haidi: asia's major market opens. kathleen: welcome to "daybreak: asia." impeachment proceedings move forward against president trump as he says there is zero risk of the 25th amendment being used to remove him. we have the very latest from washington.

there are fear some vaccines may not be effective enough to halt the pandemic. more japanese prefectures call for a state of emergency. we hear from the world bank this hour. plus toyota and honda cut vehicle output amid a shortage of auto memory chips. producers struggle to satisfy rising demand for consumer-electronics customers. haidi: we do have some breaking news when it comes to korean jobs numbers, the number coming in as a disappointment. 4.6%, taking up and worse than the 4.1% expected in december. we had expected, given that we had social distancing restrictions being planned in the month as well as more of the virus impacts playing out would impact the labor market. unemployment taking up to 4.6%.

it will be interesting to see the breakdown when it comes to youth unemployment as well, given the very high levels of youth unemployment we continue to see as a policy issue. this comes ahead of the bank of korea policy decision toward the end of the week. we are expecting them to stay there through to the end of 2020 two. certainly the rising unemployment rate and deterioration of the labor market continues to be a factor there. let's take a look at the markets in sydney. sophie: after being dragged lower on tuesday, marginally higher at the open. goleman says the commodities outlook is positive. oil players gaining more than 3% and opening to the upside heading for seven straight day of gains. in the aussie dollar, we are

seeing it holds steady this morning, holding onto overnight gains as we saw the dollar falter, snapping a three-day gain. the aussie 10-year gilts is moving lower versus the tuesday rise. other assets were keeping an eye on, with u.s. futures. moving lower this morning after we saw little change for the benchmark on wall street. and ahead of the potential decision or japan that the emergency may be expanding beyond the tokyo area. the nikkei to 25 futures lower by .2% and the yen holding steady. the boj with polity -- policy decisions next week. it may revise its forecast lower. gold hovering around 1800.

inflation rates materialize, with markets leaning on what biden may plan for stimulus in the u.s. kathleen: our top story, the house is set to vote on a resolution calling on mike pence to invoke the 25th amendment to remove president trump from office. a defiant trump is confident that won't work and may even backfire on joe biden. >> before we begin, i would like to say that free speech is under assault like never before. the 25th amendment is of zero risk to me. it will come back to haunt joe biden and the biden administration, as the expression goes. be careful what you wish for. kathleen: our reporter joins us for the latest. as the vote get started in the

house, what is going to happen? how's it going to result, and what will it mean? >> this is still a fast-moving story and is not clear yet exactly where this lands. we know that today the house is voting on this resolution basically that -- a demand that mike pence move forward with the rep -- resolution to remove the president through the 25th amendment. i soon as tomorrow they woo on a vote for impeachment. this could last late into the night on wednesday. we are releasing a shift and liz cheney, who was the number three republican in the house, just came out and said she would vote to impeach. we will see how many republicans sign on board. and it would go over to the senate but it would like to be some weeks before they would start a trial over there. maybe the day before joe biden's and occupation. president trump will fulfill the

rest of his term, most likely, but this could really put a stain on his record. especially if the senate does vote to convict him in the impeachment trial, that would prevent him from serving in office again. haidi: it's really interesting, with liz cheney making her position known. in addition to what we're hearing about house my -- majority leader mitch mcconnell being pleased but not saying how he would vote for impeachment. mitt romney was the sole republican to vote for impeachment the first time. is there since that this kind of boat of conscience, as liz cheney put it, it means that republicans won't feel the need to vote along party lines? laura: that is certainly possible. mitch mcconnell says he will vote to convict. that would mean that you would probably have enough senate republicans go along that he

would be convicted. last time we only saw it romney vote against the party. but the situation here is different, and republicans are a lot more angry and worried about the future of the party. they are weighing their political trajectory, the potential risks and rewards of breaking with the president. haidi: laura davidson there with the latest. let's get to karina mitchell with the first word headlines. governments of the u.s. are being urged to expand access to the vaccine as infection rates rise across the country and across the globe. european union has a program expected to start in april. germany is warning it's hard lockdown may last through to

