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. >> 7:00 a.m. in hong kong, live from bloomberg's asia headquarters. i'm yvonne man, welcome to daybreak: asia. and then there were four. the fed chairman says strengthening data might mean a rate hike briefing. u.s. stocks sold off on jay powell's more hawkish tone and asia pacific markets are expected to follow suit. i'm betty liu in new york or it is just after 6 p.m. on this tuesday. oh dropping the most amid new warnings about u.s. show production in the opec led market, rebalancing in washington. getting tough with china.

slapping tariffs of 106% on imported aluminum foil. beijing has hinted at a response. li na the markets in the u.s. tumbled today in reaction to the fed chairman jay powell's testimony today. but if you look at several pieces of data, indicators and a buy signal relative to other markets in the u.s.. g #btv 672 which shows you the breadth of the market. still of s&p70% stocks are trading above their 200 day moving average. if you look over into europe, for instance, where you and i talked to a lot of investors, there is a lot of value in europe. only 59% of stocks on the euro,

the stoxx 600 index are trading above their 200 day moving average. , itn that smaller breath goes to show the european markets or others outside the u.s. still have a bit of work to do before they flash a buy signal. yvonne: a great chart there. given the turbulence we did see in february, we're seeing more of a bounce back and the like the u.s. compared to europe and asia. the breadth of the market in china not a strong. a good technical signal to buy more, perhaps. the treasury yields, although we have seen the spike up. it was still haven't hit that 3% threshold. betty: it has proven to be a resistance level. let's talk about more about the risk of sentiment today on wall street in reaction to powell. >> clear volatility. we saw stocks start strong and

selloff. sort of the market snapshot. the real focus is on the bond market, which is strong. and you can see as we take a close look at the today chart of the 10 year, and what really happened was bond investors really started to react to the part of the powell testimony where there was a question. we should have it today chart of the tenure here. where the investors heard testimony on whether the number of rate hikes would be three or four this year. and what might cause powell to .ove off of that that caused the bonds to sell off aggressively. we don't have that charts a let's go into g #btv 566 momentum. momentum continues to dominate despite waddling u.s. stocks. we did see stocks selloff.

what we did not see today is the rebound late in the day. a certain number of metrics, it's part of their standard playbook to focus on this metric here. the momentum portfolio return which continues to rise. it has a lot of people scratching their head despite the selloff and raises the question, are we possibly in a new regime? stocks start higher. they ended lower. and whether or not powell was truly hawkish or just perceived that way, the market reacted as if they are concerned about interest rates and rate hikes. scene to lead things lower as well, all of which could affect foxx. >> it throws a monkey in the

ranch, if you will. g #btv 5176. their performance ever since the can see it you heading lower and you can see sky heading higher. the concern is really about eiger thatbob decided they wanted to own foxx with or without sky because sky,st did $31 billion for certainly challenging eiger in terms of his plans. it snags the main asset or it seems to do so. the surprise bid would take away would eiger has called the crown jewel of the packet she is trying to buy from foxx. that will be something we watch, but all the stocks in the u.s. here seem to move lower on this new turmoil. some of them tied to earnings.

recordwas tied to a defense deal. macy's reported the first sales gain in three years after a very od for retail in general. investors seem to love that. autozone plunging as they announced a really disappointing earnings results. they're planning to spend off a couple units as they underscore the tough road home for the auto parts industry. >> let's take a look at how things are faring so far in new zealand. .5% of it yields are higher, stocks falling and the dollar gaining as well. to sydney were we're just getting underway, marginally lower down .1%. under $.78 right now.

yields are taking higher. we're also coming down in japan and korea looks ahead for retail ales, happening this hour and little bit of pullback when it comes to equities. dollar-yen at 738. investors are extremely sensitive to any hint the fed .ill accelerate rate hikes the jerome powell suggest for instead of three? is currently bloomberg economics and policy editor. certainly a field day for you given the fact that we heard from bernanke as well. but if you heard from jay powell's testimony? >> they released his prepared testimony based on the monetary policy report. and the thought, this is more fed boiler plate.

it didn't strike me he was deviating at all. it was more and the q&a when jay powell was speaking. maybe he's being more hawkish. it's clear, no doubt. he is setting us up for changes. he is ready to reassess the 2018 rate hike half. this is what he said. strengthening in the economy and it will add some confidence to my view that inflation is moving up to target. we have seen continuing strength around the globe and we have seen fiscal policy become more stimulative. developmentsking in the december meeting to account underwriting and our new

rate path as we go to the march meeting. >> economy headwinds are turning into tailwinds. rates will rise faster this year. the stock market correction will not weigh on the economic outlook. i'm not prejudging after i heard that. be prejudging that number, but traders are definitely prejudging those numbers. >> btv 695, this is how chances have increased. stocks recovering and jay powell testifying. more than ever, the fed is convinced the fed will do more -- four and not three. the policy statement that inflation will rise. it is interesting that a , is halffed watcher

speed ahead. he will raise rates, but he is not going to ramp up the pace. think it's interesting how the bond market reacted anyway. the yield back 2.89. it hasn't burst up to 3%. they could heavy reassessed as the day wore on. i think we're back to square one. we will see.way, i think jay powell did a very good job on his first time out. catch his answers short. i still give him an eight. thursday, he will come out with even more confidence. >> kathleen hays, bloomberg economics and policy editor.

let's get more news with jessica summers. u.s. is imposing duties as high as 106% on aluminum from china. producers receive unfair subsidies and dump their products in america. the decision comes the very day senior chinese advisors are in washington for trade talks. meanwhile, the former currency , concern about american fiscal deficit and fear that it is behind inflation and dragging the dollar back. he says the dollar-yen is flat towing and it leaves investors uncertain of what ago. and more pressure on u.k. prime minister theresa may. lawmakers are backing a call for

closer eu ties. wiping out the prime minister slim working majority and threaten political survival. may is also under attack with the eu set to publish the deal later. >> the clock is ticking. time is passing. time is short. i'm concerned there is not much time left between now and next autumn because it is just a few months away that we need to reach an agreement with the united kingdom. >> the inventor of bitcoin is of swindling more than $5 billion worth of the currency from a security expert. craig wright claimed he created .itcoin under the pseudonym a lawsuit alleges the phony contracts to lay claim to bitcoin mind by a cryptocurrency colleague it died in 2013.

north korean leader kim jong-il and is reported to of used in illegally obtained brazilian passport to travel to the west in the 1990's. borders closed european security agencies and has passport issued by the embassy in prague. they reused in 1996. he reportedly traveled under the name of a brazilian citizen born in sao paulo in 1983. global news 12 for hours a day powered by more than 2700 journalists and in more than 120 countries. i'm jessica summers. this is bloomberg. >> still ahead, a closer look at the fed under jay powell. we are joined by ben eyman. we will be talking about reading virtual cash. $300,000. this is bloomberg.

