in hong kong,.m. i'm yvonne and look at the "daybreak: asia". is aop stories this friday correction come at s&p 500 closes 10% below january's record as rate hikes worried returns to the market. falling inc stock is a downward spiral, and the kleins of at least 2%. -- declines. the volatility index is more than double it week ago, and 10 year treasury yields retreat from your for your highs, but it is not simply an adjustment.

they are small potatoes. ♪ kathleen: i had an interesting conversation with bill dudley and i am putting that comment of small potatoes from bill dudley seenrspective -- we have much worse, however, he is convinced as well that, rate hikes will continue and is interesting to me that it isn't just u.s. fed officials but other central bankers downplay the stock market volatility. we heard it from greg spencer yesterday, and we heard it from ecb officials yesterday, saying it will not affect the policy path. unless it gets worse and last longer. yvonne: we heard the boe chiming

in and it is fueled by the selloff that we saw overnight. interesting contest of last week, or earlier this week that the worst may be and this is a technical shakeup given the fact that most of this market with short volatility, but now that trade is that, perhaps the dust settles, we should be ok. but today was an indication that we could see more to go. kathleen: may more dust coming, we shall see. the s&p dropped takes is the s&p dropped texas to 10%, that makes a full like correction -- full fledged correction. we are bringing in su keenan, what is next? it signals more downward moves i had. ead. had ah

day sincee worst 2008, so it does feel like a rough ride. let's take a look at the vix, what you see here is analysts say you have mother of all inverted v's. they are saying things 10 combat and be a nice profile, but besides august of 2015, there is no other volatility event in the last 40 years that looks at the court one -- current one. km strategist -- and let's take a look at some of the market moves -- what we are seeing here is the move today. right through the 100 day moving average. is confirmed now to slice to the 200 day moving average, what this means is we have lower lows and there are no

buyers. and that only sellers, foretells more selling ahead at least for the short term. let's get to the market snapshot where the safe haven plays are. oil will get to in a minute, and it was down in part due to supplies being a concern. some of the big movers and the size of the moves, 5% was not an unusual move, twitter the forption, big earnings win the puppy trade company. company.ly traded let's take a look at the banks, they are a factor in the rate hike environment, and yet they were down an average of poor percent -- 4%. a look at the high data, highflying stocks, all taking the kids, tesla down

almost 9%, will down 4.5%, these are major moves. bloomberg, to the the s&p 500 continuing, what this chart shows us is to back-to-back moves lower -- you haven't had that lower since 2018. back to you. yvonne: sue, thank you. the red this morning, and in new zealand where seeing , thelback, close to 2% benchmark for the kiwi a mixed picture, not going in either direction. trading in australia going downway and in the open 1/10 of 1%. yield also lower for the aussie 10 year yield.

bidre seen that much of a for government bonds despite this route and decline in equities. also the open in japan and korea, checking futures in japan looks to be an ugly one. we are expecting eight 600 point aop at the open, after we saw rebound yesterday, but the dollar-yen continuing to see a risk off trade in a big way. kathleen. right to the selloff, here in new york is dino kos, ,nd it would take far too long but importantly, you were the head of the market desk at the new york fed and then you left and bill dudley got to fill your shoes. >> indeed. kathleen: you have been on the investment side in so many positions, this selloff, watch

it from the fed point of view, you are aware of capital markets and what is going on and what it might mean for you and watch it now in the street side, what does it look like? >> from the perspective of the market desk, it is going to be a source of interest that we're going to monitor closely. equity the time between and bond markets and whether the two feet off of each other -- each other. ceac what is the impact in yields in the future investments on capital investments and other risky assets because of the tie-in there. kathleen: we've had this rise in yields and the stock has been nervous, the policy statement after the fed meeting is further rate hikes got people nervous,

but the number showed higher wages and the jobs report friday kick bond yields higher. that is driving stocks right now , is that something that is going to continue? right now we are seeing both selling off at the same time, so when does the fed get worried and when should they get worried? >> you had interview with bill dudley and the answer he gave you was not yet, because we had a job, but not enough to get them worried. we had a long. period talking about the consumption impacting behavior of firms and consumers. now the question is if you are going to have the reverse happening if equities go down and asset prices go down, i -- at what point do we see a reverse effect? was going to ask you

that because we have been hearing some economists out there saying 1000 point drop on the dow is no longer small potatoes, referencing what bill dudley said. can central banks continue to ignore this? the shock of it is having a recent on the market, and at what point do they have to start worrying and see inflation expectations go higher? >> you would need see a couple of things, inflation would be one aspect of it. is or some kind of confidence affect they are seeing, so if there is a negative confidence affect that they might see in the short run could be a cause for concern. what happens to the economic forecast? so running the forecast next meeting, is there an effect, a negative effect on what is happening in the equity markets to consumer confidence.

a lowerfore could be forecast of consumption, so there is a lot of variables here. the other thing with to remember is that it is not just the data last week, the mood we had from central banks globally, you suck with mark carney today with the lack of england and other central banks sending mixed signals that the winds are shifting and were going to a less accommodative industry. kathleen: in the meantime, live pictures of washington where the senate has hit a roadblock on a bill to of art and other government shutdown, we see senator rand paul refusing to grant consent to hold a vote as the deadline looms. were expecting a vote coming but thereter hours, has been a holdup, and with hours to go before we actually get to that deadline, and the government shuts down.

