yvonne: it is 7:00 a.m. in hong kong. look at the "daybreak: asia". this friday,es amazon go beating the top and bottom line. alexa also topped expectations. shares slumped, there is concerned that google's parents will have to pay more. betty: i am betty liu in new iphone touches a break as sales in the holiday quarter were below estimates although the attempted quite

did quite well. ♪ about we've been talking the investors worrying the last few days with yields continuing to march higher in anticipation of higher interest rates, itever the month of january, looked like a pretty good month for the bulls. i want to bring in this chart, as we round out the month. you can see s&p stocks the best performance since march of 2016. president trump will take a look at take credit for this.

the market is still doing well. if you look at that chart, investors are optimistic about prospects and we might be hitting an inflection point. markets are rebalancing as well, and what we saw with the bond market overnight was significant of 10 year treasury yield spiking to 2.97%. that is the line in the sand and it is a worry for many equity bulls out there. mentioned,vonne just the 30 year yield breaking through a significant level, that 3% yield. and it seemsh us, like equity investors are paying attention to the bond market. that level reached and getting to that site --

psychological mark of 3%, good time is basically saying if we break 3% that could signal a bond market possibly. ben iversenpimco's come on and say 3% might be a buying opportunity. he also mentioned the 30 year yield, and now we are back over 3%, the first time we have seen since may. a lot of changes going in the bond market right now. we started the day strong, and the nerves started to take over. romaine: i think the fed is in play and earnings are in play too. it was down and up and it finished above 37 points. you see the nasdaq finished down after it was up during the day. by two points, and

earnings playing a big part as you see after hours earnings. , amgen and mattel down on not so good results. let's stick to earnings which we have been talking about. --le and out the back unfortunately for both companies, they missed on the top and bottom line of shares after hours. emily chang is with us now today, and emily had a sit down with tim cook to talk and reflect on these earnings. how did he address these concerns? got to sit down with tim cook and we talked at length about the iphone x and he said he is proud of the performance. some bethe company sold 7.3 million iphones, it is below almost $800ut it is

on average perform, which means they are selling a significant number of phones. he told me to iphone x is the most popular phone they have lost since november and it has been the most popular and can be prouder. we also talked about how it is selling in china and that has been questions about whether this price point works for a chinese consumer. he pointed out that in china the arefive selling smartphones iphones, the same as united states, and in japan six of the top seven selling smartphones are iphones. there are a lot of questions cycle getting longer especially now that the company is allowing consumers to replace their batteries, but the reality is they had a record raking quarter when it came to revenues. revenue is coming from other places. one of them is services.

i guess the higher price point is making up for the fact that there are lower volumes out there, and we side with the asp tobers -- how can they wait do so as they wait for revenues like services and new products to come through? i think the reality is this is a company that is continuing to basically print money. another record-breaking quarter, over 80 billion in revenues and they have businesses also going well. he talked about the apple watch and it is the size of a fortune 300 company. which apple is putting on the market in a matter of days. that is something tim cook disputes about a personal digital assistant -- that is the iphone, and they have that now in the hands of 1.3 billion consumers around the world.

speaker,eve in at home the major use for it is going to be music, and he thinks the experience is in his words, job dropping. also talked about how apple is going to use the cap overseas. amsked if that will impact and a strategy, this is a company not made big acquisitions. they did by beats for $3 billion, by far their biggest acquisition. but there's always talked that apple should buy netflix or tesla. i asked if there is something you would consider, but he said we acquired 19 companies and 2017 -- we stay constantly in the market and look at companies tiny two bo big. will it help us build better products, and that is how we decide. a big acquisition sounds like to me not out of the question.

about alphabetlk though, speaking about smart the marketing in bringing those devices out there -- pixel phones and whatnot -- is that part of why we saw lower than expected earnings here from google? >> there is concern from investors about hardware products. well, bute is doing the pixel phone hasn't taken off. i spoke with alphabet ceo on the phone before the earnings call and she said a are excited about the growth of the cloud. sharesmentioned earlier, are down on this miss. they remain focused on businesses and intra-quarter variability. another important thing to point out is the concern going on with business.e ad

the scandal where advertisers realized their products were being advertised with violent videos. there is a new concern with and advertising there, and she told us that are doing lots to protect the ecosystem and advertisers never left and those who did came back. there are investing heavily in addition to hardware and the cloud. back so much for breaking that down. let's do a quick check of the market in asia. bonn steepening, stocks also taking a hit overnight. we saw asian markets trading .ater, and so is the kiwi the u.s. dollar back in its doldrums once again.

citi is flat as well. ter we saw yields following treasuries for the 10 year by a also look at japan, we saw a big win for the nikkei 225. we are expecting a retreat when it comes to equities. the dollar-yen well above 109. first world news now. >> president trump has decided to allow the publication of a memo that the fbi abused its --er in an admitted administration bias. wrayirector christopher urge the president not to release it. --zon shares are higher company saw net sales of up to

three quarter billion dollars -- fourth-quarter earnings per share doubled forecasts. says amazon will double down on alexa after far exceeding what he calls optimistic projections for the voice activated assistant. 33% of is to buy financial, clearing the way for a initial public offering. alibaba hasn't held a stake since founder was thrown out of the business in 2011. alibaba has recovered from session losses and raised annual forecast after third-quarter sales topped estimates. blackstone topped estimates in the fourth quarter as holding depreciated in market gains. net income rose almost 5%.

the results can be hard to predict given the firm waiting -- closely held assets. they have risen 14% so far this year. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. much more ahead on daybreak: asia. one of china's biggest payment companies is closer to an ipo, and will get alibaba's latest results. seven years after selling the company off. just ahead, u.s. lawmakers have a week to avoid another government shutdown. we will ask our next guest of congress is closer to a compromise. this is bloomberg. ♪

