♪ it is 7:00 a.m. in hong kong. we are live from bloomberg's asia headquarters. welcome to "daybreak asia." wall street putting the brakes on the equities selloff from about the dollar falling the -- selloff, but the dollar falling the most in months. from bloomberg's global headquarters, i am betty liu in new york just after 6:00 p.m. this wednesday. citibank sees a potential write-down of $20 billion. endsident trump up

policy over jerusalem. ♪ betty: david, you have being slides in the asian market, certainly some risk off trading ,n the u.s. based on headlines tax reform or jerusalem. markets closed mixed. for jobs data on friday, but the s&p unchanged, the dow falling 40 points, the ,asdaq managing gains of .2% but nothing to write home about after we have seen stellar rallies in technology shares, a lot of investors wondering whether profit will continue in tech stocks.

-- profit will continue in tech marks. of these benchmarks have dropped to support levels. look at new zealand. coming off in a today slide. bid for the bonds here. it is snapping a three-day streak. here we go. asx 200, and then a move up in the aussie 10 year bond yield. japan and south korea coming online. futures in japan pricing in under .5% at the open. , the dollar catching a decent did on the back of weak sterling. -- bid on the back of weak

sterling. betty: a story brewing all day long, eight security council nations demand that president designatecision to jerusalem the capital has warnings and marks a major u-turn in american foreign policy. this decision is not intended toany way to be a departure facilitate a lasting peace agreement. that is a agreement great deal for the israelis, and a great deal for the palestinians. we are not taking a position on any final status issues. betty: let's get to washington. one now make this declaration?

-- why now make this to declaration? >> when they get into office pressure thate there should be a final agreement between the israelis and the palestinians. it is coming in the middle of talks by jared kushner, the special advisor to the president and son-in-law, who has been charged with trying to develop some sort of peace plan. this came because this came at to point at which it was due sign a waiver of a 1995 law that declares the u.s. would move its embassy to jerusalem. was a demarcation point because they did sign that waiver. immediate that any embassy would be moved, but

this is a happy symbolic move for the president to declare that the united states recognizes jerusalem as the capital. >> this dominated the european new cycle overnight. , including officials the strongest words from the swedish foreign minister, saying this would be catastrophic. will this be catastrophic to the peace process? new approach that has never been tried before. whether you can jump started the process by forcing the palestinians and israelis to the table to get to negotiations, but this is also creating problems for the u.s. overseas with its allies and others in , and it remains to be seen whether militant groups will take advantage of ents to formant -- form violence directed at israel or the u.s.

issue of taxis the and progress is there. when asia way except, help us understand what the progress has been over the last few hours or so. been negotiations around a final version of the tax plan that will be developed between the house and senate and there are still a lot of moving parts. same,amework remains the but now they are talking about ways to change it to bring in it toevenue or tweak get more votes on state and local taxes issues, which mitch mcconnell the senate majority leader said today he might be open to some sort of system choose some combination of state and local taxes or property taxes. as it stands now, state and local income taxes are no longer deductible, but property taxes are. there is some discussion on the corporate tax rate adding a

couple of percentage points on that for other items in the budget, but that is still in early discussion stage. david: another key moving part -- is the discussions discussions about where we go from here. we will of bird a shutdown on saturday and kick the can down the road two weeks to come up with a plan for what is called a continuing resolution to keep government funded the next two weeks. that gives them time to negotiate the spending demands from democrats and conservatives who want spending for defense departments and other items that were promised in the senate in order to get enough votes for the tax plan. looks like we have dodged the bullet now, but will be coming back to this later the in the month. long --hat is not too

later in the month. that is not too long from now. david: stocks swinging between gains and losses. oil strategists are using the term profit-taking to describe the recent downward gyrations in the market. su keenan has more on the market story. up, rotated into that, then down, then came back strongly. what is going on? ,> these last-hours trades let's go across the board. reflectione some that tech was on the rebound, financials and consumer stocks down. care up on a $5 billion acquisition. 97%ant pharmaceuticals down

some two years ago. it is hard to tell, because it ended up nowhere, but is getting positive attention from investors who think it may be time to reinvest. let's go into the bloomberg. there have been late day's wounds, the s&p falling in late day trading three times in recent sessions. this is 2050 if you're watching at home. it seems everything is fine, then a swoon in a final hour. a dramatic swoon in the most recent session, but strategists say it could be profit-taking particularly by large scale investors and hedge funds that into the market in the final half-hour to reposition. betty: talking about price swings, bitcoin above $13,000.

it appears interest is three times greater than gold. >> they say it could last. where we are getting the statistic is google trends, which monitors searches. bitcoin,"ype in "buy requests outstrip gold three-to-one. analysts are saying that squares with what is going on in the actual cryptocurrency itself. let's go into the bloomberg, 6308. bitcoin 10 times more expensive than an ounce of gold. the recent reports is twinshe winkle bosvoss became the first bitcoin billionaires.

so many people, including jamie toon, have called for an end bitcoin. it continues to defy its worst critics. bloomberg analysts are saying perhaps 2018 will see weakness in the rally on the luster will return to gold, but for now, it looks like bitcoin investors are hoarding bitcoin rather than using it as an online currency. betty: thank you so much. can't stop talking about bitcoin. su keenan on the markets. let's get to first word news with courtney collins. the uk's main business lobby is warning rising uncertainty around brexit is affecting every aspect of corporate britain. eu citizens would leave, companies will shift to jobs, and investment will move abroad unless the government offers a clear plan. man responsible for taking

britain out of the eu admits the government has no idea what brexit will mean for business. have, the treasury has an implication, even though that is pretty crude and done of all theerage external forecasts that impact the economy, so there is no systematic impacts. >> president putin is aiming for a fourth term in office. heaking at an auto factory confirmed he would run again in march with a recent poll giving him 67% support. 1999, been in power since and victory next year would make putin's longest-serving leader since stalin.

