beaten up and sold for discounts. right now we are focused on focused onwth -- organic growth. it makes strategic sense. we are not desperate acquirers. we don't need to require -- to acquire anything to achieve our goals. we could have an amazing run with none. the key is new products, technology, focused on cordless. yvonne: and possibly on more organic growth for now. guest: lots of organic growth. yvonne: a lot of talk about your relationship with home depot. are there other plans to expand production to other retailers and other business channels? guest: home depot is such an amazing customer. they exceed expectation in our business with them. we are growing and the independent channels of the u.s. like crazy. focused on the

infrastructure suppliers, industrial construction suppliers. that business is amazing. outside the u.s. and home depot, there's a lot of other business, as well. our european team has a spectacular year in 2016 focusing on independent distributors throughout western europe. while most of them are contracted, we grew 20%. incredible. there's a lot of business beyond our biggest customer, but we love our biggest customer. they are a terrific partner. yvonne: what do you think is the biggest risk for your business? guest: our ability to hire enough engineers and execute the new products we have in the pipeline. so stats, itine is is mind-boggling. right now i am focused on hiring brilliant young engineers off of college campuses. yvonne: always great to have you. let's do a quick check of the latest business flash headlines. reportsares higher on it is considering reducing

dividend payments in the next fiscal year. it sets an interview with the committee president for the story. shareholders paid a dividend since march 2012. another report says sharp is to end production of televisions in japan next year. japan's biggest trading house sells its says it minority stake in australia's coal mine. in 2013, glencore agreed to pay rio tinto about $1 billion for 50% of the mine. hong kong's richest man have been given shareholder approval to pursue the five pointed billion dollars bid -- $5.6 billion bid for duet. it would give him access to an energy network three times the

size of hong kong. coming up next, using the purse strings. why had front is pushing conglomerates to spend more money. this is bloomberg.

yvonne: this is "a break asia." a south korean hedge fund is taking up activism. they will deploy their huge cash. we will talk a little bit more about this right now. great to see you. tell a smart about this fund and what kind of companies it is targeting. guest: they are basically targeting companies with high cash holding. this fund is a small fund launched last november. they are targeting companies that have a high cash, but don't

spend much money on investments and dividend payouts. yvonne: so this is the first activist fund in south korea though, right? what happened to the other? guest: actually, it's not the first activist fund and south korea. we had a similar fund previously, but they all closed a few years ago during the global financial crisis. targetingof fund is this year because he believes they are prepared to spend money, particularly this year, because they are hurrying for some reforms on their corporate governance. we have some political scandals around the electronics. the timing couldn't be better after that push from holsinger's fund.

is there any possibility here other investors in south korea's biggest pension fund could follow this kind of move? guest: yes, possibly. south korea's biggest pension fund has been under the pressure to be more like active institution investors since the political scandal. in this kind of atmosphere, why not? they could be more active institutional investors. yvonne: great to have you. reporting to us live from seoul. us take a look at markets trading in the asia-pacific. not a lot of riskier ahead of the fed. the nikkei 225 leading the losses here. we did get those unemployment figures, trending higher here,

3.9% for the coffee. at the wild swings after the opec reports. this is bloomberg. ♪

yvonne: 8:30 in singapore. you're watching "daybreak asia." paul allen joining us live from sydney. state rexsecretary of tillerson arrives in japan wednesday for a three nation tour of asia that will offer clues to the trump administration's policy agenda. his trip comes as tensions rise over north korea and with concern about potential u.s. protectionism. onlerson moves on to seoul friday and beijing and the weekend, where he is likely to discuss a presidential summit.