♪

>> it is not a healthy situation for monetary policy to be the only game in town. and i would like to see a situation in which fiscal policy as in a better position situation that we are talking about. >> the most important thing is the so-called reaction function. no doubt the part of interest rate has to reflect what is actually happening in the economy. it can hit the economy time to

time. >> i don't think they are particularly pressing now. and if they roll the camera forward to two years from now, we're having a lot more stimulation. is also because it relatively flat. we will have a problem getting it right. >> views on the fed priority. economist,r chief how did you interpret what he said today? to the stats, the data has improved.

sentence.he key , for the first time in a long time, and inching close, that is a big change. but he has to clearly -- that is the key takeaway. >> percent what the market reaction was like. it shows you 10 year treasury yields almost at that four-year high, approaching the key range of 3%. talking about that earlier and we can't seem to breach above that 3% level.

it is a little bit puzzling perhaps. impact ofly the higher rates is going to be because you have yields cap here at 3%. equity markets taking that tumble. what you think is happening? the market is trying to sense how strong the growth will be for the next few orders to determine if you can really get above the 3% level. to break that level and the economy was temporarily strong. is it just short of stimulus, fiscal stimulus that temporarily boosts the economy. in addition, if it were to hike four times, the loan is eu will curve and more contained because more rate hikes would presumably keep inflation below target or

at target. that is the dynamic here. there are key levels and everyone is looking at that. if we do break it, it would be somewhat of a technical level that people follow on to and change their positioning accordingly. >> what is it mean for the yield curve? is the fed going to allow an inverted yield curve? choice.ing to have much and as the short end of the yield curve is rising because of formate hikes, the tax or in -- tax reform overseas is also pushing shorter and at the same time, you have the 10 year yield approaching 3%. if you now look at the yield curve and you look at the

shorter end of the yield curve, they are approaching in some segments closer to 3%. we are heading toward this flat to inverted yield curve. net inversion may not be likely and if it does happen, it's not the same as in the past. the market is still judging this inversion and it means economic slowdown is in the future. >> at what point does the start to bite the rising rates? it is quite marginal. and we haven't spread to the credit market. at what point do we see the credit spreads blowout? >> i think it starts with the housing market. salesta this week in home were weaker. beginning existing home sales. that is where the effects of higher rates show up and start

to impact the economy. and from there, it can impact the credit market. we really slowdown and ultimately spread to that. moment, given the tax reform and the tax cuts, fundamentals for credit remain really strong. this is why credits haven't moved too much in the wake of recent volatility. we have to of knowledge the is going to be ultimately also slowing down the economy. that is the mechanism. cracks as you say, that immediate reaction is first. and then, do you think the decline was sought earlier this month, do you think that's it?

or are we in for an even bigger decline coming up? anything about the economic outlook from here, powell was pretty confident about it. that the fed gets too comfortable. it raises it to quickly. what we saw a few weeks ago was the first sign that the market is reassessing. economy.own the the data itself was shifting. >> is there anything that you wish the chair would've talked

about but didn't? thee didn't talk much about balance sheet mechanism. it does a lot of questions about it. happen.se of what would really strong about the inflation outlook itself. room for a change or a framework regarding the inflation targets. we're looking at the confidence in the outlook and responding to that. to address the inflation outlook a bit more, markets will give comfort on how that addresses the long-term inflation outlook. been aiming their nla, thank you. chief economist. a round up of that story to get your day going in the addition of daybreak.

subscribers and also available on mobile in the bloomberg anywhere app. you can also customize your settings, you only get news on the industries and assets that you care about. this is bloomberg. ♪

>> a quick check of the latest business flash headlines, a struggling toys are us is set to sell operations to a local partner. the chain is in negotiations to off of 85% stake. the hong kong billionaire that own the rest of the venture. a potential deal could value toys russ, asia, and more than $1 billion that would lead to an ipo. is becoming embroiled with heated talks over pay and conditions as profits or at the theme park division. .mployees have picketed outside

unions also slammed disney's decision to withhold the thousand dollars tax reform bonus while contract talks are underway. >> that is a rap from washington. getting tough with china on aluminum foil. we will assess the likely reaction. this is bloomberg. ♪ mom you called?

oh hi sweetie, i just want to show you something. xfinity mobile: find my phone. [ phone rings ] look at you. this tech stuff is easy. [ whirring sound ] you want a cookie? 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.

>> 7:30 a.m., wednesday in hong kong, 30 minutes away from asia's first major market open. it is cloudy today. it's good to hear more about the hong kong budget later on this wednesday. something to definitely look forward to in the city, betty. betty: 6:30 p.m. tuesday evening here in new york, where it looks like a pretty clear, beautiful night here in new york city. markets, not so beautiful. trending down and sliding. the s&p down 1.3%. i am betty liu in new york. in hongi am yvonne man

kong. you are watching daybreak asia. first word news with jessica summers. jessica: jay powell has indicated the possibility of four rate hikes this year. he acknowledged a strengthening economy and inflation. thestors marked up probability of a hike in the fourth quarter to 50%. the chances in the second and third quarters picked up. the chances that arise next month remain near 100%. >> while many factors shape the economic outlook, some of the headwinds in the u.s. economy faced in previous years have turned into tailwinds, in particular, fiscal policy has become more stimulated. foreign demand for exports is on a firmer trajectory. jessica: meanwhile, the british cabinet has discussed the anticipated -- london is amongst cities battling to host the company's

expected second listing. saudi arabia has signaled it will sell 5% of aramco. that is part of the plan to transform the kingdom and ween the economy on oil. the fallout from india's biggest bank fraud is breading as foreign lenders become -- ,ources tell us citigroup deutsche, standard chartered, and hsbc are among those reducing exposure to these transactions which are used by smaller companies to access short-term dollar funding. funese billionaire li shih -- we are told he uses so-called caller traced for the state. that is the largest deal of its kind for stock globally. german rules require shareholders to have withholdings exceeding 3%.

the german government says it hopes to avoid bans on diesel cars in cities. .hat is despite a court ruling the environment ministry says the ruling does not force cities bands, butiesel admits it confirms the right to clean air. it blamed automakers for causing the problem by selling diesel cars that even its more harmful substances than advertised. president trump reached an informal deal with boeing for a new air force one. the white house says it will cost $3.9 billion and will save the taxpayer $1.4 billion. if not clear where the figures come from. the president has long criticized the cost of replacing the plane and has threatened to cancel the order. news, 20 four hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. yvonne: we are counting down to the open in tokyo and seoul. the latest with sophie

kamaruddin. the u.s. stock selloff sparked by jay powell. is it all about him today? sophie: he will be front and about whatn concerns this might mean for sentiment around bonds and equities. when you take a look at what is on the deck in asia, plenty of data on the agenda. proposing steep duties. going back to the data front, pmi from china to india's gdp. the first budget. we are going to kick off with the japanese industrial output and retail sales. activity expected to deliver the steepest month on month drop since 2011. ahead of that, we have the yen sticking above 107. the finance ministry says the dollar-yen has been plateauing for now as investors are hesitant about which way to go. yen asuld be a gift to well as euro bulls according to , saying thisk

offer better levels to reestablish fresh loans in both currencies. the up heat tone helping to lift the dollar, trading above the 2017 low once again, and taking a look at them with radar, the dollar at that level, while gold is treading water and oil and a pressure after dropping the most in two weeks as the iea warns that she'll growth threatens rebalancing. bear in mind we have taiwan flying for a holiday. betty: a lot to watch. tech shares, we are watching that closely. you mentioned another sector has grabbed the limelight. tell us more about that. sophie: that would be health care, since early february. #btv 845.e this on g it has been the best performer on the regional index for 14 straight sessions. 9.3% this year. almost double that.