the pbocrg survey says will refrain from raising open market interest rates even if it decides to extend borrowing costs next week. economists, analysts, and traders we spoke to save the bank we'll maintain its current reverse repo rate. the pboc will refrain from raising bond costs in june. wildfires in southern california have halted filming in hollywood cost billions of dollars for local utilities. parts of interstate 405 have been shut down and properties in bel air and mulholland drive are being evacuated. insured losses above $9 billion. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. i'm courtney collins. betty: thank you so much.

still ahead on "daybreak asia," the global shipping industry after the loss for samsung heavy. we will also look at losses for other customers. david: that is up next. the possibility of a shutdown in washington and how it is investing around geopolitical risks. stay with us. this is bloomberg. ♪

♪ we are counting down to the first major market open this morning. japanese futures are looking like this, a little brighter are the u.s., up .4% as we one hour away from the open in

tokyo and seoul, korea. i am betty liu in new york. david: just to give you an update on the tax issue and the progress there, senate republicans have voted to begin talks on reconciling the two versions of the bill and both members hope to get one final version signed and on president trump's desk before christmas. chargelion is the likely if the senate version does pass, that is citibank. let's talk with invesco global markets. nice to see you. nice to have you in person. we have to start with how do you approach banking stocks now? with 20 billion dollars, one time, non-cash, but do you avoid banking stocks? >> first of all, we want to make sure the tax still is a done

deal. it is unlikely something would are not at but we the finish line yet. we will have to reconcile two different versions of the bill, then need to get the consent of congress again. i would say that right now i would be thinking about implications, but until we see a done deal, i would be reluctant to do anything in in a vance -- anything in advance of that. the pro-market elements are present. there is timing and little nuances, but in case the senate and taxgets passed cuts kick in and 2019, will that be a problem short-term? >> i don't think that will be a downem, but it will tamp markets and keep returns more modest next year than they would be if the tax cuts kicked in and 2018.

-- in 2018. david: the other element is corporates being able to expense capex, and you see that boosting productivity, but one could argue the money on the sidelines is sitting there for a reason and not just because it is waiting for accounting benefits to kick in. what makes you confident we will get a boost in productivity if they start spending on big-ticket items? >> we are seeing an increase in global capex spending, and a small increase in u.s. capex spending, so this would be a shot in the arm in terms of extending the capex spending cycle. companies have been reluctant to make expenditures because there has been a significant amount of policy uncertainty. , i think is passed that will change the scenario.

betty: you see one of the risks in 2018 of a more hawkish fed possibly, but if you look at the treasury yield curve, note sign of anybody worried about that. worrying inrobably and of itself. what i would say is we have an now with the jerome powell confirmed as the new chair starting 2018, and he has been irrgely presumed to be the he to janet yellen's monetary policy ideology. he is thed that, first non-economist in a long time to head up the fomc, so he could defer to other members of the vice perhaps chair, in monetary policy discussions. if we have a hawkish member in the vice chair seat, that could change dynamics.

goodfriend should be of some concern because he is hawkish and an advocate of a rules-based monetary policy. ofhas been a strong critic connotative easing, so we could easing, sotitative we could see an acceleration and the balance sheet normalization process, all things we should consider going into 2018. the data seems to give little credibility to the hawks at this point for any type of upside surprise to interest rates. correct, but keep in mind especially if these tax cuts kick in in 2018, that could accelerate growth. we have not seen signs of inflation in the united states yet, but perhaps that could change. we could see a fed that wants to be preemptive and start to raise

of what theynce expect to be an increase in inflation. we just don't know what 2018 will hold for the fomc. betty: no, christina, the topic of the hour and this month, speaking about expectations, is bitcoin, right, and what to expect in 2018. i want to get your view on bitcoin and pull up this chart 6038, which shows you the ,ncredible run-up in bitcoin now 10 times more expensive than an ounce of gold, seems to be taking some of that money normally in gold now piled into bitcoin. -- normally piled in gold now piled in bitcoin. what will happen in 2018, a big correction here? great question, and one for which i don't have a lot of answers.

what i can say is bitcoin is a natural outcome of what we went through in the global financial crisis, that lack of trust in institutions, that has created the bitcoin phenomenon, but we cannot see it as a store of value. this is another speculative investment. see bitcoin going away, i expect to see significant price fluctuations in the coming year and likely more regulation. final question, bitcoin is a function of than bracing broader technology, one of your convictions next year. 2018 tech trade? >> we have to recognize most tech companies will not benefit from this tax cut bill, so we will probably see more modest gains. in fact, we could see a pullback ,nce the bill comes to fruition but that represents of buying

opportunity because technology is front and center in how this economy evolves in the next several years. david: absolutely. it is used everywhere. thank you so much for coming on the program. kristina hooper. the chip maker aiming for the takeover, we look at brought calms fourth-quarter numbers next. this is bloomberg. ♪

♪ fourth-quarter's results beat forecasts and the chipmakers signaled strong smartphone demand while trying to pull off the biggest tech take over in history with its acquisition of qualcomm. joining us now for more is in king in san francisco. any surprise here?

>> they delivered again today. they saidven by what was large north american smartphone customer, which thinks means apple and that looks set to continue. betty: how does this play into their desire to buy qualcomm? >> they put out a note and proved again that they can take cost out of companies and up profitability, so they would argue that is another proof point that they have to do these things and they would be best as a combined company. seem tot would strengthen their argument. thank you very much. our bloomberg tech reporter on broadcom. more to come on "daybreak asia." this is bloomberg. ♪

