♪ >> 7:00 a.m. in hong kong. the bloombergom asia headquarters. i am yvonne man. top stories,, the asian stocks look set to pull back from record highs following losses on wall street and oil and metals. well,n on the slide as they have lost as much as 25%. this is over for cryptocurrencies. no free lunch. from bloomberg's headquarters, i am betty lou on this tuesday. president trump cause xi jinping to complain about the growing u.s.-china trade deficit and the workers at a chinese apple supplier raising can turns --

concerns about harsh factory conditions. yvonne, we know equity markets here in the u.s. were lower but what has been rising and rising quickly has been s&p estimates by analysts. see so many upgrades because of how high the markets have passed the markets have run. i have a chart view that shows this g #btv 8902 here is the yellow line here for s&p earnings estimates this year. but how they are accelerating and rising given that the bull run, the record bull run we have seen so far, much faster than the s&p estimates for 2019 and 2020. it looks behind the curve, perhaps wall street has been to

how much tax reform seems to be propelling these markets higher. >> it is quite rare to actually see these earnings upgrades in the months of january so i guess they are starting to see this windfall when it comes to tax reform. but it was a wall street overnight. first you had down a 26000 and then you had down and you get back to flat and a lot of russians on whether this is a one-time affair or if we need to correct more. >> it actually is, those questions will be coming fast and furious and increasing in pace as the markets go higher. where we ended up on the boards, the s&p is down 3/10 of 1%. the dow was fallen considerably before recovering a date at the close and the nasdaq also lower by about half a percent so that momentum we had on friday just crashed and burned today on tuesday. >> it has waned.

was look at how things are going in asia, every nice picture so far when it comes to equities. the zeal and faring better, up half of 1%. 70-67.i at we disease on dollar weakness overnight. here's how we are seeing australia. have consumer confidence numbers, shares are down a third of 1%, following what we saw on wall street and of the aussie at 79, 59, this currency is mostly driven by the residency as laws commodities and yields, just picking lower at 276, to japan, futures received -- nikkei futures are down close to 1%. we look at some other benchmarks there but the future is pointing to get a retreat here. 's 1 -- 110.41. this is the longest we have seen since march. it looks like the yen long is starting to price in that boj shift of unwinding stimulus.

have machine orders on tap for this hour as well. as we catch up with the first jessica summers in new york. jessica: the new york times possible when has strategist steve bennett has been subpoenaed by robert mueller, the newspaper post the source of direct $ that bennett will testify before a grand jury in the investigation of possible links between russia and president trump associates. before a houseed committee on tuesday behind closed doors. workers in a chinese factory supplying apple with iphone casings say they sometimes stand for up to 10 hours a day in a hot noisy workshop and handle noxious chemicals without proper gloves or masks. the conditions are described in bloomberg news interviews, the workers at the technology factory and in a report by china advocacy group labor watch. standards areat being violated is apple stance.

says therson intercontinental ballistic missile launched by north korea in north -- november was seen on a commercial flight from san francisco to hong kong. of 280ve the same range nautical miles, highlighting the north's recklessness. the u.s. is posting canada for centuries on kim jong-un's regime. petroleum says they 560 or $65 per barrel this year, that is 10% higher than in 2017. it has seen oil demand is been less and less at 1.4 million barrels per day. energy outlook, cm's he also predicts a 10% rise in chinese guest despite the current winter shortage. and bloomberg new energy finance as chinese demand for solar power led to a surprise increase energy -- global clean investment last year.

about $334 billion according to renewables and new power technologies, using -- even as president trump tried to push out of the paris pilot agreement. day,l news, 24 hours a powered by more than 2700 journalists and analysts in one and 120 countries, i jessica summers, this is bloomberg. what began as a record-breaking session for u.s. retreatsding in despite the surprising strength in the latest round of earnings, industrial shares also taking a hit from those metal prices. here is a wrapup of today's trade. >> if you look at the clues, earlier in the session it looks like the bulls were on the run, it was workers across the board, we also had the dollar rebounding, is he a little bit on the screen, let's go to some of the big movers. citigroup really captured a lot i ame investor attention,

seen j.p. morgan chase and wells fargo, they are getting a big windfall from tax overhaul. negatives, we'll get to general election in a minute, a big multibillion-dollar negative supply, investors did not like that and we will probably hear more investors and analysts say overstock.com is reporting the big downturn we are seeing in the bitcoin cryptology -- cryptocurrency market. transocean showing the dick black on the market was the energy related chairs. >> let's talk about the favorite subjects. volatility in cryptocurrencies and another plunge today. >> aeropostale he got for the cryptocurrency market, we have talked about yesterday, china is the big news now, bloomberg reporting that china government officials say they're trying to step up the mobile apps and the platforms, let's go right into 1928,oomberg in g #btv

what you're looking at is what we're calling the new year. it is down one and 30%. the corn was down more than 20. if you're him down about 24% at the worst of it. let's go to the stocks that have pivoted toward cryptocurrency and are getting hurt as a result. long island iced tea, that nearly defunct nonalcoholic beverage company took off, they're getting hit hard and kodak just announced they will have some type of east coast act -- kodak one, they got hit in a big way. finally, if you go into some of the bitcoin futures, we can see the pattern increasingly lower. look at that, must a 2% drop just in the past month.

a lot of concerns about the volatility for this kind of digital currency are coming to fruition here. yvonne: we see these before every time i see these scrutinies. we see bitcoin rallying in previous bouts of weakness that we did see. so moving on to ge right now, though shares in the spotlight, that $6.2 billion charge related to prior expenses, we will talk about a breakup. john flannery talked about a reset, is this inevitable? >> clearly disappointing a lot of investors, let's go to the chart. ge is under pressure as they announced the $6.2 billion surprise, the runoff from this portfolio of insurance related insurance care investment and it really was a turning point because now we have the ceos talking about weighing options

for have to breakup, have spinning a part of the company, if you look at the bigger picture chart for ge, you can see that this has really been under and come down very hard in the recent months and of course, has the new ceo pledges to turn things around, he is saying ok, fresh start, now i will turn things around and there are some analysts warning that there may be more bad news ahead from ge and brace yourselves, we shall see. su keenan there. trade tensions between the u.s. and china have surfaced again but president from calling china's later to tell him a growing deficit is not sustainable, joining us now from washington is just subject. the tcu, the president express and that the white house is disappointed that the u.s. trade withit continues to grow china. is that a warning side to beijing of some type of imminent

