>> a very good morning. australian markets have just opened for trade. >> good evening from bloomberg's global headquarters in new york. >> and welcome to "daybreak asia." >> our top story this tuesday asia pacific markets facing new pressures as wall street hits a 14-month low. investors weighing the fed, geo politics, and a possible government shutdown. the s&p 500 closed at its lowest since october, last year. tech and health care and consumers led the fall. no sector was left unscathed. goldman sachs was among the big

losers after malaysia filed criminal charges linked to the missing billions at 1 mdb. >> every sector on the s&p 500 was in the red with the dow falling 500 points for the second consecutive session. we saw the nasdaq also lose 0.2% losing ground for a third session. s&p futures also pointing lower, down 2%. we have the health care sector taking a big hit. a judge in texas ruling that obamacare was unconstitutional. that led to more volatility in the sector. yields were pressured as we get concerns over growth, trade tensions, geo politics, and we still have the financial sector also leading the decline. let's see how we're shaping up for the market open in asia. >> this tuesday we are bracing for losses after the poor showing on wall street. japanese shares set to resume the climb after slight gains on monday. the nikkei barely hanging on to the year to date gain of 2.6%.

in sydney opening lower by a third of 1% after futures fell the most in a week. among the laggers this morning tech players opening lower by 5.5%. we have material players also nder pressure. let's check in on the aussie dollar. ahead of the r.b.a. meeting minutes due out later this morning, a six-week low, not budging too much. then we have aussie bonds rising for the third straight day and also seeing minutes due out this afternoon. korea's economic outlook looking grimmer after the government cut the g.d.p. forecast for this year and next. oil heading for a third straight monthly decline on supply fears. it is reckoned this will prompt lead to to react and

a price slowdown in the u.s. >> back to the u.s. close, by any definition it was a rough .ne u.s. crude settled below $50 for the first time in a year and the small kap 2000 entering a bear market. so, really, another day of sell-offs? >> the stock market on track to be the worst december since 1931, trump tweeting out about the fed, a possible shutdown. you have growth forecasts being cut because of trade. a lot of concern about the obamacare ruling. let's go right into the bloomberg. what you're seeing in this chart is the failure to bounce. that's an under statement. you can look back here at the beginning of the year, february, and we have now broken below the support level and heading to the lowest close of the year. a lot of this having to do with the confluence of headlines

weighing in the market in this particular session. let's go into the snap shot. what you saw was treasuries advanced, the curve steepened. weaker than expected economic relief. the dollar split and consumer health care stocks heavily in the red one of the biggest declining indexes. nasdaq 100 tech index also hit. if we go into the big movers you can see the size of the moves was significant. johnson and johnson reeling again from the asbestos scandal. amazon getting hit from after the bell moves. they don't have enough echos for christmas oh, my god. twitter has a number of different issues, bugs to say the least and pau gasol pau gasol -- proctor & gamble just pacing the declines we're seeing in the consumer stocks. >> also the decline in oil w.t.i. below 50 bucks in about a year for the first time in about a year certainly not helping sentiment either. these are concerns over the latest inventories from

cushing. >> yeah. that is the near-term concern that the report that comes out on wednesday the weekly inventory will show up bigger than expected, surge and supply at a time when there is a lot of skepticism about opec cut pping. let's take a look at the one-year in particular and you can really see the dramatic decline we've had in recent weeks. have you to remember, folks, back in october we were at a four-year high. so the devastation of many traders that have taken positions is obvious as well. some of the other headlines again have to do the fact that when you have the stock market dropping in the way that we saw in the final hours there's a lot of rotation and asset classes and that, also, impacts the sell-off in oil. in terms of what the supply and demand picture is going to do there are many traders that believe you will see oil producers react so it could get a lot more complicated. >> su keenan with a look at overnight trading action pretty much all to the down side. let's get some perspective on the markets now and i guess the

sentiment we're seeing bill rose the president and c.e.o. and also author of "bankers of the world" joining us now from new york for this entire hour of "daybreak asia." bill, really great to have you and for this prolonged conversation as well. in terms of the reaction in the markets is there a sense this is a bit of a seismic shift in psychology? trade is still unresolved. it could well be a cold war we're looking at between washington and beijing if this doesn't get resolved. have you concerns wheefer the fed does next and economic growth getting revised down all over the place. is this a fundamental shift for after, you know, years of easy money and strong growth? bill: well, first of all, it is good to be on with you. when i was here with you a couple months ago i said that we were at that point at the top of the goldilocks economy and had nowhere to go but down. i just came back from beijing the day before yesterday in the evening and there's no doubt that growth is slowing in china and the people's bank of china

where i had a meeting with the heads of all of the chinese banks to talk about a project i guess we'll get into later. basically, stated that the people's bank has to put liquidity into the markets. there is no doubt about it. as you know they reduce requirements several times over the last couple months. they will continue to provide liquidity. however, this goes against the financial reform area, you know, in the sense of debt build up they have. so i would say china's been the difficult position now. >> goldilocks suggests there wasn't a great deal of selectivity going on. more annuitants this market now looking at how much pricing has certainly come down? more opportunities in this market now looking at how much pricing has come down? bill: there is not panic in china but there is concern

about the whole trade skirmish which has turned into a trade war. you've seen the most recent numbers on manufacturing and exports and other things. the head of the people's bank of china, we spent quite sometime together, and he feels they will end the year at the projected 6.5%. i think next year is more difficult. because they are aiming to do the 6% and i think if trade situation continues and you have to slow down going on in europe as we're saying i think it is going to be more difficult for china to reach that. >> we're seeing the sell-off in the u.s. continue, getting to lower lows and the rebounds not as significant as we've seen them in the past. are stock markets telling us something that the data has yet to show? bill: i think the stock markets are very concerned about the lack of growth that we see in europe. many major economies are not

doing well. france, germany, you have the whole question of brexit. italy is not doing well. there is a concern about growth in europe and now as we were just talking about concern about growth in china. the united states isn't an island on to itself and this eventually will impact us. those are the concerns plus the market in an all-time high very recently and people taking money off the table. it's the end of the year. >> yet this chart on the bloomberg showing we have fewer stocks above the 200 day moving average. really the sell-off showing that only 32% of those s&p 500 members are now trading above that 200 day moving average. you have seen of course many sell offensive during your lifetime. is this time different just because we had so much q.e. and so much easy money leading up to the rally? >> exactly. as i said on your program before, i have been very concerned about the search and

reach for yield we've seen with the very low interest rates over the last decade. the major central banks of the world have poured tremendous liquidity into these markets and now the fed is starting to take it back. in the sense of reducing the amount of naunds they had out there and also raising interest rates. where it is -- in other words quantitative easing is being reduced at the same time interest rates are being increased. even draghi mentioned last week he'll end quantitative easing there and they still have negative interest rates. when you talk about what ammunition there is to fight the next recession in europe there is basically none. here at least we've done something in the way of raising interest rates. and the question now is what happens with the fed going forward? >> we want to discuss the fed plus china while bill rhodes stays with us. let's now get the first word on news. >> the u.k. prime minister theresa may has given herself

