♪ kong, weere in hong are live from bloomberg's asian headquarters. strength, strength to the gallup top 25,000 for the opped time -- the dow t 25,000 for the first time. a sporting agreement. freezeorea agreed to annual military drills during the winter olympics. betty: steve bannon pledging support for president trump but their bitter and public falling out is splitting the republican

party. and bitcoin. we'll show you charts that will cheer those betting on a cryptocurrency crash. ♪ betty: it was quite chilly here today with that bomb cyclones blanketing the northeast. the natural gas producers quite warm and happy. a quick chart to show you where we are. prices skyrocketing. polar blast we have had --today, and aiding in a winter storm. in a wintering storm. you've really see the

stress on the market. some market paring back to the polar vortex back in 2014. how are you getting home tonight. betty: we will have to figure that out after the program. this winter blast did not keep investors away from equities. s&p hitting records again. the dow adding on 150 point and nasdaq also higher as well. tech stocks continue to rise. onel stock down based growing concern over the security flaws in their chips. that is one we continue to watch. -- yvonne: stocks here on because of their best week in 6 months.

new zealand kicking off flat and the kiwi at 71.53. australia just came under way. asx 200 seeing solid gains of about 14 points. slug going for the currency. 266.s lower at we are at the opens of japan and korea. the big stories remain japan. best first day of 2018 since 1996. look to be continuing that rally by 180 points or so at the open. that's according to chicago nikkei futures. get you caught up with the first word news. first, security experts say highly rated sectors are most at risk from a security

flaw in microprocessors from intel, advanced micro devices and other manufacturers. software fixes could slow down old systems. google said it privately issuesd intel of the to find remedies before going public. isokfield asset management what remainseld, of the former u.s. energy powerhouse's business. it is said the deal will transform the company into a stronger, more streamlined business. california's attorney general said the state is considering options after the trump administration proposed opening almost all u.s. coastal waters

to oil drilling. the u.s. department of interior plans 40% of options across 90% of the u.s. shelf. that includes waters were activists have called for decades to protect delicate ecosystems from oil spills. the northeast has prompted state of emergency in new york and new jersey and closing schools from washington to boston. the national weather service said bossing could see -14 bostonof snow-- could see 14 inches of snow. bloomberg. ♪ yvonne: u.s. stocks are part of the global rally despite the

huge snowstorm in new york. no slowdown in trade. we had economic data this and the jobing jobs market continues to grow tighter and tighter. sue: the job that will really kick off the market to a strong start. the dow at a new level and strategists say what is carrying this bull market is the view that the global economy is strong and the u.s. economy is strong. take a look at the market snapshot. we saw the dollar rebounding. gold up a bit. when we seeing you are created into some of the most actives, the size of the moves.

one of the losers of the day. of the torillas figure. 688.29 percent. the strengthhowing of chips. they are coming on strong despite the chip problems we are seeing from intel. there was some problems with tesla. once again, the car production number in focus and they are down. the this down a key production product. are they going to have to raise more cash? that is a question a lot of the

critics are going to have to focus on. betty: they are burning a lot of money. oil is surging here at the highest level since 2015. sue: a lot of focus on energy trading. will also flying. up above 62. flying.also go into the bloomberg. there is a view that one to give barrel,$65 and $61 a there will be an increase in oil rig count. betty: let's talk about the thunder snow. how are the airlines calving? -- coping? sue: we are hearing all these strong terms. let's take a look at the

pictures. -- heavy snow coming down on the eastern seaboard. thousands of airline cancellations and forecast for frigidaire going into friday is goingsing -- frigid air is increasing the risk for more cancellations. airlines are seeing greater income going into 2015. betty: have you guys all bundle of over there. -- bundle hope you guys all up over there. south korea will not hold annual military drills during the

olympic games. joining us from washington is joe. is this a sign we are making progress in negotiations? correspondent: it's a temporary hiatus from some of the hot rhetoric going back and forth between washington and pyongyang. the postponement of the military exercises is something of a concession to president moon in south korea, you have been asking the u.s. to do this. part of the exercise was overlapped with the paralympic games. the president who previously called talks with the north a waste of time and the state department, which was skeptical, stance.dit for this

he said talk is good. some hope there is a cooling of the rhetoric and there might be some process. betty: just wondering whether president trump --how much is he taking credit? saying his stance, his tough language and vigorous defense of the u.s. public is -- this is the result. there may be something to that. there are also indications of that the south korean president was interested in pursuing some kind of dialogue with the north. and then the north korean leader is hoping to put a wedge

between the u.s. and south korea. there are a lot of factors that go into it. nnon beingspite bam accused of losing his mind by the president, he is still pledging loyalty. starting tot: he is run into problems with some of his backers. rebekah mercer, who is helping to back breitbart. away.s backed several other candidates running republican party in arizona and wisconsin has backed

away from bannon. he is looking to regain traction with that. still ahead on daybreak on a tear. stocks we will speak to an investment manager overseas. we will get his strategy for the region. officialp next, a top says the link between the job market and inflation is broken. what that means for american interest rate policy. this is bloomberg. ♪

betty: this is "daybreak asia." yvonne: a measure of u.s. private sector jobs growth signals a strong government jobs report friday.