action? tothe president is poised decide on still tariffs that would affect china can be directed mostly at china. that is during the final report of the commerce department. this has been a source of friction for some time but the u.s. has been treading whether lightly because they are using in part of the negotiations with north korea. this may have been a bit of a wanting to president she that this remains an irritant in the relationship. whether or not trump goes through with some actions, he butpullback in the past this is a longtime issue for him at least since the campaign. the president has less than 90 days to make that decision. but is making the case for steel tariffs, is that easier for the trump administration then calling china a currency manipulator? affectsy well be and it

more directly some u.s. industries and it can be cashed in broader terms. theses to the heart of more visible to the public than currency manipulation. >> let's talk about this issue at hand in washington, army or are we not going to see the government shutdown? >> it is a closely as to whether that will happen. tonight, the the public leadership is meaning in the house with their members to present a plan for what is called a clean, continuing resolution which would keep the government open for another few 16, theyil february will at a few other things in there, some delays of obamacare taxes which suggests that their

plan to go ahead in the house without any democratic votes but they are going to need some democratic votes in the senate with majority for the republicans, they are coming on and counting on 10 democrats up for reelection in november who one,n states that sharp one of them, joe mentioned has said that he will vote to keep the government open and vote for the stopgap spending, several others have suggested that they might as well so it will be a big question of whether or not the senate democratic leadership decides to make a stand on this. in past shutdowns, i think about the one in 2013, it is usually the republicans who are to blame, is it correct to say that it will be the democrats to blame? they will lose out in terms of the public eye? >> that is the big rest of a fake -- risk that phase.

the lame has shifted to their a look in the past years but republicans have a very strong case to make that it was the democrats holding us up. that may well play to the democratic base because they are holding it up for an issue, in this case, the immigration policy that is near and dear to their hearts but nonetheless, it is not going to be a great thing to have on your resume. >> bloomberg, on daybreak asia, more insight on the looming government shutdown, why our next guest says the u.s. economy will grow more than 2% about what happens in washington. >> apple says it sees nothing wrong with conditions at one of its suppliers despite a scathing report on labor violation. that is coming up later on in the show, this is bloomberg.

♪

♪ is daybreak asia, i am yvonne man in hong kong. >> i am betty lou in hong kong. donald trump's first week as president, we will take stock of a tumultuous 12 months, looking forward to the administration's top challenges including what is at hand right now, can they get this deal done to avoid a government shutdown, joining us now via skype is the institute fellow, before joining the institute, he worked at the danish ministry of defense, also, in a private financial sector so first, let's talk about the government shutdown, we had a guest in the last hour who said he gives it a 40% chance he will seek the government shutdown, what do you give it? >> i think it is 50-50. we are in the blame game right now, whatever they can blame on

the other party, the fundamental reality is that if your chuck schumer, the democratic leader a toughenate, you have decision. do you antagonize swing state voters or do you antagonize your democratic base? >> it is a tough position, i think this will go down to the wire. but even if we get a shutdown, even if it looks messy, do you think it will derail the economy? >> the matter what happens, a shutdown will be very brief and after that, in the worst-case case scenario, we will have another short-term spending bill, to our three weeks to negotiate a copper mine is on the immigration issues once all the rhetoric from president trump is a little bit out of the

system and we can get down to business and congress so no, this will not be enough to sway the economy. >> i was reading through some of us, ites that you sent is interesting, it's as iq are expecting robust growth here in the u.s., not much of it owing to trump. you think trump is lucky here with the u.s. economy. donald trump got lucky on the timing of the global cycle, he took off right as the u.s. as youcally was exiting like the fallout from the great recessions and at the same time, he took office as the most synchronized global upturn for a number of decades. numbers,, the latest there are two countries in the world that are in recession, south sudan and venezuela. that is a good time to be president. >> it is. what is interesting is weak heard from china's credit rating that just downgraded its rating.

they are setting deteriorating payment sources that will be we heard thatred china denied is a force that halting their treasury holdings, will they be concerned about this downgrade? it gives the chinese government plausible deniability but if we move forward and the tax cuts do not have the good economic effects that the republicans say they will and all that deliver are very large deficits once again, then certainly, the chinese government has a good case in my opinion to scale back their purchases and they will now have their own credit ratings to back that up. that as if heing would follow through on? siding with china on this front?

yes, basically, i am. in the long run, if you look at credible deficit projections, unless we get a significant boost to growth, we could be looking at a trillion dollar and on starting in 2019 current law, lasting as long as the eye can see. basically, without the possibility -- if you believe that bipartisanship in congress ended a compromise on fiscal issues is impossible, you have every reason to be concerned in the long run russian mark >> i would you bring you back into the u.s. to talk about the economy and in particular in light of the fed. you know that even if we see a hotter economy and their chances of inflation might run hotter, you don't think the fed should be raising rates faster? that, i am saying the view

this is a good time, trump is lucky, this is a good time for the fed to run the economy a little hot if you like. it could allow and overshoot of inflation. this is the long structural problem that the u.s. continues to have, labor force participation is too low. need a number of years of solid waste growth to hopefully reverse that. the federalat reserve should enable that and quite frankly, i think this will be something that the trump white house would appreciate and therefore, the more likely to continue to appoint new members of the fomc that are fairly mainstream like jay powell, like others. i think it serves the fed both economically and politically to

do so. >> we appreciate your insight. this is for the international economics. coming up, inflation about to make a comeback this year, we look at what the treasurer market is telling us, this is bloomberg. ♪

♪ >> this is daybreak asia, i am betty liu in new york. >> i am yvonne man in hong kong. a quick check of the business flash headlines. google is making the biggest changes to the advertising goes on youtube since the inception. stricter criteria will be imposed on the types of videos that can earn money and a new betting process. is another attempt to clean at youtube's content and enter persistent complaints from advertisers. has been told that goldman sachs lost its commodity trading granted morgan stanley after suffering a drop of them

