>> welcome to daybreak australia. and i'm sophie kamaruddin in hong kong. we're counting down to asia's major market open. haidi: the top stories we're covering, the u.s. and china return to the trade negotiating table with shared worries about the global economy. president trump renewed threats overth national emergency a border wall as the shutdown goes into its third wake.

asian stocks are poised for a positive open after strong jobs numbers and jay powell's promise to watch. shery: let's get a quick check of the markets close on friday. we saw the dow solar more than 700 points -- soar more than 700 points. we saw all sectors in the s&p 500 gain ground, rising 3.4%. the nasdaq getting more than 4%. one of the best days of this bull market. the 10 year yield also spiked past 2.65% after the route we saw last week where we saw it lose around 25 basis points. of course we not only got more good news from the jobs market, but also a more dovish fed chair with jerome powell talking about flexibility, listening to the markets. let's see how all of this will play out in asia, sophie.

sophie: looks like a little bit of everything could go a long way in asia. nikkei futures to see a gain of over 3% for japan when trade opens. we saw apple shares take a hit friday. could see apple companies move in light of the tech giant's announcement that it will see itunes on samsung tv's, seeing a shift. of course we have that upside from the fresh round of u.s. china trade talks kicking off this monday. a few catalysts today. when it comes to the data line, we are very light today from austria. not much out in terms of major points, but this week we will see trade numbers, building approvals, and retail sales for november. adam that you have the aussie dollar trading back above $.71 after touching a 10 year low less week. that is due in part to the dim outlook for the u.s. dollar.

we're going to talk about the outlook for the dollar in greater detail later on. also on the agenda, ubs is holding its greater china conference today and we will take you there live throughout the course of our programming. you do not want to miss out on our exclusive injury view with the ubs -- interview with the ubs chairman in a little over one hour, about 20 minutes past 10:00 sydney time. 6:20 in the evening out of new york. let's get you the first word news now with su keenan. su: goldman sachs says the dollar may be poised to decline following the fed chair's comment friday. jay powell signal the central bank could pause interest-rate increases if the u.s. economy weakens. listening toank is the message that markets are sending about downsized risks. >> as always, there is no preset

path for policy. particularly with the muted inflation readings that we have seen coming in, we will be patient as we watch to see how the economy you calls. but we are always prepared to --ft the policy and see if and shift significantly if necessary. su: china's central bank will be cutting reserve requirements for lenders by one percentage point, and another on january 25. the pboc says it will release $117 billion a liquidity to offset a funding squeeze ahead of the chinese new year. ambassadors remain jittery about china's economic outlooks after contraction in december. , theresa may has stepped up her battle to persuade the british government to back her brexit deal.

she has promised more details of the plan in coming days, warning the u.k. will be in uncharted territory if lawmakers reject her plan later this month. she said that vote is still scheduled to happen next week. >> we are going to hold a vote. actually the debate starts next week and the debate will carry on into the following week. but we will be holding the vote. >> the 15th or 14th? >> yes. su: global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. haidi: thank you so much for that. u.s. trade negotiators are now in beijing for a crucial talk beginning monday. they are aiming to reach a deal before the 90 day truce on tariffs runs out in march, but many hurdles remain. stephen engle joins us now with the latest.

these talks come among the backdrop of severe volatility for both countries. is the impetus for both sides to reach -- stephen: it absolutely did. the shanghai composite to -- it absolutely could. some conflicting numbers we're getting out of the u.s. on the economic front. the chinese numbers including manufacturing have been disappointing. perhaps there will be an added impetus given the backdrops of market turmoil at economic weakness. even of the u.s. jobs report on friday was pretty robust. that said, there might be added pressure to reach some sort of deal. what kind of deal with that be? that has yet to be seen. of course china is already threatening to cut tariffs, buying more u.s. goods including soybeans, but china is resisting u.s. demand for tougher actions

on technology transfers and how that relates to potential intellectual property rights violations and less state support for strategic industries like semi conductors and robotics. what would a deal look like if it was reached? david dollar at the brookings institute said it would likely include china pledging to buy more u.s. goods, which they have already pledged to do. but it would be the timeframe and the depth of those purchases which would be interesting. also they would likely introduce more market access for automobiles and financial institutions. again, these are things the chinese have already pledged to do even before the tariffs went into place last summer in june. also, chinese action on intellectual property rights violations, we are hearing the chinese are drafting new laws to protect intellectual property and also protect claimants of those who say they have been ripped off.

but again, the devil will be in the details, how far those laws will go and how they will be implemented. shery: davos happening later this month. can we expect any high-level meetings then? stephen: we are hearing that perhaps donald trump could meet with the vice president of china. we're also hearing that later this month, perhaps not at davos, or perhaps at davos, that the senior economic adviser of china could meet with u.s. representative robert lighthizer. two days of talks in beijing. they are not the big guns. deputy u.s. trade representative jeffrey gerrish leading the representative today as well as the treasury undersecretary. china says it will be represented in today's and tomorrow's talks at the vice minister level. they are setting the bar lower so they are not aiming so high

and tight -- in case talks do not go well. if talks go well then they will bring in the big guns. davos, januaryn 22 and january 25. haidi: it really kind of puts pressureext how much the economy is putting on policymakers going into these trade talks. stephen: absolutely. again, that comes back to the first question about the impetus. the chinese economy is feeling the pain right now and that reserve ratio requirement at the banks is indicative of the numbers we haven't seeing. i mentioned -- have been seeing. i mentioned the pmi numbers going below 50. there is weakness in the chinese economy. whether that will be the input is to lead to the significant reform the u.s. wants, that is yet to be seen. that is a longer-term scenario. haidi: stephen, thank you so much.

shery: the partial government shutdown here in the u.s. is entering its third week. i believe this is the 16th day of the shutdown. president trump is now looking for alternative ways to get his wall. israel -- he has renewed threats to invoke a national emergency as a way to circumvent. was hit thee way -- lives now from ross in washington. this mean for what the government can actually do? what can president trump do? what is this national emergency he could invoke to get around congress? the power he has to actually do this is definitely up for debate and democrats would immediately come out and say they would challenge it in court. there are such things as emergency powers for presidents during wartime, but that is very hard to see the construction of a wall, which would take years and years, would be seen as a

viable solution for any kind of immediate national emergency. so, a lot more to be said about that, but it is definitely something new white house has been talking about. trump has been talking with his aides about it for some time now and examining the legality of it. i think it would be quite a dramatic turn of a bench. at the same time -- turn of events. at the same time we had president trump coming out saying talks today at the white house, which he was not in, were productive. and some progress was made. while we're hearing from the democratic side that no progress was made and things still remain at an impasse. certainly the key demand the democrats have is president trump push congressional republicans to reopen the government and then talk about walls, then talk about border security. but it seems like the white house is not moving from the

