paul: good morning. i'm paul allen and sydney. we are underarm power away from -- we are under an hour away from the market open in sydney. sophie: i'm sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: the top stories we are covering in the next hour -- a resolution for a rally. afterfutures signal gains tech lead markets higher. pressure mounts on australian

prime minister as anger grows over his handling of the bushfire crisis. carlos ghosn says he masterminded his own escape plan, denying any help from his family. shery: let's take a look at how markets closed the first trading session of the year in the u.s. in threeumped the most weeks with major indices closing at record highs, adding to the year and momentum. intove the s&p 500 further overwrought territory. index industrials and tech rallying, apple topping $300 for the first time ever. the nasdaq rallying 1.3%. a really interesting day because it was a rally for everything. we saw even safe havens gaining ground. by .1%.ures was higher let's turn to sophie for what to watch. sophie: after a strong session

on wall street, stocks gained .2%. -- and amz. checking in on the aussie dollar, we are seeing losses for a third session, retreating from a five-month high while aussie bonds are on the up, pushing 10-year yields back around 1.3%. tracking the moves we saw in treasury, which flipped aboard, checking in where we ended the session. we did see full funding thursday with the front end, we saw the long and rally, sending the 10-year yield back below 1.9%. while the yen managed to hit the strongest level since mid-november, approaching its hundred-day moving average, which could pretend a movement toward 106 for the dollar-yen.

paul: let's check on first or news. viviana: we begin with carlos ghosn, he denies reports his wife and family member's helped organize his escape to lebanon. he says he put together the getaway plan on his own. it is still not clear how exactly he snuck out of the country despite round-the-clock surveillance. prosecutors began a search of his tokyo residence where he had been under house arrest. survivors of australia's bushfire crisis heckling the prime minister as he visited a town where two people were killed earlier this week. response to the disaster and refusal to take tougher action on climate change has made him the target of criticism. 18 people died in more than 1000 homes are destroyed because of the bushfire. >> downtown doesn't have a lot of money, but we have hearts of gold, mr. prime minister.

understand there are people who have lost everything and there are still some very dangerous days ahead. viviana: bloomberg has learned political reasons are behind china's temporary halt on the shanghai and london stock exchanges. we have been told the u.k. stamp on the hong kong protest is one of the issues driving the decision. parliament authorizing deploying troops to support againstadministration rival forces. the libyan government is battling militias backed by russian mercenaries. the white house and president trump spoke to roger federer one about the move. global news 24 hours a day on air and on quick take by bloomberg power but more than 2700 journalists and analysts

and more than 120 countries. this is bloomberg. the course of dollar bears is growing louder, arguing the dollar is on the downtrend. let's take a look with ruth carson. not surprising we had a terrible december for the dollar. we now have a potential trade truce, not to mention other economies rebounding. does it make sense we are going into 2020 thinking that the dollar does not have any more room to rally? ruth: absolutely. i think you're definitely on the right note. speaking to market participants around the world, everyone is sort of chiming the same tune, that the dollar likely is going on a downtrend. so-called haven support for the dollar over the u.s.two years as the warred with china on trade. now that there is a put -- not

that there is a truce and potential deal, that support is likely to wane. a second factor likely to drive the dollar ever lower is potential further rate cuts from the fed. investors around the world have flocked to the greenback because of higher treasury yields, and of the fed decides to cut again to prop up grows, we could only see the dollar edge down further from here. paul: another key factor in this is the fed. how will the fed's rate path influence performance? ruth: a big part of it, actually. a lot of people are turning their sites to what the federal reserve could indeed do next week. saw the dollar slide last year. we have images like mng for example in london saying the fed has further room to cut so they will only add further pressure on the dollar, and another big

global fund manager saying u.s. economic growth is likely to slow compared to the rest of the world, again, adding more pressure on the fed to cut. bigy: who will be the owners of a weaker dollar than? bruce: emerging-market currencies really underperformed last year and 2020. in asia, if we look to countries like india in asia, which has supported the currency quite well, but the rupee did not pick up last year, 20/20 could be when they see their fortunes reverse. paul: still to come, carlos ghosn says his family played no part in his escape. and we got an analyst's

fed outlook the year ahead. this is bloomberg. ♪

>> i think the action of the fed is really going to be what matters, if we are in an interim cut period or if there will be further cuts to come. we are in the camp where we think that from spring, the federal reserve will resume interest rate cuts. that is going to be what contrived the market. >> we think about the most in thent central bank world remains the u.s. federal reserve. the federal reserve calls the shots in terms of the liquidity aspect of the global transition market. it plays a secondary role to the

fed. onry: some of our guests bloomberg tv talking about which central bank matters most. where is the federal reserve heading on interest rates in 2020? possibly nowhere. kathleen hays is here with what is expected and why. are we talking about this indefinite hold then? kathleen: that is certainly what they signaled might happen. they, being, of course members of the federal reserve at the december meeting. let's jump right into the bloomberg. you can see what they signaled having looked at the economy, having cut rates and decided to pause. you've got 13 of 17 members of the federal open market committee saying we will end 2020 with the key rate exactly where it is at the end of 2019. only 4 saying maybe we will hike

the key rate once, so that gives you a pretty strong sense. jay powell, the fed chair, was asked a lot of questions, so we need a material change in outlook. when i spoke to the president of the dallas fed, he agreed, same kind of statement, and one of the reasons i want to bring him into the picture is because the fed is making its annual rotation of federal reserve bank members who can vote, and rob kaplan, who is considered in the middle of where the fed is, as a, he becomes a voter along with patrick harker, who is considered a bit hawkish. two other hawks stepped down from the voting team as well as

jim bullard and in fact, neel kashkari is one of the doves who will be getting a vote. bag with people saying they are all going to fall in line basically behind jay powell unless they see something really different. we get the minutes of the meeting tomorrow, friday. maybe there will be some sense there is going to be a pause, people are hoping there will be more talk about the repo market. what people have been saying since mid-september is more and more, the fed has to add more and more short-term liquidity to the bond market because repo rates at a time when they hit their highest rates since 2001,

a lot of changes, a lot of financial market reform since the crisis. at any rate, look at this. all of the liquidity we have added lately, than the qe3, quantitative easing of 2013 and 2014. we are not doing it to boost the economy. we are just trying to make sure the plumbing keeps working in the treasury market, so this will also be the focus of people looking at the minutes and anything they say about this whole standing repo facility, which is a way to technically change things for the bank to more easily get liquidity when they need it, but since people are pretty sure about this indefinite hold, they are looking a lot more at the repo market. shery: thank you so much for that. mainstays now is the capital founder, ceo, an executive strategist. as kathleen was telling us, we are seeing more calm and the

