♪ 7:00 a.m. in hong kong. we are live from bloomberg's asia headquarters. afteracific stocks mixed lake declines on wall street. there is speculation a pickup in inflation will spark faster rate hikes. policymakers are increasingly confident in the strength of the u.s. economy. >> i am betty due in new york. -- betty liu in new york. qantas ready to lift off as profit tops expectations come

also announcing a share buyback worth $300 million. ♪ >> always lots of airlines pu ns. , in theof up and down bond market, this chart 6473, a constant worry for market participants when they look at the high-yield corporate debt markets represented by the white line. we have seen a declined in the high-yield corporate bond etf's. that has some worried whether this decline will spillover into equity markets. that does not seem to be the

case when you look at the gap between high-yield debt and 10 year treasuries. range, has stayed within represented by the blue line, and that is reassurance or market watchers, seeing the high-yield behaving like what we are seeing in treasuries, so not likely to be a catalyst if there was more market turmoil. we don't see contagion when it comes to the credit space. the price action after the fed minutes, we got more clarity, but towards the late part of the session, yields picking up on the 10 year, stocks tumbled, the dollar reversing come so it seems like there are more jitters. >> puzzling reaction. let's take a look at how we closed, the s&p down .5%. the dow losing gains, off 167

points. the nasdaq trending lower. knee-jerk reaction, then losses across the board, setting up for a softer session in asia. >> what we are seeing in asia bucking the trend so far, shares up 2%. a four-day winning streak for the greenback. bank of america saying that could he a harbinger for dollar strength. trading in australia, the index of .1%. shrugged off the gains after that wage data yesterday that came out better than expected, but the aussie 2.89% for the aussie 10 year yield. down to the open in japan and korea. futures, declines for

equities on the nikkei 225. to first word news now with courtney collins. >> thank you. the head of north american operations is leaving with effect following an investigation into inappropriate behavior. an internal inquiry found the executive vice president engaged in conduct that was inconsistent with the company's code of conduct. he issued a statement saying he regrets not showing the leadership qualities ford has always espoused. damascus, a violent bombing campaign by pro-government forces. hundreds of people have been killed. reports say almost half a million are being forced to live in shelters. local hospital

have 17 beds for 80 wounded victims. showatest r.b.i. minutes policymakers are concerned about the inflationary impact of the prime minister modi's expansionary budget. the governor said there are upside risks to inflation, while his deputy noted that if inflation stays above the 4% target, a change in the stands to neutral and the withdrawal of accommodation might be considered. russia has overtaken china as the fifth largest assault on holder of gold. the central bank raised its holdings in january 20 metric tons. pboc's reported 1843 tons. russia has increased its holdings every month since march 2015, while china last reported buying gold in october 2016. the u.s. remains the leading

owner with a thousand tons. -- 8000 tons. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm courtney collins. this is bloomberg. >> thank you so much. let's take a deeper dive into u.s. markets. it had a lot to do with the fed and its, the dollar rose, stocks gave back gains, and some investors did a double take on what the fed had to say. first, su keenan has more on that initial knee-jerk reaction. underlying economic momentum, stocks go up, then could they be hiking faster? then they come back down. for the s&p what looked like a rebound day quickly evaporated, another day lower. let's look at the big picture.

it was a risk off today, but the dollar resumed its advance. bonds were lower, and some of the big movers, there were sizable moves. an auto parts company that reported blowout earnings up in a big way. american airlines set to report, but even though it is expected to have profit pressure or 2018, they have had a big lift off for the year. campbell soup coming down in a big way, challenging retail environment and competition is starting to spooked investors. let's talk about bonds. this is 9395. $250 billion in auctions this week. eels rising to the highest level since 2008. yields rising to the highest

level since 2008. the delusion of options pushing upper rates. ,e had this two-year auction the yields again are something causing a lot of focus right now. >> certainly as that treasury auction -- there is a bidding storm that continues between lowering itsadcom hostile bid for qualcomm, and now qualcomm's bid for index people. >> let's start with radcom. -- broadcom. it made a bid for qualcomm, qualcomm increases its bid for nxp, and broadcom reduces its bid for qualcomm. you don't see this very much. offering $79 in cash, down from their $82

earlier in the month. qualcomm not happy to begin with. it is a hostile bid. broadcom made an inadequate offer worst. a lot of people on the sidelines are saying wrought, could be take in on a huge amount of debt if they manage to get qualcomm, p, butmanages to get nx the earnings could be huge. many think qualcomm could be successful in its pursuit of nxp, the right now it is a three-way nasty deal in the making with not everybody on the same page. >> there seems to be some strange love triangle there. thank you. moving ahead to our big story, the minutes from janet yellen's last fed meeting showing

policymakers increasingly positive on the u.s. economy. neel kashkari spoke exclusively to bloomberg earlier. each word change in the statement. intended to say continuing the current path we are on. that is the debate we have been having. in our bloomberg fed reporter to break down these minutes for us. there was some confusion when they first came out. we did get clarity when it comes to the word further reflecting strong growth, but it did not seem like it moved the dollar, so why have the markets turned? >> if you look at the pricing for fed tightening over the next year, after the minutes came out, that went to the most since 2010. they are now handicapping the most hawkish fed in the last eight years. this chart shows you that.

have a situation where almost three rate hikes are fully priced over the next year, so that implies there is some probability of going more than three times. if you go back to december 2015 when the fed started raising rates, the plan was to raise rates once a quarter and we had in 2016market turmoil and ended up raising rates one 2017,then three times in and three times this year as well, but people are looking at the possibility date might pick up pace and get back on plan. >> we have been talking about been, notminutes have just the markets, but the cpi data and jobs data that sparked these corrections in the first officialswhy were fed

more confident and the outlook for growth and inflation? came a few we got days after this january fomc meeting, so they did not have that data. the minutes painted a picture of inflation taking a backseat. what happened at the january meeting his they were looking at the tax cuts that had been passed. it was a bigger tax cut than expected. so they upgraded their growth forecasts because your tax cuts will push down the unemployment rate further and eventually boost inflation. so a lot of this hand wringing over inflation is take a backseat. it is like, how can you be too worried about that with all this good stuff coming down the pike? >> what was that briefing about? >> inflation did go down quite a bit last year.

