♪ betty: telling us that the economy is on track for more hikes, but no rush to unwind the balance sheet. yvonne: bank of japan governor's it speak exclusively to bloomberg. he will retain current policies for some time. betty: asia-pacific markets following wall street heiser. it rose on bets president trump will cut taxes soon. yvonne: betting against protectionism. concerns about global growth.

we have the world coverage here on daybreak asia, we will be live across asia and the u.s. for the latest from the boj and the fed. betty: and we will have more on the imf and the push for more open markets. plus, in minneapolis we will see if the samsung will boost its image. guru iswhere a tech located. daybreak asias come alive from the u.s. and asian headquarters. i am betty liu. 7:00e: it is just after a.m. here in hong kong. this is on a positive note. steve mnuchin said tax reform could be coming soon. but no real details. this: it is just words at point. how many times have you heard

people in washington say this will get done and then it does not get done? however, at least today it was enough to get the markets to this day rally. at least on the asia side, the u.s. is ending the week for you on a positive note. yvonne: let's see how things are in new zealand. the index firm, up 1/5 of 1% on the index 50. take a look at the kiwi. yesterday there was better than expected inflation data. a lot of dollar strength coming in. .7525 for the aussie. take a look at the dollar-yen. a little bit of the mnuchin affect. 10ing the kiwi continuing

9.36. i am surprised, given how strong those comments were from both men, that we have not broken the dollar-yen. wall street overcame the curse of the late the selling, looks pretty good. stocks endingd, in the green on those tax cut that's. you mentioned those comments from them treasury secretary and earnings helping things along. a lot of factors for the bulls in the u.s.. here is su keenan. the close, higher than expected, given what we have seen. a lot of strategists want to see a couple days of gains to give conviction.of

american express up after the ballot yesterday, followthrough to a 6% gain. steel, a great day according to donald trump, he signed a memo eel imports,te st aiming at countries like china. , wantingu.s. steel those practices looked at. looking into the bloomberg at oil. oil was down, but back above $50. the u.s. has been pumping more oil. this chart shows as the price of oil has weekend, opec and suppliers failed after three months to limit production and plans, according to the saudis. they ever recommitted to using output in six months.

that is not pushing oil higher but adding to concerns. blue on that chart is the price of oil. yvonne: we saw investors react to a fresh round of economic data. let's start with the latest on a jobless claims. but jobs data, continues to be strong, showing a solidification in the market. in thenot see an uptick unemployment or jobless claims that may have been last week due to the holiday shortened week. to receive continue jobless benefits, that has apriled the most since 2015. consumer confidence eased for the first time in three weeks. less upbeat about the buying climate and the state of the economy. the national economy cooled from 815 year high, that could have

something to do with the second-guessing about how quickly the trump administration will get things done. personal finance were decreasing and the buying climate declining for a fourth straight week, that is a measure of how willing americans are to open their wallets, not quite as willing as they were one month ago. interesting, let's get the first word news with courtney collins. first up, the area around the shops delis a -- around france as been cordoned off after person shot a police officer and shot himself. counterterrorism investigators are at the scene but the attacker seem to have been alone. the area has been cleared and metro stations shot. the trump administration is aiming to complete the biggest overall of the tax code since the reagan era by the end of the

year. steven mnuchin says the reforms will go ahead even as a second attempt to replace the affordable care act fails. they want up simplified personal taxes, less than the middle class taxes and make it more competitive. -- producers have reached three month of limited production have seen opec and independent allies failed to cut stockpiles and stabilize the market. notsaudi minister did identify those countries in favor of an extension, but said there is a commitment. >> there is a initial agreement that we have not yet told all producers that we may be forced to extend the measures to reach our goal. regulators and china will consider the potential market impact when they introduce new rules on shadow banking. chief economist says

changes will be rolled out gradually. but the strengthening economy has created room for reform. pboc wasry the drafting new rules. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. yvonne: thank you. the boj governor told bloomberg he will continue with very accommodative monetary policy and maintain the current pace of asset purchases for some time to come. inflation rising, will it keep providing stimulus? let's bring in our policy editor kathleen hays. was there anything new, what was the main takeaway? >> inflation is rising slowly, but continues to rise. week beforeng one

the bank of japan meets. they will have a policy report, change their forecast on growth, inflation. he is also giving us foreshadowing of what we can expect when we get that information next week. even with a stronger yen, up 7% this year against the dollar, still expects inflation to reach 2% sometime next year. let's see how far the bank of japan have to go on that. what you see is the yellow line, that is the overall year on year inflation rate at 0.3%. you can see this one is above zero. if you go to the white line, fresh food prices, 0.2%, that is far below. it was higher when energy prices were higher. when you take out food prices and energy prices, the turquoise line, you get back below zero again. you can see where that 2% target is.

they have made progress. a stronger yen makes it tougher, but it will not top inflation from eventually hitting the target. here is what he had to say. >> it appreciates and the timing -- if exchange rates appreciate, the timing could be .arlier ,he basic trend is toward 2% reflecting improvements. may be the reflation trade will get back on course. wille did underscore they keep buying bonds, keep growing the monetary base. so it is not like they are easing further but they are maintaining the stands of easing, even though they are confident. >> you know inflation is rising

and you would like it to get stronger, keeping that monetary stimulus is in place -- stimulus in place is important. course to raise rates, including robert kaplan saying the same thing. they are saying, we could get a total of three or four. basically, his baseline is two more hikes in 2017. kathleen, thank you. coming up, beware the rally. the top forecaster sounds the alarm for emerging-market currencies. and we will look at the sales outlook for samsung. one of the most watched and listened to text -- tech analysts.

this is bloomberg. ♪

yvonne: this is daybreak asia, i am yvonne man in hong kong. betty: i am betty liu in new york. profits that china mobile rose for the first time in three quarters. the biggest wireless carrier and their 4g subscribers. it rose to $3.6 billion. they gained 4g customers despite rising competition. it data traffic doubled while revenues continued to decline. that began in 2012. mattel the turnaround in has far to go. some items, the loss was $.32 a share. that is almost double the forecast of $.17.