repo markets. the fed injecting more into the system, but what happens once that starts to run off? this is supposed to be temporary liquidity, no? >> it is supposed to be temporary liquidity, but look at what kathleen covered. she covered a lot of ground. it is important not only in terms of what is happening to rates or what the fed is doing, but it is important for those of us investing or me as an investment strategist because the fed has had such an impact on the financial market. it is not just about happens with interest rate policy. they could be on hold for the remainder of this year. they could be on hold until the election, which is probable. i think they try to get interest rate cuts out of the way in 2019 so they can be on hold and not seem biased either way, relative to the upcoming presidential election or elections coming later this year, but we have liquidity that is coming into to itstem, and we refer

is not q. week, but quantity of money coming into the financial system. we look at the last four months. the balance sheet for the federal reserve has expanded by 10.6%, and the stock market is measured by the s&p 500 has risen by 11 point 2%. not saying there is direct correlation, but we know where thatmoney -- repo market, money comes into the market even if it is forced to come in to fix the repo market, fix the plumbing. where it ends up is where money gets put the best. shery: the reason we saw u.s. stocks rally is understanding everywhere else in the world that would happen with the pboc injecting cash there as well. >> excellent example. what happened last night, we had the pboc in china came in and

lowered their reserve requirement for banks 2.5%. the equivalent of 800 you want, about $114 billion -- the equivalent of 800 yuan. local stocks rally. it is more money coming into the financial system around the world. about your money getting put to work, so that does raise questions about the value of what we are seeing -- are they based on strong an ongoings or supply? >> we are now above a price to earnings multiple above 18. that's getting rich. if we look at other fundamentals, we have had an earnings recession for the s&p 500, three quarters of negative earnings growth or contraction. we are looking for right now

negative earnings growth for the fourth quarter. maybe by the time all those earnings come in, we get to flat or slightly positive, but we are seeing the market continue to rise in the face of that. we saw at the introduction of , the fed in addition to these special operations repo market, they have since september $60 billion going back onto their balance sheet every month. back to q.e from qt week, but also, the ecb, 25 billion dollars per month, the bank of japan, 15 billion dollars per month. $100 billion or more going into the financial system globally every month. where does that end up? we think a lot of that finds its way to the financial markets.

paul: in some respects, it does not feel like a lot has changed since the response to the global financial crisis. i'm just wondering where this leaves the fed and other central banks in the event of another recession. >> it raises the question, and i think your question is what happens with fundamentals and valuations? do they catch up to where this money is pushing stock prices? your other question, i agree, when we do get to that next recession with as much liquidity as is going to the system with rates where they are at, the question has been asked many times, how many bullets are left in the chamber? how much ammunition do they have left to fight inflationary pressures and that's why you aboutseeing white papers our federal reserve looking at negative rates on things like that. shery: talk you little bit about the sectors in the markets.

what has been interesting in the final months of 2019 and how we saw these underperforming parts of the market, this chart on the bloomberg showing how u.s. energy stocks have rallied and actually caught up to crude prices, which has not happened since the middle of 2017. will we continue to see this sort of movement and rotation into the laggards? >> we might. if we look at where we are in this economic cycle and where we are in this bull market cycle, there has been this continuing discussion about are we really at the end of an economic cycle, or has it been a midcycle adjustment and do we keep going? we have seen some economic data that says the economy may have just been slowing down and we are starting to accelerate again. where we were looking toward a recession a few months ago, now economic data is looking better, so the question is -- what

sectors should we be looking at? technology for the secular growth story. that is still our favorite sector. when we look at energy, we are still concerned about the oil patch and oil prices. some of these sectors like utilities, we are avoiding that. we still like the growth story over some of the sectors that are more defensive for interest rate sensitive. shery: do you buy into the idea the u.s. economy is re-accelerating when we have not seen the rebound in business investment despite the fact that tariffs were delayed? >> i will tell you this -- last year when we were definitely going into recession by many, i do not believe that at all, and i'm not saying that in hindsight. we can go back and roll the tape. right now, it is this ongoing market between the labor market is doing very well, consumer is strong, but if we look at the

business side, right, if we look manufacturing,d we continue to struggle with that, but if we look at consumer and labor, those components are strong. that is the dichotomy. that is the paradox. have: what if you inflation scarce? won't the consumer get poor as well? >> the concern for the fed is if we have the inflation scare, we have the wage growth, and if we get inflation scare and they do need to raise rates to actually fight inflation, what happens to the whole idea of they continue to inject liquidity, we look at maybe an interest rate cut or what we thought might be a cut or no action on rates, they have to start raising rates. now what happens to the market? that is a real concern. i let you go, i

the to get to some of picks. you are a fan of wide margins, aren't you? >> i think so. in this environment, those companies that have a sustainable business model, that had that wide moat around them, some of the concerns we have, and those companies are doing well in an environment like this and will continue to do well. companies that had that wide moat and continue to build it, one of them is charles schwab. a company that has a wide moat built around it. they took an action recently in acquiring one of their competitors, td ameritrade. they are continuing to build business around their model and doing a good job at it. that is one example held in that etf. at.bol mo paul: thanks so much for joining

us. you can get a roundup of stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb on their terminal. also available on mobile and the bloomberg anywhere app. you can customize your settings so you're only getting news on the industries and assets that you care about. this is bloomberg. ♪

"daybreak asia." i'm shery ahn in new york. paul: and i'm paul allen in sydney. apple shares are having a sweet start to the new year, rising above $300 for the first time in stark contrast to the dismal start apple had to 2019 when it cut its sales forecast for the first time in almost 20 years. despite that, they are back. apple went on to outperform all cap tech stocks for

the year. shery: apple is releasing software to let users mirror iphone screens on the laptop, which will allow dell users to drag files from their phones directly to their pc's. dell set up a similar app for android in 2018. edance, the owner of tiktok, has submitted an application. singapore's monetary authority is offering up to five digital banks.g permits to non- if you are away from your screen, you can always find the latest newsmakers on the radio, now broadcasting live from our studio.

this is bloomberg. ♪

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>> we begin with a standoff over president trump's impeachment trial between house speaker nancy pelosi and senate majority leader mitch mcconnell. bloomberg has learned over the congressional holiday break no thetiations happened on how senate trial would be handled. ms. pelosi has delayed the articles of impeachment to the senate. she says she wants to see a "fair process" for the trial. the main contenders in the taiwanese presidential race suspending the presidential campaigns after the taiwanese headilitary officer --

military officer was killed in a helicopter crash. five people were rescued. the cause of the crash is still unknown. spain is set to finally get a new government after the asking catalanpersuaded the separatist party to help him take office. in parliament, the catalano group agreed to abstain in a confidence vote that gave sanchez the numbers needed to form a coalition government. since march, the parliament has been without a proper government. by googleto us today health, aia improved ofast-cancer identification confirmed and negative cancer cases. google is also training artificial intelligence to help determine if a patient is likely to live or die by combining

thousands of data points to help global outcomes. this is bloomberg. shery: thank you. australia markets have been trading for about half an hour. sophie: i want to check in on assurance australia group. the insurer and its latest update noted that the bushfire that started in december and looks set to continue in january will be covered by its 2019 advocat insurance protection and as of january second, iag saying it received more than 28 hundred bushfire-related claims since september with the majority related to residential properties. flipping aboard to check in on treasury futures, a solid start for u.s. debt to 2020 and u.s. stock futures climbing across the board here after the tech rallies we saw on wall street.