early spring. the u.k. says the number of patients needing ventilators is at the highest since the pandemic first struck. filmmaking is hitting the brakes in hollywood with only 613 new film permits -- application submitted asked month. down from november when the industry was coming back. tv and movie sets are seen as being particularly vulnerable to infections as they require people to be together and interacting. the man who built the vegas sands has died at the age of 87. sheldon adelson had been suffering from non-hodgkin's lymphoma. he sold his business to stop back for eight hundred million dollars in 1995. he built casinos in las vegas and in asia. those are your first word headlines this hour. kathleen: still ahead, speak to

the world bank chief economist to discuss the challenges facing recovery amid the pandemic, andr her concern about abutting financial crisis. don't miss this interview later in the hour. first were joined by the head of global equities on market strategy and why she sees 2021 as the year of reduced uncertainties. this is bloomberg. ♪

haidi: emerging markets rose to a record on tuesday continuing to look at the applications of a biden presidency and a democratic senate. joining us to discuss is the head of global equities, i like the optimism but it is interesting to me that you have

expectations of lower volatility in the year that started off with riots in the u.s. capitol and a pop role -- possible second impeachment of the u.s. president. not to mention uncertainty when it comes to the rollout of the vaccine program. and a spiking in virus cases. >> the year is going to be -- volatility will lower over time. it is definitely starting out with overhang from things that happen in 2020, but there's a lot to look forward to. the vaccine is rolling out faster than cases arising and as the economies reopen, we expect global synchronized growth. it's good for asia and emerging markets. india has a nice story as it reopens. hong kong and thailand, and we like beaten-down emerging markets like the and mexico that

will perform better with better relations between mexico and the u.s.. resid was hit hard by covid-19 and his leverage for a cyclical-based reopening. haidi: does that mean you believe a weaker dollar narrative will prevail for the rest of the year? saira: we think the dollar will be weaker, based on growth rates being stronger around the world. also just the structural growth of emerging markets, which is where we believe you get the most bang for your bunk in terms of investing -- those bang for your buck. kathleen: what do you have to see in these economies to support this positive view and assume stocks will rise? many are concerned about what happens as economies rebound and recover. the general population may still

not be doing so well. is the fact that you see individual companies that is worth putting your money into, regardless of what an entire country might be doing in terms of its population? saira: a less volatile, broader market makes it better for fundamental investors. we think the markets will be broader this year, but the key for 2021 is going to be, can earnings grow fast enough? 2020 was about valuations expanding. the strong earnings growth will be what should carry the market. that will be based on stimulus and also companies with leverage. they've been cutting costs in the pandemic and coming out of it and now they have leverage that can be in the single digits are higher. there are some risk around whether the economy will overheat. we don't think that is a 2021 issue.

as long as we are seeing growth that we expect, it's more of a longer-term problem potentially. kathleen: so you like emerging markets and a couple of others. those that mean you are the camp that says u.s. equities will be a little better this year, but the big gains are behind us? what do you see in emerging markets? saira: bang for the buck, we think you get that in small camp -- and small-cap. we are more positive on small caps than large caps in the u.s.. emerging markets, definitely see more bang for the buck in regions that we talked about. they can grow a little faster than the u.s.. mid single digit global growth, you will get faster growth in the regions we talked about because they are more levered to reopening with consumer and tourism coming back.

