morning. australian markets and just open for trade. >> i'm shery ahn. kong -- i'm in hong kong. welcome to daybreak asia. our top story, asian-pacific stocks are set to follow wall street. is a three week high. president trump is said to want a trade deal with china and soon to boost the lighting stock

market in the u.s.. talks in beijing will continue on wednesday. set to takeump is the border wall fight to prime time tv. marketsck chart of the in the u.s.. u.s. stocks rallying about 1%. offaw investors shrugging concern over a government shutdown which is now on the 18th day. also, optimism over u.s. china trade talks are helping to boost sentiment. the s&p 500 gained 1%. there was skepticism over technology and financial stocks yet the optimism over trade really offset those concerns. the s&p futures unchanged. a little bit of pressure at the open but still we saw energy stocks gained ground in the last session. we saw oil move toward $50 a barrel. output givenhter

opec's production cuts. we are talking about cuts from saudi arabia to libya filtering into oil prices. gold is unchanged but that is after falling in the last session. the dollar gained a little bit of ground after weakening to an october low. we are seeing safe havens retreat on a better risk sentiment. the euro is also unchanged but we saw some weakness in some lead up to this session. you have some figures at the moment? >> yes we are getting some labor market numbers out of south korea. the unemployment rate holding steady at three point 8%. we were expecting it up to 3.9%. that is good news. also adding 34,000 jobs to the

economy in december. that is slowing down. youth unemployment is an issue in the country. the number of koreans out of work is hitting close to decade highs. it looks like the unemployment rate is holding steady at the moment. thee have seen losses in manufacturing and retail sectors in the last few months. there have been some concerns about south korea and growth. we are expecting the outlook with south korea for growth and jobs to be 2.6% this year. we saw samsung's earnings miss as well and that is the biggest private employer in south korea. that could be adding to the negative sentiment on the south korean economy and the jobs numbers. let's see how the jobs in asia are shaking up. >> futures are nudging higher.

we will see how much faith investors will place in trump. sony is reconsidering some chinese production if tariffs rise. we are waiting on japanese wage growth data. in sydney we are seeing stocks gained to tens of a percent. bluescope steel gained ground over 2% this morning. aussie bonds, we are seeing them slide ahead of building data. that is expected to drop. futures pointing lower after a three-day selloff that sent the 10 year yield back above 2.7%. the treasury rally could be over at the longer and.

that could give merit to the sense that bond traders are not buying into the rally. even if banks are busy slashing , the new forecast estimates are still above current market rates. >> thank you. bloomberg is being told president trump is increasingly keen to strike a deal with china soon. extendingeijing are for it -- extending for a third day. politics editor is here to discuss. we know that president trump loves to take credit for gains in the stock market. he has put the blame on the fed. >> if you look at all the things that we are weighing on the stock market in the final three

months of the year, it was a bad year already then spiraling down. the trade war was of the top of the list. with the fed signaling they are willing to be patient on policy, now with the -- mid-level executives meeting in china, it is not surprising that this is something the markets are even more focused on than ever. -- youare wondering might want to get a deal quickly to get the stock market back on its footing. you have to get something done. what is china done so far? we are looking at punitive tariffs on american made cars. promising to open up to foreign investment. to stop forced technology transfer.

the big news has been the first ever appeal court for intellectual property disputes has been set up. when you talk to people about the motivation for that, they agree that the trade war is part of it but within china itself, there are people who start businesses who get their technology stolen. they have been pushing for this. it is an interesting impasse. if trump makes a deal quickly and doesn't get the kind of enforcement mechanisms people are looking for, it will look like he did this just to get it over with. >> how do you make sure the niceties are put into play? are two reports this say fairly different things about the industry and the impact of the trade war. >> we got a congressional report saying that a prolonged u.s. china trade war could have

lasting damage on u.s. importers desk exporters of soybeans. they should the concerns that the report as expressing. the congressional budget office is saying this tariffs of added 83 billion dollars of revenues. every big caps. -- every bit counts. >> what about the global economy? we have seen the world bank cut their forecast for global growth. of much of that was because these trade tensions? >> they mentioned the trade tensions, uncertainties over everything happening in the

world. -- germanalking about industrial production fell. a big fall. people say they are looking perhaps at recession. the germans are also saying trade tensions uncertainty, this is another exporting nation may be having something to do with it. part of what is going on is people are still saying it is a bit of early days. the pain that china may have felt now is going to be felt by the u.s.. another reason for if they can get something in place, that's enough to say they are moving forward. that would have to be a net plus for everybody in the world. >> thank you for that. the latest on the u.s. china trade talks. with the government shutdown approaching a record length,

president trump is preparing an address. now is congress editor. as he continues to threaten declaring a national emergency, can we expect him to do that tonight? if so, would that be possible given the legal ramifications? >> we are told that as of this afternoon, that was not part of his speech. there is some time left and he could change his mind. he is being pulled in different directions. there are some of his allies outside of the government and in the government that won him to makethis step as a way to a quick break in a dramatic break. there are a lot of questions in congress about if you can do it. a lot of congressional republicans are saying they think is a last resort and he should not go there. we are told that he will offer

something of an olive branch to the democrats who have been in a stalemate with him. he has also invited the top leaders of both parties in congress to the white house tomorrow and he is going to talk senator's at their weekly lunch tomorrow. it suggests that he is still looking for another way out. perhaps there can be another breakthrough although it is not evident at this point. >> if he were to go ahead with the national emergency, that would be under a 1976 law. explained to us how that would work. need to divert funds. the president has wide latitude to determine what constitutes an emergency. that he is likely to be

would ask the military to step in and use their own funds to begin construction on a section of border wall. the military does have money for construction. fundsemergency, some could be diverted. come under a challenge in court. then, the question of how much of the money can be diverted because constitutionally, the congress has purview over the budget and the purse strings the government. it is unclear how that would work but the plan would be to have the military step in. >> thank you for that. get you to first word news. the world bank has cut its view of the global economy.