>> this is daybreak asia. betty: i am betty lou in new

york and the clock is ticking on avoiding another government shutdown. republican aides say they're working on a funding bill to keep the wheels and motion through march 23. a senior managing director david stockman joins us now, he was a republican congressman and director of the office of management under president ronald reagan. david, good to see you. i am looking forward to these next few minutes. fund this government and raised the debt ceiling, should you not put the two together? >> you cut but it could be impossible. cashreasury will be out of in early march, then yesterday the treasury said we will have to borrow, $617 billion in the next five months. which means they need $21 trillion debt ceiling by june

30, which i don't know where the votes are coming from. betty: are we headed towards a disaster? >> we are headed towards a disaster because if we get to october 1, fiscal year 2019, this is your 10 of business expansion, at that point will be the longest in history. they are ballooning the debt to $1.2 trillion -- in other words, it is going to whack the revenue addingbillion, they are hundred billion dollar to appropriations defense and nondefense. they have a huge disaster think to fund, trump promised he is going to bail out obamacare subsidies. for the first time in history, the fed is pivoting to qt, quantitative tightening. betty: that is the new aspect to all of this. >> they're going to be selling

$600 billion worth of bonds in fiscal year 2019, and at the same time treasuries is borrowing trillions. were in feel like we the same spot several years ago talking about the debt ceiling and stopgap funding during the obama era -- i felt like we were having this in conversation and again washington pulls through in the last moment. why is this time many different? >> first of all you have a different president. you have a congress that is fractured and dysfunctional. more importantly, even if they find a way to paper it over, my point is economics. you have bond market carnage like you have never seen before has this late. betty: are we seeing it right now with the yields? >> yes, no one has ever tried to borrow 1.2 trillion dollars, 5%

of gdp when the fed is selling bonds. the point i was making is that 1.8 trillion of treasury bonds are going to have to be absorbed by someone because for the first time, the fed and the treasury are selling huge. i don't think anybody has figured out how that is going to happen. it won't happen at 2.5 or 2.6% on the 10 year. if it goes to 3.5, but does that mean? anyones a 30% loss for who bought the treasury a few weeks ago. the whole financial system is going to go through a big reset. you can't have a 30% loss in the core bond market. asking where the fiscal hawks are, but does this make the infrastructure a tougher sell? >> i don't think it will see the

light of day because they will be stumbling and continuing a resolution for the rest of this fiscal year. they may increase the debt ceiling temporarily or suspended for a few months. i can predict with almost certainty that will not see the light of day because the republican freedom caucus and the few hawks left are going to be horrified when they see how much they have to raise the debt ceiling and how much we have to be borrowing. no one thought we will have to borrow $1.2 trillion after we had a 10 year recovery of employment. maybe at the bottom of the business cycle, but not 10 years into an expansion. yvonne: pimco is saying the u.s. is winning in the currency war. is that the new dollar policy from the trump administration? >> i think they have no idea

what their dollar policy is. andp is a low interest man the treasury as clueless when it comes to fundamental fiscal and monetary matters. the point is that there is no virtue in trashing the dollar. i think it is near the bottom of this -- 15% decline with had in the last year. itwe continue with this, will only raise the cpi, inflation rate domestically and create even more of a dilemma. betty: really quickly i want to pull up a chart here which shows the strongest month since march of 2016. president is as bad as you are saying, what our markets up? >> markets are delusionary. this is day trading. this is machine trading. and hasrobo traders

nothing to do with fundamentals. the market has been broken by the fed and until they hit something that is -- betty: earnings doesn't have anything to do with this? >> earnings are going to come up in 2017, so in three years you have gone up 2%. the only thing going on here is a rebound after the deflationary drop we had in 2015 and 2016. this is of any site they are going to keep growing at any kind of rate. if yields go over 3%, which they well, that the economy is going to go through another whole adjustment like the housing market. what is going to happen to the whole refi business when everybody out there can't refine their mortgage because they are out of the best rate they're going to get? another of course is the

russian investigation and he called this a witchhunt despite the fact that you are anti-trump. what are we getting out of this memo? is it enough ground for the president to fire mueller? -- butsh he would pick he is being cautioned not to because it would cause a firestorm and i remember the nixon times when i was there as a young guy on capitol hill. the point is that this russia thing is nonsense. there is no evidence, and if there was evidence, nafta would have it -- nasa would have had it on their intercepts. this is the democrats trying to read litigate an election that they lost and with one of the weakest candidates that they were able to come up against because their candidate was weaker. afford a $700 billion

defense budget, we don't need one. we don't need confrontation with russia, but the democrats and liberals have become the war hawks and warmongers of the present era. everything is upside down, and if you think washington is a reliable partner for wall street and the economy, you've got to think again. [laughter] betty: david, appreciate the time. looking ahead to earnings from the oil companies and how the price will rebound. this is bloomberg. ♪

betty: major oil companies are on the cusp of earnings. chevron will report on friday and there is reason for investors to be hopeful. 50% above jones low, touching 2014 highs.

a preview of the bloomberg charts you need to know. if you are an investor in energy, you would be smiling right now. take a look at the earnings analysis function. energy has beaten stocks reporting out of the 32 -- eight for eight in sales and earnings beating everything else across the board. let me get into a deeper dive here. let's look at the cash flow -- free cash flow, you could see that for exxon, chevron and pink, they are at levels we een since 2014. bucks, andbout 70 the question is what is going to happen with this cash flow?

