♪ yvonne: 7:00 a.m. in hong kong. i am yvonne man, welcome to "daybreak: asia." asia-pacific stocks brace for a selloff after the dow's biggest fall in 18 months. there is concern the fed will pick up the pace when it comes to hikes. the u.s. debt ceiling back on the agenda this week. the bond market alarm bells ringing loud and clear. hays in: i am kathleen new york, it is just past 6:00 p.m. on sunday. a new era for the fed, jay powell sworn in on sunday, janet yellen said she is disappointed to leave. in it is singapore airshow week. bossll hear from qantas

alan joyce. ♪ from a one headline monthly job report can reverberate, not just through stocks, bonds, currencies in the u.s., but around the world. wages accelerating, the rate hikes accelerating not just from bonds --8 but for pure but 4%. it was the move down and stocks that caught everyone's attention and makes us wonder how this carries through in asia. typical big story in the u.s., but anyone watching markets, i am serious, this u.s. baton has been passed asian traders and they will determine what happens next. yvonne: i think there is still

some time between now and the game for us to talk about what is happening. of mentioned a little bit equities, that could do some damage in asia. kathleen: how about halftime, you can watch justin timberlake and us too. a new round of earnings come big focus on bonds will dominate wall street this week. su keenan is here to wrap it up. bull story,bond stock bulls rattled by friday's close. let's check it out, 666, an ominous number. in two weeks.op also the s&p 500, 3.9% drop for the week. it was a 2.5% correction for the dow but we have not seen anything bigger than 1% drop in a very long time. the direction of the market on monday will clearly be key.

go to the snapshot, the eye on the dollar will continue, and we are also again keeping our eye on the bond. that is a growing focus. yields rising, is that a threat to stocks? we will answer that in a second. let's go into some of the stocks in the spotlight, because earnings as we mentioned, coming on strong. we have general motors, there is a report sing these shares could write 35% in the year ahead as they are planning on releasing fleece of self driving taxis. tesla is up your today. they are ready to tap the brakes on hong kong operations if they don't get incentives they are looking for. that will be a story. disney and twitter also in the mix for reporting. let's go into 1843. a victim of its own success?

an unusual title, because this is been a driver in stocks, but when it comes to tech, you have a tailwind, it could reversed from a tailwind to a headwind, the wind no longer at their backs. a lot of these companies not benefiting from the tax overhaul. also the growth rate is expected to accelerate in the index in nine out of 10 sectors and the s&p, but tech hardware and internet services, not so much. a bit of deceleration in 2018 versus twice 17 is actually seen in this group. that could affect their performance versus the s&p 500 eps growth going forward. yvonne: and the surging bond given the triple whammy with the fed meeting, a treasury repricing issuing more debt, and the jobs report on friday.

let's look at the focus this week, you have the looming government shutdown. su: these expecting bond yields are on the radar of most stock investors. market loves it when it is clear with the fed is going to do, goldilocks is the term we use a lot. it looks like goldilocks has the flu right now. it's not so clear. let's go into 2429. a simple explanation for the rise in bond yields, as you see way over here, is what this title is called. what this chart is called. a simple explanation from one of theanalysts, the resourcing resin bond yields is the market has gone from very pessimistic to rather optimistic on said it tightening. pricing in the fed funds two risen,n the future has the treasury real have ripped higher as a result. that is impacting stocks.

gross says itl you will not be making much money in the bond market right now. take a listen. >> they are losing money and probably half of the last two or three months. investors don't like to lose money. or even cashash and a mattress, i suppose. shorta short building -- period of time. investors should expect to make nothing in 2018. su: a very unsettling period right now. but still into the two-year, it is most sensitive to rate hikes. what is interesting, you see the big rise in the last couple of months, there are a number of record short positions on a two-year note, which shows you there are some looking to hedge given there is a lack of clarity on what had seemed so simple and clear. kathleen: that's what makes markets so interesting.

su: their own version of the super bowl. kathleen: there is so many things now, we are already commemorating the departure of janet yellen as the fed chair, as she said with some are correct, and looking ahead to jay powell. it is an interesting time for jay powell to take over, because one of the big things last year was the market being complacent, people wondering how stocks could keep moving higher. we may have seen the answer to that. if things are really accelerating in the u.s. and if bond yields keep rising, making it more expensive for companies to fund their operations, maybe the picture does start to change and that is the way it gets tricky for jay powell. andyes, -- yvonne: yes, questions to answer is is the fed behind the curve when it comes to raising rates. robert kaplan from dallas, he says he sees a lot more conviction when it comes to 2018 for three rate hikes.

