>> 7:00 a.m. in hong kong. we are live from bloomberg's asian headquarters. i'm it yvonne man. welcome to "daybreak asia." asia-pacific markets are set to continue gains. janet yellen, also speaking this hour. there is cloud on the horizon. it's in china. >> from bloomberg's global headquarters, i am betty liu in new york where it is just after 6:00 p.m. on this tuesday. sackinging headlines, staff after paying to conceal a hack that compromise the data of 57 million people.

price, model three production woes means tesla is burning cash at $8,000 a minute. ♪ ♪ betty: what might be one of her last appearances as the chair of the federal reserve, janet yellen is speaking now at the nyu's stern school of business with the former bank of england governor mervyn king. let's listen in. >> i think the other thing that i learned or discovered was important is very careful deliberationsd among participants in the in order to carefully think through a strategy and try to develop a consensus before presenting it to the public.

october, we began the process of shrinking our balance sheet, but getting to the point of starting that process involved well over a year of discussions in the committee about how we could do that in a way that the public had in mind,and we how we would use our balance sheet, and to do it in a way that wouldn't be disruptive to financial markets. far, so wood, things so good. few central across bankers as well prepared as you. [laughter] the key seems to be that central banks must keep open a willingness and ability to be self-confident about saying, we've changed our mind and learned. >> yes. i think that is absolutely right.

very important things about how aren'tnomy functions constant over time, and it's important that we adjust our thinking. >> can i take you back to your first day four years ago? what actually happens when a new chair rises? is there a swearing in? who swears in the chair? the morning of february 3, 2014, i was sworn in by the most senior of my colleagues who at the time was dan tarullo. we had a very small ceremony in our board room, just a handful , and i took the oath of office and got to work. about six weeks later, there was in,rge ceremonial swearing which was a large event.

the family came. the staff of the fed came. that was more of a celebratory moment with speeches given. >> champagne? >> it's a workday, after all. >> that's what i meant. [laughter] >> we saved that for the family treat in the evening. i got right to work. washe real first day, i slated to testify before congress the very next week. is thatur traditions the fed chair has to give monetary policy testimony and send it to the senate banking committee and house financial everyes committee february and every july.

that is mandated by law. week, i was slated to go testify. it's a rigorous process of preparing that. we were at a point of having to ,ake some significant changes so i quickly started meeting with staff. one of the things i recall doing on the first day in the office was preparing a video message for our staff. when there is a change of leadership, i think it's important that people throughout the organization begin to feel connected and know what the values and priorities are of the person who is going to be at the helm now. it probably wasn't any great surprise to the staff.

i've been in san francisco. inas a staff member earlier my career. nevertheless, i did prepare a video message in which i talked about the values of our organization. our commitment to professionalism, public service, acting with integrity in a nonpartisan way and commitment to a strong economy and financial system. >> first fomc meeting, what is the atmosphere like at that fomc meeting? the transcripts are made public five years later. people must be conscious of that. is it formal, or do sometimes people say things that surprise you? what is it like?

we are in a very elegant and historic room, seated around a massive board table, and i think the elegance of the room and its gives people the feeling intensified the feeling that they would in any event have that we are here to do important business, and the decisions we make our consequential. certainly, there is a sense of seriousness. we have been listening to fed chair janet yellen. she is speaking with former boe governor mervyn king, kind of just giving a recap of some of the memories of her career at the fed as the chair. have comelines that out, her saying, so far, so good on the balance sheet rollout off -- roll-off.

just a reminder that while we are taking a short momentary break, you can continue to watch fed chair yellen on live go on the bloomberg terminal. if you want to continue to watch the conversation, log on to your bloomberg, and you can do so. let's have a quick conversation about what we are hearing so far and about the legacy of janet yellen. we have kathleen hays. also, "bluebird businessweek" -- editorerg businessweek" peter coy. largely speaking, her legacy will be seen as positive. peter: i think she can leave with her head held high. she achieved a lot. in a veryed it resolute, steady way. look at what she did. she took the economy that was recovering from the worst financial crisis we have had

