yvonne: i'm yvonne man, welcome to "daybreak: asia". the top stories this wednesday, looking at the markets, you're seen the market meltdown is a a bit, u.s. stocks recover with their best day since 2016. the dow fell and saw its biggest gain in two years. --wasn't all clear sailing before ending with a late session rally. from bloomberg headquarters, i am betty liu in new york and it is just after 6 p.m. on tuesday.

the disney tv business is in retreat and the studio awaits a comeback, and a new shutdown showdown as president trump says and get on, if it helps break the deadlock over immigration reform. ♪ yvonne: day two of the world capital symposium in the conversation has changed in the last 24 hours as the market meltdown is questioning whether this is some type of correction or if we are even close to a bear market come but we went to the worst a of the dow on record to the best day in 2016. how real is the rebound? volatility seems to be still here to stay. betty: that is right.

what is interesting is that last month, only a few weeks ago, the great, all of economic rights, talking about global secret nice growth and the upswing, and in the market said no, not so soon. delivered a reality check to anyone who seemed optimistic about what lies ahead. were firmly bulls in place in u.s. stocks and we saw the rebound, even though it was a volatile session. i want to get to romain bostick. we started off today in correction territory and straddled the line through gains of losses until week's want into this late day rally and the dow 2.3%,ed 567 points, up the best day in over two years. and the nasdaq up that should hand out

stocks went about their 50 day moving average. 80% of the dow is now the about the 200 day. -- above the 200 day. amazon, netflix, apple, micron technology, up. on the flipside, utilities liking the market -- lagging. moves --ome of the sitting out of this late day rally. there is a lot of rage over credit default protection. romaine: we see people taking a defensive position after these gyrations. you look at the indexes that we track and we had billions of dollars trade hands today, the

value -- volume was through the roof today, four times about the daily average. a lot of this is where been called is not that people are giving up on the credit market but rebalancing relative to some of the risks we have seen in the equity market, and that is spilling over to the bond and corporate market as well. keep in mind the index we have now on your screen is a high-yield -- those are doing worse, but we are seeing protection coming, a lot of volume coming to the contracts in the high-yield markets. lows for thet its year, and investors aren't anticipating more default, but it are telling us these gyrations are making them take a more precaution in these times. betty: romain, thank you so much. asiantake a look at how markets are trading right now starting in new zealand. you see the kinds at the open

with new zealand markets down 1%, the kiwi trading pretty much unchanged. trading in australia is just getting underway right now. futures inn australia showing a gain and it looks at we are carried that over from what you have seen in the u.s. but a trading unchanged, slight cell underneath the currency. we are counting down the open in japan and south korea in the next hour. ee nikkei futures , and the dollar recovering just a bit as well against the japanese currency. -- seanus now in sydney , help us make sense of what is

going on in the market. i know you mentioned in your notes there is opportunity here for select buying, but some might be saying is this too early? have we hit a bottom here? i think we are through the technical event in the moment, ,nd we saw that in volatilities and that is well documented and flowing into short volatility funds. that has unwound and we had an event there that we are still -- we are in it reasonable goingnment -- we are through the goldilocks. period. that has pressured the bond market and is not going away. we are still positive on some equities, but you want the ones that have cyclical earnings in resources, materials, industrials. we are a lot more cautious

around proxies, infrastructures, even tech stocks. that could be pressured as we move through this year. yvonne: you mentioned volatility, and i want to pull up a chart. it shows you what a difference only a few days makes. you've got investors fleeing not only short-term future etf's, but also presented by the blue bar, long-term as well. given that, is volatility essentially here to stay? is that the new normal for 2018? >> i think volatility is going to stay above record lows. we saw fixed trading at single -- vix.vels

cynicallyat we see is -- is signaling an end to that. the economy looks rocksolid, but volatility is not like the financial crisis are the europe area crisis where you had real -- we are a long way from seeing any downturn in the economy. it is quite the opposite. bond selling off will pressure some of that drive volatility. must have been well telegraphed expectations from the market shown. we have been expecting the fed to raise rates, and it has finally shown its had, and the jobless rate in the u.s. at 17 year lows, we knew wage gains were coming. why did that expectation when it hit reality have such a

violent reaction to that? >> there is a gap between expectation and seen that happen. just like at the market structure and where money is flowing, there's a lot flowing to systematic strategies, risk which, low volatility, isn't necessarily actively managed money. it is quite mechanical when you get a little bit of volatility. market structures said it the market was really poised with a spike in volatility. betty: so the select buying that you will do is where? >> into short duration, cyclical areas. your best inflation hedge from

risks -- the number one risk remains inflation. that is going to be one of the things driving inflation, -- materials, cyclicals, anything benefiting from global pmi's will do well, .onstruction stocks, all fit as well as select exposures to the market, some fund managers in areas that continue to benefit from ongoing global growth and strong earnings. much. sean, thank you so we have several high-profile guests coming up, from the goldman sachs conference in hong kong. and ceo harveynt schwartz joins us for an exclusive interview at 11:30 a.m. hong kong time.

that is after we speak to goldman equity chief strategist peter often heimer about his return volatility. don't miss those interviews right here on bloomberg television. in the meantime, first world news. >> president trump he would welcome another government shutdown if democrats continue to refuse his demands on immigration overhaul. areressional leaders negotiating to avoid another shutdown. the president spoke with bob enforcement officials to talk about and membership and undocumented immigrants, saying it contains loopholes. >> if we don't get rid of these loopholes, the tellers will be able to come into our country and continue to kill. memberse many getting -- gang members. a shutdown is worth it for our country, i would love to see a

shutdown if we don't get this taken care of. china is calling for talks over solar panel tariffs. china is asking washington to join confrontations. they want the opportunity for talks with the fact that organization members. china is home to one of the lord's -- world's largest solar makers. there are said to be close to raising $8 billion to finance a refinery and chemical plant in malaysia. the deal can be signed next month with hsbc, and mitsubishi usa among lenders who agreed to provide funds. the complex is part of a $27 million project that will come on stream in 2019.