--tly us from washington joe, how is this going to play out, are we running out of time? >> as chuck schumer said on the senate for moments ago, we are getting into risky territory here. they are taking up quite a bit of time, and even if the senate is able to proceed in next couple of hours, the house will need for five hours to get there procedures together and get a vote, so it could last two t whenht -- to midnigh government funding runs out. as 1:00 go as late a.m., and the government will be in a shutdown technically, but the practical effect of that would be pretty minimal. yvonne: what exactly are the objections at this point? is there anything different in

these discussions so far? >> this is purely senator paul's objection to the added spending -- it is a two-year deal that raises funding for the government by about $300 billion over that. before the law had allowed, and his objection is that it would add to the deficit. he said on the senate floor that he objected to trillion dollar deficits when president obama was in office and look at you to objected and even though republicans are in control of congress and the white house. he and a lot of opponents of his are objecting on the basis of how much it is going to cost. and he is a libertarian, and there were timeout what a great victory this was, so presumably the senate will pass this, but then the house has to pass that, and andill see more spending

the deficit getting much bigger, something over trillion dollars with lots more spending and bonds been issued. forecast by 2019 the deficit can hit trillion dollars again. we are not that far away, it was at 600 66 billion in the last fiscal year, and yet the effect of the tax cut that were passed in december, that is a trillion dollars over a decade. is estimated that we don't have a good figure yet because not all of the money has been allocated. severalalking about hundred billion added over the next decade or so. it is in addition to the shortfall. a few billion there, a few billing her, then before we

know if we have a deficit. we will be following the activities in washington dc. we see rand paul talking, and we might be following it into midnight and later. but in the meantime, first world news with courtney. >> qualcomm has officially rejected an offer from broadcom that materially undervalues the company. says it fall short, however they said it is prepared to meet of broadcom can address what it sees as serious deficiencies and value. oil fell to its lowest in the year in new york after a report showed record production in the united states. futures dropped, posting the longest streak of losses since april. exxon mobil is boasting its biggest reserves in 2010 --

since 2010. had the equivalent of 21 billion barrels, enough to sustain current output for 14 years. there biggestack evaluation after china's trade surplus last month more than half, and we get more than 1.2% in shanghai, making a reversal for currency that has been rallying as the dollar retreats. u.n. extended losses after trading surplus shrank to almost 55 billion and month earlier. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. collins.ney this is bloomberg. coming up on daybreak asia, the fed outlook on rate hikes and a roundtable discussion with our guest. kathleen: list the deal that

could have been as qualcomm rejects the largest takeover bid in history. this is bloomberg. ♪

>> if wages start increasing on a consistent basis around the country and that is translating to higher prices and inflation, i would expect that it will affect how the federal reserve approaches, and that could affect trajectory of interest rates, but we are a long way away from that. this is not a static process, it is dynamic. am watching the economy, we are watching work, i am the labor market, and the most

important part of my job is to be open to learning and adapting, but i would still say my best case judgment is that three is appropriate this year. >> i think it is premature to make predictions -- clearly it of threeprojections rate hikes in 2018, that seems like a reasonable projection. one thing is for sure, i bet you in december they were not expecting that the waters but have gotten so rough and doing three rate hikes in 2018. kos, andng back dino john, i want to start with you. that three rate that, maybe four, and all has changed is the fact that the

stock market has sold off and bond yields have continued to move higher -- so, what do you andk of the fed trajectory will they continue with three or four rate hikes, or does volatility change that? >> you heard that comment about dynamic, and no matter what they promised now, they're going to do what they think is right, so it depends on how things shake out. if this is a repricing of higher growth, than they are going to follow that path. if it turns into inflation, look for faster rate hikes. if the market is telling us something we don't know that the economy will slow down, and they made lower it, so they will do what is right at the moment. to follow on that, what is your forecast for the economy inflation? academic. an

i do think there is reason to disagree with them, i think there is a good supply side growth, that means interest rates will rise and should rise, and inflation stays muted, that would be nice. fed is likeing a running a military and yet the think of what could go wrong in those cases. seems like the psychology of the market has shifted because the market didn't get what they wanted, which is tax cuts, but there is a worry now of how this is going to be paid for. numberlutely, there is a of additions, what happens to wages, what happens to inflation -- i will say that i'm not sure the fed will seem to talk in rhetoric where there against wage increases. they would open themselves to political attacks in my view, so that is one angle. the other angle we have to remember is that with tax cuts,

with spending packages that was just introduced, and the fact that the fed is not going to be rolling over its entire portfolio, more supply will be coming to the market. and onestinct sources, people forget is that with the willapering its portfolio, be more than a trillion dollars of supply that the market will absorb, even if it is borrowing. we have seen this global aunt route spread not just through the u.s. but europe as well. even in japan, some of these markets might be overestimating that inflation is picking up, because we see the ecb and boj buying bonds at the moment. >> i think it belies the and the higher

growth economy, interest rates are going to go up. interest rates go up, and the rate of returns go up, and that means stocks have to reprice down for the moment. that is the good way of saying this. seeing kathleen: what do you think of the phillips curve, even though bill dudley is a big it is n't broken. is the fed tightening too much? what would you be saying, would you urge caution, which is a three is too many this year? i don't have a vote, that is the good news, i suppose. course, theydained are going to see what would happen and how does the economy

of all in how does the forecast of all, and then they will change. 2017,in the beginning of some people thought they might hike twice, or three times, etc. the fed was able to do several news because the market was accepted of to it and economy was strong, and they will do the 3-d are forecasting, and if the economy turns weaker, the canary in the coal mine, we don't know yet, then they will adjust back. will have much less of a move. kathleen: would you think about inflation? dudley is concerned about overheating, but it startles me because this is not the 80's, this is globalization, this technology. where are you going to get the momentum to overheat an economy? >> i think the phillips curve is dead and long buried.

waiting 10 years for which is to catch up with and for wages to go up, so it made perfect sense for wages to go up and prices to stay the same. thatnk the fed understands and they are going to let wages go up and this is what the american middle class wants. if they see it in prices, then i think they jump in faster, but with wages i hope they don't take much attention. -- the factation that we're not fixing deficits or the debt -- sooner or later people get tired of that and that is going to be the root cause of inflation. i think that is down the pipe, but when it happens, it happens quickly. a last word here, there seems to be a consensus that the worst is over when it comes to the selloff, given the macro backdrop, do you think we'll see

volatility in 2018 that this is not the and in any way? >> i am sure this is not the end of volatility in 2018. episode anda short and in a few days or a week, nobody really knows, but i got this is going to be the last episode of volatility in 2018 because we happen next change -- exchange rate changes monetary policy. we knew it was over, the stocks would be back up today. much -- iank you so also want to thank john cochran joining us from stanford university. a quick check of business news headlines. to try to stave off a cash crunch -- mission street in san

francisco is among assets like with a tower in new york that they bought a year ago, they make worldwide headlines of a shopping spree but the group must pay 20 have billion dollars this quarter. fell after allegations against former chairman steve when can harm the company's reputation and financial performance and licensing status. wynn step down after allegations of sexual harassment, he denies any wrongdoing but said publicity made it impossible for him to stay. the suns for your outlook and worsening impact of pickles scandal in japan and rising incentives to attract buyers in the u.s., company says they belowd a fiscal year estimates of auto analysts, and decency's higher net income after the u.s. tax cuts. up, twitter soaring in

its market debut and what is driving sentiment. this is bloomberg. ♪ we use our phones and computers the same way these days.

