♪ heidi: good morning. we are counting down to hr's major market open. -- two asia's major market opens. shery: president trump is urged to resign following riots on capitol hill. to beesident said weighing widespread pardons.

asia looks set to extend u.s. gains as investors focus on the chance of more stimulus under joe biden. markets are looking also ahead to samsung earnings. have gotten aay boost from the global stay-at-home trend. and japan imposes a state of emergency on tokyo. haidi: we did just get breaking news crossing the bloomberg on south korea current accounts. november accounts widening year on year to just shy of 9 billion u.s. dollars. the bank of korea releasing that .ata last year, november surplus was 5.97. the good trade surplus coming in at 9.5 billion dollars in november, slightly narrower than the $10 billion surplus clock

for october. inare seeing 719.7 million november, slightly bigger than the deficit for october. let's look at how asian markets are setting up this friday. sophie: earnings will officially be more important for investors with more than 200 companies listed on the index set to report this month. we are seeing gains this morning 3600 at the start of cash trade, the biggest jump for the benchmark in two months on thursday, and also, we will be to stateeaction capitol's richland being put on house arrest. upsie 10-year yield trading march highs, looking to extend the bond rally for a fourth week after seeing commodity price

support for the aussie dollar. let's check in on what is happening ahead of trade in japan. you have nikkei futures in chicago opening little changed while the yen is staying below that 1.04 level, but the move .oward 1.03% ahead of the u.s. jobs report, we are seeing futures lower. we have jp morgan saying treasuries are in oversold conditions. little change after the rally we saw on wall street and nasdaq futures little changed as well after the 2.5% jump we saw in the benchmark overnight. they are wrapping up a less than quiet week given what we saw in the capital. along with speculation alibaba may see a stock ban, which is

not derailed. shery: let's talk about those events in d.c. president trump is said to have prepared a sweeping list of individuals he is hoping to pardon in the final days of the administration. we are told to include senior white house officials, family members, some celebrities, and possibly himself. let's bring in jack fitzpatrick. can he really do this? pardoning it comes to himself, that is a very, very legally questionable area, primarily because nobody has ever tried to do that. the supreme court has not ruled on this because they have never needed to and probably assumed for a while they would not need to. a lawyer could get much further into this, but the argument essentially boils down to on one hand, the constitution lets him pardon people. it does not say this person or

that person. hand, there is a fundamental issue of if the president can pardon himself and essentially do anything and get away with it, does that turn the constitution into a self-contradictory document when it describes his role as a faithful execution of the law? that is kind of the fundamental question that the supreme court would really have to rule on if this became relevant, but as you mentioned, our white house team that beingporting on part of what is on the president's mind at this point. in the meantime --haidi: in the meantime, we are also hearing the revival of calls to impeach the president. the exercise of the 25th amendment still up for debate. how much support are we hearing in d.c. at the moment? it comes to

impeachment, this has quickly become the mainstream democratic stance. we don't know about timing. it was very quick that representative is known omar offered articles of impeachment -- it was very quick that representative omar offered articles of impeachment, but sheker pelosi made it clear rather rely on the 20 for the amendment, so they are not moving immediately on that. but the democrats are in favor. we still have not heard from any key republicans who would seem to move the ball forward on any of those, people like lindsey graham, who did basically say the election is over, so he does not think that either of those are appropriate. it seems to fall in line with the first round of impeachment unless something changes going forward. shery: yet, we are seeing people close to the president starting to abandon him, cabinet members quitting. what do we know so far?

jack: we are seeing some staff and cabinet members leave. maybe the most notable recent one, elaine chao, the transportation secretary, who is married to mitch mcconnell. the caveat there is of course people are hoping that the 25th amendment will remove the president, which requires support from the vice president and a majority of the cabinet. it signal your opposition to the president by resigning, that would preclude you from removing him from office, so they seem to be going in a different direction and more symbolically leaving trump. resigning at the very end of his term does not make much of a difference, especially if it precludes removing him from office now. haidi: entering strategic moves. jack fitzpatrick, our congressional government reporter with the latest. media flexing muscles

in the aftermath of the capital protest, banning president trump for at least the rest of his time in office. twitter, youtube, and instagram blocking him for the foreseeable future while facebook is extending a ban on the president indefinitely. fromher news, reports china may require the u.s. to drastically reform its presence in hong kong as tensions between the sides continue to worsen. authorities may order washington the consulate,at register with chinese authorities and restrict certain activities if the u.s. imposes more sanctions on hong kong, and the australian city of brisbane is imposing an emergency lockdown after the u.k. variant of the coronavirus was detected there. residents of the country's third biggest city will have to stay-at-home and wear masks outside. the prime minister has called a

national cabinet meeting following the case of a worker testing positive to the variant. meanwhile, the head of the philadelphia fed has echoed since the federal reserve may begin peeling back bond buying this year. we could see such a move later this year or next depending on the state of the u.s. recovery, he warns moving too soon could endanger profits. i'm karina mitchell. this is bloomberg. ahead, we have an exclusive interview with the cleveland fed president. her thoughts on the u.s. recovery, the outlook for stimulus, and the crucial role of diversity in economics. next, we

>> it's a terrible tragedy for the country. >> we will never be the indefensible nation again. >> the united states has squandered its moral authority global lead what a political and economic system should look like. >> this is a president who has actively encouraged this kind of behavior because if he had not, it would not take place. >> the republican party started as a third-party. it was the party of lincoln. we may have to do that again. >> we may have to set aside this notion of being tied to one person. hasmerican democracy survived, and none of our leaders will be intimidated or fearful of doing what is right

for the country. guests on bloomberg tv reacting to what happened at the capitol. we have some breaking news. saying mikeiders pence will be opposing and invoking the 25th amendment which provides an avenue for a president to be removed from the helm of government when necessary under extraordinary circumstances. we have heard speaker nancy pelosi and senate democratic leader chuck schumer calling for this measure. the new york times saying it is when mr. pence will alert congress of his position and that this is supported by several congressional officials. we are also hearing that the police chief of capitol hill will be resigning january 15. of course, that is just ahead of the inauguration on january 20, given the armed attack on the

