♪ >> 7:00 a.m. in hong kong. we are live from bloomberg's asian headquarters. i am yvonne man. ends itsin dispute. >> not a fan. bloomberg's global headquarters, i am betty liu in new york just past 6:00 p.m. on this tuesday evening, republican leaders hammering out a compromise, the bill could be announced this week. in alabama goes

right down to the wire with an election that is too close to call. be live in montgomery, alabama in just a few moments. ♪ >> we are getting breaking data on the jobs market in south korea. the november unemployment, jobs rate at 3.7 percent, higher than what was estimated for no change for the unemployed rate at 3.6%. of masksss rate sort the big issues going on in south korea. surface it looks good, but underneath we still have very high unemployment with the youth and a high part-time unemployment rate -- employment rate continuing to dog banks and

the president, who is trying to put in public policy to bring the jobs market back in south korea come and that is likely, possibly going to have some effects on trade. >> certainly will be when it comes to the fiscal side of things when it comes to south korean reforms from the president wanting to implement. perhaps we will get those youth and implement numbers in just a bit. at asiake a look appeared pretty choppy when it comes to tax reform, uncertainty with the alabama special election. we start off in new zealand. we are down .25%. pretty steady for the kiwi. we have seen the dollar pricing for a seventh day, strong ppi print from the u.s. overnight as well, yields ticking higher for the u.s. 10 year. trading in sydney getting underway. , pretty look at the asx much flat at the open.

there forking higher the 10 year yield. counting down to the open in korea and japan. in japan, some ♪ weakness on the nikkei 225. dollar-yen steady at 113.56. >> a quick reminder to our viewers of how we ended up here in u.s. markets, a mixed the session. shares taking it on the chin. the s&p closing up .1%. the dow joins adding 100 points. the nasdaq dragged down as tech on thewhere the laggards s&p, reflected in the nasdaq. the market seemed to be unfazed by the uncertainty in that special election in alabama. we will be getting those results in about an hour. let's get to first word news.

secretary of state rex tillerson says the u.s. is prepared to negotiate with north korea without preconditions come up but he says the regime must make a different choice over its nuclear and ballistic missile programs of talks were to continue. leased withys he is progress in ramping up pressure on the north, but part of that is a strong military backing. >> we are ready to talk anytime north korea would like to talk, and we are ready to have the first meeting without preconditions. .et's just meet we can talk about the weather, if you want. we can talk about a square table or round table if that is what you are excited about. >> the rba joining that coin doubters. thegovernor phil lowe says currency is more likely to appeal to criminals than consumers and the fascination is

speculative mania. at the weekend, grant spencer said the currency looks remarkably like a bubble. fascination with bitcoin and cryptocurrencies feels more like a speculative mania than it has to do with their use as efficient and convenient forms of electronic payment. the chief eu brexit negotiator is warning the u.k. against going back on agreements made last week as concern grows the two sides are in a race against time to reach a deal. said it will accept no backtracking from london after david davis and other u.k. politicians questioned the legality of the accord. bank of england governor mark carney is under pressure to justify policy as inflation accelerated to its fastest and more than five years.

the 3.1% rate is the highest since march 2012. the office for national statistics six says it is being driven by the cost of airfares and computer games and more than 1% above the 2% target. india's inflation rate zoomed past the central-bank target, prompting speculation that interest rates will rise earlier than expected. month,ed to 4.9% last driven by more expensive food and fuel. that is the past his face in 15 months and talk all estimates of those bloomberg survey. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. topped all estimates of those bloomberg surveyed. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> let's get back to toshiba and western digital confirming the end of a lengthy legal dispute that have threatened to derail the sale of their flash memory

chip business to a consortium led by bain capital. in a bloomberg intelligence senior analyst for semiconductors and tech hardware. this litigation has really held back the two companies. >> absolutely. this deal is marquis for toshiba and western digital. good morning. what is important is for western digital to remember they have a joint manufacturing partnership and they would not procure nand at cost if it were not for the supply, and the future investments were condition on having to amicable partners. this moves them to the future and the existing partnerships for the older factories can continue to be upgraded. this is particularly important n, ause they make 3-d na

technology used for storing photos and videos. there is a risk of potentially producing this at much higher cost than samsung if they were not able to have this. ar toshiba, this is just question of whether the deal will close or not and whether there would be legal and pediments -- impediments to that sale or not. it was important for both sides, but much more complicated in that sense. >> near-term risk were bigger for toshiba, longer-term risks for western digital. it is great they have been able to solve this and put that behind them and all the stuff the matters for 2018 is how supply-demand shapes up for the year. do you think essentially that

toshiba basically gave in to reach some kind of agreement with western digital? there must've been compromises on both sides. this is quite significant. fabs were just the tip, but it affect upgrades to existing factories in production if the two sides don't have a deal. it toshiba were to say i don't want to upgrade equipment, you are behind samsung and your margin start getting hit and you're not getting product at cost, and your margin get squeezed in the process. sides, buta on both from a longer-term perspective the existing fabs are almost as important as the new ones. >> now that the debacle seems to be out of the way, what is the next major hurdle?