♪ it is thursday morning in hong kong, a beautiful of the harbor, a winter morning. 30 minutes away from the open of major markets in the asia-pacific. betty: it is 6:30 p.m. in new york, where markets closed mixed , but at in the s&p gorgeous view of the new york city skyline this evening. i am betty liu in new york. david: you are watching "daybreak asia."let's get an update of first word news. eight security council

nations are demanding an urgent meeting to discuss president trump's decision to recognize jerusalem as the capital of israel. is a statement starts the process of moving the u.s. embassy there from tel aviv. trump'selcomed decision, but arab and european leaders said it would trigger unrest and fracture the delicate piece processed. -- peace process. >> israel is a sovereign nation with rights like every other sovereign nation to determine its own capital. factwledged in this as a is a necessary condition for achieving peace. thehis decision reflects president's commitment to an ancient but enduring truth, fulfilling his promises, and advancing peace. the president's decision is an important step towards peace. betty: a volkswagen executive

has been jailed for seven years in the u.s. for his part in the $30 million in emissions scandal. oliver schmidt was the compliance liaison and admitted to conspiracy in violating the clean air act. prosecutors wanted seven years, while defense tried to limit the term, saying he had been coached by his bosses to live. china ahead of schedule to become the world's second-largest importer of liquefied natural gas. it is now on the verge of passing south korea to trail only japan as an lng buyer. it has been triggered by the government cracked down on pollution and traditional dirty power generators. one analyst says we are into ring a golden age for gas. a state newspaper in the province bordering north korea has dedicated a full page to surviving nuclear war. the feature was reposted so

often that it was forced to issue statements calming people down and came as the u.s. and south korea carry out their biggest ever aerial wargames. north has said it is preparation for invasion and is preparing a response. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. i am courtney collins. this is bloomberg. ♪ david: thank you. we are counting down to the open up markets in tokyo and seoul, korea. sophie, the hope is we stop the bleeding today. it was a massive selloff yesterday. stocks taking hard knocks midweek. today could see the hint of a silver lining given the stock declined took a breather in the united states. this could be a prelude to the stemming of losses after stocks have the worst run of declines in the year in asia. the hang seng losing more than

2%, the biggest drop in 13 months. be paying attentionaying i to china. we are seeing the asx 200 gain. utilities and property leading the index higher, but resources as the bane for the index. energy shares tracking u.s. peers lower following oils biggest drop in two months. betty: the retreat and commodities has compounded woe s for emerging-market equities. they have become the latest pain trade. is that likely to continue? hit arging markets have two month low and lost 5% after 's high ahe year november 22. this drop is notable when

global stocks, the line in blue, little unchanged over the past two weeks. commoditiesed out, is one reason, and the downturn in tech stocks is adding to the trend, but mark mobius says the cycle is in the third inning with the biggest driver being reforms. you have jitters over chinese stock market being magnified this week. 2359 come at signs of higher volatility for chinese large caps, something anticipated. one analyst called china's 2015 market boom and bust and is predicting a six act rotation from large cap into smaller peers. -- predicting a rotation from

large cap into smaller peers. stocks have of fallen, so a strange phenomena in for the shanghai -- phenomenon for the shanghai share market. betty: let's turn to india, the r.b.i. stuck to their price stability guns on wednesday keeping rates steady as there is rising inflation ahead. kathleen hays is here with more. what did we learn that is new from the r.b.i. yesterday? >> they held the key rate steady at 6%. we know they are concerned about a rise in inflation. this is chart 1506. the blue line is indian cpi 3.6% year over year. here is the medium-term target, 4%, and it is moving in that direction. oil prices and food prices are credited for this. there is the repurchase rate at 6%.

remain.i. said they committed to keeping inflation at 4% on a durable basis and their inflation forecasts and kept growth at 6.7%. they say step to reform banks will open up lending channels and help the economy. the head of the r.b.i. said the neutral stance shows all possibilities are still on the table, and prime minister's key advisers saying rates are too high and there is inflation and that is a problem. bloomberg was calling for a rate cut, and inflation is preventing the r.b.i. from taking steps to help the economy. to talkrexit, we have about that as we move into thursday. i'm looking at sterling under pressure early now. shift looks like it

was breached by the ways of irish resistance. again, themay once irish standing in her way. the irish border is why they can't move ahead on this deal. saidrish prime minister that theresa may is hoping to present the deal by friday that will win over all the people who oppose what is on the table so far. let's look at why this is so tough to figure out. government does not want a border between ireland and northern ireland. the democratic unionist party, who theresa may is counting on to support brexit and keep her in power, once the same kind of rules for northern ireland as theyhe rest of the eu, but have to go by different rules.

border will beh somewhere when brexit happens in 2019. some people say that border will be between the u.k. in terms of england, scotland, wales, and the island of ireland. one of the latest developments that it is interesting is that david davis was accused of total dereliction of duty in parliament today because he has been talking about assessments that he wants to keep private of the impact of brexit on certain industries in the economy. he finally admitted today they had done no assessments at all. he said it will be a paradigm change. he said why make these assessments. it has been a chaotic few days and the next couple of days will be interesting and important for theresa may and the eu. david: kathleen hays, thank you. the shipping theme,

coming up next, a forecast on the actual global shipping industry. y's billionav dollars wiped out, markets and seoul, korea, and bloomberg intelligence just ahead. this is bloomberg. ♪ here about some son heavy and the billion-dollar wiped out, markets in seoul, korea, and bloomberg intelligence just ahead. this is bloomberg. ♪

♪ david: this is "daybreak asia." betty: the shipping industry is back in the headlines after samsung heavy plunge 29% in trade yesterday. than $1 billion wiped out of its market value after forecasting a surprise loss for this year and next and says it needs to raise more money by selling shares diluted. one of samsung's main customers is remaining optimistic could we spoke to the chief commercial of --r o

>> it is hard when one of your key vendors is having a hard time. we believe this is a reflection over ordering and infrastructure has been built to support this. the reflection this is not happening anymore unfortunately affects some of these shipyards today. >> how does 2018 look? we have had long-awaited consolidation. we still have overcapacity. where do you see 2018 shaping up? us, the fundamentals for the industry have improved greatly in 2017 on the back of two trends. first of all, strong demand for the services we do. a pacebeen growing at faster than the past two years, and we expect that to continue in the coming couple of years.