that renews concerns that barbie 's comeback is falling. shares fell down more than 6%. betty: samsung biologics talking to pharmaceutical companies about making drugs for them. they are mostly u.s. and european firms that have agreements with six clients including bristol-myers. the expansion comes at a time when they are reeling from the note 7 debacle and jay y. lee's involvement in a corruption scandal. yvonne: the boj governor kuroda says he will continue with accommodative monetary policy and maintain the pace for asset purchases for some time. in an exclusive interview with bloomberg he warned there is a chance that yen movements could force a delay in hitting japan's inflation goals. our forecast, in defense of

that we would reach a 2% target isund fiscal year 2018, based on the assumption that the exchange rate will not move. based on no movements from the yen. let's bring in a currency strategist at wells fargo securities. great to have you, let's talk about the yen. cannots like kuroda quite get his way, given the geopolitical risks. i want to throw up a chart. look at the risk reversal rate of the euro against the yen in white. that fell to the lowest level since 2009 this week.

if you compare that to the blue line, the euro swiss measure, that is not dropped as much. is this on the right hedge ahead of the french election? >> the japanese has safe haven characteristics. we see it strengthened during times of insecurity, given political concerns ahead of the european election, with some of the ongoing developments surrounding exit as well -- brexit as well. japan is removed from that region, so maybe the swiss franc is not as safe. how the yen has been fleshed out, is now the time to buy dollar-yen? >> with regards to timing, we would say yen strength we would expect should turn to yen

weakness. we expect a weaker japanese yen overtime. the fed normalizes the stands of policy, interest rates increase in the u.s. in japan, they will continue easing until they reach that inflation target. with the policy implemented in japan, keeping the 10 year yield at zero, whereas in the u.s. if the fed continues to raise rates, u.s. treasury yields higher, the yield spread will continue to move in favor of a stronger u.s. dollar and weaker yen. want you to pull up a dollarhat shows the weakening in recent months. if you look at it on a technical below it has now fallen the 200 day moving average, which for some analysts is quite significant. what do you make of that?

some say it is a clue for further dollar weakness. look at the you moving averages they can give you a sense of shorter-term movement in the current -- currency. betty: short-term it could be weaker. >> yes, we would call that a corrective weakness. there was a bottom in 2011 where 45% higher. this is been driven by monetary policy divergence. the weakness we are seeing the dollar now we would they is corrective in nature rather than a cyclical change. betty: what is corrective about it? eric: what is interesting with the u.s. dollars behavior, surrounding federal reserve rate increases, there is been a pattern of markets buying rumors that selling the facts. the dollar tends to strengthen

ahead of rate hikes and then we see weakness. with the latest rate increase in march, we would describe the weakness in the dollar now as of that corrective weakness. we think the fed will move again in june and september. betty: we might see this pattern when it gets weaker into the june meeting? eric: it would strengthen ahead of the june meeting. betty: i am sorry, strengthen and then fall after that. eric: there is a meeting in may, it is unlikely we would see the fed move at that meeting because it is in the middle of some key events, notably french elections, the first round of this weekend and the second at the beginning of may. there is uncertainty there and the fed is moving at a gradual pace. we think june and september. yvonne: talk about global market dynamics. in your research you say it is a financial market backdrop, and

if it is favorable they can outperform at a time of a fed rate hike. we have seen the last two fed rate hikes the em performance has been quite high. we have seen a lot of gains from the yen. why are we -- wire you flashing the warning signs now? eric: the broader global financial market backdrop has been supportive. end oflly toward the last or, we saw significant gains in global equities and a rally in commodity prices around the turn of the year. is unlikely init our view that the pace of gains in global equities, commodities and so forth, would match the pace we saw previously. for a merging asia, maybe less so.

commodities will be less important for currencies. but the global backdrop is more relevant to those asian currencies. be modestay it could or there could be a correction in global equities. yvonne: things could be overstretched when it comes to equities. i guess it comes down to fundamentals. what could outperform or be more resilient, and what should we be avoiding? eric: in a merging asia as far as resilience goes, we would say that indian rupee and philippines peso could be more resilient asian currencies because of reasonably solid growth in their economies, as well a central banks that are neutral to hawkish. we saw a reserve increase from the bank of india not long ago. the central bank in the philippines has created hawkish indications, despite lowering their inflation forecast.

given the monetary policy stances and solid fundamentals we believe this currencies could be more resilient. yvonne: great to have you here, strategy -- strategist at wells fargo. in ang big returns autocratic regime. this is bloomberg. ♪

betty: speaking of emerging markets, dictators may be est friends. b they have doubled over their neighbors and the past years. good for investors here. >> as long as you disregard potential human rights abuses or freedoms that are clamped down on. isk, admittedly.

we crunched these numbers and we are finding dictatorships are better than democracies when it comes to the yields on sovereign bonds in emerging markets. here you take a look at what is happening in terms of what we track. venezuela comes in with the biggest return at 55% in just the past year. all those countries represented in orange are considered autocratic or non-free by an independent watchdog, freedom house. the blue bars are democratic countries. ghana is the second-best at 35%. and the third is iraq. third.ld be performing in terms of what is happening behind the scenes, why is this happening?