potential penalties for money laundering has ended record profits. australia's largest lender has set aside quarter 50 u.s. dollars for fines -- $450 in fines. punt billionthe u.s. dollars, missing estimates of 4.1 billion. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. wille: still ahead, we head back to the singapore airshow and the mitsubishi aircraft in the struggles they have had to build japan's first passenger jet. betty: up next, more on threat oftrump's another shutdown. this is bloomberg. ♪

yvonne: this is daybreak asia. i am betty liu here new york, and senate leaders are closing in on a budget deal on domestic spending that is going to break the cycle of temporary funding bills get the government operating. president trump says without immigration legislation, it is time for a government shutdown. the house debating right now, about the vote on their temporary stopgap funding bills. you can see the debate is continuing on the washington house floor. --ning us is congress editor even though this passes the stopgap funding bill, it is like going to survive the senate,

right? >> know, either the senate comes up with a budget plan, and a budget plan, and they have been negotiating with house leadership so they would get it if they are able to replace the temporary spending with the larger budget deal to continue funding the rest of the fiscal year. they they are not done, can take the house legislation and strip out the defense houseng portion of the and senate back with a few other items and forced the house to vote again. either way there's going to be a second vote coming wednesday or thursday. the president's comments about the let's do a shutdown if the democrats can't compromise when it comes to his demand for immigration, how is that complicating everything now? >> if they are able to get this budget deal, they can take that weapon out of his hands, unless

he is willing to veto the entire budget. but they're not going to be including anything on immigration in this deal as it is developing right now. this is separate from the immigration deal. the senate will begin debating andr on immigration package people are talking now about a smaller package that will deal the young immigrants who came here as children, and for trump's border wall. then it will be sent to the house, and it is unclear if there will be in votes from republicans to pass, but if it did it will go to the president's desk and he can either veto it or sign it. will not be able to veto it and trigger a shutdown and democrats are not going to be willing to go to the wall on spending to close down the government. what are the chances were

going to see a repeat of what happened last month where the government shutdown if only for a few days? >> by now the chances of that are not zero but they diminished greatly. either republicans or democrats in either chamber are interested in doing a shutdown. happen by accident if they're not able to get everything together and vote on time. but there are no threats issued from either side that they are going to hold up the spending bill, whether temporary or a larger deal for the rest of the fiscal year in order to get some concessions on other issues, like immigration. , doubt be the big hangup, immigration --. betty: joe, will be watching the house vote. the house still debating the bill. up next, scandals hit the bank's

bottom line and will go through the numbers next. this is bloomberg. ♪

yvonne: this is daybreak asia. ofty: the latest chapter uber's legal woes which saw travis kalanick on the witness stand. the company is fighting claims from rival waymo that was driven from former co to steal critical technology for a driverless car. since we've heard from uber's troubles, uber tech reporter has been following this in san francisco. do how dido travis travis do? >> pretty well. there was a lot of yes, you

know, and he wasn't allowed to get much beyond that. he has been a good job so far, he had a fun read on jam sessions and compared it to a jazz in psalm ball, so he had some fun. -- jazztraightforward ensemble. what was the trickiest part of the parsed that seemed most at risk? >> notes from conversations he's had, including one that references uber's desire to get some ip or intellectual property as part of a deal with anthony levandowski of a potential acquisition of auto, and that is the core of this case. they went into this deal in order to acquire google's trade secrets. that is the key question and

uber's strong desire to acquire laser technology is really coming through in the case. that is another issue that waymo needs to prove. another issue was the hacking incident that we did see and uber's failure to disclose that. we heard from the executive talking about how they were defending this bug program. on one coast, uber is fighting off waymo, and another there are sending an executive to testify on the hack. they have a challenging position because on one hand they want to defend bug bounty programs as a institution, that i did you could pay white hat hackers to fight vulnerabilities. at the same time they want to admit that they mishandled the

hack of 57 million accounts and it wasn't a bug county program, and that has been their line, defending the institution while acknowledging they didn't handle the hack as they should have. never a dull moment at the uber. let's take a quick check of the latest business flash headlines. reports in china say apple has agreed to build a second tech center in mongolia. -- 30 sayannouncement the center is expected to come online in 2020 and will offer icloud services to users in china. the first data center is being built in the southwestern province. single polar and malaysia will create a link -- the news is

announced -- singapore and malaysia what tech markets of more than a trillion dollars in value and 1600 companies. theey says the creator of hbo series game of thrones has a new trilogy of star wars movies, separate from the current trilogy already in development. newat least seven star wars fis are in the works, and the last film hauled in more than $1.3 billion worldwide. commonwealth bank will be the focus after australia's largest bank announced lower profits -- shares right now are seeing slightly in the positive territory here, up for tents of 1%.

today dive into these earnings, was the takeaway? >> the earnings are weaker than -- we haddown 1.9% been expecting a 6% rise, but what hit commonwealth bank where provisions for this lawsuit they are facing. commonwealth bank accused of more than 50,000 reaches of money laundering and counterterrorism losses with the use of atm's. they're sitting at half $1 billion -- 375 million a potential fines, and regulatory costs. the bank said in a statement that he believe the level of penalty that courts may impose upon. provisions fore financial damage, but what about hits toir reputation -- their reputation?

>> they are trying to fix the benchmarks and other scandals as well, but it doesn't seem to affect the bottom line is this is a record for commonwealth bank. betty: much more ahead on the results. ♪

>> 7:00 a.m. tuesday morning and kuala lumpur. we are covering the symposium in malaysia. now just 30 minutes away. is six: 30ne, it p.m. monday evening in new york, where the bulls had a little bit more to cheer. quitep up almost 2%, not making up for the losses we saw in the last two sessions. -- few sessions. thanks, betty. bitcoin gained for the first time in six days, snapping a losing streak that pushed losses

to $.5 trillion. the beating cryptocurrency was helped by the return of risk appetite. the agency already has the regulatory oversight needed for enforcement, says a chairman. clayton told a congressional hearing that all ico's are essentially security sales. >> the funny thing about these currencies is they only work if .hey are integrated they only work for their purported purpose if they are integrated with the financial system. it necessarily touches on all of our regulation. jessica: chancellor merkel is warning of painful compromises on both sides as coalition talks between her cdu blog and the social democrats enters the last stretch. they exceeded the weekend deadline. deep divisions remaining on labor regulation and health insurance. all sides stress they aim to reach agreement this time. at least two people were killed and 200 more injured in an earthquake in taiwan.

