♪ 7:00 a.m. here in hong kong. we are live in the asian headquarters. two big -- daybreak asia. build.ket looks ready to with more fresh eyes on wall street. eight years after its birth bitcoin is set to get another huge milestone surging past $9,000. from bloomberg global headquarters i am betty liu. eveningroadcasting this after the thanksgiving weekend. it is a important week for the fed. jay powell is on capitol hill

after increasing doubt with inflation. after the flood credits are healthy and amazon really deliver for jeff is us. -- jeff bezos. ♪ >> 12 figures, that man now possesses. for more on jeff bezos i went to bring up a chart. we just mentioned how inflation is missing the mark here. it just shows you how much we keep missing that market we are going the wrong way on inflation. that has a lot of people touting the coming rate hike next month and the one in 2018. that is going to be the subject of our conversation with many of our guests in the next hour. you can see the bond market is

already down and we are going to get many rate hikes. that is huge inflation gauge coming out later this week. in terms of the market and how we closed on friday a lot of sh buying. amazon was in the green. we expect the retail stocks moving on monday. >> cyber monday is going to be the next focus for the retailers as well. they are really reflecting on the debt we saw in bond traders that inflation cannot get any closer to the 2% market. seat inll takes the hot washington dc for his confirmation hearing. hike for yoush guys on friday. we are looking pretty good in asia. let's look at how things are in new zealand. boeing over the shenzhen.

keep in mind though that the dollar fell for the third week which is the longest losing streak since july. trading in australia getting underway, let's look at how things are faring. take a look at the aussie yields. it has been the energy space which is interesting. a two-year high last week ahead of that opec meeting. in japan, we did and friday certainly on the positive side. we are continuing to see a upset here today and tokyo. we are seeing this hovering around 111. >> let's get to first word news. putty, pakistan has talked about approach is that have paralyzed the capital of islamabad.

sending inent now forces after a peace resolution. officers have died in clashes. pakistan prepares a $2 billion step. angela merkel has stepped down from the possibility of a new election following a possible democrats and social democrats. she says the two worked well over the years. they also said any potential for this would have to support a balanced budget and pro-business politics. bitcoin has now surpassed the $9,000 mark. taking their year to date gain of about 800%. the world's most popular cryptocurrency continues to climb to his right warnings. the group is planning to offer

huge groups next month. the currency is not $290 billion. say theyrom new york are close to a deal. says the two companies are going to meet sunday evening to complete the deal at 19 or $20 per share. that would fire the transaction. they could still fall apart. global news 24 hours a day powered by more than 2600 journalists and analysts, in more than 120 countries. this is bloomberg. >> thank you. a look and lawmakers are rushing to secure the votes they need to analyze a tax bill that will make it to president trump steps by the end of the year gop senate leaders plan a make it or break phot on their bill as soon

as thursday. join us now from washington is ross krasny. a major sticking point out what are they? isthe major sticking point how much is this bill going to cost and how much is it going to blow up the federal budget deficit ? we had a new report out now from the congressional budget office a nonpartisan arm of the government that fills in the course of a decade. $1.4 trillion blowout in the federal budget deficit. the key to the report is that they say it is too soon to provide a dynamic score on how much this legislation may boost economic growth. a republicanoday on the senate finance committee who said it is a little bit of economic growth. service tax cut could pay for itself. it is unclear if that is the case. the cbo said they cannot tell

yet. there are republican senators including bob corker who said he would not vote to repeal unless he had that kind of dynamic score. given the haste in which republican leaders want to get to the floor for a vote on this enormous tax bill it is a little bit unclear on what is going to happen in the next few days. >> does that mean there is some doubt as to whether this bill can meet the senate rule? >> i think there are doubts if this will lead. will only happen if it is passed by a simple majority. if there is a long-term budget deficit that is a long time complicated. if the rule does not meet them really the process them as reconciliation could not go ahead and you would need a 60 vote block to pass this bill. that is one of the reasons

republican leaders are so keen to have a vote on this bill. withve seen this before the obamacare vote earlier in the year. lawmakers really having to take on what they know and what they do not know on their legislation. that is quite a unusual and probably dangerous state of affairs. towhen it comes nonnegotiable. people say there is the corporate tax rate that is about 20%. of course there is a lot of debate about this the individual mandate of obamacare. has the white house change the strategy at all in the past few days? >> the white house has not really been heard from this weekend. we did not see stephen mnuchin on any of the sunday shows. president trump was in florida this weekend. taxid not tweet about that

bill, he will be on the hill tuesday to talk to senate republicans. i am sure he has a few tricks up his sleeve and will try to do some persuading. there are quite a number of republican senators who have different concerns about the bill. samedo not line up on the page, that is what makes it rather difficult to mollify their individual concerns. >> and looks to be a pretty busy week for you. thank you. our bloomberg editor join us from washington. it is going to be a busy warning for us. in about half a hour the morgan to usy executive talks about his playbook for 20 to. in our next hour, goldman sachs chief asian strategist joins us for his outlook. he said asia looks to be slower but prettier. we will find out what he means by that. ceohe mainstay capital

talking about a big week for the fed. this is bloomberg. ♪

♪ counting down to the first major market open this morning. japanese futures are looking like this. higher as well of 3/10 of 1%. we are a little over 45 minutes away from that. certainly carrying out with that euphoria we saw on black friday. it feels like amazon is the big winner there. im in hong kong. a confirmation hearing on tuesday. one day before janet yellen has to testify before congress did we go now to kathleen hays with a look at this week's agenda for the central bank. inflation awith the mount.

