haidi: it is 10:00 a.m. image sydney. we are live from bloomberg 6 trillion headquarters. welcome to bloomberg. $5 trillion in equities prepare for another rocky wide -- ride. japan willernor of get a new -- the governor of the japant -- the bank of will get a new five-year term. ony: we are just past 6 p.m. sunday. accusations of banks in australia include money laundering and rate rigging.

says, let's talk fb winter olympics. -- at the winter olympics. ♪ a very good morning to you, our viewers around the world. 's take a asia" -- let;' look at what is happening around the world. we saw what happened on the markets of the united states in the past few hours. we went into the positives. technicals are pushing that up. let's go to the bloomberg terminal. hasn't been, it very good. down 7.25%. the last time we saw these numbers was back in 2009.

11%.y the question is whether we can hold on to the greens we saw and whether that will translate to where you guys are. haidi: this is pretty full this week. you can see the longest winning streak when it comes to growth. well as thetion as yuan. have synchronized tightening across global central banks? it was positive we saw some defense of buying and 90 u.s. session on friday. onin that u.s. session friday. nikkei --ndicates the in september. take that with a grain of salt regarding whether you will see

bargain hunting. up 3/10 of 1% for trading in new zealand. the kiwi dollar is trading at . 7251. some of the stocks are getting underway for a brand-new week. sydney had not suffered as much as some of their asian or global counterparts. the us and p pretty much flat -- s&p flat. aud-usd bumping above a weakness on friday. the australian 10 year yield at 2.89. let's go to tom mackenzie in beijing. an independent inquiry into australia's banks interest financial advisors and pension funds begins on monday. royalvernment sets up the

commission accounts of public anger of misconduct amid allegations of late-breaking and money laundering. all of that as banks rack up record profits. a former high court judge will submit an interim report in september. she came under attack after agreeing a new coalition with the social democrats. some members said it is time for a change. angela merkel said she campaigned on a four-year term and stands by that. the coalition has yet to become officially confirmed. a russian plane crashed soon after takeoff from moscow, killing all 71 on board. for aane was heading south eastern city, but disappeared off the radar seven minutes into the flight. it is not known what caused the crash.

an inquiry is under way. openednal case has been for alleged breach of aviation safety. are headingran toward outright confrontation since the syrian war began seven years ago. an israeli plane crashed after being attacked by opposing aircraft. israel said it hit seven targets --syria belonging to iran four of which belong to iran. israel said it will not allow iran to take control of syria. jeff: -- tom: i am tom mackenzie. this is bloomberg. kim jong-un has deployed the olympics to fight back against the trump administration sanctions. he appealed to the south korean president, extending an

to a summit in pyongyang. was very hard during the opening ceremony not to be distracted by mike pence. >> mike pence was there pretty stonefaced. i don't think he was too charmsed by ms. kim's offensive. it is a little bit reminiscent of when he was at the nfl game and walked out. interesting, a clever diplomatic ploy by kim jong-un to extend this invitation to president moon. this could drive a wedge to united states and south korea on their attitudes toward pyongyang. we knew this would be so interesting, to take place 40

miles from the dmz. it is turning out to be that. a lot of analysts are weighing not seeing what conditions south korea's president moon would give as a guarantee to talk to north korea. say for sure he would want to have talks on the nuclear he does or notr remains to be seen and they are not sure whether kim jong-un would agree. about what welk might expect from donald trump the year 2019, the budget is out on monday. are some rosy expectations in terms of constellations, expecting 3.2% for growth. but the median is 2.7%. might that be the biggest surprise? ros: people will be focused on

the growth forecast when the budget is released on monday. back to the debate on tax cuts. -- back to the debate on tax the republicanf congress said we will grow our way out of this deficit. the tax cuts will not be detrimental to the economy, because the economy will grow. we possibly had evidence of that with the wage growth we started to see, the bonuses a lot of companies have been giving. given how the u.s. economy is so dependent on consumer spending, that could increase growth. one wonders whether the trump administration will be too optimistic. we think it is possible, but we will get a lead -- that we will get a lead on some elements of the budget.

don't quite know what we will see. the office of management and toget has been working hard revise elements of the budget after the commercial spending deal. ramy: so much to talk about. ros, thank you. we will get more on the u.s. budget deal with the ftn financial chief economist, chris lowe. let's get groovy action over the weekend from the budget deal we saw. so many voices are saying different things. it seems like the world is upside down. likesyan is saying he this as a bipartisan compromise. nancy pelosi voting against it, because she wanted immigration but the dreamers. when you heard the data come out, what was your reaction? chris: i work in a bond shop.

the first thing i saw was the deficit estimates. we have a white house that is projecting pretty solid growth, not just this year, but into the future. there is a trillion-flux deficit in year two, because of the tax cuts. the omb believes we will grow -- gdp growth gdp will be strong enough that the deficit will start to shrink in the long run. that has happened in some economies. the united kingdom comes to mind. they cut corporate tax rates dramatically and soft tax revenues rise. but it is a leap of faith for us. starting with those gdp numbers. ramy: i thought i got a sense of , sayingsm in your voice it happened elsewhere. looking at the 3.2% expectations

for gdp growth, it does seem too rosy. my forecast is 3.25%, right in the same wheelhouse. had 3% growth the last three quarters. we fell short in quarter for, because inventories unexpectedly fell. back, that wast literally companies struggling to keep up with demand, a good thing. in the last several years we have had weakness in the first quarter. that is the key. if it was caused by things like tax increases and regulation, which we have had year after year, maybe we will get a bye in the first quarter. even the atlanta fed is talking about 4% growth, a very preliminary forecast. i think isis week

really going to inform of's full-year forecast. we get january retail sales. consumption was quite good in the fourth quarter. it holds up. solid,are one gdp is a this will look more realistic. if we fall short in the first quarter, they will go right back to the drawing board. haidi: i want to tell the bond a side of the story, go to the equity selloff, and then talk about what we have seen over the past few days. i am looking at this chart. is whereve said 2.63% equities will be. do you think these yields have moved up to quickly? if inflation doesn't actually actuallyze, bonds are