rates stoprest momentum. it's review says downside risks are more acute including what it movementorderly market as well as the escalating trade dispute. it sees global growth is 2.9 percent, that is down to 10 from last year from the forecast in june. u.s. consumer debt rose in november faster than expected. that's as americans continue to borrow 2 -- finance purchases. total credit rose $22 billion from a month earlier. non-revolving debt rose the most in a year. the figures also suggest consumers were more cautious heading into the holidays. heathrow airport has reopened after being shut down for more than an hour by a reported drone siding. departures were halted but

operations resumed following a police evaluation. the location of the drone -- 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. this is bloomberg. >> still ahead, the world bank is sounding the alarm on the global economy in its latest update. we will speak to the reports leader later in the show. >> up next, another day another rally for u.s. stocks. this is bloomberg. ♪

this is daybreak asia.

to the optimism we are seeing across equity markets. president trump is said to get -- be keen to get a deal done to extend the rally after the end of the year selloff. it feels like a little bit of an existential inflection points for markets. is the optimism over trade misplaced? where do you sit in terms of what risk reward and that relationship looks like for this year compared to last year? last you look back at the 12 months, a lot of the compression in prices and derating of the equity market was driven by concerns around geopolitical uncertainty and the

relationship between the u.s. and china. and the u.s.019 and china are having a anstructive conversation, little stabilization is warranted. this is a first step and was going to be a long process of trying to understand the process between the u.s. and china. there are significant long-term issues. say thatathleen hays there was some erosion of business and consumer confidence . i think that is fair. we have seen this in cfo confidence surveys. companies were discussing third-quarter earnings over the course of the fourth quarter. we have seen announcements and that tradecompanies was overhanging their activity and their plans for investment. we will be watching this

progress closely. i think we could get some stabilization if we make strides towards an agreement. for is going to be an issue multiple years not just quarters. >> that is a critical point that you make. even if we don't see a play out, the concern over animal spirits deteriorating is an issue. we see that in asia as well. i want to put up this chart. it will inform a lot of views. where the dollar goes from here. they are saying the. of strength is running out of steam. perhaps there is the idea that the fed is hitting pause or waiting to give more space for dollar weakness. how does that inform your view of how emerging markets perform

this year? forecasting the dollar is a very tricky activity. dollar would be good news for sentiment around emerging-market equities and assets in general. the move in the dollar particularly in the first part of last year really shook confidence after strong performance from emerging-market assets. if we have stability and clarity that the fed is going to continue to be data-dependent, if we have a little bit of progress on the trade front, that leads people to feel more confident that there will not be big disruptions to business models over the next couple of quarters. it would be very good news for emerging-market assets. our view is that a lot of the fear is already in the price. there are a lot of high-quality

companies that have been underappreciated by the international investment base. we are sticking with our overweight recommendation for emerging-market equities and we feel confident high-quality companies that have been that if we make progress, we can see those assets outperform. >> we have just learned that president trump wants a deal in order to boost financial markets according to sources. what sort of deal do you need to see for the markets to gain some sustainable confidence in the stock rally? >> i think it would be difficult to put together a big deal and such a short. of time. aat i would be looking for is promise to create a framework over the next couple of months and quarters. trade ishe focus on not just about how much u.s. buys from china and how much china exports to the u.s.. it is a lot more about the competition in technology and the fact that china is seeking

to and investing in becoming a global superpower when it comes to technology. i would like to see this agreement or discussion now talk about the opportunity for cooperation between the u.s. and china on technology instead of the ongoing acrimony and what feels like a decoupling of the sector. segmentenant -- text could be hurt by the u.s. china trade talks. given that they are already at high valuations against the broader market, is this a sector that given the uncertainty on the trade front you should give up on? >> we are not giving up on technology. our favorite sector call for 2019 has been health care in part because health care serves the purpose of meeting the needs of many investors. it offers income, quality, it has lengths -- less sensitivity.

it has great opportunities. still wellctor is loved across blackrock. i would note that tech faces a number of challenges on data and regulation not just in the u.s. but by european lawmakers. it is also faced pressures on policy and regulation in china over the last 12 months. companies are absorbing those policy changes and are willing to work in that environment. our call in tech is that you need to own both u.s. and chinese tech. asre is not as much overlap sometimes investors think there is. in order to invest in growth for the long term, you need to have a diversified strategy for the sector. >> what are your views on how the central bank plays into all this?

there's the idea that jay powell is willing to keep the door ajar when it comes to hitting pause. chart.to throw up our we are looking at the runoff and the balance sheet because that is essentially on autopilot and they have not steered away from their stance. you that concern particularly as we have all of these downgrades on growth and warnings about potential recessions appearing? is that a concern that even if the fed doesn't do anything that this is still going to continue to tighten? >> we think that the fed is doing the right thing in communicating data dependence. policy adjustments work with long and variable lags. for the fed to step back and absorb the data and make a

decision, once they see how the data evolves and how consumers and businesses operate, is totally prudent. your question on the balance sheet is fair. the market is worried about liquidity and liquidity drains the system. this is going to be front and center of a lot of risk-taking decisions over 2019. i would expect that the fed needs to address the concerns around the withdrawal of liquidity. it doesn't feel like a major obstacle to corporate behavior or to the market functioning well. financial conditions are amething that have led to slightly different multiple environment. we would expect that if the fed does not address liquidity and financial conditions, it would make it difficult for equity markets to perform in the way that we hope in this year. weak also got surprisingly

numbers out of germany. this chart showing industrial output unexpectedly fell in november. indicating we could see a recession in germany. what is your call for european assets given that it is not just the economic slowdown that could be affecting markets there but also political risks? >> we have been underweight european equities for all of the last 12 months. we have a call that got a lot of feedback from clients and peers. view is that we were lacking additional catalysts that the quality of european earnings growth is relatively weak and the opportunity for upside in terms of economic growth and stimulus was lower than other regions. now, we have reconfirmed our underweight to european

equities. we don't think that the potential risk from european fragmentation is being reflected in earnings estimates or in prices right now. this latest news out of germany confirms for us that we are in a slower growth environment and that without a significant stimulus to european growth, it is going to be a more challenging year for european assets. >> great to have you. coming up, we will ask if the social media detox should be eight new year's resolution. some users are finding they cannot delete facebook from their phones despite attempts to do so. we are looking ahead to the asia open and we are seeing some green issues across asian trading today.

it is getting a strong lead from over the optimism of trade talks in beijing on wednesday. this is bloomberg. ♪

you're watching daybreak asia. president trump is increasingly eager to strike a trade deal with china. we are told some advisors are competing for a swift resolution with beijing. talks are being extended into wednesday. wilbur ross said there is a good chance of an agreement that both sides can live with. u.k. lawmakers will vote on the brexit deal on january 15 when the commons will decide whether to accept the accord reached last year with the eu.