apple, microsoft, and alphabet hit fresh all-time highs and and southo rose korea. bloomberg intelligence thinks it could help digest higher than aerage inventory and quicken 2020 price recovery. we are keeping an eye on samsung report it didia supply panels to huawei phones. the head of the city state 's defective central banks has the burden should not fall on monetary policy alone. he told bloomberg that expectations of central banks have become unrealistic. because of what they did fabulously during the global financial crisis and subsequently in holding up the

global economy and global financial system, there is now tremendous unrealistic place that every problem we run into, monetary policy is going to get us out of it. i think that is wrong and i think it is wrong for central banks to feed that expectation. it cannot be that every threat on the horizon has to be addressed by loosening monetary policy. i think fiscal policy has a strong role to play and that has not been sufficiently addressed, partly because so much of the weight has been placed on monetary policy, so i think we need a better balance between the two. otherwise, it is exceedingly unfair on the central banking community. shery: this talk about possibly a looming global recession, singapore escaped recession, and the mbs eased monetary policy but not to the extent some people expected. what is driving some of the optimism you see perhaps in

2020? >> well, i think you always want .o keep some powder dry singapore is fortunate. we have both monetary and fiscal buffers. quite good. let's see how the data comes out over the next two quarters. the key assessment to be made is if this is bottoming out and if we are going to see a modest recovery next year. if that is the case, i think we are in pretty good shape, but if things were to take a turn for the worse, than i think you need some buffer, some ammunition, so ,e are keeping some powder dry and if necessary, we are prepared to use it. what policy tools have not been used? when you look at central banks and what they are saying, they are willing to cut rates, willing to go to zero, willing to go negative, talking about qe

. how might qe look like if you need a q. week of some form? -- qe of some form? >> singapore would not need qe. our monetary policy is based on exchange rates. you are encouraging digital banks to further the competition within the financial sector space. how much traction has there been? >> i think we can always do better. the hope is some of these players will come in with very advanced data analytics capabilities and do credit evaluation loan extensions in a much cheaper and faster way than traditional banks use to. we have seen some of these players becoming regionally important, and i think looking ahead, singapore wants to be a base for these players as they grow in the region, and that

means anchoring them here in the early stage of development and allowing them access to domestic banking markets. a timedo you envisage when there needs to be consolidation within the banking industry? father said even swedbank's are too many for the lion city. what do you think he would say about digital banks? >> not clear to me that we are aiming necessarily for consolidation. if some consolidation happens, it may not be an entirely bad thing, but one needs to be also mindful of a concentration of risk. .hree banks is not too many we have quite a diverse landscape. that wet clear to me

need to see a lot more consolidation. what we are likely to see and what we like to see -- interesting joint ventures and combinations between traditional financial services and nonfinancial players. rather than consolidation on its own which is mostly about capping costs, which i'm not sure is a paramount need for now. i think no regulator would like to see an overly concentrated banking system. that just concentrates risk too much in a few players. i think having some diversity in the banking landscape is positive. shery: let's not turn to high-stakes corporate drama. carlos ghosn is distancing his family from his mysterious escape from japan, saying his wife and other family members played no part in his getaway to lebanon.

detroit bureau chief david welch joins us now. what do we know so far about how he got to lebanon? david: this reads like a film noir movie from the 40's -- on 14,"940's or maybe "oceans just take your pick of mystery spy thrillers. we are hearing he escaped in some sort of large musical instrument box. i don't know if this was something you would ship a grand piano in or something smaller like a cello case, but that is how he got out of japan and on a plane from turkey and from there into lebanon using a french passport. apparently he had two of them. offloak and dagger, sealing across the globe in the middle of the night, pretty crazy stuff. occasionally we hear about this from some room trader in asia, former high-level well thought of executive -- occasionally we hear about this

rogueome robe trader -- trader. paul: what are the implications of nissan and renault when he starts to talk? david: that is the next shoe to drop. there are two things -- one is the lebanese government did say he entered the country legally and they have made no effort whatsoever to extradite him to japan, despite the fact that they are warning that he is on the loose, and interpol asking that organizations arrest and detain him. they are not doing that so far, so it looks like he will stay there. and what does he have on other executives? he has been saying all along that he is innocent, that there were other things going on, there was a conspiracy to pin him in because he was trying to fully emerge renault and nissan, something japanese executives opposed vociferously. what kind of conspiracies either, what kind of dirt does he have?

i think some people on both sides of that alliance are probably sweating right now, particularly in tokyo. shery: we are now seeing nissan and renault, their market cap sliding after carlos ghosn's arrest. how big a challenge does the new ceo face, given all the challenges at the company? before all this came up, there were problems in the company, particularly with nissan. they make a lot of money in the u.s. market. pickup trucks, suv's, larger vehicles, and they were really struggling, but the product line is old. they were doing too much discounting, too much selling of cheap discounts. that was hurting profits, and they were chasing these market share goals. he really wanted to overtake honda. they are going to have to retrench and rebuild the brand

and freshen up the entire product line. they are in the process of some of that stuff, but it's going to ite quite a bit of work, and is in better shape than when carlos ghosn took over the company in 1999, but it has taken some big steps back. there's a lot of work to be done that he would have had to do if he is still there, and others new team is going to have to do it amid a lot of chaos. for joining us. coming up, we will be talking equality and diversity in private equity. that's up next. this is bloomberg. ♪

shery: this is "daybreak asia." i'm shery ahn in new york. paul: i'm paul allen and sydney. time now to look at some of the people breaking barriers when it comes to equality in business. let's hear from selina wang in

beijing. i'm here with the managing partner of the fund, which manages more than $1 billion and invest in emerging technologies. thanks so much for being here with us. what stood out was the fact that the private equity industry is still largely run by men. a bloomberg analysis recently found the only 8% senior investment globally at the world's largest private equity firms are run by women. how do you view female private equityat firms? >> i think female representation is quite large. at the lot of females median level in private equity. mostly it is because a lot of women nowadays have very good education and overseas education.

also women are quite hard workers. once they get to higher level, i see fewer representation. the reason is because of the intensity of the work, the traveling schedules, and also expectations about women, once they reach a certain age they need to take more responsibilities. selina: what were the biggest challenges you faced when you started your fund? you went from a multinational port -- voting national foreign company to starting your own firm -- you went from a multinational foreign company to starting your own firm. >> when we first started the company, it was a bull market. capital was flowing everywhere in china, and in the past two years, we have seen tightening policy, and then industry

conflicts, so there are big challenges in the past few years, big changes in the past few years. i feel like one of the biggest challenges is to embrace uncertainty. i see a lot of consolidation right now. the good thing for us is we are quite clear about our goal to become a leading fund. we have conviction about our future, and we are in pretty good shape about that. the other challenge, i think, is balancing personal life with work life. selina: that is a very common theme i hear from business leaders in china, the societal pressure you face. it seems quite unique to the chinese market. what are those pressures?