it could be three or more. we are expected to hear from bill dudley this week as well. we could see more said hawks chiming in. kathleen: i will be interviewing bill dudley on thursday, i am looking forward to it is a great time to interview someone who is arguably the second-most the who, arguablyone the second-most important parter is when it dudley left the new york fed. i want to show you this, there has been a lot of talking about average hourly earnings. these are the guys on the line, the production workers, nonsupervisory workers. look at their average yearly earnings. 2.4%. they have been there for the last couple of months. this is the american whose rages -- whose wages are not rising. when you are a bond trader,

equity trader, you see something in a hitch your got in the gut says it is time to sell more bonds. yvonne: speaking of gutwrenching, we saw a very emotional farewell to janet yellen last week. it was almost two, the outpouring of support on twitter. opyourcollar was trending. pop her color during press conferences. it had everyone, including jay powell himself, showing support. it was lovely to see. kathleen: i kind of have a popular color dress. she is a stylish lady, known for those of modern jackets. that thehen she said fed was the central focus of her life, the core of her existence, she wished the president had asked her to stay on, that was a

lot of heart, whether you are a supporter of her not. yvonne: can't disagree with that. ,he did talk about the markets as well, in an interview with cbs. she did not say it was a bubble but she certainly said they are pretty high and we are seeing the spillover in the bond rout today. asia seeing quite a bit of red when it comes to the innocent 50 -- in the red. it is similar across the board and across the region. dollar, dollarwi strength playing through. sydni just getting underway, shares down close to 1.5% on the asx 200. up, abouts points five basis points for the aussie 10-year yield. inre waiting for openings

japan and korea as well. 110 .18, i think there was a little bit of pressure on the and strength recently. that is a market check for you, let's get you caught on -- cut up on the first word news. ramy: first, coalition talks in germany breaking up as negotiators try to bridge caps on labor laws and health care. angela merkel's block one arguments on red, housing and broadband expansion, but there remains tighter laws for contracts and doctors. the parties had hoped to reach agreements by sunday for talks will resume on monday. areouth africa, officials --ting with the resident to

the president to discuss his department that his departure. his second and final term is not due to end next year but opposition parties want him in teach. -- him impeached. an investigation is launched sorgumrt of imports -- imports. importsys it will check . the move comes after president trump's tariffs on solar panels and washing machines, which china called a misuse of trade measures. todi arabia kept oil pricing asia unchanged for a second month in response to slower seasonal demand. at $65 perthe level barrel, the first time since

2007 the price was unchanged for two months in a row, according to data compiled by bloomberg. aramco had increased the price for five straight months to january. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am ramy inocencio. this is bloomberg. kathleen: thank you so much. still ahead, we are live at the singapore airshow later this hour to speak with qantas ceo alan joyce. they are launching their first direct to london flight next month. yvonne: that is a long haul. in the week ahead, the bank of us.apore's analysts joins this is bloomberg.

♪ this is "daybreak: asia ." kathleen: central banks will be

in the spotlight this week as the philippines signals a potential hike. are expectedothers to keep rates unchanged. our guest things broad monetary tightening will follow. welcome. when i look at asia central banks, they are at a different place than 2013 when we had the bond selloff, nonetheless, now investors are thinking maybe the fed is more aggressive. does this ramp up pressure on central banks in asia? >> i don't think it does particularly. the currency has been strong across the region, so they are probably not that worried about compared to 2013 when you had rate hikes in the u.s., sending currencies weaker. think it's more of a domestic thing. conditions are good.

on inflationing risk, malaysia has already hike, the philippines is going to hike if not this week, fairly soon. kathleen: let's get right to the philippines. for the longest time, the story has been asian central banks are not moving. now as you are pointing out, there are individual cases, not necessarily a regionwide move in inflation, it's what is going on in each country. what is going on in the philippines? richard: the philippines is still looks great. i was there a week or so back, the economy is doing tremendously well. people are worried about the deterioration in the trade balance. to me, you should not be that worried, it is funding and investmentwill -- an boom. if you are funding and emerging economy, you should not be worried about that. i think the economy is doing really well. there are some inflation pressures coming through, and

from a prudence point of view, they will probably raise rates maybe three times this year to make sure things don't overheat too much. yvonne: the reserve bank of australia becomes one of the outliers, right? they are looking at their economy, lots of jobs created last year. wages are still so stuck in low gear. that has been of global strike, but it seems like for now, maybe the corporate tax cuts from turnbull will get things going, but maybe by the end of the year people think they could move, maybe not. richard: we think they will move by the middle of the year. the economy is doing very well, growth numbers are fine. as you say, the inflation and wages are fairly subdued, a global story. you have to take a forward-looking view, you can't wait until it is a problem before you start to adjust policy. guess currency has been relatively strong, that will probably hold him back, but on

the balance of risk, they will once, maybe twice this year, a little like the fed. no real hurry, that at the same time you have to pay attention to the underlying economic conditions and we balance policy as the balance of risk in the economy changes, which it is doing. yvonne: we certainly saw information from the boj last that was au think missed opportunity, because it seems like every time there is a good news story happening in japan, every time the market tries to allude to it, the boj tries to dispel it. is there a risk to that sort of vicious cycle, given the fact that once we do get the point where we need to see a policy shift, it could be too late or could be more market traction? -- market disruption? richard: no, i thought it was a sensible move.