nobody expected that because the .fallingment rate was all in we have been waiting for this explanation from the fed. the explanation they gave at the meeting revealed by the minutes was their review of what happened. it was disappointing because they found the phillips curve model they are using is not a great model for forecasting, but they could not find many alternatives. they tested out a few different theories but did not see much with, so they are sticking it and that is reflected in the discussion about the tax cuts and the potential effects of that. the other interesting thing in the staff resin tatian was basically they concluded -- staff presentation was they concluded underlying inflation had fallen below 2%.

people in the fomc worried about this. chicago fed president charlie evans dissented against the fed rate hike for this reason. not people on the fomc are buying into this, so it remains to be seen whether this will become important. >> it sounds like there is more details on that. thank you so much. the results of the minutes. much more ahead. we will talk about the minutes with ubs asset management about the rate outlook and how it could affect the markets going forward. by the ceobe joined of qantas as we look through the latest results from the airline. this is bloomberg. ♪

>> this is "bloomberg daybreak: asia." liu in new york.

the fed sounding upbeat in the final fomc meeting, saying they see momentum, but the report included caution on wage gains. now, have an brown from ubs asset management, director of allocations. what did you make of the market reaction today? >> it was puzzling. i am not sure i agree with the markets reaction. i respect it. >> what do you think is behind it? jitters? confusion? >> there is some confusion on the fed's path. we did see long-term real yields rose, which is confusing given there was not much talk about the neutral rate or long-term growth, so that was interesting. inhink the market is pricing

the possibility of a tighter fed think the but i do market reaction was more hawkish than deserved from the minutes i thought were fairly balanced. >> what do you think is priced into the market? >> in terms of hikes, almost three priced in for this year. anothert really have full hike priced in until the end of 2019, so that is where we could see the big change. is all this debate about 3-4 hikes this year, but over the course of the year we will see the inflation data come out and how the new fed chair handles this and how much he wants to let the economy run hot versus get ahead of the inflation, so there is more to play out. >> it is amazing we are already talking about 2019 when pricing in the fed. speaking about the market and

reaction, neel kashkari was talking about the significance of the word further, but also how the fed thinks about these markets. i want to play part of what he said. >> wall street overreacts to everything, the upside, the downside. we can't make policy based on market blips. we have to focus on the long-term outlook in the mandates congress have given us. >> is that really realistic? the fed is always watching financial markets. i used to work at the new york a lotd there was always of interest from policy makers on what was happening in financial markets and how that could influence what is happening in the economy. financial markets impact the economy. all that said, i would agree that some of the price action we

saw in the selloff a few weeks ago was a hit of an overreaction. fed president dudley called it small potatoes. of 25%-30% gain since the election, a 10 percent-15% fall in equities will not impact the economy that much. i agree with neel kashkari there. supplye is also the -demand dynamic going on with the auctions of $350 billion just this week alone, but the yield curve is steepening. are you saying the fed should ignore that? >> the fed should not ignore it. the fed is focused on the yield curve. we see the yield curve steepening. that is an issue. a few weeks ago we saw the you curve flattening and were concerned about what that meant

for recession. the fed is always looking for signals in markets. the fed has to be focused on the supply-demand dynamics and the yield curve, but we have some skepticism about this narrative of supply increasing. since the tax bill has been know how, the markets much supply will be coming through. that should be priced in. i think the bigger driver will be surprises on the economy, inflation, and fed policy, more so than supply outlook. >> how do you construct a portfolio in the midst of this? >> we like to take a long-term view. volatility, like today, equities get skittish when yields are rising, but has ,ou look over the long-term

fundamentals of the economy are strong. rising, butes are coming off a low level. some ofin the speed of these yield moves are keeping markets on hedge, but i don't get signals anything more concerning when we think about the broader outlook. mentioned,e go, you and we are watching yields and how they are impacting sentiment and the equity markets, but you say more important is what is driving the yields, and you say it is not inflation expectations. breaking apart the yield curve into real yields and inflation breakevens. if inflation breakevens are rising, that is not necessarily bad for equities. as inflation is rising, nominal growth is rising, and that is good for company earnings.

and so if you see real yields start to break out to the upside , that is when you probably want to get more concerned about -- >> right now we are not seeing that. >> there is a healthy enough distance between gdp and real yields. >> thank you for joining us. the reaction to the fed minutes and the market today. you can get that roundup in today's edition of daybreak. bloomberg subscribers can go to dayb on their terminal or mobile. you can customize your settings so that you only get news on the industry and assets you care about. this is bloomberg. ♪

>> this is "bloomberg daybreak:

asia." i am betty liu in new york. >> a quick check of the business flash headlines. has lowered its hostile offer after the target moved ahead with an acquisition of its own. in cashis now $79 and stock, down from $82 earlier this month. nxpcomm raised its bid for semiconductor. air new zealand soaring after forecasting the second highest annual profit as it sees fiscal earnings before tax to top last year, lifted by local demand and strong inbound tourism. pretax profit came in at the equivalent of $237 million, down slightly on a year earlier due to hire feel costs. frat and whitney has issued a

temporary fix that will keep airbus planes flying. scrapping production of a new seal that caused a dangerous pipe rations in several jets. an earlier version will be used instead. it from and properly, but did not last as long. coming up next, ford's north american chief becomes the latest prominent figure to step down over inappropriate behavior. how that could affect the company and the domestic operations. this is bloomberg. ♪