it is all about self-preservation. the autocratic regimes say if they default on their risk, potentially they will be thrown out of office. betty: what about the asia-pacific, how to those markets compare? >> it is a similar trend between autocrats and democrats. but it is not as good when you look at it around the world. but it is still beating potentially other countries. mongolia a democratic country coming in at 27% in terms of returns over the past year. look at the other orange ones of here, russia. t some really interesting stuff here. betty: certainly an interesting, different way to look at these countries from an investing perspective. thank you so much. much more ahead, defending globalization. know that trade

is critical to the future of the world. this is bloomberg. ♪

>> happy friday, 7:30 a.m. here in hong kong. 30 minutes away from from asia's first major market open. marketsn new york, closed higher. there was a rain and gloom, appropriate spring weather here. yvonne: i am yvonne man in hong kong. you are watching daybreak asia. there is first word news with courtney collins. the bank of japan governor it says policymakers will continue with very accommodative monetary policy and maintain asset purchases for some time. speaking exclusively to

bloomberg, kuroda said there is a chance that reaching the banks 2% inflation target may be delayed. i news report says china is prepared to hold oil experts -- exports in another test. on pyongyang,ity the claim comes as more military torcises happen as a prelude invasion and threaten an attack. e.u. governments have toughened on brexit negotiations and safeguarding citizens' rights. it suggests theresa may will not have an easier ride even if she wins june's snap election. talks will begin after the vote. meetingto the latest

say they are concerned about inflation with the economy expected to pick up steam in the second half. the governor said headline inflation undershot the 5% target in the final quarter of the year ending in march. a called for coke -- close vigilance. they also noted worries about core inflation. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. yvonne: we are counting down to the first major market open. let's get to, joining us live from sydney. we saw the yen fall. was that the right interpretation from the currency trader? was not a huge move, but we have seen a bit of yen wekness against the dollar,

have to remember the context of where the yen has been, always worry around geopolitical risk and some of the comments we have been hearing from the u.s. central bank have been putting upside pressure on the end. we are 6% or 7% stronger against the dollar. reaffirmeduroda has to keep that accommodative monetary policy stance. he is saying it is too early to talk about an exit strategy. we are already into that phase in the u.s. policy with the fed. but it is too early to get into those discussions. a little bit of yen weakness and that will speak through two japanese stocks this morning. we should be getting a bit of green on the screens when tokyo trading gets underway in less than half an hour. tough dayhas been a for stocks across asia, especially china. what are we talking about, how

are we ending on the final trading day of the week? >> it has been a very hard week for mainland chinese equities. they stabilize somewhat in the thursday session yesterday. regulatoryround scrutiny, whether they close on the margin debt side of things were people borrow money to buy aocks in the mainland, popular trade for individual investors, which make up most of the market. if the be looking to see selloff continues in the shanghai composite. indeed, whether speculation is true or not around whether the so-called national team in the state forces come in and buy stocks. there has been some talk that that did happen yesterday. that is still largely unsubstantiated.

the region, we should see some of that positive sentiment roll over from the u.s. session. those it steve mnuchin comments looking like they should give us a positive sentiment in asia. it has been a tough week here. a bit of green to end the week on friday should be welcomed. the big macro event this weekend's france. no one wants to much risk ahead of those presidential votes on sunday. thank you so much, adam haigh on how the markets may end here today. leaders of international finance have been defending globalization in the face of words from president trump and populous in europe. we have the imf meetings in washington, they argue that blocking the trade would hinder growth instead of saving jobs from foreign competition. the world bank leader offered a strong view. prospects.ood

a there are many downside risks, however. they need to continue with structural reforms. this is vital to sustaining economic growth. >> we certainly will be looking at how we can participate in that, continue to support the growth of trade, and how it can be done in the most efficient, fair, and global way possible. that implies a level playing field, no use of distorted measures, and no protectionist measures going forward. betty: let's bring in our bloomberg chief asia correspondent. more pushback against protectionist, this time led by the emerging markets. >> absolutely, we saw quite a strident defense of the current status quo for the global economic order.

we had finance ministers in asia and columbia all saying the what we need is a multilateral approach to trade. ministerasian finance said to go down the road of a no-win situation -- it is a carefully veiled attack at the administration of donald trump and the trade policies he has been talking about. even if they have yet to be enacted. a strong pushback from across the emerging-market world. with a clear view that yes, the economy can pick up, but only if they avoid detection us measures, tariffs, and other punitive steps to address trade imbalances. what role can china play in these talks? the president really was a supporter of globalization. enda: that is where the

narrative started, when was leaving jinping america, we had it again at the g 20 meeting last month in germany when china was at the forefront of trying to maintain language around protectionist measures. and the feeling that tensions may not be quite what they were, there is certainly a sense that people are looking to china to provide leadership. to defend the system of and growingn multilateral trade links, the global supply chain and the likes. merging -- emerging markets in particular have benefited from that. as long as the u.s. continues with its rhetoric on protectionism, it will shrink the trade deficit. yvonne: we have been talking

since the election, can china fill the void? in beijing assume that mantle of leadership? there are still economic issues and hesitation. enda: there are many sides to this debate. there are certainly valid points, criticism around china, not reciprocal in terms of foreign investment. they make it hard for other countries to invest in there's -- theirs. betty? betty: china's plans to build a vast economic zone sparked an investor friendly when it was announced earlier this month, people just piling in. president xi jinping promises to transform a little-known patch of china into the city of the future. but will it work and what are the implications? tom mackenzie reports.

tom: china's president xi envisages a state of the art metropolis rising from this largely undeveloped farmland. a two-hour drive from beijing, it will cover some 2000 square kilometers and could rival the likes of shenzhen and shanghai. it will be home to businesses ranging from state-owned champion to cutting-edge tech firms as well as universities and science parks. when it was first announced on april 1, investors rushed here within hours, quadrupling house rices overnight. the government felt forced to step in. ais propaganda find says harsh crackdown on real estate speculation and they put it up next to a sealed off real estate agent. beijing says all land and property transactions have been

blocked since last june. every real estate agent we saw had been shut down and all constructions. -- construction stopped. businessmanall among many. >> i have already moved my family to the town, i will open my restaurant soon. just four dayso before we arrived, looking for away from what he called the country's dying northeast. >> the local economy, business environment, and conditions are very satisfying. with full government support, it will take off. tom: morgan stanley expects it to top 5 million within 15 billion spent$290 on infrastructure. it will provide a modest boost to you -- gdp growth.