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and now, get a $200 prepaid card when you buy an iphone. it's a new kind of network designed to save you money. call, visit, or go to xfnitymobile.com. 30 minutes away from asia's first major market open, and it certainly isn't -- stocks are hitting lower. is 6:30 p.m. in new york where markets closed lower across the board, you can see the s&p 500 now at 2581, a loss of just over 100 points. yvonne: you are watching "daybreak: asia". first real news now with courtney collins. >> bank of england governor says interest rates may need to rise

than initially thought to keep the economy from overheating. remainon is likely to above the 2% target, with three quarter-point hikes price than over the next three years. carney says pacitti is a key challenge. -- capacity. >> going forward, we are reiterating, so importantly for your viewers, that these are interest rate cycles unlike those that they would have experienced in the past. courtney: facebook admits the cap catch every fake news account, but they are working as hard as they can. begin evidence to u.k. lawmakers in washington of a rise of global pressure to take or control of their once freewheeling platform. and twitterogle,

make pledges to promote better quality content. says criminals pitching,ng -- wet, likeon the dark coin is the sixth most valuable digital currency and is now accepted by a third of shadow vendors who accept alternative payment. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm courtney collins. this is bloomberg. kathleen: back to our top story, u.s. interest rates will drag down. here what our guest had to say.

>> it will be much more persistent and it could start to affect household and business spending behavior and i could actually start influencing the economic outlook, and somewhere i would say this is bob potatoes. and thosea correction are off 1011% and we had a double of tenure treasuries and it has to have implications for the rest of the capital markets. >> i would argue it is not really done and these things take time and it is a dislocating move without leading all kinds of wreckage of a route not expecting. >> i think that you eat is think price than and it wasn't a big deal, and the boj was fine, but that is unwinding and the entire market is realizing that this decline coming from qe is stepping away and left be ready for more. it has been a kumal to

us week for markets, and it feels like a consensus the guests we heard is that it is not done quite yet. >> it is making a meal at of the small potatoes. thatia we have heard tightening is not imminent, saint will not be pushed to push operates, but we are seeing which can be a harbinger of the wider route anticipated in asia. we are seeing early any ventures and haven seekers fleeing to gold and yen. overall, it is shaping up to be worst, and you can see , inquantum of that decline correction territory, and shares falling in the chinese trade

report, and the pain may not be over for china's stocks as traitors leverage positions. financing, the white line has fallen to the highest level since january of 2016, and that raises the potential of selling. the chart says thousand words. there are pointing can ugly open after the u.s. opened a correction, what is the potential damage? the potential damage, you can see futures indicating that nikkei 225 is set to drop at least 3% at the open and given this performance, some staunch stockholders are feeling less confident, but check this out, volumes of selloff of japanese stock valuations are looking

perhaps more attractive to buyers, with the ratio falling more than 50 times, the lowest since september. 60% of alle than topics are companies that reported so far, but there were some nasty surprises to the downside, we had me some for example yesterday announcing a cuts to its profits outlook, and so that is something to keep an eye on. qualcomm slumping after an approach from broadcom, the biggest takeover bid in history. julian, where do we go from here? what does this rejection mean for a deal going ahead? tone of the letter it is hard to imagine it will get done in a friendly way, however, the indication to me,

to have qualcomm are present us to meet with the qualcomm board, it leaves open the chance for broadcom ceo to come in and work his magic with the board to tell his side and try to bring them over to his way of thinking. yvonne: is there any chance that the board of qualcomm is open to the deal? i think they have to appear to be considering it given the offer is higher and there are concerns about the future growth prospects. the language in the letter was extremely dismissive of the offer and calling it materially undervaluing the company and said there were serious deficiencies and significant risks that the full deal will fall apart given regulatory concerns. the board will end up where they have always been saying the company is better as a standalone company rather than joining forces with broadcom. kathleen: i guess that type us of this -- hypothesis will be

tested. >> it all comes down to this vote, shareholder votes, broadcom has proposed this late of directors, and until that time, both sides will potentially be meeting with investors and making their case, and then we have to see what happens, who tells the better story when a book comes march 6. kathleen: i will put that on my calendar. three major companies, traditional and social have reported earnings, twitter, viacom, and news corp. it there is least results after the bell -- beat estimates.d are the bloomberg charts we need to know. >> after hours trading is volatile and where see investors

giving that up, and with that said, there is some back if it on why it is losing that. my first bloomberg terminal chart, some big news here in terms of revenue. at $2.8 billion come at this is the top end of the range, up 3% year on year, but when you factor in the u.s. tax overhaul and the tax charge, one in $74 million, the gap actually went into the negative, that is here in the magenta. $.14 negative per share here, equaling $84 million loss for the second quarter. that is the first of my three looks at these equities, let's put up the board and show you what is happening with five viacom.twitter -- viacom up the most, and twitter up the most since october of

also hitting a high we ofen't seen since october 2015. at so backed by bloomberg terminal and show you viacom. you are looking at revenue and revenue total is in white. this is actually a loss, they were expecting 3.1 5 billion, but that loss actually came in the form of this blue bar, blue represented in revenue for fell, entertainment, and of course that is paramount. people are saying there are not enough good movies that people were buying at the movie cinemas or on blu-ray or on dvd, so that is where we are seeing that hit. with that said, we are seeing some optimism terms of analysts. and finally, let's head on over the title here,

twitter flies back to growth, in terms of the greens and the reds here. 's the first time we have seen revenue growth in the past four quarters, not a lot, but that is 2%. few quarters it was down, nearly 8%, so that is good news there. but there's more good news on the white line. the white line is that income ever since it went public, guess what, it has been profitable until this quarter. coming in atu're $91 million, the first time ever. the reason for this is at improvement and more mobile content. and we have a bloomberg disclaimer because we are doing our own mobile content there. newsloomberg breaking feature on twitter, and that is to talk, and people should check that out. back to you.

website about a better day for twitter, and here's what happened with the shares. the most since its market debut. revenue growth, despite losing their coo and fighting the scores of bad lots and fake news out there. that's begin selina wang to break down these earnings for us. , the firstt chart profit growth we have seen come up with a share rally overblown. >> the company showed strong results for the first time in a long time and finally reversed that revenue decline and also produced a profitable quarter for the very first time. these are promising signs for investors, but the share rally may have been overblown, the daily active users remain stagnant, it remained 300

million users, which really tells the comparison that facebook and google have. in addition, while the daily active user number did experience growth, how much more value can twitter continue to deduce out of that same core base of users? at a certain point that will hit a ceiling and that is the question of the long-term sustainability of twitter that comes into question. hasne: the concern at what with twitter is that this is a platform for celebrities and journalists and not a whole lot of people are. joining in on this twitter wait anymore what is can shooting the daily active user growth -- what is contributing? >> it is to allow core users to come back to that and come back often. tweets has thet fight the process and also increased the 140 character

limit to 280 which makes it easier for people to express their thoughts without being cut off. jack dorsey admitted on the conference call that they haven't done a good job of matching people with their interests. the big focus and 28 he is going to be making it easier for people to find topics to follow. this is people who are already on the app, and a lot of these changes haven't been shifted. going to do is a big question to try to achieve that sort of massive growth. whether or not they get that is unclear. yvonne: you wonder if international growth is the same kind of challenge. when i go around the world, it seems like more government officials and other countries are tweeting just like the president of the united states. there are some fascinating

statistics in this quarter and one of them is the international growth, we saw advertising revenue and users indiana -- users in the united states decline. we saw double-digit growth, even in china where it is technically locked, and they have domestic businesses spread the word of twitter overseas. is could be alarming for some investors to see this decline in the u.s. as break concerning since. it is a key advertising market a place you can extract a lot of value per user, so even though there is a lot of growth coming overseas, they want to see more growth coming from the united states where you have snapchat and facebook rapidly growing their numbers. kathleen: sling a white, thank you very much. -- selina wang. to tverg subscribers go

on the terminal, and it is also available on mobile and the anywhere app, and you can customize your settings and get the news on the industries that you care about. korea: coming up, south says tension with north korea will be outshone by the athletes and hope what will be a peaceful games. "daybreak: asia." this is bloomberg. ♪

kathleen: this is "daybreak: asia". the winter olympics officially opens on friday in pyeongchang, south korea, but it is north korea that has the spotlight, let's get to our korean reporter, and steve, good to see you from chile pyeongchang, but it seems like the tension has incoming where we suckorth

him jungle this military parade on thursday. how are these escalating games?s affecting the >> let me tell you what is coming from the north, it is eight bitterly cold siberian went casting a chill on these games. , am holding a lot of coffee and i am going to be treating a lot of coffee because it is pretty darn cold. a far as north korea, it is bit of a chill and a bit of a warming as well because that is the policy of the president of south korea, he believes taking a less hawkish on that the united states wants what the north, to bring a fraternity to the koreas here, which open up in the olympic stadium, when you see behind me is a pop up , they're going to take

it down after the on the picks, but tonight is going to be circumstancep and as one korean team, north and south, passing by here early morning coming in getting a head start for the ceremonies. i spoke exclusively yesterday in with the south korean culture of sports and tourism said, theand he tourist numbers are going to be down just a little bit, partly because of the tensions on the korean peninsula, but he says the region will economically boom in the year's to come. becauseg the olympics, the athletes and related parties as well as major city figures are coming, tourist figures may actually decrease due to congestion. it is normal for people to avoid ofse periods, but a lot

thetors will visit surrounding areas, and according to research, the benefits credit from the olympics will be nearly $60 billion. >> from the ministry perspective, are you afraid that the games are overshadowed by geopolitics, whether it is the threats of war between north korea and the united states, or whether it is the chinese boycott of tourism because of that, or even the domestic scandals involving samsung that brought down the president? do you fear maybe these games are overshadowed by geopolitics and scandals? during the preparation for beenlympics, there have disputes in south korea over north korea's participation. and also because of the u.s. missile defense issues, china is

not sending enough people, so there are several difficulties. however, once the olympic starts we believe the issues will to solve the backdrop of the olympics and we think people will see that outstanding athletic abilities on display and get immersed in the olympics. and we hope people will see it is a very well-prepared olympics with an excellent and dignified opening ceremonies. >> you don't feel that pyongyang has hijacked pyeongchang? seesere is some media that north korea distracting the olympics i don't see it as a big distraction. rather, i see north korea sending a squad as an opportunity to make a peaceful olympics, and then happy about this. after the olympics begin and it comes to a close, pyeongchang will be remembered by people around the world. >> what do you hope will be the

lasting legacy of these games? we hope it will be remembered as the most peaceful olympics and that john chong -- koreachang means peace in n. overhang or overshadowing these olympics as we open them up in the lipid stadium behind me -- on the geopolitics front, in makingng to have with kim jong-un sister for the first time -- the first time someone from the ruling family of north korea will visit south korea. they fought the war in the north, 1953, and no korean family has come to the south, and also vice president of the united states mike pence will meet with president moon at some point as well during these

