♪ >> 7 a.m. in hong kong and where live with bloomberg's asian headquarters. i'm yvonne man, welcome to daybreak: asia. the top stories this tuesday, said to extend gains after u.s. stocks in a four-week high. can your yields fell for a third straight day. >> plans for the iphone with a big new tablet to attract multitaskers.

tech help to drive some of the , a lot of investors will be watching inflation. it is a chart that we're quite there with. the pce which is the most some of piece of data the fed watchers out there say the jay powell might indicate

what the fed can tolerate inflation above 2%. and it is a position also held by the minneapolis fed presidents neel kashkari. >> there is a collision course between what was he on the fiscal side of things as well. address the spending plans from the white house. and it is increasingly likely that we will speak about it. what would that overshooting inflation. queen of the market reaction was pretty positive to all the headlines today. the s&p up over 1%, the dow adding on another. nasdaq also higher by over 1%. volume a little bit lower than what was expected. stockith some of the big

stories today. >> we had some big stories. ge was one of them in at the ceo came out and said that there might be liabilities for some of the subprime that the company used to be involved in. we also had some movers, some earnings related stories. the demonstration of tech and financials were really the big movers here. moving higher on trump selected support a very strong cash. they're willing to engage in negotiations. after imagining milk sales are down and having to cut costs. announcing three new out , and let's take a look at the market snapshots. looking at the missteps here,

very quickly, you can see the stock is under pressure. it is down here today. late concerns and talk about how it has really been a tough year behind them. the market really focused on the fact they alluded to possible counties. let's go to the market snapshot. the bond below 2.3%. it has eased concerns about inflation. as we go to the testimony before the fed chair, that will be very important. swings is thelly title of this chart. look at the huge swings that we endingecently, including

closer to the high of the day. >> you mentioned steele. steel stealgain ing the spotlight. su: the concern is that trump could start a trade war here. let's go to the bloomberg one more time. as you are well aware, steele is probably coming from china more than anywhere else. china very much impacted by this. we saw stocks move higher. the whiteoming from house is that the president's backing or appearing to push for the stiffest 24% duty.

and there is more to come on this. at aly to oil, we are three-week high. there has been some supply demand news, very positive for short-term oil prices. the latest is that saudi arabia's minister is saying that they may remove the output cap's. and quickly to gold, another sign of a market waiting to hear what the new fed chair has to say. and perhaps taking excuse on what powell will say about the ark of interest rate hikes before investing. yvonne: let's take a look at how things are working in new zealand. kiwi, the trade deficit virginia where he and just under $.73 right now.

we are up, relatively stronger dollar on the backdrop. the treasuries were been out for a third day. in chicago right now, we could at the openpop here. we see the rebound continuing. jessica summers is joining us from new york. >> a complete to a shakeup of the $10 trillion banking sector. examining changes in the legal framework. they are subject to the same rules. withcan be working

institutional it's -- institutions. china's economy remains robust. the long lunar new year holiday, smaller businesses reported more optimistic outlook and financial analysts are increasingly up the. however, the holiday has seen some disruption. and manufacturing has eased. jeremy corbyn has raised the aakes by confirming conference of deal with the eu on customs union. the announcement over the clear divide of prime minister theresa may that once the u.k. to be outside any customs deal so it can sign trade agreements with other countries. corbyn says he's putting people and the economy before ideology. >> a final deal gives full access to european markets.

the house of commons, with standards and protections. >> on track to embrace women and more gender equality. in more than 120 countries, i'm jessica summers. this is bloomberg. yvonne: the supreme court has handed the trump administration a defeat for the so-called dreamers, at least for now. they turned away and appeal aimed at ending deportation protections for young, --ocumented immigration's

immigrants. this buys time for congress to work out a political solution. president trump weighed in on the decision with u.s. governors. president trump: i think everybody in this room wants to help with daca. but the supreme court ruled it has to go to the normal channels so it's going back in. there won't be any surprise. it's really sad when every single case filed against us is in the ninth circuit. we lose, we lose, we lose. then we do find in the supreme court. that what does that tell you about our court system? it's a very sad thing. yvonne: let's bring in our editor to talk more about this decision. joe, what is the court rejection mean for the dreamers? it seems we have time for now, but they remain in this legal limbo. acts, unless congress they will remain in limbo until the november congressional elections, putting the issue flatly in front of the voters.

there has been no real movement on either side in congress to back off the positions that have them at a stalemate earlier this year. suggestingts restrictions should not be considered as part of this in the white house is not backed off of their position that they should be. where left with the court case. there is still room for congress and they needed deadline to do so. is this considered a big push back. >> it is unusual for the supreme court to take up the case in this manner. it is a direct appeal to a lower court ruling and the administration has not asked for a stay of that ruling. so they are willing to let it go through the regular process. the supreme court was not rejecting the argument in any way.

they are just rejecting that they will not get -- skip heart of the legal process in place already. yvonne: on to another topic, the nra. trump says he's willing to take on the nra. izzy? >> he may be willing to, but he has no need to. the proposals he is backing to make some tweaks on the background check system are supported by the nra and many of the other elements he backs including the possibility of arming teachers, tightening up some of the restrictions on people with mental illness or people that are a violent threat , have their guns taken away, those are backed by the nra. there is not a lot of distance between him and the gun lobby on this issue. yvonne: but how quickly can congress act? >> they may act quickly on the

whicheasure before them would tighten up a little bit on the background check. this legislation was brought up after the texas church massacre last year when it was discovered that the person had bought the gun, he was able to buy it legally because the air force had failed to report his criminal court on domestic abuse charges. what this would do is penalize federal agencies for not reporting to the system and encourage states to give them some incentives to report things like criminal records, mental health evaluations into the existing system. tweak to the law, a tightening of the law, and that they might be able to do in the next few weeks. yvonne: thank you so much, our bloomberg congress editor. still ahead, the latest on apple's big plans for a new iphone.

plus a lower-priced model in the pipeline as well. it up next, jay powell prepares for his first testimony before congress and we will discuss what is on his list. senior economist stephen friedman. this is bloomberg. ♪

betty: this is daybreak: asia, i'm betty liu in new york. yvonne: i'm yvonne man in hong kong. leaning toward a more aggressive rate hike path. it is a trickier path to walk on. >> a big stockmarket selloff, surging bond yields a year ago. the plans are on the table.

path,ad a much trickier janet yellen can be patient and go slowly on the rate hikes. we're hearing people wonder. -get anything for more inflation. it is expected inflation. his economics and president of the st. louis fed to make a different point today. look at #btv 30 60 eight. an employment coming down to 4.1% year-over-year and you see the inflation, the latest nation it also said it this is more signs.

we see the expectations having come up towards something that is more reasonable and more consistent with the inflation targets. >> we need to see inflation rising. the fed may go too far and too fast. we did destabilize the economy. is interesting to see if jay powell gets questions like that and how he answers.