upy could also help soak some of the country's excess capacity. but beijing's grand ambitions make many locals anxious. farmers we spoke to fear they will be forced to relocate or have their land seized. many small businesses like this plastic making firm have already been told to move out. has vowed to reduce pollution and build an environmentally friendly economic zone. will unclear if xiongan live up to the governments lofty ambitions. what is clear, is president xi's strategy to leave a lasting legacy to his role, which could also boost the economy. tom mackenzie for bloomberg in xiongan. yvonne: samsung latest smartphone hits the shelves. it boosted the image after

the note seven debacle? this is bloomberg. ♪

♪ this is daybreak asia, i am betty lou in new york. yvonne: i am yvonne man in hong kong. higher, passenger growth will boost earnings. it rose 10%, the highest since 2005. in the is domestic air traffic rose almost 19% in the first quarter, according to the civil aviation authority. betty: western digital in talks with government backed investment funds about buying toshiba's flash memory chip unit. they want more participation from japanese companies, it may

be key to regulatory improvement. thee also said to be a much -- among the potential bidders. yvonne: the most a bullish expecting a 32% gain in the next year. morgan stanley is the latest to list its forecast. they say demand data shows a super cycle for the upcoming iphone 8. apple has risen more than 30% over the last year, and morgan stanley sees their shares at $161. betty: what about samsung? they're smartphone hits u.s. stores and south korea on friday. preorders for the galaxy s8 and s8 plus have surpassed one million units, setting a new company record. will it be enough to make up for the note 7 fiasco?

a loop the cofounder of ventures, one of the most widely listen to analysts on technology. do you think the success will be enough that people forget about exploding phones from samsung? i think they will come of a will not make the same mistake twice. one of the big features, it will be 21% bigger. that will be one of the big selling points. consumers have short memories. if you get a phone in front of them 21% bigger at the same price as before, they will quickly gravitate to that. betty: but can it be the iphone 8? so, i see aot think five-month window where samsung will have nice traction with the s8. if you play forward to this fall ending about the features and the iphone 8 you will likely also have a bigger screen and the same body size but the screen will be bigger. one of the critical features the

iphone 8 will have is more augmented reality. that is something that s8 does not have. betty: why is that and why is that so important? gene: augmented reality is the future of how we will interact with computing. eventually it will replace the smartphone. augmented reality is using the world around us and superimposing digital images. think of pokemon. it is critical these next-generation phones have atr -- ar capabilities. yvonne: looking at the reviews it has been remarkable. they have been talking about how the key features are not done yet. siri,supposed to rival but they would not be released in the u.s., facial recognition to unlock your phone, how

problematic is that for samsung now? they have to get it right at a crucial time. gene: they do, but in the case of getting it right it is just checking the big boxes. we talk about the formfactor. they cannot have the big tobacco e around- debacl exploding phones. i will add one more flawed to the phone is that the home button is on the back really close to the camera. there have been complaints about getting fingerprints on your camera. it is not perfect, but a step in the right direction. we have been talking about this battle in this part of the world and china, the market there. we see samsung as well as apple toe tremendous market share these new names popping up in

the mainland. how big a threat are they right now? growing threat to samsung, they own that android-based. they have about 20% global iphone -- smartphone market share. apple is more insulated, there followers are more than -- more loyal. s8 will sell about 60 million units in the iphone will sell more. samsung needs to defend against lower-priced phones. betty: i know you are not looking at stock prices day-to-day but i want to show this chart for our viewers about how bullish analysts are on samsung. if you look at the target prices from the various analysts, the stock is expected to appreciate by about 25%, regardless of everything you have heard from

exploding home -- exploding phones and it jay y. lee being jailed. does that sound too rich to you? gene: i understand what the analysts are doing, they recognize there are easy comparisons ahead because of what happened a year ago. they think the numbers will be more rosy when they report their december and september quarter. it is playing into more ambitious price targets. has been upk significantly in the past year, which plays into that. i can see it continuing to move higher throughout the year. it will probably slow down when the new iphone comes out. yvonne: we were talking about that bullish call from morgan stanley, saying apple shares will hit $151 in 12 months. is that the super cycle we are heading into? or is that too ambitious? gene: apple stock will move

higher into the release. typically it sells off a bit at the point when they release that phone. look for apple shares to move higher in september. is based moreall on services revenue and their super cycle. i would take apple over samsung. betty: what about facebook? i am curious what you thought about facebook's announcement on augmented reality. gene: it shows you that this is coming. it is hard to conceptualize what augmented reality to my it is the new way we will interact with computers and machine. mark zuckerberg's comments focused on the -- that. in the next decade we will have a radical change in how we interact with computers. thank you.

you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb thank you. on their terminals. it is also available on mobile. you can customize settings to get the news and asset you care about. this is bloomberg. ♪

♪ this is daybreak asia, i am betty lou in new york. yvonne: i am yvonne man in hong kong. news from australia. the government of approved this cki,sition of a group by the group with li keqiang behind it. there is been resistance that we have seen from australia when it comes to foreign investment from china. this is a pretty big step.

they are saying the us trillion government has approved this pursuing a by cki, $5.6 billion bid. betty: a feather in the cap for li keqiang in the struggle to acquire that. plenty more to come with asia's first major market open moments away. let's bring in shery ahn to tell us what we should be watching for. the two big themes in the early trading session will be boj governor kuroda talking about keeping monetary policy accommodative. and treasury secretary mnuchin saying they are close to unveiling a tax reform plan. in one sense, the yen just lowered, the dollar higher. no surprise there, but we saw choppy trading for the japanese yen.

that momentum is lost at this time. 109.37.is flat at kuroda said they will keep monetary policy accommodative, even if the economy grows above potential. the other thing to keep an eye on is crude futures. we saw optimism and the board just switched before i finished my talk. we are seeing optimism on of the energy sector. we now see it back again, gaining 2/10 of 1% with saudi arabia saying the opec cuts did not get the inventories below their five-year average. futures pointing up, not surprising, because of the weakness of the japanese yen. toshiba is one we are watching. bidding over its

flash memory business. they have to keep an eye on that. delayed earnings and samsung out with its galaxy