>> one of the pressures is especially from parents because in china, parents are very intrusive and very worrisome. parents are always worried, when are you going to get married, when are you going to have a child. for me, they challenge has been threefold. that is why a lot of times, i have to put my priority and work. selina: overbearing chinese parents. and it totally walking around beijing, i have noticed many ads for men's skincare and makeup. tell me about your thesis behind this company. >> in today's market in china, especially young women have become more influential and have

more character in the dating market. stars are very delicate looking, male stars like to use makeup, and that influences today's chinese younger male, who also like to use cosmetics. for one, they think that makes them look good. for a second reason, they like to please their girlfriends, and they have that are market value in the dating market. growth aret kind of you seeing in the market, and is it driven by women having more financial say in the relationship? >> i think that is one of the reasons. the growth rate the past few years is 300% compounded rate. even though the market size is only about 1/10 of our female market, but the growth rate is huge.

fascinating conversation. 300% growth in men's cosmetics. i would not have guessed that. thank you very much. shery: great conversation. selina wang there in beijing. more ahead on "daybreak asia." this is bloomberg. ♪

shery: the u.s. food and drug administration is banning fruit and mint laborers that have been blamed for getting millions of children hooked on e-cigarettes. the restriction came after months of efforts to curb an epidemic of underage vaping. for more on this, we are joined by health and fda reporter gerald porter junior from washington, d.c. banning some flavors -- to what extent are we expecting this to actually prevent kids from picking up these products? gerald: it is a great question. i think it is most asked among

public health officials who are really demanding a total flavor ban that would not leave the products on the market. i think as months go on for this legislation, we will see if kids do, in fact, become attracted to menthol and tobacco flavors that were exceptions in today's policy but were cited as less among students where they did not have to out right ban it. the whole problem is not only a youth problem but other factors such as adults trying to quit stayng who do not want to on cigarettes and the political implications that were swirling around the policy in the months of anticipation. at now, we will have to look the other flavors, but hopefully, they will stay off of them as this policy takes effect. paul: this surge in youth vaping has been passing -- has been happening over the past few years. why has it taken so long to act? >> it is a complicated issue,

but i think over the past few years seeing the surge in vaping , something needed to be done now, and i think this was an opportunity for the trump administration to new this in the bud going into a new year with an old problem, so what we see here is a policy aimed at reversing if not just halting the rise among youth that has really alarmed lawmakers and public health groups trying to get ahead of it. now is a time where it will in fact be addressed and adult smokers can have some relief that there flavors will not be gone, but kids really needed to have some type of policy in which their products were essentially being taken and flavors like mint, cucumber, mango were the ones they were predominantly attracted to. we saw months of wavering

by president trump, even after he had announced broad restrictions in september. what was the compromise reached here? gerald: some might say this is not as much a compromise at all as much a broken promise, and public health groups will be first to say, but in the swirling speculation in those months where trump said he would crackdown on all laborers, there was a political movement led by anti-tax and conservative activists calling on no flavors to be banned, and the result would be political applications in swing states, but also the viable adult factor in which adult don't want to smoke and if they are trying to quit, they typically would use flavors to stay away from cigarettes. it became a three-headed monster when considering the youth issue, but for now, this is a policy where the fda will be looking a lot harder at these companies who are marketing and selling youth vaping products with flavors in them. paul: thanks very much. let's get a quick check now on the latest business flash headlines. hong kong's exchange is said to

be discussing secondary listing options with chinese tech companies including travel provider trip.com and gaming company net. there has been no comment yet from either company. they have a combined market value of about 60 billion u.s. dollars. talks follow a rally. bitcoin's not having a happy new year. i selloff in the largest digital belowpushed the price $7,000, its lowest level since mid-december. the best-known crypto is coming off an eye-catching 2019 which saw gains despite repeated bouts of volatility. tokyo is on holiday, but markets open and seal -- open insole -- of the seoul at the top hour. sophie: asian stocks set to extend gains at june 2018 levels after the rally we saw on wall street that also saw haven

assets gain ground. the yen keeping steady after hitting an eight-week high against the greenback, so we are keeping watch for a break, which could portend for the gains for the japanese currency. let's switch out the board for a quick check on the eco-agenda this friday in asia. malaysia likely to report no change in export growth on a monthly basis. singaporean factory activity after some data, and later this afternoon, hong kong retail sales to support a year and your drop for the month of november, but citigroup seeing a rebound starting in december. paul: thanks very much, sophie. still to come on the next hour asia," wisdom tree's ceo joins us to give us his outlook on chinese markets for 2020 and why he sees some upside surprises.

and we will have the korea open up next. stay with us. this is bloomberg. ♪

paul: good morning. i am paul allen in sydney. it uses major markets have just opened for trade. shery: i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories this friday, the new year, new rally. gains after tech led u.s. markets higher in new your trading as em stocks enter a -- new year trading as em stocks

enter a new market. shery: we look at whether that might affect huawei's chances of operating in the u.k. untilse markets offline january 6, but sophie, we have australia, new zealand, trading. sophie: we are seeing gains. the asx 200 gaining the most with aussiever 1%, banks providing the biggest boost to the benchmark. turn to the open in seoul to see how the kospi is faring so far this morning at the start of cash trade. the cost beginning nearly 1%. are keeping an eye on chip related players as well as samsung's production halt at one of its korean plants. it is hitting dram supply and quickening a recovery. the korean won on the back

foot here. 20/20 could see the odds in the currency's favor given that global growth may be gaining momentum. the aussie dollar off .2%, losing steam for a third straight session while the greenback is stalling after making its first advanced since christmas eve, paul. paul: thanks very much, sophie. let's check in on the first word news now with viviana. viviana: we begin with a standoff over president donald trump's impeachment trial between pelosi and mitch mcconnell. bloomberg has learned there was a two-week conventional holiday break and no negotiations happened. sending theelayed articles of impeachment to the senate. she says she wants to see a fair process for the trial. bloomberg has learned a little cold reasons are behind china's temporary halt on the link between the shanghai and london stock exchanges. we have been told the hong kong