the big performers such as china, taiwan and korea have been some of the best-performing markets in 2020 and even 2019. we think that will normalize a bit. on a relative basis you can find more value in other regions. haidi: it sounds like you're seeing the peak of south korean equities at the moment. saira: it's more of a weaker valuation story. taiwan and korea or more technology focus. it should be more leverage to the economy reopening. kathleen: thank you so much for those specific ideas about where we should made -- maybe putting money in 2021. speaking of investors, what about cybersecurity? a former global cohead of

security, marty chavez, says cybersecurity is one of the biggest things to be concerned about over the next 5-10 years. he spoke exclusively to bloomberg about how companies should prepare. marty: think about treasury bonds. most of us have never really seen a treasury bond. who has seen a paper certificate for a million-dollar treasury? yes they are trading every millisecond of every day but they don't really exist in that paper form. with hurricane sandy, when we found out that shum -- some share certificates actually existed as paper certificates in a flooded basement somewhere, it didn't seem like that's a great way to store share certificates. as more things d materialize, it becomes pure cybersecurity and

software risk. when you think about things that are really fundamental, you think, where do all those treasury bills exist, and where do all those dollars exist? are there central points of failure? in other words, who is recording the beneficial owner of all those treasury bonds? it has to be on some computer somewhere. who owns those computers and how are they backed up? anything related to the central bank is something that keeps me awake at night. >> cyber risk is something that financial executives has -- have been warning about for some time. do you think the industry is adequately prepared for it? marty: there is nothing you can do to say that a system is free of the possibility of being hacked. so you can never rest on your

accomplishments, and no matter how good a job you are doing, you should always be very worried. as i mentioned at the outset and you're talking about these risks, there is always another level. here is a level that the industry has now arrived at. and many are taking very seriously. in the earlier versions of cybersecurity, they were going to extend our perimeter. we are going to have an extremely strong perimeter and it's going to be very hard to get in. but if you were able to get in, maybe you could just drive around. once you got in, you're just in the squishy interior that isn't really protected at all. that approach of having a very strong perimeter only takes you so far. so the new frontier that banks and many others are working on that is terribly important is taking a page on what companies

have learned by putting their computing in the cloud. the cloud providers do a first-class job on cybersecurity. arguably better than any firm that wasn't in the cloud business could possibly achieve on its own. one of the things you do when you put your business and your data on the cloud is you assume that all those computers are hostile and could potentially have been suborned. so you then assume that all of your own computers are potentially hostile. you no longer assume there is a safe perimeter of trust when you own computers. kathleen: that was the goldman sachs senior director marty chavez speaking to bloomberg. breaking news, bloomberg news asked house speaker nancy pelosi if she would be bringing

impeachment vote to the floor on wednesday. she said yes, that is the plan. so we got a specific date. you are seeing the house debating the 25th amendment. they are going to vote on whether or not that could be used and to have mike pence force president trump to step down. that would negate the need for any kind of impeachment resolution. this also comes after prominent wyoming congresswoman liz cheney said today that yes, she would vote to impeach. so the drama is building. they are reporting that mitch mcconnell is open to a vote on impeachment. not exactly saying if he would vote that way, but very interesting after president trump said the 25th amendment would not be a problem for him. all that and more coming up, keep it right here. so you're a small business, or a big one.

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haidi: indonesia is kicking off its mass vaccination program. in a televised event later on wednesday -- uncertainty remains around its efficacy. michelle, what do we know in terms of the data that's available about the chinese vaccine from the trials so far? michelle: the chinese vaccine has been tested in different countries and each is reporting different levels of protection from the vaccine itself. we are seeing lows of 50% and highs of 91 percent. that is concerning public health officials who worry they are not getting a clear and accurate picture. there is concern that because they cannot go back and analyze the data themselves and look at exactly how effective it is, and

perhaps there is something untoward happening and it's unclear how effective vaccine might be and how it will turn out. when you look at the different severities of the disease, in some cases you include mild cases you have a higher number of infections and the vaccine appears much more effective in reducing severe cases, the ones that end people up in the hospital or perhaps lead to death. the 50% cut off rate is what everyone worldwide says you have to prove in order to get something through. but there is not a clear idea of how effective this particular vaccine is. kathleen: there's a lot of concern about the vaccine and causes a lot of hesitancy. perhaps even worse, pfizer is investigating the death of a health care worker who died 15 days after getting the first dose of vaccine. what have they learned about this, and is there a connection?