four weeks to save her brexit deal. she said parliament will vote on the bill in the week of january 14. may faced a hostile house of commons as she tried to explain why e.u. leaders rebuffed her appeal for help last week. she still hopes to persuade brussels to offer new assurances but labor says that is not good enough and is calling a vote of no confidence. >> the prime minister has run down the clock trying to maneuver parliament into a choice between two unacceptable outcomes. her deal or no deal. the country, workers, and businesses are increasingly anxious. >> the may government is on the point of agreeing to a post immigration policy expected to favor high earners and citizens of nations deemed close to the u.k. clikely to include australia, canada, japan, new zealand, and the u.s. plus countries that adebris to trade

deals. the proposals were expected to be published back in september but have seen frequent delays and rewording. goldman sachs shares fell to 26 month lows after malaysia laid criminal charges in relation to the 1 mdb scandal. authorities allege goldman isled investors when it knew proceeds would be misappropriated malaysia seeking fines well in excess of the $2.7 billion of allegedly misused funds and the $600 million in fees received by goldman. and tuesday is shaping up to be a day when the stars align for space exploration. assuming the weather hold and there are no last-minute technical hitches four companies will head into orbit. they include space x, origin, and united launch alliance. the joint venture involving boeing and lockheed martin. it would be the first time so many rockets have flown on the same day.

global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 this is bloomberg. >> thank you. still ahead we'll continue our conversation with bill rhodes. china market today, 40 years since opening its economy to the world. can it boom for another 40 years? live in beijing later this hour. >> plus president trump finds some allies in his fight against the rate hike, next. this is bloomberg.

> this is daybreak asia. president trump's twitter rave against fed rate hikes has revved up again as jay poul guess ready to preside over the final meeting of the year.

our bloomberg policy editor is now here, now a former fed governor saying the fed should pause. >> i think that is what is so important to remember because president trump's tirade against the fed tweet after tweet may seem a bit over the top but he is not the only person out there saying, maybe you don't really need to do another rate hike right now. let's look at donald trump's latest tweet to get started. here is what he said via twitter. it is incredible with the very strong dollar, virtually no inflation, close to the 2% target, mr. trump. the outside world blowing up around us. paris is burning. china way down. the fed is even considering another interest rate hike. take the victory. in other words he is saying, economy is going, inflation is low. don't worry about t his trade adviser getting into the act though saying the fed shouldn't be trying to hike that key rate just to prove it's independent. well, but i think most interesting to me is the fact that the former fed governor along with one of the hedge fund giants of this age wrote an op-ed in "the wall street

journal," the sunday edition. here is their conclusion. looking at -- they're saying the global economy is getting weaker. you've got global stock markets. you have the fed reducing its balance sheet. we believe the u.s. economy can sustain strong performance next year but it can ill afford a major policy error either from the fed or the rest of the administration. maybe they mean mr. trump, himself. given recent economic and market developments the fed should sees for now its double barrel blitz of higher interest rates and tighter liquidity. in other words the reduction of the balance sheet. if you want another voice agreeing, the c.e.o. and chief strategist at double line capital, very well known in bond markets having made a lot of good calls. he says that's the message to the fed right now. don't hike rates. think of the st. louis fed. he is a fed official saying we have a flat yield curve. it could invert. this is not a good idea. message to the fed. bloomberg economics though, the voice of the consensus still. you have a strong economy.

it will continue to grow solidly next year. inflation is close, a tight market could push it higher. that's why they can and should raise the rate one more time. bill rhodes, back to you. i think i know who you agree with. let me ask it this way. does a side just pause once and say what happened after the global market had so much trouble and the global economy is slowing? bill: i predicted early in the year the fed would go four times and i think they will. they may pause for a while at the beginning of the year but they may take one more rate over the next few months. that's what janet yellen said a month ago or so. one of the things that concerns the fed is that they want to make sure that they have enough ammunition in case we do get into a recession. and this is a problem of the situation with the european central bank is they don't have any ammunition any more because they're just ending quantitative easing i guess in the next week or two and they still have negative interest rates. so i think one of the concerns

of people on the fed board is the idea that if we do trip into recession we have something in the way of ammunition to deal with it. >> and yet do you get that ammunition while markets are so beaten up? in the past historically the fed really has a move to hike rates when markets have been this volatile. bill: it depends which chair of the fed and which chair board you're talking about. and board chair which reacted that way but you had another which is paul volker. it will depend on who is there and what the situation is. so i stick with my forecast and you can have me back in another month and let's see if i'm right. >> we'll definitely take you up on that. >> bill, how much worse does the trade side of the equation have to get before that gives them pause as to what happens next year? bill: that is extremely

important, very important with the situation with china without a doubt. there are two, three big problems let's say that china has and i've mentioned on here before trade is one. there is no doubt about it. but, also, financial reform is very important because of the tremendous buildup of debt, over 300% of g.d.p. so the central bank, the people's bank of china is being called on to supply liquidity and have been doing so as i mentioned earlier. i think they will continue to do so but there are some limitations going forward. i think it's in the interest of both the chinese and the u.s. to come to some sort of agreement and i think the chinese basically want to do it. the question is how long will it take? i don't think we'll get any agreement on trade in 90 days. we saw the automobile situation which is an indication of something positive on the tariffs but they need to do much more. if there is enough progress, i think the administration will move it ahead for another 90, 120 days or something.

the real problem for me and for i think most american companies is intellectual property. this is china, 2025. >> i want to move on and ask you about the fed and ominous signs they maybe are roaring atth own risk. housing. intrasensitive, right? let's pull up a chart from the bloomberg library trouble at home index of housing stocks nearing a bear market. isn't that one more sign that something changed in september? higher rates, higher mortgage rates are hitting consumers again. you have stock markets, this yield curve sending a signal that is often a sign you're on the cusp of tipping things over into recession. bill: you make a very strong case but housing started the case months ago. i don't think it is anything new. as far as the stock market goes it's been very volatile all year. we hit the lows in february and

then we bounce back and had some problems over the summer and came back in october. i don't think this is enough to sway the fed for this interest rate. going forward i mentioned to ou i think we may see a pause. >> how tight are financial conditions right now in the u.s.? >> i think there is still plenty of liquidity around. the question is what companies want to do with that, which is confidence. >> bill, thank you so much for that. of course you're sticking around and bloomberg's global economics and policy editor kathleen hayes also joining us. we'll have special coverage of the fed's rate decision on bloomberg television from 6:00 a.m. thursday for our sydney viewers and 3:00 a.m. if you're up early in hong kong. this is bloomberg.