the ground floor collapsed, causing the deaths of two employees through the magnitude 20 kilometersuck off the eastern coast and came two years after a similar powerful quake killed 115 people in southern taiwan. higheste, hong kong's court has overturned prison sentences for three activists convicted for their part in a protest. a panel of five judges sided with them in their appeal against jail terms from lawful assembly. the court of final appeals ruling was an unexpected victory, but activists fear tougher laws will be introduced. d a major milestone with the successful first launch of its newest rocket. it will allow spacex to handle bigger payload such as satellites and missions for national security.

elon musk has said the launch success.onsidered a global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than on hundred 20 countries. i am jessica summers. this is bloomberg. -- 120 countries. i am jessica summers. this is bloomberg. betty: let me just take over for a moment, because we are seeing the house voting right now on that stock gap funding measure that will fund the government beyond february 8. we will at least keep the government-funded until march 23rd, but as we just heard a little while ago, this measure is very unlikely going to survive the senate, which has their own budget bill, which are preparing their own larger budget bill. as we mentioned, the vote is underway in the house. we have got about a little over 13 minutes left, and by all

measures, with this bill, it's very likely going to pass the house. yvonne. still a lot of looming questions, particularly with the debt ceiling as well. we heard mnuchin say he wants it to be done by the end of the month. that could be a tough sell at this point. we are counting down the market open in tokyo and seoul. the latest with sophie kamaruddin. i guess a big question is among asia is when we are watching to see this bounce on wall street, if it can be sustained. sophie: whether or not we might see that sustaining factor from the bounce on wall street, that remains to be in question. whether or not we can get a recovery after that pullback is just a healthy correction. this after a two-day selloff that left most of asia awash in red, as you can see on the map. it pushed global stocks into oversold territory. when you take a look at the mood in australia, they snapped a two-day decline.

that might prevail. when we have japan equity, some of them are curtailing their selloff --ven that he walked off his own optimism, saying it will take longer for the nikkei 225 to hit $25,000. central banks are noted after this global route triggered sharp outflows. since novembere 2016. the withdrawal with the largest countries with the brunt felt in indonesia and ireland. the outflows -- and thailand. we are going to get a sense of that when we have the r.b.i. as well as the philippine central bank due to announce policy decisions. the r.b.i. is expected to sound more cautious this wednesday. expect it to hold on rates as part of the re-focus on supporting growth. in australia, following the

rbi's decision, we are seeing the mood optimistic during let's pull up the board to show you some of the early movers. lithium minors leading gains in sydney. resources and his preferredg playbook. commonwealth bank rising for the first day in three after missing estimates for the first half. taking a look at japan, we have earnings watch, watching for reaction from toyota's profit beat. it was set to outperform. we're looking out for japan after forecasting flat annual profit. that is something to keep an eye on at the open. betty: thank you so much, sophie kamaruddin. she mentioned trying not to catch that falling knife. disney jumping in late trade after beating estimates. me parks that

boosted the numbers. reallythe theme parks is what drove disney's earnings. chris: this has become a recurring trend now. four big divisions, and particularly this quarter, consumer products with a film studio. they had a new star wars movie coming out. it is that theme parks again. betty: speaking about international, a lot of focus has been on the shanghai park. how is that doing? >> very well. they said as many as 60,000 -- 68,000one day came people came in one day to the park. they announced new price increases. they are doing the three-tier pricing they have done in the states, when you have to pay more on the busiest days. they are pretty happy with shanghai. still a very tough

stretch of, you know, quarters here, even when it comes to this business, which is still tv at espn. where does this leave us when it comes to this fox deal? chris: it sort of underscore is what they are trying to do with fox because, once again, espn was the profit driver for years. it had a down quarter again. tv business overall, flattish. they are losing subscribers in the traditional cable package. to iger says he really needs get that fox content so he can put it out on these new streaming services they are launching in the coming years. yvonne: chris, thank you. bloomberg's l.a. bureau chief joining us on those earnings for disney. moving on, talking about snap. surging in after-hours trade.

72% jump.a topping analyst estimates for the first time since going public last year. let's bring in sarah frier, joining us from san francisco right now. sarah, tell us what was really driving such a big beat for the quarter. all,: first of expectations were extremely low. this company had missed its first three quarters as a public company. this was their chance to prove everyone wrong, and they did. they put out revenue that blew past estimates fueled by this switch to a different kind of advertising system, a more automatic programmatic advertising system that brings more advertisers and makes it easier for them to buy on the platform, so we saw some success. their userncreased growth, which is another factor that people were very concerned about last year. betty: sarah, is this sustainable though? are we talking about the short-term effect here? sarah: it's unclear.

it's still a very young, volatile company. they have had some management turnover. they are working on a major redesign of their application. in the words of steagall, it will separate the social from the media. they will be in a separate part of the app from the stuff that comes from publishers and celebrities. there is a lot of uncertainty in the future for snap, but at least the advertising system seems to be working. and at least some wall street investors are saying they can now return to their original thesis on snap, which is that this is a very inventive company that has captured the attention young audience. maybe they have the potential to grab a slice of the advertising market that is currently dominated by facebook and google. betty: thinking about facebook, how much of this has to do with some of the troubles facing facebook lately?

sarah: i think facebook, in terms of its relationship with snap, has actually taken advantage of a lot of the smaller companies' inventions. they put stories -- this tool that allows you to post about your day that disappears up to 20 four hours, they have added that to all of their different platforms. when it comes to a relationship with snap, facebook is a formidable competitor, not afraid to copy the things that snap gets right. yes, there is a little bit of tension in the markets with facebook right now, the company doing really well financially, but there is concern about the impact on society. snap is trying to benefit from that concern. we did not hear facebook come off on this earnings call as much as we had in the past. betty: thank you so much. our bloomberg technology reporter in san francisco. up next, we are off to the singapore airshow to ask when mitsubishi's much anticipated

new plane is going to take off. this is bloomberg. ♪

yvonne: this is "daybreak asia." i am yvonne man in kuala lumpur. betty: softbank reporting second-quarter earnings later wednesday with masayoshi son stepping up efforts. .oftbank softbank is trading at half the value of its holdings, which top $180 billion and include investments in alibaba, you would japan, and -- 138 billion dollars, far more than softbank's own the market value. shares of gilead are lower in extended trade. the biopharma company seized up to $20 billion of product sales with growth margins of up to