investors are hoping this could be buybacks are dividends, but will are concerned there could capex.g into this -- the u.s. tax plan has been happening, and small businesses and banks have got in the boost, at probably want because of tax write offs. offs, these are the billions of dollars companies have done. looking ahead, the u.s. tax plan, they want be able to do that looking ahead to 2018. these are the charts i have right now and will check more later on. coming up, india is set to miss its budget deficit targets as prime minister focuses on appeasing rural voters. yvonne: we'll have more after this route we have seen. on 40 basisbeen up

points since december already. what this means for the government as well and also the job support coming out of the u.s. on friday. more to come. this is bloomberg. ♪

yvonne: happy friday, it is seven 30 a.m. in hong kong -- 7:30 a.m. in hong kong. his asia's first major market open. it is thursday evening in new york where this chilly and markets closing. pretty frigid for any risky investors. it was a risk off today in equity markets and also the bond market. you are watching daybreak asia. look at first world news. forecasts near back

to base in 13 years. -- itpared to estimates was the highest since 2004. 2018 manufacturing in u.s. and europe is also delivering a surge that will please central bankers. the data shows the tribe versus japan divide. planet and nissan left market rivals behind -- toyota and nissan. the big three are coming off of the sales drop after the recession, and seem to be having a hard time coping with consumers. prosecutors have opened an investigation in the acquisition of a european-based holding. provided falsee

information and is facing adening global security after spending spree of more than $40 billion since the start of 2016 hna is trying to thwart a cash crunch. ceos earned more after companies last year. 356 companies in the study received $60,000 on average. their bosses compensation is not specified but thousands of display in the upcoming months. cryptocurrencies are facing criticism in europe and india. has longn central bank been dismissive of bitcoin and others, but now says the risk of illicit activity is too high. the lack of transparency makes it suitable for money laundering. india says it doesn't consider

cryptocurrency legal tender. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. we are counting down to the major market opens in the asia-pacific, and you see the route and bonds and equities as well. good morning, we are seeing a little bit of declines in australia, new zealand has been lack of the short version of it is that asian stocks are poised for the first weekly decline going back to the start of december. we are looking at the job support -- job report. honda will be one of them, also apple and suppliers. it looks to be tepid. talking about the

bond rout, what do we need to know specifically today? >> three things i would note, let me run through my charts. the yield premium. that is the australian 10 year bonds over u.s. treasuries is about to disappear. that is a five-year look at that space. -- fiveet a close-up basis points. have a look at the 10 year yield over in japan. we are at levels were the boj intervene in july and august of last year. will they come in? we will find out 20 minutes before the chinese markets open. i should not the last thing i will mention, the indian budget. -- longhift my chart

story short, bond investors hated that budget out of india. reaching their fiscal goal, a massive move up there on the 10 7.6% if you buy the 10 year indian debt. you.e: david, thank inflation may be set to excel a rate -- accelerate. changed whenything it comes to growth and inflation? why are we seeing this all of a sudden? >> i think the policy statement yesterday came at the moment where bond investors have been selling off already and people are trying to figure out what happens next. the policy statement seems more hawkish.

they think inflation makes the rate a little bit, nothing dramatic but enough to add these bond bears on. supplyn we had management manufacturing gauge, these are called pmi's -- let's jump right in. what you see is the it is the highest since june of 2004. 50,components are all above and you orders, see how they have gone searching. production is up, fueling that the economy is recovering and broadening and labor markets are being tied to it and will see inflation. productivity is a quarterly number, and today productivity is output per hour.

the unit labor costs go up, the amount of money you have to pay to produce a unit of output -- unit labor costs jumped 2% as productivity unexpectedly fell 0.1% even though gdp grew at the .62. 6 percent. range, been in this 2.5% and here is productivity which has been weak. how you get that higher, that is what happened today, one more thing to begin at labor costs. and then you have the job reports tomorrow and the fed said we see signs of labor compensation. based on the policy statement yesterday, what are we looking for? -- unemployment is steady at 4.1%, and average

earnings up to 2.6%, not a big move, but put this in context with global recovery. pmi a stronger in europe and parts of asia and this is all coming together that growth is picking up and inflation will too. yvonne: i mentioned the indian budget, it wasn't a surprise with the bond traders -- how much more pain will we see in the bond markets? that is a very good question because this hit bonds very hard even though they are expecting him to take steps to boost rural income in particular ahead of the 29 election. the states have to see that they are gaining support, so this is a lot of work that agricultural support is being talked about. it is a mixed bag, but the long and short of it is their fiscal

2019 deficit is going to widen to 3.3%. 3.0%, but happen there is going to be a budget wire deficit. is deficit now overall estimated at 3.5% versus 3.2. that is what economists are a look atlet's take another version of this and what is going on with indian bonds. yearyou can see how the 10 benchmark jumped above 7.5% to 7.6% after the budget came out. at the same time inflation has been rising for a variety of reasons. the long and short of it is that combined with this budget inflation issing going to reinforce the sense that anything the reserve bank of india is going to lead in a hawkish direction. but that altogether, it is the perfect storm for indian

government bonds. yvonne: it is going to be an interesting meeting. kathleen, thank you. coming up, alibaba clears the way for an ipo and a look at tech giant earnings. this is bloomberg. ♪

yvonne: this is daybreak: asia. alibaba shares reversed losses after earning guidance beat. expectations the company said -- more going to potential ipo when it comes to financial earnings as well. with are the key takeaways for you? >> this is a mixed bag of earnings for alibaba. investors are concerned about the massive increase in

investments. the important billions of dollars into off-line read television as well as investing into artificial intelligence and spending heavily on content. even though alibaba says these investments keep the long term profits driving centers of alibaba, investors are concerned about the margin pressures. alibaba willthat in aking a 33% stake financial aphelion, and obie swapping that financial agreement for a equity stake which could clear the way for an ipo. yvonne: tell us more about this because it comes after the fact that alibaba faced setbacks when it came to money grants. it is an important part of alibaba and we learned from this earnings call that they plan on having deeper integration with each other. ant financial can help alibaba's expansion plans.