pro-eu conservatives voted with the opposition to block government spending on prep is 8 -- preparations for a hard split. boeing remains the top plane maker holding on by six aircraft. it delivered a record 806 commercial jets last year. boeing missed its delivery target while air belts -- airbus missed -- met its goal. australia is considering issuing a visa for the saudi woman held up in thailand. familyed to escape abuse. her passport was seized by authorities. her situation went viral when she wrote that she was appealing for help from humanity. she is now under the care of the united nations. 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. this is bloomberg. >> thank you. wall street was more optimistic about the potential trade deal between china and the u.s. as talks continue in beijing. bloomberg has learned the president trump may want to strike a deal with china as soon as possible in order to help the stock market. that could be a boost for asian stocks which are now trading in the green. let's go to sophie with the latest. >> as we are seeing, investors waive at the sign of trade tension. we are seeing stocks in sydney gained one half 1%. are also on the advance with oil trading at a three week high.

checking in on the aussie dollar, little change there. aussie bonds of falling for a fourth straight day ahead of building approval data. note in in on stocks of sydney. i want to highlight magellan financial rising at the highest level in a month. we are seeing some downside when it comes to other investment firms. low.num asset falling to a morgan stanley says a fund outflow could deteriorate further for platinum given the market volatility which is impacting retail slows. we are also seeing weakness for navigator global following the most in more than nine years off

by 21%. investment firm issues a preliminary business and earnings update ahead of its a um update due next week. i have navigator noting a likely fall in management revenue of 10%. --0% drop a quick check on one mover of note. that is the layer up firming up a touch. through fromcame turkey rejecting u.s. proposals on syria along with renewed strength in the dollar. >> let's look at tech. complaints are rising that samsung users cannot get the facebook app all -- off of their phones. some models come with facebook

already installed but users are finding they can only disable it. a you are wanting to go on social media detox and you were the owner of one of these phones, you would not be happy right now. how does this work? withcebook has made deals samsung and other phone makers. also, service providers. they said they cannot give me a list of the deals because they vary by region and type of phone. it is all of the android phones that have facebook preinstalled. once users get them, it acts like a native app on the phone. you cannot delete it. facebook says once it is disabled, it will act as though it has been deleted. users are still wary about having facebook on their phones given the recent concerns. >> does that mean facebook cannot collect data once it has

been disabled? --t are consumer at risk it advocacy groups saying? >> facebook says you will not be able to have data collected from the apple once it is disabled. consumer advocates are not taking them at their word considering the recent issues with privacy breaches and other problems with facebook and data over the last year. consumer advocates are saying that facebook should be more public about how this works. users should know before they purchase the phone whether it will have facebook preinstalled. they should also be able to deleted if they want to. >> thank you for that. ceo says the bank is preparing for a hard brexit in march of next year. he spoke with david westin. brexithere is a hard

where there is not an understanding between the eu and the u.k., on and orderly separation of the rules of governor, while he is hard to predict, i think that is a good estimate of what might happen. i think you are seeing it in where the sterling is trading. you are seeing the uncertainty in the equity markets in the u.k.. this is a dicey time. clarityer we can find and how the exit will occur in an orderly fashion, it is very important for the u.k. economy. i don't think the governor is exaggerating. i think we all need to listen carefully. >> how do you plan for that? do you have to plan for a hard brexit no matter what? the sunday after the

referendum vote which was on a thursday, the whole executive we weree meeting, preparing for a hard brexit almost two years ago. we have been hoping for an organized separation, but preparing for a hard one. we had a subsidiary in ireland. we significantly expanded the capacity of that subsidiary. now ofin the process relicensing all of our branches in europe. frankfurt, milan, madrid. inbranches of our bank london to branches in dublin. we will move a thousand 200 people from a british bank to a european bank without moving a single body. whether it is contracts or capital, we are set up so we are comfortably in front of march of next year if there is a hard brexit. we will be able to do everything

we are doing today with our client base across europe and the u.k.. >> if there were a hard brexit, how would barclays look different? surviving it and looking the same are two different things. voteen the referendum occurred, we had a situation room. brought together lawyers, risk managers, technicians all over the bank to think about what might happen if there is an economic shock. we are doing that right now. what happens if we are financing a restaurant chain in the u.k. which is importing fresh goods from farmers in europe and all the sudden those goods cannot cross the border and go bad.

who is responsible for that and what do we do? hurt?ndustries will be we are a very large provider of credit to the agricultural industry in the u.k.. 25% of every agricultural loan and the u.k. comes from barclays. stops at a hard brexit in one day. how do we deal with that? we are thinking of all of the contingencies. as a bank, we are in good shape. as a stress tests showed, we can whether almost anything. we are mindful of where the risks are. we have been prudent since the referendum. we want to be here to help the u.k. go through whatever comes its way. >> the brexit deadline is march of this year. counting down now, we have heard the house of commons is planning to hold a vote on january 15. you can catch our full

conversation there on bloomberg tomorrow at 7:30 p.m.. coming up, the world bank is bloomberg -- lowering global growth forecasts. we are asking just how ugly things could get. this is bloomberg. ♪

>> this is daybreak asia. asian economies are seen dominating for the next decade. seven of the 10 top economies are said to be current emerging markets. one of the major trends -- it is interesting given that we are talking about slowdowns this year. trends -- whatth are the growth trends shakeup

this ranking? >> this is a big picture take. it shows china by next year to become the world's biggest economy. not too much of a surprise there. by 2030, will see a big lift for india and indonesia. share --expecting the one share of global gdp to begin to match one share of world population. especially as the developing economies merged together. it fits the picture that there is a potential for these economies. delivering on that potential is a whole other story. >> what are the risks to this? some of the issues that will need to be dealt with our

productivity. that is a well-known problem around the world. that means policymakers will have to make some difficult decisions. they also make the point that with the end of an era of quantitative easing, if we get away a, it will take source of growth. policymakers will have to look for new channels and new ways to stoke their economies. picture, this does .apture some of the themes there is certainly a bit of work to be done before all of this can be achieved. you so much. the world bank also has cut its view of the global economy as slowing growth in trade and investment and rising interest rates stop momentum.

