>> very good morning. comedney markets just online. kong. in hong asia"aybreak >> trump administration lists as a manipulator. u.k. economye, shrinks may not record any growth at all in the 4th

quarter. >> philippines stock exchange .ill reopen later thousands of people have fled the area. >> australian markets just opened for trade. -- sophie what are you seeing? holdinge dollar is steady after monday due in part over export growth. given the anticipated impact from the ongoing bushfire. they japan reopened after long weekend. futures hinting gains ahead that. numbersaiting to on from japan as well. we'll get china with trade futures settled .igher in singapore u.n. is holding 5-day rally. of the u.s.

officially dropping the currency china.ator label on flashing bullet signals. let's jump to the terminal here .or a bigger picture view yuan is up 1% against its basket of currencies. the u.s. dollar since we have easing trade tensions. >> let's get more on the top stories. listing its designation of china as a currency manipulator. we've been talking about taking look at the market and reaction. beijing hasing that devaluemitments not to

the yuan. let's get to l.a. is this given that the label was placed on china in the first place. criticism.d lot of or thes symbolic title manipulator status. we didn't see specific action place after the trump administration put that label on china. tensionse heightened in the trade war. thiscognizes that within trade deal, the two countries have said they would agree to currency pack where china will not engage in competitive devaluation of currency. it signifies the real commitment appeases u.s. concerns about manipulation that may happen. whether it's real or politicking u.s. side. >> my question would be there have been a lot of criticism

over how enforceable the phase one trade deal will be. designation ass leverage? soon?ft it so >> i think if i alluded to before, lot of analyst, people who follow currencies closely thought that the trump almosttration really had for political reasons named china a currency manipulator to begin with. really meet the three criterias bys of the treasury department. it announced china out of cycle review of allar countries that the u.s. looks at to see if they're manipulating currencies or not. this is a move from the u.s. sort of gesture good will. that chinaly demanded in the talks. one-sided talks. china want to show its own people they got concessions out u.s.

this is one they can hold out as that. the tweets and the tariffs and the threats and negotiations. ofs is really the moment truth as we get this phase one deal signed. what happens after that? enforcement, is it down to this good faith from parties? >> because we haven't actually seen the text of the deal. thee been talking about deal that they've reached for months now. seen the nuts and bolts. we expect on wednesday when they lookthe agreement, we'll at this 86-page document. deal.irst phase trade within it is this sort of important chapter of how it will enforced. we do know for one t for certain values tariffsly as a threat. u.s. willct that the lust tariff threats

repealing those will be based on whether china will follow through on its commitments. we do expect out all of the mechanisms that will be in there, that definitely tariffs list.emain high on that >> looking forward to finally getting the data. sarah mcgregor there in los angeles. tensions,e trade joining us now is vanguard chief joey davis. optimismting little despite lack of details. this gives both sides enough into 2020wind to move and give the markets further room to run. little lessou a optimistic when it comes to the macro picture? certainly aren't looking for a recession. we clearly at the bottom of growthtions for u.s. this year. primarily for three reasons. deceleration and

consumer spending. the consumer in 2019 in united states spent at a robust clip. in slow down we continue to see market.abor job growth should continue but pace.obust that alone gives you about 1.5% growth this year. see a significant acceleration in business investment in large part because the policy will remain elevated. the trade --that the phase one deal is a positive on that front. third, we're not going to see a global acceleration of growth. going to stabilize. europe is unlikely to accelerate further. together,ut that all we're at the lower end of the theensus range closer to 1.5 to 1% range. of 3%.ms to north

,> how much aleavuation of alleviation of those companies? >> that's the best one is the confidence. it's really indirect effects if we do see a drop in in uncertainty. the tariffs themselves, they had some impact, they were measured quantitatively and basis points. in more percentage point terms uncertainty. held over the market in 2019. you saw that in disappointing spending numbers. there's upside risk that the pricing in that they will see some fall through from businesses. it remains to be seen. business investment tend to severalnt over the past years. >> what does this mean for the markets? the stocknking that

markets are way too optimistic moment. stocks are more attractively look at earnings yield. where do we stand there? nowell, i think right they're still downside risk in the equity market. portray myt to comments as pessimistic. be more realistic expectation. mid-single digits i will be thrilled. startingt i think is to show froth in parts of the market. it is not price to perfection but close to it. if we get the sort of earnings growth expectations that the equity market clearly ourand economic forecast is too low. wrong.d be i think it's reasonable to have expectations and surprise little bit on the upside. just like we were in 2019. be gettingseem to

ahead of itself and have priced in this strong growth acceleration globally. >> to your point, this chart on the the bloomberg showing the equityvaluation in th market. earnings have to be in order to keep this bullish forecast going? a really good question. consensus expectations are in high single digit range for earnings for share growth this year. the s&p 500at where is now, you seem to have to get that to growth north of justify multiples. you're talking about double digits. we saw it in 2016 after the slow down in the global economy. had a significant acceleration of policy particularly out of china that i repeat.ink we'll see modest inee some

earnings growth and the manufacturing sector can stabilize. oft will be a source support. unless we'll see some other earnings start lift escape velocity, we have to take a breather here and not expect to see a repeat this month. >> joe, what about a.m.? i want to get your view son that. we're looking at emerging market. good run.to be on a do you think this is warranted particularly as we potentially in the dollarning and some of those geopolitical trade issues this year? >> if you heard my comments on justgrowth, that would be a head wind to merging markets. you also mentioned the valuation a strong positive tail wind.