they might first enter with the payment component and then bring the e-commerce part, but they faced setbacks in the united states. moneyried to acquire grab, but u.s. revelatory body did not approve that. they are definitely facing challenges here in the u.s., but their first priority is southeast asia and more emerging markets. yvonne: selena, thank you so much. let's talk about apple. apple shares higher after hours after missing wall street forecast. he is tim cook told us happy with the performance of the flagship iphone x and his winning 99% of satisfaction ratings. i want to bring in the president

and ceo of mobile advertising -- thank you so much for joining. idea to you, on this whole if we are peaking of this iphone super cycle, you feel like we are with these numbers despite what tim cook says? >> overall there is massive panic on this earnings release, and alternately it was better than feared in terms of guidance. betty: people were think it was want to be in the disaster. >> part of it was that was this will still be there strongest product cycle in the history of the company, probably 400 million units in 2018, that exceeds the 2015 with iphone 6. it will be the strongest lifecycle they will have, but ultimately we view this as a step in the right direction and few it as an air pocket versus a negative trend for apple. with advertisers

and media companies, and i am curious if we see a slump in are seeing fewer iphone sold, what kind of applications will that have for advertising and media companies? >> i don't think it changes a lot. the apple penetration is still so dominant that the ecosystem created by apple for advertising is dominant all over the world. the safari internet browser which is part of the iphone is 50% of internet usage across the world. betty: 50%? >> that is where media companies do their business, and that system is the hospital -- hospitable for companies, they have shut down cookies for targeting and autoplay video ads which as consumers we don't appreciate.

of adcompanies make a lot dollars, so as far as the browser continues to be successful, that advertising ecosystem will remain relatively the same. companiese media remain hostage to what apple can do? and they can be put out of business? could, if you look at the earnings, a lot of the earnings in the advertising space is been sucked into facebook. apple doesn't help them by making browsers on their phones hospitable for advertising, there are people who might suggest this is intentional. apple has an apple news product which you might be familiar with. that is more hospitable to advertising. at the same time they make the browser tougher to do business, they invite media companies to advertise in their product where they might have more advantage and make more money. betty: critics of apple may not

like hearing that. -- thering up this chart continued reliance on apple's revenue on the iphone. started tort of level off a little bit. that to start declining or how this tim cook get that revenue backup? we had the three headed cycle -- as well as china demand which is starting to come back, you will see growth. as you go forward, it really is what is in the second act. a $50 billion revenue stream, that is going to be a big piece in the apple growth story. , you know itation is going to be buybacks and dividends.

speaks why the stock rebounded after hours. do they make a big acquisition and go after streaming? that is going to be the big nottion, do they or do they make a big acquisition which could be on the table. you mentioned about the numbers and china, 11% growth -- and you really call this rebound a real one? >> i think right now there is pulled forward demand and you a weakness.aw when you look at iphone x, you take a step back and demand has been less than expected in the march quarter. it is really china. china has been underwhelming growth for the iphone x relative to expectations. apple's growth engine and there are betting on china, so it is a rebound, but

by no means what i call this a success story in terms of the china growth story. uphought it was going to be 15 or 18% when we started, so it is a uphill battle for cook to get demand in china. when you talk about the three new devices aimed at china, front and center. you mentioned how apple is distorting when it comes to advertising, but we heard from facebook yesterday. how do you think advertising deals with less eyeballs spending less time on facebook as well? >> according to what i read in the earnings report, they pay more per impression. facebook is an impressive company in a lot of ways when it comes to what it has done for advertising. when the clean up their 15 millionhey lost

hours per day of. usage by getting rid of viral videos. and none of that set them back. if they get more space, they sell more ads, if they have less. space, they sell ads at a higher price whatever they do doesn't seem to turn advertisers away. when you mentioned big acquisitions from apple, what did you mean here? >> one rumor is netflix. does it make sense for apple to buy netflix? this would be the time if they want to be -- betty: why is it a game changer? game changer because of content, if you have -- apple isntent nowhere there. they have a small amount of content.

this is what i view as the next potential growth. apple in a transition among companies with apple front and center. if they want to make an acquisition, this is the time to do it. if they don't acquire netflix, a studio, some content related acquisition, that is a huge think they are telling the market -- content, we are fine being the fifth or sixth best player. do they or do they not? if there is a time to do it, it is now, and if it'll do it it is a telltale sign of strategy going forward. that? would you think of toi see at&t attempted acquire content, use it with verizon, these ecosystems architect and content and are

battling for eyeballs and advertising dollars. you seethe combination, these companies trying to do huge battle, nbc their content, and after facebook and google -- with verizon, at&t, and apple, that is the field. betty: it will be an interesting play for sure. on that final note on content, if they don't do it, then the time has passed -- then what happens to apple? -- you look at it, and you look at demand. you see more much or growth and it comes down to services or some other growth areas that they can pack in on the software services side. the next focus -- we know it is not auto, we know content is out there. if it is not out there, that can

be the big potential game changer for apple. they had some positives and in uphill battle to get demand. betty: dan, good to see you. and cargo president and ceo, thank you guys. you can get that story and many more to get your day going, bloomberg subscribers can go on the terminal and it is also available on mobile and the anywhere app. this is bloomberg. ♪

>> a quick check of the latest business headlines. bank of tokyo mitsubishi under pressure in new york, with isulators saying that it accused of trying to avoid the consequences of misconduct.

a federal judge is being asked to allow fines for compliance violations. we have learned other things may maych to -- other banks switch to others oversight. kobe steel swinging to a third-quarter profit. aet income was up from different $71 million loss in the previous period. it's first annual profit in three years. of suspect products have been declared safe. >> led by a recovery in the retail brokerage business. declined -- a loss of $828 million on margin tied to a --

betty: coming up on the next half hour, we talked to the british chamber of commerce, as you can prime minister theresa may can use her tour -- conti nues her tour of china. ♪