for emerging market growth is slashed by a half percentage point. our guest is joining us from washington. the world bank is saying that global economic downside risks are more acute. does that mean they are the same risks as this year and more severe or his something changed? >> i think things are getting worse the last year. report isof the darkening skies. theskies are darkening over global economy. global growth is slowing. risks are rising. we dominated our global growth forecast relative to last year. growth is going to slow down from 3% to 2.9% this year.

advanced economies are going to see a slowdown. emerging market economies will see a stalled growth. in the context of emerging-market economies, we reduce our growth forecast by .4 daesh .5 percentage points. major engines. the u.s., euro area and china. these three together account for 50% of global gdp and 60% of global growth. all three will see lower growth this year. risks, that things can get ugly. >> one of the reasons that we aroundee more slowdowns the world could be because the fed continues to hike rates. we are seeing monetary tightening around the world.

financial conditions are taking a plunge. what are your expectations for monetary policy this year and capital flows around the world? >> monetary policy in the united states has been normalizing. the fed has done a good job in terms of taking this economy through the deep crisis and increasing the interest rates in an orderly fashion. environment of financial the chairess, suggested that the policy is going to be flexible. they are going to look at incoming data. we still think that the fed will increase interest rates twice this year if there is momentum with respect to growth around the world and the u.s. economy

is performing well. --ing said that, we see that the united states and china are talking to each other. so far, all signs indicate that the talks have been quite productive. if the united states and china resolve their differences in a timely manner and take the risk off the table, the global economy can get a kick off of go up.nfidence can these two economies are quite important. they account for one third of global gdp. , andade tensions escalate

we see a deeper slowdown in the u.s. than in china, the implications of that slowdown for other economies could be quite significant. >> in terms of what we are seeing in asia, some of the emerging asian economies, we just talked about the projection 10t seven of the top economies in the world are emerging markets. in this part of the world, how much significant of the weight comes from the shift in demographics? >> the demographic trends are quite important in the context of asia. we need to think about which countries you are looking at. stillia, there is demographic dividend out there and that will contribute to growth. india's growth potential is around 7% and it is delivering that potential. we see that growth is going to be around seven and a half percent. then you have china, growth needs to slow down and it is slowing down. last year, it was a 6.5%.

this year, we are expecting 6.2%. overall, depending on the line drivers of potential growth, whether it is going to come from or laborproductivity market improvements, education improvements, or basic investment in capital, it could be intangible capital. asia is the promising region and east asia and south asia deliver the highest growth rates once again and we think that in the near future, they are going to do that. >> you mentioned india and china. those two countries have high levels of nonperforming loans. bad are the debt vulnerabilities and some of these emerging markets? >> it is true that the debt problem is there. find aicymakers need to

solution. in both india and china, we see that policymakers acknowledge the problem. announcedment measures in the case of china, obviously there are measures underway to deal with the system and all of these financial transactions associated with local governments. is theedging the problem first step. we are hopeful that these problems are going to be addressed in the coming months. >> thank you so much for joining us. we will be previewing the market opens in japan and south korea next. this is bluebird. -- bloomberg. ♪

resignedife ceo has over comments that he made before taking on the role that the company says are contrary to

its business practices and culture. paid $3.5 million as part of a noncompete agreement. the executive chairman becomes interim ceo. the permanent replacement will come from the senior leadership team. --tsche bank morees will be paid selectively to keep top earners on board and the final figure could change depending on the banks fourth-quarter results. the pace to an a half billion dollars in bonuses in 2017. >> hsbc has revealed that the gender pay gap for u.k. employees widened last year. female staff earned 61% less than male colleagues. a bigger shortfall than the 59% reported a year ago. the difference was already the biggest in banking across all u.k. industries.

is 17%.er pay gap makesays it will appropriate adjustments where necessary. >> let's look at the market open in japan and south korea. make to gainss are hinting in tokyo as well as seoul. awaitl be tested as we outcomes from the china, u.s. trade talks. with the backdrop, the yen is holding near a one-week low. when it comes to stocks to watch, i am keeping an eye on lg electronics. they reported in 80% yearly drop in fourth-quarter profits. samsung is back in the spotlight as users balk at the fact that

some galaxy funds are coming preloaded with the facebook app. we have a lot of emphasis on the health care space earlier. blackrock skate more told us health care was the favorite sector call for 2019. >> let's take a look at how things are faring as we get into a few more markets joining the freight. we are seeing australia trading to the upside. there seeing gains across energy names. oil is nearing $50 per barrel.

some robust gains in the new zealand market as well. we are seeing a positive open ahead. this is bloomberg. ♪

>> very good morning. i am haidi start watch in sydney. >> good evening, i am shery ahn. i am sophie kamaruddin. welcome to "daybreak asia." >> our top story this wednesday, asian-pacific markets set to follow wall street higher, oil coming in at a three high. president trump is said to one a trade deal with china soon to boost markets.

it could extend into wednesday. >> the president preparing to take his border wall to prime time tv. they wanted to declare a national emergency. bloomberg, wti crude has arisen above $50 a barrel for the first time since december. at the moment sitting at $49.95. we have seen crude fall more than 20% in the last year in a bear market. cuts it fromse of saudi arabia and libya. sentiment with the u.s.-china trade talks regressing, perhaps hinting there could be more demand for oil coming from the economy. this sentiment has filtered through the markets not only an oil, but the broader markets as as well. -- let's head to sophie kamaruddin with a check. forie: we are seeing cheer

asian stocks. the nikkei 225 that 0.8%. the topics also moving higher. and the kospi moving higher. energy stocks among gainers in sydney. oil continuing its upturn. both wti and brent extending gains after a seven-day rally, which would be the longest winning streak for wti since the summer of 2017. rbc capital says it is a clear rebound with the macro outlook for oil looking less dire than it did a couple weeks ago. when it comes to other sectors, we are keeping a close eye on energy and investment firms in australia. bag.e seeing a mixed navigator global following the most in more than nine years as it sees impact from market volatility. when it comes to trade tensions we do have companies on edge.