is industrying consolidation with bigger players emerging out of this trend and being able to put into place networks that can generate economies of scale we did not have before and that can to ploy the assets and capacity in a way that is more affected than before, so the combination of these two trends is positive. >> how much consolidation is necessary? you just purchased a competitive. the three japanese lines combining operations on the container side. costco in china is buying orient. cma as well with neptune. do you see more m&a and will you be active there? have yet tos complete that have been announced. we are in day two of the integration of the maersk group, andhis is in the making consumes all our energy at

mirsky. aersk.mi for us, all the focus is on making the current integration a success because it is fundamental for the viability of the deal. you have very good east-west, hamburg good north-south, is that a simplistic way. >> it is simplistic, but accurate way to look at it. are gaining a significant position in latin america and oceana, where we are able to reinforce are offering and will offer an array of products that is unmatched in the industry, so it is good news for customers. >> idc global trade picking up in 2018, or do you see it do you see-- how

global trade picking up in 2017, or do you see it picking up? >> we have seen the strongest growth and containerized trade that we have seen in a decade. of confidenceign and businesses all around the world. we see in emerging markets on the back of higher oil prices will continue in years to come, and therefore global trade should be growing again after a few years of subdued growth. david: that was the chief commercial officer of maersk shipping speaking with stephen engle. bloomberg intelligence has been testing the waters for shipping in 2018. let's have a look at the outlook. our asia transport and was joins us live right now at of singapore. we just heard a conversation there, your initial thoughts on that. finally after years and years of overcapacity, 2018 does look

right, doesn't it? .> certainly that is not entirely a surprise. orders are hard to come by for shipyards. we have seen some recovery, but that does not translate into shipbuilding. the huge ordering over the past decade, that is largely behind us and the next ordering cycle does not look to come for the next 2-3 years. shipyards.ention the i think they have issues with chinese companies. the chinese have been taking market share and have been narrowing the technological gap significantly. of theng-powered state art ships have gone to the chinese. it will be challenging for the shipyard over the next two years. david: explain this to us.

there are lots of old ships out there. the rate of scrapping not as high as it should be for shipyards? the order book is not quite there yet you mentioned. whereu compare competition is among the shipyards in the asia-pacific? >> sheer. the order book started picking 2010-2012 and the main shipping sectors, dry bulk containers and others, and now we are down. if we go back in history, you would see how the shipyard industry moved from europe to japan to korea to china. that is what we have seen over the past decade or so. chinese are not known to build ships like the lng-powered container ships, so they are and are stuckame

with offshore lng. the japanese are established and still have order books filled up 2019-2020, but for koreans, that is a challenge at the moment. betty: what does 2018 look like? >> if you look at 2018 market outlook for dry bulk and container shipping, that is looking better. the rates are already back up earnings, asset values, so it is a supply-driven story now. and the recovery in higherg is a result of growth. for 2018, it is better than the last few years. betty: what about the dry bulk shipping. how will that fair

next year? >> it a must is hit a three-year high, and the largest ships have wild price swings and are dependent on china. they are having the best quarter in the last 3-4 years. if you see the chinese beginning initiatives, that is having an impact. is doing ok, so it looks like 2018 will be better. they can look at much better outlook over the next several years. note, and alighter lot of viewers are curious, 2017 has been a good year for the stock market. a lot of people are feeling rich as we approach christmas. cost?ch does a ship

in 2016 there was comparedf a ship being to a for worry. those days are long gone. $35 millionld cost for a ten-year old vessel. it is still a lot of money, and i don't doubt that. .etty: thank you so much certainly interesting there. our asia-pacific transport analyst for bloomberg in singapore. coming up, we hear from southeast asia's answer to uber and its outlook. this is bloomberg. ♪

♪

is facing growing competition from grab and uber in southeast asia, but the ceo is not concerned and says softbank investment in uber does not matter. he spoke with bloomberg in jakarta. mostthink it is one of the epic and innovating battles in southeast asia. they are incredibly, both incredible companies, to compete with. it is an honor to compete with them in the space of ride hailing and the largest regional juggernaut with the most funding, it is an incredible challenge for go-jek and a big itson why go-jek got where is today is because we have been pushed to our limit and have had to hyper innovate and came out

on top in indonesia as result of that competition and the urge to innovate. mentioned they are encroaching on market share and services you are providing. does go-jek itself changes strategy? >> know, our strategy was designed to be resilient against giants. ,ur entire product strategy entire competitive strategy, is designed around flexibility, hyper diversification, and mitigating risks because we have so many verticals that into relate with each other. it is hard to deal with this animal called go-jek. you think you are competing with us on ride hailing, but you are competing with us on the user that uses food and ride hailing. this is a digital wallet player leveraging that in order to further reinforce its food and transport business. we are difficult animals to get, and as a result, there is a

little bit of business jiu-jitsu , that is how we survive and come out on topic and some of the largest companies in the world. >> you said your payment system would grow aggressively. what are your plans for 2018 in a crowded and competitive market? they are really diving into this now. >> sure, just to address that point. we are the only large tech player in indonesia that has anti-money lines at that scale that is a pure tech player. we are one of the few. the rest of the larger players in indonesia don't have a money license, so that is a good advantage to have leadtime to expand. we are ahead of the curve, but obviously competition will come in and we are expecting it, but we are in bracing competition because that is what makes our product great.

go-pay travels outside our ecosystem next year and starts being accepted in off-line establishments in a variety of online establishments, so 2018 is the year of partnership. there is a very long queue of partners trying to integrate go-pay right now. make of theou investment softbank has had on uber? could that lead to more consolidation? >> for us, it is important to have the integrity to pursue our product vision. it does not matter right now. we have always been the underdog in terms of funding and resources, and we still come out on top. it is not about how much money you have. it is about how hungry you are to create exceptional product experiences. ceoy: that was the go-jek

bloomberg thee year ahead summit. coming up, profit taking. find out where the opportunities are. this is bloomberg. ♪

david: it is in :00 a.m. here in hong kong. welcome to "bloomberg daybreak: asia." crossed, to end. the recent so after wall street stepped on. the dollar rose and oil is down. stirling is also john. brexit chief admits the government has no idea how much a split will cross -- will cost the country. 7:00: it is just after p.m. in new york on this wednesday. the un security council will meet after president trump offended foreign policy on to lose your -- policy on jerusalem.

happy with iphone sales in china. we will hear from the ceo, tim cook later this hour. ♪ david: eight days at may have been too long, longest streak of declines going back close to two years. let's hope we do break that spell. let's have a look at the opening in tokyo in seoul were sophie kamaruddin is standing by. like crossingks your fingers are working because asian investors are taking the hint and running with it. i'll to bet losing streak. recoverei 225 is set to its worst drop in nine months. the cost feet rising 2/10 of a percent after losing over 1% on wednesday. now is the countdown to the october trade figures for austria at the half hour mark.