current stance. haidi: as we just heard from steve, another round of trade talks on monday with china. have we learned anything over the weekend about any new posturing or positioning by the white house going into these talks? ros: not too much that is really new, but president trump today speaking to reporters outside the white house, he was optimistic again. saying the same things he said a week ago, optimistic about talks. he really thinks china wants to make a deal. there has mentioned, been no reports of possible high-level talks at davos between president trump and the vice president of china. a bite getting waved off by the white house and there is some question as to whether president trump would meet with a chinese official who was not his equal, xi jinping. be that as it may, i think we have already heard from stephen mnuchin and others that some big

talks are going to go ahead at davos between the u.s. and china. a lot of ground to cover in those talks in beijing this week. so, you know, it is hard to see anything coming out right away. ust too -- just too many items on the table. shery: we just heard from the national security advisor john bolton speaking in israel about the plans to withdraw u.s. troops from syria. what did we learn about the plan? ros: well, it definitely seems like the immediate, or very fast withdrawal the president trump foreshadowed in december really is being walked back by the administration. that is sort of interesting in that the president really backtracks on anything, but it does seem like national security advisor bolton went to israel with the express intention of talking about the u.s. commitment to its allies, talking about protection of israel and the kurds. so, he came out with a number of assurances, including an

appearance next to benjamin netanyahu. so, it does look like a little bit of a backtrack on that. bolton next goes to turkey and on tuesday he is expected to meet with turkish president erdogan, so we will see if anything new comes out of that. shery: ros, thank you so much for that. still ahead, a blockbuster u.s. jobs report suggests the economy is still running hot. later in the show we will look at how the data will impact the fed's interest rates. haidi: next, as volatility continues to be the order of the day, how should investors be positioning themselves? we will get a market outlook. this is bloomberg. ♪

shery: we're counting down to the sydni open. futures are higher, coming on the back of a strong rally in the u.s. where all equity

markets gained more than 3%. it has been a volatile week for australia. we had a crash last week affecting the aussie dollar. right now it looks like a more positive day could be unfolding. haidi: i am howdy stroud-watts in sydney. stocks poised to build on fridays gains after the bumpy u.s. jobs report. wage growth also coming in and jay powell's recently dovish comments. now is raymond lee. what a start to the year it has been. we knew volatility would be the new normal. do you expect this wave after wave to continue? --mond: obviously volvo volatility increases as interest rates go up.

but this took us by surprise. i do think going forward you are not likely to see that kind of move. but volatility will be higher than 2017. haidi: i want to throw out this quick chart. a lot of that optimism we saw on friday was really the tone of what jay powell had to say. this is looking at the correlation between tightening or normalization of financial conditions, and where we see financial conditions tightening. we still have the balance sheet. is that a bigger concern given that markets are not expecting the fed to do anything, perhaps go for a cut next year? raymond: i think the balance sheet runoff has been gradual and been well factored into the market.

when you look at the u.s. fed, the markets are not pricing in anymore cuts or hikes for this year. whereas about three months ago in october they were factoring in three to four rate hikes. our personal view is the u.s. economy is still fairly strong. overusly friday showed 300,000 jobs being created. we just they will probably raise rates one more time this year. it will still be a gradual path. last week we heard from jerome powell taking a more dovish stance saying he will be listening carefully to the financial market. at the same time for fed chair ben bernanke saying he is not worried about the recent selloff in u.s. equities. who should we listen to? i have to look at the

context of that statement. overu look at the equity the last five to 10 years, up a couple hundred percent. selloff in that context maybe is not significant. but if you look at what powell has to consider, one of the key factors is financial conditions because the selloff happened over short space of time. yes look at international data and financial market conditions. the latter has become much more important, hence markets pricing in less hikes this year, which is consistent. shery: there is consensus the global tightening around a central banks could lead to a slowdown in the global economy this year. how important will china be in supporting not only economic growth in the country, but also sentiment around the world? raymond: when i look at central banks around the world, i think the only bank that will raise

rates is probably still u.s. the ecb is unlikely to, and china will certainly have loosened monetary policy. he saw the requirement announcement last week. they're going to cut that requirement to stimulate growth. i think china will be a big part of the equation, particularly in china. sustained growth at that low 6% range is still positive. china's government has a lot of tools their western counterparts to not have. they make it easier to control the leveraging situation. they have the money to promote fiscal policy. so, we do expect the chinese growth to stabilize in the mid to longer-term. the recent sharp decrease your seen in equity markets, in our view, is not likely to continue. haidi: how does the dollar informed asian e.m.? we have this quote in light of jay powell's comments on friday

that it gives greater scope for the dollar to weaken in 2019. it is still kind of fairly resilient. you take a look at the dollar index. does that mean we will see a rebound in emerging markets orders that rely on getting some sort of substantial win, if you will , on the trade front? raymond: the dollar last year really rallied because the u.s. increased rates which led to money coming into the developed markets. i think going into this year, i still think the u.s. dollar has a little bit more to go, but the rate of increase will be much smaller than what we saw last year. i think the theme of divergent interest rate policy has the fed potentially hiking one more time and -- you will not see if i percent or 10% increase. shery: how much of the yuan

weakness was driven by the pboc's actions against market forces and where is the yuan headed in 2019? raymond: when i look at the local currency in china, it really depreciated sharply in 2018, mostly driven by market forces. you have the trade wars, you had monetary policy. then it stabilized during the fourth quarter of 2018. i expect the yuan to continue to stabilize throughout this year. i do not expect it to weaken sharply like we saw last year. for china during the trade war episodes, it will help their growth. intervene, ioes think it will only be if the yuan declines very sharply, but that does not look to be the case in 2019 and i think it will end around the seven range

throughout this year. shery: raymond, always a pleasure to have you on. you can get a roundup of the stories you need to know to get your day and week going in the monday edition of daybreak. it is also available on the mobile app. a new round of trade negotiations between china and the u.s. kicking off the week. this is bloomberg. ♪

haidi: let's get a quick check of the latest headlines. apple and samsung announced a new partnership which until recently when it seemed unthinkable. they are bringing itunes to its archrival's tv sets. evidencehaps further

they are moving away from hardware-first approach. a japanese businessman is facing arrest in the philippines over embezzlement charges. a court has issued a warned for him -- warrant for him and his colleagues. he is accused of funding transfers from a casino resort worth more than $3 billion. he says the charges are baseless. says: carlos ghosn's son his father will mount a vigorous defense. the former nissan chairman is indicted on suspicion of violating japan's financial loss by underreporting his compensation. he said he expects everyone to be surprised at his father's version of the story. powelled chair jay suggests they will take a

wait-and-see approach to the economy before another rate hike. all the reaction, next. this is bloomberg. ♪