>> the rate will continue to fall this year and we see some signs of wage pressures. it will actually be a 2% core pce inflation. >> given them, how will powell handled himself if he gets questions around inflation and around the inflation outlook. just taken over at the committee and speaking on behalf of the committee which is already made it clear in a few weeks at the committee will release a new set of economic sanctions. it gives more confidence in the projections and that rate increase will be gradual. june, we see more discussion about it. >> also the monetary policy report released on friday ahead of the testimony seems to me to down play wage increases saying that if labor markets, the

shortages would be rising more than we are seeing right now. it doesn't seem like a subtle hint. >> it has been very consistent that they will welcome inflation and they are confident it is going to happen but they don't see it as a huge breakout. >> they don't like to dwell on the white house spending plans most of the time but it is looking more like they will have to address the impact of tax cuts. i will he's revenue between monetary and fiscal policy? >> i think you will reiterate that there are positive aspects of the tax reform plan. but that the outlook for that is still somewhat open. we see higher productivity. >> steve mnuchin said that you should have steve mnuchin

without too much inflation. history suggested that relationship is not exactly one-to-one as we saw in the 90's thanks to the rise in the internet. do you think the tax cuts could boost productivity? >> i think he should be open. ,he vice chair of supervision he discusses it as a distinct possibility. early to conclude that it will be the base case and powell will take a similar line. >> the d.c. faster growth in the short term. is the bond market moving? who will give the bears to push out to the highest again?

>> and encourage higher .nflation of that discussion will likely come up in the q&a and if there door open to the bears in the market. >> i'm curious what you thought about the comment for goldman sachs and their report which is one of the most top trending with the stock markets fall my 25%. i'm curious if that is in your view at all. >> are we even going to get to 4.5% here on the tenure? >> it seems like an outlandish scenario but if you're in an environment where it is so much higher and you do get interest rate shot, it would be quite negative for stocks.

,> if we have the tenure notice it would be because we had a much stronger growth. we had a much higher interest rates that had bonds moving higher. people don't remember it because they want around then. that is the key. do we think that growth is on a per trajectory over the five or 10 years and in any sustainable way? it doesn't have to be negative for the stock market. is that balance sheet. >> what do you think could be the thing that trip him up? we notice lawmakers like to try to see what they can do to rattled the fed chair.

what could be the area that we see some trip up here? >> where can we see trip up. it is an overall time for markets. >> senior economist and kathleen hays, global economics and policy editor. subscribers. you only get news on the industries in the assets that you care about. this is bloomberg. ♪

betty: i'm betty liu in new york. ivanka: alibaba says -- yvonne: alibaba says it has agreed to buy out by do and other investors. largest backede by tencent. an army of delivery people across the country. it did nothing to stop the alleged sexual misconduct of steve wynn. the board was aware at least 2016.

japan may shakeup the rules and let's in tech companies go head-to-head with traditional lenders. ♪ mom you called?

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>> 7:30 a.m. tuesday in hong kong, taking a look at clear skies on tuesday morning. the winter coming back this week , 30 minutes away from asia's first major market open study. >> 6:30 p.m. monday in new york where markets closed considerably higher. nicer for the bulls. the s&p up over 1%. jay powell's testimony in front of congress tomorrow. i'm betty liu in new york. yvonne: and i'm yvonne man in hong kong. here with first word news, here's jessica summers. jessica: mario draghi has told lawmakers that he is sticking to his stimulus plan. he said he's not ready to reduce support for the euro area.

despite increasing confidence and inflation will pick up. economic slack may be larger than he thought. the banks must continue to provide the accommodation required amid continuing uncertainty. billionaire brothers have had their assets frozen in india, $540 million. 2008.rted at the department of justice inquiry resulted in admitting selling adulterated drugs and a singapore tribunal ruled the brothers had misrepresented critical information. and the man fired three years ago with south african finance minister making a comeback. presidentstacked by jacob zuma in 2015 and sources tell bloomberg he has the support of new president, announcing the cabinet reshuffle tuesday evening with current finance minister as he goes back as affairser job

minister. contester general may indonesia's next presidential election which would be the bitter 2014 race. he will be a candidate evidence in is made in august. he is popular and has improved access to health care and infrastructure. but he's fallen short of a promise to boost growth to 7%. global news 24 hours a day powered by more than 2700 and analyst in more than 120 countries. i'm jessica summers. this is bloomberg. >> counting down to the market open in tokyo and seoul. jay powell in the hot seat. in large part, we see markets really shrugging off this testimony. >> the rising bond yields, this is whether we will get hawkish comments from jay powell let his testimony ahead of his first public comments.

highernd seoul pointing and they are rising for a fifth straight day. also lithium stocks are under pressure after the morgan stanley forecast lithium prices will peak this year and fall by nearly 2021. and we will be watching the tech space very closely today yvonne, news that apple may release three new smartphones later. i would show you this chart as well. it shows you that global tech stocks rose to a record on monday, and the index is up 20% this year, exceeding gains on the s&p 500. they are back after swooning earlier this month. the tech players are not quite sharing the love and they have to date but 2% year nintendo is standing out given

the switch consul success. overall, there is room to play catch-up. >> expecting to hold rates today, what is that outlook for korean bonds? >> korean bonds have joined the global route, rising above 2.8% for the first time since 2014. you see that on g #btv 394 moving in tandem with u.s. treasuries. it doesn't see a move past 3%. in dbs expects korean bonds to outperform treasuries in the short term. not moving as aggressively in the fed. by the end ofes 2019, compared to five from the fed in that time. it is seen rising with improving ties on the korean peninsula. the two to 10 year korean bond is better similar maturing treasuries in the coming months.