>> they certainly seem to be and focus and it will be interesting to see if jay powell who is the nominee to replace janet yellen as fed chair is expected to pass his confirmation hearing. will he be asked about what we are going to talk about fight jumping into the bloomberg and looking at 3046? is this what fight on inflation. it is this key gauge at 1.3%. the target is 2%. if you look at this chart over the past five years what you onlynotice is that it has been about 2% once in five years. it is not going in the right direction even though unemployment has fallen. images update this for you. that is what i did not do. will be are going to see is that this was down 4.1% on unemployment. at this right, white is inflation rising? let's move on.

let's be janet yellen spoke here in new york acknowledging the dangers of inflation. she talked about inflation expectations and how that has been a problem. you do not want that to rise. say about it as well. she has been sticking to that argument. fed says they show this divide. if theyhey wait to see are actually rising towards 2% before the members folk for another hike. i think really deion they are thinking at 2018. that is why this is so important. it is not just janet yellen and jay powell. we have the president who is a key player fed rate hikes. he is speaking monday and will be speaking to jay powell on monday. he faces a senate committee and with a question him on this

interest rate hike. takeare looking at regulation and deregulation. certainly with republicans on the committee. certainly they testified on the joint committee of congress. we would hear a lot from her about the economy and the balance. there are six other speakers next week. every day we are going to be hearing from a lot of people. a lot of questions that the market is interested in. december,he hike in that is coming up next meeting. what about the past for next year, if the fed continues that isthe free market signaled in september. we are going to have the fed meeting on monday. that is the anecdotal survey from the 12th district bank to give a snapshot of the economy. remember this is what it is so important. one more thing, they are higher.

the key inflation game coming in on friday as well. be busy for the market this week. nextt to bring in our guest who manages more than 2 million dollars and is also the ceo of mainstay capital management. joining us now from detroit. the younly do not and at all because there is so much data to digest. monthw it seems like next meetings seem to be a given in terms of a rate hike. how certain are you for next year? >> that is the question. we look at december as a foregone conclusion. the future is next year. incalls for three hikes 2018. as kathleen pointed out the inflation data does not support that. raising to fight

off inflation or the anticipation of inflation. it has been declining this year, when we are looking at inflation we are well below target. at the same time we are seeing a yield curve flattening. the fed continues to raise on the short end. we have brought goals that are moving or rates for yields longer. we have seen a further flattening potential he. >> i did say we have been seeing that already. i want to bring up a chart as we are focusing on these rate hikes. it is also tapering the balance sheet. 751 75. on why did there. them unwindseen compared to any other balance sheet. could that be the equivalent of rate hikes? >> it is.

assets, withbuying the central bank is buying assets. when they are on why didn't that balance sheet it is tightening by definition. we have that underway since october coupled with the rate hike next year. myselfparticipants like there is concern about a policy impact thecould financial market specifically the stocks. >> it is interesting because senate officials disagree. they do not call that quantitative. curve isess the yield more broad and that agrees with you. let's go back to that yield curve now. if you look at the 10 year spread or the two year spread. it has gotten flatter, flatter,

flatter. what is the signal from the bond market, what does this tell you it is hard to believe the u.s. is on the verge of a recession, the economy is going pretty well. how do you take that signal. as a money manager what you do about that? look at economic growth over the past couple of quarters. we are averaging about 3% gdp growth. we are expecting strong growth next year. we think there will be tax reform at the same time we know what a aversion the yield curve means for the economy and for markets. interestinga very pattern for next year relative to what we are seeing on taxonomy strength. at the same time with the yield curve flattening even further if we do not see the 10 year yield creeping up we have to be concerned about that. given the inflation and

expectation, we have been catching this year. ever with the next couple of weeks and we got the data, is that too early to be pricing inflation ahead of jay powell's confirmation this week? >> i think so. we will see a bid now and again. --y have not been in exceptional performers for the bond market. it has been that degree with jay powell coming in. could be right around the corner. data does not support that. gearsould like to switch a little more globally towards japan. -- some peoplers in japan got a lot more bullish about stocks. there is some question about how the economy has been growing.

on japanese bullish stocks, when you look ahead to 2018? >> we are. there has been a love of questions about taxonomic's over the past couple of years. have really seen a resurgence in the japanese economy did we have been working through a very strong earnings season. with stocks in japan we are now cheaper on evaluation basis that we were 18 months ago. very goodackdrop of and evaluation we are quite bullish and have been this year on japan and quite bullish on the company 2018. >> do you think we will see a repeat for stocks? strategisterage

estimate for the s&p is 2800 and it looks like the bull market continues. are we just going to rinse and repeat? we look at the key fundamental underpinning for stocks. the u.s. and europe emerging markets it is earnings. earnings are strong and we expect double-digit earnings growth. if earnings continue to come through the we think there is more room for this market to run in 2018. reform need to passes for new levels? >> i do not think it needs to for higher levels. it would be a setback certainly for stocks and the outlook for the economy. there has been a lot to talk about with the individual change.

it is 20 or 21. certainly 22% for the corporate tax rate, that is very bullish for the u.s. economy. with correspondence to the u.s. stock market, even if this were to pass and we think it will. if we look at the overall economic backdrop we have seen a continue with scenario. will it be as strong as 2017? i don't know about that. we continue to look against the 2018. thank you, david we appreciate that. the ceo and chief of investment strategist at capital management join us from detroit there. do not forget you can always get the biggest newsmakers on bloomberg radio. a.m. hong kong time.

you can also download the mobile app to excess that. this is bloomberg. ♪

♪ >> this is daybreak asia here in new york. >> a quick check of the latest flash headlines. for this forcing me after they provide a false in -- information for the takeover of a bank. we can later said they gave incorrect shareholdings and failed to disclose that. it company executives held a greater stake in the detail. the cooperative. the time and the ruling has no impact on the the liberty of the takeover. softbank expected to proceed with their acquisition of uber. we heard about that last bit. the told softbank about attack about one month before

acknowledging it publicly. a group is to buy at least 14% of uber from current shareholders. they also plan a direct investment of about $1 billion. the s&p is considering another one or two aviation finance ventures. the banks corporate finance had said ventures will particularly be in southeast asia, middle east and africa. the financing unit began leasing a joint venture in march with development. >> counting down to the open in tokyo as well as korea. let's take a look at how things are moving. we are seeing another day of gains on tokyo. with the futures at 150 points as the open. we are looking at the softbank today at 111. up next, another massive shopping day for the u.s. we are going to take a look at the

receipts from black friday and look ahead to cyber monday. it is going to be bigger. this is bloomberg. ♪