emerging markets have nowhere the equityipated on side to the same stellar performance. positive. that's why we look longer term that the prospect for emerging equity is positive and slightly higher than the united states. in a portfolio. i think we'll serve investors well. to no other reason, diversify from the concentrated market. the u.s. equity >> to your point, we have seen 500a underperforming, s& s&p ewhen it comes to the last two years of the trade war. about thee talking shanghai composite gaining almost 20% in 2019. how much room is there for china to rise when the economy seems a little bit better but not growth justhuge political bit more stabilization? >> i think if they can get slightly higher than expected maybe 6.1, 6.2r,

possible, that would be a modest positive. economic surprise. again, what will matter more matter more should is earnings fundamental. whether in china or europe. the unitednly in states. corporate earnings is going to matter. lastrprises more so than year where i think the trade uncertainty. i think that will matter more this year. whether or not china has more you will look to the basic performance of the underlining companies. you're sticking around us.uard is staying with >> iran has seen a second night of protest against the downing of the ukrainian passenger plane. showedon social media unrest in tehran and other cities with some clashes between police.rs and some social media posts ayatollah and call

the the end of the revolutionary guard. continued tomp has tweet his support for the s.monstrator philippines released images of volcano moment erupted. thousands of people left the of anmid warnings explosion. the volcano has been venting ash days, closingtwo schools and offices and flights.g in india moretion than 5-year high. questions of its stocks. price growth has reached the end of the bank 2 to 6 targets. that's the steepest gain since and medium estimate in a bloomberg survey. president is calling for

policy silence ahead of her review.g strategy she said, to start the next two day policy meeting early to give them time to consider all the issues raised. it's the first strategy review 2003. global news 24 hours a day on air, powered by 2400 journalists analyst. this is bloomberg. up next, u.k. economy ahead of theshrank general election >> we speak about the u.s. lifting the manipulator label on beijing and the outlook for the man -- mainland economy.

>> this is "bloomberg daybreak: asia." >> let's turn to the u.k. where unexpectedly shrank ahead of the general election. casting doubt over whether there was any growth in the 4th quarter. with us is joe davis, good to you back. will carney will be forced to cut before he leaves? >> i think they are inclined to so. i think what they are looking at at alll very weak if positive growth given what has uncertainty with respect to brexit. clarity,gh one has still dealing with a very weak investment environment and the u.k. growth numbers have been disappointing. nothought maybe they would

cut rates this year. given what we saw over the past week, we are now assuming a cut. it's more anything to give a little boost to growth prospects as they proceed through 2020. returning after prime minster johnson election victory last who. that last? >> that's unclear. i think more than anything, if we do see the levels of uncertainty come down, they stay period, what history does show, that investment sixding, if you can have months, uncertainty to come down, you can have investment in.t to kick that starts a cycle. that's a dynamic that they're hoping for and probably reasons why the bank of england may give a boost here

odds.rease those >> i'm wondering if that's enough. from brexit. out that's just the beginning of the uncertainty. seem to be processing in. uncertainty should it be more pessimistic? before thed me break, we're not generally optimistic about the global economy. not calling for global recession. we do not see an acceleration in growth coming materially. certainly the u.k. would be a case as well. modest improvement, that would be positive. we look at the entire european economy, the manufacturing should come how of the a depth of the recession that we seen. we are not anticipating any sort ry.v-shape recover you got to wonder what else 2 2020 has to hold.

with 14 days we had political dislocation between u.s. and iran. perhaps on the verge of world potentially have this trade tensions with the trade deal being signed. natural disasters here more australia. what is one thing you're thinking will be a game changer for 2020 that we're not talking about yet? one that would be potentially disruptive for a be inflation coming back. when i say inflation coming feels genuine, you see in the wage numbers as well as cpi, consumer price report. monthot just the one blip. of data.e a stream you see some of the volatility. of 2017 in early 2018, that caught the market off guard. bringing that will

central bankers into view earlier than market currently expect. a repricing of risky assets. stands toething that me, stand out as something that everyone assuming central the next year or termsot doing anything in of raising rates. i don't think that will be bearish.y you'll be talking about stronger environment. that would be a risk factor this year. >> what about fiscal stimulus? be holding our breath for fiscal action? have seeing discussion, we japan already initiating huge sizeable amount of fiscal by prime minster abe. >> we're going to hear more of it. country that has negative rate it should be on the table. strongery, there's a

case to have some fiscal policy rateso have negative which i think has more downside than upside. we'll hear that. a modest case. you hear some in germany with respect to environmental related spending. japan, they've been on and off talking about more fiscal two decades. neverarrative seems to change. i'm more interested in structural reform that would boost in someterm of these economies that are really struggling to get off respect toe with growth let alone interest rates. that's something i love to see the policy front. not to say there's no effort there. spending, i at think we have to at least talk about what's the return on that investment when we talk about spending.vernment is such a pleasure having you on with us. joe davis vanguard global chief

economist. thank you so much. don't forget our interactive of function on tv go. you can watch us live and dive into the securities of bloomberg talk about.at we join in on the conversation you can send us instant messages the show. at tv go.

>> this is "bloomberg daybreak: asia." theet a quick check of latest business headlines. markets in china's car have gm and ford in guess in 2019. with slump gm down 15% and ford 26%. companies particularly upbeat about this year. they both expect the chinese in 2020o slow further in a challenging environment. the market has been weakened by

war by a focus on tighter emissions standards. shares rosetesla above $500 the first time. leaving analyst scrambling to raise their price targets. has doubled since october. high of $612 from $395. >> toyota is recalling 700,000 u.s. overn the potential safety issues with faulty fuel pumps. focuses on the wide and 2019 and lexus model. they are still investigating the problem and is developing a remedy. relief for asia to south from thailand

nota, washington's move name new currency manipulators. this is bloomberg.