87%. fourth-quarter adjusted eps topping the average estimate at $1.78. revenue beating the street at $5.95 billion. shazame takeover of shoul may run afoul of regulators. apple would be ordered to file the deal with antitrust authorities in brussels. having almost missed facebook's acquisition of whatsapp, they want to change the rules on takeovers of companies that make no money but hold valuable intellectual property. suffered any setback last month when a u.s. carrier scrapped an order for 40 jets. the first order cancellation for the mitsubishi regional jet follows repeated delays and has pushed back the first delivery mid 2020.rs to let's cross over to the singapore airshow where haslinda amin is standing by with the

companies sales and marketing vp. haslinda. haslinda: yvonne, we are talking about the emaar j -- mrj. it does seem like it is coming online. good to have you with us. was meant to take delivery in 2013. what is the status. testingve conducted very smoothly and we have passed the midpoint. more than 1700 flight hours. the delivery is in mid 2020. haslinda: what is driving this optimism considering the issues you have had so far? >> we are conducting flight testing. the airplane is getting more and more mature and also we design airplanes. haslinda: at this particular

airshow, we have not seen any mockup plane or the real plane. what is the purpose of this plane? how much interest are you seeing? yugo: this is a great opportunity to meet all the customers in the asia-pacific region. we have explained the current situation. haslinda: are you seeing any interest? yugo: sure. haslinda: where from? yugo: from many potential customers in the asia-pacific region. we have got very strong interest from the potential customers. haslinda: it is just the asian customers? yugo: not only asian customers. because of the location, a majority of the customers are from the asia-pacific region. haslinda: you are playing with the likes of established players, bombardier, for example. this is supposed to be a mixed generation aircraft. yugo: mrj is only next-generation aircraft which was designed from the --

we optimize everything including the engine and airframe. so this is ours. haslinda: despite that, you have seen some cancellations. is that impacting your profitability? are you expecting more cancellations because of the delay? yugo: no, unfortunately, recently, we agreed with a customer that cancellation will be an option for both parties. because they changed their business. they sold her business to another company and returned businessense -- their to another company and returned their license to the faa in the u.s. this is not because of our situation. haslinda: you're not affecting further cancellations? yugo: no. haslinda: what number of airplanes -- how many orders do you need to make the project profitable? yugo: we are targeting to sell

more than 1000 airplanes in the timeline of the program life. this is very long-term, obviously. we are committed to this business long term. yugo: haslinda: what do haslinda: you see as the biggest challenge for you in getting the mrj to fruition? almost think this is an brand-new product. we have a lot of challenges in development. we are overcoming many challenges. a lot of our interviewees have expressed interest in the chinese market because it has great potential. what are you looking at? long-term, the chinese have a huge potential. china is one of the biggest markets in the asia-pacific region. haslinda: are you in talks? yugo: potentially, yes. in the near term, we are focused

on other countries in the asia-pacific. week,da: throughout the we have been talking about how the market has crashed. the declines we have been seeing over the last few days to impact investor sentiment and customer sentiment? yugo: oh, -- haslinda: the decline in the equity markets. yugo: um -- haslinda: do you expect it to have an impact? yugo: i don't think so. i don't think so. business ins see the long term, not the near term. in any near-term event, it doesn't really affect their long-term business field. haslinda: all right. yugo fukuhara, we thank you for your insights. it's quite confident that the aircraft will come to fruition and will be produced.

it is set to get its delivery. anchor: haslinda, thank you so much. haslinda amin with yugo fukuhara of mitsubishi aircraft. as we mentioned, the house has voted on the stopgap funding bill, and it looks to be they have passed -- three democrats have crossed over. have voted on this and finalized the tally, they will be sending this over to the senate, although, as you have been mentioning, very unlikely to survive a senate vote. forget, our interactive tv function, tv . catch usatch us live, on past interviews, and dive into any securities or bloomberg functions that we talk about. this is bloomberg. ♪

yvonne: this is "daybreak asia."

i am yvonne man in kuala lumpur. i am betty liu in new york. voting has concluded and they do the the votes to pass funding for the defense department, enough to fund another year. this is going to keep the government-funded until mid-march, march 23. the final vote, 242 to pass this bill and send it over to the senate during the senate working on their own budget bill. the president threatening a government shutdown if he does not get immigration reform in place. all right. we are watching the events in washington. the international monetary fund has warned that the number one threat to indonesia's economy is the risk of spikes and financial volatility. we have seen a lot of that lately. bloomberg's economics editor, kathleen hays, asked the imf mission chiefs how resilient indonesia is to market turbulence. now is notappening

really new. we have had episodes of financial turbulence in the last two years after the u.s. elections, when china changed afterchange rate regime the taper tantrum, and so, this is not something that is new. doneesia has in the past very well in facing these challenges. they put out a report in the last couple of days slumpg about the biggest out of emerging markets since the 2016 presidential election. they are tracking -- they registered flows turning negative on january 30. indonesia is not one of the countries they mentioned that is most affected by this. does this make this concern, this risk, even though indonesia has dealt well with it in the past, something you are monitoring, and you expect the

government to monitor as well. luis: this is something that needs to be monitored closely, and the authorities need to remain vigilant. things can change very quickly. dimension,tructural when we meet with foreign investors, and we do that , the impression we get is that nonresident investors have discovered indonesia in recent years, especially after the global financial crisis, and they are seeking more exposure to the country. obviously, this is not something that is consistent. there are episodes of volatility, but overall, indonesia has become an attractive place for foreign investors, mainly to the government bond market, and also to equities. but we don't expect a large reversal that is sustained, but obviously, the road can be bumpy.

anchor: all right, kathleen here with us. of course, great interview. certainly interesting things. what else did he say about the volatility and how that may or may not impact things? kathleen: they may do more. he said as long as they move gradually, their communication remains good, it is an anticipated move. asked him about growth because they are looking for 3% gdp growth for indonesia in 2018. the government's 5.4%. the government -- president said a 7% growth target. he said if they make needed reform on taxes, on infrastructure spending, they could actually boost their potential to 6.5%, and that is not too far from the president's 7%. certainly watching all of this altered kathleen, thank you so much. kathleen hays, our global economics and the editor. just a reminder, the house has passed the stopgap funding bill.