since the great depression and kept it on the track and fought off people who said, let's end this. there were people who were worried that the economy would be over-stimulated. because she was a prominent labor economist with deep knowledge of how the labor market works, she had the self-confidence to say, no, i don't think that is the right thing to do. we should keep the stimulus going, both on the interest rates and the quantitative easing, long pass the time when other people said, we are going to have soaring inflation. inflation is still below the 2% target. she has been proven right on that multi-full. betty: she has been. it's interesting. this conversation clearly is , butof a retrospective market watchers are still looking to see if she could say

anything that will move the markets. kathleen: they are starting on where she's been and what it's like to be at the fed. that is interesting. now she will be able to talk -- we hope she will write the book, talking about the inside story, but i expect as this conversation continues, and we are going to be monitoring it for the rest of the evening on bloomberg television -- i think mervyn king will be getting into some of the big issues. she said, we can't get trapped by our forecast. the forecast has been for inflation to go to 2%. you will see that there is a redline that shows the 2% target and a blue line that shows you the headline inflation rate, and there's a white line that shows you the core rate, a long way from 2%. let me show you another chart here. see -- i think i can switch it myself -- the expectation is

that labor markets are so tight that inflation has to rise. it still isn't happening. unemployment is low. inflation is low. as janet yellen gets into these final few weeks of her time, as she speaks to mervyn king, if the labor market side of her doesn't come out more, and janet yellen might get onboard with ben bernanke and others who say, we have to rethink this inflation target. as fed chair, she he would to that path, -- hewed to that path. some are saying, maybe that's a good thing why jayt y powell is coming in. it's interesting that she mentioned how important it was for the fed to keep an open mind.

you have to look at the yield curves in the u.s. as well as europe. i have a chart that shows this. if we take a look at the german yield curve against the fed, five years forward, mario draghi going through a better strategy at keeping his cards close and winning this race in stoking those inflation expectations. when it comes to fed transparency, is it really, less is more? peter: excellent question. my feeling is that janet yellen strongly committed to the idea of open communications. before she became chair, that was her commission. she was assigned by ben bernanke to lead that effort. her speaking to congress, speaking to journalists, constantly being out there. i think that might have been one of her strong points.

she has brought along a potentially fractious committee .ith her as you can see as she sits there, she is a calm person, steady. i would not predict that she is going to say anything in the last couple of months that is going to surprise the markets. she's feeling like she's coming down to the end of her term. she's going to hand over the baton to jay powell. if anything is going to happen that is new, it will be under his watch, not hers. yvonne: stick with us here. we are may be going to dip back into that conversation at nyu stern business school. that was kathleen hays. i also want to thank economics editor peter coy. later on bloomberg, we are discussing issues around rising populism and the perceived threat of globalization at the global -- asian global dialogue.

bloombergence adjoins to share his views on the growth of developing countries and the convergence between advanced and emerging economies. that is at 10:10 hong kong time, 9:10 eastern. then james bachus joins us to discuss the role of the wto in globalization. that's at 11:40 hong kong time. we will speak with dr. patrick low on the role of the forum and how he sees trade tensions around the world developing. this is bloomberg. ♪

. yvonne: this is "daybreak asia." yvonne: i'm yvonne man in hong

kong. let's get a check on asian-pacific markets of the headline over night was the s&p hitting yet another 100-point milestone. we are looking at comments coming out from janet yellen at nyu, saying they are reasonably close to their goal. favorablying markets benefiting from the lead-in that we saw from wall street. take a look at the australian session, just getting underway, and we have seen the aussie, in particular, hovering around those five-month lows.stocks are up about 0.5%. robeard from rba governor lowe's saying there is not a case to move rates. let's take a look at how things are setting up for japan, as

well as korea. checking futures in chicago, it looks like we could be seeing another good rebound in tokyo. dollar-yen, we are seeing yen strength overnight, 112.47. betty: let's take a look at the mexican peso quickly, because it is falling on headlines coming out from the u.s. trade representative light highs are saying, there's no evidence that canada and mexico will seriously engage in nafta talks. this is a statement he released after the fifth round of negotiations caused a stalemate parties,all three mexico, canada, and the united states. he says he still hopes for meaningful nafta progress before the end of the year, but still, a lot of issues to contend with, the so-called rules of origin. that's a big issue between the u.s. and mexico. some analysts are saying it's because lighthizer and some of the senior officials have not been part of the negotiations.