>> this is daybreak asia. i'm shery ahn in new york. >> goldman sachs is facing wider fallout linked to the 1

mdb corruption scandal in malaysia. shares slumped to their lowest in two years as a reaction to the bank being charged and facing a demand for billions of dollars in fines. we know goldman is already facing investigation in the u.s. but now seeing criminal charges laid in malaysia. >> yeah. these are the first ever to be laid against goldman sachs here. also, basically the company is under the idea that they're liable for about $3.3 billion. $2.7 billion in terms of the funds involved and then $600 billion in terms of the fees involved on top of that. take a look at your screen. there is the breakdown right there. this also goes to the heart of the company getting charges filed against them in three units. one of them is that its u.k. unit, international unit, one is in singapore and one for the asia company unit there. this criminal charge alleges that goldman misled investors. on the bond sale proceeds

around 1 mdb the idea is goldman sachs knew the funds would be misappropriated, goldman sachs pushing back against that. malaysia's attorney general also said, listen, we need to do this because malaysia won't be held liable for what the company, what goldman sachs has done, saying their fraud goes to the heart of our capital markets. if nothing was done or was instituted then they'd be undermining their own financial system and their own integrity. look at how this has actually laid out against goldman sachs share price year to date. you can see it's actually been falling by about a third. 34%. we could go ahead and show that on the screen so our viewers can see. there you are. and this is actually on track for the worst year ever since 2011. during that time it was down by about 40% around this time this year. and in 2008 it was down by about 80%. this is a really hard fall as we know. goldman sachs shares you're

seeing they are going to vigorously defend this and that, quote, these charges are misdirected. >> and these charges, only one aspect of the whole investigation authorities have already charged some very well known people in connection to this scandal. >> of course we're talking about the institution side of things for goldman sachs but also the people side of things and of course tim leissner the name we've been talking about all this time, goldman sachs there, his deputy roger ng as well as the alleged mastermind joe lowe charged in absent ya in fact in the united states. his spokesman though says he does maintain his innocence. there is a u.s. federal reserve probe and a suit by a fund. a lot of things going on. >> wide ranging investigation going on in at least 10 countries. thank you so much for that. coming up next investors weigh the thoughts of president xi jiang ping as china marks four

decades of change. live in china next. this is bloomberg.

>> markets you have been trading to the downside for about 30 minutes. we are seeing losses in sydney led by energy with that plunging oil prices overnight. >> it is 6:30 p.m. in new york. s&p futures reversing earlier declines after wall street closed up a lewis level in 14 months. i am shery ahn -- lowest level in 14 months. i am shery ahn in new york. haidi: i'm haidi stroud-watts in sydney. jessica summers. jessica: the federal reserve opens its final meeting of the year later to stay with the white house turning up the heat on the widely anticipated rate rise. president trump tweeted his opposition to a hike and peter would beaid a rise

unjustified. a bloomberg survey suggests they will slow the pace of heights next year as threats to the economy amount. in the treasury fell to the lowest in 18 months as foreign currency reserves declined and the yuan weekend again. -- weakened again. trillion. to $1.14 last year.since may china remains america's biggest foreign creditor followed by japan. said a trade war increasingly taking its toll on china. factories are being forced to cut prices. more than 80% of companies directly affected by tariffs, reporting a decline in orders. ubs spoke to 200 chief financial manufacturers.

the bank says the 90 day trade truce will be merely a temporary respite. the italian prime minister has taken a revised budget proposal to the european commission. e.u. officials say no agreement is imminent. they agreed on a new package to center brussels after accusations their original proposal would rake spending regulations. they held talks on monday but were told no agreement will come before tuesday at the earliest. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. haidi: thank you. concerns over growth, trade tensions, geopolitics, all really weighing on global markets. let's see how australian markets are faring, sophie. for australianf

market. bonds climbing for a third session. the aussie dollar not too far off from the low. session low.t one bright spot are gold producers tracking the haven demand for bullion. laggards,ding the tracking the weakness. caltex coming under additional pressures. the stock is on track for the lowest close since august 2018. we have a stock climbing after selling to make group -- mic group. this is the second overseas has offloaded to shore off its balance sheet. on the trading diary, we are on bank watch today. it has held rates at a record low 1.5% since august 2016, and

there are divergent views about how long this will continue .oing into 2019 vanguard group seeing a chance of a rate hike due to the tight jobs market. we have d ok meeting meant -- dok meeting minutes. the forecast the slowest economic growth since 2012 for this year. that does build a case for bok policy policy for 2019. haiti. -- haidi. haidi: sophie kamaruddin. taking a look at china today, and its milestone marking the 40 years since the opening of its economy to the world. it's for the greatest creation of wealth in history, listing more than 700 million people out than 700ting more million people out of poverty. tom in front of the for been city. what are we expecting? tom: jessica: -- tom: president xi expected in the great hall of the people to give this speech,

marking the 40th anniversary of the opening. he will come out with what many has described as hackneyed propping upnd globalization, pushing that against protectionism. the focus should really be on anything he says around trade policy, anything he says around industrial policy as well, in light of the tensions that china is feeling as the trade war curious on -- carries on. this is about president xi putting his own mark on the reform agenda, and it has caused quite a lot of controversy domestically. there is debate in china around, for example, what appears to be president xi putting to one side and dismissing deng xiaoping's cause to lilo and bide their time. -- lie low and bide their time. the state is playing a bigger

role in the private sector. those are some of the key areas we will be looking at. this speech is a precursor to what we will get out of this working economic conference which kicks off tomorrow and some ofthe 21st, given the tensions domestically in terms of some of the economic data, and of course, the external headwinds. what policy issues are we going to get on the back of that meeting that ends on the 21st in terms of fiscal stimulus and monetary policy? shery: speaking of deng xiaoping , he was the one who set up shenzhen as ground zero for china's economic opening, but we are already seeing trade tensions weighing on the city. that's right. there were trade tensions and there is a whole load of domestic tensions and issues as well. fishingmore than a pool. it had a population of 30,000 people. its population in shenzhen is now about 12 million.

gdp is expected at $350 billion by the end of this year. home to many billion dollar like tencent, huawei, uid, the drawn the drugmaker, and many billionaires who set up companies. challenges.ulatory tencent has faced that john's gaming. regulatory changes around the sectors. to slow.as started you do have the trade tensions. the fact that foreign companies or countries like the u.s., like the european union, are taking a view of thel technology developments here in china and are putting up to some extent some barriers around some of the technological innovation aboutso question marks whether they will be able to export their products overseas as easily as they has been and the domestic demand pitch. shenzhen, which has done so

well, is facing its own something, and it is symbolic of the challenges facing china's new economy. shery: our china correspondent, tom mackenzie come in beijing. thank you. of course, bill rhodes -- tom mackenzie, in beijing. thank you. of course, bill rhodes. tom was telling us about the growth. a mountain of debt. from beijing.ack he spoke to the heads of the biggest banks. what was your biggest take away from those conversations? bill: with the people's bank of china, the central bank, and i should say that is one of the best if not the best institution in all of china. inhas a tremendous record the international side of confidence, and you have a very good at mission in there now who is a professor at the university. they were considered the finest central bankers in the world. they are the drivers of