♪ >> asia-pacific markets are seeing falling. the wall street is higher. says the economy is on track for more hikes. the world's biggest wireless carrier signing billions. building the future in china. legacyss the president's with a special report. this is the second hour of

daybreak asia coming to live from bloomberg's asian headquarters. i am yvonne man. betty: i am betty liu. yvonne, it has been an interesting session today given what we have seen with stocks. ebola run on -- a bull run. very surprising. investors seem to believe right away. putting a lot of faith in steve mnuchin's comments. let us pull of a charge. we still have a little time before we get into the asian markets. we have a special charge. what is interesting is that it shows you the market psychology. some confusion may being pushed by headlines, act and forth. there is the correlation between the dollar, when dollar fall, the commodities go up. that seems to be breaking down these days.

manyof that is because so other factors are affecting investors, whether it is geo plot -- geopolitics, inventory numbers or any number of things. correlations that have ruled the market before, are not so relevant anymore. yvonne: it is interesting to watch those dynamics. speaking of energy, we have to speak of the deal with duet group, the australia government approving that acquisition by cki, the company that is led by li ka-shing. it is interesting because this would actually give ages third largest and energy network three times the size of hong kong. this really does solidify his presence there in the energy sector. uncertainties in europe, this could help him diversify away from that region. we will be watching that. looking first at the market

opened with shery ahn. you guys talked about it already. the two big themes. steve mnuchin and kuroda. that we have seen the yen lose ground against the dollar although i have to say the momentum has passed and it is now remaining flat. the japan dj is happy. up 0.8%. we are also seeing new zealand reversing two days of losses. while we see the kiwi dollar losing ground by almost as much. the reason i think is because we have seen the strength in the kiwi dollar in the last session. remember, we got new zealand .nflation in the last session also, given that it reached the target of the central bank for the first time in more than five years. right now, headlines -- duet is

up more than 9%. something to keep an eye on when you are looking at the market. iron ore gaining more than 4%. one company came out with first-quarter production numbers, beating estimates it is not helping the supply glut. losingmarket in asia is ground. treasuries following in the last session. the rateising given hike odds have climbed for the month of june. we are seeing they are of past 50% when it comes to the futures. the reason i bring up this chart on treasuries is to show you the incredible move we have seen in the markets as the boj came out and said that economic policy in there-- even though it are economy could be growing above average, they would keep policy very loose.

use all the volumes jump. traders scramble to sell futures. and now, we have also seen hedging across currency markets. you thathis up to show the yen is a preferred hedge. look at euro yen, one month risk reversal. economists-- our saying it is because of the liquidity in the yen. yvonne: thank you so much. let us get to the first word news. we had to france and the area around the shonda laissez in central paris has been sealed off after a gunman shot three police officers killing one and seriously wounding the others before being killed himself. the prosecutor's office says counterterrorism investigators are at the scene at the attacker seems to be a loan. the area in that region has been cleared. metro stations have also been shots. to trump white house wants

complete the biggest overhaul of u.s. tax code since the reagan era by the end of the year. steven mnuchin and saying the reforms will go ahead even if the second attempt to repeal the affordable care act fails. he says the priorities of the administration is to simplify personal taxes, create middle-class tax cuts and make the area community. saudi arabia says several producers have reached an agreement. three months of limited production has seen opec and independent allies failed to cut stockpiles and stabilize the market. minister says he -- did not identify the countries. a initial agreement but we have not yet told all producers that we may be forced to extend the measures to reach our goal. >> regulators in china will

consider the market impact when they introduce new rules on shadow banking. saidchief economist changes will be rolled out gradually but the strengthening winning economy has created room for reform. we reported in february that the pboc was drafting rules. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. >> the boj governor told will continue his accommodative policy, maintain his purchases for some time to come. how will corroded keep providing stimulus? k how will corroded a -- uroda provide stimulus? >> the bank of japan does not

want to get in the way of the inflation. with like starting a fire embers and putting the air thing on it like they did in old movies, you want to keep moving. kuroda still thinks the inflation target, 2% could be hit by next year. at the terminal. you can see that is optimistic but you never know. already, there is the year-over-year cpi up out of negative territory. japan's main core of measurement is up to 0.2. the turquoise line reminds us of how difficult it is to get islation to rise if energy not a wind at the back of the economy. bottom line, the governor told

bloomberg television earlier slowthe stronger yen could the course of inflation but it will not stop it. here is what he had to say. -- itextend you wait -- if the exchange rate depreciates, the timeline could be earlier. toward 2%sic trend is . hard to argue that the trend is going higher. that the governor said they will maintain their accommodative policy. inflation is still sluggish. it is too soon to discuss an

exit from this stimulative course of policy. feel they have the conditions in place. they have to hope that everything continues to move in their direction. many economists are talking about the next policy move for the boj could be tightening but they are split on the timing. at the other end of the spectrum, officials at the fmoc are insisting they are on course for three rate hikes this year. what is the latest? is what he had to say about the course of rate hikes. >> the median of three rate increases for this year is still a good baseline. if the economy develops more slowly, we can do less than that. if the economy is stronger, we could do more. but i still think we are making good progress towards a full

employment, there is still some labor slack. >> for federal reserve officials , it is almostn asymmetric. they think the conditions are in place to do three rate hikes, maybe more. but if the economy slows down and of, they will consider -- but, if the economy slows down enough, they will consider pulling back. gdp could be as low as 0.5% in the first quarter. and cpi. the consumer prices were well above 2%. let us go to a terminal function while we can. 7940. it shows you how the outlook for rate hikes was steadily rising in march. now, it has pulled back a lot and that is because of these

numbers. the people are ready for the three hikes and they are looking at a stronger labor market, stronger global growth. the imf has just updated its forecast. and i thinkl there that is why rob kaplan says it is a baseline. not a guarantee. yvonne: that might just be a blip on the first quarter. we continue our discussion on japan. martin schulz joins us live from tokyo. look: also coming up, we at where hollywood is going wrong in china after several disappointing coproductions. this is bloomberg.