this as investors rotate out of cyclicals into defenses. there is the global selloff. health care does have one of the lowest weightings on the asian benchmark. investors need to have a long-term view on asian health care players as it is not as advanced as other regions. tight and financials expected to outperform the superior earnings outlook, betty. yvonne: sophie kamaruddin with several things to watch. we are also watching this week washington threatening to further sour relations with beijing on the trade front, slapping enormous duties on imports of chinese aluminum foil. that news comes on the very day that president xi is going to be arriving in the u.s. to discuss trade. our investors paying enough attention to these trade issues

that keep coming back up? enda: good morning. another warning with the duties. it is the latest in a series of steps. we have had the move on washing machines and solar panels which was not directed to china, of course, but it is part of the mix. we have a decision coming up on aluminum terrace. we are away from a trade war in the traditional sense. we have seen trade tensions in the u.s. and japan. nonetheless, the worry and the fear economists keep fighting is because of the linkages between the global supply trade now -- if they do deteriorate, it won't just hurt the world's two biggest economies, but all of the economies in the middle as well. economies are continuing to warn cannot ignore the trade tensions. it is one of the biggest risks this year. betty: what is the significance? enda: it has to be very significant. it is a higher office.

there are a series of meetings in china this week. next week, he is already the topic. offers some kind of concessions, opening up certain markets. already promised opening up financial services to deliver and all of ranch. they have some exciting to be because the backdrop of the changes in the chinese leadership, which is raising questions on the global stage about china's adherence to its own internal rules and what that means for the kind of role it wants to play on the global stage. while he might try to talk up a bit story, there would be a case of explaining, too. line as will be a fine he heads to washington. given the trade tensions we are seeing escalating this year, is china going to retaliate? they certainly have the tools to

do so, but they have not signaled that just yet. enda: relations have already deteriorated further. ammunition to strike back. they could, of course, target target chinese orders for u.s.-made goods. boeing is the classic example. the biggest importer of soybeans from the u.s. antheyould curb.s. investment -- chinese investment in the u.s., which is important in generating jobs. none of that is a risk for china, either. if you were to curb the import of soy, they would risk inflation. that china has a big stick to wave and they are willing to wait to use that big stick if necessary. betty: looking ahead to the pmi numbers coming through and we are seeing a little bit of weakness when it comes to import orders or output orders as well. what are we seeing here and what should we expect?

enda: the has been softness in the pmi data at the beginning of this year. the manufacturing sector is cooling a little bit. the broader story remains intact. numeral start has been good. we had the indicators for small business sentiment which demands the manufacturing sector in china is ok. we know the global story is holding up, so that bodes well for china's exports. the distortion would have taken a few months to get a clear handle. >> certainly still needs to look at the seasonal factors until a couple of more weeks or so. and the current, thank you. curran, thank you. prices drop the most in two weeks as the agency warned about the rise of u.s. shale output. opec-ledtor says the production curves might extend beyond the end of this year. a couple of risk factors.

if it is stronger than what is assumed. if the demand is weaker than what people assume or if the agreement that opec and non-opec countries serve would not have compliance as of we have seen in the past. they go in a different direction, but the surprise could be different. strong growth. stronger than expected growth from u.s. shale. >> we heard from saudi arabia's minister over the weekend saying that, now, he does not see a rebalancing under 2018. he does not see exactly when and how. how do you read that? is there a rethink, a rebalancing could be much later? >> there are different years on

rebalancing and the views of the people may well change throughout the time according to the changes in the market dynamics. observers started to understand the dynamics of the u.s. shale oil growth is strong, forthis has implications the global markets for 2018. i believe well beyond that. >> earlier this year, you talked about a possible explosive growth in u.s. supply. should opec be concerned about u.s. supply? it is of course after the think ofhat do they explosive growth of shale oil

growth from the united states? first of all, we should well understand it. the explosive growth is happening. , androwth is very strong once again, i would like to remind everybody that this growth is not limited to 2018. 2018y well go beyond to and may have implications in terms of covering a big chunk of global oil demand growth by itself. >> that was the iea director speaking with haslinda amin. up next, going mobile. crypto kiddies. viral blockchain-based gains sparked a global craze for collecting cartoon cats. with theing to speak cofounder, next. this is bloomberg. ♪

yvonne: this is daybreak asia. i'm yvonne man in hong kong. betty: i am betty the in new york. crypto kitties. it spiked a global craze for cats. it could mean another pilot for the world's second-largest cryptocurrency. 30% of all ethereum transactions, causing network congestion, and now, it is set to launch a chinese-language ioa app that will only stoke the frenzy. let's get over to vancouver. sure many people tuning in will be like "what is this es we're talking about?" explain how these games that seem to be coming out more and more -- how is that affecting or interlocked with the blockchain, the cryptocurrency market?

guest: i would say it's very interesting. did it possible with this concept of smart contracts, and it allowed for many other decentralized apps. you can think about uber, but decentralized, and airbnb, but decentralized. there is no third party involved, taking cuts or being the intermediary, so for us, using that technology, we are able to create crypto kitties. was the fluctuation of the market, it has been interesting. one thing to know is that the market happening happened a lot last year and resulted in the spike above the price of ethereum. for us, we deliberately did not do an ico. built a product. we shifted as a normal product, and essentially, it is easier to adopt a kitty in our game, and you would use it to do so.

kittyld have been like a coin or some type of token that represents our game. re decided to take ethe as the way to adopt a kitty. betty: you hear so much about people saying how blockchain is going to change every aspect of people's lives in the future. that wevious to you have now seen this move over to the gaming world? what about competitors coming on board? gaming -- is going to be we are one of the world's first crypto games. experiments. i do think that 2018 is going to be a huge block of so many crypto games that are exploring all of the different mechanisms, and we have already seen a couple of copycats in the chinese market and it's been a very interesting thing for us

that the ui, user interface and user experience that we design for our marketplace, you can see it replicated in many other crypto games out there. not only that, but sometimes, it goes as far as taking the same tties from our page and putting it on theirs. mobile gaming as we know it in china is huge. in asia, it's very big. tapping into that space is going to unlock a lot of activities. yvonne: copycats and cryptokitties. it does not get any cuter than that. let's talk more about china. one of your biggest challenges is the scalability. you're talking about hundreds of thousands of users on your game right now, which as you mentioned, clogs ethereum network. china is a complete different beast. we have seen millions of users on a game at once.