pver -- oversold. i think that's, but i wouldn't be surprised if we test 3% before the market comes to that conclusion. there is not that much technical support for bonds from here on toby get to three. it makes sense we would test that level again. that, inflation fear is mounting. it is only going to get worse as the economy strengthens. , ifs not until traders see inflation doesn't show up by march or april, that they begin to brief easy again. it is going to be a tough road for bonds for the next month or two. we haven't even talked about deficits in the united states. i have clients focused there for thefirst time, really since

huge stimulus deficits after 2009. there is a lot to come to terms with. is the idea of one of the many explanations given for the selloff last week -- we have the removal of a ben bernanke push, followed by janet yellen, and we don't know what jay powell is going to do. era of thethat the essential bank bust for bonds and equity markets is now over? chris: yes. i followed kathleen's interview with bill dudley last week. it was excellent. compared this selloff with the one in 2016. in 2016 the chinese economy was in trouble. we had recessions in the emerging market economies.

tumbling.s were the u.s. economy weekend to weigh 1% growth on a year-over-year basis. none of that is happening now. to termsare coming with economic strength and the possibility of global central banks were moving accommodation, and they have to figure out where prices ought to be in that environment. that is what we are doing. i saw a very relaxed new york fed president. if there is a safety net, it is lower than what we are trading now. haidi: we will be back for now and get back to you in a moment. the ftn financial chief economist is sticking around. taking a look at how your markets are faring. the upside a quarter of 1% in new zealand. 247.kiwi dollar, .7 a sharp dip in the half hour of trading for the nzd-usd.

comes to thehen it banks on day one of the real sector into the financial commission. utilities as well as energy names are dragging the asx lower. volatility is back. we will hear what is different this time around. next, the bank of japan governor is set for a second term. we will look at that. this is bloomberg. ♪ ramy: this is "daybreak asia."

the bank of japan governor may be one step closer

to his reappointment after reports in leading newspapers over the weekend. our bloomberg economic and policy editor kathleen hays is here. we were talking about this with chris low. this is an environment in which we think the fed may be changing itself. one of the reasons why governor kuroda will be , one of the best advertised reappointment of the federal bank -- of a federal bank official in many years. everyone in japan expected this. japanime minister of wants to keep stimulus in place to make sure inflation continues to move higher and the economy keeps growing. that is what the governor is committed to. in addition, this will talk the markets the boj is going to keep its stimulus in place, even if

the fed starts pulling it out by raising interest rates. haidi: stock market volatility is another reason to reappoint kuroda now because it shows markets have a steady hand at the house. but i learned so much in my reporting in tokyo, the two boj governor's terms expire on march 19. people have been expecting that the government would make this announcement in early february. here are the two new deputy governors. i want to switch focuses. while in japan, it is not enough inflation. it is too much inflation. what should we expect out of cpi? . they might -- kathleen: they might want to change inflation numbers. they held inflation steady among

of the budget deficit. their inflation forecasts for april to september of this year. 4.6%, bettered than what it was. the blue line is the cpi year-over-year. yellow shows you 43.98. the target is 4%. in terms of the number we will get in than next couple of ,ours, the year-over-year cpi 5.1 in january. 4.2 in december. not a big move. mattel has postponed a meeting with his finance ministers. it is not a good time to be easing or making moves, even if inflation eases. ramy: we will bring an -- in chr

is low into the conversation. thes get your reaction to news about kuroda, very likely staying at the helm of the boj. kathleen: -- chris: and the united states, investors are grabbing -- grappling with such a rapidly changing environment. it is quick to take one of the big variables and keep it onlyant, to know that not are we going to have the same policy in japan, but the same person executing that policy is a huge relief. ramy: looking at what is happening in terms of the divergence of the united states, possibly in europe, and the lack of change in japan, what kind of risk mechanisms might there be? hris: a globally stronger

economy is allowing the fed to remove accommodations. it is allowing members of the ecb to us mario draghi to remove accommodations there. is relativelys the easing in japan now is even easier still, because it showed that the yen can give a further boost, and maybe they will start to see inflation. it is hard to be easing when the whole rest of the world is doing the same thing. governor kuroda is committed to yield control and seems to have it down. -- why is the dollar not strengthening with all these rate hikes? chris: the dollar strengthened intorms of the --

submission of the shift in policy. and there is an expectation that there will be a ceasing of buying bonds. global qe is quite positive even though the fed is winding off bonds. europe and japan are accumulating even faster. wednesdayok ahead to -- two when that turns the corner. the chaoticic -- nature of washington politics is undermining the dollar as well. it is a group effort by the treasury secretary and the president. kathleen: everyone gets credit. chris, always a pleasure. plenty more to come. this is bloomberg. ♪

>> the 2018: volume guidance has been cut by a bout 5 million tons. competition is hitting contract prices. seesail freight companies 220 million tons. zon is now looking at earnings at 960 million aussie dollars. ramy: alibaba is moving into .ome improvement it bought 15% of beijing's easyhome. has recently been expanding into brick and mortar be a chilling and combines its expertise in the cloud with physical stores. alibaba raised its growth forecast last week and said it is buying financial services. next, we will he or why

fundamentals have changed and what to do about it. this is bloomberg. ♪

retail. under pressure like never before. and its connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. monday. 30 minutes into the session. shares comes to sydney -- we are 30 minutes away from the market opening in korea. seeing some defensive buying resulting in a positive finish on wall street on friday. six: 30 p.m. sunday in new york. the market closings, surprisingly up. we are taking a look at midtown manhattan. a little bit foggy today.