>> 7:30 a.m. in hong kong right now. away from the first major market open when china arc it's the open after that five days lunar new year holiday. >> a lot of celebrations. could go for better weather there. it is gorgeous in new york. it felt like summer. very bizarre. markets closing lower with the reaction to the fed minutes and inflation expectations popping up. i am betty liu in new york. >> we are counting down to the market open in tokyo and seoul,

korea with sophie kamaruddin now. will we see a catch-up rally from china? sophie: the market on watch mode. there could be some catching up to do. there might the pent-up demand. we have concerns around the deleveraging campaign. we are getting statistics indicating consumer stocks might be a bright spot given movie going and buying of retail and people shopping. says now would be a good time to buy chinese stocks on the depth. insurers, health care, e-commerce, and this week and gains among offshore stocks, developers, and energy companies. as you can see, mainland buyers made child back into hong kong after being left out on the while a 6.7% advanced

chinese markets were off, so a few catalysts when chinese markets come back. the china reopened is in focus after the lunar new year holiday. it is likely to keep those equity gains we have seen so far in check. >> investors had a rethink of the fed meeting minutes and implications for policy tightening. with little data today, there could be headwinds as treasury yields edge closer to 3%. tech shares may provide shelter after bank stocks shrugged off the broader selloff on wall street. ledednesday, the taiex gains. seoul, korea, mixed, but ozzie stocks set to rise. let's check in on some big

movers in sydney. by the likes of nine entertainment, extending gains at a record high. stocks sliding, blackmore leading the decline, slumping after softer sales in australia. >> thank you so much. let's stay in australia. at big day of earnings, including qantas. let's get to paul allen at the airlines headquarters in sydney. looks like a good set of numbers for qantas and alan joyce returning more money to shareholders. >> that's right. strong first half results from 15%as, underlying profit up to $976 million. net profit after tax up 18% to $600 million, and a revenue beat

at $8.7 million. take a look at the share price, up better than 7%, the biggest gains since july 2015, dividend of seven cents, and a buyback of $378 million announced. it all takes the question, what about the note from s&p a week ago saying qantas needs to boost investment in aircraft. it's fleet is aging and the need will come around 2020 win it has to pay corporate tax again. a few questions raised by s&p. you will get a chance with alan joyce when i get out of this chair and he will sit in for an interview. >> we will certainly be asking him that. we are in the thick of earnings season in australia. struck -- stuck out to you the most? crown,s take a look at

shares performing well there. the ip gamblers have returned. inwn had staff arrested china for the illegal promotion of gambling activities. that saw a hit to these talk, but vip clients are returning. $238.6alf profit million. westfield as well, net income up billion, a over $1.5 dividend of $.25. it is confident on the future outlook even though the retail space is a tough one in australia. westfield in the news, currently attracting a $30 billion bid from a french company. we will keep an eye on any more

news on that. >> thank you. paul allen for us in the qantas headquarters. we are playing musical chairs with paul and alan joyce, the ceo of qantas joining us to break down that record profit and the buyback program. first, let's get to first word news with courtney collins. up, the minutes of janet yellen's last fed meeting show policymakers more positive on the economy and increasingly optimistic they will reach their inflation target. they say they expect the rate of growth to exceed initial estimates. the minutes show several members have raised their forecasts from those made in december. u.k. prime minister theresa may is seen in flaming tensions within her conservative party by asking brussels to be flexible on the length of the proposed transition brexit.

london has said it should last two years from march 29, 2019, while the eu says december 30 1, 2020. the new proposal asks for a longer transition that would last until no longer needed. >> what ever the new relationship will be, it will be inferior to being a member of the markets or being a member of the customs union. exactly what u.k. represents is up to theresa may to tell you. topresident trump's anti-watch watchdog has split with european regulators over the enforcement on companies. playersays it dominant have a responsibility not to hinder competition. the justice department's antitrust armed says there has been no demonstrable harm to consumers and the eu could stifle the dynamism that has helped users.

saidrump administration advances in space travel require a new set of rules. the national space council says current regulations are burdensome and britain at a different time. the administration wants to up date the rules to give private operators more leeway in how they run an industry that relies on frequent, cheaper launches. 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. >> thank you so much. head of north america operations is leaving with immediate effect following an investigation into inappropriate behavior. an internal inquiry found the executive vice president engaged in conduct that was "inconsistent with the company's code of conduct."

we'll get over to detroit and our bloomberg auto reporter. do we have any more details on what this conduct was or what happened here? >> it came from an anonymous complaint inside of forward. it is about his interactions with other people, his behavior as he interacted with other people. we do not know if it is a sexual harassment complaint as we have seen. all we know is that it was inappropriate behavior with others inside of ford. >> how critical is he inside ford management? he has the north american operations. tell me about his role at ford. high levelvery executive and has been running north america since june when the new ceo jim hackett came aboard and put him in charge of north america, where ford makes most of its money. ofor to that, he was head

product development, developing electric vehicles, self driving 50's suvs, and the ford f1 that make money for the company, so he has been a critical executive and has been at fort for over 30. -- ford for over 30. respond or ford how has it responded to the potential reputational damage it poses? >> this is another hit. you are probably referencing the forward factory in chicago that has been the scene of repeated sexual harassment complaints and ford has had to settle two cases there totaling almost $30 million in fines. december,came out in it was an exposé in the new york hacketthe ford ceo jim

did a public apology. chaos in the executive ranks is the last inc. this company needs as it tries to turn itself around under new leadership, so they will need to replace them quickly and right the ship. >> who would be some contenders for his job? are a number of people internally who could move into that position. his boss had north america previously, so they will have seasoned and expense people while they oversee this job. steelcase, is from so this is his first opportunity to bring somebody in from the outside. >> thank you. our bloomberg auto reporter joining us from our bureau in detroit. to qantas we speak ceo alan joyce as their company celebrates a record first half with a share buyback. this is bloomberg. ♪

towe are counting down asia's first major market open. the weather not looking that great. a big downpour in tokyo. nikkei futures pointing to a flat open in tokyo after the big declined we saw in the u.s. markets in reaction to the fed minutes. japan and korea about the open in 15 minutes. this is "bloomberg daybreak: asia." i am betty liu in new york. >> a quick check of the business flash headlines. the nikkei news says a charge could be linked to underperforming operations for ricoh. >> david einhorn says his hedge