5% net revenue. that would be depends worst to moderate his performance. our sources say gas and power losses were to blame, goldman reports on wednesday with its trading fortunes and the tax overhaul impacts, the key data points. citigroup shares jumped at the predicted years of tax reform benefits ahead, even as competitors one that their rewards they soon start fading away. john berry fax has the combination of higher earnings before tax continued capital reportandy impact of tax this report is expected to drive significant profitability, city took a 22 billion note tax charge in the fourth quarter. and we are of course continental the open in japan and south korea, but had over to japan right now which is suffering as we have from some of the losses that we have seen in the u.s., nikkei futures are down about 1/10 of 1%.

this is after we saw a rally in has been here it in the u.s. as it is in japan, there is lots of questions about valuations that we neared the peak here in the equity markets and also how our japanese companies are being affected by the stronger currencies, speaking of the stronger yen, looking at the dollar-yen, trading flat here unchanged at 110-38. we will be keeping our eye on the japanese markets and of course in south korean markets as well. >> we are poised for the seventh day of gains for the yen, certainly seeing a lot of risk moves. a lot of questions on whether the rally can continue that we see a significant retreat according to chicago. this is about 200 points per day. , up next, heelting promised to reset now the ceo

says the company might need to be broken up, more on that just ahead, how china is leading the global clean energy drive while the u.s. takes a backward step, this is bloomberg. ♪

♪ sydney as iok at the opera house right now, a beautiful day. just some numbers coming in from the west side consumer confidence index at 105 .1. that is better than what we saw in the month of december. that is two consecutive rises we saw in december and january. this is the highest rating since november of 2013. encouraging signs for the rba as they meet next month. finances,e family this is the inflation targets still below and this is what they're expecting, lots -- lots to talk about their.

australia, take a look at some more reaction in australia but also a preview to the open in japan and south korea, we have more with all the market action in sydney. >> let's check on the aussie dollar, it is staying within tuesday's range and set for a second day just below that it is mark, this is 75 or 65. there are falling commodity prices, sticking at a three month high. the aussie may suffer if the commodity price rally is cooled by the prospect of increased supply. checking on the asx 200, that is falling for a second day. this has restocks driving the most on the index. this is over like bhp which is on the most since june, checking on some stocks in sydney, checking on south32, this after that report of a rebound in coal

output. just as they will rise the storm season. >> it is certainly going to be tenure as we watch some of the stocks in australia. talking about the mud before the open in tokyo, this iphone japan and the japanese currency. >> checking on the futures board, after that tumble that we saw in the united states, the s&p 500 more than 1%. we are seeing futures signaling an opening. japanese investors will have november machinery orders to digest later this morning was are expected to fall, checking in on the yen which is thinking below 111. btv 4456, thison has been sparked.

among the voices calling for the yen. not everyone is convinced about an early exit from stimulus. as you can see, market positioning remains negative, vines are closed in most bearish on the yen in 10 years and the yen is ranging between 150-120 .his year as the hikes rate this is the company pricing on bloomberg. i see a pickup at 11,000, we are keeping an eye on blockchain's in seoul click out, security as well as there. to the first word news with jessica summers. jessica? >> president trump's doctor says

the 71-year-old commander in and shouldt for duty remain so throughout his term. jackson examines the president last week. he does the cognitive ocean screening for dimension -- the measure or else, as, they were normal. dr. jackson says the president takes cholesterol medication, aspirin, a multivitamin and the hair loss drug. reflective's, motor function and century system were all normal. a cognitive screening resemble using the montreal cognitive assessment was a score of 30 over 30. >> john flannery says he is weighing a possible breakup of the company after its latest disappointment, a $6.2 billion a long-termed to care insurance on a call with wall street analysts, flannery pledged to separate ge's businesses of power generation

and health care at the public we traded company. and bitcoin has slumped as much as 25% of the prospect of regulatory to spread and bitcoin altered its two-day rally, rival cryptocurrencies also tumbled. they sent as much as 33% and dropped 24% before preparing to decline. and ask has a light touch the crypto boom may be coming to an end. u.k. foreign secretary boris johnson has rejected a second brexit referendum. he told reporters the most important thing was to deliver on the will of the british people and to do it with style and nash. leaders tried to keep alive the notion that the u.k. could reverse its plan to leave the block. >> whether it is david davis himself who said if a democracy cannot change its mind, it ceases to be a democracy.

we on the continent have not had a change. our hearts are still open to you. >> global news, 24 hours a day, 2700 journalists and analysts in over 120 countries. this is bloomberg. inflation is really on the way to make a comeback this year, why does this start to fight and -- why did the u.s. treasury curb started fighting again? kathleen hays is here with more on a yield curve. what happened to the bear market and bonds? movingoesn't seem to be ahead, they are taking a lot of portend ae curb could recession, it does not always but that is the fear hanging over this whole argument. the yield curve went from its biggest daily one day widening

since 2016 on january 9 a few our ago and now as brian of bond team right, it is in a flattening bins, the capital market sees the yield curve in a battleground region on the way to an inverted curve, i would say what they are talking about. 4289. flattening, flattening, 2017 and then here it is on the battleground area for pmo, this white line, the spread between five's and 30's head as low as 47.2 basis points in trading on tuesday, breaking that 50 mark means you are in this battleground on the way to an inverted curve, the notion of a bear market faded pretty quickly. this is back to 2.54 and the front and, it is leading the selloff, bonds ashley doing of

the better since they peak in terms of the deal. this is the two-year yield that continues rate hike expectations, let's go to projects is really quick. is 88 .2, moving on to the second hike later in the year. those eyes are not as high but they are moving higher, the two-year treasury yields hit 2% for the first time since 2008 on friday, quite a selloff on the short end because of this expectation. why is that only thing were fighting on the short end and not the long and? >> i think the question is if inflation is ready to rumble in 2018. let's look at what people are saying. this is the beginning of the decade. while about 70 bucks per barrel. soft a la, easy monetary policy, u.s. corporations boosting paychecks, 20 states in the u.s.