the early front-runner of mexico's next presidential election has blasted donald trump's plans for a border wall and negotiated nafta. he told bloomberg trump is waging a campaign of hatred against exiting immigrants. he says mexico should have rocked a u.n. complaint as soon as the wall was announced, and oust to take legal action himself if he wins next year's election. hate againstt only , he is veryers authoritarian. also conversational. that policy is not good for the united states, and not good for the world. ,nd is not good for him because if he continues like this, he will lose the next election. reporter: higher food prices moreand indian inflation

than predicted in february. it jumped 6.5% from a year earlier. decisionpport the rbis before the expected fed hike. central bank governor patel must be ready to raise rates if price pressures continue to pick up. itdi arabia has told opec raised oil production back above 10 million barrels a day last month, reversing one third of the cuts introduced in january. crude fell on speculation the kingdom had lost patience with fellow producers lagging to meet their own required cuts. despite the increase, saudi data shows they are still under the november 30 agreement. volkswagen said to be in talks to return to the corporate bond market next week. it would be its first major offering since the emissions scandal. the proposed sale also shows the company is trying to draw a line under the crisis, which has led to billions of dollars in fines.

biggestitionally the issuer of corporate debt in europe, leading sales in each of the five years through 2015. >> i do hope so. of course, we have made good progress in resolving it. but let's face it. there's still litigation pending, and a number of disputes and investigations going on by the authorities. that is also very important. trust, andregain that requires a lot of work. reporter: global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. time to see how the asian markets are shaping up so far on this wednesday morning. here's sophie kamaruddin.

sophie: we are seeing weakness across the board, with shares in tokyo leading the drop among major markets in the region. the nikkei 225 extending declines for a second day. i want to hit on one of the big things we are looking for today based on what paul just mentioned. a boost from saudi arabia in terms of oil output in february. rebound when it comes to crude prices, wk up about 1.4%. industry report showed u.s. stockpiles may have fallen last week, although we do have u.s. government data due later wednesday, showing that stockpiles are to rise. there are conflicting signs on what the output is according to the u.s.. below 7%,lling snapping a three-day rise. shares have dropped about 24% this year at the tokyo stock

exchange has put it on a watch listing as toshiba seeks to repair its balance sheet. mitsubishi heavy in the other direction, gaining over 3.5%, gaining for a fifth day. they have more than quadrupled. shares jumped tuesday after damages they 02 nuclear plants were cap. product -- their their price targets every last month. 1/10 ofrs falling about a percent. price target also cut, implying a 9.9% upside from the last quote. at the gainers in sydney asx 200 the copper and gold producer is up for a second day. yvonne. yvonne: thank you. now that the markets have priced in a fed rate hike, with a be

any drama around the policy meeting on wednesday? let's ask will economics and policy editor kathy hayes. she joins us live from d.c.. kathleen, i think we talked about this already. reporter: exactly. , 100% what we've got probability according to fed funds futures traders and a lot of economists at bloomberg that the fed will hike its key rate wednesday, just hours from now, for the first time in 2017. let's jump in the bloomberg and look at one of our charts to tell you the story. to do for 19 shows a white line going hyperbolic over the last for weeks -- the last four weeks. then up to 100% and staying there, that's what that red circle is underscoring. when theyime period started changing the wording about the possibility of a march

rate hike. they started talking about march specifically. the case was more compelling, even janet yellen got on board. so why did she think a that rate hike would be appropriate at the economy is moving in the right direction? labor market inflation, this is what she is looking at. the fed's dual mandate. another really simple chart, very powerful. turquoise line, unemployment. look how it is been falling for the past couple of years. it is right in the middle of that range. as for inflation, looking at that white line, the core pce. the yellow line is the fed target. it hasn't been rising much, but gradually heading in that direction. but all together, they've got the numbers to support it. those numbers support it when it comes to the main ones they are watching. now it is all about the dots and what that signals via the dot plot about the number of rate

hikes this year. yvonne: it may not be about march anymore, more about june or september. it is still widely expected that the fed is still going to go from three to four. reporter: that would be a big step. not as big as a few weeks ago, because now there have been so many people talking about it and speculating about it. a couple months ago, it would've seemed out of the question, but not now. in december, the fed did come up with the three rate hike consensus view. let's look at the dots, because this helps explain it. what you see on the left-hand side is a diamond, the dot plot. it comes from the fed summary of economic projections. our from now, they will once again update their view of gdp, unemployment, and inflation. based on that, they all pick a. that reflects the number of rate hikes.