let's get the latest from kathleen hays. she is here with more. is this going to slow the fed's rate hiking path of this year? correspondent: this is an important question. --it measuresed only private industry jobs, and the view to back up that you have a healthy u.s. labor market. this is a chart. bluet to show you this line. the private payrolls number, --look at this line. it is not trying move for move but in general they move in the same direction. it reinforces the view of what

the bloomberg survey is saying about the payrolls number. more jobs usually mean a stronger economy and more rate hikes. the issue is in 2017 we had a big policy conundrum for the fed. there is a chart to illustrate that. unemployment come ecb blue line coming down to 4.1% -- you see the blue line coming down to 4.1%. as unemployment fell, inflation came down. two percent to years.ce in the past link between jobs and inflation is not weak, it is

broken. he says of the phillips curve has completely disappeared. a ball dove but he is leader at the fed -- though leader at the fed. nant atwages are stag 2.5% year-over-year. an interesting set up to the jobs are or. yvonne: stay with us. we will bring in more analysis on the u.s. a job landscape. berkeley professor of economics allen air ball -- alan arabak. is this the year we say the connection between the inflation target and jobs data is broken? >> i think many economists are

ready to give up that. it is interesting that inflation has picked up. we have had so many reports of labor shortages and you would think that would lead to rapid increases in compensation. it has not happened yet but it may very well happen in the near future. it has contributed to the conundrum of the -- yvonne: isn't this the year? projections are unemployment is going to get down to 3% handle? if that is not happen been when? >> the unemployment rate is not a perfect measure of tightness in the labor market. in the great recession, we had a sharp decline in labor force precipitation --participation.

it has not reached where it was. especially with prime age working males. that might result in a drag in increases in compensation. productivity growth has not been very good. that is another thing that has contributed to slower wage growth. thise: could the fed say link is weaker so inflation is still going to rise slowly and if the fed is reducing its balance sheet, along with --it couldhikes prove to be unnecessary. why rush? >> that is a good point. some of the members of the open market committee agree and think

the fed should not have as many raised as the consensus is forecasting. we will see. as we approach the next fed meeting, we may have more controversy for the voters on the open market committee. yvonne: it is also about tax reform. there seems to be uncertainty about how to approach this among fed members. are we going to see a more aggressive federal reserve in light of this fed overhaul? raised forecast growth for 2018, reflecting expectations of what tax reform would do. there are different opinions

about how much it will do. until we start seeing signals of it having affect, such as strengthening of business investment, we will just have to wait and see. yvonne: we are seeing a rally of stocks fueled by the tax cut. we have seen the national federation of independent business jumping again. small businesses and investors are saying we like tax cuts. is this going to help the economy? >> there are two reasons why tax cut may cause markets to go up. it could lead to a strong economy and the other reason is if you are increasing after-tax profits. was priced in by

the expectation there would be a tax cut. no one was sure he would actually happen. would actually happen. betty: you think if we raise rates, and we may raise it faster, do we risk an inverted yield curve this year? >> anytime you are tightening monetary policy and history youight --interest rates, a inverted yield curve and a recession. betty: thank you for joining us. hays for to kathleen joining in the discussion.

you can watch us on live tv go. become part of the conversation and send as an instant message during our show. this is bloomberg. ♪

betty: this is "daybreak asia." yvonne: quick check of the latest headlines. bloomberg has been told that chinese livestreaming company ai wai is taking over broadcasting company in the u.s. fundare looking to expansion in a fledgling sector. in new york,

. 50 adatnalysts say least found snap was the popular social media platform. down.is and mark zuckerberg said his fix snap.018 sis to facebook has come under criticism after the russian hacking scandal. we're counting down to the opens in japan and south korea. quite a robust rise expected from trading in japan.

gains expected after the rally here in the u.s.. much more ahead, focusing on intel and its troubles. bloomberg. ♪

7:30 a.m. friday in hong kong. leaving the week with a beautiful look. commerce and warmer than the we're seeing in new york. betty: certainly a lot warmer. a low bar right now because it is below freezing at 6:30 p.m. thursday in new york. well surprisingly for the big blanket of snow we had. i'm betty liu in new york. yvonne: you're watching "daybreak asia."

four straight days with courtney collins. correspondent: steve bannon has pledged his continued support of donald trump after the president's annunciation -- pronunciation of his former chief strategist. house has been defending the president's mental fitness for office, an issue raised by bannon and a bug trump's -- a book trump's have tried to ban. >> we is a strong and good leader. that is why we had a successful 2017. correspondent: the south korean president said that he and

president trump agree that the gains in pyeongchang should be kept people. south korea plans to fully coordinate with the u.s. during its talks with north korea. on the pbocosted website, it tells bond traders to meet liquidity requirements in their deals. those failing to rectify internal control problems after a year will be banned from participating. argentina tries to get ahead of other markets by selling off debt. the sale is being led by the group, deutsche bank and hsbc.

global news 24 hours a day powered by more than 27 journalists and analysts in over 120 countries. this is bloomberg. ♪ yvonne: we're counting down to the market open in tokyo and seoul. the annual spirits alive and well in 2018 --the animal spirit alive and well in 2018. correspondent: we have south korea reporting its payments and malaysia reporting trade boost for november. the nikkei pmi services number reporting december due as well. much later today, india expected to forecast of the flow of expansion since 2014. we cap the u.s. jobs report. ahead of that, we saw the dollar climb again. thatan see on this chart

despite the yen holding a two ay loss, it is showing off decline we saw. despite the narrow range we have seen for the yen, it could look to retest that 112 level. straightey ignored 7 quarters of growth. you saw the boj governor kuroda saying yes. there is a gradual story of reflation. investors demonstrating a appetite for risk. will continue in tokyo. the kospi will come back with gains as well. yvonne: to sydney, in about an