protest is one of the issues driving the decision. the london/shanghai link was designed to allow companies listed on one exchange to also issue shares on the other. new zealand is sending more emergency crews to australia to help battle ongoing bushfires. australian prime minister scott morrison is facing a tough reception as he visited a town where two people were killed earlier this week. his response to this disaster and his refusal to take tougher action on climate change have made him the target of criticism. 18 people died. more than 1000 homes are destroyed because of the bushfire. >> [indiscernible] >> downtown does not have a lot of money. >> you are an idiot, mate. >> i understand the very strong feelings people have. they have lost everything. there is still some very dangerous stages ahead. viviana: carlos ghosn denies

reports his wife and other family members helped organize his escape to lebanon. he said he put together the getaway plan all on his own. it is not clear how exactly he snuck out of the country despite round-the-clock surveillance. prosecutors beginning the search of his tokyo residence. that's where he was under house arrest. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana. this is bloomberg. paul. paul: thanks, viviana. let's get back to markets. the trading day in asia gets underway. risk assets, such as stocks, oil, copper, all rising with haven assets on the first trading day of 2020. what does that signal for the broader market? >> yes, that's right, paul. this can affect haven assets. typical of a liquidity

driven rally. the pboc kicked off 2020 with a rrr cut and this, combined with the repo operation, just unleashes an enormous amount of liquidity into the financial system. we are seeing macro data coming out, supporting broader markets. the 2019 risk rally was driven by global easing and optimism over recovery in the global economy, and this is a very crucial to see, you know, this recovery is backed by -- the market rally is backed by the fundamental improvement in the hard data. the financial condition is loose. we will get even looser. this will continue to create an environment for the recovery of the global economy in 2020.

these stocks are in good shape. shery: what does this mean for the dollar and treasuries outlook? it was a really interesting rally today where we solve risk assets and haven assets rallying at the same time. kyoungwha: right. i think the dollar is already losing more of it clout and will continue to weaken in this year. american exceptionalism powered the u.s. economy last year. the dollar was, last year, it was a haven play. during the trade war, i think, you know, with the signing of the phase one trade deal, the escalating trade attentions will continue to boost the risk of sentiment, so the dollar will lose more influence. ad secondly, there will be u.s. presidential election this

year. this adds to the downside risk to the dollar as well. the strength of the dollar has been a target for president trump and continues to be so in this year as well. there is waning demand for treasuries from central banks across the global -- bond yields on the rise. i think the global, you know, recovery, is a dominating theme this year, and this will continue to push bond yields higher. shery: kyoungwha kim, thank you very much. we can follow more on her story and the day's trading on our markets live blog on the bloomberg at mliv . you can get a market run down in one click. there is commentary from bloomberg's expert editors as well so you can of course find out what is affecting your investments right now. what happened to the dollar? two treasury yields? -- to treasury yields?

now, this could turn out to be a road to nowhere. unfoldn hays is here to the map for us, and kathleen, are we expecting any definite hold? kathleen: that is what it looks like for now. that is what the fed signaled at the december 11 meeting. it was pausing after three rate cuts, so rather than continuing that path or heading toward a hike, it looks like, when you look at it. let's jump into the bloomberg and look at dot / . this is one picture was maybe 10,000 words. this is the fomc members. teen of. who predicted that based on the bayesian terms of the economy, inflation not getting out of control, economic growth probably around the potential to percent, they are not predicting a need to hike or cut rates saying minority are

maybe they will raise the key rate just once. of course, at the press conference after the december 11 meeting, jay powell, the fed chair, made it pretty clear that he needs to see -- the fed will need to see a material change in this economic outlook to move on rates. in other words, not just a little move in either direction, but something fairly big. when i spoke to rob kaplan, president of the dallas fed, he echoed jay powell's words. let's listen to what he said. materialest to be a change in the outlook, either for better or for worse. i have already got baked into my outlook we are going to have weak manufacturing next year, sluggish global growth, sluggish business investment, but with a strong consumer -- there would have to be some material change from that outlook. kathleen: not just a little weakness in manufacturing. the impact of the trade war lingers. something more severe to look at. a cut, for example. rob kaplan leads us to the fed's

annual shift in who votes at the fomc meetings because four fed presidents -- remember there's 12 overall -- rotate that vote. if we call up this chart, you can see we are going to start on the dovish side. ok. charlie evans and jim bullard, chicago fed and st. louis fed, were voters. they no longer are. but neel kashkari, who is a very fomc member, minneapolis fed president, gets a vote. we put kaplan in the middle. he is a centrist. he said he is not penciling in anything for 2020. on the hawkish side, patrick harker, president of the philly fed, loretta mester from the cleveland fed, did not get the hawks while two talks -- are losing the vote. they dissented against every rate cut in 2019, so we will see does this make a difference?

it remains to see if we get that material change in the outlook. for now, people figure, at least at this january meeting at the end of the month, no change of any kind. maybe not even a change in the wording of the policy statement. paul: kathleen, we still might be able to ring a bit of news out of the december meeting. we have the fed releasing minutes tomorrow. what are we expecting to see? kathleen: people are hoping for more clarity on what it might take for the fed to move in either direction, particularly if you guess wrong and they need to cut. people figure you look at those, you know what will happen. the repo market. that's where a lot of attention goes now. you can see jay powell at the last press conference. he was asked sony questions about this and people keep raising this idea that, g, europe -- gee, you are purchasing so many. it is like you started quantitative easing again. he said this is just to do these

temporary operations to make sure the repo rate does not go up again to the highest since 2001. we are not doing this to boost the economy. if we look at a chart from the bloomberg, what you are going to see, you are going to understand more why people are saying, g, ee, how can you say this is not quantitative easing? a number of securities have been purchased in the last three-month of 2019 pretty much, and look, it is more than they 2013 and 2014. i think people will be hoping for a little more clarity in the minutes of what the fed had been doing in the repo market, what they planned to do in the future, if they set up a standing repo facility, which makes it easier for banks to get more liquidity by changing the treasury bonds they are holding, but we may be hoping for a little too much probably because i think some people figure the fed is still figuring this out. we may have to let a little more

time go by before we know what happens next. and: global economics policy editor, kathleen hays, thanks very much. and you can tune into bloomberg tv for more fed coverage. we will be sitting down later afterharles evans, and that, with cleveland fed president loretta mester. both those interviews will be happening on friday if you are watching in the u.s., or the early hours of saturday, if you are watching in asia. still to come, hong kong bracing for more bad news on the retail sector as the unrest keeps tourists away. we will have a preview of that data later this hour. shery: next, will japanese assets pick up momentum in 2020? our next guest thinks so. we will speak with the ceo, from tokyo. this is bloomberg. ♪

shery: this is "daybreak asia."