capital, unprecedented in modern times. despite the chaos on capitol hill, investors are focusing on the effect that more robust stimulus might have on the economy. our next guest says stimulus may not be as reflationary as many think. she joins us on the line from toronto. great to have you with us. give us your views about what we can expect, especially given that we have all this rage over the reflationary trade. >> let's be clear, stimulus is inflationary and does support growth, but what surprises me is this blanket view that we are getting this tremendously different inflation outlook. is not point of view, it as inflationary as some of the conversation that i hear. you're going to see a higher

probability of tax cuts. going to bee we are getting a lot more redistributive type policies in 2021, but it's less inflationary than what we saw in 2020. in 2020, the fiscal spending we saw was similar to modern monetary theory or the idea you could spend into deficit without it being refunded. in 2021, my sense is we make start to see some fiscal tapering or a focus on increasing revenues. again, that is just not as inflationary as what we saw in 2020. the analyst consensus seems to be that at least one area where washington will be able to agree on will be these stimulus measures, more to come, especially when it comes to direct payments, perhaps from

$600 to $2000. do you expect that to boost consumer spending or for consumers to just save for the future? >> it will certainly boost consumer spending, and it does boost growth, but it does not increase long-term potential. does it boost productivity? is it going to give us high multiplier type of spending? probably not. what we want to see is higher infrastructure expenditure, more money heading towards r&d, more focus on gains. that is not to say this type of stimulus is not appropriate for what is the greatest recession of our lifetime. it is necessary for us to prevent going into a depression-type environment, but is it going to boost us from 2% to 4%? are still stuck in a 2%, two .5% inflation environment.

almost everyone we speak to on the show so far over the past few months, including going into the year, has said that the fed pulling back is not a theme we need to worry about this year or maybe next year. we heard from the atlanta fed president, who is a voting member this year, saying that could well happen, that we could have a sooner than expected tapering, obviously if the economic conditions are met. is this a scenario the market has not priced in for the moment? >> we had loretta mester saying she did not see tapering until 2022. in some ways, i think the market is putting too much emphasis on what a taper might look like and not enough on the possibility that the fed is still very much talking about extending the

maturity of its purchases. in my view, they are more likely to do that before they taper. or they talk about how other central banks have managed this, including bank of canada, in which they combined a taper with extending the average maturity of purchases. that, to me, is more impactful and will probably be more relevant to the long end of the curve. are not even thinking about thinking about raising rates, but they are thinking about maybe thinking about tapering, and my sense is that in the next month or so, they are probably going to want to lean back on the type of communication and appear way more dovish because these rates are moving very, very fast. we will be speaking to her ourselves in the next half-hour, trying to get more pointed guidance as to how she feels about the idea of tapering, but going back to -- i guess we talk about it being a mixed mandate, the mandate of social banks going beyond their

traditional areas. it comeshat means when to cryptocurrencies and alternatives, there is a role for some of these investment opportunities that are not stalled by central bank actions. >> you put it was a singly than my note did, which is to say central banks seem to be gravitating toward longer-term themes like green spending, climate change, and an equality. we are back to search for yield 2.0, but this time, now we are in an environment with interest rates really low and government spending really high, so my sense is global investors will be looking for asset classes that central banks cannot print and governments cannot tax or confiscate, so we will be

looking at by the box, but i think we will also see investors find a place for crypto in their portfolios long-term. does that mean it is necessarily a good investment today? depends who you are and what your horizon is today, but we should all get a fluent in what crypto is. i suspect it will become a significant part of our asset alec -- asset allocation conversations at the very least. havingalways a pleasure you on with us, frances donald. plus, we talked about earlier our exclusive conversation with the cleveland fed president, the outlook for stimulus, what it means for the fed position and in crucial role of diversity economics. all of that coming soon.

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ma's group may restructure its credit in the face of new regulations from beijing. the move is aimed at protecting its most lucrative business as the mainland fintech scenario changes. says domestic and international pressure on alibaba means the stock is increasingly attractive and investors should consider buying in. shares fell again amid continued scrutiny from china. alibaba is under investigation in beijing for alleged novelistic practices and faces a potential ban on investment from the u.s. engine baidu is planning a second listing in hong kong that could raise more than $3 billion.

it says it aims to sell shares in asia in the coming months, offloading 9% of its share capital. the numbers are based on baidu's valuation. capital andapanese surrounding prefecture are under a month-long state of emergency as the prime minister tries to stem record infections in tokyo. our policy editor joins us now. the prime minister pledging last night to improve this situation in a month. how likely is that looking? hard to say, obviously, yet, but one thing to note is -- itt works pretty well worked pretty well at controlling the infection, albeit at the cost of triggering the worst economic downturn on record. the numbers now are far worse

than at any number -- at any stage of the infection so far. at the same time, it is a markedly less stringent emergency rating that we saw last time. local governments will urge people to avoid going out unnecessarily, but only after 8:00 p.m., and bars and restaurants will be instructed to close at that time, and they will be encouraging remote working. given that none of these rules are enforceable under current law, several experts are asking if that will be enough to rein in new cases and get them on a downward trend. that could mean the emergency has to be extended beyond a other nationsral are asking to be added to it, which means japan could go into a recession at the end of this year. a risky strategy to

undertake. what does this mean for the premiere if he fails to get this under control? lexi was installed basically to take over the final year of shinzo abe's term in office. question has always followed him as to if you will be a one-your premiere or if you will make enough of a success of it to hold on for several years. he has always been seen as this kind of pragmatic person who puts the economy first. if he does make a big miscalculation, that could damage has already falling public support, and the country might well be tempted to look for another leader to take them into the november election. shery: is there a viable opposition party in japan right now? >> at this point, no. the opposition is still in complete disarray. it has been divided for several

years now. it has splintered into several , and it hasctions really failed to get support out of single figures at this point. no, at this point, we are not really looking to see a change of government completely, but it could be that we see a different leader, and we could possibly go into the situation we saw for many years in japan where there was essentially a new prime minister every year. coming up next, our global economics and policy editor kathleen hays will be speaking with a very special guest. kathleen: that's right. after the break, i will be joined by the cleveland fed president. we will get her views on the u.s. recovery, expected stimulus, and the importance of diversity economics. why america needs to close the

inequality gap, particularly when it comes to women studying economics. the interview is next. this is bloomberg. ♪

welcome back to "daybreak asia." we want to welcome bloomberg television viewers and radio listeners all over the world as i'm joined by loretta mester, president of the bank of cleveland, for an exclusive interview. welcome. loretta: thank you, kathleen. good to be with you. kathleen: i want to start with the big picture. 20/20 was the year of the pandemic. the fed's biggest talent was presenting -- preventing a health crisis becoming an economic crisis.