overall, it is up a little bit warmer than normal. you are watching "daybreak asia." just getting into the start of this trading week. lots of caution after last week. let's get you to be first word news with tom mackenzie in beijing. north korea has confirmed the divisive south korean president moon -- has invited the south korean president moon to talks in pyongyang. the invitation was extended during a weekend visit to the winter olympics. found many's sister things in the south to be similar to the north. she says she hopes to meet again in pyongyang. the boj governor kuroda is to begin a second term. -- kuroda and nikkei says prime minister abe will point the governor for another

five years. that indicates the prime minister wants to continue with the boj's unprecedented stimulus program. asx is looking at allegations two revealo materials in 2015 and 2016. theredit suisse says allegations it failed to reveal materials in 2015 and 2016 are without merit. officials in new york cap get to make a decision about a lawsuit being filed. the anc leader told supporters the party must resolve its problems, including accusations of corruption , before powerzuma is transferred. global news 24 hours a day,

powered by more than 2700 journalists and analysts in more than 120 countries. i am tom mackenzie. this is bloomberg. haidi: we are counting down to the open in seoul. asian markets were whacked l t week. we started off the week talking about support of buying from china, that was the hardest hit by the end of the week. what are we expecting? should discontinue -- this c ontinue? testvestors should tepidly the waters after the worst week for asian stocks since 2011. at macro risk thesors is saying this is time to expect markets are settling down. stocks in sydney are extending

friday's losses. jp hi-fi is the worst performer so far on the asx 200 after reporting an industry wide inquiry and missed estimates. u.s. stocks took a more positive turn on friday. japanese markets are looking at a hall today. fourth quarter gdp data is due on wednesday. payment potential real comes at a critical time for the stock market and yen. pointed out earlier. much on the data docket that could change sentiment. inflation updates are going to be key this week from asia, as well as the confirmation as to

where central banks will take monetary policy directions. ramy: what is interesting is the flight to save haven, particularly gold. flat, 0.1% down. it is not going anywhere. there is several reasons for this. one potential reason could be that etf investors may be selling gold to offset their losses in the stock market. check out the chart. funds. both back in etf the most since july. back in 2008, during the crash, told also fell. investors covered their margin call. taking a wider look with another chart, gold haven appeal remained evidenced on a relative

basis. gold turned higher in later phases of the global financial crisis. ramy: keep it in the pocket. thank you, sophie. let's get the outlook for wall street after friday's close brought a positive end to the worst week in two years. twote rally in the last hours. the plunge was only by .2%. what happened? in two years.eek we were mostly in the red throughout the day. there is a positive in terms of technicals. the vix, let's go right to the first chart. the biggest five-day spike, coming off the most unusual lows since 2015. a denver hedge fund pocketed

$17.5 million. and 8600% profit in a $200,000 investment. they bought protection, a one in 500 event. this is really a one in five year in event. boy, their bets came in. the worst week in his two bank years ended on a positive note. ended on aears positive note. from thet was down 12% latest high before a serious rally on friday. you are looking at the market snapshot. the 10-year is going to be in focus as we open on monday. in terms of the selloff sparking other asset classes, we saw that in the etf's, junk bonds,

treasuries, oil caught up to corrections. next hour.t in the let's talk about the agony and ecstasy with this chart if you can do. decline in the s&p 500 index momentum is the largest in history. drop tellingbig this story. on the positive side, wall street specialists are saying the fundamentals remain strong and we will see that with the economic data coming out. the override investors have been through is real and the impact is being felt. haidi: a big week i had on the data docket. we have the 2019 budget. and also retail sales, inflation numbers, what are we going to start with? su: the multi-trillion dollar budget is a huge focus for the

pentagon. infrastructure spending and as well.spending let's go into the bloomberg one more time. the focus is going to be the cpi data and retail sales. what this chart is the cpi, excluding food and energy. will be this, because it will be a sign of inflation. we already got the warning flag from the jobs data over a week ago. there is -- our views the cpi is going to tick and retail sales databe robust, and housing will be pretty significant in terms of shelving a strong underlying strength. earnings, the parade continues with all kinds of companies, coca-cola, pepsi global be there, as well as power companies like sun power

and the cisco. willer round of companies include a round of aircraft manufacturers, lows, metlife, they will round out the group. all of that will grab the spotlight of wall street. washington events, economic data, and earnings, a triple thread for volatility going forward. haidi: thank you so much, su. says theguest volatility is here to stay in 2018. ia joins us this morning from singapore. great to have you. talk as to whether fundamentals have changed and what fundamentals are more empowered after this. economic fundamentals, macro fundamentals, having to change all that much.

amid volatility, liquidity concerns, are they making more of an impact in this market? the economic fundamentals, macro once having changed. investing is about anticipating expectations from other people. the sentiment about these fundamentals has changed. looking at the way economic data was received last wanted inflation to start rising. they wanted job numbers to be stronger, which numbers to go up as a sign of a healthy economy. maybe they are saying that it is too strong now. toward the same economic fundamentals we had last year, that has changed dramatically. gone up very quietly. they went from 2.3 side --

2.35-2.88. you have to have a very strong conviction that from here on you can make a good return on equity's to forgo the risk-free rates you get on treasury bonds. that raises the bar. the market was looking for a reason to take profit. at that level, it did not have a conviction it could beat those numbers. i want to talk about where we are at in terms of asian equities regarding the selloff last week. about 9% up from the january high. valuations have taken a beating. when you look at japanese equities, do you look at this and go, now we should start

selectively buying back in? or do you think the version that was represented by the momentum we saw in the selloff, that there is more to come? i think the selloff was too fast and too short. a lot of the investors in the market today have invested in the last 12 months or so. their expectation of a loss was small as well. what we have seen in the last , they thought they would lose a certain amount and they lost two or three of a certain amount. some will be more wary about getting into the markets. had a lot of leverage. market volumes were rising through july, as well as leverage. some people suffered a big loss and had to cover it up. had last week and

this past week, too fast for it to be over. have not hadfolios time to react. you will see more volatility in because people have had to adjust to what just happened. you are saying the volatility is still going to stick around? look at the bloomberg. are we going to see this areas?on go into other you are seeing blue for rate volatility and yellowfin currency volatility. -- yellow for currency volatility. olivier: he were talking about gold early on. people did not buy it, they sold it. trying to cover their losses will have to sell whatever they can that is liquid enough and has a willing buyer

to cover their losses. wait for the other shoe to fall before getting back in. wait for things to settle down. one of the things we look at is assetrrelation within an class and across asset classes. these will be disrupted by this big event. you will need to watch those. settle back down, that will tell you when you can get back in. issueyou said the next will have to wait to fall, i love this. in terms of the storm before the storm, folks are saying we might see a bear market soon. jim rogers said that over the weekend. the white line is the s&p 500 andx fall between 2006 2007. 6% down here. 10% almost down there.

