♪ .aidi: the power game to repeal his hold on the country grows ever stronger. betty: north korea uses the olympics for talks. highs and lows in the earnings season. they need a big deal

after a quiet 2017. haidi: we are just past 9:00 a.m. and this is a quote daybreak: australia." i'm betty liu. we will look at all the action that happened on wall street on friday. how that will play into the asia-pacific trading game. record -- major ines in the market -- gains the market. substantially higher. nasdaq rising by almost 2%. not like the sessions we saw last week. we ended at the high of the session. we are really focused on several key events in asia.

is jay powell is coming out coming-outy powell's party to congress. so much heightened awareness of the potential he has to be in market mover. we have had so much with flash in terms of sentiment. even though the rally into the .lose -- the s&p pushing there is still a little bit of fragility when it comes to these markets. take a look at the set up we are saying. of .3%.eing gains fluctuating in the session against the euro and losing ground against others. upside of 31 points going into

the open. the aussie dollar is strengthening somewhat. at 107.49.ading this is how we are looking at the bid when we look at gold. from -- some gains. we are seeing some output issues coming out of libya. ore futures.n the other big story we are watching delegated to this week is china's communist party set to repeal a will -- will rule --t would allow jinping president jinping to stay in power. not a major surprise that

this has happened. many were taken aback by the boldness of this decision and the timing of it as well. could've she -- xi wielded power using other mechanisms, but the fact that they cannot with this decision that we believe was made at the central committee earlier this year and announced ahead of the meeting has taken many by surprise. awayments this move towards a centralized leadership. it has been formally limited. this collected under ship was but in place after the chaos of now they done. -- after the chaos.

it is momentous in that respect. barrier for the president because he is already head of the party. this change will allow him to extend his role of president beyond 2023. not a major surprise, but it is the timing and how it happened that is taking the back. outerms of how this played come the standing committee were anointed. five new members. we were alerted to the fact that there was no clear successor to take over for the president. it was flagged in october, but the fact it came out now has taken many by surprise. betty: what does this mean? life? -- ruleor

for life? >> the role is open for that. he is starting his second term in there is another five years for him. he is accumulating so much power in this space of time. if anything goes wrong with the economy or politically, the president will be ultimately responsible. there is a risk with accumulating that much power. he may well be trying to copy or emulate president putin in russia. he might be trying to take a leaf out of president putin's book. we are heading into the central committee meeting from monday to

beijing. in they will be making decisions about the pboc and regulators. they will be formally signed off at the national people's congress that kicks off on march 5. betty: thank you so much. we will talks -- talk more. stay tuned for that interview. let's get to the first word news with haslinda. watch the end of the winter olympics in pyeongchang. the north did say ties from the

korean peninsula should develop with washington. president trump says he still thinks the trans-pacific partnership was not a good deal for america. he reiterated the possibility that they could return if better terms are on the table. he has been a critic of the tpp and with drew a year ago. now are no indications that the u.s. return is under discussion. the next scandal has hit the liberal national coalition. 46%ives the government support. grabbing the spotlight at the mobile congress in barcelona. the company is baking -- banking on features like emoji's, camera

etc..es there are concerns about ace -- a possible slowdown. "daybreak: asia." -- global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. him with -- this is bloomberg. betty: rolling on in australia. paul allen is here with the numbers. let's start with bluescope. beat.ks like a paul: that's right. delivering 517 million. a20 3% rise in profit there that was pushed along by strong steel prices.

reward coming for shareholders. bluescope will push on with its buyback. the share price, one of the standout performers is up 20% -- 22%. we will get a little bit more on this when we talked to the new ceo, mark vassella. he will be talking tests us and about three hours time. bloomberg in about three hours time. the northharges on american business and tax changes as well. full-year net loss for qb. slightly less than what was expected. they announced they will be selling to zurich.