>> you're watching "bloomberg daybreak: asia" markets trading only new zealand and australia in the green, let's turn to sophie. >> let's look at the share sydney.n resuming gains among the better performers after china indicated it will not reduce subsidies for mainland.ustry on the 6%olute is jumping nearly this after confirming it is in talks with emr capital for the wood gold mine. let's check in on what's going bonds. aussie

aussie bonds under pressure europe.avy issuance in just holding steady here. rally afteray reaching 690 first time since july. copper futures stalling in new after climbing through april high. banks are forecasting a spike in in 2020 as they pick up in production capex and restocking. is anticipated. further rally that may happen and china sign that trade deal. the phase one trade deal. given thempen downward trend we're seeing in chinese. this get an update on that friday. >> thank you. taking a look at another potential winner from the phase deal.ade u.s. dropping that currency a emerging tag is market markets broadly. what are the broader of the u.s. seem to be chilling out of on this? >> in lot of ways, that tone,

that lack of previous occasions when the trump administration stepped back from its over currency, tariffs and rest of it. there's none of that. are no manipulators. the only addition to the watch was switzerland who's currency depreciated last year. mind. for emerging asia, this is sort win-win because it's going to set off more dollar weakness. good thing, mostly. uplar strength tends to dry funding. it threatens stability and so on things financial side of for emerging market. but at the same time, most don't wantrkets really strong currency especially if their economies effects.ng some bad such as in thailand because its currency was the biggest gainer last year. we had an interview last week

the thai central bank governor who was laying out the case why although they are to slow the depreciation, they're not manipulators. be very glad they're not on the watch list. currencies in asia, the have a wigglethey room in how they cope with this question of what to do if their currencies get stronger than they are comfortable with. dollar against of this seemsval inbe spurring more buoyance the china currency. lot of people saying that tag shouldn't have been there in the place. >> exactly. much further the go from here.

it will depend on what comes out from the phase one deal when it comes to tariffs. the yuan dropped speacully through seven in august after trump escalated the tariffs. if the tariffs will stay in place or even if they roll about rolling them back, still the tariffs were in before then. there's concerns about china's slowing. i don't think china really wants strong.he yuan get too i think you referenced the dollar. thatnk there's a risk traders are getting ahead of themselves, getting busy with success. just for a change. the yuan will settle down around about these levels. a cap.ht end as being

hard for the yuan to fall weaker. it might end in the narrow range. 6.85 or so would be much further think china will be willing so sow it go. from're getting comments the finance ministry of south that koreaial saying u.s. watch list. they will sustain policy as before. are headed to the decisions. aside from all of that and the deal, what will investors be watching this week? >> well, there's some fed speakers coming up. that's always of interest. big thing is going to be china gdp. deal is important to

set the tone. with china's gdp and what can we expect going forward. to matter a hell of a lot for asia and for risk general. we get some sort idea of how much damage has been done to by the trade war factors. >> garfield reynolds, thank you very much for that. beijing.e analysis on markets, oakthe tree capital cofounder said now good time to be investing in an exclusive interview with bloomberg. he pointed at the long bull market run as one of the factors. >> the markets has been up for

11 years, quadruple. bull market and longest expansion in history. profits are not rising and stock are.s it's what we call liquidity driven rally. that means it comes from people money to spend. if you put those factors together, it doesn't mean that downarket is going to go tomorrow. it does mean that the odds are in themy opinion, investor safeguard. time to behe contrarian. the economy is growing at a reasonable clip. odds ofers say declined.for 2020 are the threat of iranian hostilities surged to a new record. high yields edging closer and closer to new low. way i would phrase it is

to haveis is a time less risk than you did three or five years ago. ago, we were years here. now we're here. all things be equal, we should have less risk than here. i don't know whether we're going tomorrow orhe cliff continue straight up to the sky. odds are less in the opinion,s favor, in b my than we were three or five years ago. >> i want to get to the substance of your new memo. you called it you bet. frustrated investors say the stock markets are no better than the casino? right?y >> investing, as i point out, hidden information, luck and skill. is, how much skill does that investor have? skill,don't have much then you're county to luck and

information. becomes a coin toss. if you have skill, you can have edge. it's the difference between poker or blackjack. there's a science to playing blackjack. a books written about it. it.can actually get good at ed thorpet so good, wrote the book called "beat the dealer." the casinos. from he was too good. you can get good at it. most people who haven't read the book and don't know the theory it'son't study it, to them luck. ory go in, should i hit 16 stay. if you don't have the skill then you shouldup shouldn't expect to able to control the outcomes. >> let's assume argument sake if it's true, that most

people lack the skill required a superior investor. what should those people do? other activity, veterinary, we pay people to do the things we can't do. that's what they should do. should get outside help. was howard marks. >> u.s. military officials have offirmed they were told impending missile strike. iran attacked we are bases in iraq. at 11:00 p.m. local tuesday american troops were told to go and take cover in bunkers at the base west of baghdad. at half pastlanded 1:00 the next morning and the barrage lasted two hours. u.s. said no minors were killed or wounded. in hong-running protest

kong prompting more asset correspond moving to singapore. the city state is picking you the expense of hong .- hong kong they are looking at logistics kong parents are schools.ng singapore ofl volcano erupted south manila. thousands of people left the area. volcano has been venting ash and smoke for two days. closing schools and offices and temporarily disrupting flights at manila airport. trading resumes tuesday. banningies in rome are all diesel powered vehicles on as air pollution levels rise.

the city have been restricted on and monday. a day onws 24 hours air and by bloomberg, powered i 2400 journalists and analyst, this is bloomberg. >> thank you. u.s. banks set to kick off earnings seasons with lenders coming offer their best year in more than two decades. we'll tell you what to expect. this is bloomberg. ♪.

>> can we count on further valuation expansion lot of head valuations.m of >> we need to see evidence of earnings picking up. >> earnings really need to kick gear. >> we need the earnings. we expect earnings to pick up. >> short-term looks

constructive. >> is this going to be the year that value continues to momentum? >> opportunities continue to exist. going to have to at some point do the math. of thenomy is support valuation of the market. >> extreme highs on valley situation. dangerous to me. >> i don't think the market digest bad economic news. >> some of our guests what to expect. banks will kick things off on wall street with a total of six the biggest lenders this week. coming seen bank stocks off their best year in two decades. expect? we >> they outpaced the broader market. in 2019.00 by 36% no one expected them to do that again. concern aboutof earnings. we got three big banks kicking the morning and gp morgan

and wells fargo. he said fixed income trading will come in strong. banking couldment be flat. take a look at the crowded also got goldman sachs an morgan stanley. highs ins hit all-time this latest session. let's talk about some of the key issues. j.p. morgan led the banks in and expect to be in the spotlight before that. morgan stanley and goldman have a greater share of the revenue to trading. equity trading will also be a big area of focus. investors want to be watching volatility led to pick up if trading. then, profits will be a key thing. annual profits rose across the