will we see a correction before something even more major happens? that is a likely bet. as you put out in the charts of the same thing happened in the global financial crisis. institutional, long-term money takes longer to adjust and react , to rebalance. etf's are going to have to start selling to raise liquidity for people and their shares. none of this has been done in five days. maybe a couple of guys are overextended. volatility is where it is going to be. the head of applied research apac from axioma, thank you. asx banks and financial services come under scrutiny after

allegedly's conduct in the industry. this is bloomberg. ♪ ramy: this is "daybreak asia."

australia's financial sector will come under scrutiny a governor, when appointed commission begins its year-long inquiry into misconduct by banks and other service providers. this is a minute long evidence longte rigging -- amid evidence of rate rigging. our finance reporter was listening to opening statements this morning. how did we get here? about allegations of misconduct with rate hikes and high levels of been

profitability. there has been growing consumer resentment about the high levels of profitability, combined with a mantra list of allegations of misconduct. pressures have come together, and eventually the government under much pressure about it to calls for a judicial lead independent inquiry. we are getting live pictures of day one of this 12 month long commission taking place. this we are is being presided ba former high court judge. we will hear opening statements this morning. members of the press are key me a waiting what is to be said. this issue of profitability, there was a story put out said bankday that structures will change.

emily: we will have to watch this closely. the real powerhouse of record been retail. have it is comprised of ordinary people, and there is a growing concern about whether the margins of banks are acceptable. the royal commission and other pressures-- will lead to banks having less of a susceptibility to price. has to have the financial crisis everyone else has had. they emerged from the gsc relatively unscathed. has tothey have not had that sg interruption into profitability others have had. but is that fair?

the question consumer groups have been asking increasingly loudly. ramy: there seems to be that anything increasingly positive is going to come out of this on the consumer side. the phrase that comes up is too big to fail. how much credence and support is therefore this argument? emily: we are seeing pictures from the opening statement. this is all speculation at this stage. one thing the judge and the ensure is theto stability of australia's financial sector isn't interrupted. there has to be this balance between financial instability and competition. where they come down on that is going to be different. governmentto see the setting maximum profitability levels for the banks in a capitalist economy. we are not expecting that level of intervention. that is why some consumer

reporters are cynical about whether anything will change. this we will look at that day and the rest of the year. thank you. just ahead, self driving cars and the ones of your future. this is bloomberg. ♪

haidi: hyundai's autonomous vehicles unit has said it's cars will be driven by ridesharing firms. it will still have the edge over tech companies when it comes to mass production. companies, i.t. thatnies, what matters is

voice will own the market for self driving technology. market, withing that, we will be a mobility service provider. transport is changing. people like to own individually. likely.ee fleet sales what disadvantage and advantage do you see being a latecomer to this industry? are you at a disadvantage being a latecomer? overall alliance with volkswagen fairly late in the process. there are many things we need

to cover. we are a little bit behind in some areas compared to our competitors. our strengths in terms of the quality. we are confident we are one of in try for oems assisted technology to the mass market. long that we have a experience of 6 -- successfully implementing this technology, we have a deep know-how in terms of stableeeing reliable and sensor and control technology. we can macintosh manufacturer -- can manufacture in terms of mass scale. ramy: you think vehicles on a of vehicles on- a grander scale, similar to a tech company like google.

>> yes. being able to mass produce thios is technology is a different animal. ♪

retail. under pressure like never before. and its connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.

♪ >> haidi lun. this is daybreak asia. hong kong and china led last week's selloff. traders are concerned the fed may accelerate the pace of rate hikes. -- fromgloom bloomberg's global headquarters, i'm ramy inocencio. reports from japan says abe once odaona tuesday -- wants kur to stay on the boj.

♪ ,aidi: looking at the chart making headlines, but not a lot of charm when it comes to this early it asian trading session. we had technical buying propped up u.s. stocks in the friday session. we are hoping to see a rebound in asia, as well. i want to bring up this chart. it shows that a number of those markets from japan across asia and globally are now in oversold territory after this recent selloff. if you take a look at pd, things are looking a lot more bargain like when it comes to some of these asian stocks, for example in tokyo, stocks on the nikkei

225 hasn't been this cheap since september of last year. there is an argument it is too soon to weigh in. speedmentum, the size and of the fault we saw in the cell of last week and the week before would seem to suggest caution should abound. he said we should wait for the other shoe to drop before we weigh in for more buying. let's take a look at how markets are trading in this early monday morning session. morning, we are not going to get direction from japan given the public holiday, but we do have gd p data on wednesday. it's looking fairly attractive on the september lows, but we have to wait to see how it plays out when japan comes out live tomorrow. we see how the open is shaping up in seoul.

investors are largely bracing for another bumpy ride given the turmoil we had last week. that marked the worst week for asian stocks since 2011. how markets perform in china today is going to be especially watched given the drop we saw last week. this week, traders will be awaiting inflation reports with trepidation. we had the cpi report due wednesday and india do today. let's check on the yen. looking steady for the moment. the yen could consolidate around the 50% retracement of a low and the high struck in 2016. we have these reports of kuroda given -- being reported -- being reappointed as the boj chair.