there will be some premium america. at north no change in australia or new zealand. saying hong kong and singapore have been particularly challenging market. haidi: thank you so much for that. responding, samsung to the iphone x with a new fight ship of its own. -- flagship of its own. betty: we will ask what words might say about the case of rate hikes and the state of the u.s. economy. this is bloomberg. ♪

♪ haidi: i'm haidi lun in sydney. betty: you are watching "daybreak: australia."

jay powell will make his first report to congress. kathleen hays is here with a preview. released a already preview of the speech. kathleen: 55 pages. this is his first humphrey hawkins testimony. that is what the semiannual address is usually called. they do not always do it that way. this is a little bit of a surprise but gives 20 of people time to study of it -- study it. it is clearly staying on janet yellen's policy path. they are seeing further rate increases, but not so worried about inflation. they know the economy is a little above full employment. as they look at wages, they say they are probably held down by sluggish activity.

the pace of wage gains has been moderate. serious labor shortages would bring about larger increases and has been observed so far. let's look at the terminal. we have talked a lot about the hourly earnings, but this is when you strip out the supervisors. 2.4 are stuck around percent, even with unemployment down to 4.1% and expected to fall further this coming year. day one is now tuesday. he will give his testimony with tons of questions and answers. the second day will be u.s. thursday. ,hey will talk about rate hikes probably tax cuts as well. these things can get very politicized. let's bring in our guest. he is joining us in sydney.

jay powell have to be so aware of this tightened them to of important and scrutiny given the whiplash we have had from markets. how will he play it? >> he looks like he is on track to keep the yellen strategy. we see another three rate hikes this year. that is well priced into the market. .e have two more rate hikes it is a gradual return. haidi: history actually tells quite the interesting story. thisctually see phenomenon. you keep it capped at 3%.

if this limit where you start pulling back? are we ever going to get there? >>p 4.5% is a long way from where we are now. a little bit of premium about that. that is by the end of this year. you are the had a lot of moving. anticipating and pricing. john williams, whose name has also been floated for vice .hair spoke on friday

shows -- is the phillips curve broken? it is only up to 1.5%. is this one of the reasons why you see three and not for rate hikes? hikes? rate >> we see five rate hikes in the coming years. three in 2018 and two later. i think that is the critical point. where does jay powell finish? that is the biggest decision he has to make over the next two years. home -- who icome

john williams, who i respect. betty: i want to point out. we all read the lawyer -- letter from warren buffett. i want to pull up a quote that talks about the folly when it bonds.o investing in he said it is a terrible mistake for investors with long-term horizons. among them pidgeon funds, college endowments and raving .inded individuals it is another way of saying his that is always invest in

the stock market over the long-term. what do you make of that part of his annual letter? global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. it appeared in8 my inbox3 "daybreak: asia." this morning so "daybreak: asia." i will have a read of that. -- it appeared in my inbox. i will have a read of that. think bonds continue to play a role. kathleen: do you feel it is a contrarian call that you see the dollar depreciating, even though we have seen it depreciating in the face of fed rate hikes? a lot of people say the euro will do better, maybe even the yen because the fed is on its path and europe will catch up?

why do you feel that is a contrarian call? has weakenedollar already. as you say, i think you have the fed rate hikes well priced in. ecb moves not quite so much. rate hikes in 2019. the boj, i do not really see them removing that zero perceive -- 0%. haidi: kind of widely -- they had a scathing reaction amongst the investor community that you could get wage growth without inflation.

what you make of that argument? >> if you have an economy that the u.s. is growing about its potential growth rate and people are saying we might see a little bit of wage pressure -- we throw in quite a substantial stimulus, i would be surprised if some of that does not find its way into inflation. haidi: thank you so much for joining us. in our conversation, kathleen hays. today's edition of daybreak, subscribers can go to tv on their terminal. you can just get the news on the industries and assets that you care about. this is bloomberg. ♪

haidi: i'm haidi lun in sydney.