banks. they're expected to slip slightly. the global low interest rate environment. when we talk about the low interest rate environment we've seen a lot of money pour into stocks. the banks with kicking off the earnings, long are going to be important. >> we've mentioned earnings in 2020 are improving. they are not ideal. what are the warning signs? theet's go right into bloomberg result roo. there's no way to repeat begging back.ome thes just g through some of different players that will be reporting in the morning. the 2020 revenue growth projections for the s&p 500 banks index has climb to 1.9% as of january 10th. increase on the part of analyst from 1.6 two months

earlier. what's important to note the analysts are estimating a ofbined profit drop 10 billion this year because of the global interest rates low.ning >> coming up next, we have an interview with the -- and talk industrys explosive related in asia. this is bloomberg. ♪

>> you're watching "bloomberg daybreak: asia." global audience for exports billiono rise with half users. china remaining the biggest there and super league joined now by ceo ann hand. you're in the new york studio. us about this. what sort of experiences you

will bring forth. have a target number live events that you have this year? >> you mentioned about a half esports.iewers of that's people viewing the level.ional you're talking about 10,000 athletes.al level superleague is bringing technology when you wear that up estate infrastructure like wanda. we can main stream e-sports. these are everyday competitive gamers. we're talking about their 700 all the wayst, that we can bring competitive e-sports leagues to all gamers. >> investors haven't been too growthe the on your story of yet. the stock plunge 7%. than

>> if you think about it, we are right now still very much a company. lot of people have questions about how it will monetize. it a fad or niche. what i encourage investors to do is take away the word e-sports. like a new word and new category. we're talking about that 50% of gamers identify as competitive. that's 1.3 billion. said they would love to game out of home. no different than i used to go a kid.arcade as i wanted that social experience. it's a digitally native audience. lot of what's happening right now in the stock market is cap.we are small it's a little bit of like the supply and demand challenge. the market space wayt how this is a primary that the millennials want to

spend their time. right now millennial gamers spend about $117 a month on gaming content. the crazy part about that, it's almost $40 on it it's not on game play. it's on paying to watch other people game. when you start to understand wallet and all the opportunities to give them this e-sports experience, we see that the market space is much larger predict.ne can >> how do you convince advertisers and other partners to recognize that return on investment? it sound like you're saying huge in the share price is significantly tied to a issue for issue or pr the industry. >> i think it's challenging. when you look right now, most of investments you seen almost all have been private. mostly at the pro league team level. very large valuations. early days how to monetize it. what we found with brands, even

publishers themselves is that, early on, it's kind of sexy and exciting to focus on pro-level. now that everyone become more comfortable that gamers aren't gaming.out of this is more of lifestyle trend increasingly it's multigenerational. we find that brands saying i done my investment at the pro level. i want to reach the masses. toes a expireamer -- aspire to be a pro. taco bell product in their hand. i think so many brands now a largethat such segment of their population are gamers. we kind of gone from the last years of an education to now being able to start to show how we really monetize. potential for the industry both in china and

globally? question.great if you look at it right now, you'll see lot of stuff out there on different programs on bloomberg before that you'll like, it's a $1 billion industry. it's going to be worth by 2022.n wait a minute, you got gamers on the planet. that can't possibly be the total value of this industry. if you say that, just 10% of the gamers out there do want to participate in e-sports. it,ou think about basketball didn't start with the nba. culdesac on the driveway. it's just 10% of those gamers that.o participate in let's say monetize them at $5 a anth, you're looking at 20 billion plus market category and not a 3 billion. our argument would be is that

yet howon't really know quantify value of e-sports. it's a professional level theection that speaks to everyday person who aspires to compete. you so much for joining us. we have japanese market reopen long weekend. >> nikkei higher. keeping close eye on that 110 level. weakest level since may. traders today we watching d.o.j. the super long sector. .tocks to watch in tokyo

after issuing on the round of recalls in the u.s. may stop sale it of small vehicles in the u.s. as 2021.s nissan is breaking away from holder.share back --g up up, we are also the market open in tokyo. this is bloomberg.

s

china signing a phase one trade deal which adds downside pressure. haidi: let's get more reaction on washington removing the currency manipulative tag on

china. the greatere is at china conference in shanghai with a guest very well-placed to give comments. tom: thank you. i am at the china conference 2020, joined by the ubs head of .sia economics what are the applications of the removal of this currency manipulator labeled by the u.s.? is it just symbolic? >> i think it is mainly symbolic. the currency manipulator label was not going to carry a lot of .aterial sanctions nevertheless, i think it is important because it removed

some of the policy constraints or in terms of rule communications reaching the pboc and communications. this is no longer going to be a binding issue every time they talk. they can move on to other issues. it also symbolizes the fact that tomorrow, when they signed the phase one deal, there will likely be a commitment on the chinese side for relative stability. tom: how does it all play into your forecast for the currency? >> our forecast for this year is around seven. we think it will be lower than seven, so strengthened. our view is that the phase one deal throughout this year is a long year at the u.s. election. there could be uncertainty flaring up again so the exchange rate moves a little bit. it also depends on the euro and other cross currencies.