the senate.spill to the voting has just finished in washington. this is bloomberg. ♪

yvonne: 8:00 a.m. here in hong kong. we are live in quality import -- we're live in kuala lumpur. set to recover after a rout rebound on wall street. the dow had its biggest gain in two years. plain sailing. u.s. equities at soanya no fewer than a dozen times before ending with a late session rally. betty: from bloomberg's global headquarters, i am betty liu. it is just after 7:00 p.m. tuesday. general motors rallies the most in five years after shipping

fewer vehicles. but they were more expensive models. a new government shutdown showdown. president trump says, bring it on, if it helps end the deadlock on immigration reform. yvonne: we have been talking about the markets, topsy-turvy on the wall street session. the key question, is this a pause and bounceback right now? given where volatility is at the moment, yes, we have come down quite a bit. could we see more of these routes throughout 2018? betty: we had so many investors, analysts talking about a correction on the way. boy, did we certainly get a correction. as expected, the house has voted to fund it the government

through march 23. they just passed the stopgap funding measure. and to fund the defense department through the full fiscal year, adding to the already ballooning of the deficit. the senate has to wrestle with their own budget bill. amidst this, president trump threatening a government shutdown, saying, let's have it in order to get immigration reform through. we will watch headlines from washington. asare watching the markets major markets come online. sophie kamaruddin has more. japanese markets entered correction territory tuesday we are seeing a rebound at the open for stocks in tokyo, both the nikkei to do five and --opix -- and topix gaining 2.25%.

with its stocks up, we do have the yanis lighting a second day as demand for haven assets are dropping amidst the rebound. the question is whether we will -- if the meltdown is finished, how much can be recovered after the recent triggered up flows in asia, indonesia and thailand? futures.ck u.s. after the house had a stopgap bill to fund the government, u.s. futures slightly lower. futures falling a second day, but studying. -- steadying. more, talk's get more about volatility. it seems it has come back with a vengeance. is au think the vix

leading or lagging indicator of where the markets are going? is a some respects it lagging indicator because the vix is just telling you the temperature of the market at that particular time. there has been some exaggeration in the moves for the vix. etf's, they had to be unwound because the movements were so large. and indices short the vix. you have people benching on the fact the volatility will stay low. roosts coming home to because it has been painful. there has been a big clean out in the last couple days. you have a big chunk of people wiped out in the market, who traditionally would be sellers of volatility. if anything, that means in the usedg period, we will get to quick spikes in the market because we do not have some of

these people around to smooth of the swings. to,ill have to get used overall volatility will rise. which is ironic because the vix products got busted. yvonne: that certainly is the case. it was really selling the volatility. not sure how that will change the dynamics now. leverageduestion if products should be regulated more. mark: yes, of course. after a major event when people lose money there is clamor for regulators to come in and do something about it. we saw a lot of that after 2008, 2009. that may be the case, there may be pressure to do that. at the end of the day, what is risky is retail investors getting involved in sophisticated products, which the czar. anything doing with volatility

is the domain of professional investors. there is always a risk they can go badly wrong. they could bring regulations and but all that will happen is somebody won't create -- somebody will create a product that is similar. the risk of a blowup in the future is just as high. betty: how fiercely should investors be factoring in a return of inflation with a vengeance, perhaps? that is definitely something to take into account. the wage numbers we have seen in the united states are beginning to show that. we had a considerable tightening in monetary policy. now we have heard mr. jay powell, the new fed chairman, will have his first address to congress on the 28th of february. a lot of people will look at the cumbre station to american politicians, looking for clues as to where he stands on the

outlook of inflation, and the number of rate hikes the fed might do. that is still a couple weeks away. there could be a lot of movement in the market before that. a lot of investors want to know, where does the vix stand with? inflation -- the vix stand with inflation? maybe they are behind the curve. there are a lot of questions to be asked. mr. powell i am sure will get those questions from the politicians as well. betty: what should we be watching in china markets today? mark: we will be looking to see whether the funds that have been flowing will still increase or whether retailer -- retail investors are too shocked and just want to get out of the market. betty: stay for a moment, i want to bring in a guest from sydney, the chief market strategist,

mike mccarthy. you are looking at this correction we have seen in the they could saying, become a market disaster in 2018. why? i think -- betty: go ahead, mike. mike: sorry. yes, certainly there are concerns. we saw three different principles. one is an endogenous market event, that is a panic. the potential for panic is always there in markets. but the call mean for markets overnight shows less chance of that happening. we are seeing a fairly rational response to friday's session. that does not mean the markets cannot go lower, they likely will. the reality is, the pullback we have seen in valuations and the pressure that was putting on markets, it would in fact be a

further positive development if we were to see lower levels, particularly for u.s. shares. ironically it has lower the risk of a market event. risks, an outbreak of inflation or geopolitical risk, remain. that it has helped investors giving martin's a lower risk profile. betty: certainly a lot of anxiety. it comes to roost tonight. i think we survived it for the moment. you mentioned u.s. shares are be healthier if we got even more of a correction. you are looking for the s&p to reach 2400? mike: yes, i am. 8% to 10% below where we have seen markets treading in the last 24 hour period. a rising interest rate environment means the expansion we have seen is less sustainable. if we were to maintain those,

the risks would have increased incrementally as the bond market continues to sell off. what we need to see is a reprice, in a high interest rate environment. that is what we're seeing. relative to bond rates, it is a rule of thumb. there are obviously many factors to take into consideration. if we think of the u.s. bonds around that 3% mark, holding at that inflection point, we would like to see an s&p 500 market than 16at 15.5, rather we are looking at at the moment. it does give room for adjustment on the fundamentals. that 2400 level is not only in line with previous support, but would also make a long-term uptrend line. we have a scenario where we can have a further healthy pullback that is significant. but at the same time maintained

out -- positive outlook, reflecting the underlying fundamentals. mark.mike, this is while we see volatility in the equity markets, the major equities and commodities have been relatively stable. do you think there is a risk now that it will transfer to other asset classes like fx and commodities? mike: it seems very likely. certainly oil markets have been the most volatile of 2017. the moves we have seen over the last sessions continuing that session. all markets appear to have picked up some volatility. gold remains at a surprising pace. there is potential if there is confidence in what we have seen, a lot of risk for equity investors of rs the globe -- investors across the globe. we are watching the relationship