you do have 30 year treasuries aligning and yielding about 30 basis points more and comparable , down to the 1030 year version. but we will be watching closely with it in our sites. he so much, sophie there on the bank of korea. rapid element pushing japan's financial services watchdogs, shaking up the rules. garrett allen joining us from tokyo. when is japan's regulator working on it in terms of financial regulations? >> this is something that analysts in the market have been saying could be one of those. and until now, financial regulations were centered around entities. if you are a bank, you go into the banking act. of looking at the

bank, they look at functions. if you operate a settlement business, you are taking deposits and you are around regulated deposits. if you are doing risk transfer, your regulated based on that. it means the rules will be the same for every player in the marketplace. betty: so why are they doing this? rise in news rapid technologies, it has kind of blur the lines. it's not necessarily a bank anymore. there are start up companies that are starting to do that bank business. basis,hrough smartphone going through that whole game of change.

given that committee, also coming up, we will start looking at these changes in the financial marketplace. time, it can ensure the renovation can also be made. and technology develops. >> it is a sign of the times. japan has been trailing behind a lot of countries when it comes to adopting semtech. is this a potential game changer , a threat, or an opportunity? >> banks have been afforded a certain amount of protection. under the banking act, you have to be licensed to make deposits and take loans -- take deposits and make loans. it means new players can come to the marketplace. check out the competitors in space.

they can also open up new opportunities for them, taking in semtechvest companies that have adjusted the rollback in 2016. they are trying to encourage innovation and banks will open up to a bit more competition as well. betty: it japan's banking reporter, live from tokyo. yvonne: speaking of tech, apple set to be preparing three new smartphones later this year. it includes a so-called fablet and they are running tests with suppliers. let's go to mike who has the story for us in san francisco that scoop. why now? we have just started getting over the hype of iphone x. >> i have an answer for you right here, this is the samsung galaxy nine plus.

there is a little bloomberg tv scoop for you right there. it's a big phone. it's a 6.28 screen and people really like the bigger screen sizes. the next iphone will come with a 6.5 and screen and it will be a big deal in more ways than one. yvonne: is that a signal that apple was concerned that the demand for the iphone x was not that strong? mark: you listen to the apple earnings calls, tim cook and other executives, they were so high on china. they were talking about extensive growth metrics across ,ll regions in asia and japan hong kong, etc.. recently, the growth has slowed. a lot of asia-based consumers really needs these bigger screens and form factors because of this approach to having single devices. this larger iphone is really appealing to that market and it may bring it back to the correct pace.

yvonne: are they responding to real market demand for a product like this? mark: there is demand for larger screen phones, but if you read a report, there is also a discussion of a cheaper phone with many of the iphone x features. if you look at how many units they sold, my takeaway is that people like the iphone x and they want to buy them, but not everyone can afford it. people don't want the iphone eight or the eight plus because the design is extremely outdated compared to the iphone x. this cheaper phone is bringing the cost down of key features like the edge to edge screen, facial rush -- recognition will go a long way. yvonne: they don't have the best track record with cheaper phones. mark: that's exactly right. the last time we talked about a cheaper phone, it was the iphone 5c. it was an unmitigated disaster and they completely

miscalculated how much production and what the unit split would be. this will be a bit different. this will be a high-end phone and it will not be made out of plastic. it will be aluminum and glass, a true successor to the iphone 8 and iphone 8 plus rather than a plastic cheaper smartphone like the 5c. i think they learned their lesson on that phone five years ago. something is think a consumers are into is the color of the phone and the gold option is something we would be excited about. mark: that's right. apple admitted after they announced the gold iphone 5s, this was a color and options visit redesigned with the asia consumer in mind. so this is something they've been looking at, trying to bring a gold color option to the stainless steel. they weren't able to get it done last year and we were told they would give it another go.

and the upgrade to the iphone x coming this fall. our bloomberg tech reporter broke that story on potentially some new iphones coming down the pipeline. the last policy meeting, we look ahead next. this is bloomberg.

♪ betty: this is daybreak and i'm betty liu in new york. i'm yvonne man in hong kong. at the policy meeting is the last before his term ends. to discuss that and the implications with the head of korea economic research, he sees the be ok hiking rates just once this year in the second half. think you so much for joining us. we did hear saying that they

don't need to follow the fed. now that we are reaching the end of his term, with his replacement, whoever it is, follow that view? >> today's meeting will behold. april, may, orbe it will be july. i expect these in the second half. like inflation is lower than market expectation. inflation is quite low. it will be ok to see a strong number, i think. betty: if the fed moves in march.

the thing is forecast to hike three times or four times this year. how much wider of a spread chemistry bank of korea tolerate without sparking capital outflows. >> the market rate moves along with the u.s. rate, so the policy rate is not going to try to send to keep the outflow. even though there is some kind of outflow, the inquiry has a consideringand also 400 million, a short-term capital outlook can be sustained by the quick government. it is like a 100 basis point difference. stronger than those fundamentals, i think the 50 beis points, they will beholden to the bank of korea. i'm curious what you

think of a stronger korean currency and what it means for the export outlook of the economy? >> it is true, but considering the global, the strong global economy, and pick up can be of half open to korea. and also, ig sectors like korea is doing ok. up until being stable. it is growing 10%. >> external factors and risks, but what about internal risks? rising household debt amid the employment outlook there in south korea? newnow that moon has had

policies on raising wages, but what about rising household debt? is household, it debt, close like a 90% gdp. it will be an ongoing constant, but if you see the speed of it also, it can drop to single digits, like double-digit growth. so i think the government policy will be somehow effective. how the policybe is going to lead to the market, and construction investments will be delayed to the market. what they hadg up mentioned about the labor market , we see the two-tier labor market with youth unemployment hovering around 10%. our the government measures just not effective in that regard? what are they doing wrong, essentially?