i am shery ahn in new york. paul: i am paul allen in sydney. jackie's markets -- japanese markets are offline. hung -- inruddin in, hong kong has more. sophie: the yen strengthened on its first full trading day of 2020, touching the strong as level since mid-november against the dollar and appreciating overnight, continuing a nascent trend seen towards the end of 2019 when it went from 109.68 and reaching -- overnight. it is at mid 108 levels. the month has proven to be a good time to buy the yen. when investors come back from vacation, we will have a read on wages and household spending on the agenda. food for thought for the bank of japan, which is expected to maintain its monetary policy stance towards additional using. if the economy does ride out the

sales tax increase, pressure on the boj to boost stimulus should abate somewhat. shery: we are joined now by a ceo. he is with us from tokyo. always great having you with us. governor kuroda probably was breathing a sigh of relief. he had a huge stimulus package coming his way. we are talking jgb yields within range. could a rally derail his plans now? know, the think, you one trigger for the bank of japan to act would be, you know, about dollar weakness and yen strength. if dollar-yen, you know, were to begin to trade in the 95 to 100 range, that could put a dampener to the outlook for the japanese economy for an japanese corporate profits -- and japanese corporate profits in particular. they are budgeting for 105.

once it breaks that line, that is when the red lights at the bank of japan are going to start flashing. shery: give us an outlook for the japanese economy in 2020. we also have the tokyo olympics coming up and that huge stimulus package from prime minister abe. how are things looking for the japanese right now? going: i think japan is to go for gold because you have both public demand with the fiscal passage and private demand with business investment and consumer spending actually on very, very solid footing, so i think that the consensus estimates for growth are way too low. this is a japanese economy that in 2020 could easily grow by as much as 1.5 percent to 2%. paul: you are obviously optimistic. what is your outlook for capex and where are the upside for the topix going to come from?

jesper: japanese companies are actually reinvesting in their businesses here in japan, not just building factories in china or in india or somewhere else. it is here in japan. that is where capital formation, the upgrading of the capital stock, is actually happening, and as a result of that, you have businesses investing in both productive capital and human capital. that is where productivity grows, we are purchasing power grows, where the are going to start to be coming from. paul: one of the other things i know you see, no one is expecting inflation to smash through to percent recklessly, but i know you identified goods deflation in japan. can you explain what you mean by that? jesper: this is the key point. we have good deflation. prices are falling while profits are rising, and that is exactly because japanese companies are becoming more competitive. the dividends of the new capital expenditure, the dividends of

new internal proceeds, are coming through, and as a result of that, you find prices falling while companies are actually making you profits, so that is a win-win situation for everybody. it is good deflation and it makes the bank of japan extremely happy. shery: do you think so? why are they obsessing over that 2% inflation target? jesper: nobody is obsessing at the bank of japan about a 2% inflation target. the key issue, if you want to talk about price developments, the key issue here is wages, because you do need to see more momentum that the tight labor market is actually beginning to feed greater purchasing power in terms of nominal wage growth. that is going to be the key focus of prime minister abe and the administration over the next couple of months. as you know, every april, the base pay negotiations get set. last year, we got a very disappointing, just below 2% increase in base pay. this year, i hope that we are

going to go to at least as much as 3.5%. that would give you confidence that they are going to be out there releasing that spending power. shery: we are looking ahead to those negotiations. talk about abenomics and the three arrows. it seems we have fiscal policy coming through, monetary easing. where are we on the structural reform? is veryyou know, it interesting. i think that from the government's side, you know, there is little, little steps. marathon, running a not sprinting, to achieve the goal of structural reform in japan. let me give you an example. they recently changed the rules in the taxation codes to facilitate more m&a activity in japan. that is a small step, but the ripple effect through the economy, the structural change goings unfolding are to be very, very positive in the

long run for the japanese economy, and in fact, i think year,or 2020, for this mna boom will be a key -- an m&a boom will be a key theme. paul: i hate to attempt to puncture your optimism but i charto take a look at the on the bloomberg terminal. contraction asia wide, there's a number of lines. the one we are looking at is the red one in the middle. we see exports are taking up -- ticking up. what is your outlook for exports? jesper: it's interesting to die am not interested in the export side of the japanese economy. i am interested in the mastic japan. that is where the misperceptions and the gap that allows investors to make money are. on the export side, it is simple and straightforward. you and i will have to make a bet on whether china is actually going to recover and we accelerate to 7% or 8% growth.

if that happens, you will find that japanese capital goods exports will follow and benefit from that but that is a bet on the global economy. you don't need to talk to me about that. i am here to tell you that japan, domestically, is actually on a very, very positive upward momentum, where a lot of money can actually be made. youy: finally, let me ask about my shinzo abe himself. he has faced so many scandals in the past year. plagued by tons of issues. how much political capital does he have left the drive changes in 2020? jesper: well, i think he has got an a norms amount of political capital left, but the key reason, you know, is actually that he is just ruling the country with an iron fist. i mean, they are going to be in power now -- eight years. the eighth year that is not start -- now starting. it is a tightknit group of political leaders. he's got no opposition, neither

from the opposition party, nor from within the lep. it is an iron fist, so the media is desperate to come up with some little scandal. but is not going to derail his overall decision-making power? i think the answer is absolutely not. japan is a bastion of political stability. shery: jesper koll, thank you so much. wisdom tree japan ceo with his views on the japanese economy. don't forget, if you are away from a screen, you can always find in-depth analysis and the days big newsmakers on bloomberg radio, now broadcasting live from our studio in hong kong. this in through the app. this is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn in new york. paul: i am paul allen in sydney. uber has completed the

acquisition of its middle eastern competitor. they signed off on the deal after setting price gaps and other measures to keep the local market competitive. uber had first announced its purchase plan in march with both companies having operated in egypt since 2014. shery: hong kong's exchange is set to be discussing secondary listing options with chinese tech companies including a travel provider and a gaming company. there has been no comment yet from either company. they have a combined market value of 60 billion u.s. dollars. the talks follow alibaba raising $13 billion in its own secondary share offering in hong kong. aul: apple shares are having sweet start to the new year, rising above $300 for the first time. gain marks a stark -- the marks a stark contrast. despite that setback, apple went on to outperform all other major cap --

still to come, huawei in the cross hairs as tensions rise between the u.k. and china after the shanghai in london stock grabbed.link is that story in a moment. this is bloomberg. ♪

viviana: this is "daybreak asia ." first word headlines. turkey's parliament authorizing troops to support the administration against rival forces. the libyan government is battling militias backed by russian mercenaries, egypt, and the united arab emirates. the white house says donald trump spoke to the move. mr. trump warning him foreign interference is complicate in the situation. the main contenders in the taiwanese presidential race offending their election campaigns. this after taiwan's head military official was killed. he was among 13 people on board

the chopper, making an emergency landing in a matching dennis -- mountainous area. the cause of the crash is unknown. spain set to finally get a new government after the premier n separatistcatala party -- ae group agreed to abstain in confidence vote. that gives sanchez the numbers needed to form a socialist led coalition. intelligence can spot breast cancer more accurately than doctors. according to a google health study, the use of ai improved the identification of confirmed and negative cancer cases. google is training artificial intelligence to help determine if a patient is likely to live or die. also, mining thousands of data points to predict the best outcome. global news, 24 hours a day, on

air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am to vienna. -- viviana. this is bloomberg. shery: let's turn to sophie in hong kong for a check of the markets. what are we seeing? sophie: asian stocks are sending june 2018 levels. samsung, the biggest boost to the benchmark. the asx 200 gaining as well. we have aussie bonds matching higher, pushing the aussie 10 year yields below 1.3%. the aussie dollar losing some steam this friday, retreating from a five month high. cba does see strength underpinned by diminished downside risks to the global economy which is fueling a growing chorus -- jumping into the terminal, i want to show you e.m. stocks which this morning are extending gains after halting a three-day drop on thursday.