people have been worried about self tightening, i think it was a misunderstanding of policy. a have a commitment effectively to buy an unlimited amount of bonds to target the yield that zero. -- yields at zero. the last months, it has been a lower amount of bonds than expected, but as bond yields globally rise and policy titans in other places, implicitly they will have to buy more wrong -- by more bonds at zero. by the end of the year, they type of discussing the bonds they buy, but i thought it was a fairly sensible commitment to pursuing the zero yield targets, and as a result have to buy more. i think there has been a misunderstanding about what the boj did. i thought it was a useful reinforcement of the commitment. r.b.i.,: real quick on the big surprise was fiscal slippage out of the buffet --

budget deficit. does that change anything when it comes to the policy for r.b.i., or will they be more swayed under a populist budget to hike rates? risk,d: that must be the if the government is showing less prudence than expected, you are seeing a few slightly worrying signs on underlying inflation numbers. maybe they will move before too long. at the same time, the currency has been fairly firm, that should be dissuading things. i don't think there is a great hurry. it across to read america, if you are seeing fiscal stimulus into a fairly hot economy, it naturally increases pressure on the central bank to raise rates. think that's a standard observation. kathleen: since you brought it back to the u.s., are you in the three rate hike camp or leaning toward four? richard: we are in the for rate

hike camp. -- four rate hike camp. but best of the only question, it's not how many hikes, it's where did the end? the market is at about neutral, it never happens that you flatlined, you go through neutral in order to cool down and overheating economy. innk that's the biggest gap the market rather than discussion about three or four this year. kathleen: we will watch those numbers and see what they tell us down the road. richard, thank you for joining us, inc. of singapore chief economist. don't forget our interactive tv function, tv go. you can watch us live, watch has interviews or dive into any bloomberg functions. plus, become part of the conversation. send us instant messages during the show. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

♪ is "daybreak: asia ." kathleen: to commodities be go, and falling oil and disappointing earnings from exxon and chevron pulling the two giants lower on friday. jpmorgan described the results as very sloppy. ramy inocencio is at the wall with of the charts we need to follow the story. sea of red is sloppy, that's what we have in terms of what have been happening in energy. the s&p 500 energy sector. on your bloomberg terminal, this is what you would get in terms of the pie chart and sectors. energy is the biggest laggard, down 4%. remember that number, i'm going to put that relative to the falls for chevron and exxon. , s&p 500 energy,

down 4.1%. aboutn see chevron down 5.5%, exxon mobil in blue, down about 5%. all of this happening in tandem with the fall of crude, pulling away from the $70 psychological mark on friday. on thursday, goldman sachs said we will go bullish on this, 82.50, it investment -- investors followed them higher, but on friday, not so fast. all of this coming together. earnings be go, this was the biggest laggard. taking a look at revenue on the top side of your screen. eps on the bottom. 15.6% fored, up revenue growth year on year. sounds good, at its highest in the past three quarters, but they are expecting $6 billion more in terms of revenue, so that 15.66 did not cut it. -- upevron in blue, up by year on year, it beat estimates

by a little bit. eps, looking at the actual profit, bottom line is it did not come in. a huge mess. the numbers for exxon, eps at mid -- a miss. chevron was three times as much, $.55. but wait, there is more bad news. in terms of worldwide output, the blue bars for exxon worldwide output, you are probably saying, at about the same level, not really. in terms of changes, even small percentages, a huge factor. 3.9 million barrels is what happened, they were expecting about 4.1 million, off by about 4.6%. in for chevron, 2.7 4 million barrels, they were expecting about 2.8 million barrels. together,s coming pulling these down, looking ahead, able are saying output,

if you can get up there, maybe some hope. chevron plays an output rise for 2018, but exxon doesn't see a rise until 2020. yvonne: this is bloomberg.

♪ it is super bowl sunday. we are 30 minutes away from asia's first major market opens. longestthis is the sustained cold chill we have seen an hong kong in some time. and you are expecting get some of these from a frigid new yorker. -- getting sympathy from a frigid new yorker. markets close lower across the board. if you want to feel cold, go to the super bowl in minneapolis tonight. i am kathleen hays in new york. i wish i was at the super bowl. yvonne: that is where that he is

right now. hope she is staying warm. i am yvonne man in hong kong. but get to the first word news. ramy: thank you very much. stocksellen says u.s. and commercial real estate prices are high, but stopped short of saying they are in a bubble. she says the financial system is much better capitalized and the banking system more resilient member before the financial crisis 10 years ago. she stepped down as fed chair on saturday and said she is disappointed president trump opted to replace her with jay powell. a confidential you in report says north korea made -- un report says north korea made millions of dollars from banned exports of commodities. china, south korea, russia and vietnam were made by ships using deceptive navigation.

china says beijing is doing its part to enforce sanctions. plane makers have never had it so good in asia. very good business for boeing and airbus. have 3.5pacific will billion estimated passengers by 2026. boeing says the region will need at least 16,000 new planes to meet the demand. and south australia is to provide solar panels and tesla batteries to at least 50,000 homes to build what authorities say will be the world's biggest virtual powerplant. batteries will be installed free of charge. worldour, tesla built the largest lithium ion battery to support south australia's blackout prone grid. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am ramy inocencio. this is bloomberg. yvonne: thank you.