could the structural issues limit how well you do in a chinese market. anit is an extra sting -- interesting exploration. it's definitely something we are looking into. since the time where we reached extremely high capacity in the network, we formulated a separate team to figure out the issues and do a lot of research. these are growing pains of the blockchain. the blockchain right now in terms of technology is still very early stage. we are dealing with the dial-up internet that we have many years ago, right? think about creating a world of warcraft or league of legends on internet. i do believe ethereum this year is going to introduce a lot of interesting proof of steak and scaling the answers, so that will be coming down the pipeline very shortly. yvonne: i want to break into this interview really quickly to bring you some numbers on japan

in the economy. we have retail sales coming in much worse than what economists had estimated, down 1.8%, more than double what economists had estimated for a decline, the wage growth or the lack of wage growth in japan really being reflected in these retail sales numbers month on month. retail trade year on year, coming in at 1.6%. sales pretty much even. we had industrial production numbers which of course have been quite a bit volatile, up and down here over the last several months. preliminary numbers down 6.6% again. a pretty big disappointment. a decline of 4%. they exceeded expectations in the last month. up 2% will meet your on your for ip. expectations there for a gain of 5.3%. i am not seeing much movement in

reaction here in the yen, but certainly, we will be watching reaction in the equity markets to these numbers. yvonne: not a good sign for the boj, but we did see some of the flash pmi numbers that did flash some softness as well. this is perhaps feeding into the industrial production numbers. more context from japan. let's bring it back to betty from crypto. cryptokitties. we are talking about the regulatory environment. the two things china has cracked down on is addictive video games as well as cryptocurrencies. that is basically what your now.ct is all about right do you see the regulatory environment getting tougher in the near-term? >> that is a interesting question and part of the reason why we are partnering up. they are helping us they give .he -- helping us navigate before this, we were a startup company building a bunch of enterprise software, and now, we are focused in this crypto

gaining states. navigating this has been pretty interesting. we have been learning a ton. i see that, you know, ultimately, i feel that china is supporting blockchain, but the ultimate thing they laid down was no ties euros an note to exchanges because there is a lot of ico's. that we will be delivering. we see that in the regulatory environment -- i cannot the on their side, but i feel like this year, they are going to be opened to a bunch of other crypto or blockchain products that will benefit them. yvonne: the story we keep hearing so much about, how revolutionary blockchain is. i know you are not going to comment here on prices or where you think ethereum or bitcoin is going, but does it matter to you, to your business -- you know -- if we see another crash in bitcoin? does it matter to you where the prices go?

30% to 40% swings are common in the cryptocurrency side. for us, we are really product-driven. heads down, billing this as a game rather than focusing on token, like ia said before. ultimately, it does affect us. if the theory of goes to five goesrs come -- if ethereum to five dollars, it will be easier to play. of course, the economy for all of the decentralized ones out need that are doing ico or either to function as an app, that is going to affect everybody in the blockchain is, right? certainly, i don't think anyone could guarantee that they could weather the storm if there is a significant drop. yvonne: before we let you go, i know your numbers speak for the game itself, but what do you say to those that they is this all -- that say is this all a joke right now?

why would anybody user either to buy a cat? are huge,ual assets and in regards to the overall market, right now, we are a busy -- we are busy trading coins back and forth. digital assets will open the door for an entire new category, whether that is art or real estate, etc., and that will be the real interesting part in the near future. yvonne: benny jang, thank you. fascinating conversation. we have plenty more ahead on daybreak asia. this is bloomberg. ♪

yvonne: i want to recap some of these numbers. we kill missing estimates, down 1.8% month on month for january. slower pace of

growth when it comes to the retail trade side of things. industrial productions also missing quite a bit here. since -- 6.6%. we will dive into that data with our colleagues in tokyo. not a lot of reaction out of the yen. 100 743. this is bloomberg. ♪ mom you called?

oh hi sweetie, i just want to show you something. xfinity mobile: find my phone. [ phone rings ] look at you. this tech stuff is easy. [ whirring sound ] you want a cookie? 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. sure. momwhat's up, son?alk? 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. >> it is 8:00 a.m. in hong kong and live from plerk's asian headquarters. i'm yvonne man. welcome to "daybreak asia." the top stories is this wednesday, and then there were four. maybe. the fed chairman says the strengthening data might mean a rate hike rethink. u.s. stocks sold off on jay powell's hawkish tone and asia pacific markets are expected to follow suit. betty: from bloomberg's global headquarters i'm betty liu where it's after 7:00 p.m. on this tuesday. retail sales and trade slide more than expected. while industrial production plunging last month. and struggling commodity trader nobel reporting earnings and a

top shareholder says potential losses are shocking. yvonne: we are diving into some of this japanese data which was quite a miss there, betty but it will be about jay powell and his testimony that asian traders are really going to be focusing on. he was quite upbeat about the economy. and it seems like now the debate is moving forward. not whether we're going to see two hikes but more so three to four. betty: right. leave it to the markets, right? taking some good news here. optimism about the u.s. economy and selling off on that. with the declines we saw here in equities. and in the bd market. tting up forerhaps a softer sen there in asia, and particularly with those japan numbers that just came out. yvonne: yeah. who knows? buying cryptokitty is the way to be these days in light of

all this volatility. let get to you your market check and market open in tokyo in seoul. we are following what we saw on wall street in this softness in equities. yields picking up. >> i might need a cryptokitty to cuddle given the volatility we are seeing. and betty pointed out, we are seeing investors take powell's upbeat comments and not taking it too well. we have stocks under pressure. currencyies sliding against that firmness in the dollar. following the hawkish comments from the fed chairman. and we've had a fairly rough february so it looks like the last day we're just going to continue those tremors. we have a bus busy data lineup. and we got those disappointing numbers from japan. steep drop in factory activity. that was anticipated. ahead of the lunar new year holiday. and sliding about .4%. now, the next big data point, that is going to be chinese p.m.i. with expectations for the manufacturing indicator to post its first three-month slide in three years.

and later today, we do have indian g.d.p. might offer a glimmer of positivity, though, so we are looking out for that. in australia we are seeing event. nap a five-day and e a.s.x. 200 sliding aussie retail sales slid and next tuesday we will get a pulse cherk on january retail sales for australia. and that's going to likely show some softness as well, yvonne. yvonne: we did have that disappointing data coming out from japan. retail sales and industrial production, as sophie mentioned both slumped in january from the previous month. for more let's go to our deputy tokyo bureau chief to talk us more through these numbers. what's behind the slump? >> well, yes, the numbers came out quite a bit worse than we were expected. we were expecting the numbers to be down month on month.

especially for i.p., due to the impact of the asian new year holidays, frequently we see an impact from that. on these numbers as companies cut down production ahead of the holidays. but as you saw, the numbers were quite a bit worse than expected and before i came out, it seemed to be the worst month on month drop in quite some time. actually since 2011. i would imagine that the yen strengthening trend in january had something to play in that. but it's -- i would say it's too early to be overly concerned about these numbers. especially as one economist told us because of the impact of the asian new year holidays you do have to watch the numbers for january and february and look at them as a set and not read too much into this at this stage. yvonne: as you mentioned the seasonal effects in play here. but what does this mean for the outlook for february? or throughout the first quarter? we saw pretty strong numbers when it came to industrial production throughout last

year. just that the pace is going to be much slower? >> yeah. i think what we're expecting is that the pace -- will continue to see an expansionry trend. the pace will be slower. having said that, within the data today, we are seeing that the companies are forecasting for -- industrial production in rise a whopping 9%. so obviously a lot of that was factored into a lot of the -- a lot of the decline was factored into january and a rebound in february whether it will be that large or not, i'm not entirely sure at this stage. we should continue to see expansion, maybe not at the same pace as last year. and obviously the yen trend will obviously pay a large factor into that if the yen continues ton its recent strengthening trend or not. yvonne: looking ahead what should we watch out for in the capital spending data out of japan tomorrow? >> yeah, that's right. we've got cap-ex coming out

tomorrow at the same time as today. that's the data for -- quarterly data for the three months through to december. we're expecting that to expand. we're expecting -- expand a little bit less than the previous quarter. that might reflect more companies allocating capital overseas rather than spending in japan whereas labor costs are continuing, continuing to rise. one thing to bear in mind the cap-ex data tomorrow is it pays a very -- plays a very important factor into the g.d.p. revision which will be coming out in early march. so we are watching that data very closely to see if the g.d.p. data which was fairly weak, the preliminary data that came out, whether that will be revised upward or downward. yvonne: thank you so much for joining us. our deputy tokyo bureau chief there on the japanese data. japanese economic data, came on the heels of the new fed chairman jay powell's testimony. to congress which of course was closely watched today.