>> this is daybreak asia. i am yvonne man in hong kong. betty: i am betty liu in your. more from our exclusive interview with the boj governor.

let us bring in martin schulz, the senior economist from the research institute in tokyo. bloombergs kathleen hays is here joining us as well in this discussion. martin, clearly, there is no harder job right now than being a policymaker in japan where you are running out of options trying to stoke the economy. what did you make of the comment on inflation and where interest rates go? martin: the bank of japan is ¥80ady talking about the trillion buying for quite a while. they have an interest rate policy anchoring the 10 year benchmark bond at 0% meaning they are dependent on what happens in the u.s. when interest rates are not areg up that fast, they printing less.

we have a tapering situation. they are discussing it. they are thinking about how to go ahead. betty: you mentioned the japanese are going to have to deflation.with what do you mean by that? is still out% gold there -- the 2% goal is still out there but you see a big gap. you look at the supermarket prices, people are seeing inflation going up around 1% and in their view, that is enough. anymore would be way too much. wages are not going up. people are retiring and they want low prices. they are used to deflation and they are happy with it in the meantime. yvonne: if oil prices suddenly decide to rise more, that would help japanese inflation. we see the numbers rising. chance that they

will say our inflation target is 1%? martin: as the governor mentioned, when the yen gets weaker come up prices go up in japan, but not in a good way. trade balancerful last year. the main reason for that was the yenrices were up in was down. in the current situation, if we push inflation. it will not help abenomics at all. betty: they are in a bind when it comes to yield curve control. they cannot give the bank the same rate. we are holding at 0%. we continue to seat reflation ,rade in the u.s. continuing on

losing course, i should say but they do not want to start trimming down the bond purchases in fear that the market will see it as tapering. the they just hold out for best or do they need to be pretty agile? --tin: they have to hold hope for the best in the overall scenario but be agile in the market. in then buy anywhere market but the market is getting tighter. liquidity is not there. when they think about tapering, they will not do it in a well announced way. that we are increasing the interest rate. is go downey will do the yield curve a little bit. thinking about next year purchasing in the vicinity of 5-7-year bonds. that would be more quiet and more flexible. more agile in d. betty: is there any hope that prime minister abe will take steps?

monetary policy in japan cannot do it all. what do you see on the political side? this is the really important point. monetary policy is on the way out as the driver of the economy. fiscal policy -- the botched -- the budget is out there, but they are divided on it. no helicopter money. no fiscal policy becoming the engine. the constraints are too high. after the bank of japan, the taxman will come. we will see higher taxes in japan and they are preparing for a. the structural reforms are back on the table of what has to be done. and this is very slow in japan and will remain slow. because the bank of japan is still so accommodative. betty: in spite of all this, the japanese economy is growing,

unemployment is low. if i am an investor, where are the opportunities? are you staying away from japan? is there a part of the currency that you like? is goinghe economy very well. we are growing at 1.2% which is tremendous. but it will be less in 2018. we will be back at 0.8%. you really have to focus on the potential. it is usually the exporters in japan as always but there are important service markets. anything related to digitization , urban infrastructures. this is where the reforms are going on in japan. is very focused on the relationships towards asia. faltered,lks may have

but this is still about trade. japan is investing overseas in asia but also in europe in the meantime. this is where companies are looking. kuroda said it was too late to talk about exit strategy, but eventually, he will talk about it. when you talk about the balance sheet of the boj, we have seen how it has ballooned in the last a couple of years. it is much bigger now when you look at the percentage of gdp. much higher than the fed or the ecb's. we will not be seeing a lot of volatility in terms of the tapering of bond purchases, but the biggest risk could be facing out these investments in stocks. martin: this is the part that has always been minor but in the news. they will keep it particularly to show that we are not into tapering. the big oil left has been the bond market.

has, -- the big guerrilla been the bond market. -- bondsbuying backup into the government sector. when you calculate net debt of the japanese government and you put the bank of japan on the government's side of the balance sheet, you are at 100% debt. this is a situation where the economy is very stable. but in a difficult situation when you look at the out -- long-term outlook. more of a difficult situation for long-term growth. not for an explosive situation. yvonne: great to have you as always. want to thank kathleen hays. a new to stay in the battle for toshiba's chip business.

we will have the latest. this is bloomberg. ♪

>> western digital says it is in talks with the japanese government about buying to chivas chip unit. they are looking to raise much-needed cash. let us go over to our asia tech reporter. western digital speaking to the public for the first time and we see this battle for the chip business intensive fine. -- intensifying. >> a little background. on april 9, western digital sent a letter addressed to the board of toshiba stating in forceful terms that the sale of the chip unit violate the agreement of joint venture dating back to 2006. western digital had exclusive

rights and negotiations and they were displeased with what was happening. this was a bombshell and caused toshiba to halt the process temporarily. when we spoke to the cfo yesterday, the position has softened considerably. now, the message is what is best long-term.tner years of experience of running the same factor in -- factory in western japan. that is something they stressed interests arer long-term and closely aligned with the government and the financing arms. yvonne: taking a look at the narrow list of buyers. big rivals of western. -- big rivals of western digital. they are threatened by all of this. where is the japanese government in all of this, right now? have stayed on the

sidelines. ministry officials have repeatedly said that slash memory is a strategic asset for the country. some take it as a sign that a chinese bidder would not be allowed to buy and that might also complicate things for south korean companies. the government has the right of regulatory approval but they can participate more directly through innovation network corporation of japan as well as the development bank of japan which as of now have not participated in the bidding process. cast theirre to vote, it might swing the decision. onnne: putting some weight to that. we talk about the world's biggest wireless carrier which posted its first profit gain in three quarters. stay tuned. we are live from new york and hong kong. this is bloomberg. ♪

take a look at that beautiful friday morning in sydney. 22 degrees. partly cloudy. looks like a pretty good day to end the trading day. you are watching daybreak asia. let us get to the first word news. fed president has told bloomberg that things are on track for two more rate hikes this year. robert kaplan says policymakers remain confident in the forecast or 2% growth. his comments are a shift from awayast when the fed act

from hikes in the face of unexpected obstacles. he said there is no rush to unwind the fed's balance sheet. >> we need to get a little further along in so-called normalization of rates before we begin to let the balance sheet run out. for me, i think that could be as soon as later this year or early next year. we should begin the process of letting the balance sheet roll off. governments have toughened their stance on brexit negotiations, revising the guidelines with harsher language on safeguarding citizens rights and britain's best and british potential dues. will not have an easier ride it is suggested. the eu's chief brexit negotiators says talks will begin right after the vote. the turnaround at mattel has a withway to go first-quarter results falling far short of wall street estimates. the loss was $.32 a share.