we are counting down to major market opens in the asia-pacific. expecting lawson's -- losses to deepen. david ingles is here with the early look at the possible carnage we are expected to see. it's not just the weather we are worried about. now, in australia, 1.4%, have a look at my chart to give you a sense of how deep the losses are early in the market. biggest one-day drop for australia going back to the summer. a very quick look at a cross-section between the sectors here on your bloomberg appeared just about everything is down. cyclicals are down. we are getting some rotation back into defensive, and that group of stocks less escape -- less scathed. in japan, declined at about 1%.

hang seng futures, 32,000, down from 33. u.s.more moves in features. we are cascading lower on the s&p and dow jones futures. we will be extending those losses, it started on thursday. yvonne: we've not seen any real buying when it comes to safety haven buying. what are the stocks to watch, what are we looking for, we are very focused on earnings. there are a lot of earnings to come through, but it is a macro effects. one of the key pillars to the global rally, you can take this back a few years, has been still ok,which are and the other pillar is starting to be shaking and that is financial conditions. throughook at equities these prisms, you understand why things are selling off. this is 2927, for the united states and we will look at asia

in a moment. what we have for you, the top panel is the u.s. financial conditions index. the worst day for equities tends to take place when the top line starts to turn or get lower. that is a function of long rates going up, it is symptomatic, it -- i want toenough say not enough money, but relatively there is not enough -- not as much money. that's when you get a bigger selloff. it is less pronounced in asia-pacific, this is 2919. thing to measures for you there, you can see asia has been quite shaky. this bit right here i would be worried about. you tend to get fairly sharp declines, as well. a lot of words written over the weekend about what the upturn in bond yields, how bad it will play out for stocks and how far it goes, but more immediately, all kinds of

economic reports coming out in asia. what should we be watching? isid: i'm looking here, it fairly light on the data, but to give you a sense of the more important releases, let's have a look at the bloomberg him a top 5.1%, economy stuck that growth level. watch whenhing to the number comes out, whether or not the government chooses to unlock the banks capacity to lend and get the economy out of that range, it's starting to kick in. i would not say 5.1% it is starting to kick in. no amount of good data is going thisem these losses monday. kathleen: i don't think anything will help on the economic front. not yet. thank you.

president trump says a disputed gop memo "totally vindicates" him of collusion with moscow or obstruction of justice. some congressmen disagree. >> the whole point is not the accurate, it is to be misleading. the democrats did not even get to read the memo until minutes before it was voted out to the house. if they were truly interested in getting to the truth, that is not the process they would use. they used a vehicle that has never been used before in history of the house to release this one-sided memorandum. kathleen: ros krasny has been tracking the developments in washington. how are the two sides trying to paint the release of this memo? both sides are trying to score points, but will it end up really being a campaign issue in the future? ros: i think it could be a campaign issue come november, although it is possible conditions will have changed by

little sort of super bowl of competing memos would have blown over by then. i believe it was adam schiff, the ranking democrat on the house intelligence panel, he and his colleagues are trying to get their own competing memo out this week. they are trying to use this as a bit of a wedge coming into the midterms to show that a lot of members of the republican party really are one and the same with president trump, they believe were polluted through his campaign was russia in 2016. they're trying to tie the republicans to obstruction of justice if nothing else. over the past couple of weeks, we have seen the democrats lead in -- the democratic lead in the general congressional ballot slip a little bit, so they might

be feeling the brexit to the wall little bit. theyas republicans, while don't always agree with president trump on this, and as you say, some republicans came out today and said let the rush investigation run its course -- the rush investigation run its course, they have done a good theirwing doubt within own party about the fairness of the fbi and department of justice, which they think is a winning issue at the polls. get behind the president, i think the economy will still look strong and they will probably see it as a win for them. kathleen: perhaps the biggest issue still remains, that the u.s. government could be heading into its second shutdown in three weeks. are we looking at another shutdown and have we reached any kind of breakthrough in the still make it comes to immigration? looking atay not be a shutdown, we have kind of got a feeling from both sides that they don't want to go back to the brink and shut the federal government down, that thursday

is the deadline for another stopgap spending bill. there is a hope of put out by the republicans in congress that another interim bill could carry the government through to i believe march 23rd. there is a sticking point that before march 23, congress needs to read -- needs to raise the debt ceiling. that is used for the markets, and something that cannot wait six weeks, because otherwise the federal government could default on its debt. debate this week about how to go about raising the debt ceiling and whether it should or should not be done as part of a stopgap spending bill. a gets to be pretty crucial, i don't think anybody really wants to see the ust fault on its debt, i don't think they want to see the government shutdown again. chances are, the next round of government funding will not include a comprehensive immigration bill.

it seems like that is being pushed further out, possibly into the spring. yvonne: all right, thank you. our editor joining us live. we are live at the singapore airshow next, and we have an interview with alan joyce, qantas ceo. this is bloomberg. ♪