i'm betty liu in new york. hugh are watching "daybreak: australia -- you are watching "daybreak: australia." tell us about turnbull's new number two. will be a question that quite a few australians will be asking themselves is running. who is michael mccormick? he is 52 years old and a former journalist. publisher, heas a is relatively unknown to the general public in australia. is the veteran affairs minister. he has jumped from a position of relative of here need to become the deputy prime minister of australia.

he was selected as leader of the -- party.already ofdi: the less and in terms how our international viewers might not have been looking at the headlines. fill us in on terms of how our international viewers might not have been looking at the headline. >> one of the local tabloids revealed that burnaby is a father of four and had an affair with his media advisory. she is now expecting his child. this would not go away. it prompted a very interesting debate in australia europe banks. what should be private and what should be paraded on the front page of newspapers.

it prompted a debate as to whether or not the media -- that the campaign should have been around certain offices in parliament. it all to me led to barnaby joyce's downfall. he resigned last week. haidi: returning from his u.s. when itping for a reset comes to the coalition. a quick check of the headlines. germany says the $9 billion state is within regulations and there is no way to -- no need to invoke foreign trade. the dealmaker's founder and chairman leading shareholder here for the largest investment by a chinese company in an overseas automaker. a second deal with china. factory new mercedes

meeting rising demand for its cars and auto market. much more ahead on "daybreak: australia. ♪

here. it is 9:30 market's are opening with a little bit of positivity. i'm haidi lun in sydney. betty: i'm betty liu in new york. it is dreary today. you are watching "daybreak: australia." it is pretty much raining all around. china is set to repeal existing limits on the presidency to allow the president to remain in power beyond 2023.

it would remove the only formal barrier to him staying in power indefinitely. drive to calm the property market is working. prices excluding pricing climbed to 52, compared to 57 in december. the government is experimenting with ramping up mental supplies while fine-tuning existing controls. libya terminalm are to be reviewed after production was hit. the disruption could see output decline after its recovery from the country's internal violence.

an outline proposal to visit the white house in the coming days or weeks is said to have been postponed indefinitely. --icials closed agree told not publicly confirm that mesko will not be paying for his border wall. -- mexico will not be paying for his border wall. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. let's get an update on the markets as we head into this fresh trading week, where we are seeing a little bit of an upside. 72.94.i trading at this is how we are setting up. -- .7294.

this is how we are setting up. the aussie dollar trading at 1.0751. the yen is trading 107 heading into the tokyo. is yieldingd trade ofk from that cross -- cusp 3%. reminder, we had the s&p 500 pushing the average for the past 50 days. certainly in control there.

it has been an interesting, uneven recovery when it comes to the global equities rebound. japan is where you are seeing some red warnings. japan is looking a little tricky. a lot of people will be saying can we get a little more strength and push on? is a case in point. there is a chart that tells us what is going on. this is my 368 on the bloomberg terminal. this is momentum selling that we are seeing. -- 9638 on the bloomberg terminal. this momentum selling that we are seeing. the context of how the rally is playing out in other parts of the world, in the u.s. we have

retraced 50%. we are back up to 7.8 percentage points in terms of a rebound. in japan, we have lacked that. italy is the japanese equity market in a precarious position to carry through most of those big earning results. japan still maintaining a loose monetary policy. governor kuroda getting a second term. japan would be a place you would want to be from a global allocation perspective. at the moment, technicals are showing that it is pretty precarious area -- precarious. the debate governor has changed his mind on interest rates. what are the implications. ? -- what are the implications? view in such a

short time is what has happened with the boe governor. he is really talking about the fact that back in november, he did not really see the wage inflation warranting another hike. wage gains are strong enough in the for him to lean towards that hawkish decision. a very different standpoint within two or three months. the context of the uk's central-bank policy on a global scale -- a lot of people going into that november meeting were saying one and done. very little price movement in 2018. that is now changing what people like ramsden making more of a hawkish tilt.