at the very least, maybe a lot more people clustered at that three rate hikes. it's going to be watched very closely. someone from the high-profile who has changed his view recently is at j.p. morgan, now a net for rate hike camp. there's a more people arguing, not so fast. they are getting more hawkish, but not going that far. first, start with the fact the gdp has not really accelerated very much, even as the dual mandate has approached. the dp tracker up on what to percent for the first quarter, not a very strong number. why not wait and see what donald trump can actually get through congress? other people say maybe it will boost their rate hike you, and maybe. jane ellis press conference after the meeting, policy -- janet yellen's press conference after the meeting, reporters were get to ask for question

after question, pushing to get more of a sense on where the fed chair herself seized is going. for change,otential and what would change it? yvonne: we will have to see tomorrow. i know you will be focusing on every word. thank you, joining us live from d.c. taking us to president trump now and his policies. us talk about his trade pick in particular. he had some questions at his confirmation hearing. robert litan heiser -- robert lighthizer said he could be good at negotiating deals. he says china is a key issue for the u.s. is he going to take a hard line on beijing? reporter: he has been called the hammer in the commissaries known to be a very tough negotiator. we are not expecting him to take a soft stance. , and the donald trump pick

does share many views with donald trump, including the issue of where china stands in the renting of issues that the u.s. faces in terms of trade. he said if you look at our problems, china is right up there. he said china is going to -- they are going to change the paradigm on china. he has also said that they want to look at bilateral agreements more than these wide agreements that have been made in recent years. isn't set up to deal with china's industrial policy, and says he's also commented on the capacity of steel and aluminum and china, saying it was troubling. he's also asked about china as a currency minute later, which donald trump has said he would label china as a currency manipulator on his first day in office. >> in the past, it is my judgment that china was a

substantial currency manipulator. i think we've lost a lot of jobs , and honestly it's because of come a china's mitigating currency right now to weaken it is another question. that's up to the treasury secretary. reporter: he certainly doesn't want to be commenting on that particular issue and is pushing it away to steve mnuchin. confirmed, it think china can expect very tough negotiations with this u.s. trade representative. yvonne: you've also asked about nafta, another issue with the president. he wants the deal to be reviewed. he also struck marvin aggressive tone towards that. donald has called it the worst trade deal maybe ever, with regards to nafta. he says he is eager to engage with nafta very quickly. they know he would like to change at that deal in a year or so.

he is also said the u.s. must protect what again with nafta -- what it gained with nafta. yvonne: breaking news out of the white house. we have just learned, according -- we learned earlier from msnbc reporting that they did have trumps -- trump's tax returns. we have a statement from the white house saying donald trump paid $38 million in taxes on million. $150 a little more detail here coming from the white house itself, issuing a statement on taxes ahead of this report from msnbc. they are trying to sidestep the right now, also saying it is totally illegal to steal and publish tax returns. that statement coming out from the white house here. president trump said to have paid $38 million in taxes on income of $150 million.

we will continue to watch those lines come out from msnbc, as well as washington. this is bloomberg. ♪

yvonne: this is "daybreak asia." wednesday brings the latest test of nationalism at the ballot box. election day in the netherlands. they suggest the anti-islam party has lost its commanding lead. it has been divided and devices, but the debts go to the polls with a number of issues to reflect on. trump in thed white house, but there are major issues for this country to deal with. immigration and islam. will the dutch put a firewall down on the role of populism in europe? if you don't like it here, leave. that was the message from the prime minister. he went head-to-head, this

entire debate has moved to the right. this is a very fractional eyes landscape for politics. if you are expecting a very quick coalition, you better rate. it's going to take, on average, 72 days to form a coalition. the netherlands decides, that gives me much more time to enjoy some coffee, decent apple pie, and the delights of this city and this country. yvonne: having some fun there. now a look at how the investors are pricing in risk when it comes to europe's elections. head of global markets joins us now live from singapore. have you. -- great to have you. give us some context on why these dutch elections matter. we see these polls are very close at this stage. can netherlands but this trend

in the rise in populism? guest: i think it can. markets have understandably been nervous in the wake of brexit and trump. we could see a wave of populism in france, holland, and perhaps even germany. our base case for the dutch elections is that we will see a center-right coalition. our analyst has written a lot about this subject. some people say we will see a center-right coalition, albeit it may take three or four months to get it together. notes: you say in your euro skepticism will persist, but don't be confused that this is a euro exit. how this potentially affect france and germany? during a broader trend