♪ we are counting down to asia's first major market open this morning. nikkeishot of tokyo as futures point to a drop of 1.2%. not surprising after the big selloff in u.s. stocks on friday. here we go, get ready for what could be a very rocky road. this is "daybreak: asia." yvonne: the singapore airshow kicks off this week, the

leadership summit is bringing together high-level participants from regulators, the government and airline operators to address a wide range of topics. is there in the lion's den. >> i am with qantas ceo alan joyce, his first interview of the day, and we know qantas is moving into these long-haul plans. they will start a long-haul flight to london next month and they are planning on bringing singapore back in. thank you for joining us. you are pushing into the long-haul aspect, perth to london. we bring in new passengers? easiest will, it's the -- the most convenient way to travel.

we know people want direct service. startedl be on the new -- the new state-of-the-art aircraft. we put less seats on the aircraft than our competitors. it is only a few weeks away and the initial forward-looking's are extremely strong ahead of where we expected to be. we are very confident the traveling public really do like his new direct services. juliette: what impact do you think this will have on your domestic business? will he bring more traffic into australia across qantas domestically? so,ette: -- alan: we think for western australia, the economy has been depressed a little bit, and there is real excitement about the tourism opportunity this brings into that state. people stopping in perth and

visiting different tourist locations there and then coming to the east coast. the great cafes and restaurants in melbourne, the great barrier reef, we think we will get more stopover traffic. also are in talks about nonstop sydney to l.a. and new york. how are talks progressing? airbus and boeing have an aircraft and production we think could nearly do it. the project -- the challenge is to get both manufacturers to get an airplane that can have manufacturers and payloads. they are closer. i think their engineers make it happen. this is a game changing aircraft. we have flown on the kangaroo route for over 80 years. it used to be called the kangaroo route because of the stops on the way. at one stage, 13 stops.

, you can doservice a nonstop, and the convenience that introduces for the traveling public is immense. we think it is a game changer. at thee: what's breakdown will it be when it comes to economy, premium economy and business? you expect to be in comfort. alan: new aircraft technology is giving you that. less humidity on the aircraft, better altitudes and managements the people feel more refreshed. as i said, fewer seats. better seats in premium economy and business. that will be the case when it comes to these new aircraft can do sydney-london direct. we've been working closely with the university of sydney to improve the entire experience. lightning of the aircraft do you offer? how do you encourage people to get into the time zone? it is i think one of the world's

first real studies into human health on long flights and we think it will make a big difference to the travel experience. juliette: since you first and the perth to london route, we've seen jet fuel double. at one point does the long-haul flights become commercially unviable? alan: these new aircrafts are super efficient fuel-wise. they are more competitive. even at current fuel prices, we could fly two of them tell the tale and it is cheaper then another. as fuel increases, s4 engine aircraft become less efficient and these aircraft become more efficient, we think it is a hedge ahead. i was going to ask about how you are heading in this environment. alan: we take the same approach. we take some hedging to give us protection in the short-term,

and the way it works is it typically puts a cap on our feeling expenditure and allows us to participate. that has helped us become quite competitive. i have to say we are coping quite well with fuel at the moment. in october, we give an update to the market about our first half, which is july through december, and we sit qantas would make between 900 and 950 million at the underlying level. at the top of that range, it will be a record results for the qantas group despite fuel prices rising. they are digesting it quite well at the moment. juliette: your results coming up, you saw qantas share price have an outperformance last year by 50%. in you look at dividends, with some -- when can we see a return to shareholders. alan: the big things about dividends for australian shareholders, because qantas is

still digesting the tax losses that we incurred in 2013, we have not been paying cash tax, and that change will take a year or two. what we have been doing is an extensive buyback to return money to shareholders, the most efficient way of doing that. over the lasty four years, we of given 2.6 billion dollars through dividends, capital returns and buyback. we are now overtly percent of the stop being bought back in the last two years. a very good price, under four dollars, and that was a good value to the shareholders considering the current price. talk about the dreamliner's as well, i think you have an option for 45. what you exercise those options? up one by onee over the next three years and that gives us flexibility. we are taking delivery of a aircraft this year to replace

older 747s. at some stage, we will be replacing the others with 787. businesse really good cases we have in the group are balancing up, we also have a good business case to take more of the other aircraft and return 20's, that isree an expansion for us going forward. where working through the best business cases, the best allocation of capital and what gives us a bear return. juliette: we are looking at partnerships, you have a five-year alliance with emirates , but there is a question over your future relationship if you continue on the long-haul route, the president said it could make it challenging. did you find that disappointing? alan: no, we had really good conversations about that.