that is key for traders overnight. movement not been much in the dollar. the focus really back on the ink of england. of england. betty: kim jong-un hinted at new talks. white house said we will see. following the latest developments in washington. does this represent a slight fall in relations or could it be a slight headache? >> could it be olympics fever getting to kim jong-un? picks make everybody happy -- the topics makes everybody happy, so maybe that is what this is about. one of the overtures from north korea in years about reaching

out to the u.s. and south korea, looking for better relations. that optimism comes with a tremendous amount of whether he would put preconditions on talks and how the u.s. would respond. as you said, the u.s. said we will wait and see. they stressed in a statement that denuclearization remains the primary goal of the u.s.. u.s. might that the not pursue talks unless that was a precondition. a lot still to be done. some feel like south korea's blue house -- i wanted to put a positive spin on the olympics and diplomacy to make it like ,ery good for president moon who spoke to north korean officials for about an hour overnight.

house, maybewhite not quite as optimistic as the blue house. comesinflection point after the paralympic games in sooniddle of march because after that, south korea and the u.s. are expected to have some joint military exercises. that could really get under north korea's skin. he might retaliate with another missile launch. -- they might retaliate with another missile launch or test. what about the latest on gun and control measures that congress debated this week? >> congress is coming back this week. there is a lot of pressure for them to act. and the from the public

survivors from this mass shooting in florida. from republicans and white house is that they are still pretty hardened on gun control. is an influential lobbying group. they do not want to see major changes or background checks. they be they support some background check measures. we have not really heard from two of the men who really drive the debate in congress. whether they would allow a vote on certain legislative measures. it is such a divisive issue across partisan lines. it is possible not much will get done. current polling shows that more

americans want to see action on .ackground checks, restrictions at some point it comes in like four oldest -- and what will issue. electoral issue. haidi: it seems the charges are piling up. there has been another memo released. >> the long-awaited democratic rebuttal to the republican memo came out yesterday. remember two weeks ago, memodent trump released a for national security reasons. i can is something like 33 redaction in a 10 page memo. there was a lot that was not shown. the whole thing could've been

redacted, so we did learn a lot. schiff would certainly say this shows no wrongdoing or bias by the fbi, by the justice department. on friday: new charges were brought into the probe, i think that is rolling on and on. we do not know what the next shoe to fall will be. there are now two competing memos out. robert mueller will keep pressing along. haidi: seems to be picking up the pace. thank you so much for that. next, warren buffett says he wants a big deal after a quiet 2017. we take a look at his annual letter and his record fourth quarter. this is bloomberg. ♪

haidi: i'm haidi lun in sydney. betty: you are watching "daybreak: australia." stocks may plunged 25%. yields hit 4.5%. that is likely to grab wall street's attention. the trading week brings this new earning. jay powell is speaking. let's start with the goldman note. 4.5%. >> it seems like we are far away with that stocks ending at session highs. what goldman economists are warning about is a bearish scenario. a test foroking at rising bond yields.

they believe the base case is -- but rates rising to 25% would trigger a 20% to percent decline in equity prices. that would be rather damaging to say the least. the economy would still muddled through. goings fascinating is we to the market snapshot and have stocks rally on friday. investors have grown confident that the federal reserve will not raise interest rates as rapidly as was originally year. it seems like the rebound has been dramatic. this is called rags to riches for the s&p 500. this green measures the one-way price change. you can see the red drops in the past couple of weeks. look at these most recent weeks.

only solace the stock market -- what the past week we saw was the stock market rally in the past week. that was the best gain in five years. it is hard to put in perspective what the goldman morning is when you see this kind of rebound. oil future are trading at the highest prices in four weeks . what is the latest there? >> we had a bullish report. tradingeeing oil prices near $64 a barrel. that is a significant high. we have a rather bullish event with the libyan oil fields. that impacted price.