.021 a year of hope vaccine rollouts, then an historic election which paved the way to more economic ,timulus in the belief of some and finally chaos. you're exactly right -- 2020 was unprecedented in a number of dimensions, posed a lot of challenges to everyone in the country and worldwide with the pandemic and its aftermath and how we had to shut down parts of the economy to try to control the virus. i'm optimistic that the second half is going to be quite a bit stronger than we saw in 2020. yesterday's events were a real dark spot on the american country, on our american

democracy. really a stark reminder that we should not take american democracy for granted, but i'm hopeful there as well. the voters have decided we are moving in a new direction, and i hope we will learn from yesterday and that we will be able to make progress on strengthening the foundation of our democracy and remembering our values of civility and working together. this year looks like it is going to be a good year in the second half if virus and vaccines -- you know, vaccinations get done. i'm hoping by the third quarter, they will be widely distributed. people will be vaccinated and we can get back to some semblance .f broader economic engagement we have to get to that secondhand, and that is where i think the virus will dampen growth near term. the challenge is really working

to make sure that we get to that second half of the year with as little damage as possible, and for the fed, our job is to make sure we are using our tools to support the recovery so that it that it can get broader based and more sustainable. we are going to always be focused on our dual mandate of maximum employment and price stability and make sure we are there with our tools to support price stability. kathleen: let's take a look at one thing which may be very important to your mission this year, which is democrats getting majority in the senate, which has led many people -- politicians, economists, investors -- to say we are definitely going to get substantial additional stimulus. will this affect your outlook? is it possible there would be enough of an impact that the fed

less start thinking about stimulus coming from monetary policy? loretta: i do not think of it that way. early in the pandemic, we had monetary policy and fiscal policy acting in tandem. they were complement tree, and they were doing different things, as you pointed out in the intro, where financial markets were very much under pressure and stress, and in february, the fed stepped in to economic crisis was not put on top of a pandemic crisis. we brought down accommodative monetary policy, and we had set up some facilities so credit could continue to flow. the fiscal authorities did stimulus payments, households, and individuals, the ppp lending to help small businesses, and other aid that were grants that could be given to the really .tressed households

the second cares act or the package that was just past -- again, that was really targeted on those most vulnerable. if there is another package next year -- and of course, that is up to congress -- that will presumably be targeted as well so we can get to that second withwhere we have a chance the vaccinations being broad-based and getting beyond the pandemic part of the recovery into a post-pandemic, post-vaccination part of the recovery. i do not really see it impacting the need for monetary policy because i do not think we will back.essarily i think this is a journey, not a sprint. kathleen: i think the bond markets are looking at a bit of a pickup in the pace at the very least.

people are betting on reflation in the u.s. around the world. higher inflation -- do you see perhaps then they need to take action on something the fed discussed, which is extending maturity bond purchases just to make sure those yields do not rise faster than you want and, in know, put a roadblock front of some sectors? loretta: we always going to meeting asking if our policy tools are well calibrated to our economy. my own view is that our policy calibrated to a week softening in the first half of the year and a pickup if we get the vaccine widely distributed in the second half of the year, and i would not necessarily think that we would want -- if things come in the way i am expecting, i would not necessarily want to revise our

policy, our current policy. i think it is well calibrated to that. if there is a slowdown along the lines i'm expecting in the first half, i would not want us to necessarily react to that when there is a pickup in the second half of the year. i do not think it would necessarily be appropriate to change our policy stance because i do not anticipate we will have made significant progress toward our mandate goals. outlook driving our policy decisions. kathleen: isn't one of the purposes of bond purchases to manage long-term rates? if they continue to rise, you are saying that is ok because the economy is getting better? is that what you are saying? so you would need to slow down that rise in long-term rates, so you don't need to use a tool like lengthening maturity bond purchases? loretta: there's two things going on, expectations about what the economy will look like, the real part of that, and also

inflation expectations. part of what we saw over the last few days was the rise in inflation expectations. the way policy works, it works beh lags, and it has to forward-looking, but it also means it is going to mean more patience than what a gyration and a bond yield would be or what i gyration even from the economic data would be. we are going to be patiently accommodative, and of course, we will recalibrate as necessary to support the economy over the as an run, but i view it important where is the economy, where are we relevant to mandated goals, and calibrate policy relevant to that. kathleen: you said this week it will take inflation and long time to get anywhere near your marketut again, the bond reflects, and a lot of economists and investors think inflation could pick up for many

reasons this spring, the year-over-year comparison -- we have seen commodity price rises across the board. what is the probability, given especially the prospect of more stimulus coming on board, that inflation will rise faster than you expect and hit that target twitter -- hit that target quicker than you expect? loretta: what we have learned is that the dynamics underlying inflation are different than they were in the past, and, you know, we are in a lower interest rate environment than we were over the past decade or so, a decade ago. again, really, those inflation dynamics suggest that inflation is going to be moving up slowly. going to bere changes in commodity prices, but will they be sustained? i think we have to look at what

we learned over the past 10 years always with the humility that yes, things could change, but then calibrate our policy to what we think the expected path of inflation would be. my expectation is that it will be a while before inflation gets to 2% and then is on a path to be above 2% on a sustainable basis so that it is above it for a while so we get to that average goal. stock market,he people are always attributing a lot of the bullishness to the fact the fed has promised to provide liquidity or support, stimulus, as long as it needs to, and that could be a while. some people say the is possibly helping to create a stock market bubble. i'm curious what you see about that because a question we have not asked in a while is if you want to keep the stimulus in creating maybe risk