fund has been performing at its worst in two decades and says greenlight capital has not been so for since march 2000. -- so poor since march 2000. it reported a loss per share almost twice as high as surveys. the company had an that investment loss of $16.2 million in the last quarter. j.p. morgan is planning a new manhattan headquarters some see as a monument to longtime ceo jamie dimon. it will tear down the current building and raise a new tower. the new tower will be bigger than the current building, which was finished in 1961. j.p. morgan has almost doubled in size under jamie dimon's watch. >> don't forget our interactive function tv . you can watch us live, catch up on interviews, or dive into

securities or bloomberg functions we talk about. you can become part of the conversation by sending us instant messages during our programs. this is for bloomberg subscribers exclusively. check it out at tv . we will be back with our ceo of qantas alan joyce after those numbers, but what about upgrading its fleet and putting money in that? this is bloomberg. ♪

>> this is "bloomberg daybreak: asia." i am betty liu in new york. is to hand back more money to shareholders after record first-half profit, buying back as much as 378 million australian dollars, on top of the 2 billion already returned to investors since late 2015.

investors liking the news, shares of 9% in sydney. ,oining us now is alan joyce ceo of qantas. record first half, 15% increase in underlying profit, which is superseded your own guidance. what is your read on the first half? >> really good. what is great and pleasing his that all parts of the is this are performing well. we had a record result for qantas domestic, the jet star group, and our international was down slightly, but we have a huge changes to that business that will be implemented next year and we are expecting a significant improvement in his performance next year. across the board come pleasing , pleasing the board results and we saw shareholders,

customers, employees all benefited. >> international still your highest risk area, earnings rolling 5% this first half. how would you assess competition at the moment? putting resources in asia and launching this london route, is competition more intense? is theree are seeing is still a lot of capacity being added international. in the first half, we saw a slight increase in unit revenue performance of .3% and we are expecting that trend to continue . as i mentioned, we have three big initiatives that will change and improve the economics. the introduction of more 787's next year. we have eight in total arriving. dubaive from singapore to

some of the emirates that qantas is picking up, and the perth to london service which starts in march, and initial signs on that are extremely positive, so we are confident that we will see a significant turnaround in the performance of the international business. >> you mentioned you have the momentum behind you. you are getting closer to the end of the three-year turnaround program for you. it seems like this buyback and their defying s&p calls to upgrade your fleet. what is the appetite to reinvest again? >> we are reinvesting. since i have been ceo we have bought 180 new aircraft. i think the s&p report was

flawed. unfortunately they reported that last week when we were in a blackout before they had all the information today. what would have made them feel more comfortable and moody's more comfortable about it is our operating cash flows were a record 1.7 billion, up 50% nearly for the first half. we announced today that we are for jetstar, new investment in lounges, recruiting of pilots come and we believe given the performance of the company today, there are plenty of operating cash flows to return the investment to shareholders, including project sunrise, including the retirement of the 747s, and to

continue to invest in our employees with training and infrastructure. report was that flawed because it was too early to show what qantas is doing. >> looking through that report, now that you are out of that blackout, you can go more in detail, but the s&p saying the average age of a qantas airplane is about 10 years, which is older than singapore airlines and almost double the age of emirates. they are saying that time is now to invest even more money into your aging fleet before the costs become too much to replenish that fleet. that wasthink again incorrect. one of the reasons the fleet age has gone up, we have taken over

20 f-100's in western australia and queensland, which are customers were demanding, bhp and rio, because it allowed us to reduce the costs as miners were suffering. they are low cycle aircraft and are competing against similar-aged aircraft from competition. where we do have competitive need to replace the aircraft like retiring the 747s, we are doing it and the oldest aircraft in our fleet are leaving this year. ,e will have 5747's retiring replaced by 787's, and we have a plan to renew the rest of the fleet. we are investing heavily and configuring aircraft, like next year spending hundreds of millions of dollars on a380s.guring the

we also announced the jetstar aircraft will be retiring from and iso it is happening a detailed expenditure on new aircraft. we typically spend 1.5 fo billion dollars to $2 billion on capital expenditure. we think we can continue to fund that and do returns to investors. -- to shareholders. s&p, ifo you think that you feel they had an adequate information, why do you think they came out with this report? >> exactly that. they had in adequate information. i think they were after headlines.

they should have waited for the results and seen what was in the results and seen whether stands, and i think that's what moody's has done, take a more professional approach on this. >> what will want us look like in the next decade, a dominant asia,r, a bit player in or do you see global ambitions for the carrier itself with the designs on other airlines. ? >> we think there are huge opportunities in organic growth for the business. qantas international, project sunrise, which we are making good progress, that is the project to fly from australia ,irect to london or new york and that will be a game changer for qantas and give us huge opportunities. secondly, we are seeing

continued growth in the domestic market. the resources sector is turning the corner. we have seen positive revenue growth in that sector. it is an important part of our portfolio. if that starts to drive we will have all cylinders. we have our loyalty business. we are launching financial services and insurance products, and all of those new businesses are all performing really well in the opportunity for us to expand them is quite huge. always appreciate the time. thank you for coming back on the program. alan joyce joining us from their head waters. downg up, we are counting to the market open in japan and korea. could be some jitters given the bump up and yields after those fed minutes. we will get reaction and investment advice from rabobank.

atdon't miss our interview 8:40 a.m. hong kong, 7:40 p.m. in new york. stay tuned. this is bloomberg. ♪ we use our phones and computers the same way these days.