between the yen and the nikkei very closely. we will see that spread across commodity markets. say the yen is still one of the most important currencies to look at in terms of, if this is a big risk aversion event, will people still pile into the yen, or will the swiss franc be another they follow? mike: i think they are both likely candidates. how market street the u.s. dollar in the event of further panic will be one of the keys to the performance we see. some gloss has come off the idea the u.s. dollar is a safe haven currency, especially as the risk markets are emanating from the u.s. yes, i think the yen will increase in importance. the swiss franc boys be a safe haven, particularly for europeans. i do think of the yen will increase in performance if we

see declines in equity markets around the globe. betty: speaking of safe havens, we're looking at currency safe havens. but what about the equity markets? are lookingf you for safety, you buy into european equities since they are cheaper than their u.s. counterparts. mike: i would argue there is a very good reason for those european peers to be cheaper. we have seen growth in the last 12 months, admittedly coming from low basis. nonetheless, the structural rigidity and the potential corruptions coming from the brexit and political movements within key nations in europe to get to those levels are not sustainable. the valuations we are seeing in equity markets reflect those heightened risks for european economies. i think it is reasonable, i

think the dax is overpriced at the moment. markets may stretch, despite the fact they are at a relative discount to other global markets. betty: mike, thank you so much, mike mccarthy, cmc market strategist. and bloomberg's mark cranfield. let's get the first word news with jessica summers for more. jessica: the house has passed a stopgap spending bill to fund the u.s. government until march 23. the president says he would welcome another government shutdown if the democrats continue to refuse his demands for immigration overhaul. the president spoke as he met discuss enforcement to immigration. pres. trump: if we don't change the legislation, we don't get rid of these loopholes where could -- where killers like to get into our country, gang

members -- we were just talking about ms-13. if we don't change it, let's do a shutdown. it is worth it for our country. i would like to see a shutdown if we do not get this taken care of. meanwhile, china calling for talks over solar panel tariffs. beijing has a substantial interest in issue as an exporter and his acts it -- and is asking washington to join consultations. they would require the u.s. to provide opportunities for talks. china is home to some of the world's largest solar makers. saudi aramco and petrona close to raising $8 billion for a refinery and chemical plant in eurasia. the loan deal could be done next month. bought --ir b&b para

mitsubishi tod fund. potential penalties for money laundering have ended ofmonwealth bank stream's record profit. they have set aside foreign to $55 million for fines. they face accusations of breaching money laundering laws more than 50,000 times. cash profits fell to $3.8 billion, missing the average estimate of $4.1 billion. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am just the summers -- i am jessica summers, this is bloomberg. ♪ yvonne: we ask why they signed ofto the u.n. principles

responsible investment. we are at the symposium, in about 20 minutes. betty: another temporary budget deal in washington, the house voting to pass their stopgap funding bill. the latest in this drawnout debate. this is bloomberg. ♪

♪ yvonne: this is "daybreak asia," i am yvonne man in kuala lumpur. in newand i am betty liu york. washington has averted another shutdown, for now. a stopgap measure to fund the government through march 23. they are working to raise the cap on domestic spending and stop the cycle of temporary funding bills. trump says without immigration legislation, it is time for a government shutdown. jodi, as expected, the house passed. but what is it looking like now? >> the senate will have to come

up with a deal. it looks like they have a deal. the house bill extended government funding through march 23, a temporary spending bill, since the new fiscal year started october 1. what is interesting, it has a years worth of spending for the pentagon. in the senate, they are not also to take that without trying to increase to mystic spending. there will be back-and-forth. but it looks like both sides are trying to avert a shutdown, which happened the last time this occurred. england by is now the president himself, he seems to want to basically play a game of chicken with that the democrats over the immigration issue and overspending. surroundingssues immigration, outline them for us. the reason the democrats

were not willing to go for the last spending bill when there was a three-day government shutdown was because they viewed thehis immigration issue, ability for the so-called dreamers, these young come undocumented workers brought to the uss children, they viewed it is very important for there to be legislation that protected them from deportation. since that occurred, the government -- president has come up with his own proposal for the dreamers. but it does not allow extended family members and the country and would require additional border funding. he is trying to get ahead of the democrats on this issue and basically say, i have a plan, go for mike -- go for my plan. and if you do not, you are shutting the government down. there is political capital to be raised by the president for trying to blame this on the democrats.

the democrats have to either come up with their own plan or debate this with the president because they brought up the issue in the first place. it is unlikely to come to a shutdown at this point because both sides agree they need to fund. yvonne: as we have been talking about, leading to the midterm can we actually afford democrats and republicans to go through another shutdown? how politically costly was the last one? jodi: neither side -- the congressional republicans or democrats -- want to shut down. they got blamed for the last one because the republicans claimed both houses. the democrats were part of this in pushing for an immigration plan. both sides stand to lose. betty: we will leave it there, jodi schneider in hong kong. you can get a roundup of stories to get your day going. bloomberg subscribers can go to dayb on their terminals.

it is also available on mobile. this is bloomberg. ♪

♪ general motors rallied the most after beating estimates for the fourth quarter. it g.m. hosted a record $2.9 billion operating profit. in north america, profits rose by double digits. volume slid by double digits, as well. inocencioplain, ramy at the wall with the bloomberg chart you need to know. ramy: it is a little bit of a paradox when you see what is happening, the share price, the volumes are down. one thing that is important, the cost. the cost is rising among the suv portion. g #btv 559 does illustrate this well. look at the price rise in the

past quarter, up by $3000. similar for that chevrolet traverse, up by $4000. also for the equinox. while the costs are rising and u.s. consumers are ready to pay those, they are also buying them in more orders. by chevrolet equinox is up $7,000 or so. the chevrolet traverse is rising $3000 or so, relative to the year before. it is not just the cost, the people saying, we are in it for not the sedans, but the bigger cars. which has been the same storyline we have been talking about the past year. looking to asia, toyota reporting their earnings after the tokyo closed. reporting a $3.1 billion operating profit that beat gd -- beat gm. ramy: let's hop into the

bloomberg terminal on my left hand side. the yen is in yellow. as the yen goes, so has the stock price for toyota. the ups and downs here. 113yen has been on average to the dollar. that is higher than the 109. latering to think about, this year at some analysts are thinking 105 to the dollar are happening and i could definitely weigh on the stock price. it back to you. betty: thank you so much. we're back live to the world capital market symposium in kuala lumpur with our exclusive interview. you don't want to miss that interview. how are they reacting to the markets from what we have seen over the last several sessions? this is bloomberg. ♪