♪ 7:30 a.m. monday in hong kong. kicking off our trading week. the first major market opens. 6:30 p.m. in new york as the markets ended on a high note for black friday. likely we are going to see some gains for some of the retailers following amazon. it is a beautiful shot of the dark city skyline. i am yvonne man, you are watching daybreak asia. let's take a look at the first word news. >> in washington the republican party tax plan enters a crucial week with centimeters planning a

ase or break vote as soon thursday. they are expected to unveil the bill. with the potential and for federal deductions for state and local taxes. the president is expected to address senate republicans on tuesday. stocks rose despite the country's deadliest terror attack. tense up tok rose a 1%. more than 300 people were killed on fridays attack. egypt has raised their security alert to the highest level after the islamic state claimed responsibility. what still not clear caused the explosion that killed at least two people on sunday suffered shanghai. more than 30 others were injured in the blast that flattened a

vacant building do for demolition. witnesses claim a gas pipe. the area claimed there was no gas pipe. eu president donald tusk said the u.k. has just seven days to produce a new answer on the brexit divorce bill. if they want to break the deadlock before the end of the year. theresaprime minister may until next may to bridge the gap between the two sides. on that day she is scheduled to meet shot clock choke up -- jean-claude juncker. global news 24 hours a day powered by more than 2600 journalists and analysts, in more than 120 countries. this is bloomberg. thank you. let's take a look at how trading is going in australia. if has been underway for happy hour. looking like this. the dollar holding steady at 12 the bond yield seeing a bit of a hiccup in the yield and 2%.

points rightout 10 now. let's look at some early movers right out in the asian focus group raising. that is raising their new zealand company. up to 2% now bring that really and iron ore we saw them celebrating after the contract with a two month high. for the spring of next year, that is being very critical with shares up 1%. givenare some headwinds that we have seen the chinese corporate credit for this campaign could be a reality check. down aboutng shares 2% of the other hand falling after j.p. morgan downgraded to neutral. at futures we are expected 150 points pass the open it looks to be the case. 111 so far.

has been eight years since the client began their digital currency revolution around the world. showing the upside and downside. asia joiningor for us now from tokyo. chris, what are some of the issues we have heard of many that the central banks are seeing? that is right. subjects thatasic the central banks need to address in regard to the digital currencies. on the one hand, what is their approach towards the private cryptocurrencies what they going and the others? when theyer hand themselves get into the business of issuing a new currency. it is a separate issue. we have seen quite a range of

comments and responses from central banks around the world. issuingom with her to their own digital currency that a longer-term issue that the central banks are just starting to look at. private digital currencies and how they approach them and regulate them this is a much more pressing issue. especially with bitcoin surging past $9,000 just over the weekend. we have seen enormous interest in these private digital currencies. many more people are starting to transact with them. this is something the private banks recognize that they need to figure out. the longer they said there, the more this currency is going to increase. they have to do something about this. how are these issues being addressed by the central banks?

see quite a range of different responses. like some of the frontier markets for emerging markets have been basically seen their approach is banning the stuff. exercise a interesting where we saw a number of reporters go to the central bank lock and ask what is the approach towards cryptocurrency? we found in places like india and morocco it is a total. one of the prominent places that have seen a hard line has been china. they don't like the idea of resident exchanges. they want control. on the other hand japan has been much more open in fact, there has been a japanese airline that accepts bitcoin as payment. it has been a very interesting range of responses across the

globe. the governor says they need some more studying in this race. banks,all of the central it goes from the u.s. to scandinavia and asia as well. which is the most innovative as a cryptocurrency space? that was very interesting. we have learned a lot doing this exercise. the dutch have essentially created their own digital currency for internal purposes in order to test run this. they were very interested in the possibility of issuing digital currencies. -- norwegians and the suites thees have been looking at potential to make a payment system more efficient. using the blocking technology

that many people feel is revolutionary. they can produce transaction costs and increase transparency. many of these countries are already moving to cash less societies. you do use a bank not so much anymore. they have been exploring the digital currency. been notedwho has for the federal reserve has a pretty market capitalist approach year. he said, if there are private currencies that already exist in the digital space one of the central bank need to create one on top of that? very much a work in progress in terms of studying this in the u.s.. some of the northern european markets have been very innovative in their approach. >> it certainly seems like the

case. thank you. our managing editor for asia. some breaking news crossing the bloomberg right now. it comes from meredith corporation, they have agreed to buy time incorporated to make a premier marketing company. affect 200 million american consumers. the deal was going to be happening with the clutch bank backing. now with a little bit more details that they are up buying 414.5 dollars.ed that is going to be a all-cash deal with a backing from coke investors as well.

with a little bit more consolidation in the media space. had a lot of people buzzing in the political circles. with the koch brothers who are very influential they are going to try to turn time incorporated into breitbart or a politically motivated organization. it has been rising from speculation of this purchase. we finally have a announcement hear from meredith that they are buying. not a huge premium here at $14. foray see some premiums some u.s. retailers on monday. they are moving to where black friday was. hitting a record $5 billion for adobe analytics. the cyber monday lessons 24 hours away, the bloomberg charts and all we need to know. online retail definitely kicks off this holiday season on a very merry and bright news.

here, theur bloomberg white line you are seeing here is amazon. i want you to take a look at the shares. this split is too and they have percent just on black friday did that was the biggest jump in one month. that took them to a record. meantime in asia, this is alibaba group shares. you can see it will definitely be competing with amazon. even though we did not see $25 million for alibaba on a single day. felt what about 2.5%. we are seeing this contrary and move between these two giants. pull $1s expected to billion in sales for black friday. they are expected to get 50% of all online retailers for that

day. meantime, let's take a look at the next bloomberg terminal. we are talking about amazon with -- the commerce we can see how that comes around for the market cap of amazon and then 289 or so have changed for walmart. as we look at their performance on a share price basis. it only rose by about one quarter of it was sent. jump ifhalk -- saw a they wanted to approach their market value. with that being said we are seeing some better and better e-commerce growth at about 50%. for my final bloomberg terminal charge this is a great function you probably know. we bring this up to date because of what is happening with jeff bezos.