economic reform, but also, they will keep the liquidity flowing is necessary -- as necessary. it will be a tough year, no doubt about it. they need to continue financial reform, which means cutting back on the debt even more than they have in the past. last year, they moved on shadow banking, but they need to do more. that can conflict with keeping the gdp above 6%. i think there is going to be a real conflict in that sense. it suits china to come to an agreement with the united states on trade for two reasons. number one, for the confidence reason. second of all, for the growth in gdp. shery: why do the chinese feel it is necessary to maintain gdp numbers above 6%? is it time to give up those numbers which they had onto because of this potential for economic growth -- hung onto because of this potential for economic growth? to how: it is a limit

much liquidity they can sell in a market. for one of the things just said by your correspondent in beijing, which is the whole question of the currency. i do not think the people's bank of china wants to let the renminbi go lower than seven to one. $1 reason why is they lost trillion in reserves in 2015 and 2016 when there were concerns about the situation with the outflow. and that is why they put on capital controls. they don't want to have to go through that again, so it is a fine balancing act between providing liquidity, keeping the currency at a reasonable level, not to encourage capital outflow. do ishey want to encourage capital inflow, and that is why an agreement with the united states on trade makes a lot of sense. haidi: bill, that level of growth is usually correlated with the federal level of

unemployment. it seems to be tied with maintaining socials ability. his social stability top of my for chinese leaders? i don't think there is -- maintaining social stability. is social stability top of mind for chinese leaders? william: i think your point is well taken because social stability is important for the government. as you point out, the the market is down 20%. -- the market is down 20%. the situation will be such that just for that reason, i think china will want to come to a trade agreement with the united states, but it will not happen in 90 days, because that will continue, i think, the thrust of moving forward on growth. of these things have to come together, and i think you have to remember that within the leadership of china, not everyone agrees all the time. i think everyone has the impression outside that when something eminence from date --

emanates from beijing, everyone in the standing committee has agreed on it. many times, there are differences of opinion within the standing committee and they have to thrash it out, especially with -- before deng .iaoping and now xi jinping there are always differences to what the level of growth should be against the need for social stability and financial reform. haidi: and the difference is, you know, i remember when he set a couple of years ago that the structural reforms are going to be paid for. it would be like taking a knife to your own flesh. in the conversations you have had with pboc, with leaders in beijing, and you think there is the appetite for furthering these reforms? william: good question. i think there is. the question is how that balances off with what you mentioned before, social stability. they understand they cannot continue to build up that the way they did. they had to modernize the state

owned enterprises, soe's, shutting down the banks in northeast china that has bad portfolios. they also have to take care of the municipalities and providences which have overpowered. they -- are very much aware of what they need -- over -- which have over-card. they are very much aware of what they need to do going forward. bill, stay with us. look to talk about. bill rhodes will be staying on set. coming up, brexit talks look set for 2019 as the prime minister gives herself an extension. take a look at how markets are weighing this continued uncertainty. this is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn in new york. haidi: i am haidi stroud-watts

in sydney. terminal subscribers are reading all about goldman sachs's latest woes with the 1mdb scandal as malaysia files the first criminal charge against the bank. check out the latest on alleged russian interference in the u.s. election. instagram played a much bigger role than previously thought. on bloomberg.com, more brexit discussions at theresa may fights for her deal and faces a motion of no-confidence. there are leaks coming from within her own team. check out those stories trending on the bloomberg, online, and on the terminal. shery: monster now to brexit, and geopolitics, and continue our discussion with bill rhodes, president and ceo of william r rhodes, global advisors. the ecb is running out of ammunition.

the chart on the bloomberg showing markets are not pricing until 2020.te hike guys, if you can take my terminal, then you can see what i am talking about. really, with everything going on with brexit, the boe also finds itself in a conundrum, because their inflation involved the boe's target, but expectations are that they cannot move given everything that is happening. william: i think mark carney has a very difficult job. he is the most competent, but it is all politics now in the sense that theresa may have to survive and she has problems with her own party, and corbin cannot make up his mind what he wants to do, if you want to force a vote of no-confidence seriously, and it is not clear whether he wants a new -- or he wants to call new elections.

the politicians i think our stop. -- are stuck. >> they are stuck and we don't know what's going to happen. everyone wants to avoid the hard brexit. a secondple want referendum, but the question is its for for the u.k. -- europe. people are saying the fed should not hike rates. mario draghi said we are going to stop buying bonds. you can tell there is a slowdown in europe. is there a threat? william: i think there is a threat, because first of all, you have a very weak economy in france. you're starting to see weakness in germany. italy has a weak economy. even in spain, which was doing better before, has a very weak minority government with sanchez in it. and then of course, we have brexit. one of the things that i think is most at stake here is monday and as a financial center, because the major financial institutions of the world are already starting to move operations outside. the u.k. is at one of the most important moments since world

war ii. shery: billshery:, it is really bill, it isy: really hard to match out what the worst case scenario will look like. most of these decisions for infrastructure, for investment, from where companies are going to be headquartered, have already been made. a lot of the damage has already been done. is true tothink that a certain extent, but a lot of institutions are hedging how much they are going to be moving out of london. in other words, they have set up offices throughout europe and other areas, but basically, the core operations still remain in london. they want to see what actually -- coreas to how this is handled. and you have a prime minister who does not have the support of . good portion of her own party

you had an opposition who was not sure what it wants to do, and so i think something has to be forced. prime minister says she is going to force a vote on the 15th. let's see what happens and let's see if the opposition comes together to support her particular plan going forward. what i have to say is, you know, england has 300 years of the bad record with ireland. and dealing with the irish question, and that is one of the big problems sitting out there now. and they really do not have a solution to it between the republic of ireland and northern ireland. and as you know, theresa may's majority cap very much on the ounts very much on the northern iowa's party, which does not -- ireland's party, which does not want to see what they have to impose. shery: how much of a real risk is brexit to political integration?

we had to see mario draghi defending them from criticism. william: i think it is all tied together. that is a real problem here is until brexit in one form or another is worked out, it will weigh not only on the u.k., but all of europe. also, remember, we have a wea political situation. kour goal not as strong as she was. macron has gone through a lot of problems -- merkel was not as strong as she was. my gone has gone through a lot of problems. you have a government in spain which is weak. it is a very difficult time for your. it is not just the u.k. it is for all of europe. haidi: i will try to inject some optimism into this conversation when it comes to europe, because there is also a fair amount of data supporting that as asia

deals with the consequences of the trade war uncertainty and supply chains potentially get disrupted, there are investments in decisions being made in this reroute decisions that to europe. is there a permanent shift when it comes to demand coming from asia over to europe? william: the hope is that they will work themselves out of this situation and that china will work with the united states on this whole tray problem. it is not just the united states -- trade problem. it is not just the united states and china. there are problems with europe on trade. europe also has problems with china. i think if we could resolve the trade situation, that would inject some confidence i think into growth, but also into the markets, because a lot of what we're seeing now in the stock markets is a feeling that the trade problems are going to overflow on a more permanent to the economies of

the developed world, and therefore, the stock markets, which supposedly always know in advance what the economics are going to be, so it all ties or a much together. shery: bill -- ties very much together. shery: bill, thank you very much. william r. rhodes global advisors. he is the author of "anchor to the world." plenty more coming up on "daybreak asia." this is bloomberg. ♪

shery: this is "daybreak asia." i am shery on in new york. haidi: i am haidi stroud-watts in sydney. let's give you a quick check of the latest business flash headlines. included says they violation of company policies and breach of his employment

contract as well as willful failure to cooperate fully with the internal investigation. in september and denies any nonconsensual sexual relations. shery: google is to invest more than $1 billion to expand its presence in new york, reaching agreement on to addresses in manhattan to create a new campus. it may see the current 7000 headcount double. amazon prepares to "of its new second headquarters in the toough of queens -- prepares open its second headquarters in queens. haidi: they decided to delay successor after carlos ghosn deciding to split his duties and have a committee examine corporate governance. the committee will report by march, almost four months after the jailing of carlos ghosn. he and nissan face charges of breaking financial laws and misstating his compensation.