finally boosting minimum wages, this is another thing, consumer wage expectation, a three-year hike in a new york fed survey. 711 to getat #btv the other side of the story. that is where inflation is now and where it has been stuck. you have the core cpi, it jumped up to 1.2% year-over-year. not question up to 2.5 a, 2.63. this is the pce core. here's the target, 2%, a long ways away. goldman sachs is arguing that the phillips curve is going to reassert itself as the jobless rate falls below 4%. data, our state bloomberg economics team continues to say just like 2017, this soft pass in inflation is going to persist to this year for longer and economists are looking.

betty: kathleen hays with a look at the bond market and the fed. also being influenced his oil, oil breaking its several day winning streak tuesday with brent and the vti falling the most in more than a month. both edit near session lows with brent: back from that $70 barrel market, the last time it hit that level was in the summer of 2015. for more on what is happening with crude oil prices, let's head to the wall with ramy inocencio. growth inbc says the oil demand could slow this year, is that having an effect? ramy: it might. especially with china being one of the biggest oil consumers in the world. they are saying that for this year, for 2018 they are seeing growth but not as much as 2017. it is nearly 6% for 2017 but while we are looking at that, we are looking at what is happening in terms of the output coming out of china and whether that

will go up or down. this is the first of three bloomberg terminal charts. it is coming off a seven-year low, rebounding over the past month. we are winning for the december month -- december number to the upper down here. this will have an effect on oil prices. here is the forecast for the oil price. wti crude is around the $64 mark and brent is around 69 but take a look at where we are now relative to 2017. during 2017, while we are seeing this number, this average here, we expect 2018 to be 10 or 20% higher. that takes us to 60 or $65. you are probably saying we are at $69 now. they also give it some wiggle room. there is a floating range between 50 and $75, a big ranch there. taking a look at technique -- technicals. lined forretracement

the 50% line, that is a green and a persistent level that we are seeing right now, especially with oil coming off of the board. this is a 50% line here and it is easy to see it is falling because the last time we saw this was went across the back in 2014, we'll see if this holds true for the resistance. also, the relative strength index for the past index is signaling overbought territory. we are seeing to indicators here saying that is very well could be overbought. finally, to my bloomberg terminal chart, g #btv, i have actually taken that away but i will leave it there for now and we will keep that for the next hour, we will keep you waiting on pins and needles for my third bloomberg terminal. as we mentioned, china's oil demand slows, this is also the

was biggest investor in clean is feeling a, that global boom in solar. let's get more from justin well. you, we heard china embarked on these pollution curbs so when we get the level of investment, is this a surprise? >> we have been used to say this is the is on investment for the past couple of years. 2017 was the second-highest year on record in terms of global investment, 2015 was really amazing was about half of that global number came from new investment in solar power and when you think about it in 2017, the cost of building a new solar power project fell by about 25% globally and yet we still have a new record in terms of the solar

sector and also clean energy. in some ways we should not always be expecting that every year we will hit new records of energy, things are getting cheaper, you shouldn't spend as much dollars to get the same amount of power in the project. i think that is what made the number all the more amazing, we broke a record in china and got the second-highest record despite -- this has fallen and cost the building solar projects. >> do they get a sustainable? -- do you think it is sustainable? >> china built about 20 gigawatts -- $20 billion more than what we expected in solar. a lot of people said that china's solar boom would not really be that sustainable, one of the issues that china -- it is one of the few countries in the world that plays a generous -- pays a generous subsidy to solar projects. a lot of solar projects got built outside of the subsidy

skiing and a lot of industries said we will go ahead and build project anyway whether or not we get subsidies so that is an amazing development in the sense that the industry went ahead and went outside of the regulators as well. let's talk about the other clean energy stories, one of the big ones we have been watching for. in 2018 we are expecting clean energy investments to be inghly the same as last year 2017. the global economy and the fundamental things are quite strong. we are also forecasting that in wind and costs solar will continue to fall in 2018 so we will see about similar levels as we saw in 2017. there are two other things i want to highlight that will be interesting. first is we are watching battery we are expecting cost of those battery pack

prices to fall, although not as much as what we have seen in the past couple of years and the reason for that is the materials, especially the metals like cobalt and others that are going into these battery packs are increasing south that is really point to watch what impact on metal prices are going to be on battery pack costs. the other thing that will be interesting is electric vehicles. we had a new record over a million fletcher vehicles were sold globally. that will be another record broken. those two things will be really interesting to watch in 2018. of thein will, the head new bloomberg energy finance team in asia. of next, the dark side of apple supply chains. the at why one of one of biggest manufacturers are looking at allegations of violating labor standards. this is bloomberg. ♪

♪ this is daybreak asia, i am

betty lou in new york. yvonne: i am yvonne man in hong kong. south32 says coproduction rebounded just as prices are poised to arrive to a record on potential weather disruption. reduction was 788,000 metric tons in the three months ending in december and that is from 400 and 4000 and the previous quarter. analysts say around a dozen cyclones forecast for australia's storm season could push prices above $300. betty: alibaba is partnering to provide personal products to consumers, daily fresh milk is andlable in the 14 stores also farm her. they say initial volumes are around three times daily with plans to scale up over time as

the retailer seeks to expand in-store numbers across china. there he is new technologies such as blockchain to track cargo movements and automated paperwork for international shipping. the dentist conglomerate that was the world's largest container shipping line will be the first to use the new platform but ibm will provide the back and support. the new york based from will need merger approval from regulators. quite a surprise here on core machinery orders coming up from japan for the month of november, all expectations among economists were for a decline in these numbers which is generally quite volatile. also they are. a lot of economists look for a drop of 1.4%, machinery overs year on year, also, rising instead of hope for .1%, economists surveyed estimated a decline of 1%, these numbers are

on top of the gains that we saw in the prima in october, this continues to solidify that point that the japanese economy is in great shape right now. probably one of the best it has been in years despite will be have seen with the rising yen and what that has posted. it was like capital spending is quite healthy among companies in japan. this is the pre-optimistic for now but let's go to another story, a pretty alarming one, workers at one of the largest apple china suppliers has been seeing allegations of harsh factory conditions. the main manufacturer of these brushed metal casings is called cash -- catcher technology which is under scrutiny over claims made to bloomberg news. let's get to bloomberg asia technology editing manager peter elstrom with the details, peter, the details have been quite