bloomberg's economics and policy editor kathleen hayes here with a look and a little bit of a debate about whether jay powell is hawkish or not on rates. >> one thing i think that -- it's so clear right now, central banks around the world are grappling with a very important question. how do we get up to that -- what has become the gold standard of inflation target? 2%. starting his second term will look at these numbers that came out in japan and oh, darn. makes the fight harder, right? jay powell very confident on the outlook for inflation today and i think that's one of the reasons in the sense of it's going to rise that you saw this reaction in bonds. a selloff in bonds. losses, steadied by the end of the day and benchmark 10-year at 2.89% but the four rate hike camp is gaining ground. look at #bt v-6 59 because the market imemployed probability four fed rate kes this year is -- is -- hit a new high, right? look at this. that's when the stock market has big selloff. everybody said they can't keep raising rates like this. if stocks are falling, well,

stocks recovered and guess what? jay powell helped move that rate hike probability from four hikes up even further. one of the things he said, wages are goke to rise faster this year. tax cuts are boosting the economy. and we are going to see inflation reaching the 2% target. also higher average holiday earnings. c.p.i. higher, all of these helping that four rate hike camp pop again bond traders saying -- sounded hawkish to me. betty: the market seems to be taking that way but is that a widespread conclusion? >> let's look at what he said. he did hint at a policy rethink because he thinks the economy is getting stronger. in fact, he said that from december to march, it looks like some things have changed. so let's listen when he was asked about this, asked are you going to vote for three rate hikes or four by -- and a republican representative from new york. carolyn maloney. >> what we've seen since then is incoming data that suggests

the strengthening in the economy. we've seen continuing strength in the labor market. we've seen some data that will -- in my case add some confidence to my view that inflation is moving up to target. we've also seen continued strength around the globe. and we've seen fiscal policy become more stimulative. so i think each of us is going to be taking the developments between since the december meeting into account. and writing down our new rate paths as we go into the march meeting and i wouldn't want to prejudge that. yvonne: jay powell said stock market selloff, bond yields rodriguez and not going to be a big weight on the economy and ballock economics said that what we heard from him was consistent with the january fomc statement. nothing really different. others like crirs rupke at mufg half speed ahead and he's going to keep hike being rates but he doesn't see signs of acceleration from 3% to 4%, and a senate banking committee appearance by jay powell. maybe we'll get some more hints

on thursday. yvonne: yeah. that certainly is going to be the case. and really interesting to see he put a lot of personal touch in his opinions into this testimony as well which is quite unusual for fed chair. kathleen hayes our bloomberg economics and policy editor. the first word news with jessica summers. jess. jessica: thanks, yvonne. the u.s. similar posing duties as high as 106% on aluminum foil from china. it said producers receive unfair sushes disand then dump their products in america. the issue now goes to the u.s. international trade commission with the vote expected in the middle of next month. the decision comes the very day senior chinese advisors will arrive in washington for trade talks. the former currency chief for the japanese ministry of finance says the dollar-yen won't fall below 105. saying concern about america's fiscal deficit and fear that the studies behind the curve on inflation are dragging the dollar back. he says the dollar-yen is

plateauing leaving investors uncertain of where to go. the yen reached 105.55 earlier this month. its strongest since november 2016. and more pressure on u.k. prime minister teresa may. eight of her own lawmakers are backing a call for closer e.u. ties after brexit. the size of the result is out her ly to wipe majority and threaten her survival. and may is under attack from brussels after a draft brexit deal earlier. it is expected to reject many of her so-called red lines. >> the clock is ticking. time is passing. time is short. i am concerned that there is not much time left between now and next autumn. because it is in autumn just a few months away that we need to reach an agreement with the kingdom. -- security m. john-un is

agencies and published pictures of two passports issued by the brazilian embassy in prague and used by kim and his father in 1996. kim reportedly traveled under the name jesep puag, a brazilian student born in 1983. powered by 2,700 journal scompifts analysts and more than 120 countries, i'm jessica summers. this is bloomberg. betty: still ahead china's largest sportswear company expects sales to rise 25% over the next year. we're going to speak to the company's president. up next, early china data signaling that growth momentum is holding up. j.p. morgan's senior chinese economist joining us on that next. this is bloomberg. ♪

headquarters.

yvonne: this is "daybreak asia." i'm yvonne man in hong kong. betty: i'm betty liu in new york. china said to be planning its first budget zifment cut since 2012. our china correspondent tom mackenzie joining us from beijing. tell us more. what is the significance of this? >> it's significant because this is the first cut we've seen since 2012 when it was reduced. the budget deficit target from 2% to 1.5%. we got a bar chart that shows the budget deficit targets over a six-year period and then looking ahead for the seventh year to 2018. the last two years, we've had the budget deficit target set at 3%. now we're being told sources familiar telling my colleagues here in the beijing bureau that it's going to be trimmed from 3% to 2.9% for the year of 2018. now, this is going to be signed off in all likelihood by the national people's congress that kicks off on monday, march 5. and that's also when by the way we're likely to get targets around the g.d.p. number and also military spending. those kind of areas.

in terms of fiscal policy, we heard from china's senior leaders at an economic work conference in december. they sawed that the fiscal policy here would remain proactive. but of course we've also had the pboc pushing up money market rates and had other arms of the government trying to ensure that credit risks are under control. for example, with the conglomerates like anbac. so within that context we should see this deficit target and the minor reduction that we're likely to see. betty: so can we call this move a move of tightening then? in terms of policy? tom: so we were speaking to tommy cir, an economist. he said that it's not quite tightening he explains it this way. and g.d.p. growth is continuing to grow. and even if you reduce the deficit target just by 0.1% which is what we're looking at, you are still probably going to see a tick up in spending or it's not going to radically

reduce spending. he doesn't see this, tommy cir, as a shift in policy. but what he says it should be in light of the deleveraging campaign, particularly the focus by the government on reining in credit expansion at the local government level. and in fact, i was talking to an academic earlier this week, ching-ho university who advises the pboc on an informal basis and he said that indeed this is a key priority for policymakers and tackling debt and local government debt, local government level particularly shadow banking and plays into that. we did see some reaction in the bond market. the bond futures yesterday, ticking up as a result of this. and len shun security researcher saying this was a believing -- blessing for china's bond market. yvonne: let's bring our next guest to talk about china. and we expect p.m.i. zwrat and early data signal momentum is holding up and that will give president additional room to maneuver as and he colleagues chart policies for the future.

joining us is j.p. morgan senior chinese economist in our hong kong studio, grace, thank you so much for joining us. do you buy what we're hearing from tommy cir, deficit targets being reduced to 0.1% and doesn't signal too much tightening or further tightening? >> yeah. i think this is pretty consistent what we have seen on the macro policy side. overall, that the intention going forward is that economic growth has been surprising on the upside last year. and will quite likely be holding up quite well in year. we are looking for 6.7% growth this year up to 6.9% last year. what that means on the policy front the focus will shift to a focus on the quality of growth. and as well as the prevention of major risk. at means basically ongoing deleveraging and managing the financial system. and so with that, if you look at the macro policy perspective what we are looking for is macro policy will be relatively stable. with some slight to what's more consolidation and tightening on

the monetary policy front in particular. and on the fiscal policy side, are some consolidation on the fiscal policy conditions, particularly and i would say on the local government financing front. and so what that means in terms of growth is that those sectors that have been more depending on the credit growth, so, for instance, real estate, infrastructure, growth, which had been quite solid and better than expected in 2017, would likely slow modestly into 2018. and the sfore areas of the economy that are somewhat less dependent on credit. so for instance the consumption side, the net export side, and even the manufacturing part of investment which had been very soft in the past two or three years. and would likely show some moderate recovery. so a dsht part of the economy doing somewhat differently if you put everything together the overall growth picture will likely be quite -- yvonne: net-net quite faumble at the moment for china. and we've seen in terms of the manufacturing data, the p.m.i.,

and we're starting to see some of these gains in input and output prices, starting to slow. and there's a lot of seasonal effects and all of this right now. but how much longer do you think china can continue on this reflation trend? >> yeah. i think -- a little bit tricky if you look at the c.p.i., the p.p.i. trend as in the p.p.i. will quite likely gradually slow this year. because of the -- partly because of the -- so we are looking for p.p.i. to come down from 6% plus to somewhere about 4% this year. on the other hand, though, the c.p.i. will likely pick up somewhat this year. yvonne: so it will converge? >> on a gradual convergence trend. what that means is that for the overall economy, if you look at, for instance, g.d.p. deflator, that will still be on the positive side. but likely to be skwla modestly slower than what we have last year. and overall nominal growth will be somewhere about 10% for this year. yvonne: how risky is it there's a bias toward tightening at the pboc at a time when the u.s.

fed, for instance, looks to be judging from what we heard from jay powell today, looks to be leaning toward more rate hikes than fewer rate hikes? >> yeah. indeed. our view is that the fed will quite likely hike by four times this year. and there will be ongoing normalization of monetary policy. not just at the fed but some other major central banks as well. i would say for what -- pla wla matters for china is more on the domestic front. as in what happens on -- inflation. and what is happening to growth picture. because if you look at 2017, we actually had some pretty nice improvement in the overall balance of payment picture. and capital outflow has slowed pretty significantly. what that means is that china has the room to put its focus more on the domestic front. instead of having to follow the global central banks in a very strict way. but what that means on the

domestic front is that as we discussed earlier on, you have -- your growth picture will be quite stable and your focus linebacker on the inflation side -- focus will be on the inflation side. and our blaine is inflation will be moderately high they are year. and probably about 2.3% or 2.4% on a year over year basis. and it does seem somewhat closer to 3% would get the central bank policymakers somewhat more concerned. so in that sense, our baseline is looking for the central bank to not make any major change to the benchmark policy rates. but the possibility of a -- a hike sometime in the year cannot be ruled out. depending on the inflation number. yvonne: that 3% level. perhaps being a moment where -- when we need to start rethinking where rates are. grace, those are internal factors. but of course we got the external swarings, particularly on the trade front. we have the chinese going to

washington in response to these pune active tariffs by -- punitive tariffs by the u.s. housm is that being priced into the economic outlook right now in china? >> yeah. i think -- our baseline is looking for china's net export sector to do reasonably well. there was some meaningful improvement in the net export sector. in in 2017. for in year, given that we are looking for the glob economy to come in and second year of synchronized above trend growth, that the conditions on the global front will be quite favorable for china's export sector. so in that perspective, i think the risk is escalation of trade tension. with the u.s. our baseline view is that major trade war between china and the u.s., the possibility of that is still rather low. but having said that, it is possible that you continue to see from time to time some

sector trade issues between china and the u.s. and so from this perspective, i think china's attitude has been that we want to come to terms and come to agreements with the u.s. to address the trade -- rather than through confrontation. and putting everything together, if you look at the macro number, scommort is about 19% of china's g.d.p. and exports to the u.s. is about 19% of china's total exports. so what that means is that every -- slowing in china's export growth to the u.s. would drag china's overall g.d.p. by 0.16%. so what that means is that the impact on china's economy on the macro perspective coming from this channel would still be rather moderate. especially given that they -- that the economy has been on a nice recovery trend over the past six quarters or so. yvonne: we've seen this rebalancing in the economy. grace, thank you for your perspective. senior china economist at ...

-- j.p. morgan. you can watch us live and catch up on some of the past interviews and dive into the securities our bloomberg functions we talk about. this is for bloomberg subscribers only and make sure to check it tout at tv.go. this is bloomberg. ♪

yvonne: a check of the latest business headlines. virgin australia an underlying first half loss of over 10 million australian dollars. the airline expects to improve performance in the second half and there's no intention of privatizing the economy. virgin australia announcing plans to begin daily flights from sydney to hong kong by the middle of the year competing ith kwan tuss and cafe pacific -- quantus and cathay pacific. yvonne. yvonne: air asia reported falling prolvet citing current

and deferred tax charges. fourth quarter net income fell 20% to $95 million compared to a year ago. on the upside air asia said it's planning a net increase of five planes through the current arter to -- for the region's demand for travel. >> this market update is brought to you by etf securities. ♪ mom you called?

oh hi sweetie, i just want to show you something. xfinity mobile: find my phone. [ phone rings ] look at you. this tech stuff is easy. [ whirring sound ] you want a cookie? it's a drone! find your phone easily with the xfinity voice remote.now. one more way comcast is working to fit intur life, not the other way around.

yvonne: it is 8:30 in singapore and half an hour from the open of trading in the lion city. i'm yvonne man in hong kong. betty: i'm betty liu in new york. you're watching "daybreak asia." let's get to the first word news with jessica summers. jessica: thanks, betty. jay powell has indicated the possibility of four rate hikes this year. he acknowledged the strengthening economy and inflation. and hinted that may prompt a rethink. investors marked up the probability of a hike in the fourth quarter to about 50%. the chances in the second and third quarters picked up to about 80% and 70% respectively. that's while the chances of a rise next month remain near 100%. >> while many factors shape the

economic outlook the some of the head winds the u.s. has faced in recent years have turned into tail winds. fiscal policy has become more stimulative and foreign demand for u.s. exports is on a firmer trajectory. jessica: mean while, the british cabinet has discussed the aranco i.p.o. after the visit of saudi prince salman. they are battling to host the company's second listing. saudi arabia has signaled it will sell about 5% of aramco to raise $100 pl. -- $100 billion. to rance form the kingdom and wane the economy off oil. and the fallout from india's biggest bank fraud is spreading to trade financing. that's as foreign lenders become more reluctant to accept guarantees from local banks to underpin loans. sources tell citigroup, defensivee and hsbc are among those reducing exposure to these transactions. which are used by smaller companies to access short-term dollar funding.

and self-proclaimed inventor of bit coin is accused of swindling more than $5 billion worth of the digital currency from the estate of a computer security scompert. aig wright said he created bit coin and a new lawsuit that he uses phony contracts to lay a m to bit coin mined by colleague in 2013. the german government says it hopes to avoid -- a court ruling that paychecks the way to improve air quality. the environment ministry says the ruling doesn't enforce cities to impose diesel bans but admits it confirms the right to clean air. it also blamed automakers for causing the problem by selling diesel cars that emit more harmful substances than advertised. global news 24 hours a day, wered by more than 2,700 journal scompifts analysts in -- i'm jessica summers.