that is partly why you are seeing this stalemate. to themeantime, we turn latest record close on wall street and the lack of progress on nafta negotiations. in su to bring keenan who has more, and goldman sachs is sounding bullish? : it's interesting that they were among the last to take their projections up. 2800.re now saying above we looked at the market close, on track to rise above 2600. there are new forecasts, which we will get to. if we go into some of the big movers, earnings continue to be this rise., as does you are seeing a lot of the chip stocks come on strong. it's interesting to note that time warner, even though there was a bearish story coming out on the justice department coming in and putting blockades up, the

case was assigned to a judge viewed as merger-friendly who approved the comcast deal. bloomberg, inthe ,ine with the goldman forecasts they are citing an expansion of profits and valuations as a reason to take things higher. you will see that s&p forecasts from strategists have been moving higher. this is the blue marked as the purpleprice estimate -- is where the s&p 500 is now, and you get forecasts from strategists as a whole in the middle. goldman is saying investors can be reassured by the durability of the current economic cycle. a lot of the things we are seeing, goldman says, are in keeping with the rebound from a financial crisis.

yvonne: even convincing some of the bears that this rally has serious legs. hewlett-packard enterprise, after hours, they missed on earnings, but the big news was that the ceo was stepping down. su: this came as a bit of a surprise in terms of the stock initially going lower, although it rebounded as we got into the details from the conference call. you will see the stock up i about one third. a lot of the news out of hpe, this is the enterprise hardware unit to that was spun off, had to do with the profit view missing estimates, so that is why shares were down initially. the estimate from analysts was $.27. ceo meg whitman will step down on february 1. she is going to be succeeded by president antonio neri. the estimate was for $7.77

billion. it's interesting to see how that will play out for u.s. trading. the stock has had a lot of crosswinds. let's take a look at signet jewelers, which was a big mover, down from 30%. what you are looking at is the shrinking market for macy's. comparable sales have declined for 11 straight months. macy's does have a plan that makes it somewhat optimistic about the holiday season. yvonne: thank you. let's get back to the nyu stern school of business where fed chair janet yellen is speaking with the former bank of england governor mervyn king. talking about the risks to policy, which yellen said are

two-sided -- she said tightening too fast could strand inflation below 2%. inflation expectations may be drifting down, and she doesn't think expectations have trusted down much, that she mentioned hiking too slowly also has risks , which could overheat jobs, and she doesn't want a boom-bust policy. say the objectives are twofold. first, a powerful, independent institution that controls key economic policy tools in a democratic society has an obligation to communicate to the public and to members of congress to make clear what it's doing, what the objectives of policy are, and what the logic

is of the policies that are being followed. this is a matter of transparency, accountability, and legitimacy of an organization that has been given a great deal of responsibility and independence to carry it out. second, i would say communication is extremely important in making policy effective. what market participants and members of the public think the future holds in store matters andtly to how they behave actual market conditions. it's important to communicate clearly to markets and the public so that the expectations that market participants form

are one attempt to enhance the effectiveness of policy. communicating clearly that we have an inflation objective, that we are committed to an inflation objective, that its 2%, most central banks these days do that, but i think a record of good performance and that clear commitment has helped anchor inflation expectations around 2%. ,hat has been important because not only has it helped to keep inflation stable in most advanced economies, but it's also given central banks much more freedom to use monetary policy to focus on employment. for example, if you have a negative oil shock, one that raises oil prices and temporarily boosts inflation, it

would be a bad thing if the central bank had to tighten monetary policy because of a burst of inflation that is temporary. that is janet yellen. they are speaking at the nyu stern school of business, talking more about the markets and the economy, of course. she's mostly stating that tightening too fast could strain inflation below 2%, continuing how to keep an open mind and not be hemmed in by forecasts, and also saying persistently low inflation leaves the fed fewer tools when it comes to a crisis, a crisis we have not had since 2008. is tesla facing a crisis? tesla is building a new sports car that goes from zero to 60 in under two seconds. bloomberg data is saying that tesla is burning money at about