that you highlighted in terms of populism, and within that, some degree of anti-eu, and he euro, and anti-immigration sentiments. if we get through the dutch elections relatively unscathed populism, if they find this firewall we talked about earlier, then we refocus on france, where there is a greater risk of a populist victory, although our base case is benign there. -- expectman well el towell -- expect manu win. you expect ino how the markets respond the day after the dutch elections, possibly looking ahead to france? we talk about this event risk in europe when it comes to turkey, scotland, and we just see the euro and the pound barely budging.

is this due to complacency, or have all of this been based and now?-- then baked in guest: it's a case -- i think the markets, if you look at dutch equities, equity volatility, dutch bonds, the markets are relatively quiet because they are expecting benign results. once we get through this election, if we do have that benign result, we are expecting a refocusing on france, and also perhaps some degree of moderation in terms of the risks in french assets. can bell, populism defeated in the netherlands, then they make it to view it can also be defeated in france. we are working evidenced -- working against the backdrop of

populism gaining major victories in the u k and the u.s. has the trading the euro and the pound right now given the brexit concerns? it seems the ball is no longer in theresa may's court. guest: that's an excellent question. i think we will have to look at the euro and the pound separately. the euro has been relatively resilient despite all this political risk. the front end of the european union interest rate curve has backed up in the wake of we sent -- wake of recent comments by the ecb head. the trade market is looking for some degree of moderate rise in market rates later this year. whereas the pound has been hit quite hard on the expectation that article 50 will be triggered very soon. there is some degree of convergence between a resilient

euro and a very weak pound. yvonne: always great to have you. global a group head of market research. ,ou can catch up on the stories for bloomberg's private -- bloomberg subscribers, go to bloomberg go on your terminal. you can also check on the go. play the more to come on "daybreak asia." this is bloomberg. ♪

♪ yvonne: this is "daybreak asia." the price of oil has been weakening recently. australia had the opposite problem. prime minister malcolm turnbull is meeting oil and gas executives today to address rising domestic energy prices. let's bring in paul allen from sydney. what's the problem here? little bithey're a backwards here. so much of australian natural gas get exported, mostly to asia, specifically japan. that combined with drilling bans in some australian states has crippled supply. thegroup, which represents interests of 60,000 australian

companies, says the price for gas and the state of victoria has gone up from six dollars toividual -- six dollars $26. 7% onshares were up tuesday after announcing they might relocate offshore, because it's gas prices have gone up by 76%. but the context of this meeting between turnbull in the oil and gas executives. he is blaming state governments for putting export ahead of domestic needs, and says we needed to -- we need a responsible discussion about all this. yvonne: no doubt the australian government would like to see some more energy revenue flowing its way, as well. that's the great unspoken in this conversation, rather perversely, local media reporting japan earns more money out of exports that australia does, that's banks to import duties. by 2021, australia is set to overtake qatar as the biggest

producer of lng. however, the government will be very unwilling to repeat the mistakes made with the mineral action brought in by the previous labour government during the mining boom. it really alienated the mining industry and not raising very much money at all. yvonne: paul, thank you. time for a look at what is coming up the next two hours on "bloomberg markets." host: we will also look at headlines coming out of the white house, with richard maddow saying she has donald trump's tax reports from 2005. the prayers going to make his final address. no doubt some soothing words about the economy.

that's what we've been hearing in the last few days. expect that to be reiterated when the permit or closes that congress. yvonne: what guest you have lined up? , talkinghael price about bitcoin and asset class. it is becoming more and more accessible, and he says it should be in your portfolio. and may banks ceo is joining us. yvonne: talk to you soon. "bloomberg markets" coming up next. this is bloomberg. ♪

♪ 9:00 in hong kong come amid day in sydney. i'm haidi lun. rishaad: i am rishaad salamat from bloomberg headquarters in hong kong. this is "bloomberg markets: asia" ♪ up theli keqiang wraps annual meeting. rishaad: