>> 7:00 a.m. in hong kong. live from bloomberg's asian headquarters, i am yvonne man. welcome to bloomberg "daybreak asia." trump's pick faces a confirmation hearing later. to gut theged building and refine the regulatory building. betty: im am betty liu in new york where it is just after 6:00 p.m. retirement is for

real. the smashed dream of china's migrant million. we will have a special report from the streets of beijing. betty: we were going through some of jay powell's remarks issued earlier a day ahead of testimony in front of the senate committee tomorrow. it sounds like from these headlines coming up that he is pretty much going to stay in line, at least for now, with what we heard from janet yellen. he is walking into a conundrum. if you pull up this chart, the fed is continuing to raise rates in the face of what looks like investors disbelief, right? the yield curve, the treasury yield curve continues to flatten.

it is puzzling a lot of investors why the bond markets are not showing faith in rising interest rates. reflected in the yield curve? it is walking into a conundrum. what are we going to do about that? about: as we were talking with kathleen, there was not a whole lot of mention of inflation in the prepared remarks. about withbank regulation today was ag one for jay powell. he mentioned he wants to ease some of these banking system reforms that we have seen. that's a big one for you guys on wednesday. here is how we are faring in asia so far. a pretty big session in new zealand. we are seeing stocks down about .1%. the kiwi at 5920.

a little strength in the currency. the dollar gaining a little remarks fromr some the president about how he things tax reform progress has been quite good so far. trading. just started we are seeing shares up right now. the big question is crude. we did hit a bit of a nerve here, snapping three days of gains after the opec meeting in vienna. in japan, we did see some downside yesterday. it looks like we could see that again on the nikkei 225. dollar-yen seeing a little bit of strength here. bit overnight as well. we saw the reports in the country that north korea is preparing a missile launch that could be happening within days. betty: indeed, risk off, as you

mentioned. let's dive into the u.s. market, where stocks closed little changed. oil was the big story, slipping from a two-year high. senate leaders trying to push for the vote by thursday. saw a weaknessy in stocks, a hangover from the holidays, if you will. the dow showing a tiny bit of .reen gold flirting with 1300. near 58. you mentioned doubts about the opec meeting lingering. on the screen. the size of the moves is notable. up to hundred percent on the

bitcoin frenzy. on the bitcoin frenzy. investors running for the exit. hess down 50% year-to-date. continuing to show weakness. and steel companies are under pressure again. let's go into the bloomberg real quick. talking about the holiday hangover in terms of volume. was the slowest day on the new york stock exchange since christmas eve. that's pretty slow. continuing to see an effect on the market in terms of volume. that is expected to change with a slew of economic data coming out. that is anto a chart wish you could own if you don't own it already.

amazon hitting a new high, up over 55% year to date. cyber monday a big slugfest between amazon and walmart, which has a very strong online presence. the expected numbers are not in yet. they are expected to have a 17% jump. good news for jeff bezos. let's get the news with jess summers. just call in japan has raised its alert level after receiving information that north korea is planning a missile test. it is possible there are preparations for a possible launch. satellite images show nothing out of normal. there had been concerns north korea would launch a missile during president trump's recent asia trip, but nothing happened. authorities in bali have that thewarnings volcano is about to explode.

havee around the volcano been ordered to evacuate. indonesia raised its threat warning to the highest level of concern. travel and tourism accounts for the popularn tourist destination. the white house is considering banning personal mobile phones at work. trump has repeatedly complained about leaks since taking office. the ban is driven -- sources say the banister than by cybersecurity concerns. one source told us the personal phones are not as secure as those issued by the government. offu.s. holiday season is to a strong start with cyber biggestet to be the spending day of the year. sales expected to top $6.6 billion.