hour's time we look at trade data out of australia. correspondent: with the trade numbers we are expecting a surplus we saw in the previous month. we take a look at the breakdown for the asx 200. we are seeing a gain for the third day. higher.seeing telco's and also higher by steel and copper producers. against the backdrop of how the commodities, we have mining giant bhp and rio. commodity rallies sputtered today but we have seen the broader story of commodity pick up. we will watch the reaction. intel and microsoft are among

those chip and software giant me aning a large majority of smart phones and computers are vulnerable to hacking. intel says a share of the company sold last year had nothing to do with the chip flaw. are investors buying the? -- that? conern --were having concern today. after intel released a statement, things are lax but things are still down. betty: they did not have a really great explanation and are

not close to solving this, are they? >> it depends on who you speak to. a lot of analysts and security related people have been all kinds of prognosis out there. including one of the particular problem being identified will be around for a long time. intel said no. it is just pushing these updates. microsoft and amazon and google saying our dedicated safe. -- our data is safe. thesee not seen all mitigation supplies. that is the concern that still exists. patchesntel says these will be degrading the

performance of their chips ov erall. is this a chance for other companies to take a share of the data industry? >> intel is saying everybody's chips use this feature and heady quickly another said we are fine. betty: how to call visit to det --how difficult is it to de throne intel? are companies willing to swti itch? >> it has been argued that 99% of market share is intel. becauseas not changed

no one has come up with an alternative that is good enough. intel'snot help infallibility. yvonne: thank you for joining us. in the get more on this next hour. in the meantime, legal marijuana in the united states is facing a new challenge. attorney general jeff sessions rescinded the policy from the toma era allowing states decide how aggressively to enforce federal law. six u.s. states have legalized most recently, california. in australia, canada st --

cannabis stocks have been on a high after it was decided supply could be exported. correspondent: the aussie government led of the pot stocks. they say they will relax x work that -- export rules so allows producers to access offshore markets. those markets are much larger compared to the sector in australia. in california, it is a multibillion dollar industry and in australia it is valued around 3 or 4 million. there is competition over in israel, where they want to define their global

position in that market. betty: the australian market is small compared to the u.s.? >> indeed. very much so. it's a kind of tiny sliver compared. what the australian government has been doing is relaxing the rules in australia slowly so some patients can access medicinal cannabis products. the government here has told researchers to extract the plant made intoo it can be a pharmaceutical. it is not going down the u.s. or canadian route where people can smoke the products. because of what has been happening, still a very tiny sliver. in abstract, 300 m --

australia, about 300 million. move validates of this emerging industry in australia. like the hydroponics company with an opportunity to get. ket.opportune tic the hydroponics and greenhouses for a lot of these stocks. like one investor said, it is not a bunch of hippies anymore. betty: the sector is becoming more valid. thank you for joining us live from sydney. watching those marijuana stock in sydney. we talked strategy with an investment manager who oversees

$948 billion in assets. this is bloomberg. ♪

♪ this is "daybreak asia." haidi: a quick check of the latest business flash headlines. alibaba says by the online giant place to open 30 new supermarkets in beijing. it would extend their presence s. the capital to 35 store and their rivals says it will open more fresh food stores. bid fore has been a the u.s. aluminum producer

for $2.5 billion. an earlier agreement to sell them to a chinese company was scrapped due to security concerns. one of the oldest names in the retirement industry, the teachers insurance and annuity association manages every $900 billion in assets. strongly believes in denver find portfolios --and diversified portfolios. before we talk about the pension , i would like to ask about the launchedsfit, which

this week. huge indications --implications. how does nuveen deal with these changes? passivere seeing investment taking off but now we are differentiating between research and trading and that will impact the industry. it is early days to see how fund managers and staff. absorb theo nuveenh costs, is putting the cost to investors? >> some of the smaller firms will not survive because of the

increased cost an emphasis on this management compliance. we'll see a big change in the asset management industry, especially in europe. betty: already seeing a lot of that. moving along to talk about the pension industry. ratenterest backdrop has been a problem but --doesseeing the markets this change your perspective about how to get better returns in 2018? >> we will see an increase in pace.but it at a slow we are visiting asia and asking our partners to diversify into yield seeking investments. especially in the asset world,

where it is a perfect hedge for every client that wants to reduce the volatility and decrease the yield. yvonne: i know you run the wheress and not so much to put your money or the investment strategy, but i'm curious as you bring on new investors, what is the top of the line? >> the biggest concern most investors have is we have had a thing in 2017 and after that. how do they handle the volatility. nuveen, through our 13 affiliates, we are encouraging clients to diversify and

customize solutions where you see yield and lower volatility. >> are you hearing more about socially conscious investing? it is a growing issue. we saw some of that the run in japan.- of that erupt in we have seen this across the globe. we have seen this across the globe. you are seeing a big situation of esg in asia. that is a consistent theme. at nuveen, we have been doing that for over 40 years. we are the go to asset manager for esg. yvonne: from a policy point of view, it looks like china is also spearheading this.

you that impact how approach this market? >> on a policy basis, we have helped government on policy but y wheretting your mone your mouth is and also investing in esg products. in china, there is a big emphasis in japan, australia and singapore, falling very fast. does nuveen see this as a threat or opportunity? >> mostly see this as an opportunity ar.