aussie stocks are at 3-d declines while the aussie dollar is holding overnight losses sparked by the retreat in iron gdp data.e miss in take a look at is what -- take a look at what is moving the dow for sydney. probablyte, i will index. take a look at the bigger picture. a softer economy. it is lackluster, as well as the lower aussie. morgan stanley is adding to the chorus that australian stocks stockag the global picture with the asx 200 seeing and being at 5800 points. research in energy stocks are sliding, morgan stanley says they will benefit from the global growth recovery. the energy producers are losing ground, tracking the weakness of oil prices near crude holding losses near 56 bucks after the biggest drops in two months. we are seeing losses ease. telco is also down to 10th of a percent. it is a green day for aussie

shares. putting up stocks to watch when it comes to the trading session in seoul. keeping an eye on samsung heavy, after its worst plunge on record. that stock continuing to decline but into nearing is extending gains for a fourth day. it has started exclusive talks for toshiba new -- toshiba nuclear project. the company says no decision has been made on supplying panels for the iphone -- iphone 10. just some stocks to keep on the radar there. sophie: betty: -- betty: think thank you so much. first up, the un security council will meet on friday to discuss president trump's decision to discuss to lose lum as the capital of israel. it starts the process of moving the u.s. embassy from tel aviv and up ends decades of foreign

policy in the middle east. israel welcome trump's decision but arab and european leaders say it will trigger unrest and fracture the delicate peace process. president trump: israel is a sovereign nation with the right to determine its own capital. acknowledging this as a fact is a necessary condition for achieving peace. ahead of the uk's main business lobby is warning that the rising uncertainty about brexit is affecting every aspect of corporate britain. companiess will leave and investment will move a broad unless the government offers a clear pan -- clear plan. the man responsible for taking britain out of the eu and mitts the government has no idea what brexit will mean for business. the government has no idea what brexit will mean for business. our forecast has an

implication. the average ofom all the external forecasts that impact the economy. there is no systematic impact. is aiming forutin a fourth term in office. speaking of an auto factory, he confirmed he will run again in march with a recent poll giving him 67% support. he has been in power since 1999, during which tension with the west has soared. with the u.s. relations at the worst since the cold war. victory next year would make him the longest serving leaders since stalin. dayal news 24 hours a powered by more than 27 hundred journalists and analysts in more than 120 countries. this is bloomberg. president has surprised

the world, his jerusalem announcement uniting friends and foes in condemnation. the decision could have far-reaching implications. joining us now is ocbc wealth manager and senior investment strategist. it will be a headwind for markets in the coming months. in his view, he has been a major tailwind for the markets here. more headlines whether it is north korea or the new proclamation on jerusalem. how much of a risk are these geopolitical risks in 2018? in 2017 the 20 -- the geopolitical risks affect the markets. they are still driven very much by fundamentals, as well as earning fundamentals. this year the stock markets in the bond markets have done fairly well. surprisingly have

of site despite geopolitical events like the exit, north korea and the situation in the middle east. i don't think it will cause a big problem for markets, as long as the fundamentals are intact. risks,these geopolitical the marks have been quite resilient to them in 2017. it is more along the lines of bitcoin or tax reform that has got people nervous about this. youhere was one risk, if think that picture changes in 2018, where d think the big hot spot is for investors to be wary -- where do you think the hotspot is for investors to be wary ? in the bondst index markets. you see complacent fees at record low levels.

has underperformed central banks targets, but if a 2%tion picks up in 2018, handle, which is the target for central banks, monetary policy could tie in -- tighten. reason why a six office of done well is because of very easy policy. debt changes -- if the policy changes we are headed for trouble times. david: it has remained boost even if the hike rates have gone. we are likely to get a fifth what next week. what leads to significant tightening and financial conditions? is it fed or do we need to watch something else? i think it is not just the fed, it is global, central banks.

it has been fairly well telegraph. it has not cause markets to follow off the cliff because they have communicated very well. the markets have been well prepared. i think 2018 is not just a fed, other central banks are jumping onto the bandwagon. you have ecb talking about tapering. the bank of england and canada have increased interest rates. the bank of korea is increasing. the question is will other central banks jump on the bandwagon? if that happens it is not just u.s. financial conditions tightening, the global tightening. that is a different ballgame altogether. betty: stay with us because we will talk more about emerging markets and asia. that is ocbc wealth management strategists staying with us. we will turn the conversation to em and pause.

and gettingalking his take on what he had to say about em strength next year. , later on this hour, we will look at how big tech has been transforming the health-care sector. where the opportunities are within that very vast and complicated space. s&p global president joins us later on in the show. stay tuned with that and others. this is bloomberg. ♪

david: this is "daybreak asia." resourcesnklin chairman and em watcher says emerging-market rally is likely to continue. asia summit, he said stocks are passing their 20

7 -- 2017 by 20%. >> it is sustainable because we had three years of bad performance against the u.s. market. now with the u.s. markets , emergingff well markets are back because people realize that is where the growth is. we will see at least 20% more growth in emerging markets going forward. we have not surpassed the 2007 peak. that will happen. what would make you sit out. ? what risks do you see? big risks. are two north korea. i believe the u.s. will take some action. maybe shooting down a missile or whatever. that is a big risk. the other risk is the internet, the interruption of the

internet. the whole global internet community. there will be hackers going into systems and more and more cloud services being offered what the whole bitcoin thing and with the .nterlinking of systems there is a possibility of a hacker disrupting the entire system on a global basis. it is something we have to look at carefully. name terms of market, three markets. china because there is more opportunity. india would be next. there are two big possibilities going forward. and the smaller market i would say vietnam. there is big change. it is a small market. china has managed to rein in

financial risks without compromising growth. consolidatingg his power do you expect the fallout to be great? mark: i think he is making big changes in china and it is having a beneficial effect. one of the reasons why growth is continuing in china is because it was tracked down. all the money that had been wasted in practices, slowing down systems and enabling people to do the business they want to do. as this will have a big impact. one of the reason why china continues to grow. betty: that was franklin resources mark mobius speaking to haslinda. vasu.with us is markou in line with what mobias is saying?