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ 8:00 a.m. here in hong kong, live from bloomberg's asian headquarters. i am yvonne man. welcome to "daybreak asia." a mix today in the asia-pacific. game,na returns to the overnight, wall street fell on speculation. the catalyst was the fed minutes. policymakers are increasingly confident about the u.s. economy. betty: i am betty liu in new york, it is after 7:00 wednesday. oil sliding a second day in new york. concerned this could derail opec production cuts. the asian pacific's enjoys a golden year for aviation.

we will hear more views from qantas boss, alan joyce. ♪ yvonne: we have been honing in on the fed minutes. i turn in the markets for the close of wall street. asia so far bucking the trend, powering through inflation risk at the moment. china will be the big game changer. g #btv 8423. this coming at a time when the global equities in general, this rebound seeming fragile now. this up spike in yields will be the catalyst of that. now we see that tenure at 2.95%, that will be giving -- the 10 2.95%, that will be giving jitters. betty: as you have mentioned,

asia bucking the trend. this connection among global markets between the u.s. and asia, of course continues. ith this tumble in the u.s., will be interesting to see how much carries over into the trading week. yvonne: let's look at the open in korea and japan. >> jitters we saw on wall street. the nikkei 225 losing 0.8%. a firmer yen feeding into the risk off a move. the yen rising for the fifth time, on worries rising yields will hurt demand for stocks. a hawkish set of fed minutes investors are digesting. is movingthe kospi 0.5%. a continued hustle regarding gm's potential withdrawal of their factory in korea.

we are seeing bright spots when it comes to the australia session. the asx 200 writing for a second day of gains as the day lose continues apace. thenese stocks, this after and others foron running a cartel to move cars. those a stocks are under pressure. decline, with immunity and avoiding fines. some companies reported results of this morning. qantas shares a jumping the most since december 2014. ceo alan joyce spoke to yvonne and betty about the fleet. despite slipping as margins narrowed. westfield under pressure, reporting they met estimates. alas look at the big movers in sydney.

after the most on record saying it expected 1% and 2% metro tv growth. when you look at the bottom of 10% after ambling softer retail -- australia retail market. instill are seeing weakness either market in asia so far today. betty: thank you, sophie, on the markets. affecting this is the fed. it latest fomc minutes increasingly positive about the u.s. economy and pointing to faster inflation. we want to bring in our global macro strategist. vincent, tell us what really stood out for you. minutes these weren't for january -- from january 31. we saw data in february that

substantiated it was increasing. 0.2% of the 2% target. where theyto account were in january, now you have to have this data that reinforces that opinion. it could change to four hikes, as opposed to three, going forward. betty: we will have to see how march looks. what did you make of the market reaction to these minutes? vincent: it is a tale of two cities. one of the first headlines was about wage growth. the machines caught on to that and immediately the stock market rose, the dow rose. the dollar tumbled. and the balance of headlines that followed were on strong economic growth, higher inflation, exactly the opposite. a bevy of headlines were in that category. this dollarent, is

reversal or four day winning streak real right now? vincent: at least in the short term. u.s. yields are finally at levels attracting foreign investors. life insurance companies coming in the last 24 hours, buying u.s. treasuries on hedge, which suggests they are comfortable with the level of the dollar. neither will the dollar erode further nor capital losses continue in the bond market. looking for safe returns on the dollar. the bottom may be in. yvonne: we have been talking about synchronized mobile growth, we usually see the dollar weakened. if you see better prospects in europe and japan, is the dollar still oversold at the moment? vincent: we are trying to find where fair value is. people worry about the dollar tumbling, how that feeds into inflation. -- 10% seen a 10% to 10

to 12% drop. they would say that is worth about 0.75% point of inflation. that may be just enough to give the dollar a bedrock to hold onto. in the longer-term, there are a lot of things weighing against the dollar. that may come at the end of the first quarter or beginning of the second quarter. yvonne: thank you, bloomberg's global macro strategist helping us break down these fomc policy minutes. let's get first word news with courtney collins in new york. >> ford's head of north american operations is leaving, following an investigation into inappropriate behavior. an internal inquiry found the executive vice president engaged in conduct that was "inconsistent with the company's code of conduct." he said he regrets not showing the leadership quality ford has always espoused.

controlledn rebel parts of damascus say they are overwhelmed by casualties from a violent bombing campaign. hundreds of people have been killed in recent days and reports say almost half a million are being forced to live in makeshift shelters. doctors say they have only 17 beds for more than 80 wounded victims. latest r.b.i. minutes show policymakers are concerned about the inflationary impact of prime minister narendra modi's expansionary budget. the governor said there are upside risks to inflation while the deputy noted, if growth remains robust and inflation stays above the 4% target, a change in stance from neutral to withdrawal of accommodation may be considered. the trump administration says the dramatic advances in the space travel require a new set of rules. the national space council says

current regulations are overly burdensome and were written in a different time when the u.s. was a major player. the administration wants to update the world to give private operators more leeway in how they run industry that requires frequent, cheaper launches. 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. ♪ yvonne: courtney, thank you. japan we are seeing falling as much as 6.1% this morning after we heard reports from the nikkei they are said to have an impairment loss of up to ¥100 billion. this is because of underperforming north american icahn officeke solutions. we are seeing their earnings coming through.

this is the company that manufactures and does things like image scanners, printers and digital cameras. down more than 5%. talk opecead, we will with barnabas gan. he says a fourth quarter correction cannot be ruled out. betty: a review of the fed minutes and the reaction we are staying in asia so far. this is bloomberg. ♪