the trade deal, we are hoping to get more details. we know the broad strokes of this agreement that is likely to be signed on wednesday. which sectors of china's economy are most likely to benefit on the back of this signing? the first phase deal, the first thing is they remove these december tariff hike, mainly on consumer electronics and so on, and also the september tariff hike on a lot of customer goods. consumer and manufacturing will all benefit from this. certainly, this is relief, and producing as well. certainly this will be positive for the labor market because these will be labor-intensive sectors. otherwise it will be a hit. with that being more stable --

stable, there's also more discretionary goods in china. of course, there will be some impact on the agricultural side. in the short-term, china buying more u.s. products, including meat and so on that will help with prices or inflation. in the longer term, of course, more input. this will be some impact on chinese big sectors as well. >> with the diversification of the bag sector, will that continue, or do businesses think this marginal stability in china mean they can hold to that to some extent? >> we think it will continue. actually, the supply chain movement had already started before the trade war. costs and environmental costs rise in china, but the trade war released new uncertainty. there are new costs and people worry about supply chain

disruptions especially on the tech side. even though ceos, cfos may expect a deal to be signed, the intention of moving away continues. we think that continues even though there's a phase one deal. i think most people believe the u.s.-china relations will be challenged going forward. reporter: we are getting trade data out around 10:00 local time expected. what do you forecast in terms of exports and imports? are we going to see it bottoming out and a revival of trade data? the december 1, there are basic facts and also rebounding in order, so we are looking at exports up 4% and imports up 6%. imports more than exports. throughout the year, and the

first part of the year, it will still be a bit challenging. but for the year, we are looking for roughly flat trade compared to last year. last year declined. there will be improvement. reporter: when it comes to pboc and the finance ministry, what will the priority be? can they take the foot off the pedal now that we have more certainty around the trade picture? relativelyxpect focused easing policy? >> i think the policy direction is relatively clear from the economic conference that they will continue modest easing. because of the uncertainty, and the negative impact of higher tariffs from august and september are still coming into play, so these quality easing is still needed. we are still going to see some marginal rate cuts of mlf. we are seeing more liquidity.

we are looking for another 50 basis points for cuts. we see more focus, as you mentioned, the fiscal easing. infrastructure spending. target forecast for china 2020, and also broadly in the asian region. china, we are looking for 6% this year. reporter: you revised it up? >> we revised it up about a month ago when there were clear signs that the phase one deal would be signed and with the december tariff hike removed. for asia, the positive is if less is going to be collateral damage coming from the u.s. china trade conflict, especially north asia, korea and taiwan, they are very exposed to global trade and exports, so it is positive for them. we also have seen some kind of

some kind of bottoming, or may be is increasing in ports of the tech products. korean exports of -- are doing well. the signs are generally better for north asia. think for china, on the consumption side, after a year and a half of double digit declines, the automobile sector will start to bottom. reporter: thank you very much indeed, the ubs head of economics in asia, china chief economist as well. of asian economy, a forecast 6% gdp growth in china and the yuan looking like it will get 7% by the end of the year. that is her forecast. shery: thank you so much, from the ubs conference in shanghai. we will still have many interviews coming up from that greater china conference. we will have an exclusive interview with the president of ubs security, eugene qian, and our, the ubs head of china

equities, thomas faang. yuan from thethe currency manipulator list. we have already seen the market reaction in the fx markets with the japanese yen. risk on, weakening to 110 per dollar for the first time since may. what does that mean for the yuan? will it be continued strength from here on out? >> a lot of it would have been priced in already. it is not a surprise to people that the united states was going to remove china from this manipulator list. it was something china had been asking for. you can see the performance of the yuan over the past few weeks. basically getting stronger and stronger. we have seen high volumes in traded markets for you on products. trading the most it has been since early november. the yuan has the most trade

options a couple times this year, which is unusual. the yuan has had a winning streak for quite a while against the dollar. 680,you get back into the 6 90 range, it tells you people were expecting something to happen. of course, there could still be room for the you want to get a bit stronger. but it would also need to some improvements in china data as the ubs economy -- economist was saying. we do expect to see improvements. that will certainly help the yuan. later this week, we have industrial production. people want to see a pick over there as well. we need to get away from the 5% or 6% reduction and back to the 7% area. people are bullish on the yuan. there are still quite a few things ahead. don't forget not all of the tariffs have been removed. or is still some outstanding as well and that's reflected in the valuation of the yuan as well. certainly it's good for other

asian currencies as well, but quite a bit has been priced in. for the you want to get even stronger from here, it needs a mix of good data from china and other positive to happen with the u.s. as well. well. shery: the stronger you when -- haidi: the stronger you want as well as the idea that there is asian fx. this is good for asian currencies, especially em? >> it certainly gives a bit of wiggle room to some other countries. thailand would be particularly relieved that there's not too much more imposed on them. there currency is exceptionally strong and they would like to see it weaken a little further from here, but it doesn't give carte blanche to asian countries . they are up against portfolio flows. when we see this risk unmoved, which is driven, you can see equity markets around the world doing extremely well, another

good night for tech stocks in america. that would tell you that you will see a similar reaction across asia. in asia, korea, taiwan in particular, money will be flowing into those markets. the weight of money will push asian currencies anyway. there's only so much central banks in asia can do when you have this wall of money coming into the region. we have seen indonesia has stepped back saying it will not defend the levels of dollar against the rupee for the time being and we are seeing a big injection from middle east investment. central banks in asia, they won't fight this too much. there's not a great deal they can do about it. haidi: thank you so much. mark cranfield, our lives strategist. you can follow more on that story, his musings, and the action tonight on the markets live blog on the bloomberg. let's get you the first word news in new york.

reporter: thank you. night ofseen a second protest against the downing of the ukrainian passenger plane. unrest in tehran and other cities with some clashes between protesters and police. to openial media speak criticism against the ayatollah and calls for the end of the revolutionary guard. president trump is tweeting his support for demonstrators. seismologists in the philippines --e shown indicators that thousands have left the area amid warning of the imminent explosion. spewing for two days, temporarily disrupting flights at manila airport. inflation in india at more than a five-year high, boosting a case for a rate because at the r.b.i. and asked for questions. price rose and reach the upper

end of the banks to percent to 6% target, climbing from a year earlier. that's faster than the median estimate in the bloomberg survey. president christine lagarde calling for policy silence ahead of her impending strategy review. she has risen to members of the governing council saying she will start the next policy meeting early to give them time. to consider all the issues raised. . it is the first strategy since 2003 and she is keen to prevent the debate spiraling out of control. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am risk is grouped up. this is bloomberg. shery: thank you. still ahead, we speak to bnp paribas china about washington's latest trade concessions and the outlook for the mainland economy. ceoi: coming up, aramco

telling us how middle east tensions are affecting the world's most profitable company. our interview is coming right up. this is bloomberg. ♪