olympic weekend. we will see when the games start later today. warm, steve. our interactive tv function, tv , you can watch his life and catch up with past interviews and other bloomberg functions that we talk about. and be a part of the conversation and you can send messages to kathleen and me and these are for bloomberg subscribers only. this is bloomberg. ♪

yvonne: a quick check of headlines, a week trading in t cells. 32ounced profits after million u.s. dollars, and visit

see improvement in the second half. myers is generally sales were down six in the have percent on the previous year, down 5%. sources tell us softbank may by a third of the reassurance company in a guilt that can be valued at $10 billion. talks are at an early stage. the economy has reached a significant milestone with a judge ruling that drivers are independent contractors and employees. suchrs did not qualify for protection in california law and may have far-reaching implications for other ridesharing company's was business model avoids the cost of traditional employment. kathleen: coming up, will talk to jpmorgan about the direction

of the market route and how deep losses can go, and will also talk about the outlook of china. and our talk with an jim chairman and ceo. this is bloomberg. ♪

♪ 8:00 a.m. here in hong kong. we are live from bloomberg's asian headquarters. i am yvonne man. a correction, s&p 500 closes below the record as worries unsettle the market. asian stocks follow the downward spiral. sydni down and japan may fall further. kathleen: i am kathleen hays in new york. it is past 7:00 p.m. this thursday. hna's tower is part of a property firesale. the winter olympics begin later a chill.

we are live in south chiang -- we're live in the pyeongchang. kathleen: it is interesting -- go ahead. yvonne: it is not just pyeongchang feeling the chill. investors are feeling nerves shaken, given we are seeing yet another rout in equities. wehleen: it is interesting, end of the week last week on a selloff and begin this week on a selloff. it has just been that kind of a period. it has everything to do with the bond yields, keep shooting up. they look at the fed, central banks, the economy saying, if rate hikes are coming, we need to still hike. if they reprice too much that is

when it worsens. still hard to find opportunities to buy on these dips. let's check the markets with sophie kamaruddin. sophie: nikkei futures pointing to a loss at the open. a slightly lower loss so far. the nikkei 225 sliding 8.8%. the topix has a rout. the global fundamental picture does not look too bad. he notes the stock price moves algorithm if due to changes, will continue. losses are resuming for shares in sydney. we are seeing right spots in the gold mining space. keep in mind we have had central bankers in asia reassure tightening is not imminent.

the governor said he will not be pushed into pushing up rates. markets are stopping from this motion sickness. up for thes shaping worst week since february 2016. in terms of how low we can go, the market correction may be close to the bottom. there is no reason to be worried, reminding we are not yet in bear market territory. michael mccarthy's saying the decline in asian stocks are unlikely to match the plunge. is not over.e let's check in on the risk radar, treasuries and the dollar under pressure slightly. we are seeing a move toward safe haven, the yen extending its weekly event. oil,t to end by looking at

dragged into this vortex. it has been eight choppy year for crude. after the best january -- it has been a choppy year for crude. worst sincer the april. something weighing heavily on crude traders so far. yvonne: joining us to talk more about those markets, kerry craig . he joins us from melbourne. 1000 points, it is it no longer small potatoes? what did we learn this week? kerry: once volatility comes out of its shell, it is hard to maintain. we had that correction. it was wishful to a certain extent. we are telling investors, be

careful what you wish for. fundamentally, nothing has changed. we have had volatility, a market correct. to us, this story represents a buying opportunity. it is difficult to say. ofhink we will have a period volatility and something needs to trigger the market to be reassured. whether it is the cpi coming down next week or central bankers. they will be looking for repricing, but it is normal where we are considering the global economy and how far in this expansion we are. yvonne: we keep hearing the word healthy, a healthy correction right now. ,iven how leveraged they were what is the time horizon for these trades to unwind? kerry: if you look across the bulk, a lot of the hedging has

come out come of but not all of that. -- all of it. move to get these strategies. you want to see that inverse relationship start to apply, in the market go back to being calm for that to happen. once big institutional players focus on fundamentals, the fact real yields are low, we have a great economic outlook, we are seeing tax reform, the potential for share buyback from repatriation, those are the driving forces for equity markets. we assume the market will rise again. we think the outlook for the year ahead is still positive. kathleen: before we get to longer-term, will government bond markets, the treasury -- u.s. treasury market, call the

tune for markets? this is what we have seen for several weeks. since last week after the jobs report, yields go up, stocks go down. some people are looking for 3% or higher. the that keep people on defensive or volatile until the bond market establishes a level for now? kerry: you are right on the money. once you have stability, there is clarity about the repricing, that will feed into the market stability. there is a level around 3%. if we see treasury yields rate through that, it will be a period of readjustment. it is very much about the pace we have seen the move, rather than the magnitude. rise, given them to the economic backdrop and the

fed raising rates four times this year. companies are not at a level that will impinge on the outlook. stabilize, weat think bond yields will continue to rise this year. if they do it at a slower rate, the market can continue to absorb it. kathleen: bill deadly said four hikes is the base case. why do think it will be four rate hikes? fed is a think the little behind the curve in terms of the outlook. -- thek the necessary impact of the fiscal stimulus will come through. it will exacerbate some of that. four rate hikes, ultimately possible this year. the market is not pricing that in yet. we might see that from jay powell.

the meeting in march will set the tone for the rest of the year. they tend to focus more on equity market stability. that could actually be a negative thing. kathleen: kerry craig, interesting comments. thank you so much. now, first word news with courtney collins. has officially rejected an improved offer from broadcom, saying it undervalues the company. the revised bid of $82 a share tosed it from $105 million $120 million. they are prepared to meet for a successful transaction. oil fell to its lowest level of the year in new york after showing record production in the u.s. field. day, thed for a fifth

longest streak of losses since april. exxon mobil boasting the lowest reserve. of 21e the equivalent billion barrels of reserve at the end of 2017. enough to sustain current output for 14 years. the yuan sal after china's trade surplus last month more than halved. it has been rallying. rallied its losses after the surplus shrank. global news -- global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins. this is bloomberg. kathleen: let's go to washington where the senate hit a roadblock

for the government shutdown. joins us now from washington. it is such an interesting wrinkle that one senator can hold this up. i know it seems to many it will just be a temporary shutdown if it happens. but it still has to go to the house. are we sure the house wants to push it through? this point, republican leadership is telling its leaders to be prepared for a late night or early morning vote. they have been increasingly confident through the day they will have the votes to get it through the house. 40re are probably 30, democrats from republican betes, who will probably willing to vote for the budget deal because it does have a lot of things of interest to democrats. any action does lack on immigration.