the relationship a stronger than it has ever been. he was saying the partnership has worked well. we don't see that changing. even when qantas has arranged to fly from sydney to london, we might have more destinations to paris and frankfurt, that we have another 20 destinations in continental europe, we will not fly into them. the partnership with dubai really works. before the partnership with emirates, we had 400,000 people traveling to europe, now we will have 1.2 million. it has been an unbelievable success. it is good for emirates and good for us and we don't think that changes. i think what he was saying is we will change the dynamic of the for those few markets, but the core of the partnership still stands. juliette: a lot of australian ex-pats in singapore, you will start to reroute the flight to london by singapore, it will also have bigger jets with

premium economy. tell us how you are expecting that to increase revenue and demand. alan: a big increase for us, we see huge growth in the asian market, and we have been flying to singapore for over 83 years. it was our first international destination, our longest international destination and most important international destination outside of australia. we will continue to grow it. a three 25th of march, 80's humming back online, first-class and economy been reintroduced. melbourne to singapore becomes the same market as well, more capacity, better seats, more choices of product and we think it is a big growing market and a very important market for us. juliette: alan joyce, thank you so much for joining us. we will have the results later in february.

kathleen, qantas will have a new safety video that will feature vegemite hosts. you can show us a picture with your next interview. thank you so much, juliette. a lot going on for qantas. we are returning to the singapore airshow throughout the day on bloomberg television. ap ofour, boeing's senior sales discusses its take-up of planes in asia. robert martinen joins us to look at asia's demand for aircraft. we will also talk about the importance of global alliances with star lines ceo. this is bloomberg. ♪

♪ a quick check of the

latest business flash headlines. the hong kong stock exchange issued new guidelines allowing companies to price ipos below the indicative range as it tries to attract more to the list. copies can price shares as much as 10% below the bottom of the range. the change takes effect immediately to be reviewed in 12 months. yvonne: honda lifted its forecast for operating income, although guidance remains below analyst estimate. billion, but $6.7 2.3% below market expectation. the stock is nine buys, 16 holds and no cells. coming up in the next hour, we will continue to look at the global bond rout with tax-free capital raymond lee in about 15 minutes. also talking about the spill over rates is having on equities. we are seeing a declines were the 1% in new zealand and australia right now. the markets open in seoul and

tokyo, coming up. 20 more to come on "daybreak: asia." this is bloomberg. ♪

>> 8:00 a.m. in hong kong. we are live from bloomberg's asian headquarters, i am yvonne man. welcome to "daybreak asia." asia-pacific stocks brace for a selloff after the dow's biggest fall in 18 months. there is concern the fed will pick up the pace of hikes. bitcoin is now trading around $8,000. bloomberg's headquarters in new york, i am kathleen hays where it is just past 7:00 p.m. on sunday. jay powell will be sworn in monday. janet yellen says she is disappointed to leave. the samsung era returns to court.

prosecutors want the prison sentence doubled. we are live on this in seoul. ♪ ♪ >> what started from bonds, you can see both of these falling in tandem here. it is remarkable what we have in terms of the breadth of the market. take a look at my chart here. this is the first time we've seen this selloff when it comes to u.s. stocks and selloffs since 2009. it we have seen the pervasiveness of this has been remarkable, 11 sectors declining. we haven't seen that underperformance since the month of the election, and that certainly is trickling through

when it comes to where asia is set up. it looks like a sea of red when it comes to equities. well, asn the red, as we look ahead to other markets. >> it strikes me that after such a big run inequities, that has to be a lot of the reason for the severity and breadth of this selloff so far. a lot of people have been looking over their shoulder going?, how looking overast -- their shoulder going, how long can it last? yvonne: i don't know. [laughter] it's a big question whether this is going to be a healthy correction. everyone is saying whether it is, at at one point are we going to see some of these people buying into these dips. that's going to be a key question. kathleen: it certainly is. yvonne: let's get first word news with ramy on a sense you.

>> theresa may has now confirmed the country will not attempt to stay in the eu customs union after brexit. that was a key demand of hardliners who have threatened to topple the prime minister. the anti-eu camp says that would negate plans to pursue bilateral trade deals around the world. coalition talks in germany broke up as negotiators tried to bridge gaps on labor laws and health care. nhancellor merkel's cdu wop agreements on rent, and broadband expansion, but disputes remain, including the spd's demands for tighter laws on worker contracts and a review of dr. pay. monday.ll resume on a confidential u.n. report says 200h korea made almost million dollars between january and september of last year from banned exports of coal, steel, and other commodities. a u.n. monitor says shipments to

china, malaysia, russia, and vietnam were made by ships using signals manipulation. "global times" says beijing is doing its part to enforce sanctions. initialsays it has evidence that the u.s. subsidizes a sector, and it will check imports for the beginning 2014. to the beginning of 2017 this comes after president trump slapped tariffs on solar panels and washing machines. samsung heir jay y lee is in court monday, appealing against his prison term for corruption. prosecutors are appealing for a longer-term. behind bars for at least 12 years, saying that would enforce the law.

global news 24 hours a day powered by more than 2700 journalists and analysts in over 180 countries, this is bloomberg. yvonne: let's get to your market open, of course talking about how we have seen red across the screen. david: stocks down, dollar up. bonds are also getting whacked as you look at early moves across the equity space. most notably, when you look at the currency space, the south korean won down 1% against the u.s. dollar. the current account balance, not as wide as expected. that is adding to reasons why you might want a short won at the moment. when you look at the equity space, when you see black on this board, that means the move statistically, the z score, is higher than what you would normally see for that index. a good example, new zealand is percent.