that could trigger a reversal in the yen's direction. we are talking a lot of technical things in terms of the market and currency. sophie kamaruddin, thank you very much. let's dive further into what to expect in the asian trading. of indicators here, what is the best for whether asia will buy into friday's little rebound in wall street? mark: a lot of people will be looking at the hunting index, an important one for the whole of asia. it's been extremely volatile in the past couple of weeks. it's done about 13% of its highs we saw in january, which is a pretty substantial fall i any measure. it got down quite hard, as well. there will be people looking to see whether there is stability in that index particularly as the s&p have a little bounce

after the 200 day average. hanseng hasn't reached the average yet. there will definitely be some eyes on that one and people will be watching the china markets closely. they had a hard fall on friday. coming up to the lunar new year break, probably a good time for a lot of people, probably relieved we have a natural circuit breaker in markets that allows them to reassess. could be volatile today, but if we get to the next couple of days without dramatic falls, people might be relieved, but there's a long weekend coming up. i'm starting to get desensitized to the word volatile. looking at the markets and the reaction in japan to these termts about that second for perrigo kuroda, how our markets expected to come out? mark: it's not a complete surprise. he was probably expected to get

that appointment, but it shows the bank of japan is probably going to be the last of the central banks to walk away from its super easy policy. ecb is getting closer, the fed has been raising rates for some time. the boj will be the last man , and that's probably a reassurance for people who thought japanese equities had doing -- hadnot been, not doing well last week, but they probably see this as a reassuring thing that kuroda is not going to suddenly change policy. the most he will do is tweak policy by the end of the year. but it will be taken well by investors in asia. haidi: central bank stability reassurance very much needed at this point in the markets. speaking of, inflation is what started this route. we are getting inflation indicators this week.

what are we looking for? europe's big one is inflation data, which comes out in the middle of the week. for the moment, the core cpi number is still expected to stay below the 2% threshold. ite that comes out and arrives as the economists are suggesting, that could be a relief for the treasury market. it has been totally beat up. mark cranford in singapore, just trading very carefully going into this trading week. you can follow all the insights from mark and his life seems from the trading action on our blog at bloomberg mliv go. run downet a market and commentary and analysis from our expert editors. you can find out what is affecting your investments at any given moment. let's get the views from the

bank of tokyo. head of global markets research of their. great to have you. you just went and see where there is another like lower. morning, we are probably first of all trying to watch the u.s. treasury yields first. i think that market has been the catalyst market in this selloff. .e had of you for a long time and fact, i might have said it on this show, that we think central banks are withdrawing from their unorthodox policies. to put it very simply, no unorthodox policies, no unorthodox yields. we can see yields continuing to grind higher. my view of what happened last year with the bank of england was significant how they not only hinted at tightening, but they effectively had on longer bond yields around the world did

that's probably the first thing i will be watching for. if you talk about one of the reasons given for this selloff is not just a change in the inflationary expectations, but a change in the removal -- given we now have expectations that governor kuroda will be around, do you think that gives reassurance of stability on the asia side of things? guest: i would put kuroda's as basically reflecting an agreement between the central banks here and the government. whereas around the world, i see a bit more disagreement between the leaders in charge politically, and the central banks, which will make life more tricky for them. in the next one or two years. but his reappointment is abenomics. again, as the term by abe.

cliff, i want to throw out this quick chart. the painalking about threshold when it comes to the 10 and how we are seeing this negative feedback loop. jeff goodloe said the stoxx would suffer when it hits low 10.63, which is what we have seen happen. lots of prominent voices saying 3% is the level we will test next. where will be go when it comes to testing the bond market? were are also voices saying are oversold at the moment if we don't see a rise in inflation quickly. guest: that's the rub. said, what i thought marcus said earlier, was very pertinent. inflation surprised to the downside this week and a bond markets would take comfort from that. as i said earlier, as long as

central banks continue on this track to normalize policy, it goes higher along inflation and that's the main drag on equity markets for the first half of the year, anyway. ramy: if the yields go higher or when they go higher as so many expect, in terms of equity falls, you are basically saying we will see more pain here. we were talking about hang seng down. 200 down 5%, not bad, but not good either. guest: i think the message in that, i would put it slightly differently, which is that we are returning to a normal phase of volatility. i don't think there is a new normal for volatility. we are in the same normal as before and we were just for a , abnormal very low volatility regime.

i don't expect us to return there anytime soon. ramy: in terms what you think a new volatility normal might be, we are around 31 right now before a few weeks ago around the 12. where do you think that normal is? guest: that normal used to be 15-20 for the vix. we could go down a little bit. but the idea of staying at nine or 10 four an attractive. an o longer where it -- for attractive period is no longer with us. we saw etf investors really pulling their money out very quickly and that's something you need to remember going forward for the equity markets. again, for the first half of this year. ramy: we will look into that. , cliff thankf tan you very much.

let's get first word news with tom mackenzie. tom: london city airport's has been closed indefinitely after the discovery of a world war ii bomb. the weapon was found during development work and they imposed a 200 meter exclusion zone. it's not known how long the airport will remain closed. an independent inquiry into australia's banks insurers financial advisors begin later on monday. the government set up the year-long royal commission to counter public anger over misconduct from allegations of rate rigging and money laundering to financial planning scams. all that as they rack up record profits. a judge will submit an interim report in september. -- a russian plane

crashed soon after takeoff from moscow, killing 71 people on board. it was heading for the southeastern city of orascom, but disappeared off the radar seven minutes into the flight. it's not known what caused the crash. the investigative committee said it opened a criminal case for a breach of safety. harvey weinstein is being sued by new york for creating a hostile work environment and his company rid -- company. it may come locate his attempt to sell his studio in a $500 million deal. restitution for the victims and court jurisdiction over any eventual settlements. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm tom mackenzie. this is bloomberg. still ahead, china's debt

laden hna has offered a potential light line -- lifeline. we will be live in beijing with the details. ramy: has the tug-of-war between stocks and bonds only just begun? we look ahead to the crucial inflation data out of the u.s. this is bloomberg. ♪

♪ haidi: this is daybreak asia, i'm haidi lun in sydney. ramy: i'm ramy inocencio in new york. the week gets underway after news reports suggest bank of japan governor kuroda is on the verge of being reappointed. kathleen hays is here with the latest. it looks about to pay off. kathleen: friday in japan, reporting he will be real point it by gigi news.