>> the prime minister said that it is to boost unemployment. look at the employee numbers, it creates over 300,000. it still has the key drive for job creation. it is a pretty decent number, actually. >> the government to stoke quite reliant on the manufacturing sector for growth. unemployment will still say relative -- stay relatively high. >> that much is true. about that to drive that sector jobs for the young generation.

want to talk about geopolitics here really quick. this seems to be this relative olympic calm right now, a possible following of relations between pyongyang and south korea also with the u.s. we have seen talks go through. are you less or more concerned about geopolitics versus six months ago? concerned compared to six months ago with north korea showing intentions to talk to the u.s. i think it is showing improvement moving forward. you, joining us, head of korea economic research and live from seoul. the forget our interactive tv function tv and you can watch us live. catch the past interviews and dive into any of the functions that we talked about. and this is part of the conversation. you can send us instant messages during our show for bloomberg subscribers only. if you have a question to a

guest, so free to send us one. check it out at tv . this is bloomberg. ♪

>> a quick check of the latest business flash headlines, general electric says negative headlines don't tell the whole story. the ceo says it is already changing for the better. what he called a very tough year. it's revamping structure, cutting costs, raising accountability well overhauling the board. warren buffett said he was staggered by the size of the charge ge took earlier this year tied to an old insurance portfolio. the maker of armor all, black flag is under consumer products and over the majority shareholder in a deal at $10 billion. thattors, the holding 70

owns spectrum brand will become owners of the new entity. a business create with no controlling investor and widely held shares while still having tax benefits currently enjoyed by hig. -- hrg. in london with a deal worth almost 1.5 billion dollars. it is weighing sales before it moves early next year but sources say no final decision has been made. strong demand for overseas investors has led companies to sell and lease back their london headquarters in the past year. the softbank vision fund is defending the giant cash pile on deal prices, saying it's good for investors as valuations go up. early backers benefit by selling shares of softbank. the venture capital community is concerned that the fund is muscling potential deals and

pushing valuations too high. >> we are believing that we are in a secular trend where access to aas billion more for the digital world. and also, existing consumers to give them bigger services and products. betty: jack ma is showing an appetite, the company agreeing to buy out why do -- baidu. stephen engle joining us for more on this. alibaba taking a bigger bite out of the space? ele.me? >> always hungry. company we are hearing, that alibaba is going to take control of that, buying out by do and others key

investors in that start up. they run a lot of these motorcycle food delivery network, if you want to call it that, across china. what we do know is that as of may, alibaba had 23% of this company which, in the latest round of fund raising, was valued between $5.5 billion to billion dollars. we don't know how much alibaba is going to pay to take over the company. hitswe do know is that it the two biggest tech companies in china once again in another sector against each other. and that is in the last mile delivery because tencent owns the previous. chart which can show, think about this market in china. delivery is a huge country, lots of consumers, and you have two companies basically controlling 94% of the entire market.

it is not a core competency at the going to ai and other strategic high-tech businesses. they are about 94% of the entire market. to blur the way line between the online and off-line world? >> they have this new retail concept and they have fulfillment and supermarket. the tricky part has always been the last mile. and took control of the long-time logistical park were and they invested with an ipo in new york and also building a bunch of warehouses. >> much more ahead on the next hour of daybreak asia. we get the outlook for asian stocks with the focus on chinese

markets after she shootings ing's play -- xi xi p power play. and we have the outlook for the year ahead. this is bloomberg.

>> 8:00 a.m. in hong kong. we are in bloomberg's headquarters. i am yvonne man. . occam to "daybreak asia -- welcome to "daybreak asia." the 10 year treasury yield fell for a third straight day. volume was lower than usual on wall street as investors look ahead to jay powell's first testimony as head of the fed. betty: from bloomberg's global headquarters, i am betty knew in new york, where it is after 7:00 p.m. on monday. xi jinping tightens his grip on china. critics slam the new world order. no sacred cow. hong kong will leave no stone

unturned as it tries to resolve its chronic shortage of housing. yvonne: stocks bounced back and we saw bond stabilize before jay powell's testimony, which we are shrugging off for now. take a look at my chart, g #btv 599. have we seen the worst of these spike up in yields? if you look at technical, it may suggest yes. this is the moving average conversion/divergence index. buy.is flashing a are saying the worst may be over. whatever we hear from jay powell

may not move the needle to much. he may not say a whole lot before the march meeting. they may not move the yields at all, right? give the markets, perhaps. what interesting, looking at that chart, we have heard the opposite, where shorts are building up in treasuries with investors betting on both sides. it has shown you how split the market is on where rates and inflation are going. yvonne: volatility still quite elevated. market check from sophie kamaruddin. so for now, equity investors saying it is a buying opportunity. sophie: we have global stocks continuing to rally. stocks in japan extending gains for straight session. the kospi on the rise. check -- weian on

have the korean won. aussie shares rising for a fifth straight day with earnings in focus. ron's looking study. morgan stanley coming out to say it is time to get bullish on bonds. that wemberg points out are heading towards the head he days of late 2017 warnings about complacency. the sense is that if the fed chair can call markets, -- c markets, we calm may see the beginning of a powell put. the tech giant is preparing to all-out three new -- roll out three new smartphones. flipping the board to check in on aussie lithium minors, they are under pressure this morning, citing after morgan tammy said prices of them al -- the raw material will peak.

increase. a last look at the nikkei 225, which is warming up. i will be keeping a close eye on financials as officially the groundwork for a regulatory overhaul. financials adding .7% this morning. tech and energy as well as material stocks leading gains, betty. betty: sophie kamaruddin on the markets as we await the bok decision. let's get to the first word news with jessica summers. jessica. jessica: regulators in japan are preparing a regulatory overhaul that could lead to a shakeup of the nation's $10 trillion banking sector. examining changes. so all providers are subject to the same rules. that would allow merging companies to compete directly with traditional institutions. meanwhile, early data shows china's economy remains robust

despite distortions. smaller businesses reported a more optimistic outlook. are increasingly upbeat. sentiment is recovering. the holiday has seen some disruption. sales managers saw a slight downturn. manufacturing has eased. u.k. opposition leader jeremy inbyn has raised the stakes brexit by confirming the labor party supports a comprehensive deal on customs unions. his announcement opens a clear divide with prime minister theresa may, who wants the u.k. to be outside any custom steel so he can find trade agreements with other countries. he is putting country before ideology. >> labor would seek a final deal that maintains the benefits as a single market in the customs union. as david davis promised in the house of commons, with no new impediments to play.

>> johnnie walker is rolling out a female version of his iconic whiskey logo in an attempt to attract more women and embrace gender equality. jane walker will appear on a quarter of a million dollars in march, part of a drive to speak to a broader audience. diageo is increasing female management. 50-50,rd will be split male and female. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. betty: thank you so much. investors are looking ahead to jay powell's first testimony as fed chairman, looking for any hints that he might accelerate rate hikes. many are betting it will raise inflation as well. this is especially important for emerging markets. pushr rate hikes could central banks to hike at a time banks to hike at a time

when the economies just do not need tightening. kathleen hays here with more, and of course, first, we are watching the bank of korea and their decision. kathleen: interesting for the bank of korea, was it -- which is expected to hold policy for many reasons. consumer confidence fell in february for the third straight month. take a look at #btv 490. consumer confidence has now been declining since november. a seven-year high of 112. the bank of korea did a poll and it suggests what people are saying. the threat of anti-dumping tariffs on korean exports to the u.s. is one of the big things .riving this also mentioned in this poll, the potential for rate hikes in 2018 is also seen hurting consumer confidence. some people thought maybe we would see a confidence bump on the olympics being held in korea. if anything, it continues to

fall. expectations for it economic conditions also getting weaker. good news i think for the bank of korea. if you look at #btv 2810, there is no real pressure on them to be hiking rates against this. after five consecutive rate are waiting to see who his replacement is, the key rate was raised in november to 1.5. inflation has come down. there is no pressure on them to raise rates, at least, not because of inflation. there may be some other things that will pressure them. the bank of korea can sit tight. yvonne: the fed may be more the factor if we see jay powell hike three if not four hikes. it is not just the issue for the bank of korea. take a look at the bond market. investors are a bit worried about a repeat of the taper tantrum. kathleen: absolutely. i think three rate hikes probably does not bother anyone

if they are gradual. four rate hikes, this could cause bond yields. you are pointing out how we have seen the worst of the bonds lf for now. for now.elloff this is going to be the issue. another charter want to show you is #btv 3109. the yield premium over u.s. steadilys has been falling. you can see, particularly, when we have the big surge in yields dropping in prices in the last few weeks, that premium really narrowed. this isg a bit now, but something everyone is watching. also interesting, people are concerned that the books for asian economies are so much better than they were compared to the currency crisis in the 80's in asia in the 80's and 90's. the three worst performing currencies in asia are countries reliant on foreign capital.

india, indonesia, and the philippines. anything that comes from jay powell's mouth in his testimony or in terms of rate hikes over this year, if that disturbs the markets, if that hits currencies and bond markets, it is something that will put pressure on other central banks in asia that they don't want. this is something we're watching very closely. it is an interconnected world. the fed playing a big role for a lot of emerging-market economies as well. >> as you said, the bank of korea has a little more solid footing than other parts of asia, but soon enough, they will have to deal with this. kathleen, thank you. kathleen hays in new york. one of hong kong's largest energy suppliers beating analyst estimates. we will speak with the ceo later this hour. betty: looking at global equities reacting ahead of jay powell is testimony to congress. the head of equity research for asia -- this is bloomberg. ♪

yvonne: this is "daybreak asia." i am yvonne man in hong kong. betty: i am betty liu. congress in front of tomorrow. joining us now is the head of equity research asia at ubp. thanks so much for joining us. let's first start with powell and what is expected in front of congress. we have been hearing over and over again how he has been very steady in front of previous congressional testimonies. what are you going to be watching out for that you think could be market moving in his testimony tomorrow? mean, if you have watched powell speak before, not just previously in front of congress, but always, he is very steady. he has a very strong message about the fed's dual mandate.

i think he will stick to that message. he has also been explicitly talked about, you know, the market reaction to fed communication is a very important barometer. i think he may sort of test that, especially commenting around what has happened over in reaction weeks to the pretty strong jobs numbers and which numbers that have created all this dislocation have seen over the last three weeks. betty: should he talk about the market than what has happened? the volatility over the last several weeks? should he address that directly? kieran: i think the markets would be extremely disappointed if he did not. i will leave it at that. betty: so they are expecting something. i mean, what would be successful powell -- success for powell? his coming out in front of the public, so to speak. the resulting market action --

what would be success? mean, coming out, except he has been at the fed since 2012, and the governor since 2014, but of course, for the general public, it's going to be his debut. i think success would be -- we have seen the markets calmed down a little bit, getting used to pricing the tenure towards 3.5% over time, and i think if he is able to communicate a message of stability and that sort of direction of interest rates, then that would be seen as a success. yvonne: how would you position yourself equities that -- go ahead. kieran: i was just going to say, and not getting dragged into any sort of political discussion, which tends to be the bent of some of the congress. yvonne: how do you position yourself in equities ahead of this testimony?

we have seen some stabilization in the bond market, but volatility is quite elevated. is it soldiers and where equities go, by where the tenure goes? kieran: certainly, that's important. i think what we have seen over the last few months is a repricing by all markets towards three point 5%, a quicker timeline than previously expected. in the context of all of that, what we have been focused on is what is driving equity markets, the earnings recovery story. specificallyg about asia. that started in the fourth quarter of 2016 and which continues. if you have focused on that over the last few weeks with the market weakness accumulating and strong markets and sectors where we are still seeing acceleration of earnings growth, then that would have been a good approach. yvonne: japan is one of your big markets where you are overweight. rebound inng a japanese equities.

it has not been asked strong as what we are seeing in the u.s. very g #btv 9110. some are saying it may be driven by the ego day that we have seen coming out of japan. the topix has been relatively tracking the economic surprise index, which began to slump lately asked year. what's going to be supporting market?nese it seems the earnings hike has priced in. we are kind of past that now. kieran: i do not know if it is priced in. we have earnings up 55% since november. the market is only up less than half of that. we have seen earnings, multiples really compress over a period time. an all-time high despite the relatively high end. i would not say that is priced in. itas latest frustrating that has not been priced in. at the same time, you know, we have had this sort of headwinds of, you know, safe haven yen, which does

not particularly help the market, especially flows, so we would still think the earnings story in japan is the strongest earnings story in asia and also in dm markets, which we would expect to eventually be appreciated by the market. betty: i want to talk very quickly about china. whether your outlook out all -- at all has changed over the weekend, which essentially removes any kind of term limit barriers for president xi jinping. he can essentially rule, it seems, indefinitely. does that change your outlook in china? kieran: it is pretty extraordinary. pretty much expected, i think. again, and china, we are focused on the earnings side of things. last year, we were narrowly led by tech both in terms of

earnings growth and also market performance. we still think that in order to continue to be -- have leadership and chinese markets over the next him a let's say, this year, we need to see some of the other largest sector financials start to contribute both on earnings and also more on price-performance. so far, that has been lacking. betty: what could be the catalyst that change is that story on the financials, kieran? know, forll, you example, we have seen earlier today, eia, pretty strong results. see earnings start to kick in. slowly raising interest rates to help financials in general. that is basically what we would look for. yvonne: thank you. appreciate the time. kieran calder at union bank

privee. go tooomberg subscribers, dayb on your terminals. it's also available on your mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on the industry and assets you care about. -- industries and assets you care about. this is bloomberg. ♪

betty: this is "daybreak asia." i am betty liu in new york. yvonne: i am yvonne man in hong kong. alibaba said to agreed to buy out by you and other investors. the biggest bets so far on go bomb and food services. a deal would give alibaba the against-- and pits it the company backed by tencent.

there would be an army of people on motorbikes across the country. the new york state's comptroller said they did nothing to stop the sexual misconduct of steve wynn. members were complicit in his behavior, setting a tone that permitted him to wield his power unchecked, they claim. they claim the board was aware since at least 2016 of the allegations against wynn. yvonne: softbank's vision fund is defending the impact the cash pile is having on deal prices, saying it is good for investors if valuations go up. early backers benefit by feeling shares of softbank, cutting shares with uber and others. the capital community is concerned they are muscling in on potential deals and pushing valuations too high. >> we believe we are in a cyclical trend where technology is going to battle me access -- bring access to a million more

consumers around the world to the internet and a digital world, but also to the existing consumers, give them better services and products. industry leaders from 35 countries across can tenants -- continents gathered in hollywood, florida. ,loomberg spoke to the cohead starting with the key themes he sees at the moment. >> one of the key themes we hear , where there is definitely a lot of positivity in the market, is the electrification of vehicles. there is a lot of focus on the electrification theme. what does it mean for cobalt producers, lithium companies? what does that mean in the next few years? how many electric vehicles will be in the market? that is writing a lot of interest, both in the junior market and with larger companies. so, that is one place where

there is very good interest. >> are you seeing significant signs of deals in that space? a lot of those players are obviously pretty small. cobalt is a byproduct, so it's not quite the same as doing a big deal in the oil space, fossil fuels. sure.re is science for it is a smaller company, but it has raised tens of millions of dollars in capital, has access to much more. you know, fmc has spoken about splitting up the lithium business publicly. it is a market where there are sizable companies, and it's a market which we expect will continue to grow. >> what is the m&a appetite for this sort of -- m&a appetite for this sort of transaction? >> i think what we would say is the appetite -- the appetite is selectively there. ok? there are some companies that would feel like they have a license to pursue m&a that have done well the last few years.

they have addressed their balance sheets, lowered their costs, developing projects on time and on budget. the companies that have done what they said they are going to do, the shareholders are saying how are you going to best allocate your capital? might you pursue m&a? there are some companies who feel like they can pursue m&a, and they are actively looking for opportunities. >> do they come up with projections for what they expect? will it be a better year this year, do you think, for deals? >> is a very active year is the way i would describe it. it would mean that there is a lot of dialogue between companies. people are looking for opportunities. the ipo pipeline is quite robust, so it's a very active year. which is good. we feel quite good about the year ahead. bmohat was the cohead of metals and mining. we are seeing here some green across the screen when it comes

to the big ones. fourth day of gains for oil, ahead of u.s. crude inventories, which most are expecting could continue to advance. we are seeing when it comes to gold, holding above the 1330 line right now. a lot ahead of jay powell's testimony, betty. betty: that's right. certainly watching jay powell's tested in any -- testimony. up 1%,kei just about following on from the gains we saw here in the u.s. the korean kospi index up .5% as we await the bank of korea decision. the s&p asx 200 also rallying in the green. much more ahead. president xi staying in power means investors in china portfolios will be increasingly tied to one man. we just spoke about that as well

with our last guest. that is next. this is bloomberg. ♪ mom, dad, can we talk?

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it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. >> 8:30 in singapore. a sunny morning in the lion city to start your day here. a half-hour hour away from the open of trading there. i am yvonne man in hong kong. betty: i am betty liu in new york. you're watching "daybreak asia." first word news with jessica summers. draghi told e.u. lawmakers he is sticking to his stimulus plan. draghi said he is not ready to reduce support for the euro area despite increasing confidence inflation will pick up. he told the european parliament that economic slack may be larger than thought. he said the bank must continue to provide the accommodation required amid continuing uncertainty. brothers have had

their assets frozen in india. the saga started in 2008 when the brothers told -- a department of justice inquiry in heted in him admitted sold adulterated drugs. gthe man fired three years ago, seen making a comeback. he was sacked by jacob zuma in 2015, but sources tell bloomberg he had the support of the new president, ramaphosa. the current finance minister was seen going back to his former job as minister. the formerral -- general may contest india's next presidential election, which would be a return of the bitter race.