>> we will listen to what renault wants. at the end of the day, we are responsible for governing nissan. decision thate a is convincing for nissan while listening to other opinions. convincing means we should not hurry. should not move presumptuously. we should take enough time to decide. shery: we are headed to the market open in japan and south korea. we have seen a little bit of strength for the japanese yen as we see risk-off sentiment spread. sophie kamaruddin with us. what are you seeing? sophie: with the risk-off move, the yen is trading near a one-week high. we are bracing for losses in seoul as well as in tokyo. we have stocks to watch. we won't gauge reaction -- we will gauge w reaction. hitachi, is set to buy the power grid unit. keeping an eye on stocks like to cater -- takeda.

that is just a look at what to watch when the markets open in japan and korea. this is bloomberg markets. ♪

haidi: a very good morning. i am haidi stroud-watts in sydney. asian markets have opened for trade. shery: good evening. i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia."

haidi: our top stories this tuesday, asian markets head for declines after the wide selloff in wall street. the s&p 500 facing its second-worst december on record. opec has its work cut out for them to stabilize oil prices. crude is trading below $50 in new york for the first time in a year. shery: the fed is under attack before the last meeting of 2018. president trump leads criticism of an expected rate hike. of course, that rate raise would be the fourth this year, coming amid concerns over slowing trade tensions, and geopolitics, and the potential government shutdown here in the u.s. that all weighing on the markets, really risk off markets, across the world. let's see how we are looking in asia. sophie: that is the key for asia as well, the risk-off sentiment taking hold. we have the nikkei off by 1.2%. energy and tech shares among the biggest lie guards so far -- laggards so far. the kospi losing .7%. the asx 200 off by over 1% this morning with energy and tech also the biggest drags in sydney. gold producers are the one bright spot in australia as bullion prices are rising on haven demand. let's check in on the aussie dollar, trading your a six-week

low, barely budging ahead of -- low, barelyeek budging. the korean won holding steady ahead of the bok minutes do this afternoon. korea's it -- due this afternoon. the government cut its gdp forecast. we are keeping a close eye on oil markets. new york crude sticking further below $58 a barrel and putting crude on track for a third straight month of losses on supply fears. take a look at brent real quick. we did see the contract retrace its overnight drop. tracking fourth $60 after dropping to a session low of 68.64, perhaps on dollar weakness. the greenback losing some of its mojo ahead of the fed decision that we are waiting very keenly on this week. kamaruddin.e the biggest overhang perhaps for the markets for now. let's take a deeper look at this. mliv strategist mark joining us.

we had one of our earliest guests saying this is not a selloff that has been based on fundamentals, necessarily. if jay powell managed to pull off a dovish hike, do we see a rebound? >> it certainly would help. needs to be careful. investor sentiment is extremely fragile. and somehow, he has got to toe this fine line between speaking about what the economy is doing, where he seems fairly confident about the strength in the economy, but at the same time, being aware of the fact that the markets are in a state where if he suggests the fed could be going too far with its tightening, he could make the situation even worse. and then you throw donald trump's comments into the mix as well, the fact that he is asking the fed to pause, it makes a very uncertain situation. the fed can certainly help things by may be hinting that they are going to be a little

bit easier next year. but in the very short term, so bad,t is just maybe they cannot do too much about it considering the time of year. shery: why are we seeing so much a stock volatility ahead of a big event risk, when we would expect more quiet trading? mark: it really is quite unusual. as you mentioned earlier, on the news, this is likely to be the worst december really since the for the s&psion 500. that is a pretty big statement. even during the financial crisis we did not have a december that was like this. it is unusual for investors to still be bailing out of markets at this time of year and it just shows you the amount of uncertainty is very high. part of the issue is that just until maybe just a few weeks ago , people were fairly confident that the fed was on a path where it could continue to raise rates well into next year, maybe two

times or three times next year and that is being brought back quickly. some people suggesting the fed will not raise rates at all, so we have got a diverse set of opinions about where we going 2019, when just a few weeks ago, people seemed fairly confident about what was happening. there is a huge readjustment going on, coming at a time when mother liquidity is not quite as good as it normally is. we are coming close to the end of the year. you put those things together, plus some people are probably hoping the trade issues with china would have been resolved already. that is still overhanging. we have got plenty of problems going on as well. all these things are coming at the wrong time and it is just too much for investors to take when they just want to go home for christmas, really. [laughter] , looking at goldman's latest notes, saying the path of the market trajectory next year will depend on the perception of what kind of longevity is in the remainder of this cycle when it comes to economic growth, right, is the

market -- are market participants talking themselves into a recession? mark: there is certainly risk. consumer confidence in america is a notoriously fragile thing, and you can already see there are signs and things like some of the readings, which are more forward-looking. some of those are turning. if we get more negative readings, consumer confidence falling as well, it will not be too long before people are already saying the next recession is coming upon us. with anecdotal evidence in the united states that people are looking at their tv news and evening, they see the stock market down day after day, and they are considering saying to stopelves maybe i should spending because things are looking bad. it can feed into the psyche of consumers, and once that happens, next thing you know, you get a quarter of almost zero growth, and america looks as though it is going into recession. looking at things like the unemployment data is a bit backward looking. that is not really telling us

about what is going to happen next year. consumer confidence is really worth watching, and that could be something which breaks very quickly and that could undermine what's already a fairly weak situation and can get worse. shery: mark cranfield. mark's commentary and analysis on the markets live blog, mliv . president trump's criticism of fed policy could lead to a weaker u.s. dollar. you could find out what the fed team your investments. -- what is affecting your investments. the federal reserve watching for the fourth rate hike of 2018, even as president trump shifts his criticism into high gear. high flyer argues jay powell should parts for now. is there any chance the fed is listening? kathleen hays is here.