entering the bull market after rallying more than 20% since the bear market low that was hit in october, 2018. we are seeing essentially a more active tilt towards the e.m. space, paul. paul: thanks very much, sophie. with the trade war on the back burner for now, the yuan and emerging asian currencies are poised to escape the woes that -- we are joined by simon flint. what is your outlook for asian currency in the new year? simon: happy new year. pretty good. there are a couple of related factors. first of all, we are coming from quite a low base of global growth, so we would expect global growth to pick up quite significantly in 2020. and the factor that is really driving that has been a significant loosening of global financial conditions, so global financial conditions over the past 12 months have loosened by

more than they have in data since 2011, so that is quite potent for emerging-market currencies. asian particular, and indeed, won,ow yield, the korean taiwan dollar, those are likely to benefit particularly. shery: what about the high-yielders? which stand out to you? simon: i am fond of the indian rupee. it has been relatively beaten up over the past year relative to its counterparts. acondly, i would be expecting growth rebound in india, and once you see that growth rebound in india, you will probably see the r.b.i. intervening less to prevent appreciation of the rupee, which is one of the reasons it underperformed at the beginning of the fourth quarter. so i prefer rupee over indonesian rupiah, and particularly the philippine peso. paul: we do have to talk about the yuan of course as well.

it sounds like it's probably positive, yes? simon: absolutely. two or three reasons as well. first of all, the renminbi is probably somewhat undervalued. secondly, i would expect the current account to improve in 2020, mostly because global growth is picking up, and thirdly, and finally, you have got very strong passive inflows into china. if you can buy passive inflows that you will see from the bloomberg barclays ag, plus gbi e.m., you are talking about inflows worth about 20% of the net current account, so quite a strong balance of the payment picture for the yuan. shery: simon flint, thank you so much for that. let's stay with china. beijing's decision to suspend the shanghai in london stock exchange tie up is shining a light on the relationship between the two countries, and it comes just as prime minister boris johnson besides whether huawei can operate in the u.k..

selina wang joins us from beijing. tie up hast this been nonperforming. -- been underperforming. perhaps this decision was political? selina: when the stock exchange debuted a year ago, we saw china opening up its global markets as well as a way to improve u.k. and china relations. our sources say the reason why this stock connect was temporarily halted was because of political issues particularly around britain stance on the protest in hong kong, which china has been very sensitive to criticism of that. the two countries have been engaged in a spat. that escalated when they accused china of torturing -- you heard the chinese government were and that further interference in hong kong will eventually harm u.k. interests. paul: is there any significance

to the timing of this move, and how does huawei fit into it all? selina: now, the timing of this is not viewed as a coincidence. it comes as boris johnson is trying to boost ties with china in terms of trade, especially as the u.k. leaves the european union. it is also in the middle of when boris johnson is deciding what to do about huawei, so some observers view this as a veiled threat, a warning shot to boris johnson to cooperate with china. there could be business and trade ramifications. when it comes to what johnson has hinted at in terms of dealing with huawei, it said it could follow some of its international security allies, including australia and new zealand, by restricting or banning the company. they could also seek a compromise by allowing huawei to participate in non-core elements of the network. china's decision is really largely symbolic and it does not really have much financial impact, even though this did

debut about a year ago. only one company has actually used the stock connect to list on the london board. no british companies have used the stock connect to list in china. at this point, it is really more symbolic than financial. paul: china correspondent, selina wang, thank you. you can get around up of the stories you need to know to get your day going in today's edition of "daybreak." bloomberg subscribers can go to dayb on their terminals and it's also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on industries and assets you care about. this is bloomberg. ♪

paul: this is "daybreak asia." i am paul allen in sydney. shery: i am shery and in new york. in hong kong, six months of violent protests have rocked the

economy. how exactly those protests are impacting the city, with retail sales numbers. joining us now is bloomberg cross-asset reporter eric lam. we saw in the month of october, those retail sales, as this chart on the bloomberg shows, contracting by a record. we are talking about a contraction of 24 point 3% from a year earlier. 24.3% from anel -- year earlier. what is the expectation for the numbers we are getting out today? eric: the consensus forecast for retail sales and value is for that number two declined further in november. the consensus economist forecast is for a contraction of 24.6%, which would be a fresh record, slightly worse than those numbers you just saw in october. the indicator -- the best indicator we have for the weakness in that number is, as you point out, the visitor arrival data. we have just got the november

numbers just this week, and those numbers also did get worse in november. we saw the overall visitor arrival numbers to hong kong drop i more than 50%, and the visitor arrivals from china dropped to less than 2 million people in november. that is the lowest number. the first time it has been below 2 million cents 2011, so -- since 2011. the problem has continued to get worse. we are talking about potentially five straight months of double digit declines. paul: and of course, hong kong in recession as well. what are the broader implications in terms of the duration of that recession and the policy response? eric: the interesting thing with the gdp numbers, when you are talking about the overall economic growth of the economy, is forecast for year-over-year growth are going to continue to be weak in the first half of next year given that the protests did not start until

june, so the year-over-year comparisons will continue to be from a much higher base. we quarter on quarter numbers, on the other hand, economists are forecasting weak growth in the fourth quarter, but we might see a pullback back into positive territory in the first two quarters of next year. now, the potential glimmers of optimism here, one of the major factors other than retail for the hong kong economy, is trade, and we have seen some improvements on that front. thelatest trade numbers -- export numbers came in better than expected. and also, we did see that tentative phase i trade deal between the u.s. and china, and hong kong being such an regionnt group for the and china products, that does bode some reason for optimism for the hong kong economy. paul: all right, eric lam, thank you so much for joining us. with us now for more on this, we have the dbs economist. she is also in hong kong.