♪ ."onne: this is "daybreak asia i am yvonne man in hong kong. betty: and i am betty liu in new york. isl kashkari says the fmoc paying attention to wage growth. they will not overreact to these aberrations we see from one month to the next. the release of the minutes we saw from janet yellen's last

said meeting, he told bloomberg the language is vitally important. word change inch the statement. further is intended to say, continuing the current path we are on. i think that is the best of the debate we have been having. i am focused on, what is the outlook for inflation, wage growth. is there still slack in the labor market? when the minutes come out, i think the minutes will speak for themselves. the market can interpret the collective views. view, patricks harker from philadelphia. he sees only two increases because he does not see inflation moving. a number of times. >> i do not want to react to one rate report -- wage report, or the latest cpi numbers. i don't want to dismiss the data

or react to one month's blip. we have to look if it is moving toward our target. i hope it is. for almost 10 years, the fed has been undershooting the inflation target. we keep saying inflation is around the corner, and then it disappoints us. let's allow inflation to come to us. we have powerful tools to keep inflation from getting too high. we have limited tools if inflation ends up too low. let's let the inflation come to us. >> just reacting to inflation with those powerful tools can have reactions in the marketplace. we have a jumpy wall street these days. younflation breaks out, are concerned we would see wall street overreact? >> wall street overreacts to everything, the upside, the downside. we cannot make policy on market blips. we have to focus on the long-term economic outlook and

the mandates congress has given us. they have given us stable prices and maximum employment. wall street is going to do what wall street is going to do. yvonne: that was the minneapolis federal reserve president neel kashkari speaking exclusively to bloomberg. the dollar jumped as fed minutes show it could sustain additional increases. chinese markets reopened after the lunar new year's holiday. fromng us is michael every rabobank, here in our hong kong studio. was this overdone? we have seen so much afterwards when it comes to cpi, the jobless numbers, jay powell taking the helmet in march. what you make in this -- what do you make of this? >> may i say, what he said? [laughter] ride them through, see what

the trend is, then react to that. the market does appear to be very highly strong at the moment. indication you might see five basis points, not a good sign, really. yvonne: you have to wonder what is driving these yields. our market forces in play? michael: i do not think it is supply-side yet. we not seeing people suddenly walk away, even though there is a wall of supply coming. we do not think the demand will suddenly evaporate. but we are seeing the market think about, do we finally have the inflation again? which goes back to what mr. kashkari was a saying. the answer is more likely to be no than yes. but if it is a yes, everything changes. yvonne: the way it sold off, it was surprising.

if you are betting the fed will be hiking more this year, we should see more reaction to the shorter and. what is going -- more reaction to the shorter end. what is going on? michael: maybe they wanted to be more hawkish. what morganhis stanley said, it is appetizer with stock pullbacks we see? given we have seen one stock data point lead to these corrections, are we in for more? michael: last time i was on i exit,stand near the fire the way the market is positioned. i maintain the same message. betty: i am curious how you see jay powell, who will be conducting his first coming out, giving his first impressions of the public in front of congress. how do you think he will handle this? michael: very carefully.

the last thing you want to do is inherit the chairmanship of the fed and be responsible for the markets melting down. -- it is ahad of sticky wicket. potentially for the first time we have inflation coming back on his watch. he does not want to be the guy who slows that down. good luck, mr. powell. betty: and good luck for keeping mr. trump -- good luck keeping president trump off his back. not said anything yet about rate increases and how that might affect the market. do you think he can handle this, stay independent? what will you be watching for in this testimony? behael: i am sure it will another master class in fed speak where anyone can interpret what they want out of it and be

satisfied they are understanding what is going on. if he can maintain their track record of the throwing jargon and buzzwords but not giving a clear indication where we are going, i think the market will be happy. if he makes the error of being too clear, we could see dramatic market movements one way or the other. 3%, if the 10 year at that goes higher, could it hurt the asian economy? michael: it is around number. i do not think the difference be aen 2.95% and 3% will recession. but 3.5% will get people nervous. yvonne: the dollar rebounds, we thought perhaps we saw a rebound -- a bottom. theould see a snap, given way the market has been now. is that something asia needs to

wake up to pretty soon? michael: sure, that is my concern, we have pulled the elastic on the dollar really far. they say we are going, we are going. and for any number of reasons, the dollar has been selling off, instead. they will keep going. you could see a 5% or 6% shift in the dollar in no time at all. asia.ould really knock yvonne: are we going back to 2013 taper tantrum? michael: i would not say as big as that. you could have a mini taper tantrum. what we have seen in the last one to four hours is an indication of that. betty: i want to bring up a chart i had up earlier, focused more on u.s. markets. 6473, taking a look at the high yields, corporate debt markets, which we see represented by the white line. some volatility here. some indications, you look

between -- the gap has a state within range. there is not a big warning sign the debt markets are going to affect equities so far. what do you make of this chart? if there is going to be contagion or market turmoil, what do you think is going to be the catalyst, if it is not deterioration of the corporate debt market? michael: i think the keywords are, so far. that relationship has not broken down yet. let's flip that the other way. if the relationship was already broken down, we would already be panicking. the fire alarm has not gone off yet. but it some point it will go off and we will worried. it is good, does not mean it will stay that way forever. betty: it does not.

there are continued concerns about that. what do you think could drive that over the edge? right now we have a earnings that seem to be pretty healthy at this point. the markets, yes, they have reacted quizzically to inflation expectations. but what could be the catalyst that could cause this further maturation? michael: let's think globally. geopolitics are a concern. let's see what trade ships under president trump look like in the next few weeks and months. in china, even though things wee been stable, what if were to see a large corporate bankruptcy, for example? would that flow back to the u.s.? i am are random points throwing out. michael, thank you so much, michael every, from rabobank.

you can get a roundup of that story and many more to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb on your terminal. it is also available in mobile. customize your settings to get news on industries and assets you care about. this is bloomberg. ♪

♪ ."onne: this is "daybreak asia i am yvonne man in hong kong. betty: i am betty liu in new york. jpmorgan planning a new manhattan headquarters some see as a monument to jamie dimon. they will tear down the old park avenue building. the new tower will be bigger than the current building, which was finished in 1961. jpmorgan has more than doubled in size under dimon's watch.

yvonne: air new zealand the sword. at the carrier said it sees fiscal 2018 earnings that topped last year lifted by local demand and strong inbound tourism. it came in at the equivalent of two it to $37 million for december -- it came in at the equivalent of $237 million. betty: a temporary fix to keep airbus planes flying until a solution is found. a fuel caused dangerous vibrations and took many jets out of service. we are told an earlier version to readeal will be used it did not last as long as the replacement. don't forget our interactive tv function, tv . up on past interviews and dive into securities or bloomberg functions we talk about.