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it is 9:30 in sydney where markets open for monday morning trade in a few minutes. futures looking robust on the back of the rally on wall street , the bump in the job report, wage growth at a nice clip. fairly dovish tone being struck by jay powell in terms of whether the fed is going to be watchful and patient when it comes to the markets. decent upside with sydney trading. i am haidi stroud-watts in sydney. i am shery ahn. let's get to first word news with su keenan. su: the u.s. and chinese officials are set to resume

face-to-face trade negotiations monday in beijing. it is the first formal meeting since president trump and president xi agreed to a 90 day tariff truce. the stakes are high as both face a resumption of tariffs in march if they don't strike a deal. trump said negotiations are going well and china wants a deal but says they are being hurt by tariffs. president trump renewed his threat to revoke a national emergency and build a wall on the southern u.s. border. he said it will depend on ongoing talks and a partial government shutdown which is now areaing its third week democrats have threatened a legal fight if he tries to declare a national emergency. >> the president would be wide open to a court challenge is saying where is the emergency? you have to establish that. but this would be a terrible use of department of defense dollars. su: the u.s. national security

said u.s. troops will leave syria in a way that ensures the islamic state is defeated for good, adding they will stay until turkey agrees not to go after the kurds. john bolton has been in israel offering assurances on president trump's plan. last month the president announced he was pulling out of syria and the jihadist group had been defeated. japan's prime ministers of the government is considering measures to protect companies from asset seizures in south korea linked to a wartime force labor to complain. -- labor complaint. they were going to seize nihon steel. -- korea reported mitsubishi has a reliable paid compensation. 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 su keenan. this is bloomberg.

we have seen a triple are cut in china, a strong u.s. jobs data, not to mention a potentially more flexible fed chair. all of this could add to momentum in asian equities. let's go to sophie kamaruddin in hong kong. play, wehe trifecta in could see gains with asian futures pointing higher, shares in the kiwi adding through fridays gains with them up .3%. could be in order for japanese stocks which would be welcome after friday's decline which saw the nikkei and the topix briefly fall more than 3%, hinting at a more positive sentiment, let's check in on aussie bonds that are on the back foot this morning, the 10 year yields going back to 2.3% after touching a 15 month low last weekend. a check on the yen holding steady after slipping on friday with treasuries sentiment for

havens winning just a touch. to 110s a move back should the u.s.-china trade talks show progress. that is of course to be seen with the talks due to take -- take off. yen's dissent is being kept at bay. haidi: sophie kamaruddin. let's get a look at what we are watching with trading underway in asia. adam haigh is here. things are looking good at the start of the week. we had those soothing words from jay powell, but rrr cut, is that enough to really change the narrative when it comes to the selloff? adam: people have placed faith in central banks, so over the course of what has been happening in markets over the last few years, they continue to look for them as the ultimate backstop to health. when the fed was very prepared

to look through quite significant market volatility in 2018 and they were public with that, that seems to have changed somewhat with what jay powell told us friday. now we are looking here at this chart. it shows the resistance now in the stock market. struggling to kind of get back through the key 2018 levels. whether it becomes a sustainable rally or not, it is hard to see that at this point. clearly the reversal we saw in the treasury yield on friday is notable, and the fact china is continuing to take incremental steps to loosen policy, at the very least does go some way to shoring up sentiment. they are what -- they are aware of the issues, how they are being targeted. the point for equity investors is haveo have --

earnings been driven down too far? the fact you have this ongoing policy support, will it be enough to drive things forward over the coming couple of weeks? the other thing going on is the trade negotiations and the talks that get going again today. and there is a mid-level type of talk scenario but it adds another reason for people to want to at the margin take a little bit more risk. we should see a decent start to the week. does there seem to be similarities with markets and what occurred in 2016? is there anything we can learn from that time that could help us navigate the months ahead? least it is very interesting to look at the comparison and look at what was happening in 2016. there were a few things that were kind of similar at that point, one of them being oil had come off the highs and we had

elevated volatility, and we had the chinese economy slowing as one of the key themes. but this chart shows up in 2016 we had the big widening in junk bond spreads but also the kind levels,anufacturing which is what we see now. that is what we saw with janet yellen at the time, markets moved ahead of her and went to price in a scenario where the fed would make a significant pause to policy which was what happened. at the moment while investors are expecting the move from the chinese authorities late friday to just be one of an ongoing move to support policy and the economy and continue to -- which continues to struggle in 2019, in addition to that you have the market really now pricing a fairly significant pause in fed policy in the u.s. the real rate scenario at the moment is looking more favorable

, so that puts a bit of a damper on people wanting to add to risk assets. the biggest difference to 2016 is that, the fact you have the fed funds rate back to a level significantly higher than where it was two years ago. that kind of incremental bits of stocks needs a little bit of a next to push. going into earnings season in the middle of this month, that might provide the leg up we need for equities to get a little more of a sustainable rally, given the fact people have been pricing in a lot of negative news as of late. we have the policy support coming from both china and the u.s. shery: global markets editor adam haigh, and you can find his charts on the gtv library, gtv , on the bloomberg. fed chair jay powell suggested the fomc is ready to wait and watch the economy before it raises its key rate again you

this after a job report supporting powell's view the u.s. economy is still strong. kathleen hays is here. this of course comes as we see this blowup jobs report one day after a scary manufacturing report. there seems to be a battle between soft and hard data. what it boils down to is the jobs report is the most u.s.tant report in the that comes out every month, the most comprehensive, the whole country, all industries, leading indicators, coincident indicators. that is why jay powell spoke of it very favorably. let's look at the numbers everyone knows what we are talking about. payrolls came in, they were up 312,000. the forecast was 184,000. 1.5 times that anyone was looking for in terms of consensus.

as the jobs group, there was 58,000 more added to the previous months. the unemployment rate did rise. let's move on to the next point. what is going on? unemployment rate jumped. why did we think it was still strong? other evidence suggests it is getting higher because more people came back to look jobs. look jump into the library. we are looking at the participation rate. the white is overall, and it is a big jump. move age, 25 to 54, steady higher. what is increased -- encouraging people to come back? maybe they are coming back because wages are getting stronger. back to the bloomberg library, average hourly earnings were up 0.4% year on year on the month. on the month up 0.4%, on the year up 3.2%. a move in the right direction. in the end you could say

something the fed was criticized for when it raised the key rate in december, what are you doing? stock market is selling off, but jay powell said the economy looks strong. the jobs report would reflect that. the isn manufacturing suggests there was a deceleration, not a move to negative, not a move to contraction but a red flag over the economy that even jay powell acknowledged in his remarks friday he is watching closely. haidi: it was these remarks that gave the extra leg up for stocks . what did he say? what kind of balance did he strike on friday? kathleen: this was interesting because it was a panel of the american economics association. the moderator. ben bernanke and janet powell or flanking him, and he said is a strong report. he also said very important, the fed can be patient now.

it can have patience as it sees what -- let's listen. >> there is no preset path for policy. mutedrticularly with the inflation readings we have seen coming in, we will be patient as we watch to see how the economy evolves. but we are always prepared to shift the stance of policy and shift it significantly in order to promote the statutory goals of employment and prices. kathleen: inflation is still low, we can move quickly if we need to. he also said in terms of changing the balance sheet, reduction plan, people criticize him for stating the obvious, it was on autopilot, but it can be changed. he said they would change if needed. so interesting what he was asked about this by president trump on the fed and on him here he was asked about stepping down, would you?