what we're seeing is a temporary blip. we have to draw the distinction between the short-term and the medium-term. in the short-term, emerging markets could be headed for choppy. emerging markets in the last 12 have appreciated almost 30%. that, compared to global equities at 18% or 19%. you have had a big outperformance on emerging markets this year. forward, tightening of monetary policy by central banks, the risk of donald trump, those are risks in the short-term. we need a period of digestion. him, there is pretty good potential. it is clearly superior for what you have in many parts of the world. betty: have you been surprised

at how far emerging markets starts -- emerging-market stocks have fallen so far? not surprised because emerging markets are a risky proposition. this reason -- this region tends to be volatile. it is not meant for the fainthearted. i think there is good potential for money to be made in emerging markets. you have to take a medium-term view. nearly, emerging markets could offer potential. if you look at the last five years, emerging market is faced on the index. it has appreciated only 29%. global equities at 56%. underperformance and room for emerging markets to play catchup because of the underperformance. david: let me ask you the opposite and just a look at the other side. what is one emerging-market viewing in their touch?

market you emerging would not go near? we do not have one particular one that we have in mind. overall, china is always the one that has slacked off by investors. doingk what xi jinping is will be good for china. he is rooting out corruption and bringing reforms. there is a huge debt burden in china. some forecasters think the debt will blowup and it will be a market you don't want to touch, but i disagree. 90% of china's debt is local currency debt. i don't have one emerging-market. clearly, there is big trouble there. it is almost like a japan story were a lot of debt is locally held. that is a debt problem on one

side. when you look at the emerging markets, do you buy the index and chemie expect 30% returns next year or do i have to get my expectations back? if you're someone who is focused on the index and keeping costs low. sometimes, with emerging markets gems are found below the rate. it will really help fund managers. it may be better to invest in emerging markets march -- mutual funds. picking the right stocks in emerging markets. broadly speaking, dca return to active management next year and away from these massive flows into passive vehicles? vasu: i think it will be accommodation. i don't think the passive vehicles will be drop by investors. i think it is a combination.

i think there will be some investors who will put money with the index funds and address. there are others that will seek the active asset managers. you are right, the vehicles are getting traction because investors are looking for low-cost investment opportunities. there is no harm in investing to the index as far as emerging markets are concerned. with the emerging markets you need to be on the ground and finding gems. this is where managers can lay a row. betty: -- play a role. betty: there could be surprised in inflation and we may see the fed more hawkish than what it is indicating right now. if that were to happen and we were to get four, maybe more than that next year, how destructive could that be to emerging markets? a very goods question. if inflation surprises and the

fed hike rates five times or six , emerging markets will see a significant pullback. maybe even my 20%. the inflation is induced by a pickup in demand. that fallback presents a buying opportunity. not an opportunity to get out of emerging markets altogether. theret happens, and if are inflation and the markets pullback, use the opportunity to buy. david: i am guessing a lot of people will follow that advice and use that strategy. on theou for coming program. ocbc wealth management and senior investment strategist. you can get a roundup of your stories that you need to know to get your day going and started on today's addition of daybreak. dayb on your terminal. it is all a veritable and the bloomberg anywhere app. you essentially get the news and information on industry's that

you care about. good way to start your morning with a copy. this is bloomberg. ♪

david: let's get a check of your latest business headlines. start using plot chain. equity transactions in the finance industry's biggest it's yet. it has digital asset holdings held by former jpmorgan bank masters. no date has announced the place in the 19 -- in the 1919 clearinghouse. the system is known as chess. the coin 14,100 at the price. that it isloomberg probably a bubble but it will phil -- it will still rise.

financial institutions are moving in despite lingering doubts. those doubts have been strengthened by news at a marketplace. has been hacked, leaving an unknown amount of bitcoin. have a look at the bitcoin price , 14,105. apple suppliers are under pressure after taiwanese warned of a december revenue drop in orders from unspecified customers. its largest customer. 27% of the companies revenue 19%.d is gone big business leaders from around for thed are meeting global forum. our china correspondent, tom mackenzie is there. so far, whoever we heard from?

tom: they will doubt some of the big beefs of the corporate world. highlights coming from the ceo of apple, tim cook, who has been in china for a week. the chinese markets for apple is the second-largest market to them after the u.s. they are facing competition. reports a been coming out about the sales of the iphone ask. he painted a pretty positive picture. he was asked about the market for the company and said the number one attraction for him was the quality of the people that he finds here in china. he also interestingly talked about the partnership that apple has with tencent. and he said he was pretty optimistic. take a listen. tim: if you look at how iphone x is doing, i cannot be happier. ofhad a few quarters

negative growth on a year-over-year basis. we return to double digit growth last quarter, even before they iphone x shipped. that was tim cook, apple ceo. we also heard from the chairman of the fort company talking about the electric vehicle set for here and china. he said china is really taking the lead on this issue. for had set up a joint venture with a chinese company to produce electric vehicles. it was a lot covered yesterday. corporate's are building their footprints in the chinese market and how they are pushing abroad. betty: there has been a focus on health care as well, right? we heard from the chairman and founder of tencent, he is someone you don't hear from often. he said there is great opportunity for education and health care and talked about the rivalry tencent has with

alibaba. betty: tom mackenzie, our china correspondent's. we are counting down to the latest trade day in australia. we will break those numbers for you, next. this is bloomberg. ♪ retail.