part of the conversation by sending instant messages on our shows. this is for bloomberg subscribers only. yvonne: let's take a look at markets trading in the asian pacific. from wall street, a bump up. leading the losses down a close to 1% in tokyo. the kospi down 11 points. the asx 200 turned negative at the last second. the only market showing green, australia, sheltered by market jitters. most of the trend is red. dollar is back with a little vengeance. selling off this morning. down 0.4%.won dollar-yen, 107.71.

aviation in asia, the prospect for a golden year for the regional carriers. and, earnings. this is bloomberg. ♪

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ 8:30 in singapore, half an hour from trading their. a beautiful thursday morning. i am yvonne man in hong kong. betty: i am betty liu in new york. you're watching "daybreak asia." >> first up, the minutes of janet yellen's last fed meeting shows policymakers more positive on the economy and optimistic they will reach their target. they expect the rays of growth to exceed initial estimates and the labor market will continue to strengthen. the minutes show several members have raised their forecast from december.

has overtaken china as the fifth largest sovereign holder of gold. in january, the central bank raised their holdings, 857 tons. topping the pboc's. they have increased holdings every month since march of 2015, well china reported last in october of 2015. may prime minister theresa is seen in flaming tensions within her conservative party by asking brussels to be flexible on the length of the proposed transition period post-brexit. they say it should last two years, while the e.u. want it to end december 31, 2020. may wants a longer transition. >> whatever the new relationship

will be, it will be different. it will be inferior to being a member of internal markets or in the customs union. [indiscernible] trump's top anti-watch trust dogs talking about enforcement -- saying there tough approach threatens an invasion. the u.k. said dominant players have a responsibility not to hinder competition. the justice department's antitrust arm says there has been no demonstrable harm to consumers and the u.k. could stifle the very dynamism that has helped users. 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. ♪ time to see how the asian markets are shaping up this morning. this bond that

selloff once again after those fomc minutes. >> benchmark treasury yields holding at that level. the possibility of a tighter fed overtime. bonds of sliding across the board. we are seeing that push up the dollar for a fifth session. that is having a knock on effect of the won. the tsing dollar has felt to a one-week low. perhaps.ven play, the aussie dollar holding above the 78 handle for now. let's check in on equities. stocks mostly lower, tracking the drop in u.s. futures. in australia we are seeing little change as investors grapple with this wave of earnings. qantas, shares flying. bestshares having their today advance since 2009.

this coming down to the set of gains on the back of its agreement. elsewhere, korean stocks led by utilities and industrials. a tussle with gm continues this morning. the finance ministry saying nothing was decided regarding support from the government. 0.9%, slidinging with most stocks on the decline. is the worsticoh performer on the nikkei 225, anling over 6%, it has impairment loss of over ¥100 billion. japaneseading stockholders lower this thursday. betty: thank you so much, sophie kamaruddin. qantas shares as we talked about, are soaring in sydney, after their record profit. it will give back more money to show her lose.

alan joyce joined us to discuss the carrier's earnings. what is pleasing is, all parts of the business are performing well. we had a record we sold for qantas domestic. a record results from a qantas loyalty. and qantas international was down slightly. we had a huge it changes. that business to be implemented next year and we are expecting a significant improvement in its performance, all things being equal, next year. across the board, we were pleased with of the results. our shareholders, customers and employees benefit from those results. yvonne: international is your highest risk area. you talked about earnings falling 5% this first half. how would you assess competition? you have resources in asia, are looking to launch in europe.

is the competition getting more intense or abating now? alan: there is still a lot of capacity. half we saw a slight increase in revenue of 0.3%. we are expecting that type of trend to continue. as i mentioned we have up three big initiatives on the change to improve the economics. we have eight of them in total arriving. there will be changes to move to singapore from dubai. emirates from some of the flights qantas is picking up. to londonw perth service that starts at the end of march. the initial signs of that are

positive. are confident, significant turnaround in the performance of the international business. alane: that was qantas ceo joyce speaking earlier on daybreak asia. asia remains a standout market for the aviation industry. last year, they saw the strongest growth rate in investment, running into the hundreds of billions. let's speak to our transport analyst, live it from singapore. thank you for joining us. we heard from mr. joyce himself, he is quite bullish and optimistic about what is to come in the aviation industry. you are sharing his view? >> absolutely, a blue sky scenario. we talked about the chinese carrier. it is looking strong in terms of demand. what we have seen over the last 18 to 24 months, chinese and

japanese bound tourism. the demand in the market is looking good. yvonne: we have been talking about how qantas and many other using a lote been of resources. do you think the competition will stay more intense? the things or abating. what does this mean for yields? up in there is no let competition. if you look at capacity, it will be strong. middle east carriers have pulled back slightly. andthe chinese carriers low-cost carriers are still aggressive. there might be growth ahead of them. there is a targeting possibility.

what we had over the last few years, the strong decline, has stabilized. but the pressure is likely to stay. yvonne: is it all going to come to higher fuel costs? we saw double since 2016. how well-positioned are these asian carriers when it comes to hedging higher fuel costs? numbers, $10k the to $15. and oil at $80 per barrel will start pinching them. qantasgapore alliance, and others, have a very strong policy. they would be benefiting as oil prices rise. but the low-cost carriers, chinese carriers, who have no hedging policies in the last two years, would be hurt a bit.

the fuel cost remains anchored. we will be looking at a much more closely. at this point in time, i think they are comfortable. betty: what about airport infrastructure? you say that is a big challenge for air carriers in asia. rahul: i think that is a key risk. the capacity is coming on. hong kong as well. they are trying to get capacity. they are moving ahead of where they think demand is. mumbaist inaugurated the airport. that is what could stall this demand. we see the strong demand, but there are challenges ahead. lots of money would be put into that. betty: lots of money going into that area.