almost double the forecast $.17 loss. comeback that barbies is faltering. 13% in a quarter. sales -- shares fell sharply. the news report says china is prepared to halt oil exports to north korea in the event of another nuclear test. the nikkei news says a professor at the commonest party's school and noted authority on pyongyang. the claim comes as south korea and the u.s. hold more military exercises. the north has announced the drills as a prelude to inpatient and threatened and attacked. attacked --d and threatened an ttack/ global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. shery: asian markets are looking

good right now. not surprising given what we saw on wall street. who knows what could happen later in the day given that we do have the sunday french elections coming up. i want to start right now with south korea's trade numbers. we only have the 20 day export numbers that those were phenomenal numbers, up more than 20% on year. imports also gaining 60%. the reason i bring it out. exports, the white line over here. we still had to get data for the rest of the month but i point this out because a lot of times, south korea's export numbers signal where china's trade numbers will go. the two economies are very interconnected. let us take a look at south korea. the kospi gaining 0.6%. the south korean won is not doing much at the moment. we are also seeing the nikkei up 0.7%. not surprising given the weakness of the yen overnight.

we do have to point out that at the moment, the japanese yen remains down here unchanged and flat. the two big themes playing into the market, the boj governor saying that they hope or that they want to maintain policy, accommodative at the same time as the secretary of treasury coming out and saying that he will be ready very soon to unveil the tax reform plan. that sent the dollar up higher. the kiwi dollar is losing 0.3%, not surprising given the strength we saw in the past session. iron ore gaining 4%. reversing four days of losses and gaining ground. blue, commodity prices has been trending lower. this is a picture of what is to

come across markets in asia. we are going to be watching shares of china mobile when hong kong opens after profit rose for the first time in three quarters. here is bloomberg intelligence analyst, michelle mob. is this momentum going to continue as 4g matures for the rest of the year? michelle: i think overall, china mobile did report profit growth for the first quarter, mainly driven by the 4g consumption. however, we do think china 's profit growth will slow down for the rest of the year. first, because the 4g continues to mature and china mobile has the highest 4g concentration of 6% at the end of the first quarter.

and the intensity of the competition. smaller rivals have improved their 4g network quality significantly in the last year and they are spending more on marketing to gain subscribers. that will pressure china mobile's margins going forward. and thirdly, deregulation. the chinese government has ordered all three telecom carriers to reduce tariff price. that will affect china mobile the most as it has the majority of the country's long-distance roaming charges. yvonne: that reduction of tariffs and rising competition. what are we expecting from china telecom? are in a i think they better place than china mobile. they are sharing 4g networks so they can save on operating

expenses. on marketingd more to gain a 4g subscriber market share. going forward, i think they are in a better position. and also, the mobile video usage, the data consumption will also help them drive profit growth. yvonne: those two will be reporting next week. the bank of japan governor says he will continue with a accommodative monetary policy and the current pace of asset purchases for some time to come. he spoke exclusively to bloomberg television saying that even though the japanese economy is growing, geopolitical risks could still affect the yen and inflation. this is a difficult issue. certainly, in the past, whenever we had geopolitical risks rising, then the yen appreciated making policy more difficult than otherwise.

stage, i do not know because the exchange rate can move, depending on many factors. the geopolitical risks, but other kinds of developments. i cannot say anything about the exchange rate movement if the geopolitical risks escalate. >> help me understand, if the yen goes higher from here, does it hurt your inflation forecast? >> as you may know, our inflation forecast is based on the assumption that the exchange move much upward or downward. the yen depreciates, then of course, inflation rate could rise and if the yen appreciates,

the inflation rate could decline. that is true. say that our inflation forecast is based on continuous improvements in the labor market, continuous improvement in the output gap which is quite certain. is% growth now, the economy about the potential growth rate. the market will continue to tighten and rates rise. i agree that the exchange rate could affect the inflation rate in the short run, but, the base -- but, basically we see inflation rate would gradually the improvedng outcome.

>> you have done more than any other central bank governor to get that inflation rate up. months ago, and you have gone out of the total box and done everything you can. doubt, 100%, even if the yen goes higher? inas i said, our forecast defense of reaching the 2% 2018, isround fiscal based on the assumption that the exchange rate would not move and so on and so forth. so, the exchange rate appreciates, then the timing and if it-, depreciates, the timing could be earlier. trend is toward