betty: the ministry of commerce in china responding to these latest slap tariffs when it came to aluminum foil from the u.s. and heard that overnight. the u.s. imposing duties from 49% to 106% on chinese lume nim fo. we are hearing from the ministry of commerce that china is dissatisfied with u.s. duties on aluminum foil and they will take necessary measures to protect legal rights. so certainly going to be a big topic potentially when -- the economic advisor arrives in d.c. to meet with trump administration officials. the likes of gary cohn, the trade minister there, also, alking to steve munn chin as well. asian markets are shaping up not just about the trade tensions but also jay powell's testimony as well. which most market participants say this was more of a hawkish tone coming through from the new fed chair. betty: hawkish tone looking

upbeat for the u.s. economy but what this means is the punch pole will be taken away with more aggressive policy tightening. so you're seeing asian stocks and bonds fall in the wake of jay powell's comments. and taking a look at what's happening to the currency space of the dollar above its 2017 low. the korean won, probably most since february 5. hovering around that 10.80 handle. the yen extending losses. the b.o.j., those are going to be in focus as it may trim super long buying where yields have fallen on strong investor demand. and the aussie dollar just holding on to losses there. keeping steady as a policy divergence between the r.b.a. and the fed come into starker contrast. now, economic -- only one r.b.a. rate hike this year. likely in noach compared to the four rate hikes from the fed. taking a look at some equity movers in the region highlighting harvey norman. it is the worst performer on the a.s.x. 200 with shares

sinking most since 1994 as early second half sales slow. the amazon effect may be at work here yvonne. morgan stanley noting that amazon is 11% cheaper than electronics than leading aussie retailers. and japanese retailers also in focus after the drop in sales. yahoo japan falling most since last april. also perhaps adding to the pressure, the nikkei reporting that amazon japan is pushing suppliers to chip in to cover shipping and other costs. and the competition for amazon will also heat up with e-bay's move to buy the japanese assets of e-commerce site q-10. yvonne: thank you. and robert -- the trade representative of the u.s. all right. talking about more earnings in hong kong. the operator of hong kong's stock exchange is reporting full-year earnings later on. and analysts we survey, the net income probably rose 27% to about 940 million u.s. dollars. and let's look ahead to that with blerk intelligence senior analyst for brokers and exchanges, joining us here

right now. given just the volume and the trading activity that we did see last year, this is going to be a pretty good result this time. what are you looking for? >> yes. and what we any as well. the market, which is so great for them. analysts now forecast growth and it could be higher and likely that they will beat consensus expectations. if we look at average daily turnover in hong kong, that was definitely very strong. it was up 32% year on year. and actually, momentum picked up throughout the year. so in the fourth quarter, turnover was actually up 67% which is very impressive. we look elsewhere, the derivatives business, that would likely be boosted by stock options as well. so that could offset some decline in futures. listing fees, should be strong because there were more companies in hong kong. commodities, revenue, that might be flattish. because of volumes. but combined with tight cost controls we think overall it's likely that they will beat market expectations.

yvonne: turbocharged volume is what our reporters have been calling it for hong kong. but we have seen flows, particularly in the southbound side of things and the stock picked up in the fourth quarter and how does that factor into the -- this round? >> for their results, we look at southbound flows, that's continuing to pick up. it's actually as of december, southbound is nearly 14% of overall hong kong turnover. so it's very sizable now. and then if we look at northbound flows, that's also picked up. and i think they get -- got an extra boost after the msci announcement about asia been included as well. and flows through that, that's still going to go up. and then overall, we think that the stock connect in total, that should probably account for about 5% of revenue. which is pretty big. and actually we think back to the shenzhen stock exchange. that didn't start until december of 2016, right? so definitely there's a low base effect. in terms of year on year growth it's going to be pretty impressive. betty: what is the longer-term outlook for the stock? what are the upcoming catalysts

that we should be watching out for? >> yes. so hong kong exchange, the outlook is definitely very positive. firstly, as i've mentioned before, the volatility that we've seen in 2018, that's great for volumes so macro volumes last year, but this year, it's even higher. so during the market selloff, the great thing about the exchange is that they make money if you -- both buy and sell stocks, right? so average daily turnover in january, actually was more than $150 billion. so that's really huge. that will also drive the derivatives business. and also volatility and commodity prices. that will boost the commodities trading volume as well. because more hedging needs and also speculation. so i think 2018, it's definitely off to a good start. also if we look out further this year, we got the msci inclusion coming later this year and the dual class shares in april as well. and then if we look longer term, than that, there's also more connect programs.

and they're still in the works. so for example, the e.t.f. connect, the primary equity connect, but i guess the key risk is the timing of those launches. because it's not all up to the exchange. it could be also dependent on the regulators as well and when they give that ok for the launch of those programs. yvonne: you mentioneded the dual class shares. hong kong allowing that. what is the -- or how does that benefit the exchange? what are your thoughts on that? >> it's definitely very positive for the exchange. and probably for hong kong's market overall. because more companies will list in hong kong and a bigger pool of liquidity here and overall that also improves the market turnover as well. which again is great for the cash equities business. and also adds to the derivatives that flows through to pretty much the whole market. so it's definitely very positive. and also last friday, we saw the company they announced that they're going to bring forward, the time line for when they're going to implement that. to april. and before, the time line was

in june, right? so that's going to be a pretty positive boost especially for the second quarter and potentially the third quarter. if they implement that earlier. so overall, i think it's great. it's also great that investors get more choice -- in terms of the companies that they can purchase shares in. and also access to these -- the growth markets which otherwise they wouldn't be able to access. yvonne: thank you so much on that. arnie wong, senior analyst for brokers and the exchanges. now, struggling noble group reporting earnings after the singapore close laft later. investors are bracing for more major losses and noble's leading shareholder expects them to be "shocking." the bloomberg chart that we need to know. so how shocking could they be? >> shocking indeed, betty. $1.7 billion to $1.9 billion is the guidance that noble group came out with last week. and we can see that if that's

true, the 1.7 billion loss that would be the fourth straight quarterly loss in a row. $100 million down for the first quarter, $1.8 billion for the second. $1.2 billion for the third and all told possibly nearing $5 billion for 2017. hold on to that number. because i want to compare that with what's happening in terms of the net assets for noble. remember $5 billion. at the height of 2017, guess where its net assets were? $4 billion. $4 billion for net assets. 5d billion. that doesn't really compute. a lot of people are wondering whether noble is actually already insolvent. now its net assets are at $1 billion after it divested things from u.s. oil to u.s. gas, even for ships for about $100 million. we're seeing this question really need to stick into investors' minds. and as we see the asset divestiture happening in late 2015 hold on to that time frame

right there. because at the early part of 2015, remember what happened here. iceberg research sent out its note saying that noble possibly is overblowing its estimates for its asset values. ever since then muddy waters got in, investors got spooked. and we see the slide ever since then with noble losing 98% of its market cap, of its share pryce price and trading at that time -- and interesting thing, if you happen to get in in december, it actually is up by about 40%. but that's from 12 cents to about 18 cents. yvonne: we've been talking about this for weeks now. noble stands at the crux of this crucial restructuring plan to keep it operating and that's being described as complicated, controversial and of course the cost of current shareholders. so now one investor is saying hold on, though. what do they mean by that? >> walk with bhee this way. i want to show you who that investor is. that's right here in yellow.