the party indicates he will be its candidate when the decisions are in august. care andular in health infrastructure, but has fallen short of a promise to boost growth. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. betty: time to see how the asian markets are shaping up so far this morning ahead of the fed shares. let's get the latest with sophie kamaruddin. of that testimony, bonds looking mixed while asian stocks are on the rise, let higher by the nikkei 225, adding .9%. tech and materials leading the charge in tokyo. aussie shares rising for a fifth straight session with earnings very much a key driver this tuesday. the kospi adding .3% ahead of the bok decision. the korean won eying the 1070 handle ahead of that -- what will be governor lee's last

schedule meeting. we have the kiwi dollar coming under pressure this afternoon the linen -- this after new a new number. japanese tech stocks, the likes of al to lecture on the radar after a nikkei report saying alps and alpine will merge three months earlier than originally planned and will change the structure of their proposed deal. the new plan could be announced as soon as tuesday. they will discuss the terms today. we have apple suppliers also on the radar as apple has reportedly planned the rollout of three new smartphones later this year, betty. betty: thank you so much, sophie kamaruddin. china's decision to set the stage for xi jinping to rule indefinitely has sowed concerns about the implications for agreement. this triggered mockery on social media, fears that finance rules

may come under attack. curren current -- enda joining us. >> i think there are two ways of looking at this. a short range view on this is probably policy stability. it reinforces xi jinping's policy priorities around eradicating poverty, tackling police in -- pollution, and slowing the pace of credit growth. there is a feeling that in the near term, chinese policymakers will stick to that narrative it.her you believe they will tolerate slower growth in return for putting the economy on something of a more even footing. longer-term, it raises all kind of questions that are much more uncertain as to where the direction of policy will be headed and how long she would plan to stay in power, and you the successor would be. -- and who the successor will

be. there is concerned it will become more fragmented, confused, and the clear narratively have on china right it, whether or not you buy will disintegrate as the years go by. those are the two ways investors are looking at it. yvonne: it seems you're getting this political uncertainty. there is a lot of risk about this kind of leader for life and the risk of policy missteps and all of the blame we are putting onto one leader, so to speak. what does this mean for china and their role in the global stage? how should the international community be doing this? >> in recent years, we have had china increasingly in the global stage and as the protector of existing global order and protector of the trading system as we know it. xi gave that famous speech at davos. there is the feeling among investors that if you are

willing to disregard your own internal roles, how can we necessarily trust you on the global stage? it raises doubts and suspicions about the kind of role china wants to play on international community and whether or not they will integrate and play by the existing global rules or whether they want to create their own global system. fair point. if you're an awkward to have checks and balances within the government, where is xi going to be using that power at? you can argue that this could impact reforms, too. enda: this is a big question. already, there are people who are saying china should be much faster on reforms, both in opening up the economy as well as opening up its financial markets in the wider economy. xi jinping's government preaches the reform narrative. they say they are committed to it. the boardin davos, would be surprised. the bigger picture view is that china has a lot more work to do and it is in their own interest to do it.

yvonne: they are heading to the u.s. as well. we will see how that is received. our chief asia equities correspondent. jack ma shows an increasing appetite to improve alibaba's last delivery network. the company is said to have agreed to buy out baidu and other investors in a food delivery startup. let's get to stephen engle, joining us for more now. we have talked about how competitive the food delivery business is. why is alibaba adding more to this now? >> it is about that last mile. are you hungry, right? it runs a large network across -- scooter food delivery services, and they are buying this spirit what we do know is that they already have a 23% in the company. we do not know how much they are paying to buyout i do -- baidu

which is going into ai and more high-tech areas, but alibaba wants to complete its last mile. that has been the tricky part. of course, they have a number of other third-party logistics want to, but they expand that. that is what they are going to do. look at this pie chart. you can see the market in china. it is not really fragmented. it is placed right down the middle. guess who is the main backer? yvonne: tencent probably? stephen: yes. once again, in another sector, the chinese economy, these tech titans are going face-to-face, dominating. >> i feel sorry for anybody in that 6.7% slice of pie. just go home at this point. the strategy as well, isn't it, stephen, that jack ma

borders the line between the online and offline worlds. stephen: he has the new retail model he has been pushing. they will be logistics hubs. they will have these in every neighborhood across china, so they can get good to people's home within 30 minutes of ordering it on the various alibaba platforms. to do that, you need an army of delivery people, and that is why ele.me will get this distribution within 30 minutes. >> how big is this market, stephen? how fast growing, how big, is this? stephen: pretty big. the latest survey we saw was billionwas worth 10.7 dollars. the market as a whole. that was a 16% increase from the previous three months in the

fourth quarter, so it is growing quite fast in double-digit growth, and this company is a ele.me., it started financing in may, about $5.5 billion to $6 billion. >> thank you so much. stephen engle in hong kong on the latest move by alibaba. up next, we will speak to hong kong's electricity supplier about its earnings beat, reported yesterday. this is bloomberg. ♪

betty: this is "daybreak asia." i am betty liu in new york. yvonne: i am yvonne man in hong kong. php holders posted better-than-expected 8% growth in net profit. the highest estimate thanks mainly to its australian operation for profit. the profit jumps 48% during

let's jump through all the numbers and projections with richard lancaster, joining us in hong kong. thank you so much for joining us. it seems like this was across the board a pretty good earnings. doing quite well. china a little bit on the weaker side, but what is your read so far? >> a pretty stellar performance>>. all of our businesses in all of our markets were performing pretty solidly. you do mention china. we have three legs to our business in china. one being nuclear plants, when being renewables, and one being cold. the only area we did see some challenges was in the coal with regulated tariffs. yvonne: you complained about it, before, richard, about how china has been slow in terms of adjusting this on grid electricity price with this mechanism, and you are hoping this is the year that they

actually do so, but were you surprised by just how slow they are to adopt this? did they forecast this, considering you have been adding it to your assets, adding it to your coal fire power sector? richard: we have not been -- coal prices rose steeply in 2017. we have a publishing mechanism. if you look at applying the pushing mechanism, the prices did not require an adjustment in 2017, but for 2018, they will. we have not heard news, but we are hoping they will adjust prices in accordance with the formula. yvonne: given this policy inconsistency, it's c.o.p. -- is clp looking at selling down? richard: we have always aimed to have a diversified portfolio. we are not making divestments in cold. -- in coal. we are building more renewables

in china, so over time, coal is shrinking down as part of our portfolio, and we are growing our cleaner energy, which is nuclear power and renewables. >> i want to talk little bit more about what happened in taiwan. you know, with the operation. tell us a bit more about what happened and where the other opportunities now are for clp? richard: we have one plant in taiwan. a market that we have not really seen opportunities to grow in, our main growth areas are in mainland china and india. we also have two projects under development in vietnam, which we see as a potential new market for us. wewan has not been an area have seen growth opportunities over the years. betty: does that mean you are not looking at being part of the future of the taiwan power market than?