asset bubbles, should the fed dust off a seldom-used tool, margin requirements, to keep the stimulus in place and make sure the market does not get to frothy? too frothy? loretta: we haven't were to really understand monetary policy and financial stability, and we continue to do that work, and we are very focused on monitoring financial stability risks. that said, of course, we are contemplating monetary policy for quite a while, so we have to be attuned to the fact that could create some risks. i do not think we are in that position right now. nothing going on in the stock market suggest there's financial excesses or risk growing, but i do think we have to be attuned

to that and understand the tools we have to ensure that we know,in, you well-functioning financial markets, which we saw last year, we had some issues with and we addressed, and then to make sure we are not in a situation where there's financial instability risk. we even say in our statement that we are continually making monitoringe are could compete, getting back to our dual mandated goals, and of course, we continue to monitor for those. question about the main focus for the fed, but certainly the focus for a lot of investors, and that is bitcoin. we are reading about institutional investors getting involved now. china is developing its own cryptocurrency. is this an indication

cryptocurrencies are coming of age and it is time for the fed to establish some development? loretta: there is a study being done just in terms of understanding what the implications of digital currencies are for the financial system, for payment systems. we have some work going on within the federal reserve and even some experimentation with some of the technology so we are well aware of some of those things. there certainly is not any move to set up a digital currency, but, you know, we are part of system.ent we think we need to understand the developments there, but there is something -- but it's not like eminently we are ready to set up a digital currency at this point. kathleen: all right, well, the conversation is not over. cleveland fed president loretta mester, please stay with us.

this is bloomberg. ♪

kathleen: you are watching " bloomberg daybreak asia," and we are speaking to cleveland fed president loretta mester. she continues with us along with coanchor haidi stroud-watts. i want to get to women in economics.

i will never forget my first advanced econ class. kids,, like, a hundred there were, like, nine young women. you surprised by the small number of women studying the subject compared to other social and even hard sciences? loretta: not really because back in the day, we did not even have math professors in barnard. you had to go across the street to columbia. as beingt strike me unusual that there would be no women. importantis such an field. it touches everyone's lives. policymakers make policies that touch everyone's lives. business people make hiring decisions that touches

everyone's lives. because it is such a broad field, and it really is important for everyone, i think it is really important that we have a very diverse group of people going into economics. i don't know how you feel, but my own feeling is we could do better along those dimensions. talked about have this. you did a recent speech where you mentioned nudges. when you were a young college student, you got a nudge from very important college professors that made you think of leaving math and going to economics. what was that experience, and how does the research look at that more broadly? are basicallys trying to move your decision-making a little bit. i was nudged a lot. i applied to graduate school in mathematics. applied to princeton.

i happened to get letters from two professors there who said, "hey, we saw your application. instead of going into math, why don't you come here and do economics? it is a very mathematical field as princeton teaches it." so i did. that nudged me into changing my whole plan, and i went there and got my phd in economics. they are trying to do some of this experimentation at the undergraduate level, but trying to get more women to major in economics because one of the issues is that women do not major in economics at the same .ate as men we are only majoring in it at 1/3 of the rate as men. in terms of what problems you can help solve or

financial problems you can engage in. there's mixed results. american economics association meeting earlier this week. there was mixed results on if they work or not, so there's a lot of work going on to try to increase diversity, not just women but also minorities to go into economics, and i think we can make progress because if you look at majors like mathematics and majors like other social , womens and psychology are much better represented than they are in economics, and those -- andare much better those fields are very similar. i also think a lot of it is making sure that we start younger, right? you have to start kindergarten through high school to really

expose people to economics, and the council for economic education -- i'm on their board -- that is what they focus on, economic education at that k-12 level. to encourage try my toddler to be interested in macroeconomics. you talk about these nudges. so much of it is also role modeling. it's great that young women now can look to yourself, can look to the lights of janet yellen and think there are rules for -- there are rules at the very top for women in global economics -- there are roles at the very top for women in global economics. when you werease in school? loretta: no, but i had a lot of help from men. that is another thing we need to

realize. we do not want to wait until we are diverse. it is important to get -- it is important to get to that diversity phase. we are going to have to rely on men. that is the great thing. you can see it happening in the .ield, the aa meetings the researchers doing this work are not all women. there's a lot of men interested in diversifying the field, too. another reason we really care is if you want the field of economics to be growing and taking on new challenges and innovating and using new methods and interested in new questions, you need to have diversity or else it will become a stagnant field and die out. i know that sounds silly, but you have seen that in other kinds of disciplines, so it is really important we not think of this as just women helping women. it has to be everyone helping to diversify the field. similarly, with minorities, you don't have very many

african-american/black economist. they are just not coming to the field, and we need to do better there as well. i think at the fed, we have about 700 phd economists, and we lot more bachelors and masters degrees, so we have a vested interest in making sure the field is diverse because we represent the public. we work with the public, and it's really important that we have all of these represented when we are evaluating what is appropriate policy. just that diverse decision-making is much better decision-making. haidi: absolutely. inform whatalso gets funded and people that are interested. see silos in terms of what female economists are encouraged to go into?

do you see a more consistent spread across all areas, including macroeconomics and finance now? loretta: i think that has definitely changed, and i think you are right. husband is actually a theoretical economist, and there are women theorists, right? economic span of areas, including macro, which is a place where the fed hires a lot of economists, it is very much diversifying, and that is all very good. we need to have just more areesentation because there a lot of open questions. there are a lot of things to work on, and getting diversity in kind of the approaches you take two questions, but questions you ask, as you point it a- that is what makes vibrant field, and that is really important because the decisions we make affect so many people in the country and in the

world, and the central bank -- different central banks making decisions, different fiscal authorities making decisions -- economics touches so many people that it behooves us to do all we can to make sure we are representing differences across different people, different locations, different concerns. kathleen: thank you. loretta mester, thank you so much, president of the federal reserve bank of cleveland, we are very happy you could join us today. loretta: thank you for having me. atry: we have breaking news the moment. cnn reporting that a u.s. capitol police officer has died following the violence on the u.s. capitol building yesterday. this brings the number of deaths to five. of course, that includes the woman that was shot yesterday and killed by capitol police.