let me run this clip. it is impressive. >> the president ask you to resign, would you do it? >> no. kathleen: there you go. no matter what happens he has made the stand for the fed. he went on to say as ben bernanke did and janet yellen did, the fed has a strong culture. it is not a fragile one, it is not subject to disruption. this is a relatively new fed chair sticking up for fed independence. that could have been another reason markets were heartened by everything he said in this very important panel. haidi: simple but strong answer, no. kathleen hays there for us. roundals open these new of trade talks with beijing, shawn king of parks strategies says ongoing tensions could bring in longer-term political and strategic game to china. we will get more ahead. this is bloomberg. ♪

haidi: i am haidi stroud-watts in sydney. shery: i am shery ahn. you are walking daybreak us -- watching daybreak australia. i give it is are in beijing for a crucial--- crucial talk. a 90 day truce will end in march but many hurdles are remaining. we have the senior vice president who served as senior advisor in the department of commerce. how important are these working level talks when you can have president trump tweeting at any moment, derailing any progress? thatdon't think they are significantly we could get some nominal short-term gains but in the big picture i think china may look back at the trump era as a time of strategic gain and the tariffs were a rounding error. don't think of the next two or three years, think of 20 or 30 years. thinking of the u.s. leaving

tpp, arguing with japan over cars, south korea over defense, canceling eight military exercises which china hoped to do, they are willing to take the hit on the trade war to gain in asia at our expense. shery: even if they do have a deal by march 1, how important is it they have an enforcing mechanism for whatever they agree on? >> the only one would be the threat of new tariffs. china and facebook and twitter, they don't even respect their own people's rights. why would they expect -- respect the u.s.? there would be no arbitration or meet to recourse in america. if you do business in china, you do deserve what you get. haidi: [laughter] , i suppose when it comes to these negotiations, do the sort of social politics, human rights issues come into it? have we given up the naive

beijing tohina or morph gradually into a western liberal model of democracy or liberalization as we had this idea it would do so a couple of years ago? >> those days are past us when bob selig talked about china's peaceful emergence as a stakeholder. ini here to evangelize china. if they want to tramp down their own people, who am i to say? we should not invest and do business there or expect them to do other things. president trump should keep in mind in addition to the 13 canadians detained by china, three americans, sandra, victoria and cynthia from boston have been detained in china trying to get their estranged father back. not only are they not treating companies fairly but fellow americans by detaining them. haidi: i want to get back to trading in a moment.

beijing started off the year on an aggressive note with taiwan and the ties. will this escalate head to -- will this escalate? how will this play out in the 2019? will we see a move towards closer confrontation? >> we will not. china will manage to snatch victory -- defeat from the jaws of victory because the taiwan resident was on the ropes after losing local elections in november. xi jinping, in his speech the other day, rallied the , saying hong kong is one country, two systems which was originally devised but --ected by sean kai-shek kai-shek's dependence. so everyone is no rallying to her cause and it could be the thing that saves her reelection. you have the meantime

the u.s. putting up other measures to put pressure on china. last week we had the u.s. travel advisory for anyone going into china saying china is in fact using its authority to prohibit american citizens from leaving. what means of the u.s. have to more closely regulate interaction? sify's scrutiny and certain bands on exports, technology to china, and the travel advisory was an existing one that was just renewed. because of tensions, people paid more attention. i made my first trip to the mainland in october and i only found out about the advisory when i was logging onto the state department website and was thinking of returning home. it was too late. i wouldn't go now, with all the detentions. i wouldn't go back to china. when i was there i noticed my picture and everyone's being taken every block by facial recognition technology, fingerprinted twice at the airport, eight channels of cctv,

all xi jinping all the time like a benign north korea. i would not go back to china anytime soon. shery: that says a lot. how challenging will went in 19 be for the trump administration with trade and we still have the u.s. -- usmca to be ratified as well, -- towhich has not been set congress yep your but the china and u.s. economy slowing down, biggest selling point for reelection will be the economy. he can't afford to push too far, so trump has put himself in a rock and a hard place. he will end up choking in the end like he does in other areas. haidi: we will get you back on happens. that the senior vice president happening us -- joining us in new york. thinking the unthinkable, rivals

apple and samsung will agree to work together when it comes to offering movies and tv shows you all the details of this. this is bloomberg. ♪ bloomberg. ♪

shery: welcome back. i'm shery ahn in new york. haidi: i am haidi stroud-watts. you are watching daybreak australia. let's get you a check of business flash headlines. a company that provides camera lenses to apple said revenue fell by a third as appetite for iphones in china weekend. dropped from 34%, in line with estimates. they expect january revenue to remain sluggish. apple slashed its revenue for the first time in almost two decades on poor iphone demand. exchangesnian imposing tighter rules to punish rule breakers. the afr reports the exchanges looking at changes including shortening trading and exposureg

requirements. companies including china dairy, clinic and therapy others were delisted in 2018. in the battle for sales between samsung and apple, the unthinkable has happened. they have agreed to partner on a deal over movies and tv shows. raymond has the details. really you can see apple trying to boost its services revenue. of thisat is the heart move. when i saw the headline i had to read it a couple of times because you said unthinkable. the fact samsung and apple are tying up, it is a gain for apple because they have to get the eyeballs into the services, diversifying them from the hardware. we have been talking to analysts all over the place and they are saying this has had to happen. said a key part of the apple flywheel, it is one of the only silver lining in an

otherwise dark time of growth. tim cook and companies need to double down on that. gene munster also at loup ventures, he said further evidence apple is willing to change the hardware first approach is the most important thing to boost the services revenue. in the bloomberg terminal, i want to show you were that stands. this is the gtv terminal library. $37 billion for 2018. iphone revenue is still the biggest thing, but record services is what i saw for the holiday court. this is according to tim cook. looking at this another way, we can see on a percentage level ,hat services account for 14% iphones 63%. one interesting thing is based on what samsung is doing with the emphasiseems is on the fact apple might not be doing a television set

because they are working with samsung. haidi: it is the biggest week of the year with consumer electronics, the convention in vegas kicking off this week. there is one elephant. ramy: the huge trade tensions between the two countries. the biggest difference we will see, apparently there will be fewer chinese exhibitors going to las vegas this year. usually there are released last year there were 1400. we are expecting 1200. one of the big reasons is many key suppliers based in china are unsure if they can sign any deals. if you look at what is happening shares -- q qqq h-shares, we can see the biggest laggard here is with chinese shares down 42% in the past year. shery: thank you so much for that, the latest on apple and

the conference coming up. be atthe show and we will the ubs greater china conference in shanghai for exclusive interview with you -- axel weber. that is 7:20 in hong kong. ♪

haidi: good morning. i am haidi stroud-watts in sydney in australia. shery: i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." haidi: our top stories, asian stocks set for a strong start to the week after comments from the fed and further monetary easing out of china. bite optimism is helping a as well. the u.s. delegation is in beijing for the first face-to-face talks since the truce.