scathing in this report, describe the conditions and the criticism behind it. right, a reporter went out to this catcher factory in china and he talked with workers there, the workers described conditions where they stand up for as long as 10 hours a day, working on these casings this is basic protection but at the wealth they need or the mass or even if your plugs. they bless these casings in order to give them a nice sheen that they get with the apple phone, they say it is very loud, there are other issues, hundred of workers in this factory said the door only opens up about 12 inches so it is hard to get in and have very good. our reporter was able to visit the dorms were these workers stay and says there are no showers in the storm, there was only cold water and many of the workers go for days without showers, soind of

the dorms are quite dirty also, straining with debris and that sort of thing. harshnditions are quite and again, the reporter went to talk with his workers firsthand to find out about that. >> those alarming pages we just showed, when you look at the standard that apple has when it comes to suppliers, and there were conditions, is a different than the rest of the industry? hasr: to be fair, apple worked very hard at improving the supply chain. in 2010, there was a rash of suicides on the primary assembler of the iphone and company took actions to address the issues. they set up hotlines and counseling services and put up next to prevent workers from jumping in the suicide tense and -- in these suicide attempts. they have done very in depth

since -- supply report. apple now put up an annual report on their supply chain and they said that this year they conducted more full audits, complete audits of facilities than they ever have before going back to more than 700 facilities to make sure that they beat the safety conditions they have set. or moreis a growing common problem that apple has been criticized for. what about precision and what we heard about there? what has happened since then? peter: to be clear, a company like apple outsources production because it is more profitable. they do this because it helps shareholders, it helps the bottom line but it gives you less control over how those funds are made and how work is are treated. the covered has taken a number of steps since these problems

were brought to light in 2010. they were hard at improving the safety standards within their factories, there continues to be issues. one of the challenges is the sheer volume of this, these are considered good jobs in china and apple is making more than 200 million phones a year which is about five times the number int they were making back 2010. so there is a volume issue where apple needs more capacity than ever before. they are trying to meet that an apple has to confront -- construct the supply chain to make -- meet demand. >> catch of facilities, have they face this type of scrutiny before it was linked to apple? peter: they have. ago, it was at apple, they ran into safety problems, they were brought to light in the press again about their treatment of workers, they

were supposed to address those, apple has continued to use the company over the years and in this case we should say that apple was aware of these allegations, they went out and asked to the workers about them and they said the workers did not tell them about any kind of safety concerns, tetris said something similar, they asked the workers and invite any concerns with the safety conditions there. it may be that workers are willing to say something directly to people that are not -- they are not reported to and not working for that maybe a little bit more frank. you, thank you from bloomberg asia technologies, joining us live from tokyo and bring light to the story, looking at fort earnings that we got out here and the automaker cutting its focus for forecasts for 2018 from 125-170 a share. that is down from 170 last year. we are getting the lines from the fourth ceo.

saying that they are not satisfied with her performance, ford has not achieved the 8% profit margin targets in any year. we certainly heard that the warning signs coming up from the detroit auto show, this is coming at a time when they are really spending heavily on catching up with easy which seems they are still in the us as of doing so and getting traction -- traction on that front. >> we are speaking with some of our other in-house analysts, notably behind other big automakers in detroit like general motors, on the electric vehicle front. they are playing catch-up here about $11pending billion over the next several years as they discuss this detroit auto show but that will hit, it seems their bottom line over the next course of the few years as the rep of the investment on a larger vehicles. coming up next, we will be talking about investment strategies with wealth management, we will also find out why mitsubishi is so bullish

on japanese equities. this is bloomberg. ♪ retail.

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betty: we'r to "bloomberge daybreak: asia." this wednesday, asian stocks set back from following losses on wall street. asde tensions resurface president trump called xi to complain. betty: i'm betty lu on this republican leaders and angle for short term funding looming u.s.ert a .overnment shutdown -- latest biga

bank on batteries. thate: we talked about wild se session on wall street. run we havehow far in 2018. things were looking little bit stretch. was time for some healthy it.ine some have called even em, the good times maybe over. we did see the emerging markets we'verally to the highest seen since 2008. some are saying now it might be to take your profit. if we do see near term rally in the dollar, he says it could be head wind.ary

evaluations are getting lofty. we could be seeing this possible downturn in tech as well. over bought stocks, technical suggest it may be time. they are seeing there's a case here.cern betty: there's bitcoin effect. two markets don't have anything other.ith each people are locking their profits getting jittery. maybe the equity markets getting frothy too and taking their money and enjoying the rest of 2018. the first real news now with jessica. former whitetimes" house steve bannon has been mueller.d by robert bannon will testify before grand the investigation of possible links between russia and president trump's associates. bannon testified before house committee on tuesday behind doors. workers at a chinese factory

supplying apple with iphone casing. they stand up to ten hours a day workshops without proper gloves or masking. the described ase workers at technology factory ends by advocacy group china watch. apple said its own audit of the ofplex found no evidence standards being violated. secretary of state rex tillerson says intercontinental ballistic launched in november from san kong.sco to hong nine other flights within the same range. calls north what he recklessness. sanctions on for kim jong-un's regime. petroleum expect crude to average 60 to $65 a barrel this year. 10% higher than

2017. lesses global oil standing and less about 1.4 million-barrels a day. energy outlook, predicts 10% rise in chinese gas year despite the current wintered shortage. new energy finance chinese demand to solar power increase. about $334 billion poured into new power technology. even as president trump pushed paris accord.he half the money went to solar projects. global news 24 hours a day 2700ed by more than analysts.s and this is bloomberg. betty: take a look at the market in seoul. what we saw on wall street, down, gold catching a bit

well.s relatively risk. machinery datahe from japan from november. doing both the nikkei and halting a two day rise. near a four month high. daylooking to add to six gain. is holding three day event event. the january 18th meeting. central bank forecast at 1.5%. theng a closer look at nikkei. utility the one bright spot when it comes to industry groups. stocks, energyce material, the biggest drag today. retreat.ls also on the hittingg electric

records high. we are seeing they were under pressure. on japaneseeck in s.ntractor they did not find evidence of the nationalor rail project. you do have stocks up following that local report. look at what is moving the dial for the cost gaining about .6 of a percent. healthcare and real estate drag on the kospi this morning. decliners on the index so far. look at the bottom move in the market. continuing to drop following morning cutting the stocks rating. we do have the aussie dollar percent.p .2 of a .esuming gains let's keeping eye on the same

dollar. marginally higher ahead of the december export figure. gold is on the rise here. climbing for third session at a september high. we are seeing new york crude below 54 bucks a barrel. slightly higher up .2 of eight percent. taking a closer look at stocks sydney. surging the most since june june 2015. yvonne: now, trade tensions between the u.s. and china, withve surfaced again president trump calling china's leader to tell him the growing deficit is not sustainable. joining us now from beijing is tom mckenzie. .ere it is again u.s.-china trade tensions. china bracing for more trump trade?h on