>> 8:00 a.m. in hong kong, live from bloomberg's asia headquarters. welcome to daybreak asia. saless iphone super cycle of the mid-quarter were below estimates, although the 10 did quite well. it really was amazon go after it line.he bottom alexa also beat expectations. betty: i'm in new york 7:00 p.m. this thursday. planning for the post-brexit li. split saying that the

from europe should have no adverse effects. a chinese battery maker that plans to leave tesla in the slow lane. ♪ ♪ yvonne: we have been talking about this slew of tech earnings on tap. m,ems it was like the a tea they were calling it. split from europe should have no adverseapple, the iphone x concn seems to be alleviated for now. could be a good day fo suppliers. >> let's have a look at the open in south korea and japan. nikknes, especially on the ei 225. we have been talking about the big tech earnings overnight. then essentially coming out

latter part of the day into the close. the weekly drop in eight weeks for equities in the asia-pacific. it was bound to happen at some point. watch what has been happening in europe. you have five-year yields yielding something in germany. when you look at the bond space in india -- they really did not like that budget. 18 points basis on the sovereign bond. we will get that reaction later on when that market opens up. nothing clear when you look at forest markets. showed this to you guys earlier. we will an hour's time, get information whether or not they will increase the amount of bond buys. we are back to levels where they

essentially last stepped in. if there is any sort of possibility of a change in boj policy, some are pointing them to leading yields down a bit higher. ratee in a rising sort of environment. yvonne: as we talked about a massive day of tech earnings, let's start with apple and iphone x sales missing analysts forecasted, suggesting waning demand. march joining us from san francisco with more on iphone sales. it seems as though analysts were expecting it to be worseenviron. yvonne: as we talked about a massive day of tech than reported. that is what you may see stock up in the after-hours. stock on theve the

terminal, then the whisper repor t, analysts behind the scenes. there has been many reports in recent weeks about slower iphone x sale supply chain cutbacks. this has already been baked into the apple share price, which has been done a few percentage points already in january. that is why the stock is u currently. yvonne: we had gotten word ahead of time from the suppliers that it may not be great. what effect will this have on the suppliers? mark: we will see a lot of supplier's stock in asian moving in response to this. qualcomm projecting earnings in the united states, discussing how some of the big phone makers are buying fewer chips.

chipsom likewise with its and acting to bluetooth. 1/3e reported 77 and million sold. underestimates of 80 million units. $796, which is impressive for an effort selling price -- for an average selling price for a smart phone. yvonne: is there more pressure and newout revenue line?ts into the mark: the iphone is basically the core line of the company's business at this point. you use it as a hub, speakers listening to apple music, downloading applications. basically, the iphone is the window into the rest of the

apple ecosystem. to use the new home pound, you need to know found -- homepod you need an iphone. to airpods are optimized work with the iphone. they are working on all of these future products. the problem is everything is built around this iphone, the center of the spoke if you look at at the wheel. that could be concerning for investors. stillside is that it is selling fairly well. betty: what is next? transportation? mark: at bloomberg, we have been reporting on these roadmaps over five and 10 years. augmented reality. the company is working on a pair of augmented reality glasses. it would be a standalone product

to replace the iphone going forward, bringing information to your field of view. also self driving car technology is in development. we will see what they do with this. they are poking at it, just like uber, lyft, and the rest of the tech industry. betty: thanks so much for joining us. let's go back to david and look at the apple related companies in asia, and how they are trading. and the suppliers too. revenuets 5% of its from servicing apple. down 2% in the open in south korea . quite a drag on the cost the index. -- on the kospi index. we have some partial names. a look at how they are trading in the open. japan display -- just to give you a sense of how important

apple is, 50% of its revenue comes from the applicant. sony and toshiba very much in the mix. whenig ones coming out taiwan starts trading. the biggest group of suppliers easily 50%ur here, to 60% of these company's revenues. taipei, we see some pressure. easily 50% hong let's look at some of the names we are following on the chinese mainland. byd also surprisingly a supplier 5% of its revenues. this market opens up in roughly 90 minutes from now. apple, roughlyyvonne: amazon jn extended trading after reporting

it strongest quarter holiday sales growth. this as it pushes into new areas. our tech reporter joins us from san francisco. we saw disappointment from google and apple, but from amazon a totally different story. the biggest highlight? >> the big takeaway is you are seeing a vindication of ceo jeff bezos' strategy of investing. this quarter, you saw investments in warehouses, including robotics paying off in terms of profitability and investments in data centers for their cloud computing business, where you saw that really accelerate as it grows into a $20 billion annual business. betty: is this perhaps a good problem to have? how are they going to spend this big warchest theybetty: keep

accumulating, and where will it be strategic to spend for amazon going forward? spencer they picked up: whole foods last year. they have their cashierless amazongo.e store, the biggest thing is they are voice-activated platform, alexa. that is something jeff bezos called out in the earnings , a area that was surprising to them that they will double down on going forward. yvonne: the aws numbers seem to be the highlight. 44% growth when it comes to net sales. we saw microsoft as well as google try to eat into amazon watch. spencer: cloud computing isn't a zero sum game. the word is out. a lot of companies are seeing

the benefits of shifting cloud computing. previously they would have to consider big investments in new data centers. now they have to do these quick experiments. for the space they need. if it doesn't work, it is not a huge loss for them. betty: e-commerce in general, amazon prime saw good numbers. expand?e more plans to spencer: that is a big takeaway that now especially primeors are getting

numbers so successful, can they replicate that globally? like india, and you are markets like latin america -- newer markets like latin america. can they replicate the success of the prime program in the united states globally? yvonne: we are still waiting in hong kong. [laughter] thanks so much spencer soper breaking down those tech earnings for us. >> alibaba is to prime numbers so 33% of buyfinancial, clearing the wayr a public offering. royalty payments worth more than $300 million last fiscal year. alibaba recovered regular session losses. it is raising its annual forecast after third-quarter sales topped estimates. >> those of you who have followed closely know that this is a significant step in our long-term strategic washington with ant financial, giving

alibaba ownership. we believe deepening our relationship through an equity stake will give key financial benefits to us. net income rose the most 5% as private stakes in holdings in private companies improved. present,an be hard to given the firm closely held cents a -- closely held assets . president trump has decided to allow the publication of republican memo that claims the fbi abused its power in the russian investigation, and alleges anti-administration bias in the memo. democrats say it is in inaccurate and misleading attempt to undermine robert mueller's investigation. the fbi investigator christopher wray has urged the president not released it.