now we have other people also medical emergencies proving fatal from the protest yesterday. cnn reporting that the u.s. capitol police officer has died, and we are expecting president trump to release a national unity video message tonight. recappingare also some of that breaking news. we have been waiting on preliminary fourth-quarter profit out of samsung. that was a miss largely due to tepid smartphone sales as a result of the new apple iphone as well as memory chip prices. in steve to sort of flesh out this story a little bone -- a little bit more. i guess a lot of this went down to apple's new spread of iphones

overshadowing the galaxy. >> that's right. it was apple's first 5g phone going right against the sweet spot of phones coming from samsung. that was expected, and again, after the third quarter results from samsung back in late october, they warned that the fourth quarter would be a little bit weak, but it was weaker than consensus estimates from analysts surveyed by bloomberg as well as bloomberg intelligence had a fairly robust estimate for fourth-quarter operating profit of $9.9 trillion with their estimates. $9 results came in at trillion. givent income numbers where they did not break out debt divisions. that is not given in the luminary numbers. later this month, they break down net income, but you are right, there was weaker smartphone sales, but samsung is set to diversify conglomerates. they might lose arc is shared to the iphone 12, and obviously,

they have competition from wally androm wally -- from huawei chinese sellers, but they also make screens for the iphones. haidi: this is bloomberg. ♪

♪ shery: welcome to "daybreak asia" from bloomberg world headquarters in new york. markets have major just opened. our top stories -- president trump is urged to resign after protests on capitol hill. the president is said to be weighing widespread pardons. the cleveland fed president

speaks exclusively to bloomberg. loretta mester sees stronger growth this year but says the fed must be careful with a slowdown or pickup. investors focus on the chance of more stimulus under joe biden. samsung one stop to watch as fall below earnings forecast. sales climbed, but again, missed the target. yum japanng japan -- and south korea coming online. sophie: we are seeing gains for japanese sox -- japanese stocks. the yen holding steady near one-month lows, trading below that 1.04% level. traders watching to see if there andt be intervention, traders will be watching for a 30-year sale friday and we also do from japanese

retailers. flipping the page, checking in on what is going on, south korea staffing results did -- south korea samsung results did ms. estimates. a superstry is set for cycle of demand this year, so that could bode well, along with fromorecasts we got micron. the kospi really looking to close out the year above 3000 points. on the backou on foot against the greenback. let's check in with what is going on in australia. you have tech and banking stocks leading gains, but minors are arer pressure -- miners under pressure, retreating from record highs. iron or trading your nine-your highs, and we have the 10-year

yield above 1%. levels in the aussie dollar slightly under pressure. we may see officials to drop the currency lower as it is in overbought territory. looking at the rally we saw on wall street, let's see what is going on with u.s. futures. bloomberg dollar just holding onto overnight gains. conditions could enable a tentative bottom for the greenback, noting that with the new covid trade spreading globally, that may extend lockdowns and allow for broadening recovery for the u.s. dollar, and of course, a lot of focus on what is going on with treasuries. you are seeing yields anchored above 1%, this as we got more fed speak on tapering potential and cautioning we are approaching oversold conditions

for treasuries. we are getting breaking news on the u.k. virus situation. the united kingdom now imposing mandatory covid testing on all incoming passengers according to the u.k. transport secretary, announcing these new test plans, saying that inbound u.k. arrivals without negative tests will be facing fines up 500 pounds. mandatory testing just being announce for all incoming passengers. this comes days after prime minister johnson announced the third week of mandatory lockdowns. the u.k. has the second worst totality rate. we have also heard over the past day or so further bands when it comes to arrivals from 11 countries, african countries, on account of this new covid variant -- we have also heard over the past day or so further bans.

shery: hopes more stimulus and -- hopes for more stimulus and higher yields from the slim blue wave. do you continue to see exuberance over this reflation trade? i wonder how much of your views have meaningfully changed, given this superslim senate majority that we are talking about for democrats. yeah, it has certainly been more of a nuanced change than a large wholesale change to our outlook. we marginally see the 10-year higher by year end from our initial estimate, and from an equities perspective, it does not change our overall outlook in terms of what markets we favor, in terms of price targets, but under the hood, it does change a bit in terms of what sectors we prefer. we see a bit more stimulus upcoming with estimates of

around $650 billion coming in the first quarter or so. that improves our view of cyclicals -- particularly industrials, transportation, and so on. tofavor sectors exposed cyclicality, but not really wholesale changes to our outlook. i find it interesting that your most positive calls are still on the two markers that ran so well into last year, particularly china and south korea. do you expect the rally to start to broaden? china.e still favor china and korea were two of the best-performing markets, asia probably the best performing market globally, including taiwan as well. we still favorite from a long-term perspective. we think china's growth potential is more attractive than most major economies. we think with korea we will see

very strong earnings rebounds, and we think earnings do not yet reflect that, and korea is the highest beta economy in terms of the global election cycle. strong rebound this year, korea should be tied into that nicely. as well, you have this text super cycle coming in next year with higher prices on semiconductors and increased higher demand, which should favor korea as well. with regard to china, yes, do expect them and broaden. do expect the drivers of the rebound to broaden from just exports and industrials more towards consumers, so we are favoring some of the more cyclical sectors in china as well beyond just large-cap tech. the cosbyare seeing seeing another record high and hyundai motors jumping the most in three years. we have reports apple will be teaming up with hyundai motor for self-driving cars, but at the same time, i wonder what happens when you have continued strength in the korean you on --

yuan. one -- korean onx: obviously, a strong you -- a strong yuan does hurt exports. we are not expect a significant strength going forward, but broadly stable, which does make for a more attractive environment for foreign investors. certainly when there's expectations of a weaker currency, you are not going to all those fears. and aect a stable yuan strong rebound from an earnings perspective. korea has largely been driven by tech, particularly tech exports from china and tech exports globally in the pandemic, auto experts have been hit globally broadly as a sector, but we expect that to improve as well just on the back of this broader cyclical recovery. shery: we saw samsung