why is this expected? its 2%flation halfway to target in japan, you can say the boj is making progress. prime minister all they want to make sure the aggressive stimulus continues. in this particular moment, it would single to the market -- signal to the market that it will keep raising rates. even if the control gets harder. another thing bloomberg economics point out, it's a good time to reassure markets he's there. why now? that's part of it. part of our economics team pointing out that at a time of stock market volatility, all week, and a long weekend in tokyo, the markets needed to know that the government is ready to do this. two newputy governors, ones have to be appointed.

this will come as a package. governor kuroda will be reappointed. pressure on the government to move soon. inflation is an issue in india as always, but this time for the opposite reason, it's are weo target range and expected to get rained in closer to that target? kathleen: it is expected a little bit. down to 5.2% year-over-year in november, #b 43 tv. the target in india is the r.b.i., 4%, well above target. the wholesale is starting to add. the r.b.i. held its key rate steady even though economists are staying it will stay, they are saying we are worried about the budget deficit and how they can keep up or pressure on inflation this year. we will talk more about

the inflation outlook with cliff tan in hong kong. you talk about this paradigm shift when we talk about what it's doing globally. we had a reminder at last week that the markets are capable of going down very quickly as much as they are going up for the past year. do think central bankers will be very crucially alert to the possibility of a misstep? guest: of course. they always are, to give them their due. i think actually, it's interesting you let off with india because i think for the fed, the federal budget deficit is going to come back in a way that it hasn't for 35, 36 years. i think what the markets are beginning to focus on is a very old word. we kind of haven't heard it since the 1980's, the twin deficits. the fiscal and trade deficits of

the united states. trumpeek, when president unveiled his budget plan, he was greeted with a string of trillion dollar plus budget deficits indefinitely in the projections. for a central bank, having to deal with that possible fiscal stimulus and keep the economy on track is a difficult challenge. haidi: that's an interesting point because bill dudley, who i interviewed last week, has raised his forecast for gdp this year by a full half percentage 2% to 2.3%. what you vote in march even if inflation hasn't moved towards target, he still says the long term view says it's enough to vote for the rate hike even though it's not take in the cake. what should the fed do? what will the fed do?

guest: with think the fed will hike and although governor dudley is big on financial conditions and financial conditions in the u.s. are doing rather well. so from his paradigm, there's no reason to pause. as i said, i think you know this, the u.s. is no longer on an emergency footing and rates don't need to be on an emergency footing. that's probably one of the main planks in what the fed is thinking about right now. ramy: talk about this 2.5% growth. 3.25% in the past few hours. with donald trump factoring this in, some people are saying it's too rosy. what are your thoughts on that? is it too much and too optimistic? guest: yeah. my own personal view and our teams view is that it's too optimistic. most economists are looking at the labor growth and

productivity and it's hard to make both of them together at up to 3%. we may see disappointment as the year goes on. haidi: in all of this, should we look at china? that was the worst performer in asia. really huge move for the yuan, as well. his volatility in china the next thing we should be looking at? guest: i think what you saw in china is the reduction of confidence. there is a widespread -- you talked about the fed put -- in china, there is a widespread confidence in the government overall that they can fix everything and get it all together in time and maybe what we saw in the fall on friday is a reduction in that confidence. we talked about the hang seng index earlier. index is not

really a hong kong index anymore. it's probably a better measure of china than hong kong these days because of the listings that have taken place in the last 15 years. seng index is a measure of confidence in china. ramy: we will leave it there. thank you for joining this roundtable on everything in the world from equities to bonds to currencies. each asian head of global markets researchers and kathleen hays. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb on their terminals. it's also on mobile on the bloomberg anywhere app. you can also customize your settings so you only get the industries and settings you care about. this is bloomberg. ♪

♪ ramy: a quick check of the

latest is as flash headlines. a struggling airbag maker, takata, has reached a deal with two groups, of its essentially legal product. people suing the company have agreed to support a bankrupc y ending plan. at least 22 deaths have been lead to -- have been linked to the faulty airbags. alibaba -- the deal as to the recent expansion into brick-and-mortar retailing that combines the cloud with physical stores. they beat earnings estimates and a raised its growth forecast. it's said it's buying 33% of the online payment service to financial, paving the way for an ipo there. coming up next, a dramatic

gesture, kim jong-un sending his sister to south korea with an invitation for moon jae-in. does it actually change the state of play? we will be live in seoul next. this is bloomberg. ♪

♪ haidi: a: 30 in the morning in singapore, half hour away from trading there. .1%. about the singapore session will be watching oil prices as well as looking ahead to gdp and retail sales data out this week. i'm haidi lun in sydney. ramy: i'm ramy inocencio in new york and you are watching daybreak asia. let's get first word news with tom mackenzie. haruhiko kuroda is to be given a second term. appoint corrode

up for another five years when his term ends on april 8. that would indicate that prime minister wants to continue with the unprecedented stimulus program, which has weakened the yen and stoked corporate earnings. north korea confirmed it has invited president moon to talks in pyongyang. kim jong-un's sister extended the end it -- the invitation during the winter olympics. she said she never expected to travel to the south, but found many things similar to the north. she hopes to meet again in pyongyang or it allegations -- pyongyang. allegations that it failed to secure information are unfounded without merit. they are failing to disclose information according to a legal firm in the u.s. lawyers want lawsuits, but a court in new york has yet to make a decision.