an investigation of zurich-based gauge group holding after it was founded provided false information. facing scrutiny after a global spending spree starting the beginning of 2016. hna is now looking to sell assets to ward off a cash crunch. global news 24 hours a day by journalist and analysts in over 120 countries. this is bloomberg. betty: still ahead, theresa may's trade mission to china. british trade minister about the visit. yvonne: a look at the british lt u.s. job numbers. this is bloomberg. ♪

betty: this is "daybreak asia." yvonne: after a flood of earnings data, investors turning their attention to the u.s. january jobs report due later on friday. analysts things 180,000 jobs were added last month, with the unemployment rate going steady at 4.1%. for more of what we can expect, let's bring in glassdoor chief economist. glassdoor comes to be the second largest growing job site in the u.s. we continue to see these job numbers, seem pretty solid. the good thing about glassdoor, you have the ability to look at the wage picture across sectors in the country essentially. what are you seeing when it comes not to just jobs added, but wage growth? >> that is true, glassdoor has become one of the biggest recruiting sites today. we see strong hiring across the

board, naturally and in a bunch of metros. a strong month of job gains, but has you have mentioned, there has been weak and growth. on glassdoor, we are trying to emphasize there are some pockets of the economy where there are labor shortages and wages are starting to pick up as employers struggle to hire. yvonne: what pockets are you talking about? >> the healthiest markets we are seeing today is in e-commerce. i don't just mean software developers. i mean truck drivers and delivery associate, the people fueling the health of amazon. we have also seen gains in health care. health care has been the 800 pound gorilla in the industry. medical size nurses, technology. in tech, software engineer in

particular. we see young start of tech companies turning that technology into a business model. i want to bring up a quick chart. there is speculation we are in the sleep cycle when it comes to the labor market. i'm not sure if you can see thi chart, but our viewers certainly can. looking at the trend historically, it looks like a midcycle scenario. with the absence of wage growth, this is not a typical cycle we see. given the fact we are midcycle now, doesn't mean there could be further acceleration in jobs from here? andrew: it is true there is further to go. we are late in the economic cycle. we are seeing payrolls grow at 170 per month, not to 40 like a

couple years ago. -- not 240 like a couple years ago. i believe with the $1.5 million tax cut that just passed, that is riffling through companies. that will unfold over 2018. you are seeing oil prices recover, which is having an impact on energy markets. exports anyone that services or goods. in 2018, i believe there is a good one for this expansion to continue. 2019 is a different question though. betty: this tax reform, is that going to be directly responsible increases in the u.s.? andrew: of course, bonuses, many bonuses in

many companies have made headlines. but that is different from raising base path. bonuses are in easy way for companies to get some of the benefits to the workers without being on the hook for sustained upward ratcheting in their payrolls. we should not totally attribute these bonuses to the tax bill. the impacts of the tax bill happens indirectly on wages. it encourages companies to invest. the investment makes people more productive. that raises wages. that raises wages. that is two months later or beyond. yvonne: i am also curious. is any of the lack of wage pressure, doubled with the fact that we have a tight labor market, is any of this attribute able to employers attracting employees through other means? not just higher wages, but other benefits being offered. might that have any impact on

wage growth? andrew: it is having a material impact. if you look at the total compensation package for workers, it has been shifting away from traditional wages and towards benefits. those could be things like better health insurance or free meals at work. benefits could also mean nonproduction bonuses, exactly like what we saw after the passage of the tax bill. it isit is true workers are takg more compensation home in the form of benefits rather than wages. there are strong tax reasons to do so. when people's income reaches a certain point, they care more about other things like maternity leave and meals at work and less than another dollar in their paycheck. betty: don't forget our interactive tv function, tv. ande you can catch us live,

dive deep into any securities or features that we talk about. this is for bloomberg subscribers only. and check it out on tv . this is bloomberg. ♪

yvonne: chinese president xi jinping calls for stronger ties with the u.k. after speaking with theresa may. after a joint panel to oversee two way commercial ties. our correspondent tom mackenzie joining us now. what else did they talk about? tom: this was an 18 minute bilateral meeting between the two leaders. president xi wanted to see cooperation with the u.k. on trade and multinational corporations. prime minister may said she welcomed chinese investment into the u.k.

this is a starting point as the u.s. and europeans step up scrutiny of investment. check it out onthey talked abour commitment to north korean denuclearization, and the one country, two systems system for hong kong. trade obviously a big part of the conversation. the bilateral meeting was followed by a tea ceremony, then a dinner of roast duck. enhanced golden era. do we have any more details as deals have been announced? tom: we got a few more details. she was traveling, the prime minister, with a delegation of 50 business deals have been announced? leaders, one of them the ceo of aston martin. we asked them about their china strategy and how they plan to grow.

take a look. >> china is a growth engine for us, particularly within the next year or so. we will be introducing an suv into our range. that is our big part of our china growth strategy. china last year -- almost 100%. we did very well here. 89% growth. maturing for us. we wanted to continue that momentum. martin looking for a joint venture partner to push into the electric vehicles based in china. the british company will be financing a tech city a couple miles outside beijing. standard chartered will be involvedtake a look. in a one billion pound fund for the belt and road initiative. prime minister may slice back to the u.k. we make it details on a london to shanghai stock connect. stay tuned for that in a few

hours. betty: up next, what one chinese every maker is doing to of tesla in the electric car market. this is bloomberg. ♪