underperforming when it came to fourth quarter profit. a lot of that had to do with the fact that we have seen memory chip prices falling. is that going to be an issue, especially given the reliance of semiconductor exports when it comes to korea as a country? is a very it significant aspect of the taiwan economy. certainly, you look at taiwan is producing roughly half of the global semiconductor supply, and so falling chip prices, certainly an impact on profits for the large companies in taiwan and korea. we think given the demand for dhips and given the increase semiconductor intensity of most products in the modern economy, we think we will see continued growth in terms of semiconductor demand. factorhip prices are a of supply as well, we think they have worked out a lot of the

oversupply bump we have seen in the past few years and prices should stabilize. we have breaking news at the moment. "the financial times" reporting beijing has ordered chinese media to censor coverage on alibaba. it told the country's media to censor reporting on the antitrust probe into the tech group. we actually have not seen founder jack ma for a few weeks now after its ipo had been halted. this move by authorities is control overxert the media coverage on these sensitive issues related to alibaba, according to "the financial times." let's get to karina mitchell with the headlines. : japan isarina

restrictionsnger infections.in covid however, they are less stringent than last year's emergency, which sought in japan's worst economic contraction on record. meanwhile, the u.k. variant of the coronavirus was detected. residents of the country's third biggest city have to stay home and wear masks outside. the prime minister has called a quarantine following cases of a brisbane worker coming down with a case of the virus. the semiofficial global times says authorities may order washington to cut staff member's at the conduit, register with

chinese authorities and restrict certain activities as the u.s. imposes more sanctions on hong kong. professorer hong kong and activist has been released on bail a day after being arrested alongside dozens of others under the city's sweeping national security law. the group has been accused of participating in an unofficial primary election last year that china says was part of a plan to paralyze the government and subvert state power. global news 20 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in more than 100 20 countries. i'm karina mitchell. this is bloomberg. ahead, samsung earnings missed. we break down preliminary numbers with an ing analyst. up next, calls to remove president trump from office. we hear mike pence is opposing invoking the 25th amendment.

this is bloomberg. ♪

just: president trump has released a video of national unity tonight on social media. he is now saying that a new administration will be inaugurated on january 20, telling supporters that their journey is only just beginning. he is focusing on a smooth and seamless transition. thatys he still believes election rules must be reformed. he did call those pro-trump supporters that stormed congress yesterday -- he called them rioters defiling the seat of democracy and said those that broke the law shall pay. he focused on a smooth and orderly transition of power, but again, the headline here that a new administration will be inaugurated on january 20.

of course, for weeks, president trump has not talked about the smooth transition of power. it has only been this week that he pledged an orderly transition given the violence we saw on capitol hill yesterday. in fact, given what has happened, there are growing calls for president trump to be removed from office before his term ends later this month. let's bring in congressional reporter jack fitzpatrick. how much support is there in congress to impeach the president? jack: we are hearing from more and more democrats in favor of impeachment in the immediate term, but it is still just democrats. it may mean something that we are getting to swing district democrats and more moderates, but we are not hearing from republicans in favor of impeachment. i would also point out this is not just because they are concerned about what happens over the next two weeks with trump in office, but the articles issued in a resolution

doesngresswoman omar bar thean option to president from ever running for president again. it is different than just getting him out of office now in that sense, but it is not a bipartisan effort at this point. to parse continue these lines from president trump's message of national unity, certainly taking a step back saying the new administration will be inaugurated on january 20. what are the implications for 50/50 said it

was when they managed to pass the bush tax cuts through the budget reconciliation process. there is a process to try to pass legislation through the senate with a simple majority rather than 60 votes. it has been done before with a 50/50 senate with the vice president's tiebreaker, so it's not impossible to see things like infrastructure or some extra coronavirus legislation getting through, but it is going to be very difficult because these are slim margins for democrats in both chambers. trumps a the meantime, fire could be making good use of the next two weeks he has still in the white house. bloomberg news has learned he may be compiling a list of pardons. jack: our white house team has a

really good story out on a very long list of people who are being considered for pardons. the number one person would be the president himself is on his own list as a preemptive pardon, and the number of people who could be preemptively pardoned for things they have not even been charged with, including chief of staff mark meadows, some family members, including a ivanka trump. the self pardon is a gray area because nobody has ever tried to do that. it is clearly legally questionable, but the list goes from the president himself all the way down to lil wayne and some figures in the administration. our government congressional reporter jack fitzpatrick. up next, beijing warns the u.s. of a heavy price to pay for what it calls washington's interference in china internal affairs. that refers to taiwan and hong

kong. this is bloomberg. ♪

shery: we are watching hyundai motors as it jumps by the most since 1988. this is a 33-year high coming after reports that it might be tightening up with apple in order to manufacture self driving cars. hyundai motor and a related parts manufacturer the two best now.s right hyundai jumping the most since 1988 after that apple tie up report. here's a quick check of the latest business flash headlines. jack ma's aunt group may restructure in the face of new regulations from regime -- jack ant group-- jack ma's

may restructure in the face of new regulations from beijing. domestic ands international pressure on alibaba means the stock is increasingly attractive, and investors should consider buying in. alibaba is under investigation in beijing for alleged monopolistic practices and faces a potential ban on investment from the u.s. chinese search engine baidu is planning a second listing in hong kong which could raise more than $3 billion. sources say it aims to sell shares in asia in the coming months, offloading up to 9% of its share capital. the numbers are based on baidu's current market value of about