forrester research says spending from thanksgiving through monday probably helps all retailers. news 24 hours a day powered by more than 2700 in morests and analysts than 120 countries. i jessica summers. this is bloomberg. yvonne: jay powell heads to capitol hill on tuesday for a confirmation hearing. keyleen hays is here with points from his written statement. it was a two page statement prepared ahead of tuesday. kathleen: two and a half pages that we can only assume were very carefully written. don't say too much. don't say too little. make sure everybody is on notice that you intend to fulfill the standard role of a fed chair. int is one of the messages this terse but potentially effective statement from jay

powell. not surprising, jay powell said he expects interest rates to rise further. of the balance sheet to gradually shrink. he said the fed must adjust to the economy. that makes it clear the fed is independent. they will do what they have to do to grow inflation and boost growth. very important is what he said about banking. said the financial sector is stronger than it was a decade ago. that is implicitly a step of support -- a statement of takent for all the steps to change bank regulations and capital requirements. he said higher capital makes it easier to deal with risk and that the fed will look to ease regulatory burdens while preserving core reforms.

not going to pull apart those important reforms. yvonne: we heard from the dallas fed chief. or what did he say? kathleen: he thinks it may be appropriate for the fed to hike rates. here is why. imbalancesing threaten growth. he specifically mentioned housing and equities. unemployment going lower and lower. he thinks the job market is going to get more overheated. of ae tell you, the odds rate hike in december are about 96%. we are waiting to hear from the minneapolis fed president. he should be speaking about now. remember, he has dissented on rate hikes for inflation below target.

i think one of the big questions everyone wants to know broadly from fed officials, and may get hints tomorrow from jay powell, three rate hikes in 2018, 4? what is the momentum? anything jay powell says on that will make big headlines tomorrow. yvonne: absolutely. kathleen hays, our global economics and policy editor. our next guest says a jay powell means more of the same at the fed. we heard a lot of that in the headlines we saw an hour ago. manager's chief asset and global strategist joins us now. i want to hear what you think about all this. do you think we should be on this path? >> absolutely. the federal reserve is too late and normalizing rates and there is damage done.

and the damage is not in the form of inflation. it is in the form of asset prices. by keeping rates low, we are building asset bubbles, and i think that is going to get worse. bubbles where, david? david: i think there's a building asset bubble. it's like the water level in rise.asement starting to it's not explosive because of some artwork by bitcoin. it's going to continue to grow. if you look at real estate in major cities around the world, it has become incredibly expensive. are trading at 18 times over earnings next year. this is going to grow. it's important for the reserve to try to normalize and as much as possible head off these asset

bubbles until they get worse. >> you may be more so about regulation and asset prices, but what can jay powell do at the fed to get inflation back to 2% when we are talking about normalizing rates and the balance sheet unwind? very much, but it doesn't matter. there are problems around the world. who wants inflation? growth. problem is wage the dynamic in labor markets -- and this is true in the united states, great britain, japan, the dynamic and labor markets is favoring more corporations and companies over workers. the days of big union are over. we have a labor force where management is able to keep costs low and force wages down and workers are not able to argue for a wage increase no matter how tight the labor market is. if you heat up the economy

enough -- wages are the last thing to move. by the time you get wages to grow, you have a serious asset bubble problems. structurere about the of labor markets. the central bank needs to protect the economy overall. do you worry about a flattening yield curve? is there a risk of a recession? matters if yous have a recession, but you can't tell anything from the yield curve. this expansion is unlike any other expansion because central banks have been so involved in .he long end of the bond market the banks are holding so much money in japan and europe and buying this much in the way of long-term bonds. that distorts the yield curve. can't tell what that is

saying about the economy. fomc projects three rate hikes next year. i gauge the fed outlook. i don't trust the yield curve. the yield curve is like a tortured prisoner. torture is immoral but a tortured prisoner will lie. central banks have been torturing the yield curve and now it is lying to people. betty: don't trust the yield curve. his stick with us. we are going to talk about the u.s. tax reform plan. also ahead this hour, is disney close to appointing a successor to bob eiger? we look at a front runner later on. this is bloomberg. ♪

yvonne: this is daybreak asia. republicanse continue their push, their drive to get a vote on a tax reform bill by thursday as president trump and he will be more personally involved in the final push. get it look like he will the votes? whack's it is coming down to the wire and everyone -- >> it's coming down to the wire and everyone is starting to put their chips on the table, if i may use a few cliches. now, there are a few questions about whether the treatment of smaller businesses such as partnerships are treated fairly by comparison to corporations. they are demanding changes. one senator said he might vote no tomorrow when the funding committee meets to vote to move things along to the floor.

if he votes no, it will be held up for a time. there are deficit concerns being raised by traditional deficit hawks in the senate including corker, flake, and a few others. the could force changes to legislation when it comes to the floor. us what going on with the consumer financial protection bureau. we have certainly had fireworks in the last couple of hours. how is this going to play out or is this going to be another distraction when it comes to tax reform? >> mulvaney is the director of the office of management and budget. he presumably would be heavily involved in all the tax issues and budget issues we are heading toward at the end of the year. he has been installed as the acting head, although he will probably delegate those things, the day-to-day operations, to a lieutenant. this is all going to be headed

to court because the law is that they are at odds with the law on both sides. this is going to have to be settled by a judge somewhere along the way. yvonne: thank you. kelly,ring back david chief global strategist with j.p. morgan asset management. he is joining us live from singapore. david, more optimism when it comes to tax reform despite what joe said that some people are still on the fence on certain aspects. i have a chart that kind of shows what the market is that market is factoring in at the moment. that shows what the market is factoring in at the moment. if you look at the russell 2000 , it is slightly rising, but not nearly as high as what we saw during the election. what is the price?

i think we will see tax reform. there is the issue of winners and losers with tax reform and companies that have overseas exposure. will it affect their relative behavior in different parts of the market? yes, tax reform is going to happen, and the reason is they set a limit. i am going toys issue you a $100 trillion credit you with nothing on it, can find a way to diffie that up to please most people? yes. nobody is going to throw the cake out. the senate will pass a tax reform bill. i think before the end of the year, the president will sign a

big tax cut. it's nicesounds like to have, not necessary to have, we are not quite sure how much of an impact it will have on the markets. --ant to show you a chart show our viewers a chart that shows the s&p hitting 28 hundred next year. this would be the longest bull .arket ever is there anything that's going to derail this market? is at somee probably stage, but it's very difficult to break a bull market there are a few reasons. they will have plenty of time to get out if there is any correction, not to worry. the other thing is very low interest rates. that will make it hard to jump to something else. the 1987 stock market crash. a treasury bond than was 10%.

thing, which is very important to the united states, is embedded capital gains. this means you have to pay a huge tax bill if you want to sell stocks from a taxable account. i think it's difficult to generate a bear market here. to say what the biggest risk for stock market in 2018, what would you say? david: the biggest risk is always that which you don't expect. the market prices in what they do expect. the tax reform bill -- i know corporations are going to get a bigger part of disproportionately. if you factor in 1.5 or $1.7 trillion of tax cuts over 10 it might add 5% to s&p earnings in the long run,

assuming it's never reversed, which it probably will be at some stage. it's not game changer. maybe people have priced into much. i think if we don't raise short-term rates fast enough, stock prices will go up. eventually, they will fall. or you could have geopolitical issues. the main thing is, valuations don't tell you when you will have a bear market. nobody can tell you that. what it does tell you is that long-term strategy -- long-term growth will be lower. david kelly, chief global market strategist for j.p. morgan. this is bloomberg. ♪

yvonne: a quick look at business headlines.

related to tax changes and a plan to cut more jobs in france. 900 and more positions may go in the retail banking business, resulting in 470 $5 million on top of 2500 jobs socgen has already said it will eliminate. le monde says a potential -- fiat says it has not been charged with any offense and is cooperating fully with french authorities. china's development bank has reportedly filed an insolvency suit against a wireless operator in india. the embattled firm controlled by a billionaire defaulted on dollar bonds earlier this month in the highest profile debt failures since india's new

bankruptcy code was passed. next, isming up bitcoin the tamagotchi of 2017? we look at the cryptocurrencies rise just ahead.