you talked about the air cargo space and what singapore airlines, how that is a good benchmark for other area -- for other air carriers? has been very volatile over the past five to seven years. we saw cargo loads, fuel factors. what we have seen, e-commerce has been the fastest segment within air cargo. i think the airlines are benefiting out of that. that leads to higher airfare markets. that will continue and take out , and makee volatility air cargo earnings more sustainable. you mentioned cathay.

all those benefit from this. yvonne: thank you so much. oil prices.out we will talk about the commodities space in general. the highest trading profits since 2008. much more on those numbers. this is bloomberg. ♪

♪ is "daybreak asia." i am betty liu in new york. yvonne: i am yvonne man. glencore reported record profits since july. let's go to remy inocencio. he has the bloomberg chart we need to know for glencore. deals,dends, debts and going the right way.

been paid down. there is definitely a thirst for deals. it all hinges on net income. g #btv 5358. but huge turnaround from 2015 when we saw a crash in the metals market. it copper in red, zinc in blue, coal in yellow. tot has helped net income $5.2 billion. that is a record. the question, what will glencore do with of those profits? i mentioned dividends. g #btv 1575. is the 2018ne perspective yield for glencore, 3.6%. we can see it shoot up significantly from the 1.3% it has been at for several months. bhp ando and blue and yellow, a far cry. out $2.9hey put

billion in terms of the dividends total, which is three times as much as they thought folks would be at. also to the debt, g #btv 972. they are paying down their debt in a real great way. -- i want to point out free cash flow in white. this is that $2.3 billion for 2017. you can see the ceo predicts $10 billion, looking ahead. what is he going to do with that? one thing they want to do with m&a is get this agribusiness. we know glencore is in metals and mining. but they want to get into agricultural commodity trading. betty: after all this good news, what are analysts saying? ramy: analysts are very bullish on this. hop on over to this side of the screen and check out the

function on your terminal. take a look at the green, that is the buy, hanging out at 21. last time it was that high was in 2013. and threeix holds, sells. they say glencore is one of our top picks in mining. they are back and red hot. betty: back and of strongly back. thank you so much, on those results. oil dipping in new york on concerns expanding u.s. stockpiles knocked to the seam out of opec production cuts. crude will see more downside in this current quarter. ocbc economist barnabas gan joining us from singapore.

what more do you see in oil prices? if you just look at the fundamentals, we have already seen u.s. production crossing the 10 million barrels a day threshold. these signs suggest there is still a risk of ballooning supply in the oil sector. quarter in the first [indiscernible] it could push prices lower. i was not surprised for oil prices below $60. that mean fores opec and their curbs, their production cuts? barnabas: this is an interesting question because of the fact the opec cuts have been successful.

history, aross compliance rate of 100%, as well as the mandatory targets they showed in the market. it is a success. prices have been edging higher not just from improving fundamentals last year. there is a message by opec, that they should continue these production cuts to the end of this year. would be whereat the downside risk is, if they do taper lower. to what extent have we seen these shale drillers cautious in their expansion? ,e have heard some from these focusing more on returns rather than growth. cautious inquite terms of how much u.s. shale can play in terms of the price?

the climate surrounding oil prices [indiscernible] i know we have seen a huge rally since 2017. we believe market watchers and investors are watching closely how the fundamentals do the coming year. i am sure opec and the shale producers know this. it is a very key driver and potential risk of a prices edging lower. i would believe that producers should remain cautious into the years to come. the numbers have shown the increasing oil production in the u.s. is actually at 2%. at least the numbers are showing shale producers are more confident.

lower oil prices in the coming quarter could take production again into the rest. want to step back a bit from the oil markets and talk about the commodities market in general. saying, analysts are given where we are in inflation, where fed expectations are, raising rates, we are about to enter, according to some, a commodity super cycle. are you on board with that? barnabas: i know there are costs for a super cycle. -- our view for commodity prices is a neutral stance, at least for 2018. is $70 aor cost barrel. $70 could invite

more shale producers. [indiscernible] simply because of the higher rates environment. asia has embarked on a higher rates environment. the be ok has high interest rates. -- the bok has high interest rates. all of this does direct gold prices. promote new should behavior in the year to come. yvonne: we have seen the miners have benefited from china's winter campaign. they are curbing capacity and pollution. we are expecting those curbs to last. what happens then come are the good times over? then, are thes good times over? barnabas: the very high uptick

in demand has pushed commodity prices higher. at least for 2018 we are looking for slower growth in china i 6.5%.-- by that could lead to decelerate it growth. they could affect metals, gold. commodity prices are still very much china-centric. it will be advisable for closely at theok chinese economy in the coming year. gan,e: thank you, barnabas joining us from singapore. find in-depth analysis on bloomberg radio. check out daybreak asia. you can also download the app, bloomberg radio plus. this is bloomberg.

♪

♪ let's get a quick check on how the markets are playing out in the region. you can see japanese equities, the nikkei 225, falling hearing -- falling. we are seeing declines here in the u.s., based on the fed minutes.

hikes,e of interest rate the nikkei down 1.3% right now. let's look over in australia, how trading has been going, into the second hour. after initially looking at early gains, the asx 200 turning slightly lower. yvonne: we are seeing the same thing across the board in seoul. downa look at the kospi, about 0.3%. the won falling. opens in 15 minutes. futures should be signaling the same types of trends. we have plenty more to come. will be next on bloomberg markets. we will be watching a lot of what is happening for the china open. a lot to look ahead to, given

hong kong really bounced back in a big way yesterday after the hang seng came back from the lunar new year holiday. betty: certainly the china markets will be the ones to watch. as we have been seeing here, there has been what happens here in the u.s., to how that affects asia trade. it all goes back to the fed. we will get more clues on the fed speaking with the jay powell next week in front of congress. that is it from "daybreak asia." our coverage continues with haidi lun and david ingles. this is bloomberg. ♪

♪ david: market slide after a late session on wall street. there is concerns the fed will the government pays. shares soaring on the back of record profits here. there is also news of a $300 million buyback. support for the chinese data, they have run construction back. that is the big winner, we will talk about that later on. ♪ david: welcome to bloomberg markets