so far, what has been the consensus view of what is going to happen? kathleen: wouldn't you say, from everyone you interviewed, that even now, even with trump tweets and everything else, one more hike in 2019? excuse me, in 2018, and hoping fewer in 2019. that would be the consensus. president trump, the day before the first-day of a two-day meeting, out in full swing. let's read the latest one. "it is incredible the outside world, blowing up around us. paris is burning, china way down, and another is just rate -- interest rate hike." i am interpreting for mr. trump. "just keep it there." into thearro jumping act, saying the fed should not be hiking the key rate to prove that it is independent in the face of these kind of tweets, i suppose.

they should just watch the data. he argues for this. even so, jump into the bloomberg. world interest-rate projections. the bond market, people who bet are saying there is a two thirds chance. it is true. this is up closer to 90% for weeks on end and then it dipped into 80's and 70's. they are going to cause. listen to our bloomberg economics team if you want the consensus view of why they should hike. that will boost inflation even further. tax hike impetus will carry into next year. consumer confidence pretty healthy. rhodesads on our -- bill on our show earlier, citibank vice chairman, and we call him heker to the world because knows just about everybody. he says the fed will hike again. maybe next year is the issue. oni predicted here are the in the year that the fed would

go four times, and i think they will. they may posit the beginning of the year, but they may take one more rate over the next few months. that is going to be on the dot. this is a meeting where you get the summary of economic projections updated, their view of the economy, and based on what they think of the economy, what they think of rate hikes in 2019. a lot of focus there. shery: influential voices saying the fed should pause. kathleen: i think this is important. excuse me. a stock market, portfolio manager, who sees the market down, saying you cannot keep hiking rates. an op-ed in the wall street as wellsunday edition as another, they think the economy is slowing globally. they point to quantitative tightening, speeding up. the fed will be reducing its balance sheet at a quicker pace.

strong performance next year, but it can ill afford a major policy. given recent economic and market developments, the fed should cease for now it's double-barreled let's of higher interest rates and tighter liquidity. he says he does not think -- of higherrel blitz interest rates and tighter liquidity. be discussingt to it, and i am sure this is a very tough decision for them. as bill rhodes and others have said, this is probably the toughest decision the fed has faced in a while, and that was the message from the op-ed. it is a big one. still betting on one more rate hike at least for now. shery: kathleen hays taking a look ahead. and of course, counting down. we will get all the answers, hopefully, or some of the answers. we have the special coverage on

bloomberg television from 6:00 a.m. thursday if you're watching here in sydney, 3:00 a.m. if you are an earlybird viewer in hong kong. first word news with jessica summers. u.k. prime minister theresa may has given herself for weeks to save her brexit deal, saying parliament will vote on the bill in the week of january 14. she faced a hostile house of commons as she tried to explain why you leaders rebuffed -- e.u. leaders rebuffed her appeals. they hope to persuade brussels to offer new assurances, but labor says that is not good enough and is calling a vote of no-confidence. >> the prime minister has run down the clock, trying to maneuver parliament into a choice between two unacceptable outcomes. her deal or no deal. country, workers, and businesses are increasingly anxious. jessica: the may government is on the point of agreeing a post-brexit immigration policy

that is expected to favor high earners and citizens of nations deemed close to the u.k. they are likely to include australia, japan, new zealand, and the u.s., plus countries that have agreed to trade deals. it was published back in september but has seen frequent delays and rewarding. as ubs says the trade war is increasingly taking its toll on china, it is as factories are being forced to cut workers and investment with more than 80% of companies directly affected by tariffs, reporting a decline in orders. ubs spoke to chief financial officers and manufacturers. the bank says the 90 day trade truce will be merely a temporary respite. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg.

haidi: thank you. let's go back to sophie kamaruddin with a look at one stock we should be watching this morning. pharma.that is takeda that would be the biggest decline for the share price since april, 2018. that is still investment grade, but this makes takeda one of the most leveraged companies as the shire acquisition does lean on more debt. downgrade, since the shire deal was announced in may, we have moody's along with other ratings agencies putting takeda on watch for possible cuts, given the anticipated debt burden. billionill take on $30 in new borrowing as well as debt in that in this -- this acquisition. that is just one of the stocks

moving in tokyo. we will have plenty more to come after the break. this is bloomberg. this is "daybreak asia." ♪

haidi: "daybreak asia this is i am height." -- this is "daybreak asia." i am haidi stroud-watts in sydney. shery: shares slumped to their lowest in more than two years in reaction to the bank being charged and facing a demand for billions of dollars in fines. ramy inocencio has the story. it could be more than $3 billion from malaysia in the u.s. and it could add up to another $2 billion. one point $8y: billion on top of what was actually used. -- $1.8 billion on top of what was actually used. there is a lot of money floating around in terms of possibly trying to recoup this. malaysia is now firing this -- filing this litigations although

saying -- salvo saying you need to bear the brunt of this. not just goldman itself. it is three goldman units. goldman sachs international, goldman sachs singapore, and goldman sachs asia, according to the malaysianthe malaysian edge. the attorney general came out saying that if we do not do anything, then basically, our financial institutions will take the hit. this is from the malaysian attorney general. show our viewers on that. basically, it would undermine the financial system and their market integrity. looking back over the past year to date, we can actually see how toll on has taken its goldman sachs share prices, down by a little more than 34%, on track for its worst year since 2011. goldman sachs continuing to say that it will "vigorously defend itself against the charges." they are saying they believe the

charges are misdirected, adding that the bank is going to continue to cooperate with authorities moving ahead. >> ramy inocencio with the very latest. let's get some views from singapore. our guest does cover malaysia. as ramy was just saying, the attorney general saying this goes to the heart of attacking malaysian capital markets. does this sort of action buy the malaysian government -- could it be effective in rebuilding some of that market integrity and investor confidence in malaysian assets? >> it's difficult to say. i mean, i think the reality is that malaysia, like much of asia, has been caught up this year and a lot of pressure from higher fed rates and trade tariffs, from tighter liquidity, and all of this has really been a more and -- lent a more negative tone. it has benefited perhaps compared to some of the other

countries in the region because it has not got a current account deficit, and therefore, it has not been as inclined to come under pressure due to capital outflows that mitigate against on current account. clearly, asia has been hit and malaysia has been caught up in that this year as well. shery: as we have been talking about the implications of the fence last meeting of the year are -- fed's best meeting of the year are crucial. going to take a lot of the pressure off emerging markets in asia, particularly if we get a bit of a detente on the trade site as well. at thethat is true, but same time, i think if the fed does cause, there could -- pause , there could be a sense that they are wondering what the fed knows that we don't. the markets are likely pricing in a fed hike this week.