eight thousand dollars a minute to ramp up production of the all-important model 3, and at that rate, it would exhaust its current cash pile by next august. with us is our reporter who helped to crunch those numbers. $8,000 a minute -- why? >> it's a lot of money, isn't it? they are trying to ramp up production of this model three-car to 5000 a week, and they are trying to build the machinery that is required, the tooling, the services around it. that is where a lot of the money is going. real quickly here, should investors be worried about these numbers? >> if you are a debt investor, definitely, you should be worried. if you are a shares investor, you can ride the train longer. we have to remind people this company has missed a lot of targets. whether they get to that number by the time they say they will, who knows?

yvonne: thank you, nabila ahmed. we've got to keep that stomach when it comes to some of the volatility when it comes to the cash. plenty more to come on "daybreak asia." . this is bloomberg. ♪

yvonne: 7:30 a.m. wednesday in hong kong. you're 30 minutes away from asia's first major market open. beautiful blue skies this morning. yvonne.orgeous, it is 6:30 p.m. tuesday in new york as we prepare for our thanksgiving feast on thursday. markets did close higher today, and of course, we are continuing to monitor janet yellen and her remarks at nyu. i am betty liu in new york. yvonne: i'm yvonne man in hong kong. you are watching "daybreak asia ." let's get to the first word news jessica:ica summers p

hewlett-packard slumped on news that ceo meg whitman is leaving. she will step down on february 1, to be succeeded by president antonio neary. whitman became ceo in september of 2011. hpe's fourth-quarter revenue missed estimates, and its first-quarter earnings per share forecast was below analyst expectations. pai hasrman ajit proposed and a net neutrality rules, handing a victory to broadband providers like at&t and comcast. pai set december 14. that includes a ban on fast lanes and gives quicker service to content providers willing to pay extra. the trump administration has sanctioned three chinese trading companies to disrupt the funding of kim jong-un's nuclear program. treasury secretary steven mnuchin says action is being taken against one individual, 13 entities, and 20 vessels.

nine of the firm's sanctioned are publicly traded. a senior minister says singapore's wealth management industry has not seen significant outflows despite a down on taxp evasion. singapore will start sharing information on bank accounts under anour nationals oecd program. the senior minister of finance says there has been no meaningful exodus of funds. >> where do people need their money back out why do they put their money in a particular place? it's because they want to ensure they get the best returns on their money. those are the kinds of moneys we want to attract. if there's an outflow for the wrong reasons, it's up to those companies. you should be here because you want legitimate business activity.

obviously, we will clamp down. >> global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. yvonne: we are counting down to the market open in tokyo. let's get the latest with sophie. janet watching what yellen says at nyu, but once u.s., fresh highs for stocks, enough to convince bears like a goldman sachs to turn bullish on the s&p. at what point is this going to tip the bears? sophie: rational exuberance is calledmeone at goldman it. other strategists say they are keeping an eye on inflation expectations, which could rock the boat when it comes to an outlook for stocks. we are potentially seeing the stock rally continue. keep in mind there is little on the agenda to provide some clear agenda. keep in mind we had more remarks from the pboc's governor.

he has a pine further on the need to promote systemic financial risk. we shall see if that will imperil the recent rally in china and hong kong. futures in tokyo and seoul are pointing higher. keep an eye on resource stocks today. yvonne: we have been looking ahead to what to expect to come out from the q&a with janet yellen and the former boe governor mervyn king. she has been saying the fed is reasonably close to their goals. long-runw that sustainable level come inflation, but they are close to achieving that dual mandate. what else can we expect from the fed? has there been any reaction so far to janet yellen's remarks? sophie: she also addressed the need to consider a policy we think and keep an open mind and not be trapped by forecasts. you can see the dollar is

losses, givenits the overnight drop we saw against its g10 peers, and we do have the yen holding firm right there. keep in mind there is application for what it might mean for the policy tightening path for the fed. rate hiket 90% for a in december, and that has pushed up two-year treasury yields. i want to show you this chart. we are seeing that flattening trend continue for treasuries, which reflects cautiousness. what this has done is made the short part of the yield curve 1994ost oversold since when you apply the relative strength index analysis, as you can see right here. one can interpret this as a bear market for bonds. betty: we have been watching the mexican peso, as well, which whipsawed all day long.