about 9% of outflows come u.s.the as we make our footprint here in asia, we are actively working with millennials and policymakers. we are very excited about our opportunity here in asia. yvonne: great to have you. nuveen's ceo. it's bitcoin's bubble about to burst? this is bloomberg. ♪

yvonne: decline -- bitcoin had a 2017, but many think it is a bubble that is

about to burst. the shows the rise of cryptocurrency. look similar to 2014, when at a record high only --, it started to decline. we will talk to our commodity strategist. his history going to repeat itself? correspondent: very likely. 2014 was the only year they down.was -- bitcoin was deteriorated have a massive frenzy. and it has similar overhaul conditions. conditions.t about 700 new cryptocurrencies were

launched. yvonne: what is happening to some of the cryptocurrencies outside of bitcoin? >> that is the problem with bitcoin/ . it is like aol. they are coming -- are becoming to old dog. it is the one everybody knows but things like ripple and lightcoin. of peaks when lot the fed titans. yvonne: you have been looking at the connection between the coin--bitcoin and gold. before theght

andtightened was up bitcoin was at its most overbought levels. it looks like they reversed. things, gold, the supply is limited and cryptocurrency, it is parabolic, there is not limit. get back to where it was. tocoin could get back 20,000. he frenzyenzyhe -- t last year was at presidency. cryptocurrency is another story.

bitcoin is a bit of an old dog in this space. yvonne: this is bloomberg. ♪ yvonne: welcome to daybreak:

asia. asian stocks for the best we can almost six months as confidence and global growth sexy records on wall street. have.s. and south korea military drills during the upcoming winter olympics. i am betty lou in new york where it is just after 7:00 p.m. on this thursday. we are assessing the intel chip software fixes could slow down systems. hyundai roars into the self

driving car race with a new global partnership. ♪ yvonne: we've been talking about equities have been for japan in 2018. no exception as we talk about was,. the bestay day since 19906i do not think we have seen ms. of 3% , i think at least two standard deviations from the past 20 years. this is only happens a handful of times -- happened a handful of times. you really do see the games. a lot of us had to do with tech. is this really going to continue or is it just a catch-up rally after we saw underperformance in parts of november last year? betty: as that like technology shares hold the key, yvonne, as well as the japanese currency.

if we see a resurgence in the yen, couldn't spoil the expert picture and the economy and the stock rally throughout pretty much all of 2017? we're watching the open in japan. let us get to the first word news with courtney collins. courtney: first, security experts say highly regulated sectors, such as government offices and public health institutions, are most at risk from the security flaw. from intel and other manufacturers. this could close down the systems using old computers and legacy components. apple says all of its mac and ios devices are affected by the bug. brookfield asset management is buying westinghouse. canada's biggest asset manager agrees to buy the remains of the powerhouse's u.s. business, as

well as the european business. westinghouse ceo cuvee gutierrez says the deal -- jose gutierrez says the deal would streamline the company to a stronger business and expected to close in the third quarter. the california attorney general says the state is considering options after the trump administration says it is considering opening almost all coastal waters take oil drilling. they have 47 possible options of drilling rights across more than 90% of the u.s. continental shelf. that includes waters were activists have fought for decades to spare delicate ecosystems from oil spills. and a fast-moving snowstorm whipping the u.s. northeast has granted more than or thousand flights and prompted the of emergency in parts of new york and new jersey, while closing schools from washington to boston. the national weather service of manhattan -- says manhattan could get nine inches of snow by late thursday, and boston can see 14 inches, that is 36

centimeters. windchill could feel like 30 degrees below zero. globaglobal news 24 hours a day. powered by more than 2,700 journalists and analysts in more than 120 countries. i'm courtney collins, this is bloomberg. >> thank you. let us take a look at how the market open is faring and seoul. all eyes on japan. >> all eyes on japan. a stellar gain we saw on thursday. the rally is continuing, adding 0.5% there. we do have this backdrop of economic growth for japan, which has the governor saying that growth is looking pretty -- inflation remains a concern. that is giving back with the program right at zero .4% 0.4%.

bear in mind this month is going to be a crucial one for trump trade agenda with several deadlines looming. aside from the u.s.'s trade efforts, the remaining 11 members are meeting in japan later this month to attend a final agreement. with the backdrop in mind, asian currencies have been rallying heavily over the past year. check out the screen to see how the gauge of regional currencies have been faring. they mark the first annual gain since 2012 since the beginning of 2017. when currency that is starting 2018 off on the right foot is the malaysian ringgit. a cross the level for the first time since august 2016, as you can see from the terminal. we are saying that level just flirting with that level right there. given that we have speculation around the upcoming election in malaysia.

let us check on what is making moves. industry.e, leading group games rising over 1%. we do have, when it comes to stocks that are leading gains, a . -- a stock thatoc was cut to the neutral after its plan to enter the mobile phone business in japan. that brought by ratings to a 12-year low. the fourth day of losses for the stock. last look at what is moving in. 0.33%. materials leading the resource stocks under pressure. bear in mind we saw the commodity rally fall somewhat,

but the backdrop again for commodities is still looking decent, given the global activities coming along. betty: we'll be watching all that. sophie, thank you very much. as we have been talking about the u.s. and south korea, they will not hold their annual joint military drills. during the winter olympics south korean president moon jae-in says he and president trump agreed during the phone call says the games should be kept peaceful. bloomberg editor jodi schneider is here with more. more. jodi, these are postponing these drills, not canceling them. does that indicate movement and relations or negotiations here? : they are a postponement. the u.s. has said they will continue them after the olympics. obviously, this shows the confrontation that we had been seeing, all this really heated discussion and war of words between president trump and north korean leader kim has