$70 billion, and more banks and details may yet be added. china has made his displeasure known after the u.s. announced its ambassador to the united nations will be visiting taiwan. this latest news from washington adds more fuel to the feud between the world two to economies. chinaget more from our editor. -- this latest news from washington adds more fuel to the feud between the world's two biggest economies. we are still waiting to see if the foreign policy director will be different, but what do we make of this latest response from beijing? >> the response from beijing is in line with the way they have reacted to these actions in the past. obviously, we have had a number of senior trump administration officials visit taiwan this year. taiwan has always been sort of a point of contention, especially

for china hawks in washington, which see it as sort of a bulwark against chinese expansionism. i do think it could be impacted by the transition and how that might change foreign policy in the u.s. nominee to become secretary of state under joe biden actually also tweeted this week about the sweeping arrests in hong kong and use language really similar set aboutke pompeo standing with the people of hong kong against beijing. they really jumped on the .dea of hypocrisy >> the attack on the capital in given china the opportunity, with a domestic audience in mind, to say all these comments from people in congress, the administration about how the protesters in hong kong were peaceful, that seems

hypocritical on a day when they are calling similar protesters attacking the capital rioters and saying they should be arrested. shery: we have also today seen thisdevelopments on listing story, saying they will be going forward with the deletion of china unicom, china mobile, and china telecom. what kind of reaction have we had from beijing, and does this also raise their higher, and potentially we should be looking to see what sort of retaliation there is against u.s. companies? >> i'm not sure that any real retaliation will be forthcoming. the strategy of beijing, for at least the election, has been

when the u.s. takes action against china, for china to retaliate, to show that it is not going to take these things lying down, but to try to take actions that are not going to escalate the situation because ultimately, beijing wants to see what a biden administration will look like, what the policy framework will be when that administration comes in. i think you will see more tough , similar to when the new york stock exchange had its delisting/not delisting saga. willhina administration make the point of how quickly u.s. rules can change. samsung's fourth quarter numbers missed estimates. shares are still higher in seoul. this is bloomberg. ♪

karina: this is daybreak asia. while president trump is now promising a peaceful transition, he is still facing removal. speaker nancy pelosi wants vice president mike pence to act. republican mitch mcconnell are also calling for the resignation of the head of the capitol police force. denouncing what he calls as an assault on the citadel of liberty. president trump could be banned

from twitter come you to come and instagram for the balance of his presidency. facebook is extending a ban on the president indefinitely. shopify is removing online stores link to the platform -- to the president from his platform. resulting charges of fraud. the justice department says the accusations surrounding the 737 max returning to service. the doj says the charge is related to the original flaws and subsequent system upgrade. india says high frequency indicators point to a broad-based economic recovery after the decline amid the virus. the government says continuous quarterly growth shows a relatively stable situation. the statistics ministry admits the gdp will shrink by 7%.

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'm karina mitchell. this is bloomberg. with democrats set to gain control of the u.s. senate and house, joe biden will have a clean slate to reshape the economy starting with covid relief funds. mester. with loretta pandemicd about how relief and higher taxes could impact the u.s. and fed policy. , whenly in the pandemic you think about the beginning of the year, we had monetary and fiscal policy acting in tandem. a were doing different things. as you pointed out in the intro. the financial markets were very stress.er pressure and in february, the fed stepped in trying to make sure a financial crisis was not put on top of a

pandemic crisis. have set up some facilities so credit could continue to flow. the fiscal authority did the stimulus payments to households and individuals. lending to help small businesses and other aid that were grants that could be given to the really stretched households. es act was care i targeted on the most vulnerable. if there is another package next year and that will be up to congress, that will presumably be targeted as well so we get to the second half where we have a chance with the vaccinations being broad-based and getting beyond the pandemic part of the recovery into a post pandemic, postvaccination part of the thatery, and trying to get

up. i don't see them impacting the need for monetary policy to support the recovery. i don't think we will necessarily be back to our goals in a short time. >> i think the bond markets may be looking at a bit of a pickup in the pace at the very least. 10 year yields have decisively broken above 1%. people are bidding on reflation and higher inflation. needu see perhaps then the to take action on something the fed has discussed? to make sure the yields don't rise faster than you want and put a roadblock in front of some sectors. >> we always go into every meeting and we have a full discussion of our our policy tools well calibrated for the

economy. my own feeling is that the policy is well calibrated to our outlook which is a weak softening for the first part of the year and then a pickup if we well distributed in the second half of the year. i wouldn't think that if things come in the way i am expecting, i would not want to revise our current policy. i think it is well calibrated to that. growth, i slowdown in would not want us to react to that when there is a pickup in the second half of the year. i don't do get would be appropriate to change our policy stance because i don't anticipate making substantial progress to our goals. it is always the outlook driving our policy decision and progress on our goals. >> isn't the purpose of bond

purchases to manage long-term rate? if it continues to rise you say it is ok because the economy is getting better -- is that what you are saying? you don't need to use a tool like bond purchases? >> there are two things going on -- expectations about what the real part of the economy will look like as well as inflation .xpectations embedded part of what we saw over the last few days is a rise in inflation expectations. the way policy works is it works with likes and it has -- with lags and it has to be forward-looking. it also means it is going to be more patient then what the gyration in the bond yield or what some of the economic data would say. we will be patiently accommodative and will recalibrate if necessary to support the economy over the medium run. important to as

look at where the economy is and where we are relative to our mandated goals and then calibrate our policy to that. loretta mester with our global editor kathleen hays. let's get you a market check with sophie kamaruddin in hong kong. sophie: a decent week for trading in asia. asian stocks rising to fresh highs with tech along with energy. at 1990 highs. fresh records for the kospi. miners are hitting a wall as they see prices staying below 170. aussie banks are rising in tandem with the 10 year yields trading at march levels. and the benchmark treasuries holding above 10 would -- 1.08

this morning. quick check of some stock movers. sei motors. that there may be a tie up with apple cars. and a rise in tokyo shares. bridgestone is rising. keeping a close eye also on samsung shares. resultsfourth-quarter coming in less than forecast. interesting that move because samsung's profit for the fourth quarter missed estimates. 9.5% trillion -- 9.5 trillion yuan. let's get some analysis from idc

senior research manager, kiranjeet kaur. give us your reaction to the samsung numbers. kiranjeet: it is no surprise. , it faces competition. launched earlier in the year. q4 is not the strongest time. shery: when it comes to the semiconductor business, we saw a down cycle late last year. are we expecting a recovery anytime soon? kiranjeet: in q4, [indiscernible] coming quarters,

we expect a drive-in demand. really overe peak in terms of the demand? kiranjeet: it has been ongoing. for computing devices has peaked pretty strong. demand for home devices and for entertainment devices has been strong. what about expected or potential frontloading in front of an expected shortage? kiranjeet: hopefully, we should see some of these businesses start to stockpile in q1. will drive upt

the prices and that will be good for companies like samsung. shery: how much does a stronger korean wan hurt? kiranjeet: samsung makes its revenue -- that has definitely hurts samsung earnings to some extent but on the other hand, i would also say that the downsides from the chip business. they are doing well. samsung even if it hurts their smartphone business. s21 wille galaxy be revealed next week.