those comments from trade notesentative lighthizer, looking optimistic about a deal done before the end of the year. he sophie: spoke about his concerns that not enough headway is being made with nafta talks. this is round five. he is saying there is no evidence that canada and mexico will seriously engage. take a look at how the mexican peso is moving on the back of those comments. near a five-week i that was earlier sparked by mexico's own boy. a little bit of a divergence when it comes to the interpretation of how those nafta talks could play out. yvonne: thank you so much, sophie kamaruddin on the markets. now to a bloomberg exclusive. we were the first to report that uber covered up a massive hack that compromised the personal people,of 57 million drivers and their customers.

the new york attorney general has announced an investigation into uber. eric newcomer broke the story for us. >> after a year of keeping it quiet, uber has said they paid $100,000 to get hackers to delete the private information of more than 57 million people. now uber is saying that they should have made the hack public, that they should have, in particular, disclosed the had that 600,000 drivers their drivers license numbers stolen, a piece of information that could be used to impersonate someone's identity. they kept the matter a secret. as they were facing investigations from the federal , and after aion settlement with the new york attorney general's office, at a time when the company knew they were facing scrutiny for their data handling. discovery, to the

which the new ceo learned about when he took over in september or sometime thereafter, he asked for the resignation of joe sullivan, the company's chief security officer who functioned as the company's deputy general counsel. travis kalanick, the former ceo, remains on the board and board membersank who knew about the hack in november of 2016. this went all the way to the top, and more than a year later, to come cleaned with the hack of 57 million people's information. betty: that was bloomberg technology's eric newcomer who broke the story on uber. the new york attorney general is to open investigation into this matter. all thescuss implications of all of this with tom kellerman, strategic cyber adventures ceo -- cyber ventures ceo.

he served as adviser to the international cyber security protection alliance. thanks for joining us on this breaking story. i don't know what struck you most out of this hack. was it the fact that uber knew about this a year ago, or the fact that they paid these hackers to keep it quiet? payment of ransom is agree just. the lack of investment and proactive cyber security measures to protect their supply chain of developers who were the reasons why hackers had a footprint to begin with was beyond the pale. is shocked, and i think this a bridge beyond regard as it relates to the standard of care that must be imposed upon the technology industry as a whole. yvonne: is uber likely to face any kind of fines or penalties? can you talk about what implications they could be facing? >> federal data breach reporting regulations, as well as state breach reporting regulations,

necessitate that they report in a timely fashion that folks' identites could have been compromised. i don't believe that they lived up to the credit card cyber security standards that would recommend more proactive measures being taken across the supply chain to include their developer community as a whole. i'm shocked. i can think of the or this isment illustrated by the fact that the cso was a lawyer. betty: it is quite shocking, tom, and as you say, beyond the pale. you are waiting for another few .onths given the situation, what are you implying. -- implying? is it more government intervention or more to prevent or stop this from happening? >> we need a federal data breach reporting standard that is higherhing that mandates

levels of reporting, but also more proactive cyber security measures to be employed. passwords are dead. the fact that passwords were stolen who extorted the corporation, it's a egregious. we have to move beyond passwords to things like adaptive authentication, and we need to pay attention to what we are investing in technology as it rao -- as it relates to securing the supply chain. betty: if companies don't comply? betty:>> not only will they be subject to penalties in the u.s., but overseas, as well to the upcoming gdp are regulation that is going to come into effect on may 18 of next year could find these companies up to 4% of the revenues, and this is a significant step. the biggest challenge any to stress to you, we are currently investing only 6% on the dollar

cybersecurity. underinvestment in cybersecurity has gotten us to this place where we feel comfortable paying ransom to hackers. crazy. the ceo basically fell on the sword and said, there's no excuse for this. i apologize. what can he do moving forward to change some of the governance of uber when it comes to cybersecurity? >> i commend the new ceo by taking the bull by the horns and taking governance decisions that might fix the culture of said,rity, that being there is going to be a mandate internally to move beyond passwords. there should be closer attention paid across the supply chain, the information supply chain, of uber, and all the developers constantly tweaking and revising