president trump edges closer to a radical move to fund his border wall, renewing threats to invoke a national emergency. shery: the friday session here in the u.s., the dow gained 700 points, really all 30 members -- all 30 members gained ground. the s&p 500 also rose. we saw tech and communication stocks leading the gains, nasdaq treasury yields spiked a 10, getting past that one level after losses in last week's sessions. we saw declines. we could be setting up for a positive day across asia as we had a positive u.s. jobs data, not to mention a more dovish fed chair with jerome powell talking about flexibility and watching the financial market. u.s. futures up .2% at the moment. sophie: we have been calling it

the trifecta of catalysts. japanese shares, this would be welcome after friday's slump, the nikkei could see a gain of 3% at the start of cash trade. in sydney stocks are gaining .4%. after a turbulent week for the aussie share market, we are keeping a close eye on gold stocks. as gold prices hit a speed bump friday after rising above 1300 per ounce for the first time since june. energy companies may look good after the oil prices had wti taking here -- higher. looking at risk sentiment coming back. we look at the yen for example holding study after losing some ground as haven demand is waning a touch. while aussie dollar trading up after falling to a 10 year low

last week and it is building on a two-week gain this morning ahead of u.s. china trade talks for we are seeing aussie bonds already on the back foot, sending this back to 2.3% after touching a 15-month low last week. calmera, start -- a start. su: goldman sachs says the u.s. dollar could be poised to decline ahead of the fed chair's comments -- following the fed chair's comments friday. he said the central bank could cause rate increases if the economy weakens. he said to the american economic association the central bank is listening to the message is the market is sending about downside risks. >> there is no preset path for policy. and particularly with a muted inflation readings we have seen coming in, we will be patient as

we watch to see how the economy evolves. we are always prepare to shift policy and shift significantly if the siri to promote our goals of maximum employment and stable prices. china's central bank will cut reserve requirements for lenders by one percentage point with a half cut january 15 and another january 25. the pboc will release $117 billion of liquidity to offset a funding squeeze ahead of the chinese new year. investors remain jittery about china's economic outlook after a factory gauge showed contraction in december. japan's by minister said the government is considering measures to protect companies from asset seizures in south korea, links to wartime forced labor complaints. south korea's forced into labor have reportedly applied to nippon steel's local assets. last year south korea ruled that

nippon steel and mitsubishi were liable to pay compensation. carlos ghosn's son said his father will mount a vigorous defense at his first hearing tuesday. the former chairman is indicted on the condition of violating japan's reporting laws by underreporting his compensation. he told a french newspaper he expects everyone to be surprised of his father's defense. 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 su keenan. this is bloomberg. the partial u.s. government shutdown entering its third week, president trump for alternative ways to get his wall. his renewed threats invoke a national emergency as a way to circumvent congress and now says they are planning a steel barrier rather than concrete. ,r. trump: a steel barrier

steel. it will be made out of steel. tough -- lesss obtrusive, stronger and we are able to use our great companies to use it -- to make it. we will be doing a steel barrier , and that gives us great strength at the border. haidi: the latest from editor ros krasny in washington. a steel wall instead of concrete. does this get us closer to ending the shutdown, which is now in the 16th day? comments fromar the second-ranked democrat in the house who said we will take steel versus concrete. it is not a new idea from president trump, even though his chief of staff indicated today it was something that was being put out as a new bargaining chip . the president tweeted about the steel structure for three weeks.

he had a very interesting photo couple weeks ago about a tall steel fence with spikes on top, very medieval looking. but it does seem like the democrats still regardless of what you want to call the wall or do with it do not want to budge on funding. they don't want to pay for this wall. they want president trump to agree to reopen the government to sign spending bills they will put forth this week, then talk about border security. it is unclear if the sides are closer together despite the offer of the steel wall, despite president trump's latest tweet there was a productive meeting at the white house today. one thing that is interesting is president trump was not at the meeting. he was at a presidential retreat at camp david talking to close aides including his medications director. there is a sense in the white house president trump and the

republicans are losing the pr battle on the wall and the shutdown. so maybe the suggestion of the steel wall and the suggestion of movement from within the white house is part of that. once again it is hard to see the democrats budging. the national security advisor john bolton spoke in israel about the plan to withdraw u.s. troops out of syria. what did we learn? couple of weeks ago president trump decreed by tweet the u.s. had beaten the islamic time jihadist group and is to pull out of syria. he has had a lot of pushback from within his administration and certainly from lawmakers, defense hawks like lindsey graham. it looks like he is backtracking a little bit. he often went to israel -- he also went to israel to assure the u.s. has their backs, the u.s. will not pull out of

eastern syria until isis has been definitively defeated. definitely some change in position there. alton goes on from israel to turkey where he is expected to meet with president erdogan on ankara.and ankara -- in it is interesting. don't see them back down on the president's directives, but after sacrificing their defense, jim mattis, there is movement. haidi: thank you so much for that, ros krasny in washington with the latest and also on the agenda, the trade negotiations between the u.s. and beijing. u.s. negotiators are in the chinese capital to begin these talks. they will aim to reach a deal before the 90-day truce runs out in march but many hurdles remain. stephen engle joins us with the

latest. have we had any progress in these talks? there was volatility, the economic slowdown in beijing. you can argue the poor data in the u.s. as well. does this give both sides impetus to reach a compromise? stephen: it could but you could argue as well the u.s. has dug in its heels on the main issues it wants to have china address. that is of course forced technology transfers that lead to what they claim to be rampant and institutionalize file instance of intellectual property rights. also of course state support of key industries going forward like robotics and chips, semiconductor in the space as part of china 2025. these are bigger structural issues and changes that the u.s. wants china to address. these are very unlikely to be

resolved. it will likely has as impetus is with the market volatility and economic uncertainty, both in china and the united states, could lead to sort of a lower hanging fruit deal. we heard from brookings institute deva dollar, he said sort of a deal would include china's pledge to buy more u.s. goods. china is already pledging to buy more goods including in the energy space, in soybeans. also he says it could make more market access pledges to automobiles and u.s. financial institutions. these are pledges the chinese have already made. and the third component could be chinese action on intellectual property rights. there are draft laws going through the chinese judicial system to add some teeth to their ivr laws.

the depth and breadth of those laws and the implementation will be the key. shery: on daybreak australia we are talking to an analyst talking about these working level talks starting this week are really not that significant event the president's slump. it could that she could resolve any treat any moment. could we see anything before the march 1 deadline? stephen: this is why i suspect they are sending in the smaller guns, no disrespect to the ustr's jeffrey gerrish. he is the deputy trade representative, leading a series of today talks -- two-day talks. china also says it is sending its representatives in at the vice ministerial level. they are sending junior officers to lead the negotiations per that gives them wiggle room.