worth jumptotal net by about $2.4 billion year to date. 30 billion dollars. he has been the number one most richest person. $100 course now broke past billion. those are the three bloomberg terminal charts need to know about if we continue. cyber monday kicking off in just a few hours time. >> thank you. you can get all of the stories you need to know by going to bloomberg daybreak. your also available on mobile app. customizecan also your site to get the industry and assets you care about. make sure you check that out. this is bloomberg. ♪

♪ >> we are counting down to asia's first major market open. we are watching in japan where those features continue to climb we are lessrcent as than 15 minutes away from the opening. this is daybreak asia. >> i am yvonne man in hong kong. we are releasing the global outlook. with bloomberg coverage gaining momentum and support from monetary policy and for and fiscal stimulus. they are above consensus on growth and inflation for 2018. to talk a little bit more about global the banks economist. thank you so much for joining us. we have seen some tremendous numbers coming out of asia. there is a three are high for singapore that we got last week robustna moderating some

growth this year. is there anything that could derail this growth? >> i think there is certainly the risk of these economies. the u.s. has been watching the corporate credit risk and there is the overall growth. with the case of china they are looking at this it is never easy to deleverage. enoughould not be big that it causes a meaningful look at since the global growth will hold up for longer. you can argue that some of the drivers are kind of fading. the smartphone boom has been dusted. where you see the next blank for growth next year? >> essentially i see in terms of the composition of the forecasting is that it comes

with the evidence of that happening in dm. in dm it should happen and to talk -- an 2018. trade dynamicter happening the overall look. with asia one example of the margin of this coming in growth in exports. you can see this picking up. it is actually a improvement in the cycle and that is where the sustaining growth for longer. us where you are in terms of your inflation forecast, particularly here in the u.s.? focus is onhe remain soft until 2018 and then beginning to pick up. it will go through 1.7% by august until about it is that now. the gradual pickup will give the confidence of the u.s. core inflation picking up as well. >> why?

why do you see this happen in the second quarter of 2018? >> as you know, it has been dipping below those levels. we see the continuing to push higher. at the same time we are seeing the moving mba important driver. finally we are seeing china sustaining in the positive territories. pressure thatice is a long time. of of the three factors better wages and commodity will push the u.s. inflation towards 1.7%. >> where does that leave you? are you up a consensus for how many hikes we are going to see coming from the fed? >> we expect that to raise three times.

there is always the market concern. they are not pricing for 2018. he do expect to see those happen because they are picking up and improving. the fed photo with confidence that to happen. >> what about for asia? you can argue that china is already heightening as early as this week. with indonesia and china perhaps they are looking at cuts next year. central bankhe will continue to join on this is over 2018? we are no forecasting asian central banks to continue with a rate hike continuing. week but wethis expect them to hike in the first quarter of 2018. beginning from there we see the other central bank also having a

rate hike. china has been tightening. we have been expecting a explicit hike with a deposit base continuing into 2018. that will happen in the fourth quarter of 2018. we are expecting the central bank in asia to have a rate hike for those companies. you did mention china, this rollout is a aggressive measure when it comes from asset managing. i have a chart here that shows the margins with a return into this market as well which perhaps leads to a panic compared to equities last week. be witherned should we this pickup and money lending? we have seen this clear ramp-up in the past six months or so.

of the overalls i amtion for the market not really looking at that. investors theyn have not been invested in china. it is not like there is a letter of exuberance with the market and china. >> really quickly, deepening 2018 will finally be the year that people are quite a down about the crash landing in china? i think so. i think the key number that people should focus on is the gdp. we are not seeing a big improvement that it is rising and china. we expect that to rise by about 5% above gdp did. we do expect that to stabilize for the second half of 2019.

2019 he will get some stabilization of the gdp. i think that is when investors will see that this is not going to crash. still lie in there. >> thank you so much for your outlook. forget that our wherective tv function you can watch as life for as interviews or once you just want like this one. diving to any securities or functions we talked about and be part of the conversation by sending us instant messages. this is for bloomberg subscribers only. this is bloomberg. ♪

♪ check of the latest flash headlines. saudi arabia's two biggest countries have agreed to build a plant that processes chemicals

and plastic. the project will have a final value of 20 ilion dollars. it will process 400,000 barrels of oil per day and it is fully operational in 2025. saudi arabia is moving towards a more diverse economy to wean itself off the dependence on oil. abu dhabi oil company wants to raise as much as $2 billion for their fuel retailing unit. they are advertising the ipo price as a range of 54.8. put them at $10 billion. ipo activity in the uae is selling been showing signs of picking up an 2018. the focus group is saying the established challenger to new zealand and spark new zealand. this comes after the austrian finance review showing documents of potential trade and equity wires. with goldman sachs making the pitch ends formal papers due

next month. they want a deal before the fiscal year ends on june 30. we are seeing shares up more than 3% this morning. league help justice the top spot in the worldwide box office for the second week owing and $113 million in 67 territories. the latest pixar animation with second claiming the top spot in america other thanksgiving debut. mexico andonth in has been a hit and china taking an $18 million of the weekend. coming up in the next hour, we have the market open coming up and we are joined to talk about the outlook of 2018. we will chat with him for the next 10 minutes or so. he has been quite bullish for thea and japan as well as bank did they could hit 32000

and 18. taking at the live pictures they looked at a volcano there after the second eruption we have seen. we are seeing that this morning. ♪

♪ kong livem. in hong from bloomberg's asia headquarters. this is "bloomberg markets: asia." , asia-pacifics looking to build on record prices after more fresh highs on wall street. sets of another milestone, surging past $9,000. >>

just after 7:00 p.m. sunday evening. janet yellen and jerome powell on capitol hill amid increasing doubts about inflation. tencent seeks to boost advertising revenue. ♪ >> inflation numbers the big question for bond traders. china pmi, india gdp, key data. erupting in in indigen indonesia. for the region. that is the picture right now. live pictures of this corruption in bali.

a few flights are being diverted. no huge disruptions yet to air travel. incredible pictures there of the eruption. let's get to first word news. time inc. will be acquired at $18.50 a share worth $2.8 billion. it is said to have $600 million in backing from the koch brothers. it creates a premier media company serving 200 million consumers in the u.s.. washington, the republican party's tax plan enters a crucial week with senate leaders planning a make or break vote as soon as this thursday. democrats expected to delay or

derail the bill. some republicans are concerned about the potential into federal deductions for state and local taxes. will address senate republicans this tuesday. pakistan has scaled back its response to protests that have paralyzed the capital over the past three weeks. the government is sending and paramilitary forces. two police officers and six people have died in clashes. the arrests may unnerve investors as pakistan plans for a $2 billion bond sale. angela merkel has stepped back from the possibility of a new following the possible rival between the christian democrats and the opposition social democrats. she told her party that the two worked well over the past

two years and said any potential coalition partner would have to support a balanced budget and pro-business policy. bitcoin has surged past $9,000 gains above 800% year to date. continues to climb despite warnings of a bubble. one group will offer futures contracts from next month and p of digitalrket ca currencies is more than $290 billion. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. let's look at the market open in tokyo and seoul, korea, some momentum in the early part of the trading week. >> a good start to the week

173.26, on track for an 11th straight month of gains as this bull market does not seem to end. zealand is at a record high. investors, week for emi out of china, gdp out of and likely meeting the first rate hike from the bank of korea since 2010. ag function, monthly returns on the msci asia-pacific. 11 straight. you track the global index and it takes you back to november last year. it is academic. a few things we are following, opec on thursday. above a little lower, but

59 on friday. opec and russia set to agree on a framework for extended cuts. that is a moving target. is your function for that. downgrade from s&p friday, a weakening --r-rand dollar-rand weakening. not getting the upgrade out of s&p following the move from moody's. that is something we are watching closely when markets open up. we are on a seven-day run their on the sensex index. >> a nervous start to the then recovered and

ended flat on most major indices in china. the index still up 24% year to date. goldman sachs favors china, india, as well as korea and have raised their 12 month target for -japan, alsocific ex upgrades on msci china. with chiefe on this asia-pacific strategist. is it too late to join the party? dancestill think we can farther. >> what is driving this?great earnings and then the underpinning of global growth as well? >> to a large degree, yes. the best of the party is behind this, but we think we have

credible gains for 2018. of index is up 32% as friday, and we think we have to in u.s. dollar4% total return terms, including yield. to pick up on your point, earnings. we have a terrific global growth environment which we are operating in right now. indicatort activity is running close to 5%. that make moderate a little bit, but will stay strong. about 14% earnings growth for the region as a whole. as long as you wish and's are ok , which they are at 14 times earnings, allowing for a bit of multiple compression, you can 14% total dollar

return. >> you see this bond selloff and yields hitting 4%, some contagion when it comes to equities as well. do you see this as alarm bells on where equities are going to go or it is the government taking the froth off the markets we have seen? more are inclined to think of the latter. there is a theme you pointed to which is that interest rates globally will start to rise because we are at full capacity in many economies. we and the market expect the fed to raise in december. the market is pricing one fed hike next year. four, sothere will be we are more hawkish there. the metaphor is will we call the aws.th and rates j the lower jaw has been

following, widening, so they are now wide open and that has been a fertile environment for equity markets globally and asia. , theyear, the upper jaw growth will stay stable, but the lower one will start closing. the key dynamic for next year is how much and how quickly they close. >> what level on the 10 year are you going to see? >> it is a great question. on that.one some work the punchline is that somewhere around 3%, maybe mid-3% is where we think 10 years become more of a drag for asian markets. i think it does depend on how quickly we get there. if we grind up during the course asthe year, it is not challenging as if we had a 50 basis point rise in a week. if that happened, i think we

would see a correction and markets. i want to ask you more about the fed in a moment, but china for now. what do you think of the drivers and the equity markets and what ?ill they be in 2018 do you see any, sector rotation? >> yes, we do. thank you for asking the question. the underlying construct is china slows moderately next year from 6.8% published gdp to 6.5%, but underneath a few other things going on with more macro prudential tightening in the property sector, and that will probably be offset by some moderation in terms of rates, so even the tenure rate has gone above 4%, we assume that eases back down into the mid-threes

down about 30 basis points. we think there will be of this between selective macro prudential tightening in property and other parts of the investment economy and that is calibrated by fine tuning in terms of fiscal monetary policy, so against that backdrop we think the new china theme, which we have been strong proponents of, continues to play out, and a been poundingave the table on is a green china, that the environmental crackdown taking place obviously will hamper some investment, it creates new opportunities around that all theme of a greener china. new opportunities in those areas and in terms of the , we were asking about a crash landing in china. it sounds like you also see the same thing, this whole talk

about crash landing in china which seem to be hitting this feverish pitch a couple of years ago is pretty much out of the dialogue, right? >> i did not quite catch the key point. the whole point is idea of a crash landing in china done with? degreeink to a large that is the case. we are moving somewhat beyond that in the dialogue. no doubt a continuing overhang in terms of credit, but we think so far the evidence is we are beginning to attenuate the magnitude of credit growth in terms of what you could call credit to the financial economy as opposed to the real economy, to the wealth management or trust product area, so we have

seen a selective crackdown on that so-called shadow banking area and we think that is indicative, not proof positive, but indicative of a move towards a soft landing from a credit perspective. rallyt has fueled this or ,re those in the nifty 50 index at how can they continue to beat some indices when you are hobbled by restrictions when you can't allocate? tencent is 18% of the msci ,hina index and alibaba is 15% and most fund managers have the 10% limit in terms of allocation. the point is the neutral is well people'st most individual stock concentration limit is. rallyingtwo stocks are , they are already well behind

the eight all, akin to samsung electronics close to 20% of various indices, and if you have , 10% limit, you have a problem so we have identified stocks that trade in tandem with tencent or alibaba and say we have a proxy exposure there. you can have a patch up waiting in some other areas and that will help you not to lose the performance. >> stick with us. ,e have more from you as well looking at your outlook for 2018 coming up next after the short rake. tencent,ing face of what china's largest company has up to and how it is driven by facebook strategy. this is bloomberg. ♪ ♪

♪ >> this is "bloomberg markets: asia."

i am yvonne man in hong kong. >> i am betty liu in new york. the 2018 markets outlook with the goldman sachs chief asia-pacific strategist. you were talking about the fed and goldman sachs and you are more hawkish than consensus on interest rates, how many we will get in 2018. you see four? why is that? twinighterdynamic u.s. interest rate view is capacity in the u.s. economy, the spare capacity, has probably been used up and that is clear in the labor market with unemployment below 4%. even allowing for changes in employment dynamics and some people counted back into the labor force come we will start to get -- labor force, we will

start to get some labor inflation. there are some aspects of inflation which are temporary. ,ne has been mobile phone costs and that starts to wash out of the data as we go further into next year, so inflation is likely to creep up towards that 2% fed mandate mark and the fed is likely to be acting in anticipation of that, and with interest rates low, gradually up during the course of next year in order to not fall behind the curve, so to speak. one of the key aspects here for investors to note is say we were right about that spread between one rate hike priced into the market and our view of four, then how can we be bullish on equities if we think the fed will tighten more than is the case? onlyically the market has

been moving to price one hike at a time, so even if we are right, it will take moving through the year to get those interest rates priced in, and as we do that, and if we get a tax cut, that will at about five dollars a share, that will be an earnings lift the market will look at as we get those gradual interest rate hikes, so even with valuation compression, the underlying earnings can get us an 11% price return. aboutnow you were talking the bond markets earlier. pretty sanguine in terms of rate hikes when you look at the yield curve. and thethe fed mrs. misses, what is the risk of a taper tantrum or shock

in the markets? you definitely put your finger on one of the risks we have highlighted for next year. , but thenr base case there are a host of risks around that. we stand by what we said and managed to advocate through the course of the year, but a bond up,et yield move particularly a quick one, is one of the risks. if you have inflation that rises more rapidly than we are expecting, that can trigger a

rise and expectations about the short end and the long end, and that could filter through into , and generally a rising dollar has not been favorable for asian equity market performance as a benign performance we had. around dollar and how that flows through to asian equity markets is one of the areas of risk we can look at for next year. focus on the key return drivers, china, india, korea. you see growth numbers out of southeast asia that are robust. >> this is true. recommendations, we are playing a relative performance game, so the for the aseanx

has lagged the overall msci asia-pacific ex-japan index by 15%, so it is up 15%, but has % returnthe 30 per an for the broader region, korea, and to a larger extent india. the key dynamic is the asean markets tend to be less economically sensitive the north asia is, and the story has been the global economy recovering momentum, technology doing well and global cyclicals and technology in north asia. we think that dynamic continues. it may not last the entire year,

but for the hardware sector, we think the cycle is longer, and ,or the software cycle, alibaba tencent, we think they have clear structural growth ahead of them. , but wens are inflated are not overly concerned right now. you still have growth dominating north asia versus south asia. >> thank you very much. you can catch our interviews and watch us live and get involved with our conversations with our interactive tv function. for bloomberg subscribers only. check it out at tv . you can take some of the charts we fire up to the morning as well. check it out, tv . this is bloomberg. ♪

♪ quick check of the business

flash headlines. facing hna group accused ofter providing false information. regulators say they gave incorrect shareholding's and failed to disclose that executives held important stakes in the deal. fully and cooperative the ruling has no impact on the validity of the takeover. softbank proceeding with its investment in uber despite a security breach the company covered up for one year. saysall street journal huber told softbank one month before acknowledging it publicly. aims to buy 14% from shareholders and plan a direct investment of $1 billion. >> standard chartered is finance joint ventures and may list won it once in china earlier this year. the corporate finance had said the venture's would potentially

be in southeast asia, middle east, and africa. the aviation financing unit began a leasing joint venture in march with citroen development. much more ahead. this is bloomberg. ♪ this is bloomberg. ♪ retail.

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aonne: not so happy of monday. 7:30 in singapore. half an hour from the open of trading in the lion city. betty: looking pretty gloomy for the start of the week. i am betty lou, you are watching daybreak asia. let's go to first word news. egyptian stocks rose on sunday despite the country's deadliest terror attack. 0.8%, and cairo taking their advance to 17% this year. 300 people were killed in an attack on a mosque in northern sinai. egypt has raised the security

alert to the highest level after claims of the islamic state group so-called responsible. unclear about an explosion that killed people in china. witnesses blamed a damaged gas pipe of death but a local power company said there are no gas lines in the power area. said the u.k. has seven days to produce a new offer on the brexit bill if they want to break the deadlock before the end of the year. he gave theresa may until next monday to bridge the gap. on that day may is scheduled to meet european commission president jean-claude juncker, which is now a critical moment for the u.k. andairport has been closed it will pay no alert is that the highest level as this mountain could erupt again. hundreds of tourists are struck -- are stranded.

people have been told to leave. authorities insist bali is safe and say singapore's advisory to avoid parts of the island is excessive. it last erected in 1963 and killed about 1000 tilde -- in 1963 andrrupted killed about 1000 people. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. time to see how the asian markets are shaping up. looks like was of them in positive territory with the exception of korea. a lot going on for the bank of korea in particular. david: thursday might be the first time they hiked since 2010. the chart is now flat. i am guessing all of that has to do with samsung. we will get to that in a moment. everything except south korea on the way up. new zealand already at a record half of 1%. here is a breakdown what is happening on the kospi index,

half of 1%. 2% drop, across i.t. names. morgan stanley came out with a note. they are cutting their call on samsung to equal weight, price target to .18 million. let me get you the -- 2.18 million. 2.6%, biggest drop in a month. 2.7, 2.8 is the price target for morgan stanley. there was a massive run-up as well. now another one we are talking about early monday morning, i have never seen it as vertical as this chart. this takes you back to 2012. 9400. is your next stop, lookout bitcoin has done over the past few years or so. this is the function that has the returns per month, 47% this month alone, but the best months inrecord, low base, 14% back