sony is reconsidering china production if tariffs rise. we did get a job listed numbers from korea and the labor cash earnings from japan coming in at 2% year on year. morford -- more for investors to digest. haidi: it is feeling very risk on on the moment. let's talk about asian trading as a gets underway. market joins us. this progress or semblance of progress, positivity in trade talks leading to quite a bit of risk on movement, seeing oil $50 a barrel for the first time since december and aussie jumping 0.5%. are there legs underneath this weak?or things week -- mark: their overriding sentiment is cautious optimism.

we continue to see risk assets go higher. there is a hope we will get a out ofe statement beijing on trade. not necessarily a conclusive deal, but the fact they are proceeding with talks and there is indication there will be a deal. that is all needed for this risk asset rally to continue. the reason traders are cautious is because there are obvious event ricks -- risks. we have a statement from trump tonight on the potential of the border wall and chance for a shutdown. of the uncertainty around what trump will say and what the reaction will be to the democrats that many traders are very nervous and no one wants to take risks. we have seen quite a powerful move in the last week or so. a lot of short-term traders are saying let's scale back, take a profit. at the moment the theme is a risk on, but volatility will remain. morning, lots of

news, everything from emerging moments to bitcoin. joining this chorus of calls saying the end of the bull market is nigh, when it comes to bonds, that is. mark: i think that is absolutely the case. people got carried away over the christmas week in bond markets in the same way they did in every other asset. we saw capitulation in equity markets and the yield price cuts from the u.s. that seems strange given it does not seem the u.s. is close to recession this year. markets are pricing in a more up -- pessimistic outcome then indicators seem to imply. it is true it is slowing down, but that is not recession. while it is unlikely the u.s. will hike many times this year, it is more unlikely they will cut this year, more likely they will get one or two hikes and the curve is placed too much and the downside and the next couple months we will see bonds continue to selloff.

elds reaching the highs of last year again, they will just higher from him. shery: jeff bloomberg talking about emerging-market stocks, saying they will leave the s&p 500 if the u.s. dollar weakens. mark: i am completely in his camp. even without the dollar weakness we started to get in the last week. this year we will probably see the dollar weaken again in a volatile fashion. i think that will help emerging markets, which are better valued than other stocks. this can last a not only for the year ahead, but most years. we saw the u.s. outperform the last four or five years. a long theme can start reversing. where the valuations are much better.

i think that will be a big theme of 2019. shery: market, thank you. you can follow all of the day's trading on the live blog on your terminal. and commentary and analysis from bloomberg's expert editors seek and find out what is happening to your investments. let's get to first word news with a jessica summers. itsica: the world bank cut use of global economy, slowing trade and interest rates. including what it calls disorderly market movements involving escalating trade disputes permitted sees global growth at 2.9% this year. that is down 0.1% from last year's forecast in june. debt rose in december faster than expected as americans continue bought -- continue to borrow the finance purchases.

credit rose over $22 billion from a month earlier. debt rose the most in a year. there was a $25 billion credit again in november. consumers were more cautious heading into the holiday season. will vote ons theresa may's brexit deal january 15 when the comments will decide whether to accept the accord reached last year with the european union. they approved financial measures to make a no deal brexit more difficult. votedu. conservatives with the opposition to blog government spendings on preparations for a hard split. heathrow airport reopened after being shut down more than an hour by reported drone sightings. departures were halted soon after 5:00 p.m. u.k. time, but operations resumed following a police evaluation. the location meant incoming flights were not affected. the incident comes after

suspected drone rains on gatwick airport before christmas. -- 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. i -- xixiam aomi shareholders agreed to a further 365 days. it was meant to be when the six-month lockup period expired debut.ng the hong kong saying it shows confidence in the company. a further 365 days is when that lockup will go on for undertaking for the controlling shareholders. a sigh of relief for anyone who holds xiaomi stock, given it tanked 7.5% monday alone.

jpmorgan gave up its buy recommendation. the sellingrried recommendation would come through today, but another year of respite for shareholders. shery: one of those smartphone makers that has seen pressure recently. in the u.s. bloomberg has been told president trump is increasingly eager to strike a deal with china soon depart up financial markets that have slumped on concerns over the trade war. talks in beijing are extending a third day into wednesday, adding to optimism about progress. kathleen hays is here. we know that the vice premier showed up to these meetings. we have any more sense of what can come out of these talks? kathleen: we have heard optimism expressed on both sides. i do not think that is so unusual. if you are really working on a trade deal, the last thing you

want to do is start leaking things prematurely, have a get out in the press and to the public prematurely. i think it is interesting the story our white house team has broken tonight about president trump pushing for the trade deal. two sides clearly, one would be peter navarro, chief adviser on trade. wilbur ross, the commerce secretary, billionaire, former secretary. and robert lighthizer himself. then you have the treasury secretary mnuchin, larry kudlow. just worried about the stock market. it will be interesting to see which side of this, which president trump yields to. they are saying it is not so much trade, but uncertainty about the fed. if trump is pushing hard, you wonder if he will put aside

stronger fundamental things he is saying must have any a deal and settle for superficial things like removing tariffs, selling more cars, or buying more u.s. cars chinese have offered. property is market access a really counts. shery: they have lowered the car tariffs on u.s. cars is starting january 1. seen concessions like soybeans and grain imports beijing says well by more from the u.s. kathleen: i think they will say it is great because you are the biggest soybean buyer in the world and it is hurting u.s. farmers. heard reports from the nonpartisan part of the government lobbying these concessions. you have a temporary cuts and tariffs, buy soybeans, great. will try to stop the forced technology transfer, etc., meanwhile there is damage.