if things progress well across the table, then of course we could hear the vice president could meet donald trump at davos. we are also hearing robert, trade representative, may meet with senior economic adviser at leo later. these talks will be key to what will come later down the pike. our chief of is a correspondent, thank you. we have an exclusive interview with axel weber. we will ask about his outlook for china and the bank's ceo succession plans. haidi: and we talk about the prospects with g10 currencies in the new year. this is bloomberg. ♪ ♪

shery: this is daybreak asia. i am shery ahn. haidi: i am haidi stroud-watts. currency market has stabilized

following the strengthening of the japanese yen and weakening of the aussie and the u.s. dollars. japanese officials work to calm fears in the slash crash. we will put a question to this man here he joins us here in sydney. -- this man. he joins us here in sydney. demand? real again >> what we have seen in the latter part of december [speaking simultaneously] >> the yen has rediscovered its preeminent safe haven status. for a while the u.s. dollar was with -- was showing support from the convulsions of equity markets but markets are shy if you think about the u.s. dollar, whenever risk goes off, given the dysfunction going on in washington at the moment. that brought the yen safe haven characteristics back to the

fore. retail investors are trying to exit the offside short yen positions that was instrument a with the crashes from last week, but that has put the yen in a much stronger position that is justified in terms of the ways we look at risk sentiment, yield differentials, etc. if the u.s. bond market doesn't recover, it will keep dollar-yen capped, sort of below the 110 level for the near term. if risk sentiment recovers because the trade talks yield something and risk comes back on, the yen is going to reverse a lot of strengthening we have seen the last week or two. haidi: you said 2018 we had a return to basics on the top of the fact the fed was aggressively hiking, given the fact the markets priced in to nothing, maybe a cut next year. we heard from jay powell, he seems to be getting data dependent, giving people scope

for the decision-making process. does that lend itself to the dollar weakness? could be ahead of itself pricing in rate cuts as early as this year. that is where the money market is already at. what was really instructive about his comments was his willingness to draw parallels between 2016 -- if you are member, the fed got its first rate hike under its belt in 2015. that was four months before they resumed the process with tightening. he is hinting we can afford to topatient, clearly sensitive what the markets are saying. that rules out anything from the fed as for as the first half of the year is concerned -- far as the first half of the year is concerned. 2019 could be very different. for that reason it is premature to be talking about rate cuts. confidence,vent -- it could take heat out of the dollar. we are going into this year

feeling the dollar is writing for quite significant appreciation. shery: u.k. parliament will debate brexit. what should we be expecting for the pound? they have lost so much already. is there something you can trade the currency with all the volatility caused a political headlines? that's caused by political headlines? >> 10% plastic lines, 15% rallies, if the whole brexit thing goes away. next we could be more is your mental because now the u.k. -- i thinkback -- is we are in a situation where if it gets rejected, and parliament has no appetite for a so-called hard brexit or crash out, what happens? there is a meaningful prospect this ends up in a second referendum be are we could get more of a hint of that. theresa may is opposed to it in

public at least. that will be the catalyst for significant revival. our view is still we are assuming a hard brexit is going to be avoided. there is more upside for sterling the downside over the course of the year, but you can't discount the near-term risks possibility of a near-term brexit. -- no deal brexit. shery: and what is what happens, we will see more volatility, analysts think. looking at this chart showing asset class volatility, we have asked -- fx volatility spiking in yellow. what would be the overarching story for emerging market currencies in this environment? >> crucial is going to be whether or not the u.s. and china can resolve their differences and construct the recently meaningful comprehensive trade agreement. if that happens, there will be a

cathartic event as far as risk sentiment. i think the uncertainty about china and evidence of a slowing chinese economy in q4 has been holding down emerging markets. if we get a breakthrough, emerging markets stand to benefit from that. a high volatile environment is softer, and volatility is going to remain elevated through this process of qe into the phase of qt. jay powell could put that on for some time. in general the china deal could be the catalyst for a significant rally across most emerging markets. that is what we started to see friday. we saw the moves with turkey, the south african rand, emerging em countries. a lot of it needs to do with optimism how these talks will play out in a couple of weeks. he will be good news for em -- it will be good news with em. haidi: thank you for joining us.

lots of things playing into the space of e.m. including oil prices. we have this update across the bloomberg terminal, goldman sachs cutting its 2019 oil forecast. prices are still undervalued at the moment, goldman cutting its forecast to $62 versus $70 a barrel previously. forecasting prices at $55 a barrel, down from $54 previously. it has been a great start for the year when it comes to the oil patch of brent surging to best, gaining almost 10% after the jobs report and dovish comments for the fed as well as of course saudi arabia, opec looking like they are making good on the opec less decision reached in december to cut supplies for at least 1.2 billion barrels a day, look like the saudi's are doing more than that in addition to -- looks

like the saudis are doing more than that. goldman seeing prices even lower this year. coming up on daybreak asia, exclusive with that ubs chairman axel weber. he joins us as the swiss bank looks for a potential successor to the ceo. stay tuned. this is bloomberg. ♪

asia. this is daybreak i am haidi stroud-watts. shery: i am shery ahn. the 19th ubs greater china conference kicks off in shanghai today and brings together senior 200utives from more than leading chinese companies with over 2000 senior representatives from across the international financial communities. no doubt trade will be high on chineseda as u.s. and officials begin fresh talks.

let's cross over to the event where we are joined by the bank's chairman axel weber for an exclusive interview. thank you for your time. happy new year. it is 2019. will it be the year of more confrontations or resolution on trade? >> if i go back to last year, s is usually davo the place where you change the economy, but it turned out to be a difficult year. i was among the few that said the market is ahead of its self -- of its self. the market in my view is taking a varied view on the economy. it is doing well, and there are difficulties we need to watch but overall i think the sentiment is not as good as it should be because we are still in a favorable growth environment. that seems to be overshadowed by

most of the discussions. shery: what is the environment like in shanghai as you speak to the people and companies in china? i have a starting panel yellen and myself. we will talk about the state of monetary policy. clearly monetary policy and the retreat of monetary policy, the fed raising rates going into a pause, and european central banks stopping its purchase events thatse are really have changed what the global economy was driven by for the last couple of years. markets have to get used to that. that adjustment is difficult. markets will manage. monetary policy will continue to be very responsive to economic situation. the economic situation is cooling off somewhat to less of an upswing that we might have seen last year.

there is no reason to be skeptical. we have a relatively good global economy, relatively good performers on trade. there are trade disputes but at this stage it is setting the stage for the future collaboration between the major economies rather than already some confrontation. there are some ongoing discussions. as long as they are ongoing, we are in a good place. shery: by central banks being responsive, do you expect the fed to react to downtrend for the economy and global economy calling off rate hikes are changing the timing of these increases? economists early on had sort of penciled in a pause for the fed in the last quarter of the last year which didn't happen because some of the impact of the trade disputes has been less frontloaded than was expected. we clearly expected the first half of this year for the fed to

look at the data and be data dependent. since inflation really hasn't surged and isn't a major problem, the fed can take stride . they will be quite cautious in the first half of this year to look at the data and i think that will lead them to eight pause in the march meeting -- to a pause in the march meeting. i think the market is ahead of itself with the expectation there might be first rate cuts on the horizon. we see the economy less dynamic going forward, but we don't see any likelihood of recession anytime soon. i would have a question about the fed moving the opposite direction that quickly after they continue to raise rates throughout the year with four rate hikes. we see less in the future, but not clearly a change of direction, but a pause has reassure the markets. that is widely expected. haidi: central bankers everywhere are facing this time