it could lead to more concerned. i think reality is that, you know, with the unemployment rate in the u.s. down at the point 7%, you have growth at 3.5% annualized. 3.7%, you have growth at 3.5% annualized. i think the bigger issue for asia and emerging markets in general is if the u.s. economy does indeed slowdown into 2019, that could actually be much more negative for asia, even if that means the fed is going to pause in terms of further hikes. with the markets priced back, the bigger issue is u.s. demand for asian goods and exports are already slowing in this region. clearly, if there is some truce or deal on trade that will help, but the trajectory is still for lower trade and that will have a negative impact on regional markets as we go into 2019. it seems we also headed to tighter liquidity conditions. a reversal of the easy money policy that we have seen. so what would that mean in terms

of which currencies or markets you favor? mitul: that is a good point, because already, liquidity has been tightening, and dollar strength, higher rates, have all lent to tighter liquidity. we are seeing not just the fed but major central banks globally thatng back from qe, and will mean tighter financial liquidity conditions gone forward as well. we think for em, it is not going to be an easy year given this backdrop. for asia, those countries that are more highly dollar-indebted will come under more pressure, but you know, they could mean, for instance, this year, if you look at it, which countries have been under the most pressure, indian rupee, chilean peso, -- philippines peso, it could mean those countries that are trade-orientated --

the economy in the u.s. will slow down into next year. the momentum is weakening. trade tariffs are not going to stop. we're pausing the 90 day truce. we are seeing signs of weaker exports in the region. i think those high value-added countries such as taiwan or korea will be much more intereste impacted. up -- mitchell to catch mitul, thank you very much. plenty more to come on "daybreak asia." this is bloomberg. ♪

shery: this is "daybreak asia." haidi: shares of nissan. take a look at how they are tracking at the moment in the tokyo session. a much awaited board meeting.

let's get it over to tokyo. david ingles is there with the stored. how much longer do we have to wait now? david: it looks like we will be least in the situation of not knowing who the successor will be for at least three months. yesterdaydid achieve in the board meeting was essentially coming out and saying they are be establishing a committee which will look into governance issues at nissan, and out then, when they come with their recommendations and the comments in march of next year, will they then be able to come i guess, namely the successor will be. in the meantime, we do understand that the chairman's duties will be split amongst the companies executives. shery: david, we have been getting reports that nissan is pushing back on the possibility of an extraordinary general meeting. what is the latest on this front? david: this time yesterday, we

were looking at reports that renault was demanding its of the alliance, nissan, to hold an extraordinary shareholders meeting to discuss all these issues, the indictment we had last week. just two things in terms of the updates here. according to kill to news, nissan has pushed back and rejected that call. kyotoso heard -- to kil news, nissan has pushed back and rejected that call. we will have to wait and see where we go from here after that meeting takes place, guys. >> david ingles in tokyo, think you so much for that. coming up next, we will be talking about oil. wti falling to its lowest level in more than a year. glhave figures of a supply

ut reemergence and skepticism of the opec plus the rate we will look at wti's latest drop, next. this is bloomberg. ♪ ♪ there's no place like home ♪

argh! i'm trying... ♪ yippiekiyay. ♪ mom. ♪

>> it is 8:30 in hong kong. we are just one hour away from the open of trading. we are seeing pretty much a down day across asia as we get sluggishness across the board. a pretty steep selloff everywhere from tokyo to sydney as we follow the losses we saw on wall street overnight. the s&p falling to the lowest since october 2017. this overhang from the fed, still and overhang when it comes to brexit and trade. geopolitics as well. in china. we are focusing on what president xi jinping has to say when he speaks in beijing later on today. i'm haidi stroud-watts in sydney. shery: i am shery ahn in new york. let's get the first word news

with jessica summers. jessica: turning up the heat on the highly anticipated rate rise. president trump tweeted his opposition to a hike. peter navarro said a rise would be unjustified. a bloomberg survey suggests the fed will slow the pace of hikes next year as threats to the economy amount. china's holdings of treasuries fell to the lowest in 18 months. that is as foreign currencies declined. it dropped for a fifth straight month to $1.14 trillion, down from $1.15 trillion in september, and the lowest since may last year. italian prime minister giuseppe conte has taken a revised proposal to the commission, but

officials say no agreement is imminent. eurosceptic deputies agreed to send a new practice to brussels after accusations their original proposals would break you spending -- e.u. spending regulations. they held talks on monday but were told no agreement will come before tuesday at the earliest. and some good news, the gender gap is improving. but the reality at the world economic forum, they say the difference will take 202 years to bridge the divide. the group's global gender cap report was -- reported to was are gap -- gap was reported tuesday. the economic opportunity remaining entrenched. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. haidi: jess thank you.

,the reserve bank of australia has just released its minutes. they kept rates on hold for a 26th consecutive meeting at the rba. case for a strong near-term adjustment in policy, but again, it is something we have heard before, which is that the next rate move is likely to be a brother been down and pointing out the risk to consumption coming from household debt am a week wage wageh, -- debt, weak growth. the rba also commenting on financial conditions in australia, saying generalized tightening of credit availability is a phenomenon that is taking place in this market. let's take a look at how our asian markets are shaping up

week, all putting downward pressure on prices. our asian energy reporter stephen stapczynski, joining us from tokyo. agreement to cut supply, not boosting prices. just last week, we had byc agreed to cut supplies 1.2 million barrels per day. in the past, that would have boosted prices, but as you said, we're seeing wti at the lowest in more than one year. what is going to happen now is the market is obviously looking and russia, maybe they need to cut more. when you look at saudi arabia, russia, uae, and iraq, they added 1.6 million barrels per

day to the market between may and october. maybe this one point 2 million barrel per day cut is not enough. maybe they need to do more. there might be some traders in the market saying they cannot make the 1.2 million barrel cut. trump can shoot off a tweet and criticize saudi whenever they cut production. shery: are there concerns about the u.s. acting as a swing producer? what other fundamental is our country leading to this malaise and prices? -- in prices? stephen: we are seeing the u.s. production continue to boom despite the prices falling. marketf folks in the expected when prices went below 55, below now where they are, you would see a lot less shale production.

we will see them cut their demand next year as an economic slowdown. it is really bearish factors in here despite opec doing the most that they can in their eyes to add some support and bottom to the prices. shery: especially with the u.s. becoming the net exporter of oil since the 1970's. everything happening in the soil environment, is there anything else that can do at a time when it seems the cartel is becoming weaker with qatar also withdrawing? stephen: i think the thing the

market really wants is a lot more transparency. maybe, how will you get the cuts done? they want to see the countries actually make the cuts. saudi is going to cut by thousands of barrels, hundreds of thousands of barrels per day, but how will they do it, when will they do it? actionnt to see actual instead of lip service. the market will continue to be a bit skeptical. shery: stephen stapczynski in singapore. plenty more ahead on "daybreak asia." china launching its reform and opening up policy with the aim of transforming into a great modern socialist power. that goal appears within reach. more than 700 million people lifted out of poverty in just four decades is testament, many

would argue, to the success of beijing's signature socialism with chinese characteristics program. deng xiaoping embraced agricultural reform, lower trade barriers, and loosened the sectors on the private sector. wto, and greater exchange rate flexibility followed, transforming china into the world second-biggest economy. now, president xi jinping faces a critical moment. economic issues abound, including an aging population, huge inequality, and the subsequent risk of a middle income trap, when progress as measured by per capita income stalled. after that, the fight for influence. while he advocated a strategy of hide your strength behind your wants china to be a global superpower, and that led to tension with the u.s. and of beijing's policies on trade, technology, and market access.