that is the biggest drop since the u.s. election in november. despite honda, for example, one , that's angainers earnings story, but this is what you are looking at, japan and south korea opening up. bottom of the heap if you look at the benchmarks in the asia-pacific. samsung, down about 3% at the moment. very quickly, let me check on the nikkei vix. we did have a spike in vol coming out of the u.s. we are watching a lot of these benchmarks at similar measures when things open up in hong kong and especially india, because that market on friday got smacked silly. we also want to watch amid this wave of risk aversion.

it.ne: great chart, i love as for india and getting smacked, no budget. i have to ask you, what is happening to the treasury? you have been watching market so long. what does it feel like to you, david? david: it makes me feel old [laughter] . -- feel old. [laughter] kathleen: you started in junior high. david: treasuries, a lot of people are getting in short positions. 10-year.t checking the not a lot of changes there. the 30-year is pushing up. there we go. this is the two and the 10. 69 tips on friday going into this morning. it's very early, but that is the reflection on the move up to the longer and, and perhaps we are getting bids on the shorter end of the treasury curve. this is starting to show up across the currency space.

traditionally, you would normally see -- we are aring the yield in australia versus the yield in the u.s. we are at three at the moment. yes, we are getting dollar weakness broadly, but on the other side of this, the aussie dollar is actually on the way down. we showed you the other chart, and that is dollar-positive against the aussie, 2.5% on the australian currency. kathleen: thank you so much. we look forward to seeing you back here keeping us up-to-date with the market action in asia as we see how traders respond to what happened in the u.s. profitaising its annual forecast to a record thanks to strong growth in the music and tv divisions. the company sees operating income at 6.5 billion dollars

while predicting four-year sales at $7.7 billion. the incoming ceo says he is pushing for more reforms. >> we have to maintain a sense of urgency and keep momentum on the good performance. i believe we have no time to be complacent, especially from the standpoint of global competitiveness. kathleen: let's bring in our bloomberg reporter. great to see you. also, how much is this a leadership story at sony when you look at these great results? so, i think, the a and the oldhit ceo, they worked a very close together. it's thanks to their action that sony is where it is now, $26 billion this year. that's why the change of management was taken well by the

markets. about 1.5% orup so. we've seen analysts say positive things about the change. the announcement lasted about 40 minutes, and i've been covering sony for three years. this was the most lighthearted and fun press conference i've seen yet. yoshida was side-by-side, laughing. i think people feel comfortable about the change. story, and irship think that leadership will stay in power. yvonne: it's kind of a double-team. one plays offense, one plays defense. what is coined to be the priority for the new ceo? it was a phenomenal quarter, it seems. this wasn't just the company's

focus, relying on growth in playstation anymore. . he has a lot of different things happening in each division. what is the future of iphone? apple is struggling with its issues. as apple falls and becomes less popular, sony has a lot of issues. they take a $1.5 billion write-down a week ago. they had a good movie, "jumanji." are they going to sell the division? ?re they going to keep it you how do you compete with disney? are you investing very heavily? with playstation 4 coming to an ps5 shaping up?

shida has to micromanage all these different things to keep the ship going. so far, the investor reaction is he can do it. he's been doing it for four years behind the scenes. right.ou should be all yvonne: certainly, some big shoes to fill for yoshida. our bloomberg news asia tech reporter, joining us from tokyo. janet yellen brought the curtain down on her time at the fed with disappointment and a warning for the markets. she said u.s. stocks and commercial real estate markets are high, but stock shorter's say they are in a bubble. let's talk more about the fed here real quick.

we talk about micromanagement at sony, but how much micromanagement is jay powell going to have to do, not just when it comes to inflation coming back in a big way, but also when it comes to financial conditions? >> absolutely right, yvonne. the economy seems to be in pretty good order. increasingly, there is the view that there is a worry of for the risk, and it might come from financial markets. we have really high real estate valuations. there's a sense of inflation ,ants to accelerate quickly then suddenly that might put pressure on financial markets. what would be spillover effect be? yvonne: she always reassures us that the financial stability of thes is important, but

thing about financial conditions, everybody's complaining because they were so easy and loose. it seems like sometimes in the past come if the stock market looks shaky, people choose the fed of not moving on rates. complicated corner. partly to him it will be determined how far and how long this equity selloff continues. >> absolutely. central banks are confident in what is happening in financial markets. they don't want to be seen as triggering volatility. hard tolen said, it's know how much a direct affect on the economy a stock market selloff would have. maybe the economy would be willing to bear the brunt of it. even if the fed tightens at the pace it is, there is plenty of liquidity in the global economy. the bank of japan is committed

to its powerful easing as subscribed. other central banks are only moving at a glacial pace in terms of raising broad benchmark interest rates. even if the fed does move after a -- faster and trigger global volatility, there is plenty at central banks run the world. kathleen: it is, at what point are they going to stop when it comes to tightening. r.b.i., the philippines, as well. what is going to be most interesting for you? >> it's a big week and an important week. we've had malaysia and south korea tighten rates. that has brought asia insync with global narratives of banks tightening. overall though, it would be interesting to hear the forward commentary from the central bankers. are they worried about inflation? are there signs inflation is taken off?