november of 20 -- 2013. more green, the massive run-up in bitcoin prices, close to 10,000 early morning. betty: sounds like a different week but same story, bitcoin on the rise. president trump's picked to lead the fed has a confirmation hearing, a day before janet yellen testifies before congress. our policy editor kathleen hays here with the week ahead. let's start with the growing doubts about fed inflation targets. kathleen: it is something that has been brewing for a while because of what i want to show you now. i will show you the dual mandate to show you why many more officials are taking a closer look at the fact that inflation, 1.3%476, is down here at year-over-year. you look at their key index, and

moving further away from the target at 2%, which is receiving only once in five years, even as unemployment has come down from 10% to just over 4%. this is the issue the fed is having a hard time explaining away. let's remember, last week, janet yellen, the current fed chair, was in new york with mervyn king, the former head of the king -- bank of england. of talked about the dangers low inflation. she mentions low-inflation expectations are probably. that is not good if you want inflation to rise. she opened the door of concern even as she continues to say low employment will help boost inflation. but the november minutes from the meeting also showed this divide and some fed officials saying they were concerned about this. a few saying it we should not hike until inflation is clearly on the path back to 2%.

that is why it is a big deal as janet yellen and jay powell prepared to go before congress. let's look at the week ahead. dudley, he speaks about the economy. he will speak to more times this week. he is an ally of janet yellen, brexit -- baxter up on the gradual rate hike path. upth tax hurt -- backs her on the gradual rate hike path. orl jay powell continue this will he express more doubt or's what will he say about safety regulation? this will be the closest of the week, even though janet yellen testifies to congress, and there are six other fed speakers. we will be busy listening. one of the things we are listening for his hints on a rate hike past in 2018 -- passed in 2018. they will be looking for several, gradual. in september they were looking

for three. been looking at the meeting, and on friday, third-quarter gdp will be revised. if you are a hawkish fed official, you point to confirm we need more rate hikes. even though we also have the key inflation gauge again, it might raise to 1.4% year-over-year, but these are the things in the next with all of the important fed speaks. yvonne: and that is right. we were talking about big data out of china, india, but the bank of korea, that will be a key focus along with all of these economic indicators. kathleen: another area will be will be busy because -- where we will be busy because korea meets on thursday and they are expected to raise their rate for the first time in 6.5 years. let's look at what is going on on chart 5957. you can see the key rate coming down for more than six years, ..25%, a record low

inflation has fallen below, but look at gdp, 3.6%. exports drive the economy. a lot of numbers, but let's have a big number on thursday because purchasingising its managers index. that takes off a global series of pmi over the weekend. nationsget more asean as well. a lot of japan. the jobless rate, consumer prices, housing, not only do we want to know this week for the bank of japan, we want to know what it means for prime minister abe because we think maybe it is starting to slow. and on thursday, india's second-quarter gdp will be out. the focus is how much is the new goods and services tax slowing gdp, taking longer to shake off, releasing pressure on the reserve bank of india to think about rate cuts this year. betty: the result on the agenda

but we are missing europe. we have brexit negotiations and ireland. kathleen: it is so fascinating because of the irish border, the northern ireland border, that will be -- it seems to be the new key. the e.u. said it was the irish border plan spelled out before the december summit, and the ireland e.u. commissioner has said they will veto any deal that does not keep the border open. there is a lot of things going on as theresa may tries to get her plan together. and the euro inflation data, that is important. the ecb from last week seemed to show more dovish tilt. germany is pushing to move away from the stimulus, but that will be in focus this week in europe. a busy week on the central bank front. you know i love it. [laughter] yvonne: we will have you here all week talking about it. the economics policy editor for us.

plenty of big stories coming up this week and all covered on daybreak asia. one in particular when it comes to china, the latest manufacturing pmi data is due out this week. we have the official reading thursday followed by the thai seeing, the private gauge. expect to show momentum is basically between somewhere between study and slightly slower this month. i have a chart that shows what we have been seeing, 403. you can see the manufacturing data at 51.6. economists are expecting to take this lower, 51.5. nonmanufacturing quite robust. 54.3 for the month of october. but the economists are going to be parsing through this data as the government deleveraging push is 32 byte. it raises concerns about how much of a slowdown policymakers are willing to tolerate, not to mention stricter environmental

regulations and the pollution curbs as well about which is continuing to drag on industrial output. those are the key things to watch. betty: and they will continue tightening behind the scenes in china, and how that might affect this outlook on china and the slowdown we are expecting about 2018. we are also looking ahead to the latest meeting of opec nations and independent producers like russia in vienna. it will be thursday. spending output curbs which could expire in march. lots of speculation they will extend this. in fact expectation they will extend cuts to the end of 2018. i want to pull up g #btv 1148. you can see crude futures continue to rise in anticipation of these cuts taking hold and being extended. we had wti crude going above the $59 a barrel market.

you can sum it up in one word, shale. shale production. this is why we will likely see these cuts extended. yvonne: the big question also, if russia is going to play games to these opec extension on the curbs as well. that could be interesting to watch. coming up next, tax off the agenda in washington at the senate prepares to vote. the state of play. this is bloomberg. ♪ this is bloomberg. ♪

♪ yvonne: this is daybreak asia. i am yvonne man. betty: i am betty lou in new york were republican lawmakers are trying to finalize the votes they need for a tax bill that will make it to president trump's desk by the end of the year. they will plan about as soon as thursday. we are joined by the asia editor jodi schneider.

does it look like they might actually get this done? reporter: there is certainly a chance. they certainly want to. republicans in congress and the trump administration the legislative victory badly, and this would be a big one. tax reform is not something that has happened since 1986 in the reagan years is the last time the tax code was overhauled, so this would be a big win. but there are still hurdles in the senate, getting it through the senate where you need 50 votes, and they can only afford to lose to republicans and some republicans have expressed some concern. no democrats are expected to vote, and even if they get there, they it to reconcile the house. they want to do it by the end of the year, and that is quick. there are very few legislative days left on the calendar for congress to consider this. yvonne: the key sticking point is how they will pay for this.