it could be we are going to have a lapse in government funding. but it will only be temporary. kathleen: we are seeing a live picture from capitol hill. it will be a long night for many. the objections, you said there are things in common. opponent forcal the democrats? joe: that was rand paul's objection. it adds a lot of government spending. it will probably expand deficits. to whatever deficit expansion would come from the tax cuts passed in december. among the freedom caucus and the house, there are conservatives interested in domestic spending. they are in favor in an increase in defense spending. but they do not like additional money going to other programs. side, it is at

matter of getting the same deal mitch mcconnell gave chuck schumer in the senate. they want an open debate and open voting on various immigration proposals. paul ryan has not been able to go that far. only saying he wants a bill that can be signed by president trump. outline has been objectionable to democrats. they would like to have and think they can get the votes for a more expansive immigration law. yvonne: when it comes to what the market is doing, it seems they are taking notice of what is happening in d.c., in terms of spending and how it will affect the deficit. paulthat is something rand has mentioned. this will expand the deficit. there are forecasts we could see a $1 trillion deficit i 2019 --

by 2019. there is extra government spending that could heat up the economy. perhaps kick up inflation and prompt the fed to kick up interest rates more rapidly. that is a concern out there. this is an election year. they are wanting to get this done and out from under -- off their tables, so they can go ahead and deal with some other issues. countdown,we see the less than five hours to go before we head into that shutdown. sobczyk, joining us from d.c. our exclusive interview with mgm chairman coming up later this hour. the newest casino in macau, and recent shockwaves for the agency. also, their prospects in japan in half an hour's time.

kathleen: we are counting down to the latest inflation numbers from china. mizuho joins us with a preview. this is bloomberg. ♪

♪ yvonne: the numbers speak for themselves across the board. this is "daybreak asia."

i am yvonne man in hong kong. kathleen: i am kathleen hays in new york. currency that a had been rallying as the dollar retreats. for more, here is enda curran. what is going on, what is causing these jitters? the think the catalyst was trade numbers yesterday. we had a big shrinkage in the trade surplus. more demand for currency out of china. biggeralyst was, the backdrop is, perhaps the yuan has gone far enough for the authorities against the dollar and a basket of currencies. there is a feeling china's currency is going into pain territory. they may ease up on capital controls. buting overly substantial,

signaling they are willing to let money flow out easier. yvonne: i want to bring in our joiningianguang shen, us on set. you might want to bring up a chart. not just with dollar renminbi, but what we have seen against the basket. beenis what the market has watching out for. we see the renminbi strengthen against this basket, the most in two years. have we reached an inflection point, that this is too strong for the chinese government to tolerate? >> i think so. it is approaching 6.2 last year. they have signaled their concern over the renminbi. data, 30 badxport actually. that is one month before the chinese new year, up 20%.

it is a very weak export. yvonne: you don't think there is a seasonal affect? >> the seasonal affect should point to a much higher number. see 36% up.ou in terms of capital controls, how much might they ease that going forward? mr. shen jianguang: they should encourage capital inflow. that has to do with appreciation. i believe they will start to encourage capital outflow again. given the strength we have seen in the renminbi, does that affect inflation? it in terms look at of the weak dollar, it has an impact on chinese inflation, for sure.

china is importing to a certain extent. we get a better picture with pbi. -- ppi. no indication china is as strong with the global reflation story as it was. the feeling right now is, the reflation story in china is relatively contained. yvonne: there were all these calls and questions for 2018, that china could be the exporter of inflation. mr. shen jianguang: there is a real risk of high inflation from china. aroundary we are seeing a 1.5% increase. but it could double, because of the seasonal affect. but it is opposite to that activity, the export numbers. january will be very weak. the chinese new year will be in february.

so february will have a very high inflation number. we need to be satisfied with a very high ppi number. kathleen: i want to look at the trends in 2018 as we look at china's imports and exports. maybe there is seasonality, but you are concerned about the weaker growth in exports. could this be a signal about the global economy? what do you think is happening now? we have had other issues for shipping. if you look at them, they have been pulling back a bit. some of theleak -- leading indicators that things are starting to change. mr. shen jianguang: the european economy is very strong. we may see even higher growth on the u.s. side, but probably slower in europe. numberthe strong export

may not be sustainable. week exportthis data, the renminbi depreciated. it is a reaction to fear. enda: is that is your feeling, that the currency could weaken further? mr. shen jianguang: that is right. february data will be much weaker. that is the renminbi sentiment. yvonne: is it because of what we see in the u.s. and europe? it seems the trump administration is trying to talk down a weaker dollar. -- are we in a bit of a currency war? notshen jianguang: we have yet reached a currency war. but a strong renminbi [indiscernible] thee is a reason kind of weak export data. yvonne: thank you, shen

jianguang, joining us from mizuho securities. take a look at the interactive function, tv . dive into any securities or bloomberg functions we talk about. become part of the conversation. you can send us instant messages during our shows. this is bloomberg. ♪

♪ ."onne: this is "daybreak asia i am yvonne man from hong kong. kathleen: i am kathleen hays from new york.

its outputs, ci ting rising incentives to find buyers in the u.s. billion, below.2 estimates. higher debtthere is income after the recent u.s. tax cuts. after: mayer has plunged a slump in the key sales period. they have said that they do not see an improvement in the second half. myer says january sales were down 6.5%. coming up, the trouble hna group, holding a $4 billion firesale, hoping to cut their massive debt. also, we look ahead to markets.

continue to see a drawdown in equities. the s&p heading into correction territory. it did officially go there overnight. this is bloomberg. ♪

♪ yvonne: 8:30 in singapore. looks steaming hot. i am yvonne man in hong kong. kathleen: i am kathleen hays in new york. you are watching "daybreak asia ." let's get to first word news with courtney collins. england governor mark carney says interest rates may need to rise at a steeper pace than initially thought to keep the economy from overheating. he lifted forecasts. he says inflation is likely to stay above the 2% target. carney says capacity is a key challenge.