dialed down a bit. obviously, kim is talking to president moon in south korea. kind of unclear about what they are talking about. probably just about the olympics. tensions remain high, obviously. at the same time, we are seeing some talks, which we have not seen in more than two. years.two it is unclear whether the u.s. will participate in those talks. they're at least allowing them to continue and taking some of the pressure off by postponing those drills. >> president trump is taking credit for this movement here, saying that his tough talk in the face of kim jong-un, that is what has helped the relations here between the north and the south. has it helped? jodi: hard to see how that kind of confrontation would actually help lead to talks. it seems more of this surrounds the olympics, and that north korea wants to if not

participate, at least to see those go well. this really does seem to becoming more from the north korea-south korea side than the u.s., which has not even necessarily said it will join talks. yvonne: it seems like all the talks in d.c. has been about the fire in. and fury. we have been reading about this. steve bannon has been part of this. we have seen a change in tone from steve bannon, as well. do they plan to bury the hatchet here, or will we see more confrontation? jodi: it is hard to say that they are bearing the hatchet, especially since the white house has been saying, and the press secretary has been saying that president trump has been disgusted by the comments. it really does seem to be a bit of a distraction for the administration. ony came off of a big win the tax bill and have made comments about starting 2018 talking about infrastructure

doing big things. they still have a budget to settle. now they are talking about this back and forth and a lot of things that could be potential for the white house. it is a distraction. steve bannon has also said he will run candidates against key republicans in the senate. hard to say that he is burying the hatchet with president trump, even if he says he wants to. >> thank you so much, jodi schneider,. bloomberg editor. we are getting more headlines apple coming out with a statement here on the intel chip security issue. apple saying all mac and ios devices are affected, saying the apple watch, though, is not affected by meltdown. are noting that there known exploits affecting their customers at this time. apple also saying they have released mitigations to dispense against meltdown. security uncovered new

flaws in these intel microprocessors, yvonne. yvonne: just one of several companies that have responded swiftly after intel admitted to how the chips are global to hacking. let's talk about more risks and attacks in about half an hour to discuss how governments and businesses are exposed. betty: up next, young single on with his outlook for the year ahead and south korea. this is bloomberg. ♪

betty: this is daybreak: asia. i am betty lou in new york. yvonne: i'm yvonne man in hong kong. the u.s. and south korea have agreed to suspend annual military drills. they are seeing some progress at least when it comes to negotiations. plenty were happily -- plenty more happening.

u.s. talks to amend a five-year-old trade deal. it takes place in d.c. let us take a look with young sun knwon. thank you for joining us. given the north korea situation, i cannot help but wonder what will happen with this deal with the u.s. and korea now that pyongyang seems to be creating a wedge between these two countries. is there a chance of the break serve? president trump -- breakthrough? president trump seems to think there will be a quick fix. young: i do not think there will be a quick fix. is ihing that is important believe there is an open line between t two koreas. we believe it will reduce the miscalculation risk. >> some people are saying

january is kind of the moment of truth where we learn from the trump administration on and their takes on trade policies. because you have the core stocks and nafta talks, talks to put tariffs on exports, as well, we are not talking about a trade war so to speak but do you think the risks to the south korean economy will come externally or domestically? think the impacts will be quite limited, given the u.s. will come forth with only 10% of the south korean exports. most of them are from china or asia. driver in south korea is a semi conductor -- the semi conductors. also, they will reduce their

trade surplus to the u.s.. there should be some kind of political pressure for south korea's trade policy, but overall, we believe we will have a limited impact on the korean economy. yvonne: you also mentioned the chinese tourists and the group travel bans. we saw an effort to stop the diplomatic relations, -- saw the diplomatic relations, but some of the bans are still in place. young: we believe that china's tourists will come back to south korea in full-scale this year. gdp.were at 0.2% for we have not seen the major tourists right now, but we have the winter olympic games in february. after that, we believe china's tourists will come back to south korea. betty: i am curious about the

increasing tax hike, the increasing minimum wages and south korea. here in the u.s., we have a president who is trying to be more business friendly, instituting corporate tax cuts. in south korea, it is a little bit of a different story, where the president is trying to redistribute income. how much could that lock off growth and south korea? is that a big risk -- in south korea? is that a big risk? young: they raised the corporate tax rate from 22% to 25%, over the other countries like the u.s. and japan. the tax rate, we really have some kind of -- on south korea competitiveness in the global market. in terms of the minimum wage hike, about 60% gain. the biggest gain since 2001. we do have a little impact on the job market.

at the same time, we are already seeing some type of retail providers raising their retail prices. that is the offset risk to our inflation forecast. we're watching how this hike and minimum wage hike will play out on the korean economy this year. >> how about raising interest rates? how will that play out in the housing market? young: south korea was the first country in asia to hike interest rates in november after the u.s. fed started the numerous asian of market policies. we will deliver on the rate hikes this year. market andhousing south korea is showing some correction. anding transaction volumes the housing construction orders already started to decline. they'll will be a drag on the economy growth of this year --

that's will be a drag on the economic growth of this year. the strongelieve export in south korea will more than offset the domestic housing market. yvonne: how graduate will the rate hikes be? the minutes show there were a lot of concerns about inflation, we have a strengthening yua an as well. young: we believe and gradual monetary policy. in the past, we used a hike every two months but now we think they will hike the interest rate every six or eight months. we believe the rate othis time will be 2.25%. that means we expect another rate hike through 2019, compared to the historical perspective that was quite gradual. yvonne: given that t was at