it is worth returning to that chart that shery brought up earlier and it shows us just how severe the downturn is in retail sales in hong kong and how it coincides with a contraction in mainland visitor numbers as well, so as long as this unrest ndntinues, do you see any e to that trend? >> right now, our forecast for ,he gdp growth of 2020 is 1.5% after the 5% expected throughout the fourth quarter of last year, so we all know this is mainly due to the ongoing social movement and the trade war uncertainty. the second half of next year may see some rebound because of the low base comparison in 2019, but the risk of deflation is also rising. the cpi is rising now around 3%, and costs will stay elevated

because of china. the port price has been rising 100% in china and the substitute -- i'm sorry -- chicken, beef, lamb, -- also, sorry. we see the risk of stagflation is rising in hong kong as well. paul: in terms of retail, it is a pretty ugly picture, and if we drill into the numbers a little more, we can see this chart, just how sales -- how severely sales have plummeted. we have jewelry and watches, the worst affected. that is the red bar. but pretty much everything is suffering as well. again, without the support of mainland chinese visitors, how do you see a turnaround in this picture? now, actually, it accounts for 40% of the retail sales barrier of hong kong retail sector, so it is hard for

the hong kong retail sector to ,ee a near-term rebound in 2020 and in fact, it dropped by over 50% in the previous months, and retail sales -- the year on year dropped from february of last year. without an improvement in the social instability and the see them it is difficult for to come back to hong kong in the near term. but there is also some good news in the retail sector. -- over some temporary rent adjustments for the tenants. afford some sort of large-scale close of business, and also the layoffs. the unemployment rate increased from two point 8%, a 20 year low, to now 3.2% now.

we don't for see that it will foresee to rise to -- that it will continue to rise. shery: property prices remain resilient, right? why, when we have so many challenges for the hong kong economy? as for themuel: property price, it is quite the price. property price remains quite receded. theontinue to see -- property price rose by around 2% to 3%. this is mainly because of two things. -- policy support. proposedr, carrie lam to increase the leverage of all the potential homeowners in hong kong and also relax them -- the requirements -- so homeowners

can access in the least affordable housing market and demand/supply imbalance could not be stopped even though a large-scale project can be implemented in the next five or 10 years. it is still far away from helping the city to solve the problem. shery: quickly, tell us about how the relatively weak chinese yuan could be having an impact on hong kong as well. samuel: so as for the chinese aan, we know that will be potential phase one trade deal between the u.s. and china. it is mainly focusing on agricultural product, which is less controversial for both u.s. and china. but for the second phase of the trade deal, it is more on energy transfer and financial market

openness, which is difficult for both countries to reach a deal. the chinese will see some downward pressure, and this will continue to pressure the retail performance of hong kong. shery: thank you so much for joining us. still more ahead on "daybreak asia." this is bloomberg. ♪

shery: this is "daybreak asia."

i am shery ahn in new york. paul: i am paul allen in sydney. the report used policy for the first time in three years after narrowly dodging recession in 2019, but the head of the city's the fact of central bank says the burden should not fall on monetary policy alone. he told bloomberg that expectations of central banks has become unrealistic. didecause of what they during the financial crisis and subsequently and holding up the global economy and the global financial system, there is now tremendous unrealistic expectations placed on central banks, that every rough patch we run into, monetary policy will get us out of it. i think that is wrong, and i think it is also wrong for central banks to feed that expectation. it cannot be that every slowdown, every risk or threat on the horizon, has to be addressed by loosening of monetary policy. i think fiscal policy has a strong role to play, and that it

has not been sufficiently addressed, partly because too much of the weight has been placed on monetary policy, so i think we need a better balance between the two, otherwise, it is exceedingly unfair on the central banking community. >> speaking of the global economy, this talk about possibly a looming recession -- policy,eased monetary but not to the extent that some people expected. what is driving some of the optimism that you see perhaps in 2020? >> i think you always want to keep some powder dry and not deplete all your policy buffers. singapore is fortunate. we have monetary and fiscal policy buffers. quite good. let's see how the data comes out over the next two quarters. a key assessment to be made is whether this is bottoming out, and whether we are going to see a modest recovery next year. if that is the case, then i think we are in pretty good

shape, but if things were to take a turn for the worse, then i think you need some buffer. you need some ammunition. so we are keeping some powder dry and we have set as much, that if necessary, we are prepared to use it. and there is still space. >> speaking of space, what policy tools have not been used? when you take a look at central banks, they are willing to go to zero. they are willing to go to negative. they are talking about qe. youmight qe look like if need qe of some for for singapore -- of some form for singapore? >> we are not subject to the lower bound of interest rates, and even then, you have negative interest rates and qe as supplements. >> you are encouraging digital banks to further the competition within the financial sector space. how much traction has there been? >> i think we can always do

better. and the hope is that some of these players will common with very advanced data analytics creditities and use evaluation, loan extension, in a much cheaper and faster way than traditional banks would do. we see some of these players becoming regionally important, and i think looking ahead, we want -- singapore wants to be a base for these players as they grow in the region. and that means anchoring them here at the early stage of development and allowing them access to the domestic painting market. s, doven these development you envision consolidation in the banking industry? manythree banks are too for the lion city. what are your views now, talking about digital banks?

ravi: not clear to me that we are aiming necessarily for consolidation. if some consolidation happens, it may not be an entirely bad thing, but one needs to be also mindful of a confrontation risk. three banks is not too many. [laughter] ravi: so we have quite a diverse landscape. it is not clear to me that we are going to be able -- we need to see a lot more consolidation. what we are more likely to see and what we like to see our interesting joint ventures -- are interesting joint ventures and combination between traditional financial and nonfinancial players. consolidation, which is mostly about cutting costs. which i am not sure is a paramount need for now, and as a regulator, i think no regulator would like to see an overly

concentrated banking sector that just concentrates risk too much and a few players, and i think having some diversity in the banking landscape is not a bad thing. shery: monetary authority of singapore speaking to haslinda amin. we are seeing markets across asia broadly in the green. let's turn to sophie for what to watch later this morning. sophie: we have some catalysts to help asian chipmakers track the u.s. peers higher. led by andy after nomura raised md.anm the shanghai composite broke through 3050 points, and technical hurdle. we are keeping an eye on hong kong exchanges on reports that they are discussing new listings . we will be watching reaction to news that china is temporarily helping the program.

it is less likely that trade inflows will be diverted away from hong kong pot stocks connect by london. the are keeping an eye on a company which was downgraded to hold as its price tags are put in question after the liquor maker's 2020 forecast. that is it from "daybreak asia." our markets coverage continues as we take a look at the start of trade in hong kong, shanghai, and shenzhen. standby for the china open. this is bloomberg. ♪

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in beijing, a.m. shown john and shanghai. welcome to "bloomberg markets: china open." i'm selina wang. >> i'm david inglis. we are counting down to the open kong.de in hong the top stories today, the rally rolls on. asian equities again after a strong first day of 2020 in the u.s. in europe, em stocks enter a full market. on thea cuts the cord shanghai-london trading higher. we look at whether the latest qualities have a chance of trading in the u.k. >> japanese prosecutors raided carlos ghosn's former tokyo home