>> well, they are aware that the rhetoric is ramped up again in washington. ebb and flowed in 2017. coming how the administration and white house from officials there, suggesting that they are going to be taking tougher line on the u.s. where president trump has on his decisions to make when it comes to whether or not to impose tariffs on imports from china. of course, they're aware that has failed top reduce the deficit with china. for 2017 it increased by to 275ion u.s. dollars u.s. dollars. the midterm elections is a for 2018. whether or not that will make boy againe whipping for the gop and president trump. all those things are considered beijing.als here in the u.s. being taking tougher on deals.

buy money grams. all those things are being official here. chinese have been clear, if tariffs are imposed, they will retaliate. there in lies the risk. is going to bet the gdp numbers that come out tomorrow as well as other chinese data. what can we expect? >> that's right. it's worth looking at the gdp numbers. that come out tomorrow. of this in the context u.s.-china republican. most economist say it's the togest potential head wind growth there in china for the rest of this year. fulltations are for the year of 2017, we'll see gdp ticking up 6.8%. be the first time it 2010.ed since around round of data points as well as the gdp number including sales ande retail

industrial production. they are both expect to remain in line with previous numbers. the investment is expected to down. we're going to be looking at leverage and the broad money percentage of gdp. downis expected to tin -- tick first time since 2011. property sector that's expected inshow positive sentiments 2017 after a difficult 2016. overall investments in roads and bridges and railways that is in 2017.to slowed my economist say that investment will continue to add lower this the property sector could be something of a drag on the growth picture. getting those data points tomorrow around 3:00 p.m. beijing time. yvonne: republican lawmakers are for another short term u.s.ng measure to avert a

government shutdown. latest now from bloomberg news editor who has been tracking this. here we go again, do you think deal here?ull off a >> certainly is the last minute. it's usually the last minute. passed since october funding ran out october 1st, to pass three short term spending bills. republican lawmakers are trying for a short term spending measure that would take february 16th. then try to work out the broader spending issues. allocate the domestic versus military programs. there's another hitch. they want the democrat -- want to --ad billion badly deal with immigration issue. so called dreamers. now the republicans look to try isolate the democrats on this issue. saying if they wanted to deal ith this, they want to bring up as part this spending bilker

who would haves to deal with the fact that they shutdown. the president is trying to now make it about the democrats. saying the democrats are the that caused the shutdown. that's a real problem in an election year. it's unclear what democrat will push. looks like at this point, the republican leadership really wants to isolate that immigration issue and say they deal with it separately. talk is assessment of health about president trump. there's been talk about his mental health. doctor giving press briefing saying he gives him clean bill of health, mentally and physically. aboutll this speculation the president being unfit for office, fake news? >> fake news. very interesting that the president keeps bringing up his health.

that he's said in the past week we keep hearing he keeps saying how fit he is and there's no problem there. if he stoppedthat talking about it, people wouldn't bring it up so much. stage, he has been given that clean bill of health. is lot of these tweets and a lot of the fights he's picked. things.nd of every that happens, this issue comes up again. this? say why is he doing what is behind this erratic behavior. betty: one year anniversary when take office. we seenoval ratings them tick up slightly when it comes to approval. we're pretty much near those have seen in the later part of last year. one year on. reform.ax we have deregulation. what thee confident

trump administration can achieve ago?hey are feeling a year >> the tax bill was a large win. certainly. that was a big legislative win. of people didn't think it was going to happen. they needed a win. that's going into an election year. only for the president and his one year mark but the republican leadership in congress. that, there haven't been lot of wins. we talked on the international about trade.ed trade it a place where the tosident said we're going restore america's greatness. what's happened america is increasingly isolated. campaignlfill his promise pulling out of the trans partnership agreement. he did fulfill the promise of saying we're going to nafta.iate those negotiations are not going well. end up't actually labeling china a currency manipulatetor. something he said he

would do. isolating america on world stage. record.ixed not a lot has been accomplished. lot of what he has doing has to get to fulfill his campaign promises and to base.to that they still seem pretty happy. there.lot more to come lot more to watch. jodi snyder there. more headlines coming out on the car company. saying that it's going to be 25 of model launches by the end 2019. lincoln brand will orient itself and shrink's passenger car lineup. suv's offering higher profit margin. away from being a full line auto maker. everythinging to be to every consumer has basically left it with not nothing but has it behind the other

automakers. comments some of the evp,g out from the ford executive vice president jim farley on top what we heard predicting lower than what wall street analyst predicted for earnings for this after spending more on catching up in their electric vehicle lineup. ahead, staying automaker, latest attempt to secure measures.attery betty: looming shutdown weighs investors. response.e asian hartmut it' issel. this is bloomberg.

betty: this is "bloomberg daybreak: asia." from all.s. stocks

time high. investors kept track of earnings and possibility of government shutdown. look at the asian markets are shaping up on wednesday. us now from singapore is hartmut issel. it was a wild session i have to say overnight. we are looking for fresh catalyst here in asia. what's the read in from this reversal that we've seen? what's the trigger really here? trying to wrap our heads around it. >> honestly i don't think there's a specific trigger when then itrection happens, will be the reason for that follows afterwards. not convinced possible government shutdown. it's such high risk or such a high possibility that investors would really worry that much it.t i see it for coincidencal. would say, we have seen

very strong markets around the world. fact, some cases some of the markets really wondering. extrapolated in other free markets we would have exhausted saw for thel we entire year. healthy. of i'm comfortable if not everyday goes up one percent. healthy more correction. yvonne: i have a chart that highlights that hartmut. look at the rsi's if thelook here in asia, nikkei, they've all been streaming over for some time now. place that is not is actually europe. can you just ignore the technicals? we had a very strong weeks.st 2.5

also some of the markets here in asia, we had a lot of conviction in the earnings outlook. asia,nk especially in evaluations are everything. they're not ambitious. upside on that. but at the same time, if market in a shorto fast time span, that opens risk of more severe correction. i'm quite happy we get one or two days rather than big spike up and then heavier correction after that. month you were telling us, ubs is restating inards laggers that we saw 2017. the indonesias, thailands we upgrades fornings the first month of 2018. thatand seem to be taking lead. even with these laggers, we're seeing record highs for some of these. how much further do they have to run?