what do we expect in terms of demand? kiranjeet: the flagships boast of their abilities. they boast in these cases? what defines of the potential demand. i would say much of it will depend on the prices of new iphones. europe, and upside. but there are still countries in lockdown and that is clamping demand. haidi: great to have you as always going through those samsung numbers. coming up next come we have the latest on the pandemic. china is facing its biggest covid-19 outbreak in about two months. this is bloomberg. ♪

shery: a chinese city of 11 million people near beijing is in lockdown. it has recorded around 200 cases . lon china's biggest outbreak in about two months and there are concerns given the history

of what the country has gone through that it will spiral. they are not taking any chances. >> i don't think this is a huge sort of concern. whatnk this reflects on china has gone through a number of times since it contained the first large outbreak in wuhan earlier in the year. it has seen flareups in various cities and they have contained them with a playbook that has largely been successful. mass testing. they are testing the entire city. it is quite incredible when you think there are 200 cases and they are rolling out the testing of some 11 billion people. they are also using the quarantine system to control cases getting in at a pretty sophisticated tracking system that they use that uses surveillance technology and mobile data. i don't expect this one to get

out of control though it is really interesting in that it shows how insidious this virus is and it can still come back to places that have closed their borders and tried to snuff this out. shery: we do have more definitive results so far when it comes to the china vaccine. the biggestght, trials in brazil which has the world's largest outbreak which is a pretty good trial location. they came out saying that the shots are a 8% effective against preventing covid-19 from developing. -- 78% effective against preventing covid-19 from developing. along the lines of a little bit better than astrazeneca. theh is very far behind

moderna.ine like still in the territory of efficacy and working here. brazil says it will apply tomorrow for authorization of this wreck scene. .ao paulo -- of this vaccine sao paulo is relying on it. indonesia will also authorized vaccine and the president there getting the shot on tv. emma o'brien. shery: the las vegas ceo is taking a medical leave immediately. the chief operating officer robert goldstein will take the reins at las vegas sands and sands china for the duration. rose.s. chipmaker macron

in trade after issuing a bullish forecast indicating improving demands for its products. it says revenue will be about $5.8 million in the fiscal second-quarter, about $300 million higher than the average analyst estimate. the market is upgrading its view on tesla saying it misjudged its call. an analyst admits there is no graceful way to say it but our bc had this completely wrong. the broker has maintained a cell underperform rating during which time the stock surged more than 1200%. haidi: sticking with autos, hyundai is moving the most since 1988 with shares up as much as 24%. transport reporter is on the line. what about this tie up with apple? >> at this moment, we don't know

much. both sides are checking on the report. this is something that both companies have been focusing on going forward as their future business going forward. it is an important part of the but whether there will be any collaboration, we will have to wait and see. haidi: in terms of these ambitions are the self driving cars, what is the initiative on this path? >> apple has told us that any product that might come out on the autonomous side would probably be in the next 7-8 years. hyundai is right now working to put out company probably their first robo taxi next year.

companies are in various stages of development on this at the moment but obviously, this is something that no one company can do alone so there is a lot of collaboration going on between automakers and other tech companies that we know. it would not be surprising if there is any sort of collaborations that could come from this. reporteria transport with the latest. itsng up next, overhauling lucrative consumer credit business so it can keep lending nationwide. we have more on that story next. this is bloomberg. ♪

isdi: jack ma's ant group planning to restructure its credit operations to allow it to continue lending under new regulations. we have more. what is the hope that this overhaul will achieve? , antder current rules is expected to need a license to operate nationwide. its current lending business does not have those licenses now. the plans are right now to shift their loans and operations into this new entity

called a consumer finance entity that would help them continue lending nationwide. otherwise, the new regulations could threaten ant or dramatically restrict their comfortable businesses. haidi: the regulatory challenges that ant is facing seem to be growing at this point. is coming at them from every front. on top of the regulations with the loan business, we are also told at the high -- that at a high level, the government has told them to rethink their priorities and come up with a plan to overhaul the structure and a timetable. and this week, we saw the pboc come out with more regulations on credit. challengesso facing on the so-called financial holding structure that they have to receive a license for that the idea is that they are

planning to cut all the assets that need a financial -- to put all the assets that need a financial license into that entity. haidi: how is jack ma doing? lulu: the million-dollar question. our sources say he has not been detained. he is in the country. he has not been seen in public ever since the november ipo halt. his ownan that, fortunes have tumbled almost $11 billion since the end of october. broad gains across asia. let's turn to sophie kamaruddin with a check on what stocks she is watching. , weie: here in hong kong

are keeping an eye on mgm china shares. there are no plans to restructure. morgan stanley -- on mgm china shares to underweight. hong kong brokerages on the watch. they're looking for a rebound in the space. h shares are attractive. radar on as on the report that beijing regulators may suspend it from conducting business if it cannot finalize plans to dispose of risky assets. shanghai -- let's get a quick check on how our futures are looking at the moment. after we saw the

s&p 500 finish at another record high. gainers.s big yields are rising. we saw the taiwan dollar inching its strongest level 23 years. chinese futures ended the session higher. the yuan is yuan -- trading at its highest premium since the fixing in november. tvdi: coming up on bloomberg totephen will be joining us discuss these growing tensions between the u.s. and china as joe biden prepares to take office. will foreign policy with china change? and we will have more information on chinese telcos getting delisted in the u.s. there is continued confusion. that is it from daybreak: asia.

our market coverage will continue in asia. markets: china open is next. this is bloomberg. ♪

>> it is now 9:00 a.m. i'm tom. tom tom and opening of trade.