their applications. yvonne: i know you have made this point before about the underinvestment of companies in i.t. problem,trictly a u.s. or how do we compare versus other countries in terms of investment in cybersecurity? thee lag behind to singaporeans are the most proactive, followed by the europeans. the europeans and singaporeans see a kindred this between privacy and cybersecurity. their understanding of cybersecurity goes beyond encryption and perimeter defense. we have to appreciate that the cybercrime wave that is being sustained against us is highly technical, and we must reinvest cybersecurity. companies do you think are paying off hackers? i am just curious. >> it's terrible that i have to state this, but i would suggest companies, not

necessarily publicly traded companies, but small to medium-sized companies, are paying off hackers because they are trying to maintain resiliency while under siege. they shouldn't be paying off the hackers. they should be working with the fbi and secret service. if they don't have the capacity to defend themselves, they should have a security service provider to protect them. betty: i was afraid with that answer might be. kellerman, certainly disturbing, strategic cyber ventures ceo on the latest news out of uber. up next, china's biggest airline is expecting to reap the rewards from its partnership with american airlines. hear what china southern's president has to say about its rother and the new beijing airport. this is bloomberg. ♪

yvonne: the q&a session underwayyvonne: at new york

university stern school of business with fed chair janet yellen speaking with former bank of england governor mervyn king. in the last couple of minutes, we have seen some headlines coming through. she is saying that the fed does not want a boom bust policy. hiking to slowly also comes with risks, which could overheat jobs, and she has seen some hints that inflation expectations may be drifting down. ultimately, tightening too fast could strand inflation below 2%. it seems like the risks to the policy are two-sided, that saying that the fed is closer to reaching its goals. betty: hard to get that monetary policy right, not too hot, not too cold. china's biggest airlines has beijing's new airport will help it offer more international destinations and increase flights to the u.s. china southern expect to fly 50 million passengers in and out of when itevery year

opens. expansion to america is a key part of that strategy. our correspondent china -- tom mackenzie is at the airport. how is china broadening its horizons? as you alluded to, china southern is one of the largest airlines in the world, but the largest by passenger numbers in asia. iny called that dominance their country. they are based in guangzhou, and they have routes linking southeast china and australia, now they are going to be aggressively pushing out routes between china and europe and china and the u.s. that is a key focus for the company, and a big part of that is going to be because they will be getting about 40% of the slots at this new airport tilt behind me and south beijing, expected to open in 2019. it's going to change the game state-ownedthree airlines. also part of this is china southern's partnership with

american airlines. american airlines bought a 2.7% stake in china southern, and the president of china southern says the partnership is expected to deepen as they try to build out new routes between china and the u.s. take a listen. >> we are investing in each other, although the amount is not so many. the meaning is clear. tom:tom: that was the president of china southern talking about what we have seen in the competitive landscape. there is partnership with delta airlines. delta and china east have been investing. there have been these partnerships, deeper investments, and it looks like china southern and american airlines could be looking for closer cooperation between themselves as this expansion continues.

yvonne: tom, you mentioned about this mega airport hub right where you are. what are the opportunities for the likes of china southern and across the region, as well? tom: the new airport, as you be openinggoing to in 2019. it will allow china east and china southern to get significant slots. it is air china that has dominated beijing up until now. this airport is going to cost about $12.9 billion. it is going to provide capacity for up to 100 million passengers. beijing capital airport is pretty much maxed out. they have about 94 million passengers passing through in 2016, hence them building out this new airport, and it is going to be a hub for the region. they want to see flyers coming in from southeast asia and australia via china to the u.s. and europe, and the president is saying that it is all about slots. take a listen.