2% in a gradual manner. >> what it be fair to say that at the moment, you could ease or tighten? at this stage, we will maintain the accommodative policy position. by the way, under the current control, fixing the short-term interest rate at -3.1%, and the 10 year gdp rate at around 0%, will -- this could become even more accommodative or expansionary. if inflation rate or inflation expectations rise, then real and fixed it, the

real interest rate would go down making the monetary policy even more accommodative and expansionary. selfere was some reinforcing impact on the policy prices. yvonne: that was our exclusive interview with kuroda. coming up, we take you to the wasteland of china. resident she hoping to transform the thriving economic legacy. president of china hoping to transform the thriving economic legacy. this is bloomberg. ♪

is daybreak asia. i am betty liu in your. yvonne: i am yvonne man in hong kong. taz love has recalled more than 50,000 model as and x vehicles to replace faulty parking fee --

faulty parking brakes that may not release properly. there could be a small gear badly made by a supplier. tesla says if the gear were to fail, parking brakes could become stuck in place. shares continue to fall after hours. betty: baidu's president has said the company's push in the driverless technology is as significant as the apollo moon mission. it is aiming for a complete software solution for autonomous cars from algorithms to mapping data to hardware. they plan to be the first to do so using an open platform for developers. very excited to open our platform this week. making sure we have the developers to use this open platform. developing applications and services. this is theat --

first time that any company has opened the technology on a platform. we really want to accelerate development of autonomous driving. yvonne: another day, another settlement for deutsche bank. 157bank will pay over million dollars. and that it had not fully complied with constraints on investments. out fines on the currency traders for failing to flag the dan. -- the ban. newa plans to build a vast economic zone to rival shanghai and shenzhen sparking an investment frenzy. people are going purchase real estate. the chinese president's plan to transform this little-known

patch of china into the city of the future. tom joins us from shanghai. what did you find? -- betty: it seems like tom is having a hard time hearing as. we will try to get him back online in a moment. we will take a quick break and we will be back in just a moment. ♪

betty: this is daybreak asia. we mentioned china's plants to build a vast new economic zone near beijing rivaling shenzhen and shanghai. tom visited this area and he filed this report. envisages's president a modern metropolis rising from this stretch of largely undeveloped farmland. beijingur drive from will offer 2000 square kilometers and could rival the likes of shanghai and shenzhen. businesseshome to ranging from state home champions to cutting edge tech firms as well as universities

and science parks. announced onirst april 1, real estate speculators from across the country rushed here within hours, quadrupling house prices overnight. the government felt forced to step in. this propaganda sign says -- harshly cracking down on real estate speculation. beijing says all land and property transactions have been blocked since last june. every real estate agent we saw had been shut down and all construction stopped. it is not just property speculators hoping to make their fortune here. businessmensmall amongst many hoping to make it big here. moved my already family to town. i will open my restaurant very soon. anothermoved here from province four days before we arrived, looking for a new life. the local economy, business

environment, and conditions are very satisfying. with full government support, it will take off. tom: morgan stanley expects the population to top 5 million within 15 years with around $290 billion spent on infrastructure. analysts say the new area will likely provide a modest boost to a year.th, up to 0.19% it could also help soak up some of the country's excess capacity. the grand ambitions make many locals anxious. farmers we spoke with fear they will be forced to relocate or have their land seized. any small businesses like this small plastic making firm have already been told to move out. the president has vowed to reduce pollution and build an environmentally friendly economic zone. it is unclear if the president

-- if the region will live up to the government's lofty ambitions. what is clear is that the to leave a strategy lasting legacy to his role which could also boost the economy. tom mackenzie joins us now live in shanghai. this is juste know another project by the chinese government to boost their numbers, spend their money, create jobs? is there really demand here? tom: that is a key question. whenmbition becomes clear used stand here like we are now. the beating heart of the shanghai a economy behind us. an area itself which was farmland up until the early 1990's. this is what the government wants it to emulate. the likes of shenzhen. the key question is are they

going to be able to make it happen? the language from the government is quite ambitious around this. they say they want it to be a crucial strategy for a millennium to calm. we saw some of the economic impact on this immediately after the announcement. a terminal shows some of the stocks, the businesses and companies that saw a spike in their share price immediately after this announcement. some of them going over their 10% limit. the analyst expect this project, because it has the backing of the president, will the demand for construction materials, cement and it is part of the governments of attempt to try to deal with the problem of overpopulation and congestion in beijing. ubs saying you will have to wait 15 years before we know if it will match the likes of shenzhen. betty: a long-term bets. we have seen some of those stocks come down a little bit

after that buying frenzy. tom mackenzie from shenzhen there. business.e movie film coproduction in china says hollywood studios have been getting it wrong in its attempts to roll the second-largest movie capital in the world. media editor,ur dave mccone. what is behind the collapse of this project -- of these projects? main forces has been pressure from the chinese government. that is on all outbound deals. they do not want the currency weakened so they have been putting pressure on some of china's it is to which has been huge dealmakers not to be investing their money abroad. that has come to bear on some of these big movie deals that have fallen through under that pressure.

her has also been pressure from the u.s. side. if you congressman have gotten together to lobby against the idea that china is getting more and more of a footprint within the hollywood industry. there is some concern on their be used tohis would present an unrealistic picture of the country which is actually representing china and chinese values. that has been one of the things that the chinese government has said it wants to do with the movie industry. that is a concern as well. some of the top investors from china have said they have felt that pressure as well. betty: with the beijing film festival happening right now -- has many u.s. studios made that trip at all? lot oft has attracted a the financiers of films that are still very interested in dueling deals with chinese investors.

to get the chinese investment in hollywood movies. that has been a big flow there. their focus has been on companies and individuals that have -- that are already based outside of china, which means they are not subject to the currency controls the chinese government has put on. individuals -- one example is a cable maker that has diversified in a number of industries including the film business. they have spent millions of dollars on millennium films. there are deals like bass in the making because these companies have assets outside of china and are therefore free to make that kind of deal. you also have people coming in and raising money for funds to support independent films, coming out of hollywood. they believe there is still a big and growing appetite in china for hollywood fare.

they: we have been showing big wall which has been a flop. what if -- what are the studios getting wrong when it comes to accessing the chinese market? what is missing? dave: more chinese. that is what they need. theme.pth in the chinese more extensive chinese participation. films need to qualify for the coveted coproduction banner. dave, we are going to leave it there. that is it for us here at "daybreak asia." ♪

>> it is 9:00 a.m. in hong kong. rishaad: we are coming to you from bloomberg's asia headquarters. this is bloomberg markets. heidi: asia-pacific markets climb among optimism president trump will push through tax reforms. rishaad: the bank of tokyo governor tells bloomberg he will maintain current