haidi: this is "daybreak asia." i'm haidi stroud-watts in sydney. shery: and i am shery ahn in new york. the policies led by deng lifting morered -- than 700 million people out of poverty. tom mackenzie joins us from outside the for bit in city in beijing. with xi jinping due to speak this morning, what can we expect? talk: -- tom: a

key focus is whether he uses this as an opportunity to announce further measures to open up other sectors of the economy. we will be listening in to see what he says more broadly about trade and what he says about industrial policy. there is skepticism that we will see any radical changes announced during this speech because what many would see as president xi's repudiation of deng xiaoping's legacy, whether that is on term limits, whether that is on the role of the state and private enterprise, or the role of china on the international stage, there are concerns that were articulated respectedke to a economist in china, president of primavera capital. he remembers seeing his teacher being dragged away during the ultra revolution. he worked through the period of the last 40 years and became incredibly successful. he was the chairman of goldman sachs. he says this moment in china's history is pivotal.

take a listen to the president and chairman of primavera capital. >> a combination of challenges we are facing right now, domestically, and also the challenges people are facing know,ally, and you business confidence, investor confidence, or even just the broader public confidence, now has been weakening. people have been expecting a stronger, deeper reform. people in china should not wait any longer. >> how would you categorize this moment in the context of recent chinese, modern chinese history?

would compare this to the period between 1989 and 1992. withwas also a period tremendous assets. concerns and worries whether china would continue to reform or stop. fortunately, thankfully, that came to an end when deng xiaoping made his famous tour to shenzhen. jumpstarted the reforms. we very much hope our current leaders -- >> what is their take on the priorities?

>> i do believe the leaders continued to have the commitment to deepen economic reform. the priorities may change. focus on law, you transparency and a level langfield. it is simple. people in power have too much power. >> he thinks the chinese political leaders do have the skills and the tools at their disposal. we will see whether president xi

jinping addresses any of those can turns in the speech. it will be taking place right behind me in beijing. haidi: thank you so much for that. let's take a look at the obstacles facing companies wishing to do business in china. the -- we know that the traffic in beijing on days like this can be really difficult. shery: the opportunities of doing business in china, particularly over the past 20 years for foreign businesses come a but the challenges have been immense as well. it has never been easy to do business. >> you're absolutely right. huge opportunity.

british businesses being part of that. but certainly the last 12 to 18 months, british businesses have highlighted some of the more recent challenges. in our survey we are releasing today, it was cyber security and i.t. restrictions, so we are talking about the new cybersecurity law, the way it is so complex yet vague, brings a lot of uncertainty to u.k. businesses here in china, and also, it means that because they have to store that data locally, it means they are not linked into the rest of their platform globally. the u.s. china trade tensions and sometimes, british businesses have been caught in the crossfire, especially if the supply chains involve both the u.s. and china. a knock on impact on demand and the general slowdown or knock on impact in sentiment, which is impacting the success of the business is here. entry is one thing that

president trump and other chinese economy and the sort of lack of openness , particularly when it comes to foreign businesses wanting to seek those opportunities, that has been an area of criticism. what would you be hoping to get from xi jinping's speech today that might make you more optimistic that things will get easier and more streamlined for businesses in china? well, i think, just the fact of opening up. we have seen certain sectors start to open up and certainly, there has been added knowledge and -- an acknowledgment. but to be honest, there are still huge parts of the economy where british businesses cannot really operate. maybe that can be a challenge getting a business license. things are very difficult to get because of that. would like tot we see is more rhetoric around opening up. not just rhetoric, but we would actually like to see some of

these reforms happening and the market opening up for the benefit of international butness, british business, ultimately, that will benefit the chinese economy and consumer. shery: they face a potential hard brexit at home. what has this uncertainty done to affect operations in china? nicholas: well, these were other questions we put in our survey. of brexit the impact due to british businesses and revenue here in china? no said whether there was a deal brexit, hard brexit, that would not have an impact of revenue here in china. the sectors that said it would a negative impact were those related around manufacturing, the financial services, and i think this is a lot about the uncertainty that a no deal brexit would bring, and certainly, the disruption on the supply chain, and potentially, some? around question marks

china manufacturing goods. shery: have they started to make material changes to the way they do business in order to prevent brexit concerns as well as trade tensions affecting the business? say, on thewould side of brexit, not so much. china bilateral relations in a way are removed from the u.k. european negotiations. we believe u.k.-china negotiations will continue to grow. we are seeing some british businesses start to take certain precautions. for example, a lot of them are looking to see if these tariffs go from 10% to 25%, and if they do, we could start to see some steps thing taken. 13.5% of companies involved in good manufacturing said they would consider moving production from china, and i guess they would be looking at places like southeast asia where the costs are cheaper anyway.

this is something some british businesses are considering. holt, thank you very much. british chamber of commerce in china, the chairman. you can get a roundup of the stories you need to know to get your day going in today's edition of "daybreak." bloomberg subscribers, go to dayb on your terminal. it's also available on the mobile bloomberg anywhere app. you can customize your settings as well. this is bloomberg. ♪

haidi: this is "daybreak asia." i'm haidi stroud-watts in sydney. shery: and i am shery ahn in new york. cbs says they have grounds to terminate less nunez -- their ceo. violations of company policies and breach of his employment contract as well as willful failure to cooperate fully with the internal cooperation. nonconsensual sexual relations. haidi: t-mobile is said to have won national security approval of its takeover of sprint, checking one of the regulatory boxes required. they are clearing the deal, moving them closer to their $26 billion tie up. the focus goes to the federal

communications commission and the justice department's antitrust division. shery: standard is to separate its private equity unit, ending a two-year drive by ceo bill bill winters to quit. that funds are buying a majority of the banks private equity assets in a transaction valued at $1 billion. the unit has helped create more than $1 billion of losses and restructuring costs since the charge three years ago. on what to watch and markets today and head over to sophie in hong kong. sophie. we are watching chinese on markets as we anticipate key economic signals this week and as china seeks to bolster growth, there is speculation that beijing plans to speed up local government debt sales by allowing issuance from january. the frontloaded issuance will increase supply pressures. they are pushing the contracts below its lowest level. in light of malaysia filing

criminal charges against units of goldman sachs in relation to the 1mdb scandal, keeping an eye on any market reaction, 1mdb's 2022 and 2023 bonds posted the biggest drop as malaysia turns up the heat in goldman sachs, haidi. sophie kamaruddin in hong kong on the markets for us. that is it for "daybreak asia." our markets coverage continues as we look ahead to the start of trading in hong kong, shanghai, and shenzhen. the market open is coming up. a momentous day in beijing. we will be live t -- we will be live there, as president xi jinping speaks to commemorate 40 years. this is bloomberg. ♪ place, the xfinity xfi gateway.

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rishaad: 9:00 a.m. in hong kong. asia markets have for a decline. the s&p the second worst december on record. rishaad: crude closing below $50 for the first time in a year. opening up. we will assess the highs and lows in beijing.