>> the earnings picture for asia strong.ry arguably not quite as strong as last year. hardware i.t.re for example, some of material stuff rolling over. we think we can keep above 10% comfortably. sector. that is now the biggest sector in asia. two wasn't the case about years ago. you certainly have -- we just a study on this -- biggest -- even the old economy, some progress isn't as high of course. when old economy recovers, the second good for largest sectors which is banks.als and the we have high conviction in earnings in asia. this is a trend break. if you considered 2011 to 2016,

asia earnings on average wasless 3 percent -- was less than 3%. still has room to even rerate this year. betty: i want to point to a came outat just from deutsche bank. is calling for some doom and warningt certainly a signal. of u.s. coming supply government debt. here.sed tax reform that leaves us with a widening deficit. that's going to have to be and more paper coming in the market. he said that's going to be a big markets inobal general could cause the dollar to fall and rates to spike. say to that?u >> deficits certainly with the tax reform goes up a bit. pragmatic about

it. usually when you have debts and itof extent,ed to that typically the markets takest those positively. after maybe couple of quarters or yearses passed, eventually slows down. still have the debt. that's reading on a '18 and '19. i think it's premature to worry too much at the beginning of aspect.le about this for 2018w the big risk is unexpected spike in inflation. happen, that's the more risk.s yvonne: thank you so much. plenty more to come on "bloomberg daybreak: asia." this is bloomberg.

yvonne: google is making biggest changes to be advertising rules youtube. stricter criteria will be videos tor types of earn money. new vetting process that offers advertisers. to clean upmpt youtube's content and answer from advertisers. quarter coalnd production rebounded. was 788,000 metric tons in three month ending in december. from 494,000 in the previous quarter. cyclonesround a dozen forecast for australia storm season could push prices above ton.a coming up next, driving deal. look at why the demand for ev is

pushing toyota to join forces aussie miner. this is bloomberg.

betty: these are nonoil domestic, ports. missing on estimates. 3.1% growth on year even year in december. we're seeing drop of 5%. economist forecasting a slower or not as big of drop. seeing here the tracing that things are slowing down in the fourth quarter. we saw that in the likes of rest asia. we already seeing south korea,

china, export growth as slow year.s end part of the thailand picking up slightly. trend here now global demand picture may not be rosy. betty: so much of that dependingen what happens -- depending what happens here in the u.s. and china. to see how the asia markets to that data. the dollar.ck on not seeing mump the way of reaction. could see same dollar continue to advance after a five day rise. seeing aussie gain about .2%. came in strongest since 2013. trading at three spot 94, 50 of

the currency. seeing kospi halt a three .2% this morning. in tokyo snapping a ride. shares sydney they are being stocks.by let's check in one of the big movers in sydney. we are seeing medical the best sydney, after earnings topped estimates. machine maker that is retreating from record high it hit on tuesday. ed.wngrad was keyence is set for all time

high. machinerytion in makers in tokyo. posted second straight monthly rise steady. movers ande of the shakers. thank you so much. let's get to the first world jessica summers. >> thanks, president trump doctors 71-year-old commander in chief is fit for duty. so.ld remain he examined the president last week. -- doctor jack said the president takes aspirin,ol medication, drug.itamin and hair loss >> neurological exam, deep tendon reflexes and motor function and century system were all normal. exam was normal with a over 30.3 30

>> general electric ceo is weighing possible break up of the company after latest disappointment. $6.2 billion charge related to old portfolio. on the call with wall street analyst, flannery plans to separate g.e.'s primary business, healthcare and publicly traded companies. as 25% slumped as much as prospect of regulatory crack spread.ears to rally. halt two day 24%.ch as 33% and dropped online training platform etx to to anhe boom maybe coming end. the crypto favorite messaging planning biggest coin offering ever. they want to raise $600 million private sale of

tokens to use telegrams. another 600 million becoming public sale of token beginning march. hours a day power 2700 journalist bloomberg., this is betty: oil breaking seven day winning streak falling most in a month. that was last time it hit that the summer of 2015. on crude fall. china cnpc, growth in oil demand could slow this year. deal for the oil market. >> definitely. could be a factor why we're they did. fall as

first to my bloomberg chart behind me. while we're taking a look at demand possibly falling. it's still going to be rising in terms of growth. 4.6 for 2018. the outputtching is for chinese oil as well. you can see in the white line is actually hit a seven year low. we're now rebounding off that. for this latest month december fills in, we'll see whether that goes up or down. impact onhave a price where oil goes. cnpc, said that they're thinking 60 to 65 bucks a barrel for 2018. you're probably thinking that we're already at $69 for brent. widere saying there's a range here from $50 to $75. chart, this is all about technicals. i like that one. looking at the 50%

retracement line. a key resistance line. if you follow this technical, hit 7140 which is that 50% line was pack -- back in 2014. it has maintained in that green line up until now. that, we areh seeing this come off just little beth. in addition to this, there's not indicator, there's another one. that is relative strength index. signaling in overbought territory ever since week.art of last while we're seeing oil come off, we're seeing oil rigs on.he u.s. come trying to take advantage of the price rises here in the most date. weeks to it was up by 10 rigs. that's the highest. biggest jump ever since june of last year. longse're seeing record here that's in the blue.