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♪ a.m. int is 8:30 singapore. a warm day in the lion city. half an hour away from the open of trading in singapore. we closed trading in new york much higher, the bulls back in place. i am betty liu in new york. you're watching "daybreak asia." the markets are rebounding and asia in tandem with what we saw in the u.s. the nikkei 225 up about 3% at this point. let's get to first word news with jessica summers. tech, consumer and material stocks helped u.s. stocks to their best day in more than here.

as markets fell from eight today rout that went global. the s&p 500 index rose the most, while the dow jones surged the most in two years. treasury yields swung the for measuring higher, while the dollar declined after two days of gains. bitcoin gained for the first time in six days, snapping a losing streak that pushed overall losses in digital currencies to half $1 trillion. the leading cryptocurrency was helped by the return of risk appetite. they already have the regulatory oversight needed for enforcement. jay clayton told a congressional s arettee that all ico' security failed. >> they only work for their purported purpose if are integrated with the financial system. therefore, in necessarily touches on all legislation.

jessica: at least two people killed and more injured in a powerful earthquake in taiwan. the ground floor of the marshall hotel collapsed, causing the death of two employees. it struck late tuesday about 20 kilometers off the eastern coast, exactly two years after a similar powerful earthquake killed 115 people in southern taiwan. higheste, hong kong's court overturned prison sentences for three activists convicted for their part in the 2014 democracy protest. a panel of five judges sided with them. in their appeal for jail terms. it was an unexpected victory. activists feared tougher laws made the introduced to control legislation -- demonstration. an important milestone with a successful launch. it will allow spacex to handle bigger payloads such as commercial satellites.

elon musk said the launch will if theidered a success falcon heavy did not explode after liftoff. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. ♪ betty: thank you so much. quite a rebound we are seeing in asia following rebound in the u.s. volatility is front and center. sophie kamaruddin with more. sophie: we have to wonder if it is a return to volatility after a calm 2017. if you look at -- the nikkei 225 rising almost 3%. the topix rising the most in 15 months. the yen gaining ground, but holding on to its today loss. , korean shares its a

three day drop. the won, strengthening the first time in five days. the government says it will take stabilization efforts if needed. in sydney, stocks hold a two-day drop. the aussie dollar is under pressure as it gets sold against the kiwi, following robust jobs data. the kiwi dollar under pressure this morning. we will need the rbnz to take a hawkish tone. stocks in wellington the slide after the long weekend, following the correction we have seen in recent days. i would like to look at the bond of, looking mixed this morning. we do have kiwi debt rising after the latest eco-data. halting ark crude a three-day decline that met expectations u.s. stockpiles will fall again. gold is recovering, up 0.2%. let's close the board to check

early movers. most, it is inhe the semiconductor business. galaxy resources rising the most in september. sk hynix earlier jumped over 5%. tech stocks are finding a little bit of favor this morning. it really has been quite interesting, here at the world capital markets symposium. the perspective from southeast fundamentals are strong, we have seen robust growth. given the valuations are quite cheap compared to what we have seen in the u.s.. could still serve as a safety given. who better to talk about this second-biggestr

asset fund. i am happy to be joined by the ceo in kl. thank you for joining us. >> thank you for having me here. yvonne: a violent drawdown, but it seems things are changing. what is the takeaway? >> global fundamentals are still pretty good. growth is looking higher compared to previous years. for that region, corporate's will be able to support valuations in the market and the recent sell down was probably just a correction, the result of a rally. time. short a yvonne: how active is kwap going in and out of investments? are you sticking to your strategy? >> we are, very actively. last year onwards we were very

focused [indiscernible] when you are focusing on return on investment, you have to do a little realization of your profit and try to keep a very active trading policy on the board. we met our target. our target was 5.5%. and we beat 5.76%. it reflected how active we were. yvonne: you are quite confident you will be returning assumptions, given volatility? >> volatility is an opportunity for creating. we think we will be able to achieve. yvonne: at the time you're trying to tweak your investment strategy, looking toward broad, overseas investments.

tech has been an interesting space for you. you invested into uber. our valuations still interesting for you to continue these tech deals? or with of the meltdown we have come down and it. >> we are a long-term investor. we felt valuations are still positive, because of the potential for further expansion. putting bigeally money and. we're just testing waters. u.s. dollars.n washe last evaluation, it $60 billion. we ok with a that investment. we are also invested in venture capital. 100he moment it is close to

billion u.s. dollars. it is a very diverse investment. we feel because of the diversification there is risk speculation as well. [indiscernible] yvonne: sustainable investing is a theme here. how much are you looking at in terms of kwap? >> kwap stopped it on ethical grounds. we were an ethical fund. and we focused on sharia, which has ethical and sustainable features. and lately we have been focusing on other things. one we started in 2014. mandatea very specific we outsource to fund managers. we have internal people for doing it.

we havestic portfolio, four different managers managing us. entry of two different fund managers managing our portfolio. yvonne: before we go, i know kwap is in talks with foreign insurers. i know it is a sensitive issue for you now. but the central bank is capping the foreign ownership, and these big insurers out there. are you closer to reaching a discussion? >> i have said it before any times, it is one of the many initiatives we have this year to close this deal. at the moment we are talking to two parties, [indiscernible] what we have done is put in a bid for it. moment, we are waiting

for feedback from the. if we are, we can probably look at the next level, to try to conclude the deal. it is still very early. yvonne: i appreciate the time, the kwap ceo at the world capital markets symposium. plenty of other guests throughout the morning. we will be joined by the former greek finance minister, updates on brexit, and the implications of globalization and retreat, what it means for asia. betty: a lot ahead. jampacked, a busy day for you. we will also go through what is expected from rio tinto's earnings report and what it could mean for investors. this is bloomberg. ♪