yvonne: they are more so signaling it is one and done. >> it will be interesting to see. we may need to move tighter here. what are the views on the weak dollar? what does that mean for asian policy? it will be interesting to get an update on their views on where we are going in the months ahead. yvonne: thank you, enda curran kong.g us here in hong we are going to continue our conversation on global monetary policy next. find out why reverend lee says the ecb will be one of the key drivers of rate normalization in 2018. kathleen: later in the show, -- asia is ae major growth outlook for airline manufacturers. we will return to the singapore airshow to find out how boeing is trying to take it of demand. this is bloomberg. ♪

kathleen: this is "daybreak

asia."i'm kathleen hays in new york. yvonne: i'm yvonne man in hong kong. asian futures, tumbling almost 11% -- 1%. let's get the view from sydney and raymond lee, kapstream capital portfolio manager and ahead of credit, joining us here this morning. welcome back to the show, of course. of course, it's been about the bond market. we've been talking about this for months now, but what do you think has shifted now that we have seen treasuries and that at 5%? raymond: i think treasuries were bound to go up in terms of yields. it hit a low of 2% or thereabouts in september. with global growth estimated by the imf at 3.9%, fundamentals u.s.,ly, not just in the

are headed in the right direction so you need a valuations and bonds to reflect that. to go up to 2.85% for the u.s., i think it's good for the markets, and if anything, it comes to yield curve, as well. if the fed is going to hike three times, you want the long end to move up. i think that is good for the market. yvonne: typically when we see the fed raising rates, we see the curve flattening, but now we have seen a bit of an unwind, which has been a pretty crowded trade. can we be surprised with a steeper yield curve? are the bond vigilantes going to come out in full force now? i think the yield curve might get a little bit steeper during the year. i think one thing to look out for is the ecb and boj. i don't think the markets are pricing in the potential for those long-term yields to move can, if they change their communication to reflect what they are seeing in the data

around gdp and unemployment. if they are becoming a little bit more hawkish, those bond yields will glow -- will go up in europe and japan. you might see a steeper yield curve, and i think that is good for the global economy. kathleen: what happens if inflation doesn't accelerate? yes, the overall wages went up 2.9% or 2.6% year over year, but if you are a line worker, you are flat at 2.4%. it seems like everybody is shooting first and watching for more data later. what if they are not signaling four rate hikes? do bonds stabilize -- stabalize? raymond: inflation is a key data point. i believe it was the highest wage growth since 2009. what we do need is continued data points in that direction.

they need to establish a trend, and if they can do that, it will be reflected in interest rate expectations. if you look at fundamental data points, they have created 17 million jobs since the recession. the market is getting tighter. supply and demand will get to a situation where all parts of the economy will eventually start to see some wage inflation. we have wage inflation stuck at 1.5% for two years. now it is ticking up to the high 2%'s. if we can sustain that come it will support hiking three or four times this year. kathleen: i want to get to some of your strategies. we have lots of central banks meeting in asia. we've got the reserve bank of australia and more. you've got solid growth and inflation, but the philippine peso, continuing to slide. many people are betting they will raise the rate. how are you fitting in the

philippines and australia bank moves into what you are doing in 2018 to make money? raymond: sure. fundamental growth is very strong. experts have been great. you've already seen it in bank malaysia.bank of in terms of the rba, we think they are slower compared to the other asian central banks. is general view is that abe not going to move up or down for the next three or four quarters. think the next move by the rba is probably going to be up as opposed to down given what they have said. what they want to see is unemployment ticked down by another 0.5%. if we get those two things in australia, you will see the rba move. yvonne: that aussie yield premium over treasury seems to be all but vanished, raymond.

is there a signal that this perhaps could start to invert, and could that be more declines for the aussie? i think you look at curve differentials between the aussie and the u.s., it is getting into areas sort of flat now. eventually, when the fed hikes, likely in march in my view and a couple times this year, you will see the short end go up above the australian short end rates, which hasn't happened in 10 years or so. rates and long aussie short u.s. rates because we think eventually those curves will crossover, and i think you will see that play out later in the year. yvonne: it is certainly going to get very interesting. raymond lee, kapstream head of credit, joining us live from sydney. don't forget our interactive tv function.catch up on some of the past interviews , dive into any of the bloomberg

functions we talk about -- that is on the right side of your screen -- plus, become part of the conversation. you can send me or kathleen a question for guests in our shows. this is for bloomberg subscribers. be sure to check it out. this is bloomberg. ♪

kathleen: a quick check on some of latest bloomberg business headlines. honda's guidance remains below anas estimates. has nine buys, 16 holds, and no sales. yvonne: yahoo japan raises its view for the year, listing operating profit forecasts to $1.7 billion, although that remains below estimates. the company cited active investment for its decision and released results for the three months through december. operating profit rose 2% to $480

million. coming up, seoul, south korea's high court rules today on jay y lee's prison sentence. we will be back. this is bloomberg. ♪