if the new airport finishes, according to our calculations, at least we can double the flights. tom: china southern expects to have about 250 planes flying from this new airport when it opens, and clearly, this does lay down something of a competitive question mark for the likes of singapore and hong kong when it comes to hubs in the asian region. yvonne: it really could shake that balance that we see among those carriers in china. tom mackenzie, thank you, joining us live from beijing. the aviation industry is due for a revolution of its own. major manufacturers are ready to develop the artificial

intelligence that will one day allow flying taxis and pilot-less planes. airbus says china is a fundamental part of the strategy and has set up its first chinese innovation center in shenzhen. the chief technology officer called the pearl delta tech hub the silicon valley of today. i think one of the remarkable things is that shenzhen has been called the silicon valley of china, and i disagree with that. if you look at silicon valley in california, there is very little silica and -- silicon that happens in silicon valley. today, it is mostly a software and web services-based innovation ecosystem. shenzhen is rightly the silicon valley of today, because it is where the hardware innovation takes place. of course, it started with has really, but it

expanded in a lot of other areas. in -- then company biggest drone company in the world, grew up in record time. technologies,ther which are hardware or hardware taken to the next level, fleshware, and i'm referring to the beijing economics institute in shenzhen, which is the home to china's gene bank, is doing a lot of fascinating work in both sequencing and encoding genes. that holds promise for synthetic biology for the creation of new materials, which could be of interest and very much applicable to our industry, the aerospace industry. those are the kinds of things that shenzhen does now that our world-class and unique in the global innovation ecosystem. yvonne: what do you see as potential challenges? yvonne:>> the shenzhen

government has done a lot of things very right, i would say. one of them is the fact that the services they provide to the entrepreneurial, innovation, and tech ecosystems are top-notch, world-class, extremely fast, responsive, and they try to cut through as much of the red tape and bureaucracy as possible. one of the exciting developments historically, there have been concerns for western companies doing business in china around intellectual property rights. yvonne: does that concern you? concern,nly, it is a but i think that is a place where china has really matured. been very heartened to see the creation of the first intellectual property tribunal, a court dedicated to the enforcement of intellectual property rights in shenzhen, so i think these are steps in the right direction. stuff: a lot of exciting happening for airbus. the goal is to look outwardly,

given the tremendous amount of development we have seen in software, as well as hardware in the country. airbus, really tapping into that when it comes to r&d, making partnerships when it comes to automation. they mentioned being in talks with baidu, and the first step is going to be about flying taxis. they seem committed in this push, as well. they hired someone new to leave that innovation center. no surprise, he came from uber's china business. betty: certainly, a lot of innovation ahead. mying taxis, i have to wrap head around that. let's wrap our heads around some of the headlines coming out from janet yellen, talking about inflation, saying that the fed is not certain that the inflation is transitory, and the fed expects inflation to move

back up in the next year or two. >> who is the most interesting person you have ever met? [laughter] >> most interesting person? that is a very hard question. spouse is any extremely interesting person. i met him in the fed cafeteria staff. when i was on the i found him extremely interesting. somebody unusual mind, who thinks very much outside the box. >> yes. you know, his ideas would

probably not suit him very well for the kinds of jobs you and i have held, but he is a .istinguished academic he's gone on a lot of unusual and creative directions. yvonne: certainly, a lot of interesting questions coming out of this q&a. [laughter] lane, talkingmory about interesting people from her life, of course. headlines for investors to hone in on, talking about inflation, in particular, not a mystery. she has admitted the fed is not certain that low inflation is transitory. that could be important. betty: that is very significant. you hit the nail on the head, that headline about low inflation, not certain that it is transitory. temporary factors are restraining inflation. we will continue to monitor that yellen conversation. coming up in the next hour of "daybreak asia," we are going to

talk about the latest crackdown on corruption in saudi arabia with arabian foundation's director. more on china's aviation ambitions. we will speak with steve saxon of mackenzie. this is bloomberg. ♪

♪ yvonne: 8:00 a.m. here in hong kong, i am yvonne man. welcome to "daybreak asia." risepacific markets set to as the s&p 500 hit a new record. the hang seng, less than 200 points from 30,000. there is a cloud in the horizon. it is china, systemic financial risk. betty: i am betty liu in new york where it is just after 7:00 p.m. this tuesday. all change at hp. meg whitman to quit next year, the stock slumping an extended trade.