farmers may be heard more permanently if this persists. the question is, it is one thing to get concessions on some things. the things easier to get on intellectual property, enforcement mechanisms in place. that is what the skeptics or people who really do want to see a change, make changes they have not made in the past, that is what they will be waiting to see. will the president but that to the side and tell his good friend xi jinping enough has been done so they can both move on? we. will see. it is an interesting week we do not have much to go on in terms of specifics. shery: the president being keen to get a quick deal to keep stock markets continuing to rally was this idea he still believes in terms of weakness we have seen in the chinese economy the u.s. still has a bit of an upper hand. there is some weakness coming through for the u.s. economy as well. kathleen: bank of america said

yesterday [indiscernible] cutannot cut rates, cannot taxes again, china has all its stimulus tools in lace to get things going. it is interesting that leland the chinaunder of beige book, said it is weaker than the public figures look. i was talking to another china watcher saying he agrees the economy is weaker. both sides are vulnerable. the longer they go one, the more vulnerable they become. manufacturing reports for her the u.s. week, the china week, a deal is a good thing to get. get. critics of the trump and opposed to the trade war say, you put us through all that and you do not get real promises from china? that they are going to enforce intellectual property? that is where the president will

be vulnerable if he cannot hold out for real action that will come from china after a deal is made. haidi: kathleen hays there. these talks going for a third day. as president trump prepares to make is prime time address to the government shutdown, we look at how we manage to get here and what comes next. shery: as the u.s. and china appear to make progress in trade talks, we get analysis from pinebridge investments. this is bloomberg. ♪ is is bloomberg. ♪

shery: this is "daybreak asia." i am a shery ahn in new york. haidi: and i am haidi stroud-watts in sydney. our guest says the worst is over in terms of the trade war. omarng us from singapore, slim from pinebridge investments. happy new year. i want to go to this chart to

a guest saying this bull market when it comes to the u.s. bond market is looking like it is over. we are taking a live look at speculators, participants not sure when it comes to treasuries. in the blue is a decline. a pickup when it comes to 10 year yield and positions signified in white. what is your view on this? we talked about 3%, what happens when we get to 3% and beyond. blackrock saying treasuries one of the safe havens that regained their haven status. is the bull market over? i think broadly it should go higher. besides the fed action, which may be more progressive and gradual going forward, as was indicated in the last week or so, i think what would drive the u.s. treasury increasingly is the size of the treasury issuance, which is the

increasing rate. exceptionals redemption month in terms of treasuries. positioning was murky. i think going for the size of the u.s. treasury will be a factor in terms of market action. still keen fed is a in terms of normalizing policy rates when it can, even though it might be more gradual going forward. shery: what about elsewhere outside of the u.s.? where are you sing opportunities? chinese bonds are coming back with a vengeance. omar: yes. i think the primary driver of the market last year was tightened financial conditions. i think this is something still running its course this year. it did have a big impact last year in terms of the credit market. i think that has also transpired

in terms of the equity markets and emerging markets and toward the latter part of the year in terms of developed markets. ifterms of opportunities, the financial conditions continue to be tight, or start being tighter, some part of the credit markets will be interesting. particularly we like asian investment grade. it is well anchored, decent fundamentals, good ownership. some parts of the high-yield markets. even though he maintained the credit cycle has peaked, one has to be opportunistic in terms of bonds one buys because it needs to be decent credit. shery: what about the u.s. dollar? seen more dovish comments from fed chair powell. data-dependent said create more space for dollar weakness? i think the dollar reigns

-- i think the era when the dollar reigns supreme is over. there was diversions between the u.s. and the rest of the world. i think this will dissipate this be moreven it will gradual. i think other central banks, are keen to normalize. that dollar performance and strength has dissipated. i think the story will be [indiscernible] broadly i think the dollar will go weaker from ear. in this macro environment when you see volatility across assets, some of advocated for alternative investments like property.

the real estate market, where are we in this cycle? i think the real estate -- market is generally vulnerable. it is traditionally vulnerable whenever you have economic growth slowed down and interest rates rising. the real estate market tends to be localized, each jurisdiction having its own dynamic. in an environment where interest rates are rising, when we come from a multi-year phase of good performance in terms of real estate, by demographics are not really good in some places, and you have an economic growth is slow down, i would be cautious in terms of real estate. shery: omar, thank you for your time. omar slim, of pinebridge investments. coming up, carlos ghosn's lawyers fight to free him from detention as an actual trial could be as much as six months away. this is bloomberg.

♪ ay. this is bloomberg. ♪

haidi: this is "daybreak asia." i am haidi stroud-watts in sydney. shery: and i am shery ahn in new york. carlos ghosn spending 50 days behind bars. his lawyer says an actual trial could be as much as six months away. they filed an appeal. our editor joins us from tokyo. as we said, he has been detained almost two months now. he finally got to speak publicly for a few minutes, but he has been rearrested and he is still in detention. is mr. ghosn any closer to getting out? dave: we will know on friday, january 11. that is the day his current detention period expires. himhey do intend to keep

behind bars, they will have to extend that. as we have discussed in many issues before, there are several ways they could do that. they could try to lay new allegations. they could re-indict him under other charges. it does not necessarily mean he is on the way out. one thing the appearance did do is establish he is not giving in. one theory is the reason he has been kept behind bars so long is they are really pushing to see a confession. rather than just trying to convict him with the evidence they have, they want him to admit to wrongdoing. it is pretty clear now he is not going to do that. he took this opportunity to show his resolve apparently has not weakened to fight on his own behalf. that could create prosecutors that want to keep breaking them down, for mean they are willing to grant him bail and proceed with the trial.

monthsuld take up to six before that would even start. there is a long road ahead for not hesn, whether or stays behind bars beyond the end of the detention period. david, are the ceo's comments likely to win him support outside of japan? dave: that is interesting. certainly has explanations of what happened regarding his allegations will be persuasive to some, but not so much to others. it does clearly paint him as a very high level executive that did take some prerogatives that are not necessarily available to other people. liabilities onto the company than taking them off. he said the company did lose money, but it is not necessarily available to ordinary workers. that could store some resentment there, but have supported among

other executives, for sure. haidi: dave, appreciate your time. dave mccombs in tokyo. beijing., ♪

haidi: it is 8:30 in hong kong. just an hour away from the start of trading. in shenzhen and shanghai, a gloomy day across the harbor, but positivity when it comes to asian stocks. we could see that flow onto the open of trading. gains of about 0.6%. japanese stocks extending their rally. we are also seeing a turnaround when it comes to trading in south korea after yesterday's losses. following that positive cue we got on wall street. policies continuing to dominate in the u.s. we are less than an hour from

president trump speaking in his televised runtime address. expected to address issues related to the government shutdown and his border wall fight. i am haidi stroud-watts here in sydney. shery: and i am shery ahn in new york. let's get first word news with jessica summers. bloomberg is being told president trump is eager to strike a deal with china to increase funding financial markets. house told key white advisers are campaigning for a swift resolution with beijing as trade talks are extended into wednesday. commerce secretary wilbur ross says there is a good chance for an agreement both sides will agree with. australia is considering issuing a visa for the saudi woman hold up in thailand. rahaf al-qunun says she filed bangkok to flee family abuse. viral fearon went her twitter account when she wrote she was appealing for help form -- from humanity.

she is now under the care of the united nations. as complaints are rising users of some samsung smartphones are not allowed to delete facebook. comendroid-based galaxy s8 with of the app already installed, but owners are finding it is almost impossible to remove it. consumers have become more concerned about their digital rights and privacy following relevant -- revelations about facebook's sharing of personal information. boeing remains the top rainmaker, holding on by just six aircrafts. they delivered a record 806 last tried toboth companies beat earlier supply shortfalls. even so it missed its delivery targets while airbus met its goal. easing concerns the u.s.-china trade were could hurt demand. 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. look at how take a asian markets are shaping up this morning. sophie? sophie: midweek we see asian shares sitting, with kospi leading the advanced 1%. foot withon the back ten-year treasury's holding at a three-day decline. 7.6%.nchmark yield at with dollar facing pressure, the qb and aussie leading g10 gains. the aussie retreating a bit from the december high in the session. as we do get building approval data coming through, bigger drop than anticipated, down 1.9% for november. taking a look at japanese shares. gains of 0.8%. the nikkei headed for a third day higher with health care the best-performing sector. want to highlight stocks on the move in tokyo. this after a series of

[indiscernible] climbing after being raised to overweight by the bank. manufacturing under pressure. downgraded to underweight at morgan stanley with a lower price rate. smartphone demand and tech innovation ahead of the 5g in fusion. downgraded. there was the sluggish smartphone business, indicating the company can be pushed from the overall weakness we have seen in the smartphone space. shery: thank you. resumes his four-day trip to beijing later. he had an hour-long meeting with president xi tuesday. there is speculation he traveled to china to talk about strategy ahead of the second summit with

president trump. let's head to seoul. how much do we know about this trip? not much is known about this trip besides the fact kim jong-un left the day before yesterday. we know this information through north korea's central media. this is also special because north korean state media normally do not report kim jong-un's travels to china before. it could be a power move from north korea's propaganda turn -- terminal to show they are flexible with kim jong-un traveling in and out, overseas. sitting down-un with a xi jinping for an hour-long meeting goes to show he will definitely prioritize the north korea-chinese relationship over the u.s. relationship when it comes to preparing for his talks with donald trump. shery: we had heard from korean

local media there could be a second potential meeting between president trump and kim jong-un. this could happen in hanoi. what do we know? the closest we know so far is the south korean local media citing diplomatic sources in both washington and seoul. saying u.s. officials met in hanoi. koreant their north counterparts to adjust the schedule for the upcoming second u.s.-north korean summit. there are not many details released further than that, though there are mixed report saying other locations are being considered. however, donald trump himself has said a date and location will be announced in the near future. shery: how could this potentially affect the china-u.s. trade talks? in the last year president trump has not been shy about

conflating geopolitical strategic issues. we heard yesterday from the chinese foreign ministry saying they will not be using north korea as a bargaining chip. when it comes to these trade talks. however, many analysts bloomberg news has spoken to says china, in order to maintain its leverage over the korean peninsula, it needs to value its relationship with north korea. not only for china, but in terms of north korea's point of view. china could be the strongest foothold to push within the security council to lift sanctions the strongest that have been imposed so far in history. haidi: thank you so much. latest on this birthday visit for the north korean leader in beijing. we are turning to malaysia and the government is looking into allegations china offered to investigation into

the struggling 1mdb investment fund in exchange for deals with infrastructure projects. it comes after wall street journal said senior chinese leaders offered to help bail out the fund back in 2016. our singapore bureau chief has the story. this drama continues. all of these extra developments. what are the allegations suggesting? stephanie: what is interesting about these allegations, for the first time it explicitly talks about china's influence in this sprawling global scandal. basically the allegations are that senior chinese officials offered to malaysian officials to help make the allegations go away. to make some of the probes go for stakes innge key projects such as rail and pipeline projects.

i have to say, the chinese embassy in malaysia has come out to deny these allegations, saying there are groundless. they gave a statement to local media overnight. they say they have had a policy of never interfering with internal policies of the country they invest -- countries they invest in. this has been a concern with china's belt and road initiative, that they are using financial clout to build influence in developing economies. most: is that the interesting or new aspect of these allegations, that it brings into these soft power and economic ambitions beijing has, pushing with belt and road? yes, is certainly brings that into focus. it is true it will play into those concerns. the malaysian current prime

minister has in the past criticized the cost of these projects and put a halt to these projects. the malaysian finance minister he felt the cost of these projects was inflated but he would have to review documents to see if these allegations are true. the malaysian government will investigate these claims. they have yet to confirm this has indeed happened. chief,bloomberg's senior thank you for that. xiaomi's shareholders agreed to a lockup. what that means for the stock. this is bloomberg. ♪ ♪

haidi: -- shery: this is

"daybreak asia." i am shery ahn in new york. haidi: and i am haidi stroud-watts in sydney. pay gap in the u.k. widened last year. when men average earned a 61% less than their male colleagues. the difference was already the biggest in banking across all u.k. industries. the gender pay gap is around 17%. hsbc said it will make appropriate adjustments were necessary. signalingfrey gulac alarm bells on u.s. debt, calling it horrific. he likened it to every household in america maxing out three $5,000 credit cards. he said that could pose a greater threat to the economy than people realize, prompting questions whether the u.s. is really growing at all. haidi: sick eight a pharmaceutical has been cut by

s&p. they have weekend key -- weakene d key financials. s&p is keeping takeda at investment grade. the ceo told bloomberg aside deal is going well. shery: let's get more on those breaking xiaomi headlines we saw crossing the bloomberg earlier. controlling shareholders agreed to a further shareholding lockup for another 365 days. bloomberg tech reporter shelley joining us now. investors were concerned we could see a downside for xiaomi, given how poorly the stock has performed. could we see a boost for the stock? shelley: that is what the

founders and key executives are hoping with this announcement. it is kind of common for these companies for extended lockout comment to make a big song and dance announcement about it. they are trying to say look, we know the shells are down quite a lot since the ipo, but we are putting on this song and dance saying, we believe in his company and are holding it for the long-term and are not about to sell out anytime soon. how badly the stock is performed since its ipo. shelly: the stock is down since ipo. was one ofr xiaomi the biggest of last year. it was supposed to harold -- herald a company that could take over apple and take over the world. shareholders control 19% of the stock. the outstanding shares.

what they are china to say is, we know we hold a large portion of these shares and we are not going to sell right now. it was a horrible six months for how shares performed. even at the start of the year we had jpmorgan giving up yesterday. that caused a plunge. is the future looking any brighter? certainly right about jpmorgan and the bearish bets increasing. short-sellers are circling this stock. for the short-term, there is not so much optimism for this stock, but these executives and others who are bullish on xiaomi say this is not a short-term play, it is a long-term story. that has been the calculus from the beginning on this company, that maybe in the short-term they are not going to rival the likes of apple or huawei, but in the long-term if you believe in

this company, it will come back. shery: we will be watching that in the hong kong trading session. shelly banjo, our tech reporter in hong kong. we will be speaking to our next guest about the implications of this continued government shutdown taking place in the u.s.. we're counting down to the next hour, the u.s. president is did talk to a nationwide address to talk about the shutdown and his argument for the border wall as well. this is bloomberg. ♪

haidi: this is "daybreak asia." i am haidi stroud-watts in sydney. shery: and i am shery on. president trump expected to make voters over the government shutdown for funding the border wall. jeffrey, great to have you with us. will this public appeal were? jeffrey: i doubt it. minds arest people's made up over the usefulness and morality of this wall. it is been the subject not only of trump's presidential campaign in 2016, but the midterm campaign last november. i think mines are pretty well set. anmp will make a case it is emergency and the wall is the

only way to solve it, but i think it is pretty unlikely it changes the situation. shery: do expect them to invoke national emergency? we know it will lead to legal challenges, but it could up the stakes in this standoff. jeffrey: i doubt that is coming tonight, but a do think that is emerging as a solution, if you can call it a solution, to this crisis. trump obviously cannot countenance backing down so asly to the democrats, a result, he needs a creative solution to get him out of this jam he has put himself in. the national emergency may do that for him. though it is likely to end up in the courts. haidi: a pretty dramatic solution. will be tying his political future on it because there are many aspects of tapping that funding that will be deeply unpopular with even his base supporters. jeffrey: yes, i think for his they will probably go

along with most anything he does. the audience to worry about our republican legislators on capitol hill. the situation he has himself in, it is impossible to back down. the national emergency would allow him to create a new scapegoat, which would be the courts. presumably they would block this move. the rationale is not particularly strong. that would allow him to say look, the courts are preventing me from building a wall. i did everything i could, but the courts are standing in the way. it might be a silver lining in that it keeps it alive for him as a campaign issue going into the presidential election in 2020. haidi: it is quite a way to start out 2019, isn't it? and this televised address to get messaging across, clearly they think it is not coming across enough to be convincing. does this really set the tone of that 2019 is another year we of asee domestic politics

chaotic nature as u.s. politics continue to dominate? jeffrey: yes, it is certainly a bad sign for any hopes people of bipartisan cooperation in this congress. i think one area that is hurt is infrastructure. that was a place where there was overlap between house democrats and trump, and potentially could have seen progress. i do not think we can rule that out yet. this is not a productive way to start off the year, as you said. the other big area to watch is the debt ceiling coming up in the spring or early summer. if we have this partisan rancor in congress, that raises concerns in markets. shery: jeffrey, the rational between president trump building this wall coming he says there is a security crisis on the mexico-u.s. border. what is the situation there? jeffrey: the number of

attempting -- crossings and attempted crossings, of families and family groups has risen somewhat. although the level of crossings as well below where it was at its peak in the later part of the bush administration. this is a crisis in any real sense is not a legitimate claim. this is a big part of trump's political appeal. it was something he campaigned on in 2016. the sense that the border is under threat is part of his political outlook and very popular with his supporters. i would interpret it primarily as a political move independent of the facts of the border. shery: any time we have controversy such as trade tensions with china, we keep saying president trump may have to back down. is a shutdown a different issue? because there are so many

federal employees out there. jeffrey: i think it was relatively easy -- the shutdown basically the 21st, on the holidays when no one was paying attention to politics. it was easy for people to justify the shutdown. as we come back to normal life, a gets -- it gets more and more difficult by the day. there is a issue of virus tax refunds, not being able to process exemptions to trump's tariffs, the agriculture department not paying subsidies to farmers. there are a lot of things the federal government does that go unnoticed when things are going well. every day that goes by with the government shutdown, those things start to be noticed by people. that is not just here in washington and new york, it is across the country and in places of voted for president trump. haidi: what is the most likely scenario how this plays out? jeffrey: i think tonight will

mostly be messaging. what i am looking for is later in the become, potentially thursday when trump goes to the border, a declaration of national emergency that might allow him to save the face, but to reopen the government and kick this issue into the courts. haidi: jeffrey, appreciate your views. down to thatng televised nationwide address coming up in the next hour. let's take a look at markets in asia. sophie is in hong kong. sophie: casting the spotlight on taiwan, forecasting 10,000 points for the year end, after losing 8.6% last year. this after a series of weak ecodata. bulls are looking at external factors. we are keeping an ion chinese auto parts suppliers. requestedkers have

exemptions, including suv's and machinery. we are keeping a close eye on xiaomi. the ceo will not sell shares for another 365 and ditto for the cfro -- cfo. keeping an ion chinese bonds, we have futures jumping the most since june. 10 year contract, the highest level in more than two years. plenty going right for chinese debt. the yuanank is easing, is stabilized and foreign investors once again liking chinese stocks. over toefore we hand bloomberg markets: asia, thank you. let's look at how markets are trading at the moment. it looks like asian stocks are primed to see gains.

0.8%, an extension of a rally in tokyo. also a turnaround after yesterday's drag from samsung's numbers. in australia, a robust session. the aussie dollar has been rallying. risk on seen in oil patches sentiment as well, with the wti hitting $50 a barrel for the first time since september. politics dominant where you are? shery: yes, stay with bloomberg. we will bring you president trump's live address in full. that is 9:00 p.m. in new york. we will also bring you the democratic response. this is bloomberg. ♪ bloomberg. ♪

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welcome to bloomberg markets, china open after it optimism about the trade stocks in beijing. oil, a three-week high. >> beijing talks extend into a third day. anchor: the president ready to take his border wall argument into prime time and -- -- a national emergency. ♪