>> we will not tie our hands to a specific path, with rates going forward. we are reiterating, though, for your viewers, these are interest cycles unlike those they would experience in the past. >> facebook admits they cannot catch every fake news on its site. they give evidence to u.k. lawmakers, the rising global pressure to take more control of their once freewheeling platform. facebook, google and twitter repeated pledges to promote better quality, -- content. a new study says criminals are ditching bitcoin because it has come -- but, more expensive and inefficient. most widely used cryptocurrency is likely to lose

its dominance on the dark web to lightcoin and sah. it is accepted by 1/3 of shadow lenders. economy has reached a significant milestone, a judge ruling grubhub employees are contractors and not employees. such workers do not qualify for staff protection under california law. far-reachingy have implications. typically avoid the costs of typical employment. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins. this is bloomberg. ♪ breaking news, the reserve bank of australia, they release their quarterly statement on monetary policy. they say their inflation growth

forecasts are little changed. there will be sometime before the economy reaches full employment and before inflation returns to the midpoint of its target. underlying inflation of 2.25% by june of 2020. this seems consistent with rba chief philip lowe. he says he won't be pushed into more rate hikes. raisingbanks overseas their rates is not something that is going to force his hand. it helps us understand why. growth not picking up much faster, either. understandable why he would want to take his time. we cannot take any time to see how the asian markets are shaping up. let's get back to sophie kamaruddin. the bearishowing message from wall street, the

pain is continuing for asian stocks. bonds and mostly climbing, given the focus on jitters in the bond space. relief in sight, given little on the calendar to entice. japanese stocks headed for the worst rates in two years, given the meltdown in u.s. markets. let's take a look at one of those movers. nissan dropping after cutting its profit outlook. performer, its -- it will plunge. celltrion joining the broad tumble. myer, getting hammered after its sales report, at an all-time low. let's get back to the broader moves, in the currency space. i want to highlight what is happening with the korean won. it is set for the 111 mark.

now down about 0.6%. the yuan in focus, after the drop in chinese trade data thursday. much,ssie not moving too below the 78 handle, following the rba's statement, and on the back of the governor's comments he will not be pushed into pushing rates up higher. if we look at the commodities space, crude at the $60 level. gold finally catching a break. we do have that putting a shine on gold miners in the region. one of the only bright spots in asia so far today. yvonne: thank you. the aussie, off some of the highs we have seen in this session after slightly dovish

comments from of the rba. china's indebted hna group marketing $4 billion of property in the u.s. market, trying to stave off a cash crunch. let's talk a little bit more about this fire sale. is there a pattern to this, in terms of what they are selling and keeping? >> there is. there are a couple patterns. one, they are looking to sell off the real estate gems they picked up overseas. those are less complicated sales compared to the stakes they own in major companies. primarily because in some cases, they pledged those stakes against borrowing. we are looking at properties in manhattan alone, properties on fifth avenue, gems they would like to selloff and make money quickly. but they have a lot of money to raise.

at the end of last year, they set the target at $16 billion of assets when the new year starts. they have a lot of sales to go. another pattern, they are reorganizing their assets. they have a complicated asset structure with a lot of subsidiaries and holding companies. those are gathering together. we have a situation where a number of these holding companies are bringing these asset companies under their parent and using them for more liquidity. kathleen: given all these sales, is the pressure to raise cash still rising? how far will this get hna? the pressure is still rising because they still have big numbers to make up. they arerrent quarter about $2.4 billion short of their target of what they need

to pay off. in thisdebt just due quarter. overall, they have $29 billion in debt in coming quarters. a lot of pressure to sell these assets. the structure is often complicated, it takes them more time to do that. pressure is still building on them to sell off assets. kathleen: thanks to dave mccombs joining us from our tokyo bureau. the opening of south korea's winter games is just hours away. geopolitics lumen heavily, from threats of war. steve, that is quite a scene to set for us, isn't it? >> that is right. a lot of people in the olympic stadium behind me tonight for the opening ceremony are not

going to be thinking about the chill from north korea. it is the chill in the weather. this is the warmest day of the year ended is cold. including layers on, three layers of goose down, and i am still freezing. can you imagine the people in the stadium behind me? they will be out here tonight, subzero temperatures, in the stadium they decided -- because they were already over budget -- they decided not to put a roof on the stadium. it will be pretty cold. the geopolitical situation, pretty chilly as well. but trying to warm up with north thea's overtures to lay off rhetoric and saber rattling in exchange for joining the south korean team. that is what we will be talking about as well with mike pence, the u.s. vice president will be meeting with president moon.

moon jae-in, an unprecedented meeting with kim jong-un's sister. the first time a family of the ruling member in north korea will be in south korea. a lot going on. remember, there will be some athletics going on, too. [laughter] yvonne: we have to focus on the games and technology as well. we are hearing this is one of the most technologically advanced olympics -- how so? steve: that is right. for one, there will be a 5g trial or pilot program going on. kt, the technology partner of theolympics, can showcase potential when they have commercial rollout of 5g next year. these 40 times to 50 times speed wireless internet so they can facilitate platforms and new

innovations in ai, augmented reality and virtual reality. presidentat the kt told me about the potential and the reason for showcasing at the olympics. bywe have rolled out 5g combining kt's technical skills and services. createdsuccessfully everything. it is a huge achievement to showcase 5g at pyeongchang. steve: they still have to get some of the latency issues down. it is down to about 10 milliseconds in the current pilot program. they want to get it down to one millisecond. it could be seamless talking between your smart phone and all your iot gadgets and gadgets to your car. i guess we don't need humans

anymore, do we, if we get down to one millisecond on our devices? [laughter] warm.: stay stephen engle, joining us from pyeongchang. find analysis from the day's big newsmakers. you can also download the app, bloomberg radio plus, or bloombergradio.com. kathleen: an exclusive conversation with mgm chairman james murren, who breaks down expansion in japan. this is bloomberg. ♪