♪ yvonne: this is "daybreak asia." i am yvonne man in kuala lumpur. r.b.i. wraps up its two-day meeting. rising inflation could cause -- arising budget and needs finances are also will bloom. kathleen hays here with more. governor patel's hands are tied? >> it throws an interesting monkey wrench in the works. indian inflation is topping targets. budget could be helped by rates the don't go any higher. we will look at g #btv 4398. it is a lovely, simple chart. you can see the yellow line at 4%.

the white line, wholesale prices, just below. the blue line shows year-over-year cpi up to 2%. the question is, is this going to accrue transitory? a lot of people are guessing it will. it calls for 4.7% inflation. by the first quarter of next year, 4.5%. but our bloomberg team is saying inflation is going below the rbis target in march or april of this year. prices, theurge in drop in housing. all of that will move it in this direction. one more thing, market meltdown. it gives a reason to sit back and say, a rate hike is not expected. that could stir things up. it is another reason to sit back and relax at this meeting. yvonne: what about the budget

and how it hits indian markets so hard. how does it affect the policy picture? kathleen: it makes their job harder and a lot of raise -- a lot of ways. budget is such a big factor. let's look at "bloomberg at gessweek -- let's look #btv 1907. you can see how there has been a steady rise in the government bond, the 10 year. all of a sudden, it spiked up on the day the budget came up. all the market turmoil that selloff in equities helped push that yields back down at the lower. still clearly on an uptrend. what is also going on, the r.b.i. in india, unlike other countries where it is the department or treasury that has to sell debt, the r.b.i. has to

auction the bond. the higher it gets, the tougher it is for them to sell the bond of the auction. they had to cancel three bond auctions. it has been a problem. 1034, took at g #btv give us a larger and longer sense of this rising yield. about go back six months, the white way up line. that is the indian bond. at any rate, a steady rise for six months, the longest stretch since 2000 in yield. they are looking for a move update percent by 2019. there is a lot of pressure in that picture. the r.b.i. having to go higher in auctions. and higher borrowing costs can dampen growth. maybe you slow things down that way.

bottom line, all 37 of economists in the survey are looking for the r.b.i. to hold the key rate at 6%. we are pretty sure that will happen. you can see down the road they still have so many dynamics. yvonne: kathleen, thank you. rio tinto underlined profit that to $8.6 billion. of that is according to analyst estimates. let's bring in david singer, joining us live. talk us through what we are expecting. what is this all likely to mean for shareholders? yvonne.ood morning, census figure suggests this will be a strong result for rio tinto, the second-biggest miner.

from $5.1 would be up billion a year ago. it would be the strongest result since 2014. that is the back on strong demand, improving global growth, and a rally in commodity prices. the key thing to rio tinto, iron strong pricing. iron ore held a steady, copperhead impressive gains. the environment was strong. what does that mean for investors? the result will underscore a revival for the sector. for the investors that stuck by those companies they say it is time for them to be rewarded. rio tinto expected to significantly boost the four-year dividend. it is also expected to extend the buyback program. they are expected to buy back to

billion dollars a share this year. they are looking for an increase from additional programs. betty: we have talked about this before. these companies have these growing cash piles. are we going to see them put that money to work in m&a? david: that is the big dilemma. they're in mind, investors, the companies themselves, remain very wary of the past. there were some really calamitous m&a in the previous decade and the start of this decade. it is a scar. faith.s a big leap of the question is, these rising cash piles, cannot return it all to investors. their analysts calculated the top miners should have $80 billion in excess cash. that is beyond additional

returns to investors. what will they do with it? they will look to fund intel and growth options. but that pipeline is not that big. on the table, but will investors supported? in the case of rio, probably they would. investors are in a position now where they probably would back the company that wants to go out into a big deal to add a new communal -- commodity. betty: were there any surprises to watch out for in these results? david: a couple things. we are waiting for rio to make a new announcement on a chief financial officer. there are corporate governance issues kicking around. the sec has an inquiry on a deal it mozambique. and a sharesales, in a minor indonesia stock.

much, on rioyou so tinto. don't forget our interactive tv function, dayb . you can catch up live as well as dive into securities or functions. plus, become part of the conversation by sending us instant messages. this is for bloomberg subscribers only. this is bloomberg. ♪

♪ campaign is being launched wednesday calling for more to be done to encourage women into leadership roles. potential backlash of the me too movement, seeing female managers retreat from some company activities. >> i think the question is not if me too has gone too far but if me too has gone far enough. brave women have raised their voices, they want long-standing change, not just for the day or the month, but the decades. and we have to have the right institutional policies and those have to include a due process, investigation.

need to be investigated and swift action has to be taken. the cultureto end of complicity, looking the other way. because it is all of our responsibility. >> facebook is making a lot of watch itself. so much harassment is happening online. now you have people saying, powerful people, saying there is a backlash against big tech that it is addictive and they don't want their kids using services like facebook. what are you doing to address those concerns? >> we are taking a lot of steps. mostly, that meaningful interaction in the newsfeed. they will see more things from friends and family. policieshas had against harassment, bullying, any form of gender-based hate online.

it is something on facebook we take super seriously. we recently rolled out new anti-harassment rules of people can take more steps to block people from trying to repeatedly contacted them from multiple accounts. people can read or respond to a message or not respond without a person knowing they did it. is something we have voice taken very seriously. facebook's coos sheryl sandberg speaking exclusively to our emily chang. time for a quick look what is coming up on bloomberg markets. dave? >> we are going to get more 60,et opens over the next 90 minutes or so. we will start off with taiwan, malaysia and singapore. the chinese markets, very important here. we are live out of the four seasons hotel in hong kong, lots

of big guests coming up from the conference. we will have jeffrey curry, the head of commodities that goldman sachs. and 40 minutes after him, the chief economist to make sense of fundamentals right now. we know equities did overshoot the targets given we asked him a little bit of the facts, does that lineup with the global economy. and we will put that question to another guest. betty: good to get more clarity out of those great guess. david ingles and haidi lun our next with your market coverage. stand by for bloomberg markets. this is bloomberg. ♪

♪ david: when you look at what is been happening in sydney, the asx 200 snapping its two-day , almost $90k billion in market cap. a lot of this started on wall street, this recovery. equities swinging wildly before ending the session up. i'm david ingles in hong kong. i'm haidi lun in sydney.