goldilocks investment. abu dhabi based. and right now they hold an 8% ownership. but with the new restructure plan, that would be diluted. and they're calling this a massive delusion of their ownership if that went ahead. they're pushing back and saying they don't want that to happen. because it would affect not only them but prudential in red and c.i.c., china investment corporation in green. flip up the screen. all of them, 40%, they actually get squeezed to 10% here. and then the creditors get to come in. for example, one of the biggest ones okzip this 07% slice which is the senior creditors. and also management would come in at 20%. but the prior pie actually had them at about 18% so they would be fairly insignificantly affected. so the next big thing that we're looking ahead to is the debt that has to be paid. flip up the screen one more time. because i want to show you the milestones, the hurdles that have to happen. and interest is due on bonds

expiring in 2022. this could be chump change relative to what's going to be coming up in march 20. $379 billion in a bond is due. and not only that, if they can get through that, yvonne, $1.1 billion for a loan repayment due. right now, just remember, i told you that there's only about $1 billion in terms of net assets. we're going to see what comes out of the earnings call when that happens after the singapore close. but a lot of red on the screen. a lot of investors right now are very nervous about noble. yvonne: breaking down what to expect from those noble earnings coming up later on. up next, we want to speak exclusively to anita sports about earnings and outlook for sales in 2018. this is bloomberg. ♪

betty: this is "daybreak asia." i'm betty liu in new york.

yvonne: i'm yvonne man in hong kong. anta sports reported full-year net income of $489 million. botch estimates. and largest sportswear company sees sales rising 25% in the fourth quarter year on year. joining us is anta brand president and executive director james young. thank you for joining us. strong year for 2017 for anta sports. we talked about the revenue growth at 25%. it seems like some of the local rivals are not going to match that. what is driving this right now and how sustainable is it? >> actually, 2017 is very exciting year for us. o this is our second year to try a new strategy we call warm focus, multibrand. and so starting from 2016, we really focus on sportswear business and also we -- our brand portfolios inside the group. we have six brands.

target different segments in the sports industries. theaters six brands really performed very well. in 2017. and trying to achieve another milestone for the group business. yvonne: you're certainly beating out the competition in china. you're getting market share and closer to rivals like nike and adidas globally as well. we have a chart that kind of shows just in terms of the stock what we are seeing how you really have outperformed in the past five years as well. you know, offering a lower price for your products, the only way to narrow this gap between these rivals? >> not really, actually. so as i say, ok. we have six brands in our portfolio. so obviously we focus on the mass markets and provide best value products to our consumers. and our targets target high end sports fashion segments which is -- a distinguished feature from nike and adidas. so a very strong footprint on

the high end markets. really attractive mid to high end consumers to purchase their products. and on the pop-up we also have a joint venture which we really cus on the high end of the sports segments and also focusing on the outdoor segments. so these kind of portfolio really give us an opportunity to cover all the segments in orts industry to provide the largest variety products to consumers in different sports occasions. yvonne: given the momentum that wure seeing and not just with the anta brand but the nonanta brands and at what point do you say it's time to expand abroad? >> we are really looking for the opportunity -- we still really focus on our business in china market. but for the future, five to 10 years, we are actively looking

for opportunities outside china. betty: where exactly? what would be most attractive to you? >> so obviously we really look at the -- developed countries. and like u.s. and europe countries. it's a target market. we really want to move outside. so we basically take two strategies to handle that. ne we try to globalize interbrands. 1 and on the other side we are looking for merge acquisition to see where we can find opportunity to purchase the -- a partnership with other well-established brands outside china. yvonne: what brands would make most sense, that would be quite adjacent for jante? -- jante? still focused on the sports industries and sports segment. any established sports brands it's a target.

we have interest in some. but it's also by chance, ok? for the acquisition part. so we are very actively looking for the opportunities. betty: so you might be getting some phone calls after this, james. given a statement like that. and you certainly -- you know, been -- been fast growing. and really successful in this market in china. i'm curious when you say looking into the big retail market here in the u.s., what do you think you've learne ere, you know, in china that you could translate over to ccess in the u.s. retail market which is so, you know, fast paced right now and, you know, and -- and really complicated for a lot of retailers? >> yeah. actually, betty, i mean, recently, retail industry undergo a tremendous transforming in the past five years in china especially.

both online and offline business growth grew fast and we see the great integration between online and the offline business in china. and in china, you look at the sports industry. it's really mono brand driven. which is each brand, a distinguished area to set up the retail experience with the target consumers. which give a lot of advantage for the consumers. to have a better experience with the brands. i mean, u.s., we think is right now still the multibrands minant, models in the sports industry. but we see a change from multibrands to mono brands. so this kind of format i think kind of more nt

relevant advantage for retailer, for our brands, to really feel that the distinguished advantage in the future. so we've got a great experience in both online -- offline business in china. i think this kind of experience can be transferred to u.s. business. to a certain extent. yvonne: we have to leave it there but thank you so much. james zheng, anta executive director and breaking from china, the manufacturing p.m.i. numbers for february coming in. missing estimates by just quite a bit here. 50.3. economists were expecting 51.1. nonmanufacturing p.m.i. coming in and also p.m.i. at 54.4, expectation nor 55.5. a little softer and we have to factor in the seasonal effects of the numbers given the fact this was all during the chinese new year holiday.

don't forget you can always find in depth analysis of the day's big news makers on bloomberg radio. tune in to "daybreak asia" from 7:00 a.m. hong kong time and download the app. bloomberg radio plus. through access via bloombergradio.com. this is bloomberg. ♪

yvonne: this is "daybreak asia." i'm yvonne man in hong kong. betty: i'm betty liu in new york. and yvonne, we just had the china manufacturing or the

february manufacturing p.m.i. numbers coming out at 50.3. slightly undershooting in that index of 51.1 here and we've been following just how the chinese economy is doing with this leveraging process and the new trade tensions that have now erupted between the u.s. and china. yvonne: that 550.3 print and haven't seen a number that low since july 31 of 2016. but certainly we've been talking about how this is a lot -- a seasonal effect in play as well. we're dealing with higher base effects pretty soon throughout 2018. so certainly some head winds to watch here as we do see input and output prices and shown signs of slowing as well. so big question is how will this impact when it comes to pks p.i., prices and industrial profits as well? so continuing to watch those china markets. and p.m.i. numbers on bloomberg markets as well. a preview joining us from singapore today, what are you watching? >> obviously looking at this. and it's quite a big miss,

actually, yvonne. and looking at this 50.3 figure. also miss on the nonmanufacturing side of things. and services, includes construction as well, and we will be along to go through and analyze the data and get to the -- the bones, the bear bones tuch. there he is. he will be joining us in about 15 minutes or thereabouts. if -- or less. john balgeti, joining in us about 45 minutes talking about that company's recent buyback and it's got just four big shareholders. why did they decide not to de lis is one question we will be asking him and also getting through some of the latest numbers that they had as well. some good profit numbers coming through from virgin australia as well. bloomberg markets next. ♪ 9:00 in hong kong.

8:00 on the east asian seaboard. haidi here in sydney. this is bloomberg markets: asia. ♪ haidi: what challenges for china. have playedar may an overall influence. >>