♪

kathleen: this is "daybreak asia ." i am kathleen hays in new york. yvonne: i am yvonne man in hong kong. and gm looking to expand to hong kong and japan. there are also other expansion opportunities. joining us is james murren, and our tokyo studios. jim, thanks so much for joining us. talk a little about about what you have seen in tokyo in your trip this time and the potential as japan as a gambling hub, and the cost of the company will take to realize that concept. jim: first, thank you very much for having me. i have been here about a week and a half. i have been having an exciting, informative time.

is a verygovernment large market. to be twicesider it as large as the singapore market and the market on the las vegas strip. three or fourere years. i have been up and down the country many times. the opportunity is to further the central government's goals of driving international tourism, promoting widespread economic activity, and to create international tourists that travel this country for experiences. for that, mgm, with a group of the consortium partners, is willing to invest upwards of ¥1 trillion for that opportunity. yvonne: a lot of casino

operators are diving into this market. what are the challenges you see? there is the political side of things and we are waiting for the casino bill to go through. aspect -- different what hurdles do you see? jim: japan have studied this issue now for the better part of a decade. in a typical japanese fashion, it has been well-researched, transparent, and very thorough. the opportunity in front of the country is, can we use integrated resorts to economically stimulate tourism and the economy, and can we do so in a safe and secure fashion? the first order of business is to ensure safety, security and the public good. why this would be positive for the people of japan. once that issue is addressed,

then we address how best to present an indicated -- integrated resort. on has provided information this complex story to give the government officials the information they need. at the same time, have been meeting with dozens of japanese companies and thousands of japanese people to hear what their vision would be for an integrated resort. kathleen: it is certainly a potentially big market. proponent ofs a tourism and opening up japan more. i am curious, when you talk to businesses, it does seem like a big market. what do they want to see? of the always thinking unique aspects of that culture, that society. the mgm philosophy is to

partner with local partners. we have done that in macau, the united states, and we are seeking to do that here. we seek to find the best of japanese technology, entertainment, food and beverage. the greatest hospitality in the world is here in japan. what we believe is the vision is not just to create an integrated resort, but a uniquely japanese resort to celebrate the rich history and culture of japan and that with the international power of a company like mgm, and my ownership operations. i have to ask you something about steve wynn. how does that play out now? what has happened in the

gaming industry is sad. it is a tragedy. imx a proud of the women that have stepped forward -- i am extremely proud of the women that have stepped forward to improve working conditions for everybody. at mgm resorts we pride ourselves on our culture, the integrity with which we treat each other, and we can always do better. we are working hard as an industry. mgm is proud of our record. macau is an incredibly dynamic market. i am leaving in a couple days. after i go overseas, going to macau. to this weekend i am going oshinumaki. maybe talk about the

influence steve wynn has had in macau. drive thet him to cultural shift from the vip market to a more mass-market, family-oriented. presence inhout his macau, that shift could be losing steam? i can speak for mgm resorts. it was mgm resorts that acquired mirage resorts, and then the bellagio and treasure island. ard, thebeen the stew owner, of that beautiful resort. likewill come across just mgm macau has, we are incredibly

excited about what we are accomplishing in macau. the combination of the las vegas sands organization, galaxy,o organization, mgm, is an incredibly strong platform to continue to evolve the macau market the way it wants to evolve, in terms of a total entertainment destination. yvonne: jim, appreciate the time and perspective. thank you. you can get a roundup of the stories you need to know to get your day going. bloomberg subscribers go to dayb on your terminal. it is also available on your mobile. customize your settings. this is bloomberg. ♪

♪ kathleen: let's take a quick look at the latest is nest flash headlines. had a loss of almost seven dollars a share. this have to do with the california wildfires and a $7 billion charge tied to the u.s. tax overhaul. the ceo's efforts to under sure

underwriting -- to shore up underwriting are paying off. in six jumping the most years after talking to softbank about selling a stake. sources tell us softbank made by up to 1/3 of the reinsurance company in a deal worth around $10 billion. it is in an early stage and nothing is confirmed. hailingl invest in ride , microchips, and indoor farming. kathleen: turning bonds from losers to winners. main property unit is the best performer among real estate companies in the corporate debt index, returning more than 2% since last december. last year they were the worst performers at 9%. yvonne: that is almost it from

us on "daybreak asia." david, a marathon? >> a bit of a sprint, a job. maybe we will walk of it. yvonne: markets like this, right up your alley. >> it does not happen very often. a lot of people use different things for their sales. yvonne: is there an index? [laughter] david: he is coming here on the show at 10 past, hong kong time. are we seeing signs of stabilization or whether or not [indiscernible] steve davies also joins us out of singapore. the other thing i want to ask him, everyone has had their hearts broken, before. can you trust again? was the vix a good indicator of

market sentiment? now it seems more distorted. and when can we jump back in and love again? inflation data out of china -- and not that data matters today, but we will debrief that, the shocking trade numbers we had yesterday. a lot to talk about at the china open. kathleen: the data always matters, sooner or later. our market coverage continues with david and haidi. yvonne: standby for "bloomberg markets." this is bloomberg. ♪

♪ david: here we go, time for a correction. the s&p 500 closed 10% below. rate hike worries continue to shake the market. we are looking at the asian market. japan leading the benchmark, with declines approaching 3%. when you look at the core of the issue, the issue has more than doubled. lots to talk about. i am david ingles in hong kong. haidi: and i am haidi lun here in sydney. the new york fed boss said it is simply an adjustment. bill dudley says it