, whether the right decision to hike rates last year? could they have waited until 2018? young: they believe this is not tightening but more like reducing accommodation. so the south korean economy growth last year was quite great. gdp growth was higher than the potential. we believe the rate hike in november had good measures. so we believe it will buy some time to deliver on the rate hike. the market interest rates already went up. no need for them to hike interest rates quickly. yvonne: young sun kwon, senior economist joining us here in hong kong. next, find out what the fed says the relationship between inflation and the job market is broken. this is bloomberg. ♪

yvonne: this is daybreak: asia. betty: a quick check of the latest business flash headlines. 2018 revenue estimates were snapped from $1.14 billion, down from $1.3 billion. boomer has been told chinese live streaming company y y is planning to have a spin of f platform in the u.s.. people familiar say that streaming company is going to raise 2 million -- $200 million

this year. yy gained as much as 2.5% in new york. mark zuckerberg says his personal goal in 2018 is fixing facebook. he posted his annual objectives on his own page on the social network. this book has come under criticism with alleged russian meddling in the 2016 election and not doing enough to curb hate speech. he said the company has " a ;lot of work to do." signals of strong government -- the link between jobs and inflation is completely broken. will this slow the fed's rate hike path this year? hike path this year? kathleen hays is here with more oas the plot thickens. kathleen: it certainly does. let us start with the jobs report. the first week of 2018, a good year and a good week for stocks

so far. not so great for bonds. a lot riding on the jobs report. we saw markets move on the adp survey of private job creation and the u.s.. that number jumped 200 -- u.s. that number jumped in december. the payrolls gains from the u.s. government of 190,000. some people are saying over 200,000 at least. here is the issue. for jobs? to more g the fed had a big inflation conundrum of 2017. let us look at the door mandate. al mandate. 4.1%. very low number. inflation up and down, but still a bit away from the fed's 2% target at 1.5%. the president of st. louis fed said what is happening here, the

link between jobs and inflation is broken. the phillips curve, which has been watched it for years, and is continuing to get more jobs, lower unemployment, more inflation, he says it has disappeared. will this affect other fed officials? we do not know. downsay it could be slowed -- sunday could slow down the pace of rate hikes in 2018. speaking of these other important numbers , unemployment is unchanged at 4.1%. the hourly average earnings are stagnant at 2.5%year over year -- 2.5% year over year. yvonne: in many cases, this of led by strong exports. what are we seeing in today's data? kathleen: the south korean number is very important because it is one of the reasons that strong exports are performing in 2017 and expected to continue in 2018. this is one of the reasons the

bank of korea decided to hike rates at the end of the year. that surplus is to $11.5 billion in november, from a $.6 billion the month before. 8 from its $.6 billion -- $8.6 billion the month before. in december, that is important, because the bank of japan think the monetary -- wants the monetary base to grow to feel the economy. japan gdp has seven straight quarters of growth. very good performance in 2017. we're waiting for the japan services number. it is seen at 51.2%. that is above 50%. the composite index is seeing at 51.2. waiting for australia's november trade. at 6.7% announcing it gdp growth through march 2018.

plenty more there. thank you. alert.y apple conference on mac and ios devices are affected by intel chips. this is bloomberg. ♪ ♪

yvonne: happy friday. it is 11:30 in sydney right now. beautiful outside the sydney opera house, coming through with some trade data from australia. what a miss. we are seeing a trade balance deficit of $628 million in the month of november. betty, them estimate was for a big bounce back of $550 million after that, and we did see $105 million for the month of october. this certainly was a disappointment given the fact that we did see the resurgence in commodity prices in the months of november leading up to december. this could be a big letdown in the numbers today. betty: this could be.

props, explain partly by the strength we have seen in the australian dollar and the latter half -- in the latter half of last year. let us get market reaction to this numbers with sophie. sophie: betty, it looks like traders are taking those numbers in stride. we do have a slight dip in the aussie trading at 7859 -- $78.59. the aussie is on course for a three-day gain. keep in mind, we have been tracking the general strength in iron ore and other metals. thatair could move toward 79 handle. they did admit the reason gains could be a bit overdone, given they were mostly caused by the dollar's general weakness. taking on equity trading in sydney, we do have aussie stocks gaining 0.5%, lead higher by, telcos and materials as miners are gaining ground when it comes isthe best performers, it

miningin the metals space. energy is the worst-performing stock. and energy producer. more on the data docket ahead this friday, taking on the is trading atgit, the four handle trading in august. is due out later today. they remain in double-digit territory. pricesand set higher crude as well as tightening from the government of malaysia is generating this. it will hopefully boost the ringgit. cost could see the benchmark join global -- after thursday'ss stellar start to the year. in this risk on mode, we are singled under pressure although easing the losses from earlier this morning. gold traders and analysts from

bloomberg have traded neutral on gold prices. in the metals spaces, will get to that slightly -- in a little bit because we're seeing the loss of the dollar down 0.8%. checking back on palladium, it is coming to a 17-year high as supplies are tightening. other commodities have far to go when it comes to breaking records. 0.33% off of its all-time high. start looking for cheaper alternatives like platinum's to cut car exhaust. betty: thank you so much, sophie. commodities. but a schedule the first word news with courtney collins. courtney: think you so much. steve bannon has pledged to continue to support donald trump after the denunciation of his former chief strategist. been in told a caller -- anatoly caller that "nothing will come

between us and president trump and his agenda." the white house has been defending the president's mental fitness for whit office. >> it is disgraceful and laughable. if he was unfit, he would not be sitting there.he would not have defeated the most qualified group of candidates the republican party has ever seen. this is an incredibly strong and good leader. that is why we have had such successful -- such a successful 2017. >> the united states and south korea will not hold their annual military drill. he ande-in says president trump agreed during a phone call that the games and pyeongchang should be kept peaceful. south korea also plans to fully cornet with the u.s. throughout its talks with north korea scheduled for next week. chinese regulators are stepping up oversight of leverage bond

trading, a rule posted on the pboc website. this market participant should control leverage ratio and bond trading. also told bond traders to meet with liquidity requirements. is failing to rectify problems after a one-year grace period will be banned from trading. sell $9a is rushing to billion in bonds to meet financing needs for the year as it seeks to get ahead of other regional economies. the government is selling maturities of five, 10, and 30 years. they range between 4% and 7%. there being led by deutsche bank. global news 24 hours a day. powered by more than 2,700 journalists and analysts in more than 120 countries. this istney collins, bloomberg. >> thank you.

apple says all mac and ios devices are affected by the chip's security issues, known as meltdown and specter. this joins intel, microsoft and others dealing with the vulnerability. it leaves a large number of computers and smartphones susceptible. mark get the latest from gurman. apple joining in on this conversation now. they seem to be stressing that there is no known exploits. this is coming out right now on a statement on the company's website. the breakdown that they are confirming all apple devices on the market right now -- and i want to state getting into that, every mac computer, desktop, gpad, ipod touch -- anythin that runs the mac or i was system is affected. apple has over one billion devices in circulation, so that is important.and

important thing to add to that is the company says there are no anyone taking of advantage of that law that has been in many types of chips for about a decade now. yvonne: are you getting a little bit more to tell in terms of how much or how many security fixes are needed? itfact, what the impact would have been a constituent speeds? mark: apple has a variation of different operating systems. one is for the apple watch, and the tv the ipad, and the operating system. as early as december, apple released software updates and they are all out right now. for the mac, iphone, ipad, and apple tv that mitigate one portion of the chip problem. that one is called meltdown. the company says this mitigate the problem. they do not call it. t a full solution but a mitigation. the researchers were saying the fixes are the mitigations of the solution would cause a slowdown in hardware speed performance on

those affected devices. what apple is saying is the fix is not affecting performance any noticeable degree, but there is another point called specter, which is another part of this law that has to do more with web which has- this flaw to do more with web browsers. they are saying they're coming up with another version of safari web browsers in the coming days. they say the slowdown could have 2.5%.decreases of up to in practice, that is not noticeable that they're putting the number out there to cover all their bases. yvonne: all right, mark. thank you for explaining all of that. bloomberg technology reported in san francisco great as we just mentioned, apple saying all of its devices are affected by the newly revealed security issue. however, there are no known exports affecting experts at

this time. we heard mark gurman talk about this. i want to get to our guest right now, officer bryce boland. you said it is no surprise thist this is affecting ios devices. is this just the beginning of tackling this problem, or is it perhaps not as big as the time companies are -- not as big as the tech companies are making it sound like? bryce: this will be a problem around for a long time. this is how chips were built. the design change will have this impact for many, many years. we expect the only real way to address this problem fully will be to make changes to the hardware people have deployed in their mobile phones, computers,

and programs running services on the internet. yvonne: describe that to us. when you say many years and you have got to address the hardware side of this what are we talking about exactly? bryce: well, the challenge is here, there are two pieces to it. one is the fact that there is a hardware design that creates the opportunity for people to be able to see data they're not supposed to be able to see. that is going to require hardware changes. those changes are already being developed. in some cases, there are already chips available. on the other side of it, you need software that is going to try to reduce or limit the tolity of the attackers exploit that weakness. they need to be pushed out to millions and billions of devices. many will not be attached or get updates for many, many years and they will be stuck with this problem for a long time. betty: it is quite concerning.

where does that leave the public? bryce: well, if you are using a computer that is built to last 15 years, you need to make tree get gets a software update that will come from the software vendors. if you are using your computer to access things on the internet, the specter issue will be here with us for a while. for the manufacturers making an effort to reduce the likelihood of impact, we are all going to have some risks that you will be exploited to. what will potentially be stolen, like your passwords, the credentials you use for accessing your email, accessing online services or ebay. those of us -- e-banking. those are the things we will see criminals and nationstates used to try to feel that information from people. yvonne: intel have felt the patches will slow down chip speeds, as we were talking to mark gurman about.

customers of the cloud are paying for that performance. who, in the end, should incur those costs then? bryce: i think there is going to be a real impact on costs, especially for certain types of processing that involves a lot of interrupts. where we will see the performance -- we will see the biggest impact on performance. those workloads, you will expect the companies are going to see potentially a significant decrease in throughput, and that will have a direct financial impact. by more power to achieve the outcome. the extent does not yet fully understood. i think that will become better out and this is rolled we will see it coming out from the cloud hosting divided -- providers. yvonne: you mentioned this raises a lot of questions about

the fundamental flaws when it comes to designing some of these chips. does this spark a major rethink, then, in the industry?could be the potential consequences of all this now ? bryce: think back about what has caused this problem. to designt trying chips to run as fast as possible but taking into consideration they are only to be used by one person. by one process or a set of processors that were used by one person. that is not how we use our computers today. today, weezer computers to browse the internet, code is provided to you from websites all around the world. other people from and you do not know what those apps are doing. because of those design decisions, we're locked into this world where we have multiple people accessing our computers designed to run code from only one person. we are seeing a breakdown in the isolation, and a person can run code and get access to the

information out on the computer by anybody. i think, a cycle of innovation in the kick space to try to come up with new solutions and high-speed, but also protecting the security. it will have economic benefits down the road. >> that is a silver lining but it does raise the question of how could these flaws have existed for so long and not been detected or not been revealed? these flaws permeating every part of the computer system. bryce: yeah, well this particular type of law has been regulated about in the past. there has been a lot of series about these attacks. we have now seen some very smart research identifying a way to actually turn a theoretical approach into a practical approach. this does happen from time to

time. . it not completely unusual i guess the challenge here -- it is not completely unusual. i guess the challenge here product speeding up computers has been used in the past 10 years. it has now created the opportunity for a security weakness, which is pervasive across the industry and that is what we are facing.i think the economic impacts will be felt for a long time . it will -- i think we will andnationstates criminals working actively to find ways to exploit this and take advantage of the window they have to steal people's passwords and other secrets. >> quite scary and disturbing. thank you for clarifying many of these issues. bryce boland, asia-pacific chief technology officer. you can get that developing story and many more to get your day going on today's edition of daybreak.

it available on mobile in the bloomberg anywhere app. you can also customize your settings to get news on the industries and aspects you care about. this is bloomberg. ♪ . this is bloomberg. ♪

betty: commodity markets are seeing a record-setting of gains. a booming manufacturing sector. china having to do with a lot of that. bloomberg commodities reportage david has been tracking all of this from melbourne. is their potential for further gains here in commodities? there is potential for further gains. i'm afraid that record hot streak is now over. the bloomberg commodity index returns on 22. raw materials clocked up 14 days of gains through wednesday. that was a record in data back to 1991.

they declined on thursday to snap that sequence but the outlook is looking bright. plenty of potential for further gains. there is some short-term factors. a cold snap in the u.s.. also a weaker -- a cold snap in the u.s. also a weaker dollar. a global factory built. we are seeing some of the -- factory boom. we are seeing some of the strongest since after the global financial crisis. it will help erode some services of materials and it will also bring in a prospect of improved demand. that will be pretty critical for commodities markets. that kind of strong global growth story, as well, hold a lot of promise. more chinese exports and if it means we are seeing some strong factory outwards in the u.s., that is certainly positive. we're seeing the likes of this and goldman sachs.

citigroup's thank you dry on china. it will be pretty critical to see things like chinese debt to be certain we will see further gains taking in the first half. >> is certainly is the case. palladium is closing on an all-time high. what does that -- why has that metal been searching, and are the risks that that will continue? david: really fascinating, yvonne. palladium zeroing in on a record set in january 2001. a couple of factors here, certainly on the supply side.we saw a warehouse inventories fall in december. they had a fourth annual decline. let's supply, also the likes -- less supply. morgan stanley said they do not see supply catching up with consumption until 2021, maybe

beyond then. that,is a broader story in the auto market you were called the scandals last year with admission test for diesel vehicles. clady him is used in kabbalistic conversion for castling -- palladium is used for gasoline-fueled cars. we saw this rise in europe last year, while more palladium needed for those kabbalistic spacerters -- catalystic converters. a fascinating one. yvonne: thank you for wrapping it all up for us. bloomberg commodities reporter joining us live from melbourne. find out why hyundai is doing and take on google and gm and the self-driving auto market. this is bloomberg. ♪ ♪

yvonne: this is daybreak: asia. betty: hyundai motors is speeding ahead with its development of self driving taxis as it looks to take on google and general motors. so he came joining us now from seoul. they're planning to catch up on

the tech competition. what is different about there's? >> this could be a watershed moment. its move to speed up development for self driving vehicles. the cio, who was hired is one who is leading 100 engineers and dat strategists incarnating research hubs. they want to interpret everything from ai to energy storage. storage. they said the most urgent task is the mobile service it is the first time that hyundai said they are initially going to roll out self-driving taxis. in order to speed up such developments, hyundai is companies and buy higher good engineers. if they integrate well with the company, hyundai may have bigger deals next year. betty: this partnership between aurora and hyundai, talk to us more about that.

what are the details? how big is it? >> this is huge news with hyundai investors. they have been waiting for this for a long time. is the first time hyundai have a major partnership for self-driving car development. it is really impressive that hyundai picked aurora. aurora is a silicon valley startup started by former google, tesla, uber indicative. s. time w-- it the heard hyundai executives started talks about time. it is getting serious about the in 2021.ing cars yvonne: what does it mean for

?he south korean automaker a lot of political tensions with china, in particular too. >> yeah. new technologies this is self driving cars -- such as self driving cars are motor taxis. it was struggling with falling sales. i'm pretty sure hyundai can now speed up developing those and its partnership with aurora. i think they're making milestones here. yvonne: all right. thank you. bloomberg news korea auto reporter joining us live from seoul. time for a quick look at what is coming up in the next few hours on bloomberg markets. >> an absolute terror, partly? look at -- once we? -- aren't we?

yvonne: japan is not doing as well now. >> the dow did not have a record day one this year. how does that feedthrough to the ?ections today in a sense also, the same sort of thing.global markets research had formitsubishi -- head mitsubishi joining us in 45 minutes from now. asking more questions about the rally that we are at the moment enjoying, if that is the right word. brian marr, as well. yvonne: that is right, rish, on a tear. stay tuned. this is bloomberg. ♪

>> we have got a sea of green. investors betty on global growth and a factory boom -- betting on global growth and a factory boom. during as the u.s. -- the upcoming winter olympics. and apple getting written by the bugs exposed by intel. no known impact on its users, says tesla. i am rishaad salamat in hong kong. >> and i am haidi lun in sydney. still bullish on hong kong property demand. putting him at odds with a growing number of analysts who see a