of unprecedented challenge, whether it be the fed exiting extraordinary monetary policy, the boj maintaining its monetary policy, or the pboc struggling with its impossible trinity. , do former central banker you think we are underpricing the risk of a policy error because we have never been here before? we are moving out of an unprecedented time of ultra-loose monetary policy for almost a decade. it is clear central banks need to move to more normal policy. they were doing that as a measured pace. they were doing that at a data-driven, data dependent mode, and they will continue to. if you look at the fed, they have been tightening monetary policy and raising rates. than in previous tightening cycles and our data dependent in that cause. in europe.e

the banks will continue to face responsibility but in general, they need to retreat from the central road they have been playing in many markets. there was a lot of discussion central banks being the only game in town and removing themselves from that responsibility is going to be good. it will be good for the economy and their independence. in general i think the central banks have done a good job stabilizing the situation. you need other policies to kick in. you need growth oriented policies, longer-term reforms to make the economy grow at a more sustainable place. monetary policy can't fix it. countries see inflation around target or slightly below. they see a very strong economy. they see labor markets improved. if that is not the time to remove yourself somewhat from unorthodox policy with ultra-loose stems, more normal policy, i don't know. that is the time when they

should do it, and they were right to do it. how is the trade, fears about protectionism, clearly still weighing on investors minds, how is that weighing on your business? axel: for us it is a major issue because switzerland is a very open economy, small but open. it has major trading partners in european union. i heard in the previous program you touched on brexit, you touched on the italian situation. that is going to impact, and here it has to do with market access and trade. in goods and financial services. that is impacting other countries and impacting on us as a major bank. any dispute between the united states and china is going to impact on ubs because we have around 20,000 people in the united states, and we have strongly build our presence in china and we are the first bank to be offered a majority stake

in our securities operation here . we are putting a lot of people on the ground and a lot of effort in growing in china. if china and the u.s. enter into some difficult time, that will impact on us. as i said before, there is talks that are still ongoing. it was a good outcome from the argentinian summit of the g20 the president's gave a clear signal that they want an agreement to be in place, and they have given each other 90 days or we should use that time. very often these agreements are never done early on. they are done on the last leg of negotiations and it is positive that this week at some level of government, lower level, there are ongoing negotiation's in mainland china between the u.s. and china. haidi: as we moved to the internal business going on at ubs, how is the process to find a successor to the ceo going? are you favoring christian? prefer tothing you

have an external candidate? when will we see update? axel: this is a lot of speculation. i don't want to encourage that. we have been doing well. we have reoriented our business, we are growing our business, and what we said as part of what we do is to get as much talent into the bank as we can, good people and we are interviewing people, but i don't want to confirm or deny anything. for us succession planning is part and parcel of what we do. the ceo and i are in our eighth year at the bank and that is when you need to start thinking about what is it you are going to do and how you will pass the bank over to your successors. deliberately talking plural. we are at an early stage of those discussions. i don't want to front run any of

that or add to speculation of your this is part of our normal around the bank operations. it will not be a change the bank operation. it will not happen. we are in a good environment, not driven by the clock and we have all the time we need to do this orderly. it is important because disruptive change at the top of the bank can be one of the most, really worst experiences an institution can go through it we are committed to being continuous, not being disruptive and doing this as ordinary and up the pace that is needed. i don't want to add to speculation anything is imminent. it is not. shery: when you are -- when you say you are in a good environment, how true is that when you see so much market volatility? does that affect your growth targets, and when it comes to wealth management? the environment affects -- usl: the environment affects

like everyone else. you look at the european banks, we have actually done quite well in that european bank. european banks are in a different environment to u.s. banks. we have a much deeper capital market i can focus more business on the domestic economy and u.s. economy. that is why growth of wealth management business in the u.s. is a new initiative we are running. that is of course affected by volatility, but we are not affected in any way differently to some of our major peers. we are the number four wealth manager in the u.s., and we are trying to grow and compete with the major u.s. banks. for us the business model we the is one where we are only truly international wealth management bank. we have a strong u.s. presence but also a strong asian presence and many of the u.s. banks are more centered on the u.s. market than we are. our business model bringing

international business assets to international clients and helping domestic clients invest in -- invest internationally will be a very favorable to the environment, the growth environment because the major growth centers around the globe are the u.s. and asia and are well-positioned in these markets to gain traction and benefit from growth, in particular growth of the richest individuals and their income. shery: so this extended bull market was closed -- was called the trump bump. some are calling the selloff the trump slump. how fair is this? if you want to own the upswing, you own a downswing. that is what policymakers are finding out every time they put themselves at the center of basically claiming influence and victory over a well-run economy is if the economy then turns,

you also are the center of the focus on the blame. really what you see is the u.s. tax reforms, in particular the structural production of u.s. taxes for corporate has been a major driver over the last two years. we are now seeing some of these discretionary fiscal measures like the deficit financing, become more of a headwind going into 2019 and going forward. yes there are downsides that are related to a set of policy measures taken in the u.s. this was a once in a century tax reform. the stimulus cannot last forever. we are starting to see that fade out. at the same time the fed is reducing its monetary stimulus and is raising rates. those are the major policy instruments, fiscal and monetary, but they are running out of steam as the fed comes toward raising rates.

it is not surprising the u.s. stimulus as it runs out will provide less of a tailwind for the u.s. economy and therefore the u.s. economy will normalize in its growth rate, but it is not a bad growth environment. it is still a favorable outcome, -- outlook for corporate earnings and the labor market. i think the labor market is ahead of its self and start into price in a recession. you will see some weak spots in the economy. a soft spot is a better description than any recession probability. , you saidy quickly you were not looking at deals you thought european banks should be bigger. are you looking at any deals at the moment? axel: we are not. yousef -- i said everything needs to look at whether organic growth, which is what we are driving, the forefront of what we are doing, can be supplemented by some inorganic acquisitions, largely, not

necessarily focused on group mergers but targeted acquisitions in the business areas which are active. for us accept -- if there are opportunities in the market, and i think at the european banking industry is continuing to face headwinds, we will see consolidation in the industry. at least we are ready to take opportunities if they come along. you cannot plan your growth strategy on inorganic growth. you can move your management, and for us that is the global business, wealth management, and we want to grow that in a growth initiative where we can move what we need to to get more assets on the management. haidi: always a pleasure to have you on bloomberg, axel weber joining us out of shanghai for the annual china conference. jay powell says the fed will be open to pausing even as the u.s. job market delivers a blowout performance last month.