there seems to be this antitrust review concerning this chip sale between bain and toshiba. m&all of these larger transactions are coming under substantial review, not only the u.s. and china, but multiple jurisdictions, including the eu. there has been tremendous consolidation in the space across the chip industry, and this is just one. i would imagine in this particular case however that this does not change the overall landscape going into private equity hands for toshiba semi. it does not upset the apple cart for the memory industry. i think from a regulatory perspective that the powers that be will be looking at that as -- >> thank you for your analysis there. senior analyst for semiconductors and tech hardware for bloomberg intelligence

joining us from new york. alabama has not sent a democratic senator to washington in a generation. tovoters head to the polls choose between roy moore and doug jones, it is anyone's race today. are now live from montgomery, alabama. kevin, good to see you. the polls are not going either way. there is also the question of whether we should trust the polls themselves, but this is now down to turn out tonight. it is down to turn out. i am in roy moore's headquarters where they were be carefully following the results in just under two hours at 7:00 p.m. local time. we got some new exit polling data. the majority of republican voters according to their polls

do not believe the allegations of sexual misconduct against judge roy moore. nbc news reporting in their polling data that 55% of alabama voters according to their eggs of polls said the allegations made little to no impact on who they would vote for. how that exactly will breakdown will be carefully monitored as the night goes on. just undero close in two hours in a state that has historically been very conservative. >> that is so interesting hearing the results of those given the state of where we are come what will be the more shocking result, roy moore winning or doug jones winning? question, andreat a lot of sources in washington dc are scratching their heads tonight trying to figure that out. should judge roy moore be elected to the senate, his

troubles aren't necessarily over. several prominent republicans have come out against him, including mitch mcconnell come , thell as richard shelby senior senator from alabama and also a republican. should they vote to expel him, that will be interesting, and quite honestly, i have spoken with several voters on the ground who said they are weighing that decision, voting for judge roy moore, because they think he will be expelled and replaced with another conservative. on the flipside side of that, should doug jones win, then that is one less boat president trump -- vote president trump has in his coalition to get things done. infrastructure, the president hopes to get done next spring among those. to game out the situation, let's say that roy moore loses

and a democrat is in that seat. how much our tax reform and other legislative agendas, how much are they jeopardized? i am assuming a lot more after this. >> that is a great question. look, the republicans right now have 52 seats in the senate, and so one less republican means that is one fewer republican votes in the senate that they can afford to lose in order to get a majority vote they need to get these things done, so on the issue of tax reform, republicans want to get that done by the end of the calendar year. state officials signaling that whoever wins tonight will get confirmation in the senate by january 3. that is where this gets interesting. president trump will be on capitol hill to meet with members of the conference

committee between the senate and house of representatives as they hash out details on the final language of this tax bill, but should they not be able to bring this to a vote by january 3 and doug jones is elected, that is one fewer vote they can afford to lose. we all know the undecided votes on the tax bill, like susan collins of maine. >> we will be there all night monitoring the results. our chief for seeing to an correspondent in montgomery, alabama. still ahead, our exclusive interview about the supply volatility we have seen. have we seen russia contributed to output curbs, and of course rising prices. don't miss that interview. >> up next, more on the republican moves towards 21%. a former chief policy advisor to the senate majority leader joins

us in just a moment. this is bloomberg. ♪

♪ >> this is "bloomberg markets: asia." i am yvonne man in hong kong. >> i am betty liu in new york. it taxes now. on their senate work tax bill. kevin brady saying they will reach a final agreement by friday this week. with this now is the director of tax policy kathy koch, a former chief policy adviser for tax and economics in the senate to majority leader harry reid. let's talk about one area in this tax reform that means a lot to a lot of the viewers here, the corporate tax rate. it seems like some of the reports are saying we will meet around 21%. where do think we end up with the corporate tax rate? 20% because it

seemed like the flagship of this reform, but i would not be surprised if over the next 24-48 hours that everyone tolerates another percent or two. it is the hardest thing about this whole process, the coming in, getting it under this $1.5 trillion and meet reconciliation targets, so i would guess that this is worth another percent or two to get done from but my money is still on 20%. i would not be surprised if it crept up a little. perhaps to help pay for some of these other things we are seeing in the tax reform package. also, it seems like the senate parts of that that are more in favor in the negotiations. would you agree with that?

>> i am a senate alum, so any the senatetell you bill will lead the charge, and i think a house person would take you the opposite, but the senate bill has certain benefits. it is kind of reconciliation ready. the reconciliation instructions only cover -- reconciliation instructions only cover the senate process. that gives it a leg up in the negotiations. >> there has been a lot of talk about the tweet sent i senator rand paul a couple of hours ago about how he will not vote for this budget-busting spending bill and said he cannot in good conscience add to the $20 trillion debt and said i voted for tax cuts last week and look for to voting on the final bill next week. our problem is spending.

fight foro lead the smaller government and lower spending, including opposing this week's cr. at what point does the ballooning deficit enough of a reason to vote against tax reform? priority wey -- a might have thought there was more reason than legislators are finding now. all the dynamic scores for this bill, including the ones released by the treasury indicate the tax bill alone does not pay for itself. the tax cuts don't create enough growth to offset the costs. reportid, the treasury said we are doing tons of things , and all of those things taken together will grow the economy enough to pay for things. is everyone,ne democrats, centrist democrats, and republicans, most republicans, really think that the corporate system needs reforming.

i agree. the rate is too high. it is way outside national norms and the territorial system is the globale with standard that would enable our companies to can pay. this has to be done. toes it have to be done a this particular price tag? i don't know. tax reform is hard to get everyone on board for. if this is the price to pay, i believe everyone can say they will tolerate more debt. at some point, we have to pay attention to the burden of interests on our budget, and that will be an issue sooner or later. >> you mentioned growth, whether we will generate enough growth to pay for this bill, but gary shilling said history suggests that tax cuts don't necessarily lead to more capital spending, more jobs, and not necessarily higher wages. do you think trickle down

economics works? tax is toothat our high on the corporate side. it is so far outside the norm. you do a lot of planning to get a tax rate that let you compete, so that is too high. do i think that tax rate go right through to the workers, consumer, and market? i think we can look at the literature out there, and there is a large literature on the burden of the corporate tax on workers, and even the joint ,ommittee and treasury recently part of their policy and scoring process says that 25% of the corporate tax is carried by workers. we know it is carried by workers in terms of reduced job opportunities and lower wages and all kind of things. that happens over time. that does not happen in a minute.

if you look at the joint committee table, that rate burden on individuals does not happen until the end of the budget window, but there is some trickle down, but the question is how much? rateuch of the corporate is going to show up in my paycheck tomorrow? i don't think i should go spend it now. csthy, thank you so much , thank you so much. this is bloomberg. ♪

♪ a quick check of the business flash headlines. india's richest man considering

an ipo after a $30 billion investment spree that shook up the market. he is holding internal talks at reliance industries about listing jio next year or 2019. buthas not made a profit, aims to improve financial performance before any share sale. >> china's big three airlines and 22 worst the kleins months, dragging large cap down. in 22 months,nes dragging large cap down. oil prices were blamed for those declines come although the three carriers have climbed to 10% so far in the last month. facebook changing its structure to pay taxes in the country where sales are made rather than routing through its irish subsidiary. the company has been under pressure for its practices.

last year, it agreed to stop routing u.k.'s sales through dublin after sparking public only by admitting you paid $6,000 in british taxes in 2014. 20 more to come. -- plenty more to come. this is bloomberg. ♪

>> wednesday morning here in hong kong. we are 30 minutes away from the market open. >> 6:30 tuesday evening in new york. in a gay -- >> let's get to the first word news with jessica summers. suit.a has settled it

$418 billion. western would also be allowed to invest in high tech plan for next generation chips. -- talks about restructuring involved a proposal from creditors about restructuring debt. voting continues that will have wide ramifications for u.s. politics. sexual and con -- re went -- of more winds,

he will leave life they strengthen global economy will put a return this year. should race to $60 per barrel. the u.s. could add 900,000 barrels a day. see things at the high 50's, 60's range which seems to be the most reasonable outlook and i think there's more uncertainty. the big? here is venezuela. >> global news powered 24 hours a day in over 120 countries. we are counting down to some of the major market.

we have this alabama special election going on. a lot could happen. >> when you look at markets, fairly muted. japan,e futures in likely that will be the star. maybe about a fourth of 1%. --hiba is in the next there toshiba is in the mix there. this is how things divvy up. we're getting pressure following the pullback in oil prices. currency markets very much the focus. have jobless rates out of had inflation at

in terms of data as well. >> we are all watching the fed today and tomorrow. >> when japan opens up, we are watching the two-year yields specifically. we are seeing a move up there. the other thing i want to point this and go into my chart right now. to his theoking two-year spread over the funds raised. happensy, what usually between 75 tois

100 basis points. about 65.rently at in other words, we are approaching the region were typically conditions look bright before markets -- >> we will be watching the chart. the markets still open in india. situation inosite india. it just rates may rise earlier than expected. this has to do with onions. >> that is right. we know that onions make us cry. onions could the making becausen watchers cry

of the knock on effect because of a possible rate hike. this year is all about onions. look right here at the price of onions. basically it is about 400 to 500 times higher. this has to do with a monsoon rain this year pushing off prices and this does have a knock on effect and the total .pi for india we are taking a look at the blue line for november.

look at how much it actually grows relative to october? with that said, there are all saying wers coming were talking about a rate cut. now they are talking possibly about a rate hike. asset management says bond prices is almost a done deal. in february, some traders are already pricing in a nearly 50% chance of a hike. we will definitely be watching.

finally, with that said there are some people who have a contrary and point of view right now. right now, could india inflation actually ease? seasonalityut the of the onions, as well as tomatoes. we can see that falls in the first half of the year. the cpi estimate still stands the same date next year. those are the three charts you need to know as we look ahead. -- it will fall following the completion of europe's largest commercial landlord.

deal.talk more about this like it is the swansong so to speak. >> it is indeed. what the forget industry is facing. here, i spoke with tony sherlock says the current listing is back. has reached 1167 .ustralian dollars 10% sobeen down almost

there is a case to be made that may have got a good price for the business, given what has happened. we have seen this happen in the u.k. and the u.s.. it could have been a smart business move at the end of the day. here are just getting news talking about westfield and saying they are changing their rating from triple b plus two now a watch position. we see these joining and after this acquisition. universal has a better credit rating. they will be looking at how this the company because

when they merged, that was also a stop deal. is focused on keeping costs low. the other thing we need to keep an eye on is the fact the offer cash.ut 65% stock and 35% basically that brings down the shares havestfield not started trading. -- even though it is an agreed deal, you never know. >> you don't know what kind of opposition there might be. tell us about the landscape after this if this does go

through and what other sorts of deals we might see. >> this is the second deal in less than a week. you had investors getting and getting interest from investors. i think it is fair to say the consolidation is well underway the gigiave to see pease and are already in talks. westfieldsically -- is known for its marquee

properties from sepsis go to as brick london and and mortar retail is taking from online companies, some companies are repurposed and. putting in movie theaters, bring entertainment for . not just shopping. after all, it is prime property. still very much in play. >> thank you. countdown, the final janet yellen. this is bloomberg.

>> this is daybreak asia.

>> as we have been talking about, a two-day meeting and busy week. englande bank of thursday an 18 hour window. let's get some insights on what we can expect from janet yellen. federal reserve started a two-day meeting. the final one of 2017 on tuesday . already wednesday in asia of course. they are expected to cut that key rate a third time. you can see wanted to percent,

telegraphed by fed officials. the data has mostly supported it. what is important besides that is the fed every three months projectionseconomic . unemployment, gdp, inflation. right now, people are wondering if they are going to do 2, 3 or in 2018. hikes you can see the consensus for 2018 that indicates three rate hikes. it is interesting. we had a guest on earlier. he thinks that the do anything, they may direct up.

there are still some holdouts for two rate hikes. you just mentioned what people will be listening for. i see inflation is going to start rising. does she represent that view? we shall see. weston we certainly shall. let's bring in our next guest. from his office in new york. thank you for joining us. hike really going to be about those projections. do expect much movement in that. >> hard to say. i would imagine there's not much of the difference at this point.

suspect 2018, it would stay more or less where it is. perhaps there's a slight chance of the 2019. moving up a little bit so -- if you go back to when they inrted publishing the starks 2012, they have been clearly of fedhe market in terms funds so there's only so much of market intelligence that you can get, even from the minor movement. positioning on the curve ahead of this meeting and eu actually factor in the fed and tax reform?

>> earlier in the year, in the .ummer we were publishing rates at that point in time are thought was given the speed with which the deal got done, he was probably very high of tax reform taking place. we switched and at the moment, we switched our short position to the long end well refined deals to the politically rich. if you compare to where we are , about 82 basis points seems to rich for us. if you look back, yields have

been about 80 basis points. that is basically our rate position right now. front, we are hesitant to take an outright position. looking at the data, we see positioning. we don't see a lot of bad news there, but a lot of cheapening and the different curve. >> let's take a look at what could change of you or what could change the markets view because i think one of the things that is interesting is the fact that inflation is so below target. we don't know if we will get more inflation.

-- letter which measured look at, they are both pretty far from targets. is that one reason you're looking for live -- rather limited selloff? inflation will rise that much. what if that is the markets view. is that why you see this for a mild a few at this point? >> that is exactly right. seehe 30 year, i don't expectations moving higher from here. year'shing, i see real -- yields moving higher. essentially, yes, the fed is hiking rates against a backdrop of inflation. i think breakevens in the long

end are going to be under pressure. if the fed stocks set to rate hikes, you could see it in the belly of the curve. pricing is the market -- if you look at the three forward, that is at 2% so the market is looking for a limited fed at this point. >> thank you. >> you have seen orders coming out for japan for the month of october. much better than what economists

had estimated. also, a contraction year on year. that was not the case. these orders continue to show signs of of hit -- pick up. .e will keep our eye more ahead on daybreak asia. ♪

a quick check of business flash headlines. low after citigroup $4 billion.t at shares are new their decline

after being investigated for the cause of the fires that destroyed hundreds of buildings caused thousands to flee. -- a challenge. prime minister justin trudeau grounds.ind it on cost salesging supercar causing ferrari to boost production. sources say for our a will assembly. has doubledock since it spun off from fiat-chrysler last year.

to continue to dominate the discussion on the market. this is bloomberg.

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kong is 8:00 a.m. in hong and we are live from bloomberg's asia headquarters. welcome to "daybreak asia." asia-pacific markets signal of next start -- a mixed start. the rba governor conference he is no fan of bitcoin. he says it appeals to criminals, and the surge is speculative mania. betty: it is just after 7:00 p.m. in new york. toshiba ending a dispute with western digital. they will abandon a lawsuit and invest in future chips.

in alabama, a vote that is too close to call. we will be live in montgomery, alabama in a few moments. ♪ we have more breaking news coming through on bloomberg, with westfield shares just starting trade in australia. we are seeing a pop of 15%. we will bring up shares. the biggest gain we have seen in three years for westfield after the takeover of unibuy. seen inf m&a we have the retail sector. betty: driven by the online realty rent -- online retail rate. amazon behind the struggle we have seen with mall operators, and in contention here with m&a

for the u.s. let's get to first word news with jessica summers. secretary of state rex tillerson says the u.s. is prepared to negotiate with north korea without preconditions. he says kim jong-un's regime must make a difference over its ballistic and nuclear programs if talks are to continue. he is interested on ramping up pressure on the north, and since success is about a strong military backing. secretary tillerson: we are ready to talk anytime north korea would like to talk. we are ready to have the first meaning without precondition. let's just meet. we can talk about the weather if you want. we can talk about whether it is going to be a score -- be a square table or roundtable. betty: the rba joining the ranks of bitcoin doubters. in this -- saying this year's

fascination is "speculative mania." at the weekend, grand spencer says the currency's gains look remarkably like a bubble. >> seems like bitcoin will be attractive to those that want to make transitions in -- make transactions in the black or illegal economy rather than regular transactions. this fascination with bitcoin cryptocurrencies feels like a speculative mania than its use as efficient and convenient forms of electronic payment. jennifer: the chief brexit eu negotiator is warning the u.k. of going back on agreements made last week, as the two sides reached to make a deal. michel barnier says russells will not accept any backtracking from london after other u.k. politicians questioned the legality of friday's accord.

talks begin the end of the week. bank of england governor mark carney under pressure to justify policy as inflation unexpectedly accelerated to its highest in five years. novembers 3.1 rate is the highest since 2012. the office for national statistics says it is being driven by airfarebank of englank carney and computer games. it is a full percentage point over the bank's 2% target. india's inflation rate zoomed past the central bank's target, prompting speculation interest rates will rise earlier than expected. consumer prices jumped 4.9% from a year earlier, driven by more expensive food and fuel. that is the fastest paced in 15 months, and talked all estimates in the bloomberg survey. the bank expects a rate rise by the end of december. global news 24 hours a day powered by 2100 journalists and analysts in 120 countries. this is bloomberg.

betty: let's take a look at the market open in tokyo and seoul. we were looking at westfield, s&p upgrading -- at least a positive watch after this union by takeover. -- unibuy takeover. >> this 5% machine orders, 15% with westfield. i will give you an update on toshiba. update on what jessica was mentioning, you ran a lot of inflation numbers that have come out so far. we are also looking to the u.s. there is your inflation story playing out against the bond markets. we are mixed on equity markets, as has been the case. the first few minutes in tokyo, let's do an mob. let's start with australia.

westfield, 15% up. topsy-turvy session. at the end of the day, not a big move. one point up on the asx 200. westfield, 15% up. topsy-turvy session. looking at the nikkei 225, a look at the big movers early on. not too much. basically split between down 100 stock, 119 on the way up. back to this collision course between high inflation and expensive equity markets. when you get those two things together, that is usually not a very good thing to have. two standard deviations above your tenure mid. looking at the nikkei 225,asia'k market. -- look at the bond markets i think we have a graphic of that showing how these yields have moved up. there is your bond bleed for y ou. -- i think we have awe want to chey quickly. let's demarcate this -- it has been quite a year.

a lot of milestones. everything kicked off when they wrote down their nuclear unit this time last year. -- had western digital same western digital saying you can't just sell your chip unit. the auditor said an unqualified opinion in its earnings. removed from the nikkei 225. a share.re, at 310 there is your target price for the stock. 5\357. moment.t 10 the -- 357. 1.3% up. moment. 5, of course, is your perfect score. 0 sells on your toshiba story.

betty: let's stay onfairly posis rating. that toshiba story. toshiba and western digital confirming the end of the legal dispute threatening to derail the $18 billion sale of the memory flash business led by bain capital. i want to bring in technology reporter ian king from san francisco. for toshiba to clear the way for the sale of this business, it is equally more important for western digital. ian: this is huge. it needs chips that will be made in future factories to stay competitive. needs that technology -- that technology. solid-state is the future. magnetic spinning discs is not what it will build its future on, and that is what it security today. betty: is this a big hurdle for toshiba overall, now that they are avoiding that delisting?

ian: the delisting -- they've got to get this closed. there's got to bring the money a -- in froming selling a large stake in this unit. they have raised capital to tide themselves over. that was looking less likely, but this is certainly a huge step towards putting that company on a solid footing. betty: what a -- in from selling a large stake in this unit. difference does it make for the big chipmakers? samsung, for instance? ian: if there was a winner in the year for this to be put on track, it would be samsung. samsung has spent more than anyone else, has put more pressure on its opponents than anyone else. anytime you are not spending, not pushing forward, you are falling behind. when you are up against samsung, that is something you cannot afford to do for very long. betty: he were talking just now

about the regulatory hurdles potentially this deal could pose with bain when it comes to antitrust reviews. do you see anything on the horizon with the authorities from china? ian: it has been constructed carefully. there were concerns not just from china, not just the u.s., but from japan. japan did not want to let this business go. there were several parties that owned stakes. the largest actual individual holder remains toshiba, unless i'm getting that run. it is complicated. into gettinggone the whole approval process done quickly. betty: ian king joining us from san francisco on this toshiba agreement reached with western digital. still ahead, oil climbs reports. stockpiles are falling.

yvonne: but up next, however the markets assessing janet yellen's ultimate meeting? toby lawson joining us in just a few minutes. this is bloomberg. ♪

betty: this is "daybreak asia." yvonne: 3 big central-bank with threeis week, largely predictable outcomes. the fed expects one more rate hike before the year is not. investorsthe fed expects one moe comfortable, saying that the new boss is a lot like the old one. joining us is the head of global markets -- markets seems pretty australia, joining us live from sydney. thanks so much for joining us.

with the fed, we have been focusing on the dots, but when you price the dollar, yields ticking higher ahead of the session, what could surprise janet yellen at this point? >> the big surprise would be them not hiking. we see a 25 point move. it would be a more dovish step. we are in for next year's three hikes. some are -- we are thinking three. if the u.s. economy peaks towards the mid-half of 2018, it 2020e one further one in where the adjustment is. i think overall, we are expecting a fairly dovish statement, by a 25 point hike. yvonne: there is a lot of factors about that flattening yield curve, calls that in 2018 we could see a completely flat one.

will that mean in terms of a market perspective? would that mean -- with that be a signal to sell equities? side,we on the treasury the duration -- there continues to be demand for treasuries. they are liquid. they are safe in terms of potential hedge of any risk. as the yield curvethey are liqu. they are flattens, there might be less valuation interim of equity holdings. overalloverall, the outlook is positive, both for the equity market and outlook market in the u.s. betty: i want to show you the inversion. i will show you how the spread between the 2 and 10, just how flat it is getting, even to the point where it might invert sometime next year, however briefly. not only might that have implications possibly for the equity markets, but what about

the economy? how are strategists looking at this yield curve as a predictor of economic turmoil recession? i'm sure they are looking at it closely. if you look at the chart, it certainly turns around. what drives that will be central bank and economic outcomes. overall, we think the economic end story for the u.s. will peak around me to 2018, and possibly into recessionary activity mid- 2019. we may see that gdp target in terms of growth stops or slows down a bit earlier. then we might see some impact from there. betty: one thing you mentioned in your notes is that the risks on the u.s. side are more political than they are economic. do you think the risks on the

political side will be even worse than we saw in 2017? toby: it's just does not seem like it is going to go away for the president and the white house and the administration in probe,., the russian matters relating to the president himself. it is unlikely to dilute in any way. whether it has any impact, that remains to be seen. but it is clearly a risk factor. it is one thing you can't necessarily price for investment. it will be a factor at some level. we know the noise will not go away, that is for sure. yvonne: we have seen this frantic unwind when it comes to sectors out of tech into financial. it seems like in the last week or so, it has been a bit murky as to where we are in that rotation. do you think in 2018 it will be about the tech stocks, or are

flows heading back into the banks? toby: i think we will have a bit of normalization in terms of those into the equity markets. you have had a big run of momentum in the last quarter. there is still for that to continue. investors will be inclined to look at valuation as we head t owards a peak in equity prices. you will see those close towards the first half of next year. does that make sense for asian to see that rotation? or when it comes to tech, do you continue to buy on those dips? toby: you have to pick your sectors right, but emerging markets look good. does that make sense for asian to see tha european market looks good. emerging markets have underperformed overall, so there is plenty of catchup. you can be confident that if the

u.s. is looking good, that is good for emerging-market stocks. betty: talking about bitcoin real quick, we have seen a lot of volatility when it comes to those bitcoin futures. we have seen a little bit of arbitrage opportunity when it comes to spot price, futures as well. we just heard from phil lowe talking about this being speculative mania. what questions are you getting from clients? toby: i think he would have to agree with that right now. -- you would have to agree with that right now. it is in the news. price is based on mainstream media catching on the story. you have the fear of missing out, investors trying to grab some, thinking it is the next big thing. it is speculative. who knows what value and how much? we have a way to go before block chain will replace currency as

transfer of payments. right now it is speculative. it is mainstream right now. we will be watching it closely. from an investor's perspective, certainly not recommending to jump in. yvonne: thank you so much for joining us, managing director and head of global markets australia. you can get a roundup of the stories to get your day going with bloomberg daybreak. for bloomberg subscribers, go to dayb. you can get news on the industries and assets that you care about. one of my favorite graphics here with janet yellen. this is bloomberg. ♪

yvonne: this is "daybreak asia." betty: we are also looking ahead to the open, the market open in

india. inflation failing to reach its target in the u.s., japan, and europe. in india, just the opposite. zooming past the inflation target, bolstering the view that interest rates may rise earlier than expected. we have the bloomberg charts that we need to know. this has to do with tomatoes, onions, all that? >> it has to do with vegetables and fruits across india because of the seasonal monsoons. check out my first bloomberg terminal chart. one.would be this this is the price of onions on a seasonal annual basis. you can see that at the end of almost every single year, the price of onions skyrockets. 400 timest is up by seasonal annual basis. more than the base price. it is 800 indian rupees because

of the rainfall happening. there is a knock on effect in of the food cpi. the food cpi is having another knock on effect on the cpi. that is why we see this on the blue line, 4.8% for the november cpi. this of the food cpi beating an our bloomberg survey for the month, and quickening at its fastest pace in 15 months. you can see how is relative to the october cpi. a lot of people before this came out were thinking we were going to get a rate cut, but because of this unexpected rise, a lot of folks thinking they will have to change their minds. bravo bank things in the second quarter of next year, they will see a rate hike. swapper putting a 50-50 chance of a hike as well.

with that said, there are some contrarian's out there, granted not money, and getting smaller at that. at 4.8%, the cpi is but the cpi estimate appears to roughlling lower th september next year. people are saying this because, with tomatoes, onions and other vegetables, this is a very seasonal basis. take a look at my first chart. at the start of every year, these food prices did start to go down. it is very much in the seasonality of onions and tomatoes that dictates what happens with cpi. who would have thought it would have been with bonds? 3 bloomberg terminal charts that you need to know as we wait for the indian markets to open.

yvonne: india's richest man is said to be considering an ipo of his mobile operation, after a $30 billion investment spree that shook up the market. we are told he is holding internal talks at reliance industries. has not made a profit since launching last year, but aims to improve its financial importance -- financial performance before any shares sale. airlineshe big three saw their worst daily declines in three months. air china sell 5.5%. china eastern not far behind. rising oil places were blamed -- oil prices were blamed for the decline. facebook is changing its structure to tech pay taxes in the country where sales are made

rather than writing everything from its irish subsidiary. the company has been under pressure from authorities for its practices. last year it agreed to stop routing sales through dublin, after sparking anger by admitting it paid only $6,000 in british taxes in 2014. taking a look at markets in the asia-pacific's ahead of the fed decision, that december hike likely priced in to the market. we are treading water when it comes to the nikkei 225, as well as the kospi. a little bit of the upside for the asx. we did see the dollar eking out seven days of gains ahead janet yellen's press conference. usd.for the aussia coming up, looking like a photo

finish in the high-stakes race for alabama's u.s. senate seat. we will be live to montgomery alabama, for the latest next. this is bloomberg. ♪

yvonne: we are i have hour away from the open of trading in singapore. betty: you are watching "daybreak asia." let's get to the first word news. jessica: australian mall owner westfield jumped on a $15.8 billion takeover by unibail. inagreed to buy westfield the property acquisition since 2018. the deal marks the end of the road for a westfield's co-founder. >> we believe that the deal properly values the company.

for that reason, we think it makes a lot of sense to accept the offer and recommend that you are shareholders. thecombined group will be world's best shopping center company. it is very complementary to the existing portfolio from the u.k. in the u.s. jennifer: toshiba has settled its dispute with western digital. announcement -- an official announcement is expected anytime. both sides would drop their cases surrounding the sale of the flash memory chip unit to bain capital. western would be allowed to invest in a high-tech memory plan and guarantee supply of next-generation chips. tosident trump is set want saudi arabia to consider bids by u.s. companies for nuclear reactors. washington has prohibited traditionally nuclear fuel --

we are told the administration will discuss the issue at the white house later wednesday. the bank of england governor says the number of companies pledging towe report reporting centers from climate change has doubled in five months. the combined market cap of $6 trillion no support recommendations on climate change disclosure. people bloomberg they include some of the biggest names in the business. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. yvonne: to see how the asian markets are shaping up so far. david: we are getting more momentum across some markets. a lot of korean engineering firms catching up. four counts of 1%. we are not getting the kind of risk appetite we have got the

last few months or so. here is your inflation story playing out across bond markets. india with an unexpected pop in inflation. we are looking ahead to the u.s.. the fed is also out with a decision. that is the story out across currency markets. nothing consistent with that. watch steelmakers in china when things open up a half hour from now. we are getting an eye on these contracts. wti is up after the early cut off. here is your split across the asia-pacific. write about in between, i would contracts. wti is upsay. we are washing for shares of toshiba. s&p placing the company's rating at positive. -- i of the big movers mentioned these korean engineering firms -- really lifting the index in south

korea. a lot of movers because of interest from westfield. up and your biggest pop down. aussie dollar, two charts i want to bring up. 50 day crossing below. a downside momentum coming in that market. one story is this -- you're getting a lot of negative surprises when it comes to data 47.ustralia, this is your city economic surprise index for australia. here is your currency at the moment. forecastour median from the analysts we have hold so far. something has to give at some point. i am guessing we will get an adjustment to lower incomes, especially if we see more downside when it comes to the aussie currency. yvonne: thank you so much david.

let's talk some politics. alabama has not sent a democratic senator to washington in a generation. between roy moore and doug jones, it is anyone's race. we are live from montgomery, alabama. we are about to get the results in a half hour's time. what are some of the exit polls saying right now? >> senator luther strange, a republican telling reporters just within the last hour that he's not going to say who he voted for. that gets interesting because there are some folks that should judge roy moore win against democratic challenger doug jones, that the lawmakers on capitol hill would vote to expel him. should they expel him, it would create a situation where someone could appoint the next senator,

and that could be senator strange. a lot of back and forths we will be chronicling. doug jones hoping he will emerge victorious, becoming the first democrat in more than a generationa lot of back and forl be chronicling. to get a senate seat in alabama. judgejudge moore denies these allegations. his supporters do not believe them. according to an exit poll, more than half the folks that voted said the allegations made little to no difference on who they cast the ballot for. yvonne: certainly a lot of excitement i had tonight. ahead tonight. z says up, find out why a& oil will continue to gain ground next year. we are joined by their senior commodities strategist next. this is bloomberg. ♪

asia."this is "daybreak

checking the price of wti crude, a 5746 this morning after in industry report signaled u.s. stockpiles slid for checking the price of wti crude, a 5 a fourth week. ihs markets says a strengthening global economy should put a floor under oil prices. in an exclusive interview, dale juergen told us brent should trade in the high 60's per barrel next year. >> probably the extra kick up in the price is a result of what happened in the north sea, because the market is a little more tight. -- anlly you have an old opec and non-opec agreement. we are continuing to see a strong global economy. that has translated into high oil demand. that is what is putting the floor into the price of oil. obviously the disruption of a pipeline can affect it. there is some geopolitical

tension in the price. the fundamentals is what is holding the price up. >> what is your outlook to 2018? 50's,see things in a high 60's range to be the most reasonable outlook right now. there is more uncertainty. a big question mark hangs over venezuela. their economy is in channels, and yet somehow it is holding together. people in the middle east, but you have to think about venezuela too now. >> in terms of opec, they have agreed to extend production cuts until the end of 2018. are they succeeding in rebalancing the markets? daniel: i think so. the goal was to start off rebalancing the market. i think it has taken longer because the inventory was so high. inventory is what they are looking at as their number one indicator. what happened is coming together

of opec and non-opec, which was tentative at the beginning, is now a historic accord between those two parties. particularly at the heart of it is the relationship between saudi arabia and russia, and their determination to make this agreement with. >> the kuwaitis said this agreement could be revisited in june, and hinted that cuts could and before 2018. -- could end before 2018. daniel: there has been talk about exit strategy. their message is, we will wait and see what happens with the market. many parties want to carry out until 2018, let's not have a lot of speculation, and others have said, we don't want to let this get out of control if we need to increase volumes. it was reasonable from their point of view to get a 2018 agreement. obviously six months, things can

change, we will review it in six months, but not with that same degree of speculation. what they did not want was to have everyone in march wondering what would happen with the agreement. march happens to be the month russians will have their next presidential election. the outcome is not uncertain. i think the russians also want to see stability here. betty: that is the ihs market vice chairman, who is listen to quite often on oil prices and commodities, speaking exclusively to bloomberg. joining us from sydney is a&z senior marketing banking strategist. i want to mention a headline we are getting on been telling -- o n bitcoin. convening ans emergency meeting. i will ask you about bitcoin in a moment vis-a-vis commodities.

first let's tackle oil and what we heard from daniel yergen, that oil cuts is at a 2018 agreement, let's not start talking about an exit strategy. is it too early to talk about an exit strategy? >> i think the market is always wanting to know how this plays out, even if it is potentially 12 months away. that certainty will weigh on prices. is ank the market itself bit too early. position, be in a especially post northern hemisphere, around how the inventory situation is looking, to get a handle on whether the market consisting us, that potential increase position, especially in we will see once this production cut agreement ceases. a bit too early, but the market

will continue to talk about it. betty: absolutely. if there are things the markets love to talk about, it is opec in will happen with these cuts. you heard daniel yergin talking about oil being around the 60's level. those that sound right to you? -- does that sound right to you? daniel: maybe a touch higher. we do expect to see that inventory drawdown accelerate in 2018. that puts the market on a much more sustainable basis. if we get that peak up in unplanned disruptions -- and they have been relatively low over the past few months -- the market will be susceptible to the old term spikes. we would not be above dollars spiking $70 per barrel in the scenario. i think we are in a range where we expect to see prices

stabilize. if we continue to see that good growth in demand as well, and high$60's if ao fair level for the course of 2018. yvonne: we have seen disruptions in europe this pipeline that has been shut down temporarily. the explosion overnight in austria as well the perfect storm when it comes to european oil markets. i have a chart for our viewers to see, where we did see at one point the spread between brent and wti the longest in a few years. we have edged off that now. do you think that spread will increase sharply after the north sea is repaired in two or three weeks? daniel: i think the spike we are seeing recently is a reaction to that pipeline shutdown.

i think it is critical to the brent benchmark price as well. once we do see that repaired, things will settle down. the pressure is on a relatively widespread between brent and crude. throughproduction cuts europe, whereas in the u.s. we are continuing to see u.s. shale in particular come through fairly strongly. i do suspect even after the europe, whereas in the u.s. we are continuing to pipeline is back in operation, we will see relatively high sprint -- high spread. yvonne: with the broader commodities space, given this synchronized growth theme, how that impacts commodities across the board, do you think for 2018 this asset class could beat out

any others like stocks or bonds? daniel: yeah, i think so. it does feel like the investor class with commodities has come late to this cycle. there was skepticism about sustainability growth. growth seeing chinese much better than this year. there are question marks about whether that slows down in 2018. outside of that, it has been a broad scope in demand. -- broad pickup in demand. investors are just starting to watch on to that theme. even if growth is less than it next year, i think investors will continue to pile into the sector. betty: some will say that a new commodity is bitcoin. we were speaking with the winkle plus brothers. i want you to hear what he said

about whether bitcoin is the next gold. >> we think bitcoin is like gold 2.0. whatever your reasons for scarce,g -- fungibility, we think bitcoin matches or beats gold in all of those categories. bitcoins there scarce, money in leading gold? daniel: i don't think so. from my point of view, that speculation is being driven by investors, particularly in the asian markets. i don't think that is a result of any safe haven buying, which is really key to the gold market. twoink for the moment, the separate drivers of these commodities or currencies -- they are not cannibalizing each other. certainly if time plays out, there is potential, but we don't

think it has. betty: in your mind, is bitcoin a currency or a commodity? daniel: look -- i am a bit old school. if it does not come from the ground, it is not a commodity. the world is a much different place these days. we will have to at least keep an eye on it as a quasi-commodity. betty: [laughter] thank you so much, anz banking senior commodity strategist. tv you can watch past interviews, as well as dive into tv you can watch past interviews, as well as dive into any interviews we have talked about. you can send us tv< messages dug our shows. this is for bloomberg subscribers only. check us out. this is bloomberg. ♪

yvonne: this is "daybreak asia." betty: the federal reserve begins its meeting today. a busy week for central banks. rate decisions from the fed, bank of england, and ecb all within an 80 hour window. -- 18 hour window. investors being told to brace for a tightening in a decade. our global economics and politics editor kathleen hays joins us. >> this is a two-day meeting.

it started on tuesday, ends on wednesday. it is the last one of the year where janet yellen will have a press conference. if for some reason the president decides to confirm powell early, janet yellen will step down as soon as she is warning. a lot of interesting stuff potentially coming out of this meeting. first of all, rate hike. it is suspenseful. i don't know if it will work. projections on your bloomberg. a couple years ago, they were at 98%. but now everyone is all-in, rate hike in december. what is interesting, a summary of economic projections. it is the fed's forecast. each submits the forecast for gdp unemployment, and inflation. those are updated every three months. the last one we got was december. now it is december, -- was

september. now it is december, and time to update again. the dot clock is where we could have a little drama. markets are saying two rate hikes in 2018, up from just one. like j.p.banks morgan, goldman sachs that say you could have four rate hikes in 2018. check this out with me. very broad consensus in the second half of the year for three rate hikes. in 2018, here is the consensus as well. you can see it is much more diverse. much more divided. ftc financial earlier says, if anything, you will see people drifting up higher. d it would only take 3

to build a small consensusd it y before a rate hike. that is why i think there is a very important amount of drama around this. finally janet yellen's last press conference. we want to get a sense of how she -- swan song, however you want to call it. we know she has led the very effectively. he willpowell takes over, walk in her policy shoes ast f irst. yvonne: we will certainly have to look up for the next year. let's do a quick check of the latest business flash headlines. utility giant edison international slumped to a one year low, after citigroup put the cost of the california wildfires at $4 billion. shares renewed their decline after edison said it's powered equipment is being investigated as part of the search for the fires that destroyed hundreds of

buildings and forced hundreds to flee. betty: canada is stepping up its trade battle with boeing, instead of hornets, taking used planes from australia. the latest in a spat between the u.s. and canada. prime minister justin trudeau campaigned in 2015 on not playing the f-35 on cost grounds. secondhand was ruled out months ago. betty: furry will boost production next year, with deliveries on pace for the -- 9000 car a your target. ferrari plans to increase profits by increasing its lineup while maintaining exclusivity. ferrari stock is a most doubled up to spinning off from fiat chrysler. yvonne: take a look at what is coming up in the next few hours. haidi isberg markets,"

watching plenty of things happening, including an alabama. >> at the top of the hour we will hopefully getting results of this special senate election. special not just in name, but in implications further whittling down the slim majority held by republicans, whether that means tax reform can get pushed through by christmas. we will take asset management executive director joining us in melbourne, getting his calls what it means to asian markets and bitcoins. we always like to hear that. opec secretary-general will be joining us over the next hour. he will be live in beijing with tom mackenzie. lots to talk about. extension deals done. what does it mean in terms of sustaining prices at $65? is it sustainable, and role will

russia play as well? also talking about this strong e b push in china, how that plays in oil demand as well. j.p. morgan's head of regional oil and gas, one of our regular guests when it comes to the oil patch, joins us for commentary on whether these pipeline issues have given this boost to prices -- whether that can be sustained. they have just revised prices. yvonne: i want to remind you guys that the polls are about to close in alabama. voting between the candidates roy moore and doug jones. we will give you those results as they come in within the next hour. ♪ retail.

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haidi: bitcoin back in the headlines. south korea holding an emergency meeting. the rba government announces speculative mania. toshiba and its dispute with western digital. they will abandon the lawsuit and invest in the future. it down to the wire with a vote to close to call. we are live in montgomery as polls close. welcome to "bloomberg markets: asia." it is just