south africa's ruling national congress meets later monday to finalize the transition of power from resident jacob zuma. supporters of the party must resolve its problems, including accusations of corruption against zuma. they replaced the president in december and is expected to proceed him in the presidency, as well. israel and iran are edging toward outright invitation amid the most serious tension between the two ends the syrian civil war began years ago. and s 16 crashed after being attacked by antiaircraft missiles and the military said it hit 12 targets, including for that belong to iran. israel said it will not allow iran to effectively take control in cereal. -- in syria. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm tom mackenzie. this is bloomberg. ♪ some: we are getting shoots of green, albeit

cautiously in the early asia session. a lack of a catalyst coming through in japan with the national foundation day holiday today, also a holiday shortened week when it comes to a number of markets. let's get it over to sophie for a look. we see the beginnings of a rebound or a recovery? sophie: it might be too soon to call that. we might be seeing the fragile beginnings of that. we are seeing rish it's in the region, and investors may be hitting their desk with trepidation after the week we have had. stocks are moving higher in seoul and wellington, but these shares are extending losses after their worst week in two years. we do have s&p futures going higher, which could offer hope for asian equities after a positive turn we saw on friday. focusing on what's happening in

sydney, you have the worst performer on the asx 200 the most since august 2015 after a disappointing forecast and holdings after being downgraded from deutsche bank following its quarterly report. horizon is one of the biggest boost in sydney after cutting core volume. ,hecking on the mood in seoul health care are leading the rise on the kospi. some of the friday declines on the second day. quick check on the currency markets. the korean won strengthening after losing 1% last week. the yen is a softer by a touch, but holding on to the gains we saw on friday. we do have the dollar index under pressure after posting a second weekly event on friday. ramy: thank you very much. looking ahead to the asia-pacific open her it a wild ride in bitcoins appears to be over for now.

the rebound has made the digital currency seem more stable according to supporters. we bring in su keenan for the latest. i'm looking for the dma's. it seems to have hit a resistance. is that what's pushing it going higher -- bitcoin higher? a lot of that has to do with tuesday. here's what's unusual is sort of turning the very volatile asset on its head by claiming hey, it's more stable. is there support for that? check out this chart. ,he rebound has been steady comparable to the s&p 500. it rebounded off that low after dropping below 60,000. what that did is it stabilized the vix or the volatility for the assets. check out the s&p 500 comparatively. its volatility has spiked and

you see much more wild screens -- wild swings comparatively. we are the more stable asset. still, you wiped out gains for the year for the s&p 500 for the bitcoin, yes you dropped 70% , butits high of 20,000 judging from the price action in the last week, the calls that it's over the bubbles finally popped do appear premature because it's steadily risen off the bottom. we talked about what happened last tuesday, the government taking an approach on cryptocurrencies that sparked a big rebound while the negative headlines we had about crackdowns in china and south korea, that has subsided. very interesting to see how bitcoin goes forward in the next week after the last two wild weeks have left it somewhat more stable.

bruising we state more , speaking of bruising, it was a poor week for oil. given we are expecting a few key reports, what's the outlook? su: the outlook is negative if you look at the way huge hedge funds have run scared. they cut their net bullish positions. look at the price actions. we were at 60 62 weeks ago, 66 two weeks ago. he believes it has spread to oil at this point. >> fundamentally, nothing has changed. the irony is that the catalyst of the selloff in the equity market was that inflation print last friday because of strong economic growth, the foundation of our upgrade on commodities. su: what he is talking about is

fundamentals here. he believes, take a look at the year chart in oil, the demand could not be stronger. the fundamentals are strong. what really not oil down in addition to the jitters in the market is the fact that u.s. oil output rose above 10 million barrels a day, which exceeds saudi arabia. , all ofeeing rigs surge that bearish for price in the near term. back to you. haidi: north korean leader kim junkfood advised moon jae-in to me in pyongyang, a dramatic gesture that may raise prospects of easing tensions on the korean peninsula. it was delivered by kansas city and the winter olympics in south korea. sister in the winter olympics in south korea. is this a game changer? is this good pr and upticks?

there is a lot of excitement over it. guest: at the beginning of the weekend, we thought this was a nice propaganda machine working for north korea, the kim jong-un's sister rival was the biggest news. but of course, it was overshadowing the olympics. things, it seems like are flowing very fast. we just heard from washington, d.c. that the u.s. may actually engage in direct talks with north korea. this is a fundamental shift because before there was precondition that they would only talk to north korea if there was any sign of north korea dismantling their nuclear program. this came just hours after pence had left, so looking visibly, i wouldn't say uncomfortable, but maybe awkward about the whole situation with south korea and north korea trying to engage in

a summit. , 12 hours there was ago, analysts were saying north korea was succeeding in treating a wedge between south korea and the u.s. that seems to be going away just within the last hour or two. lots of dramatic movements going on very quickly, every hour it seems. haidi: it was interesting, the amount of significance being read into by the fact mike pence didn't shake her hand, he reportedly turned up late and didn't stay very long. int are we watching out for terms of this excitement and fervor from the unified teams and really settling down? what are the signs of settling down after the olympics? presidentth korea's did not accept the invite yet. he had said that we need to consider what we are going to do

with the u.s.-north korea relations and his staffers had talked about the need for u.s. engagement. ago, the viceurs president pence apparently indicated the willingness to have direct talks, change in the policy. before it used to be maximum pressure until north korea started to dismantle the nuclear program. now apparently the word is maximum pressure and engagement. so a shift there. lots of developments. next, we will have to hear from moon jae-in whether he will accept the invite and have a meeting with kim jong-un. ramy: that would be his store if it did happen. on one hand, if he accepts it, that is fraught with possibilities, political ramifications. if he rejects it, is that showed south korea and the united states is more bellicose to some degree.

what do you think needs to be laid out there so that this doesn't become something that totally falls apart for south korea? peter: yes, many of the critics obviously point out that south korea's resident moon jae-in is playing into conjunctions hand. that this is a delaying tactic and gives north korea time to complete a nuclear program. that said, the fact that with washington just said they may engage in talks, it moves the needle quite a bit and away from what would have been, i think, just hours ago, what would have been an incredible tip about pickle for south korea's president moon jae-in. he was, at that time, dealing if hehe notion of a, accepted the invitation, he could have driven this alliance with the u.s. in a more

difficult position. on the other hand, if he said no, that would have created more tensions, escalating potential hostilities here. so, in some ways, just in the last couple of hours, to moments out of u.s. should just south korea's moon jae-in has avoided some difficult decisions. ramy: so interesting as this plays out over the backdrop of the olympics. i remember in the 1988 olympics, it would be interesting to see if that happens. 20 years ago, the sunshine policy, we are back here again, possibly. there are these raise here, but our people ready? and on another level, does that matter? ll, the older generation clearly are skeptical. they are critical of any moves by north korea for peace talks.