we had a sharp fall in the venezuelan output. this is viewed as the saudi arabia of latin america. threatened to embargo. trying to keep up with their output. the venezuelan oil shipments to the u.s. have plunged. that has been bullish. a jampacked week when it -- give us a look at what you are watching. we have gdp and factory activity. they are important because they are closely monitored by the fed. let's start with housing. that's going to bloomberg once again. even going into the housing data coming you saw the homebuilders optimism is back to a peak.

it is back to that white line on the top. the are seeing permits and construction. according to economist, it matches the data we are likely to get this week. expected -- gdp expected to come in as expected. matching estimates for fourth quarter. reports are coming in at or above expectations for a robust economy. haidi: thank you so much for that big week ahead. the other stories we are reportg, the earnings reporting a record fourth quarter in 2017 earnings over the weekend area we have the bloomberg charts that tell the story.

warren buffett also had his annual, must read shareholder letter. ramy: coming in at 16 pages. in the 20shortest years he has been putting this out. profitsd about record that you mentioned. he talked about the first time he is seeing a loss in the insurance business and frustrations. what we are seeing is 32.5 billion dollars for profit in the fourth quarter of 2017. this is about five times as much year on year. isi have written, profit just half the story. the other half is another $29 billion that happened because of u.s. tax reform. just because they do not make that from their own operations, they say that is still very real.

let me switch this up. the second one, you can see something very similar. look at this. growth from a relative to the past three quarters where we saw a contraction. very good numbers. in my third chart, something just a little bit of a black guy. this is operating -- black eye. this is operating margins. you can see this is that the lowest ever since 2008. the reason i mention this is because they booked their first loss in terms of 14 years. and threes, fires hurricanes over in the gulf. this is just the numbers here. more abouthow you

the aspect of the annual shareholder letter. it -- the out with 64 book share value. looking ahead, there will be a new gap rule that will distort net income. watch out for that. sensible purchase price is a quote. you have not seen any megadeals in 2017, but he is still on the lookout for them. betty: he is always on the lookout for them. watch us live and see past interviews on our interactive tv function. you can also dive into any functions that we talk about here. check it out at tv . this is bloomberg. ♪

betty: samsung has launched its answer to the iphone x. it is called the galaxy s9. we have been looking at the specs. a game changer for samsung for just keeping track with apple? >> it is keeping pace with apple with the iphone x that they released last year. it is very similar to the s8. ,hey have camera upgrade lowlight enhancements, slow low video and augmented reality emoji's. for smiley brackets faces. it has stereo speakers with the voice control personal assistant. is, is thistion

enough of an upgrade for the flagship phone or just a small step forward? that will be the question for investors. haidi: the bigger question is how much of a test is will be for lee? what comes next? ateveryone be looking whether he has the magic touch. he has been out of the office for the better part of a year as he spent that year in jail for various charges. he has a suspended sentence and is free. there is a new ceo at samsung. .hey had record earnings they had 22% of the global smartphone market. samsung is doing well. they will be looking at whether goingkes any misstep

forward. they could be saving there firepower for the next phone with a full double screen. screen.ble yvonne will be joining betty next. yvonne: big news for the weekend. a clear sign from president xi jinping that you might want to extend beyond the next term. larry from commodities and global markets, a great china voice to talk about the implications of this. it has changed the political trajectory of china. betty: we have the managing aboutor harry who talks the markets now and tax law. he says one big source of instability will be continued

trade friction. we have continuity out of jay powell and the fed as well. this is bloomberg. ♪

♪ 7:00 a.m. in hong kong. asia." to "daybreak asia-pacific stocks are set to rally into a third week after a strong close on wall street and treasury yields dip. repealed term limit for allowing the president to rule indefinitely. his grip on power arose even stronger. betty: i am in new york where it is just after 6:00 p.m. on this sunday. north korea uses the winter olympics to hint at fresh