money managers pushing ahead. tot could be what's helping signal the rsi isn't over by territory here. this is where we are now in terms of oil at least coming off for today. breaking up that several day streak. yvonne: thank you. trading unit is picking up a in australian lithium minor. an asiant move by .utomaker aut david, what's the strategy this investment? right.'s groupading unit of toyota announced its investments in $230 million. they australia headquarters. introduced lithium in argentina. this is about securing long term

supply of lithium. what they see is fast rising demand. we're really seeing that demand by forecastharged of rising penetration of electric vehicles. which is really going to need amounts of raw materials to produce the batteries that vehicles.power those back in october, goldman sachs they forecast lithium production needs to quadruple over the next decade just to meet the demand. they said was quite unprecedented in the commodity arena. seeing producers, traders looking to lock in those supplies. its doubled capacity at facility in argentina. two parties say they're looking japan.essing plant in that will produce lithium hydroxide.

strategyrstandable particularly when you're member at toyota. and that of the toyota car maker wants to add electric of its lineup. yvonne: i think this speaks to the australian government was talking about. commodity boom. for someeing this race of the automakers to tie down materialsbattery raw like lithium as cost continue to rise? >> absolutely. every producer, every project sameoper, all say the thing. interest and inquiries from the car making companies have really increased exponentially in the last couple of months. said twohe companies years ago, car maker would not return a phone call. makers are knocking down that door. we're seeing that scramble for supply. they are forecasting these gross

in electric vehicles they're looking five or ten years down the line. working at the kind of volume need.terial they they want to lock that in now. they're not prepared to rely on people further down the supply chain. to act.t last year in inhium that might develop australia. this is a thing that will continue. just overnight with mckenzie and resources said that. of those dealse from car makers. likes ofn in detroit ford, they will invest ev's.llion in yvonne: on supply, the new at more lithium in the market. what is the outlook on supply? >> it is ramping up. that's the case here in

australia, there are three mines will come in production in the third half. mean new supply will meet demand. production quadrupling by 2027. that keeps pace with demand. it's going to be a whole knew wave of mine projects nextd from the middle of decade to keep pace with fast, rising demands. of growth in the come. to yvonne: david stringer bloomberg news asia. up find out mitsubishi says japanese stocks will see double digit gains. chief equity strategist chisato next.ma join us this is bloomberg.

yvonne: this is "bloomberg daybreak: asia." said tpep next guest reach 2100. japan's economy may move out of deinflation. likely rise as earnings keep improving. from tokyonow chisato haganuma, mitsubishi, can i -- equity strategist. you have a bullish outlook on market back in japan. for therun there nikkei. what is underlying the major factors underlying your bullish outlook? >> okay. as you mentioned, i think for te nikkei. two points is importance. is end of the decision and other is deal of the earnings. timepeople believe part

workers wages in japan is rising. nothing happens for full time workers. sme, small enterprise start to rise. these are labor union acquired good relationships with companies. on inflation. labor. when we have the tight labor market, maybe the company is up salaries.ate their second reason is

earnings. years ago, profit hasin japanese company increased. here not only the second reason but also the factor of earnings. as example, industry concentration of winners, is one market.domestic but at the same time, the company -- ahead.go >> yeah. is beneficiaryy of higher incomes of the asian emergingr the countries.

they enjoy the-- benefits of the higher income of asian company. verye: you outlined broadly that the two main drivers, my own question to you really is, we heard so much yen. the japanese the strength of the japanese yen. how that might cut into some of the earnings corporate of the exporters in japan might that be a risk your outlook? risk.course it's one appreciates.n , theyher currencies, euro

appreciate. the dollar akness of dollar. more important is many japanese companies, production base abroad. weaker yen is better. but the impact on earnings is so big as before. to change my basic scenario. about: there's been talk japan's reduction in long bonds. there's lot of questions to etf purchases. do they stop etf purchases. you see ado, once soft target, do you think that

can slow or dampen some of the defenses especially from some of the foreign investors. quickly please. >> okay. purchases, ietf think this part of the market. the inflation in 2%, -- the it is very unlikely. years, we must take --

together we share purchase by company.ese but now, it'sme, .uite small yvonne: we'll leave it there. chisato haganuma, mitsubishi chief stanley security equity strategist joining us live from tokyo. plenty more to come here on "bloomberg daybreak: asia." this is bloomberg.

yvonne: we're getting breaking news. markets in watching particular the euro. continuing to rise now strengthen as much as half percent to 123 against dollar. since 2014.est a three year high for the euro. a prettyinues to pose ecb whichrum for the has been pushed to end quantitative easing giving the euro zone,n the all.r oil prices certainly on the flip side, you see the strength of the euro and price action that might be complicating the

ecb.re there for the the euro rising about half to 123.there yvonne: we saw the weakness is veryt, which interesting given that we heard germany,rts that in angela merkel was hitting stumbling blocks. uncertaintyce of and must be monitored when it comes to dampening inflation. certainly one to watch. like people are willing to buy on these dips for time being. the multinational businesses came to do business with china are increasingly finding to conform worldjing geopolitical view. angus, china has flexing its muscle? >> good morning what we're seeing is whin china really insg

companies that they conform to china's government view on sovereignty in relates to territory issues. if you want to sell goods and china, you must recognize them as china territories rather than categorizing them on websites as countries. seen companies file of that last week from marriott to delta. they're all grambling to change they'reite to make sure par. seem like little tweaks here that these companies have made errors on. is it for some of the multinationals to conform to views? these there's lot of violations they the archives for

and look at history for. >> that's exactly right. if you do look at the language errors some of the these theynies call them and apologized. down --t a case drop now, china has grown economic authority to enforce this. very difficult to know how far can go. i looked this morning at the ten theest companies around world that sale goods and services for 20% of the revenue into china. than half of them refer to taiwan for instance. is, how far is china's government going to go to rule.e this could be going through decades archiveses of online if you wipe every reference to taiwan and hong kong from the

interpret. -- internet.can you afford it ra if that's big of market for you.ty yvonne: thank you. for us here ont "bloomberg daybreak: asia." time for quick look what's coming up next. >> yen rise, take a look at back is a truell correction or chance to buy the dips.

♪ i'm haidi lun and this is bloomberg markets, asia. ♪ haidi: following wall street now are pulling back from records that the yen strengthens to a four-month high. tensions also resurfacing. trump calling to complain about the growing deficit. in 18 alien dollar quarterly lost. workers at a