-- then? richard: we are a participant in the market at the moment, and we would like to develop more renewable energy projects across asia. we are quite selective about where good fundamental projects are. more opportunities in mainland china and india. that's where our focus has been. betty: that certainly has been where the focus has been. what about australia and that market and where are the opportunities there in australia? richard: our focus has been getting our business in solid shape. we have a very strong retail business with 2.5 million customers, mostly focused in victoria and new south wales. our challenge has been to reshape our business so our generating plants support our retail business, that we are not long to the market or short to the market. having achieved that now, we got

some further work to do to get levels of customer service up to the highest standards and to get our operations as efficiently as costs, but reduce our business is in pretty solid shape. yvonne: there's also questions about your stake in energy australia after the ipo was scrapped in 2013. do you see that the ipo is on the table at the moment? richard: longer-term. and when i say longer-term, our vision is to keep it as part of our portfolio, but to bring in a more diverse shareholding so we have local shareholdings with access to local capital. in 2012, we were facing acquisition of our business in hong kong, so repatriating the capital was something we saw as a good fit. today, we don't have that same pressure to repatriate capital for other investments, so we are taking our time. you have no firm plans at the moment for any sell down or

listing in australia, but longer-term, that is still -- yvonne: is there a magic number on whether you decide to sell down were still out? richard: we take a long-term view of our businesses, so we invest with a long-term view in mind and we aim to build a sustainable business, and we aim to have that business earning the cost of capital. yvonne: you have been talking about this offshore import terminal. you want to build right here in hong kong. you are making some progress it seems like. what are we talking about in terms of capacity and the level of investment in the floating storage?unit richard: -- storage unit? richard: that is helping to meet the action plan. they have a 2030 action plan which will see a shift further away from coal generation towards more gas generation, and to do that, we need more gas and diversified gas sources. with lng imports, we can access more competitively priced gas,

which means we can source the best deals around the world. we have a project which we are about to take through for the environmental impact process. it is an offshore project and has very little footprint. it would be half the cost of an equipment land-based terminal. betty: i want to break in really quickly because we are getting the decision announced by the bank of korea, leaving their key interest rate unchanged at 1.5%. the bank of korea, the central bank, leaving their interest rate unchanged at 1.5%. this was of course widely expected. all 17 economists surveyed by bloomberg predicted the rate would stay unchanged and perhaps we would only see the bok raise rates once, maybe twice this year. certainly withstanding any of the rate hikes we're seeing out of the u.s..

again, here is a quick look at where the kospi is trading right now, up about .4%, and you can see at this moment the dollar weakness continuing here against the currency, trading at 1069 against the yuan, yuan. yvonne: a slate weakening. largely expected here. we were talking to them earlier saying they don't expect any kind of hike until possibly the second half of this year. let's move on to richard lancaster. we were talking about your import terminal in hong kong. this lng market, very competitive right now. are you confident you are able to secure some of this long-term supply? richard: we are confident. there is an oversupply of lng at the moment, so it's very good time to be a buyer of lng. there is also a very good market for the floating storage vessels

that we would need, so this is an ideal time for hong kong to be securing long-term supplies of lng. yvonne: you mentioned the timeline in terms of the time horizon. soon is when things are going to start moving. what would soon mean? six months to a year? richard: we have completed nearly all of our environmental impact studies. the next part is to put our report through the public process in hong kong and to get approvals from the government. once we have all of those, we will then be ready to start construction. it's quite a straightforward soility, a jetty in the sea, the construction time is not long. yvonne: richard, appreciate the time. richard lancaster, clp ceo joining us on their earnings. 20 more ahead on "daybreak asia." -- plenty more ahead on "daybreak asia." this is bloomberg. ♪

yvonne: this is "daybreak asia." i am yvonne man in hong kong. betty: i am betty liu in new york. we just got the decision for the bank of korea. coming out a little bit earlier than what we may have seen traditionally, but the bank of korea, not surprising, at least, on the expectations front. keeping rates

unchanged at 1.5%, widely predicted by economists. yvonne: given what we are seeing for inflation, consumption still quite low. it's really hard for the bok to withnue what the fed -- the fed and the path they have been on. eventually, they are going to have to face these tightening measures we are seeing in the fed and probably react more to what jay powell does. nevertheless, if we do see a new replacement when it comes to the bok, we are waiting for the announcement to come through on who is going to succeed. his last meeting leading rates unchanged at 1.5%. let's talk about hong kong. no sacred cows in a search for new housing. that includes golf courses, amusement parks, and even container ports as potential sources. a tight supply of housing has helped fuel soaring housing curvesaxes and mortgage have failed to call things down. a guest.s is

some of these proposals have been laid out here and are quite controversial. what are we looking at? >> some of these involve touching country parts. hong kongers love their country park conservationists hate the idea of housing going up on what seems to be arrested against the urban sprawl of hong kong. that has been rather controversial. some of the other ideas have come up raise ideas about things like pollution such as building homes on top of the container port. one of those cause for relocating the terminal. another cause for housing on top of these container ports, and of course, you have the issues of noise, air pollution, and so that has not been without controversy. most controversial measures are playing with the

.remiums the government charges developers a certain land premium to convert farmland into residential use, and if they are able to make things more attractive for the developers, i.e., lowering the land premiums, we could see more of that farmland being put to good use. betty: how much housing could these measures actually a mock overtime? -- unlock overtime? there are many estimates. micro flats are very popular in hong kong, but assuming some we are a normal side looking at, it could unlock more than 1.2 million homes over the next few decades. this obviously is not going to happen overnight, but the potential is very, very vast. hong kong has so much -- 75% of hong kong's lands are underdeveloped and unused for

residential purposes, and that could unlock a lot of land. betty: could it take a lot of steam out of this? the home prices we have seen already. the demand is still quite strong. >> yes, it could overtime stabilize the trajectory. demand fromot of mainland chinese, so it's a very good question. it's entirely possible that higher supply will unleash more demand as well. betty: thanks so much. housing is always a fascinating topic. that is it from us on "daybreak asia." stay tuned for bloomberg markets. ♪ mom, dad, can we talk?

sure. what's up, son? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around.

♪ >> this is "bloomberg markets: asia." ♪ asia-pacific markets extending gains and investors await his first testimony. his choice of language is crucial. critics slam a new word order -- world order.