>> i don't think we are on the brink of a war. that thehink escalation is continuing. i think what i see and what you see and everyone sees is a type of de-escalation which is happening. i am very much comforted with what is going on. haidi: the saudi energy minister speaking exclusively to bloomberg. shery: staying with the middle east, the reason why the iranian air defense force mistook a ukrainian airliner for a cruise missile remains unclear, but esther averts -- experts say

multiple airs of failures is what killed the 176 people on board. our senior editor jodi schneider joins us. what happened to those safeguards? reporter: that is the real question now, now that iran has admitted it was that surface to air missile that was shot inadvertently, it says, at that ,assenger jet with 176 people that crashed and killed everyone on board. there are multiple layer's of safeguards that are supposed to prevent this kind of thing and they all failed. including one of the most obvious, why they were allowing civilian aircraft to take off just hours after they had -- had sent those missiles to iraqi-u.s. airbases. tot is a basic safeguard not

be allowing these passenger jets to take off so that there would not be this mistaken identity, was.f course, there there are also other issues about who was giving the orders, whether it was going up the chain of command. there's a lot to be looked at. of course, it's very concerning to the international aviation community. there's a real question about whether this is safe airspace, even if tensions were to decrease in that region, even if the military tensions were to decrease, there is a real question about whether they want to be using that airspace for civilian aircraft. haidi: have we seen the criticism aimed at iran based on the global stage? reporter: there has obviously been a lot of anger, a lot of frustration. it began even before iran admitted this is what had occurred when they were still

saying there was no possibility for it to be a missile attack. we heard criticism from canada, where about one third of the passengers on the plane were from, as well as the u.s. and the u.k. it seems to have abated a bit. some experts are saying at least there was not a broader cover-up of this aircraft. at least iran did sort of come clean and say that it was a missile that made this occur, however, it was late, and there is a question of what this means for investigations going forward. haidi: our senior international editor jodi schneider, staying with the middle east now. saudi arabia saying it will keep close watch on events. the ceo speaking exclusively to bloomberg at the international petroleum conference in saudi arabia. of these attacks, we

bounced back immediately. we responded. oure was no interruption of international customer. to continuewas able to be the most reliable company in the world, supplying to all of their customers. the main thing as a result of what happened, all the world knows aramco is reliable, and they say because of our resources and the way we manage infrastructure, the excellent infrastructure we have, and the workforce we have that are capable of dealing with anything. reporter: i saw that, but you don't want to go through that again. so what is the defense strategy? >> the defense strategy is that for us, we make sure our emergency response, our business community annuity -- continuity is there, that the government,

in terms of the defense of the facilities, they are doing a lot to make sure our facility is more secure and protected aired from our side, we are making sure we increase our capabilities by making sure we have more and more flexibility to respond to anything that might come at us. the government is doing a lot in to make the defense sure all facilities across the kingdom are protected. with: the saudi aramco ceo bloomberg in iran. plenty more to come on "bloomberg daybreak: asia." this i bloomberg. ♪

haidi: you are watching "bloomberg daybreak: asia." a quick check of the latest headlines.ash visa is buying the fintech company plaid for $5.3 billion to improve access to financial status. evaluation in a

2018 funding round. merit medical systems is jumping off as activist investors are concerned about the holding and plans to meet management to help operations. shery: walmart hasshery: fired 56 people in india as it restructures its operations, but denies local media claims that it is planning to leave the country altogether. is ceo says walmart committed to growing its business over there and is looking for ways to operate more efficiently. the fired staff include eight senior executives and there are reports that walmart is planning further cuts in april. haidi: the only way is up for tesla. shares rose above $500 for the first time, boosted by china's pledge to maintain electric vehicle subsidies this year, leaving analysts grambling to raise their price targets. october. doubled since

coming up next, the ceo of australia's largest natural gas producer is talking to us about climate change. this is bloomberg. ♪

reporter: this is "bloomberg daybreak: asia." the u.s. is dropping its designation of china as a currency manipulator, clearing another hurdle ahead of this week's trade deal signing. the treasury is making its announcement in the semi annual report that was delayed by the phase one negotiations. critics had attacked the manipulator label. the currency strengthened to 6.883 monday. iran had seen a second night of protests against the downing of the ukrainian passenger plane. videos on social media showed unrest into ron and other cities with some clashes between social -- protesters and police.

end ofe calling for the the revolutionary. . guard president trump has continued to tweet his support for demonstrators. a long-running protest in the hong kong prompting more asset managers to give to singapore. that adds to signs that the city stage is taking a business at the expense of hong kong. family office advisors are looking at logistics as a move and growing numbers of hong kong parents are considering singapore schools. u.k. economy unexpectedly shrank ahead of the general election. this prompts doubts about whether there was any growth in the fourth quarter at all. policymakers are debating whether further stimulus is made -- needed to support the economy. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries.

this is bloomberg. haidi: time ticket a market check with sophie. sophie: asian stocks are seeing gains. the yen has reached 110 for the first time since may. the offshore yuan extending the advance. breaching 690 for the first time since july. the korean won trading at the strongest level since april. chipmakers are rallying. the cost be pushing higher by 8/10 of 1%. gold miners are under pressure in sydney. ther a three-day weekend, nikkei two to five climbing above 24,000 points this morning. softbank is among the biggest

boosts.- let's check in on the stock. softbank rising for a third straight session as another softbank startup streamlines. the indian hospitality startup is set to have thousands of china -- scaling back ambitions for cutting costs. exhibited more than 200 cities. pan pacific sliding at a 3.4% drop. japanese construction, let's 10%k it in, jumping over this morning, surging the most since april 2018 perhaps on recovery hopes after the company cut its annual operating income outlook. operator, at muji which has not traded for now. adr has dropped 10% in the last two sessions. the company on friday recorded a miss and cut guidance due to uncertainty. at 2129eeing the stock

yen. turning to secretary of state mike pompeo speaking at the moment in san francisco, delivering remarks at the silicon valley leadership roop of the commonwealth club. thesecretary now saying u.s. is increasingly at risk from china's action. this coming just hours after the u.s. actually removed china as a currency manipulator from the semiannual report. also ahead of that signing of the phase one trade deal on wednesday. secretary pompeo speaking right now in san francisco, saying the u.s. is increasingly at risk from china's actions, perhaps just a cautious tone as we see trade tensions easing between the u.s. and china. we will get you more as we get more remarks from the secretary in that event in san francisco. for now, let's turn to the

philippines because the stock exchange is set to reopen later today. this is after the volcanic eruption south of manila shut markets, schools, and even the airports. our reporter claire yellow has the latest. . hasad heard -- claire yao the latest. we heard there was a partial opening of the airport. reporter: in manila, things are starting to clear up with classesnt, work, and resuming. markets are expected to reopen around 9:00 a.m. later. the ash cleared up, especially around the airport, which allowed it to partially reopen after being closed sunday to monday. they canceled as much as 500 flights, affecting is meaty ash many as 80,000 people. there are a lot of delays just because of that backlog. morepect to see some improvement today, but it could take a while.

were --he markets, they treating was suspect -- suspended monday, but it is expected to reopen. volcano was at the second highest alert level, which means hazards of explosive interruptions could happen in the coming days or even in the coming hours. we continue to see lava and dark gray steam coming out of the crater, and it has triggered as many as 200 earthquakes in the area.that could be indicative of more volcanic activity upcoming. as we continue to monitor that volcano, attention is turning towards evacuations. the government has cleared only about 30,000 people from the area. a fraction of the target of about 200,000, according to the emergency plans. ash continues to make some national roads impassable, but helicopters are on standby to help with rescue. haidi: you mentioned the

expectation or the fear that things could worsen. what are geologists saying about the potential for another repeat of what we saw yesterday? so far, we are still at the same alert status, which is the second-highest so far, but they do mentioned that the highest status, alert level five, is when the hazardous explosion is ongoing. that has the potential to trigger more earthquakes and even what they say is a vertical whereion -- irruption, lava would be x bold from the volcano which could trigger tsunami said the area. so far, we are still at level four. haidi: thank you so much for joining us. to the bushfires in australia. peter coleman says the industry

has suffered and unfair "black eye" in the debate from climate change. we discussed the fallout with bloomberg exclusively in saudi arabia. it has been a very, very unusual event. as you know, the australian bush is designed to burn, but we have seen this year unusual weather conditions. it has been the hottest year on record in australia on average. during the bushfires themselves, we saw a record temperatures in some local areas. the images of course are very and quite shocking when you think about it, not just the loss of forest, but the wildlife and the effect on the people who live there. . the debate in australia zapping up with respect to its intensity. i think we have to get through the triage of trying to repair what's happened and then that debate needs to occur and it

needs to occur quickly. reporter: but you think climate change is the biggest risk for the industry? >> certainly it is on my risk register of the largest thing we know to be looking for as a country. five years ago, climate change was not the biggest issue we were dealing with. today, it is by far the biggest issue and it is in a number of areas. it is what consumers think about the product we are selling, and that's the most important thing. it is a product long-term that consumers want? secondly, can we attract employees? do they want to be part of an industry that is getting a bit of a black eye? and of course, long-term financing. there are a number of factors to deal with at the moment as we think about climate change. qatarer: australia and are neck and neck i believe with data numbers for biggest exporters, but lng had a huge

glut in 2019. what does this mean for your business? >> it doesn't matter who is the biggest exporter at all, we are supplying as much as we can into the marketplace. 2019 was a tough year, particularly for the spot markets. the previous year, chinese demand drove the market and drove pricing up, but in 2019, we saw quite a bit of softening. we think 2020 will actually be a tougher year. not for long-term contracts, but for the pricing. the u.s. hasn't found a home yet. reporter: what about china? has the trade war hurt this lng market? we know china has become more energy independent. they want to be dependent on imports in the wake of the trade war. if they are not the big driver, are you worried about who will be driving the market? nott certainly causes try

to pause as they think about energy security. energy security is for any notion. with the trade war going on, the u.s. actually become such a large exporter of lng, and certainly to find tariffs put on that, i'm sure it forced the trainees to sit back and say, where is our source of supply coming from? is this what we want for the future? we are still confident they are because they have alternative fuel sources whether it comes out of mozambique, russia, australia, or elsewhere, but it certainly did put a damper on the market. shery: the woodside petroleum ceo peter coleman speaking exclusively to bloomberg. coming up next, our exclusive interview with ubs security chairman eugene qian. this is bloomberg. ♪

shery: this year saw the

official opening of china's 45 trillion dollar financial industry and foreign investment bank. they include ubs securities, which had its sights on doubling headcount in the next three to four years. let's go back to our ubs greater china conference in shanghai and our reporter tom mackenzie. thank you very much. i am joined by the chairman of ubs securities here in china, eugene --eugene qian. out the sizenting of the financial here in china. it is a huge opportunity, but a lot of western funds are now bedding down in china. what are your priorities for 2020? >> for us, it has always been extend the lead in investment banking through ubs securities.

also, establish a very strong, local presence in onshore china markets in wealth management and asset management. these are the global businesses we have other than the domestic swiss banking business. on all to put it cylinders to develop our three key global initiatives to leverage. reporter: as you look at the year ahead, what do you think will be the key drivers of revenue for the business? which sectors will be driving that? sectors, it will be domestic consumption for sure. theill be china opening to world, which will be a lot of new free-flowing capital. we are forecasting something around 300 billion rnb year into asia, notwithstanding the msci for asia inclusion already increased to 20% and not going to further increase.

continued inflow of the international capital, those are active nowadays. there is a lot of flow into the china domestic bond markets that's even bigger. for bloomberg and others, if you were to increase the trainees bonds into the index, -- chinese bonds into the index, we have billions with inflow of foreign capital into the domestic bond markets. reporter: in 2020? >> i think it's starting now. reporter: we have seen record defaults onshore. to thinkiving pause about whether it is still too risky a market? >> you have to differentiate. when you talk about international capital into the bond, there is a financial bond, policy bank bond, the corporate bond. the credit bond depends on the rating. ease, they arefo

aaa or aaa plus. we extend to set up international or graduating, and hopefully we will have more clarity. we are not seeing massive flow into the chinese corporate bond as of yet, although later on there should be relaxation. reporter: what is the ipo pipeline looking like? >> fairly interesting and growing strong. last year in 2019, we did our we have a board ipo,

stocks change registration following the u.s. sec filing or the new york stock exchange approving those ipos. we have our first one and we are working on the second one in the logistical space. they are helping the high-tech and in certain sectors, including new material, new energy, and pharmaceutical and the smart manufacturing companies to raise funds. we have seen growth in this market. there will be more and more chinese companies seeking domestic ipo as opposed to the overseas ipos. china is still in a phase of capital formation. reporter: what are the key challenges for the business in 2020? is it talent? you have so much competition now from j.p. morgan, goldman sachs. >> yes. , especially for

the financial services. across to wealth and also asset management. we make sure we have the whole lifecycle. , weire the right people train them, we retain them, not just pay them competitively, but more importantly to promote them into the ubs culture. we hire the right kind of employees and colleagues who will become the backbone of the workforce and carry our franchise towards the future. theother competition in market is you do see the chinesee of the strong security firms who are much bigger, focused on many multiple frontiers, including retail brokerage and others. our international partners choose not to operate in. that's not our global strength. we focus on more institutional business and high and of wealth

management, both in the ubs securities. i think we have to pick our battle and then position well for more competition. i think with the more financial opening, we can see that we play into our strengths. reporter: always good to talk to you, the chairman of ubs securities here in china. thank you. great to hear you and also from eugene. they will both be back at the ubs greater china conference in time.utes tom will speak with the ubs head of china equities, thomas fang. coming up in just a moment, prices of everything from onions to gasoline and medicine are surging in india, putting the r.b.i. in a tight spot. we will take a look at the central bank options next. this is bloomberg. ♪

haidi: we are getting for the remarks from the secretary of state mike pompeo speaking in san francisco at the commonwealth club event. he said countries were unprepared for china being in 5g systems. of course, this is in line with u.s. warnings about the likes of technology. and 5g this week, we heard warnings from senior u.s. officials to the u.k. saying that using their technology and 5g in the u.k. would be nothing short of madness. mike pompeo says the country is

also unprepared and that the u.s. continues to be in conversation with north korea. the secretary of state saying the u.s. is increasingly at risk from china's actions. he spoke earlier at stanford today saying the actions towards iran, the killing of qasem soleimani, were part of a broader deterrence strategy. we will leave that there and bloomberg subscribers can continue watching at live go. you can see the diary entries for the day and the rest of the week and any key events you might have missed. shery: one of the big headlines, india's inflation rate hitting a five-year high in december, far above the rbis target and prompting expectations of a further pause, rate cuts, even as the economy uses momentum. kathleen hays is here with the numbers. it really puts the r.b.i. in a difficult position. what is driving prices up? reporter: just about everything. inflation hitting a five-year high, up 7.35 percent, measured

by the consumer price index. that's the big one. it is the biggest, deepest jump since july 2014. problem.fact a let's jump into the bloomberg now and look at a simple chart. perspective.l into here is this more than 7% jump 2019. month of december you have to go back to 2014 to see an even bigger jump. lower, able to cut rates five times last year. he did not have to worry about inflation, but a lot is going on at once. for example, prices across the board, food, fuel, medicines, mobile, home prices up 4.3% and food prices up four point 1% year-over-year led by a surge in vegetable costs, especially onions. you want to take a look with me, onion prices have been up as much as 60%.

this is a price of rupees per barrel. in the middle of the year, they were down to about five per barrel. one more thing that makes this a big worry is oil. oil prices during the u.s.-iran tensions went over $70 a barrel on brent crude. they have not come down that much. that's another big reason why everyone in india on the government level and central-bank level are getting worried. haidi: can the reserve bank afford to wait to pause with the economy slowing, even as we see a spike in inflation? reporter: it's a very tricky time because their gdp seems to slow to 5%, down from 8.2% in 2017. that will be the slowest since 2009. that's a time since prime minister modi promised he will create a $5 trillion economy by 2024. to do that, india needs to grow at 9% to 10% annually.

some people are saying it will not be caused, ultimately, you will see a rate hike. the nifty 50 has gone up sharply. bond yields have rallied. they are down. some people think they are stabilizing but inflation will move higher. you also have the rupee that has gotten stronger. it has stabilized. i think this is something to think about. if inflation keeps rising even with a slowing economy, eventually, the r.b.i. won't be cutting higher in february but we are looking down the road to possibly hiking. haidi: our policy editor kathleen hays with the r.b.i. conundrum. let's get a preview of what we are watching later this morning. sophie: we are awaiting chinese trade figures. the hang seng has declared pre-protest level closing at eight month highs. the biggest duck by market value. tencent --

shareholders sold a 2% stake about two years ago. we are keeping an eye on chinese auto stocks. mainland car sales falling 8% on an annual basis. we are also looking at saic motor. forecast at 29% drop. coming up in the next hour, we have an exclusive interview with the bnp paribas ceo. the bank is one of only two with a coveted type a bond license in the mainland. we will head back to the ubs greater china conference in shanghai as well. we will hear from the ubs head of china equities, thomas fang. the china open is next. this is bloomberg. ♪

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>> it is 9:00 a.m. in shanghai. welcome to "bloomberg markets: china open." i'm tom mackenzie. yvonne: i'm yvonne man. we are counting down to the open of trade. david: i'm david ingles. the japanese yen weakens as a currency manipulator is removed. yvonne: markets reopen in manila after monday's temporary halt. a volcano continues to rumble, causing thousands to leave their homes. david: the world's -- to