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david: 30 minutes before noon in sydney and we are waiting for the latest trade numbers for october. -- waiting for the latest trade numbers for october. betty: i believe we are getting that data out any moment. david: we are getting them right now. i have to recap these numbers. had a 5 million aussie dollars. we were expecting 1.4 billion. look at the aussie dollar right now. we are coming off 1.8 billion roughly a month before, we were looking for 1.4. we are getting just above 100

million aussie dollar's in terms of the trade surplus for the month. it's have a look at the aussie dollar and see. her, 75own a few see .68 roughly. higher range for today was 75, 55. that is a bizarre number. what else ist falling across the markets. more details coming out here. imports were up 2% from the month back. exports fell 3%. betty: ah. david: yeah, it's not a blip. $100 million for surplus. that explains why we are getting the drop in the aussie dollar. quite a mess. if you want to write that in a love letter. sophie is watching the markets. sophie: we are seeing a slight drop in the aussie but keep in mind it has been trading around a december low because we had

that weak third-quarter gdp asber on the aussie dollar, well is that retreat in iron ore . when you look at the catalyst, not much to the upside for the aussie in the near term. when you take a look at the bigger picture, ubs expects the rba to downgrade the economic outlook following the third-quarter numbers. now with missing the trade balance, that might lend credence to that potential outlook. taking a look at aussie shares, they are on course to snap a three-day decline. you have i.t. and utility sectors leading the game. consumer stocks are on the rise. 4/10 of aning percent. yesterday's decline had -- led by harvey norman. sharesnow seeing energy on the updating to 10th of a percent. -- 2/10 of ay percent. other industries are gaining ground. materials are now little changing. looking at specific energy.

telcom was bleeding -- was leading at 2.5%. it was upgraded to hold out morgan financials. we have qantas airways halting a four-day drop. when you take a look at acliners, we are looking at pressure for some miners. alumina is falling for a third stash and -- for a third session. the worst performer today slipping to a july low after being cut at j.p. morgan. lover, it hass dropped 32% for salmon since may. betty: time to get some shoes she -- time to get some sushi. let's get to the first word news now. first up, a bloomberg survey said the pboc will refrain from raising open market interest

rates, even if the fed decides to increase costs in the week. of 32han three quarters economist, analysts and traders say the bank will maintain its current reverse three. it refrained from raising costs in june after a fed hike switched from march when it followed suit. in thete newspaper chinese province bordering north korea has dedicated a full-page to surviving nuclear war. reposted so was often that it was forced to issue statements coming people down. the u.s. andame as south korea carry out their biggest ever aerial wargames. north korea says it's preparation for invasion and has to and a serious response. wildfires in southern california shutput a major hallway down and halted filming. the fires have shut parts of interstate four 05 and properties in bel air and mulholland drive's are being

evacuated. it is two months since the deadly fires in california history backed up insured losses above $9 billion. and the record breaking da vinci painting is to have a new home in the middle east. the $450 million masterpiece will be seen at the booth abu dhabi. -- at the -- abu dhabi. estimates -- presale estimates questioning its prominence. it is thought to have been the last the vinci in private hands -- the last da vinci in private hands. this is bloomberg. let's get a commodities check now. most metals and oils and oil prices slid in new york trade. we have the bloomberg chart you need to know. >> earlier we were taking a listen to the ceo of ali talking

about how he would flood the markets with iron ore. that is cause for concern. i want to show you what is happening. g #btv 2017. the white line is a price of iron, -- iron ore. it has slid 15% year to date. the yellow line you see is inventory in china. it is just about quadrupled over period. time curious where this yellow line will go into the future. the reason i say that is because of my next bloomberg terminal chart. for is the sc ag function china's imports of iron or. we are seeing a huge drop-off in this box for october, down 23%. the last time we saw something as big as that was only in 2014. where is price of iron or going

to be going, especially with china not demanding as much as a has-been. want to take a look at what is happening with copper. two thirds ofn up a percent, it is down on the year. we see that over the past several years or so, it has been on the downward trend. take a look at the yellow line. we can see that it has hit a high in 2011 and 2012 and is about half of that. we have to talk about china as well. the area line here is of construction that china is doing. you can see it has been flatlining at 2016 and 2017 because of the leveraging. we can see in the purple line, it is copper consumption. that is also flatlining and plateauing and is deleveraging. copper price, where is that going in the future? stay aware of that. we have to talk about oil because oil was not on the ball today. this is g #btv 2347.

the yellow line here is brent crude. debbie btine is crude. you can see sharp drops in the past day. the latest eia data that came out in the united states did not have to do with oil, a had to do with gas. there is an oversupply in gas, that lends itself to the fact that the cousin there's so much gas, they don't need oil. there is less demand for that. we are seeing that shoot up in terms of the white line, then oil coming off the price that we have seen over the past few weeks, especially from the opec deal. we can see that brent crude is at $61 on that handle. for wti it is on the 56 dollar handle. lots of ups, but many more downs. copper there,d: you have to pay attention to dr. copper, not dr. ramy.

we will look at what is in store for markets in the coming months. we are looking at oil prices right now and we are joined here. you, just a broad picture for the crude markets, especially for refiners in this region. going into a better space than it was at the same time last year thanks to opec. opec's cuts have work so far. they have managed to produce global oil. the extension of the production cuts, what we see as if it continues in compliance rates remain higher, then you would see oil go back to the five your average levels. that would be supportive of the oil price. the key risk for this would be what happens in the u.s. to show market -- to shale market. are we getting an early

indication that they are starting to come online? it is easy to say that they will decrease the number of oil rigs that are active, but getting get into the ground and market is another thing. what is the timeline and how does it affect getting back to the five your average? kunal: if you look at u.s. shale, 20 new rigs have been deployed. falling up since september down to november and risings have been -- and numbers have been rising. the numbersint is, and the drills have been drilled, but brexit is coming out of it. the wells have risen by 2000 units in the last one year. productivity is about 800 barrels a day in the u.s. if you build a map around it,

just getting the oil out of these wells in 2018 would increase supplies by 1.5 million barrels a day. that is a big risk in 2018. betty: is that going to derail opec's plans? kunal: come again, please. betty: is that enough to derail the effect of opec's cuts and their plans and 2018? imc i, i'm not following you. without thes asking and f2 derail all of the extensions that opec has put in? or are we making too much about it? i still see inventory falling and going back to a five-year average. is a big supply risk and we still have to figure out how much a supply will arise. markets be a case where

balance around 2018. it may push back in 2019 as well. opec may still need to extend production cuts. at some point in time, they will have to cut back on these cuts and give the supply out again. david: we are calling it opec slip. the other thing i want to ask you, before we started this conversation we talked about refiners. what is the outlook for that side of the market? kunal: downstream has been doing well. the oill because of prices. of gains for these companies in the last two years. it is good enough for opec. in morel start to bring supplies. it will keep on producing.

what we see 2018, we will not see oil rallying and we will not see inventory gains coming in. there is a lot of capacity coming. office of -- all this will put pressure and inventory gains would be hard to come by. david: your top panel is your .efining margin help us understand what this relationship is? kunal: look at the chart on the bottom side and you can see inventory gains seen in 2017. in the first half of 2017 two around june, oil prices came down. you could see refiners were making losses. since then, oil price picked up from $45 to $60. that tilted the oil earnings outlook for the bond 17. if oil prices rally from $60 to $70 or $75, you can see gains. it is unlikely. toid: this morning as i came

work i almost got run over by a tesla. there are a lot of electric cars. when do oil producers have to start worrying about the electric vehicles? kunal: i think they are already looking into it. on demandf the impact an impact on demand substitution, we don't see that happening until the mid-20 20's. by 2025-ish, then -- the new rate or have half a million oil barrels a day. can dispel that much oil, then oil command -- oil demand can go from there. 2032, that would happen and you would see all demand start to fall. sign oil company should be looking. we are seeing it happening already. they are talking about banning i

see you by 2025. david: we welcome you to come on the show. coming up, big data, text in the health care industry expected to top 30 more billion dollars in the next five years. we hear from a division of europe's biggest software company. this is bloomberg. ♪

the health care industry is facing many transformation to the use of advanced analytics and big data. researcher wiseguy reporter said the global health care big data mark will hit $34 billion by

2022. they discuss the changing legislator.th sap thank you for joining us. this is all happening when just a few days ago we heard about this deal between cvs health and aetna. a lot of this will be gathering data to drive down drug prices, to better track health care information. tell me for us, is a lot of this reality, or is it just hype we talk about big data and health care. ? >> it is a pleasure to be on the program. the reality is this is happening. this is very serious. the intent of the capital to have intelligent technology and health care is very meaningful. reconciling the equation of health care and the reduced cost of data management

with integration, data is absolutely required. as all the other big data technologies, machine learning, computing into quantum computing are absolutely necessary to rio leash the prod -- the promise. the last transaction that we have seen over the last couple of days, weeks and months are focused on creating large health care delivery platforms by bringing all this data together and trying to dive -- drive efficiencies out of those systems. betty: the data is so different. there is a difference between data on your phone that is tracking where you are and what you like to eat and that sort of stuff, for us is data that is really about your health, which is so private. isn't that the biggest hurdle when you are using big data in the health-care industries that a lot of this data is so private

and goes through security and it is a big concern? you're absolutely right. the framework of data privacy is highly complex. it is reasonable -- it is regional. it changes from one region to another in a country. the complexity is finding a way to bring the data together from a different format. that is one dimension. the broader issue here is really about the gap between what the technology affords us to do and what the law allows us to do. there is still a gap. we are not allowed to manipulate data. are facing thewe consumer who wants to be in control of their health care. these patient in the middle of the equation is increasingly letg to give us consent to the data be manipulated for research purposes or technology progress.

i think that shift will help us reconcile data privacy frameworks. what is sap doing on this front? corporate mission of sap is to improve people's lives. our health care is a highly strategic division. we have two promises. first, we are helping our clients better by bringing them solutions that help them address procurement, hr, supply-chain logistics. at the same time we have a different opposition where we that areatal help and of our focus where we are it to accomplish two things. we are helping them do more with data. we are helping them bring data that is disconnected together. we are helping them drive

insights that are predicted at the level of one patient at a time. this is a way that is much more dynamic. delivery it will help better care at a lower cost. david: david here in hong kong. we no change is good and is not always welcomed. what is the pushback you are getting when you talk to your clients? thomas: there was always a concern around over we able to protect data as we manipulated. data breaches always a concern. on that front i think cybersecurity is getting more and more sophisticated. we are slowly addressing that concern. on the other side, fundamentally we are talking to organizations who have spent a lot of energy implementing large systems. now the question becomes, do i need to rip and replace my past investments in order to really

benefit from health solutions? rip andot have to replace. most propositions are presented to the market and implode as cloud solution. they complete -- they can be incremental to the existing stack. these are typically the two major dimensions on resistance allowing talk at the enterprise level. the challenge in the middle is always about behavioral change that can be championed by these positions. when you bring new, innovative into the systems, whether it is a payor or provider, you always have to ask the clinical side to push adoption of new models to scale. david: we have to leave it there. lots more to talk about when it comes to the space. we welcome you in the program in the future. snp health global president. you can find more on the future of health care.

head to bloomberg.com/feature health care. -- bloomberg.com/future health care. this is bloomberg. ♪

david: this is "daybreak asia." betty: a quick check of the business headlines at this hour. a shoot somber message for anyone betting on iron -- iron

ore. it is threatening to flood the market if it climbs too high. it is the world's top iron ore producer. is prepared to unleash as much as 50 million tons of spare capacity to balance prices. would newer prices inefficient producers back into the market. there is a bond sale with interest rates bringing crippling cost. they want to sell 150 million for petrol security and china. the carrier is part of a group that had a $40 billion global spending spree has attracted the scrutiny of a lot of regulators across the world. almost it from us here on "daybreak asia." rishaad: they do this every five

years, it has been well anticipated. we will be hearing from her and looking at these products and what is happening with micro-lending. we have financial development as well. us in aboutoining 15 minutes from now. yousef i should say. executive will be health at medical and care in china and the opportunities that they see in the country. lots more than that. that is all i have time for. betty: a lot happening and health care and around the world. that is it for "daybreak asia." standby for "bloomberg markets." this is bloomberg. ♪ is this a phone?

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>> asia-pacific market stemming their losing streak. the nikkei 225 recovering from the worst slide and nine months and the aussie dollar off of october export numbers. the trade balance falling from 1.6 billion to just 100 million. and the brexit chief admits the government has no idea how much it will cost the country. in hong kong, this is bloomberg markets. ♪