they have seen this happen before. it hasn't gone anywhere. all it has done is continue to keep the kim jong-un rain, that dynasty basically in power. everything -- everybody is waiting to see what happens. with the talks. clearly, north korea has made a gesture that they are willing to talk, whether that is genuine and there is going to be progress with dismantling their nuclear program remains to be seen. ramy: the question is, whether these are words for show or if there is some authenticity and genuineness behind us. thank you very much for that. up next, looking beyond the apple. we look at plans to move on high away from mere iphone assembly. this is bloomberg. ♪

♪ this is daybreak asia. i'm ramy inocencio in new york. haidi: i'm haidi lun in sydney. the fortunes of the debt laden china's internet group looking a bit brash in the short-term. it has been offered a potential line from a bank. thomas can't us from beijing. tom mackenzie joins us from beijing. where is this coming from? from chinas coming citic bank. it's a state run bank during they are offering a line of credit worth $2.3 billion to hna. you know they are a conglomerate on this massive debt fueled acquisitions spree, including stakes in deutsche bank and hilton group. toy can offer up some credit

hna because they are under pressure over rating in some of this debt. in the first quarter, they told creditors they have a shortfall of $2.4 billion in the first quarter. they are looking at asset sales worth about $16 billion, including $4 billion worth of u.s. real estate. this offer is expected to ease some of the pressure for now for hna. of the stakems reduction in deutsche bank, is this a one off for hna or is this the start of a gradual unwind? well, they will play a significant role in deutsche bank and continue to have a significant stake in deutsche bank. they have voting rights of 9.2%. they hold 4.3% of equity in deutsche bank.

they say they are looking at refinancing or working out the financing of this equity holding in the german lender and in fact, we spoke to john cryan and last week and he said he is not concerned about the relationship. it remains fine with hna. but clearly this is something they have to reconsider, again a look at the financing of it or it -- of it. they worked with ubs. it will trigger next week. if that is the deutsche bank shares remained below 15 euros a share. at the moment, they closed at 2.5 euros. that's worth considering. the hna will have a smith can stake in the german lender. ramy: to what extent are the banks making bank in terms of the fees here? tom: well, over a three-year period, and we have a bar chart

that shows this. there were about $55 billion worth of acquisitions over three years. 2016, $18 the end of billion and they generated fees of $200 million. many of these institutions are looking at helping hna unwind some of these deals by health put forward in the first -- helped put forward in the first place. they did about nine transactions with the conglomerate worth about $26 million and jpmorgan worked closely with hna, as well, about six different transactions. those banks are looking at working with them. other lines are hsbc and bank of america, said they would stay clear because they were concerned about the debt and the capacity of hna. ramy: tom mackenzie in beijing.

meantime, apple supplier hon hai is seeking to use the proceeds of an ipo in china to fund billions of dollars in investment in next generation projects. it's part of the bigger plan to move beyond pure electronics assembly. for more, here's our managing editor for technology peter elstrom in tokyo. does this have anything to do with what is happening with apple iphone sales stagnating? was a busy, it weekend for hon hai all the way around. there was a meeting with employees where terry talked about his strategy going forward and before that, they had this filing in china when they talked about their investments there. clearly the slowdown in the smartphone market, including iphone sales, has been a factor for hong kong.

but they have talked about moving beyond the assembly that they are known for and extending into these higher value services, including they took control of sharp in japan and moving up the value chain. now, terry was talking about bigger investments into artificial intelligence, the internet of things, they data, and some of these areas where they feel they can add more value and get more profits and move up the value chain in the technology industry. ramy: what are his plans in china, then? well, the detailed some of this yesterday in a filing ahead of this ipo for foxconn industrial internet. they laid out eight different projects with a want to make investments for a total of more than $4 billion. significant investments. of factories lot in china, but this is a detailed investment, including ai.

the chinese government is providing financial support in ai, with a want to lead. they put their own ambitious lands out there to lead an artificial intelligence -- an artificial intelligence. it's the first time they are listing one of the units in mainland china. haidi: some major ambitions there. joining us in tokyo. thank you for that. don't forget, tv you can watch us live and also catch up on past interviews and dive into any of the securities of the bluebird functions we talk about. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

♪ haidi: a quick check of the latest is flash headlines. uber has settled the lawsuit late on friday, ending the conflict that had cost the company a car engineer and fresh embarrassment. million toing $245 resolve allegations that it was involved in a plan to still information -- steal information, senior employee. scandals thatof forced the ceo to quit. ramy: the airbus superjumbo will live on for at least another

decade. they signed a contract with an option for 16 more. it extends production of the plane until 2029 after airbus admitted it might have to terminate the project unless new orders came along. if emirates completes the full deal, it will have 178 a three 80's, more than half of all the models flying globally. it on that is just about daybreak asia. time for a look at what's coming up on bloomberg markets. musings, as market always. what are you watching? said it. markets continue to expect more turmoil in the markets ahead even though it japan is shut. we are focused on china and hong kong. these are markets that led the route next week. we took a look at those numbers and we have a slew of guest coming up on the show.

first up, we have angela harding, arising ceo. the question really is whether it's growth is under pressure as suggested by some analysts. it would lose its most viable contract two years earlier than scheduled. 10:40, a not executive chairman, we take a look at the considered -- casino space after the departure of steep when and the sexual harassment could allegations. what is the outlook two years after the crackdown? haidi. ramy: that is it for daybreak asia. our market coverage continues. this is bloomberg. ♪

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♪ markets in asia pacific bracing. this hour, focus on china. reallylapse last week leading declines across the asia-pacific. the other thing we want to talk about in the show, ending last friday at the highest level. three times higher than the level back on january 26. i am here in hong kong. up,inda: also coming a once from japan say corroded to stay on at the boj. this is "bloomberg markets: