collect hello and welcome to daybreak asia. here new york. >> to open you the news you need to know as markets open across asia. >> our top story this tuesday, a's show looks set to remain under pressure after wall street fell on week data. the yen is holding its gains. the market now waging the pegs it to vote -- the brings it to vote. -- the brexit to vote.

airports cut services and southwest is putting its hawaii plan on hold. >> let's get you set up with a quick check of the markets. we saw the s&p 500 falling half a percent. lowered by those tech stocks. we have seen more concern over trade data. weak export falling more than 4% year on the year. we saw the nasdaq falling the most in more than a week, while the dow lost 4/10 of 1%. we have utility companies announcing they are flying -- -- utilityling for companies, p gmt announcing they are filing for bankruptcy. &e announcing they are filing for bank of secret we are looking for to the aggregate financing in yuan loans. let's see how we are sitting of

the asian markets. >> taking a look at how cash danes up are seeing 2/10 of 1%. this after a two-day decline. up 1.7%, this after being raised to a conviction buy at goldman. thet biggest drag on this so far. importse, the iron or we saw could be impacted this morning. tocks overall looking set decline on wall street after weak economic data in europe as well as from china. market activity awaiting the brexit vote in u.k. parliament. japanese markets are to reopen this tuesday. the nikkei 225 could be looking at weakness after last week's 4% gain. we are going to be looking for more data from india. we are awaiting on the trade performance from december.

from japan, flash machine orders through december, we are going to see the downturn continues after the 17% drop we saw in december. theet's get more on how chinese trade data -- we have -- here with a wrap of the wall street session. it's interesting, investment found the silver lining in citigroup despite a 21% klein. > citigroup said the trading environment is starting to get better after the hard and of 2018, so that lifted banks for a little bit. the chinese trade did a really fueling one of two big concerns, macroeconomists say, and that is global growth. as go right to the snapshot, -- let's go right to the snapshot. we have bonds sort of on chains. inde really had been down

the regulatory session. of course the second question is the persistence of the government shutdown. let's take a look at the winners and losers. investors grasping in the good news. maker,on, the yoga pants touring big. during the holiday they outsold the competition, had slamming sales. pg&e taking a big hit. let's look at oil in the five-day trend. you can see it started to bounce back. it's in the second day of declines. that had a lot to do with declining stocks and concern of global growth. in terms of direction for the s&p 500, we just come off three weeks of gains. ,e are due for a declining week we certainly kicked it off in that way. >> let's now get the first word news.

paul: eu diplomats are said not to be working on the assumption that brexit will be delayed beyond the end of march. although direct talks have yet to take place. heads for a widely expected defeat. the labour party raise the pressure on the prime minister, demanding a snap election as may's deal fails. >> we were promised the easiest trade deal in history. yet we've seen a divided government deliver a botched withdrawal deal with vague outlines on what our relationship with the eu will be. the government is in disarray. if the prime minister's deal is rejected tomorrow, it's time for a general election, it's time for a new government. >> leading oil producers will lead that will meet in march ahead of a policy decision.

the body that oversees the of limitation of supply curbs will meet while oil ministers meet in vienna. plus group ofopec producers have cut out more than one billion -- one million barrels per day to stabilize the crisis. saudi arabia will be -- saudi arabia says more action will be taken if necessary. some hope the worst is over for the bond trading business after the toughest call for the unit in seven years. shares jumped the most in the the500 after john said trading environment was starting to improve this month. ae city reported fourth-quarter trading revenue. state mikeetary of pompeo says he's told saudi king salman and crown prince mohammed he expects the king to hold everything the person responsible for the murder of jamal khashoggi.

says he was completely clear about the administration's view of accountability. goebel news study for hours per day and on twitter. powered by trey 700 -- by 2700 journalists and analysts. >> down impressions on the economy have increased. but has ruled out growth. that the weakest export-in port numbers since 2016. weakest export/import number since 2015. are we going to see targeted stimulus measures? of exactly did they say? >> it certainly sounds like that, doesn't it? ultimately what the premier was saying, according to this report, was nothing new. he reiterated what we heard from chinese officials. it's interesting giving the ,iming -- given the timing

given on the back of those terrible export/import numbers. as you said, they are not going to look toward a flood of stimulus. we heard that before from officials. we have seen the pboc changing some of its language. we seen fiscal measures around tax cuts and personal income. tax cuts,additional that something the president has outlined as well. he hopes toaying get a decent first quarter to stabilize the growth picture and meet those year-end targets. bloomberg economics things by the end of 2019 you're looking at growth from around 6.2%. that's dependent on what happens with the u.s. trade deal and those talks that continue. again, just recapping that data yesterday, exports dropping four .4%, imports down 7.6%.

commerce banks says there is a clear drop -- clear downward trajectory. they say tariffs are one aspect of this but it's really the global demand picture that was the major fall behind these reduced numbers. we have that front row -- frontloading affect starting to come on. when the tensions are switched to what kind of policy response we maybe getting in addition to what we've been seeing already from the pboc and on the fiscal front as well, we may get some steer fund guidance today, because we have a meeting of the state council, the finance all givingd the pboc press conferences some point later today. we are going to be turning into that to see if we're going to steer ondditional policy responses. looks like it's going to continue to deteriorate, not just those export/import numbers, we've had had weaker, not to mention consumer sentiment looking pretty weak as well. >> as you said, not just a trade war, weakness and declines.

beijing's are in getting position going back into the next trade talks? >> maybe this is the silver lining. it is going to put pressure on china to at least get a pause, a longer-term positive a longer-term tariffs pre-at they don't want to see that ramp up come march the first are march 2. those pressures on that front. citigroup saying a consequential long-term deal still looks very unlikely given the structural challenges that were made for both sides. we know the vice premier is going to washington to continue those talks, that's what we expect january the 30th and 31st. the pressure is on trump. to get the stock market something of a boost. the pressure and usn pressure in china may be two sides.

even if the consensus is going to be a consequential long-term deal. maybe just a continuation. that may be enough. >> thank you for that. tom mackenzie in beijing. the partial u.s. government shutdown dragged on and the effective results from the busiest airports to trade talks. >> joining us now from the washington bureau. recordstretches into a 24th day now, you are looking at how different agencies are dealing with the impact of the shutdown. >> that's correct, different agencies to -- different agencies dealing with it in different ways. it provides some of the security monitoring. even though they miss their paycheck on january 11. is seeing a slight pickup in absenteeism, which has contributed to snarling delays around security lines. the you have the office of

u.s. trade representative, which says it is forcing a contingency lapsed funding. that office also said they were continuing to negotiate trade deals. important, given the u.s. is trying to deescalate trade tensions with china and is on the cusp of opening of trade negotiations with the eu, japan and the u.k.. important to note they didn't say how the u.k. would affect negotiations. >> the negotiations continue between president trump and congress. we are hearing that the white house is seeking more negotiations and talks with how democrats -- house democrats this week about the border. we had expected house democrats cat's -- softsoft cap spending bills. >> it's interesting, in just the last hour we heard there are preliminary talks between bipartisan senators, and we have the political reporting that the white house is seeking to meet with house democrats.

this appears to be a bid to circumvent nancy pelosi, probably unlikely to succeed. to putocrats are looking stopgap funding bills on the floor. unclear whether that has any chance of success on the senate side, whereas the majority leader may take a vote on anything that says he won't take a vote on anything the president wouldn't sign. -- majority leader says he wouldn't take a vote on anything the president wouldn't sign. >> just quickly, where's the public and all of this, how do americans feel about the shutdown? a great question. we heard president trump say he would gladly take responsibility for the shutdown. began, by autdown wide margin the american blame

-- the american public does put the blame on president trump. and his mom portion was the blame a democrats on this. >> thank you so much for your time. craig sullivan in washington. on the government partial shutdown. still ahead, we will be discussing strategy on the high-yield bond space. he says selectivity is key here. on the riskarkets of fed policy and why recession concerns are on the rise. this is bloomberg.

this is daybreak e.a. -- daybreak asia. where that the economies, one of the reasons the fed is expected to press pause on rate hikes. in turn helping the yuan defined china slowdown. let's discuss this with head of

u.s. rate strategy. great to have you with us. we have to be that we have heard more and more fed officials talk about this economic slowdown in china, including one of the most hawkish in the fed. could this really be what prompts the fed to be a little bit more cautious going forward? >> there have been a lot of things that changed dramatically over the course of the last six or eight weeks. there has been a shift in the equity market, which has increased the tight conditions within the financial conditions tightening index. for that reason i think the fed is going to be content to take a step back, take a look at what going on with the global economy, and from that point decide whether or not they can to deliver another two or three quarter-point rate -- corner point rate hike. >> we are seeing more and more signals from the global economy that we could be seeing a

slowdown this year. to deliver another two or three quarter-point ratethis ga, showing the composite leading indicator taking down since the start of 2018, also falling again in november. how big are the risks of the economic slowdown being a hard landing? think it's a really big risk, and i think that's one the fed is most concerned about. we see not only in the shape of the yield curve and a lot of different indicators, but the fact is a lot of central banks globally have a poor track record of engineering a soft landing. they want to keep hiking until something so obviously breaks that they need to stop. yieldhave seen the peggy -- is that on be a result of if the fed pauses financial condition sufficiently enough? >> i think occurred with broader fundamentals and the probability that the fed was going to reach

their -- what at the time was freeport -- 3.4% funds target. that's off the table because of what has happened with risk assets, and that's a function of the trade war. it's the function of a very old amateur expansion, it doesn't matter, because the fed needs to respond to the economic realities. >> how much does the balance sheet runoff pay into that play into this? is it as boring as watching paint dry? >> one thing we can say with a fair amount of certainty is it does change the amount the treasury of -- treasury department does have to borrow. that does play out with a lot of front end credit spreads, whether it is commercial paper reductionre just the issue have seen. >> we have seen some steepening of the curve. what is the most probable not

inversion scenario out there? >> if the fed stops hiking, the curve will receive income and that's how you get a steeper curve back in the market. the curve flattening has owes the long to the fed. if they want to stop it, they can sibley stop hiking. i would add that 2019, the big trade for this year in treasury space is going to be timing the re-steepening. not? invert first or i really think that's the open question right now. >> the fed has vowed to be more data dependent. really not much. >> i think the fed is going to find themselves in a difficult position if the shutdown continues for a few more weeks. actually they suggested they may have a ratings problem issue for the u.s. government if the shutdown goes past the first of march.

that seems to be a pretty clear line in the sand. i think the administration has a lot of issues at the moment. >> i don't really know what's changed so much between the fed in december and now. it feels like it's change significantly. out --f people calling saying, you've changed your tune. >> the only thing that really whiched from the point in 10 year yields peaked to where we are now is the equity market. saided to a large extent you hit the point where we are starting to get nervous, we are going to take back and possibly back. >> i found the dollar smile interesting. great,t going to be either in which case the dollar can continue to underperform. >> i would think chop around is a general test shop around is a

general theme. while it's going on in europe and their slowdown starts to take hold, i think you could see dollar outperformance, which would contemplate the issues for the fed, we would then risk in putting deflation rather than the inflation we are looking for. >> what could eat -- what could introduce upside risks? thinghink the biggest right now would be the end of the trade war, some type of stabilization and equity markets that rebound in oil prices. i think all of this would point to some significant upside for the global economy. again it's just the reduction of uncertainty. with the vote tomorrow and everything it's on the table, i do think a reduction of uncertainty is the next trade. >> always great having you with us. get a roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb on your terminals.

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♪ >> this is daybreak asia. let's get a check of the latest business headlines. alibaba fell after the wall street journal said the company has seen growth slowing in china this year. the paper cites president michael evidence, who says here means confident in china's consumer secular. evans knows some troubling headwinds, but insists china's future continues to look good. the top analysts say the worst is yet to come after the stocks suffered its most painful quarter in a decade. tsmc will struggle to fill the whole left by apple's decline in countrynd has told the

to repair for the first annual profit drop in eight years. a downturn is expected after they cut their revenue outlook paid a >> china's top oil refiners said to have one cabinet approval for lifting his retail unit. we are told there clear of the final regulatory hurdle and aims to offer shares in hong kong before the end of the year. the marketing has about 36,000 fuel stations and will need about 40,000 convenience stores and may seek to raise about 5 billion u.s. dollars, less than the 10 billion in 2016. brenner should reach the same conclusion and remove ms chairman and ceo. of the investigation into an alleged financial fund with his french partner, and hopes they will reach the same conclusion. he has been held in jail since then. down to thatng

though taking place in the house of commerce, theresa may facing an uphill battle to push her brexit deal through. she didn't have the numbers in december. she's going back again for a second go. jake corbin has said he will call for a vote of no-confidence. you are looking at live pictures of that debate, taking place at westminster. there's a pretty interesting story. it saying theresa will force a second vote on the brexit deal, even if she faces defeat because people claiming the german chancellor angela merkel will offer potentially more concession. >> the first vote is shut down, which is widely expected. suggesting the eu could grant extra confession once this deal that they've worked on for two years is shut down. leader corbyn has indicated his party will also be ready to call

i no-confidence vote within days if this deal is shutdown. join us for special coverage in parliament live from westminster, starting at 6 a.m. london time, 2 p.m. hong kong. this is bloomberg. . this is bloomberg.

>> you are watching daybreak asia come on paul allen with the first word news. airports have closed terminals and services. houston partially shut down after security screeners joined other workers in missing paychecks. the terminal handles united express, a branch of united airlines. president trump has dismissed a plan by lindsey graham to reopen the government and discuss the border wall. indian inflation eased to a 18 month low. the r.b.i. may switch to an easing policy next month. consumer prices rose 2.2% in december from a year earlier.

the third straight monthly moderation and in one with the bloomberg survey. this is the final reading before the r.b.i.'s monetary policy .eeting a canadian man has been sentenced to death in china for drug trafficking after a one-day trial. at hiswas given 15 years initial trial last month, but his sentence was increased on appeal. the verdict raises repeats and strained relations. to other countries are made in custody in china while the while a cao is remained in custody. more -- powered by more than three 700 journalists and analysts. i'm paul allen, this is bloomberg. >> thank you. fears of an economic slowdown after china is weak trade numbers really weighed on u.s. markets. frank highert the while weighing on the aussie dollars. so with a check of feels really and markets. >> aussie shares are easing

earlier gains. a two-dayhange after drop. communication and material stocks are under pressure. check out the aussie dollar stabilizing following a decline on this, comes comments. -- trump's comments. the chinese trade slump, that is a bad signal for the aussie dollar. it dies as much is 15.3%. this after the company accepted a revised takeover offer that values the educational service provider and $1.5 billion. gaining ground after reaffirming the acquisition and investment business. off by 5.25%. this after announcing the

resignation of cfo, who has been named to the role at adelaide bryson. under pressure after being goldmaned to sell it and expectation that iron ore prices will fall to $60 in the second quarter. haidi: citigroup firing the staffing gun pit shares rising on 4%, trading venue across the venue, falling 21% in the fourth quarter. >> we of course saw a chunk of the trading come from a trade in asia. what happened there area >> citigroup made a loan to an asian hedge fund. they lost about 200 million. bloomberg reported $180 million on this loan. fixed income trading is a bit of a misnomer, and that includes foreign exchange. they required citigroup to change up the entire fx prime brokerage.

loss,aid without that fixed income trading losses would have been in the mid single digits, midteens rather than the 21% we have seen. >> we heard from the cfo, and he was ruthlessly optimistic when it comes to the bears trading environment. what is he believed that? investors clearly bought that sentiment as well. >> shares are up today, even though they had this huge trading loss. the fixed income volatility we saw on the fourth quarter, usually that's a good thing. trade off of volatility. results are so volatile during that quarter that hedge fund stopped trading entirely for a while. will see the same commentary from the banks reporting tomorrow and wednesday. >> some pessimism in this industry and really not helping those headlines coming from deutsche bank. >> today was a pretty good day for citigroup and deutsche bank. it has been really rough. shares have really fallen,

bonuses are down 10%. intensifying talks with their rival commerzbank. think about strategic options and what point you need is there may need to be asset sales. >> goldman is going to be interesting. are we expecting any commentary if the executive stumper get on head on, then the analysts can ask. amount up to $5 billion, maybe a little less. they are going to want to see if there are any impact on the current business. >> thank you so much. to detroit, and while it may be called the north american international auto show, china is playing a central role this year with details on what american executives are saying about competition. >> one side of things, we know the future is bigger, especially with the shift from the small

sedan to the suvs and the pickups. the executive chair of ford is saying big is not just one thing, the future is also electric. the parisommitted to climate accord, unlike u.s. president trump. part of it has to be electric vehicles in the equation. future economy and their mission requirements, like a vacation makes most sense, regard us of where you are in the world. china has committed to it and is going full force. they may be much earlier adopters than the u.s., but that's ok, i don't think we're going to have a total bifurcation. that, ford has said the earmarked $15 billion going towards electrified come as always driverless cars in the coming years. this terminal you library chart.

i brought it up before, in the year 2020 through 2022, we are expecting china's percentage of all in the world is going to ev's in the world will top 50%. this does make sense for ford as they continue to try to get market share, especially in the world's fastest-growing economy here in asia. are also restructuring plans happening. not just on china, there are focusing on volkswagen and a possible partnership. the ceo is basically saying they have to do this. because there's going to be a change in the old and the new, and they don't have to sell the brand. there is the high cost of competition and they have to make things to scale.

volkswagen ceo saying even though sales have been falling. >> we know the narrative we have been talking about the past several months and years. it's a bit of a head scratcher. we know the decline in auto sales and car sales is happening. it does make sense. steve carlisle did say if folks are leaving, if everyone leaves the there's actually opportunity if you stay in the game. >> we are launching the facade, as you know. 1.9 million vehicles. vehicles's entire car markets in many countries. of sedans, weory are a german engineering company. to it. to stick yes the market is tight, yes it's declining, but we think there's good opportunity there. >> blue folks -- volkswagen ceo there. he did point out the fact that the whole entire stock -- whole

and entire market, 4 million cars pit he compare that to the german market. german cargnore the market. you can't nor this massive sector still even though it's on the decline. >> bill be the last one standing when you get the market shares. ofnk you, with a wrapup what's going on in the choice. up next, it's been a difficult december, investors are turning positive when it comes to the junk bond market. buy?w the time to

♪ this is daybreak asia. >> investors are turning more credite on global markets, which revised recommendations falling december selloffs. how quickly as the turnaround in the conditions that brought on the credit carnage? kong.get more from hong

>> more forecasters are expecting a bounceback and morganmarkets did stanley joins blackrock interning bullish after the worst year in a decade spreads tariffs to the highest level in five years. morgan stanley did not see any further widening as he sees widening by 25 basis points by the end of 2019. check out u.s. high-yield bonds. after a brutal fourth quarter. spreads tightening across ratings. so a word of caution for any rally junk bonds. and he says stay clear of junk notes. over in the european yield haidi -- european high-yield corner. breather with spreads widening again. more volatility may be ahead with the upcoming brexit vote

and u.k. parliament. that may test the strength of the issuance market after a rocky 2018. >> let's get more these global credit markets. we are joined by martin horn, global head of high-yield investment. class,annot every asset activity is really key here. >> this is not the time to mass-market in any shape or form. commentatorsmost would observe is some of the market action on pricing, we saw in the final quarter of last year was totally overdone in the credit markets. fundamentalshe conditions we find ourselves in. you have to remind yourself that the default rates and europe are still mucking about 1%, in the u.s. it is one to 2%. the dynamics we saw the end of last year actually priced in

fold regimes that we saw in the post-lehman's. period --lehman's .ost-lehman's period >> market usually fall between where sentiment lies. everything is perfect. what are you liking at the moment. >> your summary is absolutely right. our base analysis is that markets are terrible pricing risks. where we center our investment bonds to underpin a lot of our portfolios. we think the secure bond market in particular is totally undervalued by a bond market that tracts plus or minus two and index. we take a total return view.

the bond market does not appreciate the value of having asset security backing your positions. you have all the assets of a business that you pledge under your bond contract. and you're opening position tends to be that you are twice covered by the shares pledged to you. or when you initially lend that piece of debt. involved in the secured and unsecured market. the secured paper is a valuable asset to have. uncertain about the default regime going forward. >> stock market regain a bit of their footing. really falling in january.

there's the risk of more volatility coming up. how will the risks play out in the treasury markets? we do see more volatility and yield. >> it's a massive opportunity. around the fact that these markets are illogical and they don't price these assets well. i think it's reasonable when you think about the sheer number of to think thats volatility is going to be a theme of the financial markets. there's a point where spreads go so wide. at that point you tend to find credit markets snapped back very quickly. i pick that particular point of interest for us, you look at europe, you look at single be spreads.

it's roughly the same level where they high-yield market drops out. a point where investors will ignore volatility context. i'll take a position and they will overcome there inside he about the wider headlines. that. be approaching i think it's reasonable for you guys to assume the volatility is going to be a theme for the financial markets. >> what about the brexit disruptions? there could be some real opportunity there. we are expecting this bill to be voted down on tuesday. how important is it to stress currency valuation, especially when we could see a big hit on the pound? >> i think you are absolutely right. through,l won't get and the market is largely expecting that, but it's what comes after is the important

thing. if we take a big step back again for the headlines, most trade disputes, which heard both sides, get resolved in a relatively short period of time. there are reasons why germans will want to continue to go out east and the u.k.. regardless of what scenario you pick, i think this is a debt-term destruction disruption rather than something fundamental on the global stage we should be focused on. devaluationearnings , i imagine we will get some. beeny team, we have looking at sterling assets since before the original vote in 2016. before that vote we lined up a series of names that we really liked, that we've seen how they treated to lehman's, how they treated through the sovereign -- sovereign debt crisis.

opportunity only lasted about three weeks. we had the same discussion last week, where we lined up names that we thought were recession resilient, and we are zooming -- we are assuming sterling will get hit. there's enough debt to that really goodyou have assets come understanding pricing tends to be top-down driven. that's the point where bottom-up selectors should earn their management piece and demonstrate investors and do their job properly. >> finally, emerging markets come in terms of the space, are you getting the reward at this point that makes it impractical to get in this year? >> i think when you talk about volatility, the em market, the em volatility class, if you like. we need to see a premium come out of the em market, to really have conviction.

one of the problems is it means so many things. economy isan different from the south african economy, different from the turkish economy. what we are trying to do, we pick the spot you really like. you get the premium that rewards you for investing in jurisdictions. >> we go back to selectivity, don't we. appreciate your time. head of global high-yield investments in hong kong. let's take a look at some of the over on bloomberg.com. president set a month ago he would gladly take the blame for a government shutdown over his wall. he is getting that blame. users reading about city, hope and the worst is over. >> you can follow the fight in -- every yearus

people toss and $1.7 million. >> we should go there and get rich. this is bloomberg.

ballot get you a quick check on the latest business headlines. the carrier says it's done all just do line it does come without approval of the faa for senate flights over water. southwest had expected to begin

selling tickets for hawaii late last year at the start of the service this quarter. there is no new timetable. says that pg&e bankruptcy is the only viable option in the face of forcing finances and potential fines linked to last year's wildfires. the country had been in talk with state policymakers and lawsuits say credit downgrade stroke of the capital markets. ups he notices expect the file for chapter 11 protection later this month. streaming service is investigation in norway under allegations to listen to the numbers. it follows a series of reports and local media that they have been placing the figures around artists such as beyonce and kanye. denying they are under suspicion or have been charged. trading and south korea as of the hour. japan coming back from holidays

here. >> japanese markets will be playing catch-up after a three-day weekend. nikkei futures the ring -- nikkei futures facing weakness. the potential threat to get these equities as we are seeing the money supply growth tick up. when it comes to what we are watching and japan, investors are ticking of earnings through names like cosmo, pharma. when it comes to the trading session, it could resume games that resume gains. -- resume gains. 130 top executives, including .amsung chairman keeping an eye on the sun. this amid the decision that could come as soon as tuesday in japan. honda may be on the move on the nikkei report that the automaker will face the target.

that is a similar level to the previous year saying it will have focus. the u.s. china trade dispute is the biggest risk of 2019. that is knows supplies, given how 2019 given those trade talks. and nikkei chairman interview says the company plans to spend more than ¥100 billion or even $104 million a year over the next decade. looking at three generations ahead instead of two. as a introduction of 5g. >> the chinese slowdown continuing to be the reverberating theme across asian markets as well is what drove s&p stocks lower for a second straight session. take a look at the aussie

session. we are looking pretty flat at the moment. a 10th of 1%. we are seeing materials lower. they are taking a bit of a beating given this shrinkage. we are talking about earlier. >> especially with a stronger thenese yen, concerns over economic slowdown after chinese trade data, not to mention week data out of europe as well. coming up on the next hour of daybreak asia, global investors, global strategist, and we will be discussing how this trade in tech cold war could affect sentiment that he says many markets have more than discounted those fears. we will discuss this -- discuss. this is bloomberg. ♪

place, the xfinity xfi gateway. and it's strengthened by xfi pods, which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything.

leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. haidi: i am haidi stroud-watts. shery: i am shery ahn. sophie: hello from hong kong. i am sophie kamaruddin. we will bring to market moving news from across asia. >> our top stories this tuesday, asian markets facing a muted day as investors await the brexit vote. theresa may seeking support of labor. investors are weighing up the trade from-- weak china. the economy is under increasing pressure. shery: the car world is in

detroit. warnings of doom and gloom. china is playing a leading role at the show this year. slowdown in the auto industry. one of the growing concerns across the world as we see the weak chinese trade data and weak data out of your. sophie kamaruddin with the latest. growth with the global worries, stops looks set to remain under pressure here. stocks in japan lower by .5% after rising 4% last week to snap a five-week decline, so weakness once more. there could be pressure on japanese equities as we are seeing money supply growth slow. we're taking a look at what is kospi.n with the we have it gaining ground, up .2%. stocks in sydney gaining ground up .2% as well. we could see a rise for the with discretionary and energy shares leading gains along with financials. to check in on sterling, trade looking choppy after the

1.29ncy breached overnight, holding near a two high, but volatility is searching as traders are concerned theresa may steel -- holding near to a high, but volatility is surging as traders are concerned. economy is facing increasing downward pressures. state media say he told the state council the government aims to maintain a stable economy and improve the business environment but insisted he will not authorize a flood of stimulus. the meeting discussed the work report that will be submitted to the national people's congress in march. .u.tish and the you -- e diplomats working on the ascension that brexit will be delayed. the assumption- that brexit will be delayed. the brexit deal heads for a

widely-expected defeat. they are demanding a snapelection if made's deal -- a snap election if may's deal failed. >> a botched withdrawal deal with nothing more than a vague outline for what our future relationship with the e.u. will be. the government is in disarray. it is clear. if the prime minister's deal is rejected tomorrow, it is time for a general election. it is time for a new government! >> the fallout from the u.s. government shutdown has seen airports closed terminals and services through lack of staff. downon partially shut after security screeners joined the workers in missing paychecks. the terminal handles a branch of united airlines. president trump has dismissed the plan by lindsey graham to reopen the government and discuss his border wall. eased to an 18n

month low, increasing the chance the r.b.i. may switch to anything policy next month -- an easing policy next month. straight monthly moderation in line with a bloomberg survey. it is the final reading before the committee meets to decide on rates next month. 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 stephen engle. this is bloomberg. haidi: thank you. the chinese premier says downward pressures on the economy have increased, but he ruled out the -- old stimulus. shery: tom mackenzie joins us from beijing. tom, so what exactly did he say? keqiang saying they were going to open up the gots on a on -- spi

flood of stimulus even as pressures increase. he said he wants to see a strong foundation in the first quarter that will allow them to meet their growth targets for the year. we don't have them yet. we are expecting to get them in march. most economists expect targets of around 6% level. for your growth will probably come in at around 6.2%. full-yearents are -- growth will probably come in at around 6.2%. put those together, the worst since 2016 alongside the pmi contraption that we have seen, the falling or the weak consumer sentiment, the falling factory gate prices, the major data points seem to be pointing down in china, adding to that pressure for additional policy stance or stimulus at least. we are looking to some of the meetings taking place in beijing

to see if policymakers are going to outline additional measures even if you do not get the flood of stimulus that premier li keqiang was talking about. you have the finance ministry and the state planning body. we will be paying attention to those. additional data points. the aggregate financing data is expected out today. you saw -- we got a terminal chart that shows this. stimulus is lower. despite some easing from policy makers in june, starting from june of last year, there was a view that money supply is going to soft and again -- soften again for the month of december and that does not bode well for credit going to businesses. we will be looking for that data when it comes out and it should give us a clearer picture of the credit scenarios and how much pressure corporate china is under as well as households. we will be getting new u.n. those at -- yuan loans as well. shery: does it at least create pressure that a resolution

sooner rather than later would be preferable? tom: there is certainly a sense now that it is adding pressure for the chinese side to ensure they hammer out some kind of deal even if it is not that consequential long-term deal that some have been looking for before march 2, when of course the u.s. has said additional put in could be place. oxford says they will put pressure to ensure those additional tariffs. the likes of citigroup saying and you big deal between the u.s. and china by march 1, march 2, is unlikely given the differences in the structural changes the u.s. side wants to see implemented here in china. on the other side, the u.s. is under pressure with markets not performing well. trump has been saying that trump wants to see a deal to ensure markets get a bit of a boost. both sides have reasons for

trying to strike some kind of deal even as major differences do persist. we are going to get a central committee meeting, of around 200 of china's top leaders, this weekend, where we may get more details of how china is repositioning itself for these trade discussions. we have the vice premier expected to be in washington to continue these discussions with robert lighthizer. tom mackenzie coming to us from beijing was a look ahead at what to expect when it comes to these trade negotiations. in the meantime, concerns about chinese and global growth is not sitting well with investors. asian stocks set to remain under pressure after u.s. stocks were lackluster overnight and the reaction to the china trade numbers. neil dwane joins us now from allianz global investors. great to have you. this feeds into the bearishness over the local economy, what it looks like to play 19. add on top of that the in 2019.ty -- light

add on top of that the uncertainty. a pretty optimistic start with the rebound earlier this year. that is a fair summary, although i would not position in quite so consciously from an asian perspective because i think the underperformance last year and the underperformance in the last decade would suggest asian investors and european investors have priced for a much more difficult environment, and it is really only the exuberance of the u.s. and particularly the tech sector that has allowed them to perform so strongly. the world is preoccupied with trade, but i do not think this trade deal, even if there is one, will really make a big difference. i think you're right to focus on the tech supply chain. america and china start to go head-to-head across tech industries like ai in the next 10 to 20 years. haidi: we have talked a lot about activity.

you would not want to be anything but selective. in terms of what you were saying about how really within the u.s., we are playing catch-up in terms of the losses, asian of us here have been looking at the deteriorating conditions in china and the impact on asian supply chains from the trade war. in terms of being selective, what are you looking at that would be favorable and maybe even hedge in asia? the whole mood of asia springs from china, so you're opening comments focusing on china i think are absolutely right. we think we see china as rebalancing and deleveraging. this is a process president xi cannot afford to change. he knows come on mike italians, that he has a debt problem and he will seek -- unlike the italians, he has a debt problem. he will try to be as accommodating as he can. the key message is that china is growing, rebalancing. even the chinese have fallen out

of love with their own market. one place i would be looking is across the china h and a share markets to offer sustainable dividend yields. be, anda good place to the halo effect into the rest of asia will come over time as people realize that china probably is not falling into a recession. shery: what about the political uncertainties we do have in the elections in may? do local political uncertainties in asia play a part here? neil: i think they do. i think we have seen some concerns over what i call the twin deficit problems, countries that have been having a budget deficit and current account deficit, of which indonesia and india are two. 2019,k as we looking to prime minister modi is probably going to fight on reasonably strong round. they would like to see him -- strong grounds. they would like to see him reelected. that causes problems for

optimism in indonesia. we can be optimistic on the indonesian elections. thee is a lot of -- structural reform will continue to unfold during 2019. haidi: i want to get some clarification on your thoughts on domestic chinese markets because we did have china announcing they are doubling the quarter. that was the only way foreign investors could get access to domestic chinese investment. you have the stock connect, bond connect. it has been muted across the board. we have been looking at these numbers when it comes to stock volume turnovers and we are seeing a 10th of what the average owner of a -- average turnover would be. do you see a pickup? neil: we do because we fundamentally leave china is trying to open up and we think, clearly, president xi has a lot of issues on his plate, not only the trade war, but the rebalancing. to one of your earlier comments, we would expect to see further

fiscal reform to try and boost the take-home pay of many of the chinese society. we would also see some property taxes and reform come through that maybe will help stabilize some of the more expensive property markets, so we think it is very much steady as she goes, but when we look at the political environment in china relative to, say, you know, what is going on in brexit, europe, or the shutdown in the u.s., we don't think china looks anyway near as political disarray as some of the other markets at this time. the opening up of these markets i think is a clear sign the chinese have no intention of devaluing the renminbi. they are trying to make sure international investors know they are serious about the credibility of the currency. shery: in the u.s., we have seen valuations drop around the levels of the bull market. the ctv chart on the bloomberg showing the s&p 500 is around 15 times forward earnings. could this lure investors back

into the u.s. market away from those emerging markets like china? neil: i think, on similar measures, i think emerging markets, not specifically china, around somewhere between 12 and 13 times. they are trading on nearly a 20% discount. the way i would calibrate the u.s. equity market is we have probably seen peak earnings growth, q3 last year. we are going to see solid earnings growth in the q4 numbers. we are already seeing high level of warnings for 2019 and obviously, although people are not forecasting a recession in either china or the u.s. or the world for 2019, people are much more nervous of a u.s. recession in 2020. in which case, you're paying 15 times earnings for, what? declining earnings in the next couple of years? normally, in a recession, the u.s. trades on 10 to 12 times earnings. there is quite a lot of valuation risk.

if i was nimble, i might buy some stocks that have been sold off quite aggressively. if i like the fundamentals. you are looking for good shorter-term dividend income, you have got to come to asia and europe for that from the equity markets. shery: very interesting. neil dwane, global strategist at allianz global investors. still ahead, we will look at the market in china. an exclusive interview with the executive president of hello bike. haidi: theresa may appealing to lawmakers to back her brexit deal. all signs are pointing towards a heavy defeat. we will take a look at the implications ahead of that house of commons vote. this is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn. haidi: i'm haidi stroud-watts in . the brexit deal had to a widely

expected defeat. guy johnson has a look at what to look out for. guy: theresa may's brexit deal goes in front of parliament at 7:00 p.m. tonight. just about everybody expects it to fail. the question is, by how much? if it is less than 100 votes, it's possible theresa may will come back with a slightly tweaked deal and put it to parliament again. if it is more than 100 votes, then this deal is probably dead, and then we are dealing with a whole different set of circumstances. it is possible that the opposition party will call a vote of no-confidence and win it. if that were to happen, there would be a general election. if it fails, it's possible the labour party he would push for a second referendum. many in the house of commons seem to be moving in that direction, deciding if politics cannot decide, maybe the people should. what we may see is a series of indicative votes, a testing of the waters scenario where basically, mp's will vote on a

series of outcomes, a norway option, i.e. staying close to the european union, a no deal brexit, or a second referendum. all of these may be tried in the next few days. dealber, if theresa may's does fail, she has a chance to come back with a plan b. we will wait and see what the outcome ultimately looks like, but it is likely to be a very for britishours politics. guy johnson, bloomberg london. sure to join us on bloomberg for special coverage leading up to the brexit vote in from.k. parliament, live westminster, starting at 6:00 a.m. in london. let's get back to allianz global strategist, neil dwane. thank you so much for sticking around. what is your base case scenario for how this brexit post goes -- vote goes? neil: unfortunately, that is a very good question, and i think,

prior to what happened last week, our case was that there would actually be some type of withdrawal agreement. it's unfortunately clear, as your colleague has highlighted, this deal that theresa may has negotiated, won't pass the house of parliament. she does not have a plan b. the house of parliament cannot agree on a plan b. we would say it is unlikely that there will be a general election , and therefore, the central case at the moment is likely to be a no deal brexit, but where i would differ from guy is i think there is no incentive for the european union to see an extension of article 50 or to offer anything else. they also do not want the british voting in the may parliamentary elections, which will happen to decide the new european parliament. so i think we are increasingly reaching the point where, unfortunately, the divisions in the u.k. are so clear between remaining and leaving, that it

is hard to see that we are going to make any progress. we remain in constitutionally uncertain times in the u.k. shery: despite all of the chaos surrounding brexit, we have seen smaller stocks within the u.k. perform better. this gtv chart showing the ftse 250, which includes mid-caps, there are performance -- their outperformance. stocks seem to be doing pretty well despite the pound continuing to slide? opportunities in certain sectors in the british stock market despite all of this messy, messy brexit situation? neil: i think the first thing i would say is i think sterling itself is very attractively valued on any fundamental economic grounds, and therefore, i think the recent rally that we have been seeing is the fact that i think the markets are beginning to feel that we are reaching a political pressure point where europe and the u.k.

will come to some type of arrangement. i would therefore say that i think, in answer to one of your earlier questions in the first segment, where would one be looking to take risks? increasingly, a lot of international investors have sold out of the u.k., sold out of the pound, and therefore, what you have seen is the bigger stocks, the ftse 100 has taken the hit, and that has left a lot of the smaller cap stocks performing relatively well, because irony of the situation of the moment is, despite all of the political uncertainty we are seeing in the u.k. over the last year or so, the economy is doing better than most of the economies in europe, which puts into some reflection the reliance that europe has on the global economic growth, which as we discussed, has been flowing quite rapidly. haidi: given how protracted this been, of uncertainty has it is not surprising that a lot of investors have gotten out. a lot of it has been priced in. i am wondering if it is all

being priced in right. i want to bring up this gtv chart, "how cheap is cheap enough?" we have seen no brexit may not be fully priced in yet. u.k. relative valuations hitting an eight year low earlier last year. you take a look at that low hit that in 2010, but the thing is, is that discount, which is not far from the decade average, is that enough? were -- does that go does that goor -- or does that go forward? bit like two, a years ago, one of the last times i was in hong kong, and the u.k. market collapsed on that morning, one could argue there is an off a lot of bad news put into the u.k. market. many international investors have marked the u.k. as too difficult. have hedgedestors the currency, so i am wondering who is left to sell it.

increasingly, we are seeing momentum building inside the u.k.. m&a, i would expect to see poverty assets as well as corporate assets bid for by international companies who want a piece of the fifth-largest global economy. so i am reasonably optimistic that any clearance of the brexit uncertainty, whether it is even a no deal, which everyone calls a crashing -- i am not sure it will end up being that bad -- would clear the uncertainty and allow the u.k. to move forward. so i think there is a lot to play for here from a u.k. perspective. as a quasi-contrarian position, i think the u.k. is cheap enough for clients to be looking at it. it has big dividend yields, international corporate companies, so if you're going to take a bit of risk, maybe take some on fashionably trillion risk in the u.k. .> not entirely uninvestable we will leave it on the quasi-missed it time.

neil dwane. we count down to that -- that-missed it tone -- was optimistic tone. neil dwane. this is bloomberg. ♪

>> a quick check of the latest business flash headlines this hour. the company sees growth slowing in china this year. michael evans says he remains confident in china's consumer center but admits it is a market that will require patience. he says china's future continues to look good. shery: nissan's boss says samelt should reach the conclusion on carlos ghosn and remove him as chairman and ceo. with his french

partner and he hopes renault's directors reach the same conclusion at the nissan board. ghosn was arrested on november 19 and has been held in jail since then. coming up next, we will talk about inflation in india. this is bloomberg. ♪

>> i am stephen engle with the first word news. the leading oil producers will meet in march to assess output strategy ahead of a policy decision a month later. the body that oversees the implementation of supply curbs will convene before oil ministers gather in vienna in april. the so-called opec plus group of producers have cut output by millionn one barrels per day. saudi arabia says more action will be taken if necessary. citigroup has offered some hope that the worst is over for its bond trading business after the toughest quarter for the unit in seven years. the lender's shares jumped the the s&p 500 after the cfo said the trading environment was starting to improve this

month here at they reported a 21% plunge in fourth-quarter trading revenue as markets kept clients on the sidelines. a canadian man has been sentenced to death in china for drug trafficking after a one-day trial. robert was given 15 years at his initial trial last month but his sentence was increased on appeal. the verdict raises the heat in strained transpacific relations. two other canadians remain in custody in china while the huawei cfo -- 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 stephen engle. this is bloomberg. haidi: let's take a look at how asian markets are shaping up this morning. we have been sticking to a few people about this idea that asian markets priced in the slowdown in china. that does make sense when you take a look at the moderate reaction we see so far today. sophie: we have the mood turning a touch positive.

japan joining region all gains up .1%. the nikkei 225 building on last week's 4% advance, led higher by financials, health care, and tech. the kospi leading regional gains afterume the events friday's decline. take a look at currencies broadly higher against the dollar while the yen holds gains at low levels. there was a drop of we saw in aussie imports to china for the month of december. and the cnh trading below 6.76 as analysts see more games to addsfor the yuan, which pressure for beijing to trade with the u.s.. stop movers across the region. we have this company jumping in sydney -- with the u.s. region.vers across the we have this company jumping in sydney.

the service provider at $1.5 billion. in tokyo, all of this climbing most, extending its rally as optimism seems to be building over last week's announcement of new leadership and the board shakeup. a pharmasset -- company on the back foot. this after keeping it -- a pharmacy company on the back foot. >> thank you. over to india, another drop in the inflation rate opens the door for the reserve bank to shift policy and even cut its key rate as prime minister modi gears up for a general election. haidi: kathleen hays taking a look at the latest numbers. preview trade numbers out of india for december as well. kathleen: it is looking better, down for the fifth month in a low.an 18 month many to on our are saying, look,

this gives the reserve bank of india a chance to make an important shift on policy. jump into the bloomberg library now to take a look at a chart which shows you the inflation rate, far right hand side, 2.19%. the range for inflation is 2% to 6%. 4% is the middle. it is now almost below that very wide range. above had been a heavy -- the midpoint, 4%. probably the main reason why the r.b.i. has raised rates. the will give them opportunity to cut that key rate, if they like. some are looking at bloomberg economics to a cut, 2.65%. in fact, you have somewhat lower gdp, 7% year-over-year, not as strong as it was. investment has been delayed ahead of the election in india, the general election this year. you have a global slowdown out there.

and we have a new reserve bank of india. the governor has seemed considerably more dovish, more insect with modi's government's desires. and of course, the question of the election is very important. it could only be -- how much it pleases modi and his team, who knows that the fact that there might be easing with the r.b.i. would be welcome. mr. modi is still a very popular candidate, but his: members are off the peaks that they were. numbers- his polling are off the geeks that they were. i love the story of the hindu festivals. three times as much. the government pulling out all stops i should say to make sure construction, so many things going around it. it is part of his story. money being spent ahead of the election to help mr. modi stay in power when the general election comes up.

>> we have these key trade figures coming out of india for december as well. india, then it oil importer, will help narrow the deficit with oil prices falling. kathleen: so far, so good. i have a funny little thing on my bloomberg screen. i don't know if it will bring up the chart for you or not. somethingided to put in picture mode. our able-bodied team in the control room will do it for me. it is seen narrowing. it was 16.7 billion -- the consensus is for 14.3 billion. bloomberg intelligence looking for something even narrower. that would be good news. it is following oil prices. it is other things that are a big bust. it is good for the economy and the rupee, potentially. remember when the currency was getting hit so hard? that was one of the things. wider current account deficit, not the kind of thing that what

investors want to see. it was one more thing hurting the rupee. another piece of the puzzle. in the last 24 hours, i would say it is the cpi number that is going to resonate most with investors and the reserve bank of india. haidi: all right, kathleen hays there for us ahead of the trade numbers out of india. let's turn to autos now, to detroit, where all the action is this week. it is called the north american international auto show, but china is playing a central role. they areencio has what saying across the pacific. another report saying we have seen -- ramy: first it was 20 years and then it turned out to be nearly 30 years, 28 years. with all the negativity, they are trying to figure out where they can put their money for growth, and we were talking yesterday how that money is, in large part, bigger cars, bigger

autos, suv's, hybrids, but it is also the electrification of things. our guest said the future is electric, that ford is in line with the paris climate deal, and in the future, they need to factor in ev's as part of the equation. take a listen. future fuel economy of requirement, electrification makes the most sense, but you are right. china has committed to it, and it is going full force towards it, and they may be much earlier adopters than the u.s., but that's ok. i don't think we will have a total bifurcation. it may be a time thing. ramy: i like the positivity because he is taught them about not so much competition but he is saying china can get in on the easy game and the -- ev game and the u.s. can as well. talking about the market, hopped into the bloomberg terminal because i want to show you how big the market can be,

especially with china. in 20232022, we can see, according to bloomberg -- 2020 theygh 2022, we can see are coming in under 20%. chinail 2029 to 2030, will take up at least 40%, if not more. that is one side of things. one other thing very quickly is that while they are putting in in billion into ev's autonomous vehicles, they are putting $11 billion in restructuring. there is this interim partnership happening with volkswagen and on the order of about $11 billion there. let me read you this quote i have from ceo james hackett of ford. he is talking about change with the old and with the new. they say they don't have to sell ford-branded cars but will possibly be doing this with volkswagen.

talent can be anywhere. capital can be anywhere. and of course, global reach is everywhere. weighingo had cadillac in with hopes and fears for china. what did they say? ramy: the fear that a lot of us are talking about is the u.s.-china trade issue. interestingly, steve carlisle came on the air and he said that when it came to the u.s.- china trade war, he was not concerned, in part, because they make most of their cars they sell in china, so they don't have to worry about those tariffs. let's go ahead and take a listen to a few more thoughts. steve: we would be hopeful that these trade issues find their way to the rearview mirror and all that uncertainty starts to subside, but even with that uncertainty, it is still an anonymous market with -- an enormous market with huge upside for cadillac. ramy: not only that, but when it comes to the u.s. consumer and the chinese consumer, there is a and of legacy that does drag

little bit on cadillac. but when you look at china, when you think of the last generation , they did not really think about a cadillac to begin with, so it is a very fresh -- it is very fresh and attractive. >> ramy inocencio, think is a much for that. in a moment, markets await theresa may's brexit vote. our next guest is recommending one trade. he is joining us now in the studio, next. this is bloomberg. ♪

haidi: you are watching "daybreak asia." i am haidi stroud-watts. shery: i am shery ahn. let's see how investors should be playing the range of outcomes. usnk you so much for joining today. this gtv chart on the bloomberg showing option traders positioning for the u.k. to delay its exit. this would be risk reversal, showing investors are more negative on the currency in nine months time instead of three months contracts, which would actually capture that march 29 exit date. what is your base case scenario for help brexit plays out and where do you see the pound going? >> we think in terms of the base case that theresa may's withdrawal agreement is eventually going to pass, maybe with a little bit of delay, but

not significant. there are lots of different alternatives being discussed, ranging from no deal brexit to a new referendum perhaps. but we think the probability of each of these happening is actually a bit lower than the base case of this agreement actually getting through. the question is what do we need to get there, and part of the story is more market pressure, so more pressure on the forceh pound, which will them to go along with the deal. so i think for the pound, short-term, still a bit of pain in our view, but ultimately, as you get to mars or later, we are going to get the deal done. shery: i asked you what your base case scenario was and where the pound was going, but in all seriousness, how difficult is it to make predictions for the pound when you actually have so many different potential outcomes for brexit? vassili: i think you're completely right. markets have had a hard time pricing in the path for the pound. it is a currency that has become very hard to trade, very headline driven within a given day. at it ise have looked

let's look at the pound against some of the smaller european currencies such as the region crone.nd -- norwegian that is basically playing the view that if things kind of get delayed or will not go particularly well, we think the bond will go badly, but even if they improve, there is not necessarily a reason to buy the pound, but some of the other currencies around the u k, countries around the u.k., will do better. around the u.k., countries around the u.k., will do better. that might help sentiment. haidi: it has been such a head scratcher when people say it is a binary event. it is quite clearly not. you could have a second vote on the brexit deal. you could have a second referendum. there are so many potential ways to play this. if you take a look at the economic performance of the u.k., it is not actually that bad compared to europe. does that drive a recovery in

the medium-term? vassili: that could be an interesting point. of course, the brexit deal or the lack of it is holding back a lot of factors in the u.k. the economy is clearly slowing down. nevertheless, we think that if we get over this hurdle, we actually think the bank of england might be able to create a couple of times this year, which is not priced in by the market. they have priced in rate cuts pretty much everywhere. if we do get over that hurdle, we think -- haidi: that would be currency-driven anyway, wouldn't it? is mostlynflation currency driven, but if you look at the labor market, it is relatively tight. if we do get some kind of resolution, some of the investment that has been held back might be -- haidi: we will hopefully know a little bit more in the coming hours, but we have been talking a lot about the deterioration when it comes to the china economic story. we keepof the things saying, the pboc has lots of

policy tools in their toolshed that they can use, but one of them would involve embedding letting go of their control of the currency a little bit. what are your expectations as we get this dollar weakness this year? vassili: we don't think that is a particularly likely scenario, especially in a situation where we actually think, you know, the dollar is going to be a little bit weaker overall this year. i think when we look at the sort of currency management, especially in the context of trade tensions, it seems to us that relative stability is kind of the base case here. we do think there is going to be more easing and there's going to be mainly domestically driven -- so we are watching credit, tsf, the data coming out of china. it has not translated to pick up an activity yet, but it is something we are monitoring. for us, the sea and why, if you -- the cny, if you want to be short the currency, it is more

of a hedge for a generally more risk constructive position. if you want to be more pro-risk in the global portfolio, maybe selling cnh can be a hedge. wise, thego well risk currency will just be stable. if things go badly and the dollar strengthens, maybe the hedge works in that case. shery: you agree with the bearish dollar consensus. has the market priced in the potential downside for the dollar? vassili: there are two parts of a dollars story. one is what makes the dollar stopped going up? the dollar was very strong last year. this dovish shift from the fed we have been seeing and the peak in the u.s. real rates, we think is absolutely key to preventing any dollar upside. we think the significant dollar downside will only happen when we get better growth around the world. europe, to some extent china, and we are going to start seeing those great expectations being repriced and a little bit.

that is a necessary condition for seeing a weaker dollar. shery: thank you so much for your time today. strategist,acro vassili serebriakov. ofdi: coming up, the state the bike sharing market in china. it has been a tumultuous time. we have our conversation with the cofounder of hello bike, next. this is bloomberg. ♪

haidi: this is "daybreak asia."

shery: plans myself was airline to launch flights to huayi are the latest victim -- why are the latest -- to hawaii are the latest victims of the shutdown. southwest expected to begin selling tickets late last year and to start the service this quarter. there is no timetable. haidi: china's top oil refinery is said to have won cabinet approval. sinopec has cleared the final regulatory hurdle and aims to offer shares in hong kong before the end of the year. sinopec marketing has 36,000 stations and 26,000 convenience stores. less than theise $10 billion in 2016. shery: jc's screening service is

under investigation in norway over allegations of fake numbers. it follows a series of reports in local media. norwegian artist association claims potential loss of income from the manipulation of streaming data. under --ies it is haidi: hello-bike is considering an ipo. the company says it is well-positioned to dominate the sector. the hello-bike co-founder spoke exclusively to bloomberg tom mackenzie in shanghai. been thebike has number one in this industry since 2018. it is equal to the combined rides of other competitors. we take have to market share. is your strategy for

monetizing what is essentially a capital-intensive business? >> relying on the revenue from daily rides is enough, and we have proven this. in more than 100 cities, we break even from the daily rides. tom: people started off by giving the sector with great excitement and they saw it was able to solve that last problem. and then you had pictures of mountains of bikes piling up and bike sharing companies collapsing. so you have done something you would claim right to avoid that. what is the strategy you have taken to stay above some of those issues? or twohe first one years, this industry and our industry peers developed to fast without following basic business rules. they put too many bikes into the market, which is a waste of resources. your futuree funding targets and what do you see your current valuations sitting at? in the short-term, we do not

have fundraising plans, as we are very well capitalized at the moment. if needed, perhaps in six months, we might consider a new round of fundraising. we are valued at $5 billion right now. tom: there has been some speculation that softbank might be looking to invest in your business. is that a conversation you have been having? have you at least entered into discussions with softbank? li: we had contact with softbank , but there is no substantial development or anything that gets us closer to a deal yet. and eventualo objective for the company, and if so, what kind of timeframe might we be looking at? li: we will definitely go public at the end of the day. we do not have the timetable yet. still rapidlys growing. when the time for an ipo comes, i believe our company will be valued at tens of billions of dollars, much more than it is now. shery: that was our exclusive interview with hello-bike

co-founder li kaizhu. let's get back to sophie kamaruddin in hong kong with the markets. we have been discussing throughout our program the slowdown in the auto industry. how are chinese automakers doing now? fall with did see byd other carmakers. we could see moves as we are getting more talk of government led stimulus perhaps on the horizon, given the forecast for 2019. car sales are looking dim indeed. goldman seeing sales dropping 7% after chinese car sales fell for the first time in 2018, so watch this space. we are watching tsmc, as analysts put it more pain ahead. bernstein telling clients to prepare for the first annual profit drop in eight years when tsmc reports results on thursday. kuala lumpur, we are keeping an company.ildings it has identified assets for sale and it is reviewing its cost as part of the company'

transformations as they are embroiled in a lawsuit with the former chairman and management. a new ceo may be announced in the next few days according to the chairman's letter. haidi: before we hand over to "bloomberg markets: asia," let's take a look at how markets are trading. we are seeing positivity across asian markets. ,he nikkei 225 seeing gains modestly, as japan comes back online after the public holiday yesterday. shery: really surprising given the negative signals we saw from wall street. take a look at asia. .1%.es down taiwan and kuala lumpur looking positive. this is bloomberg. ♪

>> 9:00 a.m. in hong kong and shanghai. welcome to bloomberg markets. >> markets across the asia pacific facing a muted session awaiting the brexit vote. theresa may talking about labor demands. week trade data from china as the economy is under pressure. >> putting the pedal down. as one of the largest sharing companies faces collapse, we have an interview with a chinese startup.