we are breaking down those embers next. this is bloomberg. ♪ ♪

haidi: let's look at marketshaidi:, aussie targets have been treating underway. we are -- trading underway. a boy and session, .1% higher, technology is a leading gainer in the sector. energy also continuing to gain after brent crude has its gain in almost 10 years, goldman their target for brenda, saying prices are still looking to elevate. at the moment every single sector except for property in the red so far. following on that session from friday, the santa claus rally came to three weeks too late. better late than never for the u.s. shery: lookout foggy it is in

sydney compared to -- looking at how foggy it is, manhattan looks gorgeous. we have one of the best rallies of the bull market in the last friday session. the dow, the s&p 500, the nasdaq all gained more than 3%. i am shery ahn in new york. haidi: and i'm haidi stroud-watts here in sydney. not a beautiful sydney day. you are watching daybreak asia. let's get you to first word news in soup -- in new york. su: chinese and american will resume talks monday in beijing. it is the first formal meeting since presidents trump and president xi agreed to a 90-day ofiff truce, and both sides face a resumption of tariffs in march if they don't strike a deal. negotiations are going very well , trump says and china once a deal because they are hurting

because of the tariffs. president trump has also renewed his threat to invoke a national emergency as a way to circumvent congress and build a wall on the southern u.s. border. he says it will depend on what happens in ongoing talks to end a partial government shutdown which is now in its third week. immigrants have already threatened a legal fight if trump tries to declare a national emergency. >> i think the president would be wide open, saying where is the emergency? you have to establish that all but this would be a terrible use of department of defense dollars. or theresa mayus has stepped up her battle to persuade the british parliament to brexit -- back her brexit deal. she promised more details in coming days, warning the u.k. will be in uncharted territory and lawmakers -- if lawmakers reject her plan in a vote later this month. she said the vote is still scheduled to happen next week.

u.s. national security advisor says american troops will leave syria in a way that ensures the islamic state is defeated for good, adding they will stay until turkey agrees not to go after the kurds. john bolton has been in israel offering assurance on president trump's plan. last month unity was pulling out of syria and the jihadist group had been defeated. 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 su keenan. this is bloomberg. thank you. let's look at the aussie markets now. sophie kamaruddin is with us. good start to the trading day. as our bloggers have been saying, the only way it -- [indiscernible] while the shares are on their way up with the asx 200 , led by techigher

and resource companies. energy firms tracking gains after the breast -- the best week for crude. rio is among the biggest for the materials sector. we are seeing gold stocks under pressure as bullion prices extend friday's decline. santa barbara is off 2.2%, the -- also resolute mining after announcing a 33% increase in productions for the fourth quarter. let's quickly check in on healy us in sydney, splitting the most since october 26 after rejecting a buyout offer from china. it is a hospital operator that owns 60% of the group already. the takeover bid is opportunistic but fundamentally undervalues the company and anyn't intend to pursue further. a quick check on the aussie dollar, treating around three we kind waiting on u.s.-china trade talks in monday.

the aussie continuing to recover after falling to a 10 year low last week. strengthening going into this week. we are going to get aussie trade building approvals and weaker sales this week. sophie kamaruddin with the latest on the market. fed chair jay powell suggest of the fomc is ready to wait and watch the economy before it raises its key rate again even after a jobs report supporting powell's view the u.s. economy is still going strong. kathleen hays is here with the latest. a very strong jobs report, but this on the back of really week isn manufacturing data. su: and some would say this manufacturing survey is the second most important. hard data from the government covers the entire economy, gives you a sense of where the economy is and where it is heading. that looks pretty good. report is- a blowup

what people called it. payrolls, here is this big white bar, 312 thousand. the forecast was around 184,000. surveys show they added 58,000 workers. it jumped to 3.9%. let's move along. you can say it is -- why is in employment -- on a claimant rising? on implement could rise for a wyatt -- unemployment could rise for a while. look at this -- this is not it. i will put that down. give me a second. i am so excited. prime age participation not just overall rates but this increased 25 to 50 euros workers again in the heart of their earning years, this has gone up sharply. it appears there is more people

coming into the labor force. why are they more optimistic? maybe because they have seen their friends' wages rising. let's go to our third chart. we will look at average hourly earnings which are now at their strongest in nearly 3.2% year-over-year since 2009 going into the recession. this is core inflation, one of the key inflation metrics, under 2% target, usually 8%. follow the blue line higher. bottom line, looks like the jobs reports supported the view jay powell was criticized for when the fed raised rates in december. why are you raising rates if the stock market is falling going to hurt the economy? they were holding nicely, so it looks like this indicates their view. vindicates their view. say aftert does he the jobs report was released? kathleen: look to good and he is -- weakthe weak i.s. am

ism. he said the fed can be patient on policy. let's listen to what he said when he spoke on a panel on friday. >> there is no preset path for policy. and reticulated with a muted inflation readings we have seen -- and particularly with muted inflation readings, we will be patient as to see how the economy evolves, but we are always prepared to shift the stance of policy and shift it significantly in order to promote statutory goals of maximum employment and stable prices. jay powell invoked 2016 when the fed thought it would do three interest rate , and with volatile stock markets, chinese stocks falling off and brexit, the fed only raised once at the end of the year. he said similarly they are listening carefully now to the markets.

he said if things change, the fed could change its balance sheet reduction, something it was criticized for saying being on autopilot. he unequivocally said if the president asked her to resign, will you? -- asked you to resign, will you? that puts an end to the story when he said no. the guy strong jobs report and the fed chair said things look good, and -- they got a strong jobs report and the fed chair said things look good. haidi: the latest on the fed so far. looking good in the asian session. see more cuts with price target out of goldman and commodities, cutting the base metal targets now, citing china's deceleration as being notably decelerating. goldman is cutting its corporate from 6500,100

maintaining the 12 month corporate target at 7000, seeing short-term weakness and mid to longer-term recovery your this is on the back of them cutting price targets of both wti and brent. this despite we have seeing the saudis and opec plus making good on promises to cut reduction -- production numbers and the best week for brent since 2016. shery: the best week in two years. and goldman sachs cutting the 2019 oil forecast. they still see prices undervalued or they have cut the 62.5 2019 forecast to dollars against the previous target of $70 a barrel. we will have more coming up on "daybreak asia." this is bloomberg. ♪ erg. ♪

shery: the battle for sales between samsung and apple, the m

-- the unthinkable has happened, they decided to partner on movies and tv shows. forly reflecting the shift apple on its business. ramy: the iphone is where it gets most of its revenue, moving to software. and the services side of things. folks and critics have said they needed to diversify. what happened last week when .hey revised the revenue down analysts have been saying this is actually needed. this is samsung has allowed apple to showcase movies and tv shows on itunes, on its own samsung televisions which is remarkable. analysts have been saying this was needed to happen. dan ives with bush securities says with services, a key part of apple, one of the only silver linings in a dark time of

growth, tim cook and others need to double down. venturester at loup said further evidence apple is willing to change its hardware first approach and work with third parties to reverse -- to boost third services revenue. isdo see third services number two with revenue, $37 billion for all of 2018. the iphone in white is the number one portion for revenue. , we didresting thing glean some interesting pieces of information. the fact apple is partnering with samsung, they might have put the emphasis now on possible -- squashed any possible apple television set. haidi: take a look at it asian markets. seeing gains up close to 1.5%, energy now surpassing tech as the leader sector wise after brent has its best week since cuttingt week, goldman

forecasts for oil. looking at new zealand, upside .4%, futures from tokyo to seoul to china looking positive. remember the last time u.s. stocks gained this most, the nikkei rallied 4%. rallied 4%.

haidi: good morning. asia's major markets have just opened for trade. shery: good evening, i am shery anh. sophie: welcome to "daybreak asia." haidi: our top stories this monday, asian markets set for start to the week after a strong jobs report and comment from the fed and monetary easing out of china. trade optimism helping things along.

the u.s. deleg