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yvonne: 8:30 in singapore, a half-hour away from trading. looks cloudy, but i'm sure much better than where betty and i are right now. betty: you are watching "daybreak asia." that is probably guaranteed. let's get to first word news. >> amazon shares jumped in extended trading. the company sees first-quarter net sales of up to 50 and three-quarter billion dollars. earnings doubled forecasted. ceo jeff bezos says amazon will double down on alexa, after for

exceeding what he called optimistic projections for the voice assistants. factories expanded more than forecast in january, its fastest pace in 13 years. the index was little changed at 59.1, compared with estimates of 58.6. september's readings was the highest since june 2000. 2018 strong manufacturing start in the u.s. and europe is delivering a surge in inflation pressures that will seize central bankers. u.s. car data from the year shows a stock detroit versus japan despite. nissan left american rivals behind, while deliveries for suvs rose. the big u.s. three are coming off of a sales drop since the recession, and are having a hard time coping with drivers abandoning passenger cars for suvs. some american ceos earned 40

times the median staff salary and other companies last year. the 356 companies in the study received $50,000 on average. thousands of companies will reveal p/e ratio in the coming months for the first time as part of the dodd frank act. global news 24 hours a day powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: 10 to see how the asian markets are shaping upreveal p/g so far this morning. i love how garfield reynolds, is saying iter, could be a freaky friday in asia.

>> that is really putting things into whack at the moment. the other thing with the 10 year yields -- the bond market really sold off on the back of the budget. essentially missing a lot of these fiscal targets. at the currency market, we are looking at the jobs number breakdown across the asia-pacific. it is quite early. here is when south korea opened. 3.4% at the moment. 1.4.drag is at about we are looking at 0.42 at the moment. earnings in japan is another key thing we are following today. more coming out at some point in the trading session. most after the close. a broader look. things are shaping up positive.

a good time to get into the japanese market when it comes to earnings. that has been so good that the current valuation earning on the .ikkei 225 is actually cheaper 225ei 225, 84 out of the companies have come out so far. earnings a little bit less compared to revenues. still a decent amount in there. companies have come out so far. earnings earnings seasonre entg on the japanese market. betty: we are watching some of japan's financial institutions results.they roll out is next on the list, after is next on the list, after nomura reported a big jump in profits. let's start with nomura. what are the big takeaways?

instance, pretty positive. nomura posted 88 billion yen, their best quarter since the financial crisis. from that perspective, it has been pretty positive. the share market performance has been good through the third quarter. the benchmark topics index had a 20 year high. that has been encouraging for the markets, which is great for the market. prime minister shinzo abe has been encouraging the public to take money out of savings from that deposits and put it into more productive investments that will generate wealth for the nation. coming up, the next part of the earnings this afternoon is the mitsubishi ufj after the market closes this afternoon.

matsui has already achieved the full instance, pretty positive. ef forecast. it will be interesting to see how much mitsubishi has turned this target, and whether or not they will be making adjustments to it. yvonne: let's stay with nomura a bit longer. profits took a dive this quarter. profits took a dive this quarter. what is behind those decline? gareth: that was quite surprising to look at the overseas profits, which took a yen.to 1.7 billion a $14as been driven by million unrealized loss on a margin loan. people familiar with the matter confirmed it was related to south african retailer which has been in pain for many financial institutions around the world.

nomura found themselves ef caugt up in that as well. a tiny profit for overseas. side for soomura's long. thankfully just a one-off. we hope the overseas business will continue to do that are going forward. yvonne: you mentioned a pretty solid report. seems like they are the worst performer among the megabanks. what is the problem there? gareth: it is a huge problem. their core business is the problem. [laughter] not a good thing at all. mizuho has been squeezed quite badly by the administrative bank's policy. the margarine on loans --mizuhon been been squeezed.

there are lost interest rates, where is the other banks have other big overseas operations which can generate income. loans hasmatsui tends to focusn and generating high returns. mizuho has a lot of work. income was up a bit despite the and generating high returns. firstms post the thir, increase for quarterly profits. yvonne: the japanese megabanks are banking on this domestic recovery. more news to talk about. major global oil companies are releasing the results with exxon and chevron set to report later friday. there is a reason for investors

to be helpful. brent and wti above june's low, now touching 2014 highs. inocencio has a preview of what to expect. she is on the wall with the charts you need to know. she is on the wall with the charts you need to know. ramy: everyone loves a surprise, at least if it is a positive one. looking at energy stocks on the s&p 500, energy stocks have surprised the upside. eight of eight, 9.4% on average. he .63%. .63%. the earnings surprise, 8.3% to the upside is something to be happy about. i want to talk about free cash flow. you can see the trend lines

here, following the price of oil. we see exxon in blue, chevron in pink, finally rising above the flatline. the last time they were positive oil was, 2015, when wti around 70 bucks or so. the big question with cash flow, what are you going to do with it? a lot hoping they will do buybacks, dividends. some are worried they will be pulling back from the fiscally more responsible times when oil was lower here. here.next chart plan.s the u.s. tax a lot of small things and he was businesses have said we will get a bump. that might be a wash

. off all they can write of these expenses. because of what is happening with tax reform, looks as if they may not be able to do as much of a right of -- of a write-off as possible. follow me to this screen. this is a new chart. the united of all states, we are pushing more than 10 million barrels a day. exxon says it will be pushing into the permian, about $3.3 billion for an investment this year alone. chevron, they are both saying it is part of their plan

for the next decade. those are the pros and cons we are looking at in terms of what could be ahead for earnings. some positives, some negatives. looking toward exxon and chevron on friday. some are hoping for a good surprised. betty:looking let's stay on ene. a relatively unknown chinese car battery maker is aiming to be the next powerhouse. it is planning $1 billion factory with enough capacity to top the output of tesla and suppliers of nissan, gm, and audi. we have the details from tokyo. who is catl, and how big is their plan? plan is the biggestnew only next to tesla's factory.