we see it could increase the federal budget deficit over a decade. emily: emily: $1.4 trillion -- jodi: $1.4 trillion and that goes with other independent analyses and some done by the federal government. that is a lot of money and concerns some lawmakers. it is a reason you will not see any democratic votes for this. that concerns some people in the house as well even though the house has passed this bill. when you get to the reconciling of the two bills if the senate passes there's, this will be a concern that comes up. the other concern, and democrats are against this, this largely benefit corporations and wealthy individuals. not necessarily the middle class. there has been debate, but most studies have shown the preponderance of benefits would go to upper income people and corporations, so that concerns people. yvonne: what about in the white house?

we have not heard much from the trump administration on what they could the as a tweak ahead of this. is that surprising we have not heard from them this week or last week? jodi: thanksgiving was last week, so congress without. the trump administration wants to see this past and get over the finish line, so they are trying to not get into much .etails this has been their mantra, get it done. the president will be on capitol hill talking to republicans who have a weekly lunch about that. they have a meeting with republicans and democrats about this looking into next year, but they just want this done. the president wants it on his desk very badly. betty: we have been focused on health care reform, notice tax reform. if it gets done, what is next? jodi: it is a big win, and this helps republicans in 2018 in election year. we will see i don't think big

legislation in 2018 because it is a big year and is hard to get things through. we will continue to see call for helping corporations in various ways, regulatory reforms, the loosening of regulations in a number of industries, those kinds of things and things the administration can do through executive orders as well. betty: thank you so much. it will be a busy week in washington. jodi schneider, the asia editor on upcoming tax reform and the boat. finding revenue beyond games, why tencent wants to be like facebook when it comes to advertising. this is bloomberg. ♪ ♪

♪ this is daybreak asia. i am betty liu. yvonne: i am yvonne man. tencent wants a change of culture to boost ad revenue. they are looking to facebook for inspiration. the advertising chairman earlier this month talked about the potential. in the advertising landscape is probably at a good stage now. this is one of the most exciting moments that growth is likely to come from the areas of social advertising. growth is likely to come from professional advertisers, global

, willing to explore new ways. yvonne: let's bring in our technology reporter now. taking a look at the strategy, it sounded like what facebook does now, but the culture of internal competition from tencent, is that going to change from here on forward? lou: social advertising is where all the potential growth is. that is capturing the imagination of investors. if you look at facebook, their revenue, 97% comes from advertising. tencentounts for 17% at right now. they have the gaming business to explore other areas of. for tencent, their culture is very different from other companies. it is a very bottom-up culture. because they have seven units across many business divisions, they need somebody who is very top up management and can see

the divisions and try to coordinate data synchronization between the different business groups. yvonne: you mentioned advertising is a small portion of tencent's business. how much potential is there for revenue growth? lulu: it is only accounting for 10% of advertising in china right now. if you look at the lion share, it is e-commerce, alibaba ticking up the lion's share. , facebook, they are leading this. tencent is expected to increase advertising from 9% to 15% in a few years down the road. betty: what are the challenges? what do they face when they are trying to grow their ad business? lulu: their internal culture is one of the things that they are looking to amend right now because lower doesn't oversee -- lau doesn't oversee any business

groups, so he is looking at breaking down the silos, getting groups working together. you have the base of the infrastructure which is ai and data analysis, then also the data you are collecting from we the, qqq finance, all of social advertising that has a combined fill-in users. getting the groups working together is one of the things they are looking at. betty: breaking down the silos. lulu chen, the technology reporter on tencent. let's get a quick check of other business stories we are following with the business flash. saudi arabia's biggest companies have agreed to build a plant to process chemicals. aramco said they have a final value of $20 billion and will process 400,000 barrels when it is wholly operational in 25. saudi arabia is moving to a more diverse economy to we itself off the dependence on oil. -- wean itself off the

dependence of oil. yvonne: the company is advertising the ipo price in a range of 64 to 80 u.s. cents a share which would put it between $8 billion and $10 billion. ipo activity in the uae is picking up after only two deals were completed throughout 2015 and 2016. betty: focus group is hitting group in new zealand. the news comes from the australian financial review citing a potential trade in private equity buyers. credit suisse and goldman sachs made the pitch with formal papers tonight's month. focus once a deal before the deal ends on june 30. yvonne: warner bros.' justice league held top spot for a second week, pulling in $113 million in 67 territories. and disney's latest pixar

animation with second by claimed top spot in north america on its thanksgiving weekend debut. it is set in mexico where it opened last month and has been a hit in china here as well, taking $18 million over the weekend. betty: for more movies over the weekend, so busy cooking on thanksgiving weekend. someone who had a lot to celebrate was jeff bezos, who is ,ow become the 12 figure man worth over $100 billion. he reached that on black friday. the stock alone has risen 5% less week, so he joined the ranks of very you billionaires like bill gates to reach over $100 billion. incredible, right? yvonne: it is incredible. that 12 figure, it really has reached a $100 million

milestone. the first time we have seen him -- bill gates was back in 1999. it is set to continue now that we are expected to hit cyber monday. plenty of people clicking on sales as well. you can click on rich go. you can see how he fared in the likes of all of that. among the billionaires, he is the one to watch for 2018 as we talk about the amazon effect that continues to dominate most sectors of all global economies. starting to dominate the world. betty: the only problem is how to give it all away. if he wants to go that route. yvonne: charity. that is almost it for daybreak asia. time for a look at bloomberg markets. what are you watching? rishaad: waiting for mr. bezos to come to me. [speaking simultaneously] [laughter] aboutd: we are talking what is going on market wise. it is the start of a new trading

week, and what can we expect in asia? we have research, looking a look -- taking a look at the fx and more. is there something wrong in the heart of corporate japan? we will talk to people about strategy. i will be talking to the relentless ceo as well about corporate japan. is there something at the root, is there something in the dark heart of corporate japan? yvonne: another scandal last week. rishaad: those are some we are talking to. betty: looking forward to it. i imagine jeff bezos will have a lot of people raising your hands. that is it. market coverage continues. this is bloomberg. ♪ . ♪

♪ rishaad: another jaw-dropping milestone for bitcoin, now surging past $9,000. kong,ntial is hot in hong but prices show few signs of cooling. , black0 billion man friday helps amazon the liver for jeff bezos. i am rishaad salamat in hong kong. this is "bloomberg markets: asia." ♪ rishaad: