♪ betty: stocks fell and the dollar heads for the first weekly drop this month on concerns the tax bill will struggle in the senate. paul: marco rubio and susan collins both it is sized tax cuts for the rich. president trump says it is all about the middle class. betty: stocks surging on the disney agreement. it includes most of mr. murdock's media empire. , alexaet smart -- siri

and others get ready for a new voice in the crowd as samsung prepares a new speaker. betty: good morning. here in the markets in the u.s., it is really the tax reform, the last minute zynga coming up from marco rubio. that dragged down u.s. stocks. but overall it looks like central bankers are trying what we are calling dovish tightening. they are trying to move the ball forward with interest rates without disrupting. mario draghi of the ecb trying to thread that line today. paul: grappling the same old problems the world developed, in terms of inflation. 7% in 2020 point does not sound terribly optimistic, does it? betty: no. no, it doesn't. perhaps that is why markets took all of that in stride. let's quickly pull up where the

u.s. markets ended up today. we were lower, taxes a main focus for investors. the s&p down 0.4%. anddow lower by 77 points, tech shares, as well. most of the major s&p groups were in the red, except consumer discretionary stocks. a slower day in asia for you? paul: yes. let's take a look at new zealand, trading now for a couple hours. the end the next turning negative, down 0.1%. zx turning negative, down 0.1%. it, weead too much into are off by about one point at the moment. the aussie still pretty stable, cents.76 u.s. we are also counting down to the

opens in japan and korea. the u.s. dollar a little weaeke -- a little weaker against the japanese yen. cap to rates unchanged and pledged to move slowly in winding down stimulus. mario draghi focused on euro-area inflation, expecting to undershoot the target by 2020. the pound traded little changed, after the bank of england kept of the rates unchanged and reiterated future hikes would be limited and gradual. they voted to keep the key rates at 45%, as predicted in a bloomberg survey. it has been a busy day for central bankers. mexico raised its benchmark rate for the first time since june. it was a split decision that signaled more inflation is ahead. policymakers in turkey raised one of their key rates, but by less than expected.

they vowed to keep policy tight end tell the inflation outlook improved. indonesia had eight cut since the start of last year is sufficient for now. the philippines cap rates at a record low of 3%. u.k. prime minister theresa may is in brussels with the other e.u. leaders for a summit that is to focus on brexit. the meeting is likely to agree there had been sufficient progress to move on to future relations and trade. chancellor merkel there are still questions to be answered. other leaders say it is time for may to explain how she sees's the u.k. new relationship -- how she sees the u.k.'s new relationship with the european union. gop leaders have a last-minute plan. it sparked criticism from within. marco rubio attacked the party for putting the wealthy ahead of the working families.

said shelins of maine does not favor any cuts at the top end of the scale. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. uncertainty around tax reform, the key theme moving u.s. markets today. the dollar remaining under pressure. not a great year at all for dollar bulls. it is set to slow, the week lower. >> the tax debate was looking good, but fly in the ointment, rubio moved in. let's go to the close one more time. we look at this at the top of the hour. 1%.000, down more than the broadest measure of the market, most members stocks are domestic, and stand to benefit the most. the fact they are down the most shows you concern about taxes is

significant. let's go to the most active. a lot of action on the board, 21st century fox up on the deal with disney. getting a lot of attention from washington, antitrust is a concern. you have sports rights channels and bundles, that is a concern. lawyers at the ready. pierne falling the most -- 1 falling the most in eight years. most people cannot remember the last time they have been in a pier 1 store. that does not speak well. the activist investor elliott trying to move the ceo and founding members, that has put pressure on stocks. ,ur spotlight chart, g #btv 569 is about banks. they have been hot since november, but the rotation of bank stocks from tech stocks,

forget that. tech is back in the driver's seat a bit. you are seeing two lines. at the end of the day, either tech or banks tend to drop in change positions. bid the past few days. the nasdaq, language from the final minutes, that is a trade to keep watching. the final hour has been where the action is lately. su keenan, thank you. let's get to one of the big stories of the day. fox and disney surging after they announced their $52 billion deal. disney will pick up a large chunk of the media empire built by rupert murdoch, including fox's movie production house. let's bring in our telecom reporter. this was like -- this was

predicted in a simpsons episode in 1998, according to some tweets. how did this come about? >> it began on a summer evening over a glass of wine. the two ceos, rupert murdoch and a biker, melt at rupert murdoch's l.a. vineyard over the summer. they were talking about the future of the industry and the disruptive forces that are coming in and wrecking their plans. they started talking about, what could the future look like. a few weeks later, bob iger went back to rupert murdoch and said, why don't we do a deal? paul: why is disney doing this? nabila: disney is doing this for the same reason as why rupert murdoch is selling this. going against netflix, amazon, the disruptive forces we talked about. what disney is looking to do is become something like the walmart of hollywood.

they will have a lot of assets, they are bulking up and scale, hoping that will help them fight these upstarts. betty: no question this is shaking up hollywood, the media world. fromwill be the reaction some of the companies like netflix and amazon and others that in a way forced to the steel? nabila: they did force this deal. they are spending a lot of money on their own content, their own studios. what will be interesting is the fight over hulu. this gives disney a controlling stake in hulu. comcast still has a stake in hulu. they wanted this asset, they were in the bidding, but it did not work out. what happens with hulu will be interesting to watch. betty: it will be. murdoch wants to write his own history. what about the future for james murdoch?

certainot sound very when you listen to what bob iger was saying. nabila: james murdoch celebrated a birthday this week, he turns 45. we thought maybe he was going to renewed job at disney. but i guess they will work out what to do. two more years is not great for him, immediately. maybe this could be part of bob iger's succession planning, as well. name peopleame is a talk about as a possible successor. thank you, our bloomberg media and telecom reporter. looking ahead this hour, counting down to the business survey in japan. our guest joins us in half an hour to break down the results of the survey. paul: europe's two big central banks show where they are heading next.

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paul: we are counting down to asia's first major market opens this morning. japan futures traded out of chicago looking weaker, as we wait on the results of the in 40 quarter survey due minutes time. i am paul allen in sydney. betty: i am betty liu in new york. europe's central banks kept policy steady. why and what is next -- kathleen hays here with more. let's start with of the ecb and inflation, still a problem. kathleen: it sure is. people found this surprising. the ecb was updating its forecast for the future. but it is clear, mario draghi

and his colleagues do not see inflation picking up much oomph. by 2020 bases inflation averaging only 1.7% year-over-year, under the 2% target. that is why they kept their key rate unchanged. they did not make any additional changes or shifts or explanations to have a shift the bond purchases next year. mario draghi at the presser after the meeting made it clear. he said price pressures are still muted, there is little sign of any upward momentum. here is what he said it means for policy. >> an ample degree of monetary stimulus therefore remains necessary for under flying inflation pressures to continue to build up and support headline inflation developments. 1187, showingtv us confidence on inflation. but it is a long way away, under

2%, the ecb's inflation target. looking at core inflation, 0.9%, year-over-year. let's move to the bank of england. they kept their key rate unchanged. what was interesting, in the statement about what they did in the minutes, they made it clear they are more update on brexit. to keep thee 9-0 key rate at 0.5%, even though inflation has jumped up to 3.1% year-over-year. the target is 2%. it is the first time they had a unanimous vote since february. they see more modest rate hikes ahead over the next few years. does not seem like pressuring pressure on them. they said specifically that progress on article 50 negotiations, the u.k. and e.u. trying to take your out how brexit will work, reducing

chances of a disorderly brexit. let's look at g #btv 3821, to take a look at inflation. it is up to 3.1%. what is most important, look at gdp. you are above target, regardless. gdp running about 0.4%, well below average. concern, worried may be has not bit the economy yet, but you will see more caution move slowly. whatesting he signaled out happened in the next couple weeks is a plus for the u.k. economy. paul: plenty to analyze here. naeimi.help us, nader let's start off with the ecb. a prettyathleen paint bleak picture when it comes to inflation. but there have been 18 straight quarters of expansion in the eurozone, and an upgraded

forecast. nader: we talk about central banks being pessimistic on inflation or expecting and inflationary target by 2020. i should also say this is reactive data. since thet we are in, gsc, the group has had a long recovery. they have not had a lot of recovery yet. the current -- the recovery we have seen since has had a large shock. first for the european debt crisis. 2017 was the first year we had synchronized growth. inflation is terribly lagging. time.a matter of it is not only investors but central banks will be surprised inflation would be sooner than expected. paul: if we are patient, inflation will go up? nader: correct.

maybe the process has been suppressing inflation. we do not expect inflation to be 10% or 5%. already we see signs in that in the u.s.. i think it would be quite complacent to give up on the -- there will be reflation at some point. betty: when you look at the markets and what they are pricing, they are more dovish than the scenario you are playing out. how ugly couldn't look in 2018 if we do have those upside in inflation surprises? that is- nader: absolutely right. when you look at what is priced into europe, they are forecasting 2% inflation by 2020. you look at market pricing, inflation target won't be

achieved until 10 years time. -- one of the biggest risks from my point of view in 2018, a little bit of shock. complacent because we have not had inflation over the last few years of recovery. that is the biggest risk. bond market investors, in my view, in for a rude shock in 2018. betty: described to me what kind of scenario you think is going to play out, and how you position for that? number one, when you look at the pricing around inflation, inflation itself is the most undervalued asset or exposure in the world. to break evene from these levels makes a lot of sense. we have a decent allocation to break even.

to areas of the market benefit from a synchronized goal of growth at higher inflation. energy materials, cyclical sectors, away from bond proxies and momentum. all those areas that have benefited from this goldilocks. we cannot have our cake and eat it for too long. with high-growth will be high inflation. that will disturb the trends we have seen the past few years. kathleen: i would like to come back to this broad question. we can look at a turkish aware inflation is and how the trends are still not favorable. except for the u.k. but they had a huge drop in the pound and a falling economy. the e.u. you look at -- what do you see driving

inflation? it seems to me, when this happens, it will be so gradual, i would assume it is hard to get any big move to make a lot of money in in that trade. nader: i agree. when you look at the inflation trends itself, it is a worst-case scenario. when you look at leading indicators of inflation like the growth and pmi surveys, relationship between growth and inflation overtime, all of those and strongrowth, synchronized growth will be inflation. likely experience a sudden growth and inflation. i would not be surprised. at the same time, it is

expectations. the market expectation is that we will not achieve the 2% target in 10 years' time. the complacent expectations are enough to disturb the market. kathleen: good point. we see how low the 10 year is in the u.s., 2.34%. many think it should be at least 3%. is there trade with more oomph potentially for equities? or does it have more oomph for bonds? which asset class do you like, and what part of the world do you like to put on this trade best? our initial rise in inflation expectations should be positive for equities, bad for bonds.

it depends how the rise in bond yields unfolds. the initial rise in bond yields should benefit some sectors of the equity market, at the expense of other businesses. main term defense of growth, areas of the market that have benefited from easy liquidity will come under pressure. the part of the market that are valued overall, should do better. you look at u.s. energy, totally underpriced. expectations are so depressed, it is under owned. the sector benefits from rising bond yields and high inflation. there are a lot of areas you can position the portfolio to favor from rising inflation and rising bond yields. that is the best case scenario. we get these corrections in the bond market, leads to performance in the equity market. the risk is, the selloff in the bond market becomes disorderly. if that happens, we will get a

bonds and equity market selloff, which is not bad. the equity market has not had a correction for so long. the higher they go without a correction, the worst things will get. derl: thank you so much, na naeimi and kathleen hays for your analysis. find the days big newsmakers on bloomberg radio. tune into "daybreak asia." you can download the app, or access it via bloombergradio.com. this is bloomberg. ♪

betty: a quick check of the latest business flash headlines. airbus set for major changes at the top. the chief operation officer to leave as early as february as

part of a management reshuffle. the ceo of airbus helicopters lined up to replace them. not seekaying he will a third stint as ceo in 2019. paul: walmart's supplier pushing ahead with its restructuring. the hong kong company agreeing to sell its product businesses for $1.1 billion. they're looking to transform itself into a digital company, profits have been slumping for the last three years as retailers contend with ring -- bankruptcies and store closures. customers may be opting for cheaper models of the iphone. apple failed to cram enough new technology into the iphone x to $999 price tag. waiting times to buy the phone have shortened. they are concerned demand is below initial expectations.

they say the models released this year are not yet indicative of a super cycle. samsung entering the smart speaker market and claims to have a strategy to combat apple. this is bloomberg. ♪

paul: it is 10:30 in sydney. 30 minutes away from asia's first major market open. betty: it is 6:30 p.m. thursday in new york, markets closing mostly lower. a lot of uncertainty. are we or are we not going to pass tax reform next week? the s&p lower by 0.4%. a survey in japan in the next half hour. i am betty liu in new york. paul: i am paul allen in sydney. you are watching "daybreak asia ." let's get to first word news. hashe disney-fox deal confirmed a $52 billion acquisition of much of the media

empire built by rupert murdoch. disney is picking up assets including fox's movie and tv production house. -- it is an epic downsizing for murdoch, who spent three decades a massing the operation that gave him such influence in the u.s. and u.k. politics. china and south korea talking about a u.s. missile defense behind him. president xi acknowledged the problems. president moon says he wants a new tie between the countries. it led beijing to cut back on tourism and resting -- restrain korean companies working in china. indian prime minister narendra modi looking to retain his home state, which would be key to him sustaining momentum ahead of national elections in 2019.

five exit polls suggest they take most of the legislature after a campaign featuring on happen it -- unhappiness with modi's policies. u.s. regulators swept aside rules on net neutrality, removing obama-era protections. the republican-the lead fcc voted 3-2 to give utmost authority over broadband providers, and leave enforcement to other agencies. they said it is time to restore freedom to the internet, but critics disagreed. >> i dissent from this legally lightweight consumer harming, corporate-enabling, internet freedom order. dissent because i am among the

million outraged. >> global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins. this is bloomberg. ♪ paul: thanks, courtney. let's take a quick check of the markets in new zealand. it is friday afternoon, we have 0.1% -- we have the zx up about 0.1%. all the stocks are online, and we are looking off about 0.33%. the aussie dollar weakening slightly against the u.s. it is around 76 cents. one of the biggest afters on the asx,

planning to raise $1.5 billion to finance a tunnel. crown resorts surging in sydney, selling a las vegas plot for $3 million. one of the biggest losers in sydney, macquarie alice -- atlas . let's look at what we should be watching is trading gets underway in asia. adam haigh is here. pimco had predictions. they see global growth improving, but they have a warning, brace for a downturn, and maybe zombies? adam: ultimately, they are saying the goldilocks environment of steady growth but not inflation to worry investors, remains intact in 2018. it is a place you want to be reasonably invested in. they are warning into the second half of next year, whether inflation does start to pick up materially. a lot more than markets are

priced for the moment. i think as we look at how investors are positioning for that going into the back end of the year is an equity market. trying to buy some downside protection at this moment. let's dive into the bloomberg, g #btv 9573. it shows in the uptick in people buying puts. the number of contracts being written for those puts has climbed to a record. it is not the surprise you would expect, given we had a stellar run for equities. investors now need to be positioning for this next phase, if the bull market is coming to an end. there are some things that need to be done for the portfolio. ofh two weeks or meaning this year, no one wanted to take any more risk. betty: you have been looking at the top for fund managers in a currency market. ,alaysian ringgit, chinese yuan

pretty bullish on those? adam: yes, they are amongst the top picks. 2017 has been defined by u.s. dollar weakness, and some of the other currencies have done back on the back of -- have done well on the back of that. some of the people we spoke to are expecting that to continue in 2018 to be a good performer. part of that is in improving global growth scenario. emt should benefit currencies, broadly speaking, both in asia and some parts of latin america. that in malaysia itself, there is good momentum with at the fundamentals and the fact the ringgit continues to be undervalued and underwriter -- under owned. let's look at g #btv 6007. it shows bullish optimism around

the ringgit and the chinese yuan . and the optimism around chinese growth, as we saw from the pboc tweet on monetary policy yesterday. there was an indication of tighter policy. it was very marginal and reinforces to people the authority is determined with their deleveraging push and wanting to iron out bubbles in the economy. next year will continue to be a well-managed policy from the pboc and authorities in beijing. incrementally that will allow further appreciation for their n onshore.h -- the yua betty: the republican tax plan could be going off the rails, because senator marco rubio saying he is a no on the bill as written unless the child tax credit is raised.

but president trump's of the florida senator will come around. pres. trump: he has really been a great guy, really supportive. i think senator rubio will be there, for sure. we are doing well on the tax front. we have tremendous support. now, joe sobczyk. let's say marco rubio is a know, will tax reform pass? joe: he still may have the votes. the only other senator who is most probably and no is bob corker tennessee, who raised concerns about deficit issues. he voted against it initially when it came to the senate. vice11th hour drama, president mike pence has delayed a trip to the middle east. he was supposed to leave saturday. he will stick around in d.c. until tuesday night, should he need to cast a tie-breaking vote in the senate. they can only afford to lose two senators. there are still question marks

around jeff flake of arizona, who is retiring and has deficit concerns. susan collins wants to get the things she has been promised on other legislation. it could come down to the wire. i should add rubio is not making a big ask, in terms of the overall cost for the tax plan. the senators seem to be working toward some way to accommodate him. whether they will be able to do that by tomorrow night, is unclear. paul: what are some of the key changes or modifications we might see in the final version? joe: they are still negotiating tonight, and they will continue through tomorrow. the biggest changes in the corporate tax rate, raising that to 21% from 20%, which was both in the house and senate bill. they have lower the tax rate for

the wealthiest wage earners, those making more than $1 million a year, from 39.5% to 37%. there have been changes on the pass-through limitations, how much income can be attributed to the pass-through tax rates. -- pass-through tax rates. they have restored the exemption for graduate tuition and student loan interest adoptions. and there are a number of other to trymoving the dials to get within balance to meet the senate's budget requirements. bloomberg congress editor joe sobczyk, thank you for joining us. samsung aiming to introduce a smart speaker in the first half of next year, in an already crowded field of voice-controlled devices. how will that compete with amazon, apple and google? let's bring in mark gurman from san francisco. the market big enough for all

these digital spies -- i mean, smart speakers. [laughter] each very funny, they are trying to come up with their own that focuses on their own services to appeal to their customers. the premise is simple. one,ple does not have someone wants a smart speaker, they might work on -- look on amazon or google. it means they might by smartphones and fire sticks and other things from the competition. it is necessary for the consumer hardware makers and services providers to have their own skin in the game. paul: where might each of these companies be looking for in at? what would make 1 -- for an e dge? what would make one better than another? mark: i will be honest, they don't have much of an edge over each other. amazon has one with a big screen, one with a small screen.

$30, you can20, attach to your own existing expensive speaker system in your car or media room. amazon has a plethora of overt -- other types. version.s their home it has a music focus, as well. someone else has one that does not have as much power, with the mucus -- with a music focus. they are all doing something a little different. but no one is outside the box except amazon. betty: it is hard to keep track of all the differences you just mentioned. i do not know of anyone standing out. how big will this market be. -- how big will this market be? mark: it could be a $3.2 million

market. but the point is not to develop revenue, it is to keep people locked into the ecosystem. it is a way to ensure sales of other products like phones and tv's or appliances and dishwashers do not go down the hill for other companies that do offer smart speakers that attach to other part of their is mrs. -- attach to other part of their businesses. paul: breaking news crossing the terminal. a company in china raising $1 billion. still waiting for further information on that. china raising $1 billion up a top outplacement -- top- placement. they: economists expecting latest survey to show a rise in japanese businesses.

this is bloomberg. ♪

betty: this is "daybreak asia." i am betty liu in new york. paul: i am paul allen in sydney. sunac china raising $1 billion in a top-up placement. we had been expecting an announcement along these lines. company, 226ed million shares to raise extra cash. this continues the theme we have been seeing of the deleveraging occurring in china, particularly for these types of companies. betty: we will keep watching those headlines. in the meantime, watching for headlines on the bank of japan's their fourth quarter survey.

likely to have stronger profits, and a weaker yen. the data may also highlight a labor shortage. i want to bring in our guest. i know you are traditionally bullish on japan. what do you think we will see in these numbers -- will it only add to the improving sentiment of the economy in japan? >> i think the answer is yes. see the data shows, the key points will be the nonmanufacturing sector. that is the domestic economy. they have been in the doldrums the past few years. it proves japan is going to be on track. if we see perhaps upside surprises, that can be quite supportive for the yen? jesper: it is interesting.

the yen is primarily driven by what happens in the united states of america. positive surprises from the tankan? yes. for all intents and purposes, the bank of japan stays at zero interest rates throughout 2018, so the yen should be weakening. paul: presumably, a weakening yen would further boost to the tankan into 2018. would that be your analysis? jesper: i think you are absolutely right. the relationship between corporate profits in the japanese currency remains a strong one. for every ¥10 of depreciation, corporate profits get a boost by a percentage point. absolutely, a week yen is good for listed companies in japan. paul: we see corporate profits

get a boost. but it is not leading to pay increases. how long is the japanese worker going to have to wait to see wages rise? jesper: it is interesting. the pay increases are coming through, it is just that they are not reshaped. two years ago, pay increases of 0.5%, last year, 1%, this year, 1.5%. it is happening, but it is not a v-shaped recovery. when you expect to see -- this is the first tankan since shinzo abe's reelection. do you see bounce as a result of that? jesper: you make an important point. key forl stability is business investment expenditure. the more stable the policy regime, the more credible prime

thester abe's longevity is, more companies are going to feel confident to upgrade their domestic capital stocks. watch for the business expenditure money, -- number, the capex number, to grow. betty: we will get those numbers in a few moments. what do you think will be the big economic surprise in japan,, come this-- japan, year? jesper: the economy can grow 2.5% to 3%. capital expenditure is rising, japan growing it almost 3% would be a great surprise for 2018. paul: those tankan numbers are crossing the terminal now. the large manufacturing index better than expected at 25. the survey had an expectation of

24, a big improvement on the third quarter of 22. a large manufacturing output weaker, 19, where 22 had been expected. that is the nonmanufacturing index, coming in weaker at 23. expectations had been for 24. large oil industry, slightly weaker, 7.4%. there had been an expectation of 7.5%. it is weakening from the third quarter, when we had 7.7%. i know you have not had not much time to digest that, but could we get your thoughts? jesper: the tankan is very much in line with expectations. there is greater strength for exporters and weaker confidence growth from the nonmanufacturing sector. overall, this is the japanese economy that is recovering nicely.

it is not too hot, not too fast, not too slow. that is an excellent environment for corporate profits to continue to surprise on the upside. keen to find a result of the nonmanufacturing index. any surprise, at weaker than expected and no change from the third quarter? jesper: it is interesting. i would have liked to have seen an uptick. two orare not talking a three point drop, it is a one point drop. it does make an important point. yes, in the domestic economy of forn, you do have more room mergers and acquisitions, corporate restructuring, and shareholder activist to turn companies around. betty: in a bigger context of

all of this, we have seen central-bank tightening. we saw mario draghi try to thread the thin line on trying to continue to tighten, but at the same time seeing nowhere inflation happening anytime soon. the central banks are trying to be masterful, not disrupting the markets with their tightening policies. how will that affect the bank of japan, going forward? theer: when you look at tankan, there is no smoking gun, absolutely no reason for the bank of japan to change their policy. looking across the pacific, what is going on in the u.s., will that force desegregation of monetary policy between japan and the u.s.? absolutely. does that mean that kuroda, the bank of japan, will get itchy

and pulled the trigger on wage increases? absolutely not. there are a lot of changes that need to take place. so zero interest rates are here to stay in japan. betty: thank you so much for joining us on the reaction to the talk on the survey. this is bloomberg. ♪

betty: a quick check of the latest business flash headlines. twitter jump to its highest since october last year among speculation of a deal following disney's grab firefox. disney was said to have considered buying twitter last year. goldman sachs advised twitter in those discussions. bloomberg lp is developing a global breaking news network for the twitter service. paul: singapore airlines warning

overcapacity and the aviation industry remains a program, as it tries to stem off challenges from a middle eastern rivals. they fight back at the premium level and low-cost operators. in june the company said changes may include job cuts. they offered 3 -- cabin crew unpaid leave. >> i think we will continue to see the environment remain challenging, because there is full capacity in the market. [indiscernible] but there is support for the transformation. facebook is to put ads before videos in its new watch product to create a lasting business model for the content. the social network has expanded watch by paying creators directly for their shows. if they can build a big enough ad business, it will not have to continue doing that.

facebook admits the scenario is a long way off and authority tweaked the formula several times. in the next hour, our guest joins us in a few moments on why the dollar is a big risk of next year. this is bloomberg. ♪

♪ >>. so to slide on them republican tax bill may struggle in the senate. the dollar is for a drop. caps taxrubio his all cuts for the rich. president trump says he will come around eventually. >> the latest survey shows japan's recovery continues. confirms a $52 billion much of rupert

murdoch's media empire theory -- empire. this is the second hour of daybreak. yes, that is a story will get on. will be learning more about the deals with mythe see more what we may see coming out of this deal between fox and disney a little later. betty: certainly shaking up hollywood in the media world. we will dig deeper. reverberations all around the world. let's get to the first word news. we have courtney collins. >> piece of the cap rates unchanged. onio draghi focused inflation, saying he expects to ownership targets by 2020.

the bank of england cap policy unchanged and reiterated future hikes would be gradual. keep a key rate at .5%. it has been a busy day for central bankers. for the first time since june, it was a split since june that signaled more inflation ahead. they've got to keep policy type until the inflation outlook improves. the philippines cap rates at a record low of 3%. republican tax cuts are all about helping the middle class, even as gop leaders plan to cut the top rates by million-dollar

earners. susan collins of maine says does not favor any cuts at the top end of the scale. google news 21st today powered by more than 2700 journalists and analysts in more than 120 countries. paul: a quick check on the markets now. austria early afternoon in new zealand. more with what we can expect. the world map at function showing the weakness we overnight.through of course, we are talking about the big disney deal. the dollar under pressure, sending wall street lower and we

have weakness coming through. let's switch over to see how japan and south korea are faring as they open up. off oncethe being sold again. we did have the large manufacturing index coming in slightly above estimates. large manufacturers themselves begin to let -- having a look at the commodities space, it is generally weaker. family moment -- at the moment, the start of the day under pressure. focus. stock in

to the downside, off by about one and a half percent. another week for the regional index. energy socks looking ok. they are on the back of the general stability that we have seen coming under pressure. up.weakness of japan opens betty: chinese president and his south korean counterpart are

putting us that behind them. this is the focus is on improving bilateral ties. is this a reset in relations for soul -- seoul. yesterday he wanted to build a foundation for a new era. -- the missile defense system that china has always had poses a threat to them. he has continued to roll up from north korea, let as you touched

on both sides. back in october, this is they will put this on one side and focus on building a economic relationship. the impacts on noticeable launched ana infectious -- difficult forry soft drink companies here in china. of course, the questions of north korea and how these two countries work together have been dominating the discussions. china continues to say they want suspension for suspension put in place. stopping onreans the other. the south korean president has backed sanctions on south korea, but he has also push the need for dialogue.

there is some of i'm terms of china and south korea. they say they want to see a denuclearization of the korean peninsula. what else is on one's agenda while he is on china -- in china? relationship. over a 17executives year. . see it has strengthened quite remarkably the last two years despite these tensions and from south korea to china which outstripped exports from china. a lot of goods being produced and consumers want to get there hands on.

we may get more details coming for. at someected to me point today. sowill then go to the city, they hope these two companies build an economic foundation and it will make it easier for them to deal with the question of north korea. >> thank you. deal -- massive deal. fox focuse will see on movies and sports. -- >> looking at all the numbers that are being bantered around is pretty crazy. when we get down to the main meet of this, the disney ceo did

talk about synergy as well as cost savings. my first bloomberg terminal chart -- what we are looking at is studio entertainment revenue in white and parks and entertainment in yellow. assets get character to join forces with disney. for example, x-men owned by fox. avengers.ders -- the revenue,look at studio it fell. not because of these peanuts, it might want up. similar story for parks revenue. withu mentioned the world

a bigger environment in avatar, we could see a lot more people being pulled into this universe. what does fox have to gain? in white, this is the entertainment division. it in range the past several years. when you look at income, it has been falling. fox tv's income fell 36%. one bright spot has been the ad revenue coming out of fox sports and we have the same that fox wants to focus on news as well

as sports. now, there is one big beneficiary. that is rupert murdoch himself. the top 100 people on bloomberg billionaires list. taking a look, for murder is now at 87. he actually jumped five notches. at $14.3is now billion. theained more than half of dollars. analysts are saying when all is said and done and this is finally closed, people are he could gain another $2 billion which will put him in a place of number 69 or 70.

steal. of hans with the ceo bob iger joined -- >> we have long expressed a desire to be the direct to consumer business. that is the way the world these days. not only does it provide better opportunity for customization, but it provides companies to reach more consumers really a value.re is properties tox grow hulu and also use the fox assets to help complement our , as wellvices as well as on the sports front.

>> what you did with disney and netflix, ending the licensing agreement. >> netflix has been a great partner and we considered ending that relationship very seriously because of the revenue generated . we are in the business of .reating long-term value as we look ahead, we saw the of direct to consumer was far more. we believe it was time and we relationship and take the approach with the assets we are buying as well. paul: disney ceo bob iger speaking. still ahead, our exclusive interview on the airline's

ambitious growth plans coming up. next, rates that signal future wealth management. this is bloomberg.

♪ paul: the bank of england and the european central bank caps off unchanged even though they faced very different inflation scenarios. that2018 be the year inflation finally picks up in europe. hays is here with a look. clear.s pretty

in the forecast, they say inflation will average 1.7%. they will not expect to change the rate. the bank of england kept its he rates steady. team pointing out that maybe europe is starting to see signs of inflation reflected .n some of the comments prices are moving in the right direction, albeit slowly. forbrexit breaker is a plus potential growth. they kept their key rate, but they see inflation moving higher, topping the target in three years. a little bit ago, we spoke and

he says he thinks 2018 will be the year that inflation finally starts being a factor. >> 2017 is the first year that we synchronized for the growth. i think not only the investors, but also the central banks will be surprised. >> inflation has jumped quite rapidly, but remember that is because of brexit fears. the eu is far below target and we have the u.s.. at any rate, i think it is an interesting view. we will see if central banks

caps on to that. i think right now any optimism is so guarded. in david andbring wealth management. as kathleen pointed out, our prior guests talked about how he thinks we are under price inflation and how it will be the big bear next year. where do you stand? we see inflation gradually picking up. it is important to see a comeback. a number of factors have been affected by the situation. is still relatively positive in terms of momentum. more importantly, this is something we need to stretch out is that the central banks are .apable of tightening gradually

the commercial banks across the world are in a much better situation and are much healthier and they are able to regain some of their activity. six orbeen missing for seven years. with the commercial bank going back to its normal job, you will see velocity in terms of liquidity. while it may come down, if there is volatility that the bank level, -- >> i love people that share people talk about -- what is the world has shifted in more -- what if we can continue to have growth? is that a bad thing in wouldn't that be a plus for equities? the situation is not

survive. >> it is actually. if you look at the recovery, it is a bit unusual. it has been a long recovery cycle in the intensity -- there ando rush to touchdown there is probably no reason to inflation because there has been structural changes taking place. if you look at the cycle, it has recovered, but not that significantly so most of the have stability. positiversification is because these open up for opportunities at a different stage of the cycle.

>> we recently -- it was recently encouraged. the survey is run by the bank of japan. do think the results will change the conversation their? >> not in the short-term if you are returning -- referring to the central bank of japan. what we are seeing in japan we are seeing in the rest of asia. they all the expectation in the main reason because of the global trade which is a lot stronger than what the market was expecting. the private missing investment cycle that is still recovering. further anderialize have to be we

constructive on japan. >> and also on china. >> it is quite well but it has corrected in the past few months. it is interesting because people the tighteningut measures in place across the country. construction,at they feel solid and these levels have come down, so it is a much healthier situation and we are expecting that sector to emerge further and becoming more stable and regular investment cases and this is what we need. we want to avoid volatility.

doing inhat china is many sectors to rate would not be surprised if next year in the property sector, we stopped to see, which would be extremely positive. betty: plenty to come on daybreak asia. this is bloomberg.

♪ paul: let's get a quick check of the market trading here. trading at the top of the hour. about three quarters of a percent lower. off and really dragging their on thursday.

are heading the same way as financials weighing in on the market. coming up, the us showing prime minister and a special election in sydney this weekend.

♪ away we are half an hour from the open of trading. you're watching daybreak asia. let's get to the first word news. courtney: first up, the disney-fox deal is confirmed. a $52 billion acquisition. disney is picking up assets including fox's movie and tv production house. channels include fx and national geographic. murdoch spent three decades of massing operations that gave him -- influence in u.s. and

u.k. policies. voted 3-2 to give up most authority over brand -- broadband providers and enforcement to other agencies. >> i dissent from this consumer -- ing, corporate enabling am among the millions outraged. the meeting is likely to agree there is specific progress. chancellor merkel says there are

still questions to be answered and other leaders said it is time to explain how she sees the u.k. relationship. -- five exit polls suggest he will 99 246 of the legislature after a campaign featuring unhappiness with the policies. >> global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. paul: thanks very much. time to see how the asian markets are shaping up.

looking like the best into the trading week. so far, we have seen more upside in the costly installs. the 26 perit reached -- of course, we have the latest survey as well showing resolve manufacturing improving to the highest level in a decade. this is also news on the japanese equity product, but so we are seeing stocks under pressure. is's have a look at what driving the japanese market lower. you can see every sector is being led. industrials coming under pressure as well.

sector downforming by about a quarter of 1%. let's have a look at some of the stocks. -- it is up by almost 30%. yesterday, it came through it plans to get into the smart phone sector. this is an e-commerce company and we are hearing that the -- very interesting article on the bloomberg. it is not such a great idea.

a little bit of weakness to round out the commodities space. surveys west on mentioned. ryan fowler -- >> it was a very bullish report. expansion is likely. one forecast downward and very normal for the december report.

show plansit will are cut about two full percentage points from september. very minimal production and that i think can be taken as a sign of bullish sentiment. forn the implications policy over next week's board meeting? corona made a mr. correction to reversal theory. we will be looking for any kind theyference to that when have the policy board meeting. for now, most economists expect to move towards the exit the second half of next year and that would begin with higher

targets under the yield curve control policy. betty: what is the government going to do to make sure the positive sentiment continues? beene big question has household spending. the only way to run or money is to give them more money. we will test it will also help companies keep cash piling on their books. negotiations are really beginning this month. we are starting to see various people lobby for position.

we will see where the companies come through, but that is the big question over the economy right now. for will companies do --her wages question mark for higher wages? the us showing from minister faces a tricky weekend. the outcome may determine the himself.he government had johnson is tracking this. it is really difficult situation. >> as you say, it is going to be a close fight. alexander, the formal -- former number eight world's tennis player. he stepped down last month. he is one of about a dozen lawmakers in australia that have

citizenshipon a saga. he stepped down from parliament britishunced reduce -- citizenship. he is representing the labour party and polls put them on about 50-50. it is in play. how is the race going to end? thatlearest indication both prime minister malcolm and turnbull can labour party leader have both been out there campaigning there is

aggressively in support of their candidate. very important as you say. see.exander regains the -- itself is not a huge burden. he has been doing that the past few weeks. after ask whether or not being in charge would undermine his and its members in his party would question whether he is the best person to lead. joining usk you for on the upcoming election there over the weekend terrific much more ahead on our airways.

exclusively next.

paul: this is daybreak asia. qatar airways is dueementing a new strategy two isolation from saudi arabia. >> we are not going to slowdown. what they want. it will not have negative impact on the line. it will continue to grow. it will of course affect the bottom line.

on a marchiving and ahead which will continue and that people in the us when they -- how many new destination destinations we are announcing -- destinations we are announcing. .aul: can you give us an update are you having to reschedule more flights, cudmore? -- flights,? >> we are expanding. we have been successfully done get. we will continue bringing more passengers on board. our bottome issue is

profitd we are giving a warning. as a matter fact, we will have a negative year which will be our bottom line, but as far as passengers, we are hoping we will be close to the number of passengers we carried. how are you dealing with the backlog? there's 12 more triple sevens from boeing. what are you doing about your backlog? >> let me be clear. we are not selling airplanes because of the blockage. as a matter fact, we are xeparing for our 777 airplanes that will be delivered to us.

the only way we can roll our fleet is to sell back older air place-- aircrafts to make for the new ones. paul: can you give us an on how the economy is doing. i was reading a story on how the budget deficit is looking to decline. how do you see it? don't listen to a lot of fake news that our adversaries put out about our economic performance. it is robust in the expansionation and

will continue. about -- have you see this furthering your plans to gain access into mainland china? over a matter fact, it is 9.9%. secondly, we want to have a strategic relationship. potential. yes, they have difficulties, but as you are already based in hong kong, they have a very robust plan to restructure and i'm sure they will continue to march success.uge ceo: that is qatar airways al baker speaking. let's get a quick check of the

latest business headlines. airbus is set for major changes at the top. we are told the ceo is lined up to replace him. the chair would all of his off bregier would follow his boss. >> -- the carrier is debating how to live back at the premium level and against low-cost operators. back in june, the company said changes may include job cuts. i think we will continue to see the environment challenging. with support across

the organization of these, we are well prepared. pushing ahead with restructuring. the company agreed to sell three of its products for $1.1 billion. profits have been something the past few years as retailers contend with bankruptcies. bloomberg subscribers on their terminal. you can also customize your settings and you only get news on the assets you care about. this is bloomberg.

paul: let's do a quick check of the markets. let's start off with tokyo. pretty negative over there in bullish and also negative in sydney as well. pretty much following along from what we have seen in the other

markets. let's take a look at s eoul. if you doubt in the u.s. over the future of the tax plan. sureple of senators not about the way it is going to go. singapore starts trade in just over 15 minutes. global markets down about half a percent. this is daybreak asia. governor -- st. kitts field to criminals more than

consumers. bloomberg news market reporter justina lee joins us for the details. isst of all, explain what it and why she is into bitcoin. >> analysts are saying japanese investors have gone from trading to leverage crypto trading. margininted to 50% ethics trading by japan. think -- i think it makes sense to me because the japanese andrnment has been set up more friendly to

cryptocurrencies. i think it is possible that japanese retail investors have gotten more comfortable with cryptocurrencies. stillis interesting, but there is clearly risk with bitcoin. is this in line with the norm or wisely are they requiring such high margins? >> the one of 2% margin requirement that goldman is the meaning for clients to clear the transaction is higher than what the exchanges themselves are demanding and of course, part of the -- higher than what is typical for gold and oil futures, but considering we have a lot of big banks refusing to clear these transactions at all given bitcoins volatility.

i think it seems like most links are still trying to be cautious. cme futures? that ifwe have seen is you days ago people were surprised about high -- how high the premium was. at one point, the futures were trading 13%. it seems like the premium has more than half at this point and that is probably because many more people responded. there might even be more short-sellers coming in so looks like the market is normalizing. paul: justina lee in hong kong. thanks for joining us.

that is almost it for us on daybreak asia. and look at what is coming up here on bloomberg markets. >> we have can jail the -- -- that is a question we will be asking him. effectively, the economy coming back. he will look at that survey which came in better, just reinforcing that. -- the stock as well. thistories surrounding one. 430% of your today. that is not uncommon at the moment. we have seen a lot of this going on. it is a question no one can answer and in looking at the dollar. this whole mystery surrounding

the tax overhaul policy. can donald trump get this through? when gordon joining us from singapore. it. is to come and that is if you did not get into bitcoin, bit into these stocks. you have some good returns there. that is it from daybreak asia. retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.

rishaad: slow but steady, more good news. rising optimism and the recovery on track. theresa may facing a brexit leaders to be eu creative in the interest of striking a deal. haidi: i'm haidi lun in sydney. , disney'sthis hour $52 billion deal includes much of rupert murdoch's empire. this is "bloomberg markets: asia." ♪