the biggest reason behind this rise is the chinese government support for the industry. the government has been doling out very generous subsidies for buyers. cities like shanghai giving out free plates to early adopters. they are looking to be in a high-growth market, which the government is very supportive of. technology is very good, too, partly because they have a long history making lithium batteries for petroleum products, including the iphone. that is why when bmw was established in its chinese friend in 2011, they chose catl makee supplier to batteries. betty: certainly having the government support is important. what has propelled the fast

growth in the past seven years? >> the bmw was a very big help. made their history making batteries for chinese products. they physically share the basic technologies in battery. will they be able to challenge global suppliers such as panasonic? currently they have only 1% of their sales from outside of china. that situation will probably change very soon. of upcominglot

of upcoming clients, including hyundai as yvonne: jie ma joining us from tokyo. what deal prime minister theresa may has won in china. we have that next. this is bloomberg. ♪

betty: this is daybreak asia.

yvonne: let's return to the vision of u.k. prime minister theresa may to china. she arrived in beijing with an explicit goal of experime -- goal of expanding two way trade. thanks so much for joining us. saying last night that this is the new shine in the golden era between u.k. and china. are investors buying it? >> i think theresa may has been on this trip very much to reaffirm the golden era, to perhaps bring more shine to it in the coming years. certainly the british business community has welcomed the developments over the last two to three days, most notably the kicking off of trade investment

review, which means there will be an intensification of dialogue between the department of international trade to ease trade restrictions on both sides, and perhaps lay the foundation for a future trade arrangement. otherwise, we had a ceo roundtable, which again intensified the dialogue between china and u.k. businesspeople. we have seen a few wins. fe saw the restriction on bee will be lifted, other changes in terms of dairy products, which is all good for the u.k.-china trade relations. yvonne: how tough of a sell will minister toe prime open to the chinese market? evenit came to macron, with mr. trump, it was almost like these deals were repackaged mou's, which these

are nonbinding. is it going a sell to be? >> you have to look at what was said in davos a few weeks ago about how china will be opening up further in the coming years. that is what the u.k. business communities looking forward towards. there is talk about opening the service sector to international businesses. year, weck end of last opened upial services in terms of foreign investment restrictions. we are hoping to see words turn into action opened up here in cd we see and more even playing field for british and international players. betty: what has brexit meant for u.k. businesses operating in china? have they felt this is more of a challenge or is there any affect at all?

nicholas: when we talk to our numbers -- in fact, the brexit question is almost seen apart, except in one case of standards. suddenly we don't have the standards recognized in china -- that could be one issue. for the most part, chinese-u.k. relations seems to be apart from europe. what we want to see is stronger u.k.-china relations, whatever happens with brexit. yvonne: stronger u.k.-china relations very important for the prime minister. at post-brexit, in post-brexit world, even if there was a trade deal to be put together, we are not talking

about one for five, 10 years in terms of negotiations, right? trade deals do takeor time, especially when there are lax negotiations behind that. -- are complex negotiations behind that. expect a trade deal to be signed happensn after brexit -- probably not. but we will be in a good place for when we formally exit the european union. betty: do you think it will be a better deal for the u.k. than as what they would have had as part of the you -- part of the eu? nicholas: the u.k. is a different economy. it is the largest exporter of financial services in the world. that is the biggest part of any tradedeal as struck by the u.kn its own, rather than as part of the european union. we can tailor is more to our own economy -- tailor it more to our own economy. we could get a more advantageous

deal for the uk's economy if we are doing it on our own. on the other hand, you are talking about a small economy. there are advantages and disadvantages of negotiating on your own or as part of a larger block. >> for breaking news wherever you are, bloomberg and twitter have launched tick-tock of the first global news network design for social media, involving live hourly updated news reports verified by bloomberg. by bloomberg.c this is bloomberg. ♪

betty: a quick check of the latest business headlines. kobe steel shares jumped the highest in july after a fake data scandal. net income was $151 million, up from $371 million loss the previous period. kobe reinstated a full net income forecast, its first annual profit in three years. yvonne: bank of tokyo mitsubishi is under pressure in new york, with regulators saying it's just from a state licensed -- its shift from a state license to a federal one was unconstitutional in on carpentry.

-- betty: alibaba is leading a $300 india'sinvestment in online growth. existing investors also participated. india's retail market is worth over $900 billion. rrocery shopping accounts fo two thirds of that. yvonne: time for a quick look at what is coming up in the next few hours on bloomberg markets. rish, what are you watching? investors --hing that is the trillion dollar question. inwill have a look at that 10 or 15 minutes from now, talking about the dollar staging a rebound. looking at the implications ahead for these markets. telling us about how some of these frontier economies like pakistan, perhaps also vietnam

-- how they are addressing the structural weaknesses that has hobbled their economy. he will be on 45 minutes from now. we have a look at -- again, about these markets, but also what happened with that indian budget we had yesterday. yvonne: the yield much higher. seems like no end in sight at this point. rishaad: that is a look at what is coming up. betty: a lot happening. market coverage continues with rish and haidi next. yvonne: standby for bloomberg markets. this is bloomberg. ♪

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♪ the iphone super cycle touching the brakes. sales in the holiday quarter below estimates. apple is seeing good times ahead. elsewhere it really is amazon go after a beat on the top and bottom line. -- alsoso said exceeding expectation. and criticism for bit -- for bitcoin. they extended their two-year slide. i am rishaad salaam is in hong kong. haidi: and i am haidi lun in sydney. we're going to look at china's biggest dealmakers. we will be discussing ballooning corporate debt issues. this is "bloomberg markets --