michelle: an obstetrician and gynecologist had a reaction about three days after he got the first dose. it does occur thousands of times in the u.s. every year that people develop this condition that involves the lack of production of platelets. the doctor eventually died and developed a stroke. he had bleeding in his brain, and his wife and some other people believe it might have been related to the vaccination because he did develop those symptoms in the days following the vaccination. the issue here is that it is correlation versus causation. it's not clear whether the vaccine itself actually triggered a reaction that caused that problem, or if it is something that he would have had even if he didn't get the vaccine. kathleen: we will follow the

story closely along with you, michelle cortez, our health reporter. at&t is said to be an early talks with banks to raise $14 billion, sources say it would be constructed as a 364 date delayed draw. bank of america said to be leading the transaction. at&t and bank of america declining to comment. visa is walking away from its proposed acquisition following antitrust grounds. the doj sued. taiwan semiconductor cementing its role as the world's chipmaker of choice. set to report 20/20 net income rising by more than 48%. the best result since 2010. coming up next, we speak to

carmen reinhart to get her outlook amid the pandemic and the risk of a global financial crisis. she joins us next. this is bloomberg. ♪

>> this is "daybreak: asia." japan is set to expand its power state of emergency beyond tokyo and the surrounding areas. leading the government to impose new measures. several other regions are calling for help and pleading for people to respect health guidelines. tokyo and the other regions affected account for more than half of the japanese economy. meanwhile organizers of the delay tokyo olympics a reparations remain on course for this year. a new poll suggests many

japanese suggest the game should be canceled. there is a surge of coronavirus cases. the prime minister has said he is confident the olympics will go ahead. over to india which has become the biggest vaccination program on earth. a crucial test of how quickly developing nations can protect their populations. private planes fanned out from a western city with hundreds of thousands of medical workers ready to start this week and. india has 1.3 billion people but struggles with poor infrastructure and cold storage facilities. navy divers in indonesia reported one of the flight recorders rummage at that crash this week and killing 62 people. the recorders may report what caused the plane to crash. it was much older than the 737 max that is gradually returning

to service after a global grounding caused in part by another crash in indonesia. 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. haidi: let's take a look at how markets are faring so far in the first hours of trading. sophie: the benchmark set to snap a two day drop. premier investments clocking the biggest gains on the index so far this morning, jumping to a record high after data where online sales rose 60% year on year. bhp, rio on the rise. roman highlighting there is more upside given the bullish commodity outlook. oil stocks on the rise as well. jumping more than 3% this

morning. it rose above 53 overnight and brent topped $56. there is caution around a rally saying there is formidable assistance. -- formidable resistance. kathleen: markets around the world are hoping for an improvement in the pandemic battered economy. the chief economist of the world bank is warning of another covid related danger. saying another financial crisis could be quietly ruing and it could take years to recover. this is the concern of carmen reinhart, who joins us now from florida. the outlook right now, you have warned of many things. as we go from 2020 as a year pandemic to 2021, the year starts with virus cases surging,

vaccine rollouts being spotty and low in some cases, and then you've got this chaos in washington. how much does this affect the world bank's view? your view of the global economy, and certainly have the u.s. will or will not drive it? carmen: as you pointed out, i've been emphasizing don't confuse rebound with recovery. the world bank projection is for a rebound. however, a rebound this year still leaves per capita income, income per person, below where it was before the crisis. before the covid crisis. so calling it a recovery is misleading. i'm glad you brought up the issue that, here we are a year later, and we are still right now facing record infection

rates. the longer this goes on, the more disruption in terms of jobs, in terms of closures, of businesses that cannot really get back to anything resembling normality. so when people hear the term financial crisis, the first thing they think of is a lot of drama. i'm not talking about that. i am very concerned that the longer this goes on, the more strain on balance sheets of individuals, households, firms, of countries. it is a cumulative tool.

this did not start as a financial problem. this started and continues to be first and foremost, a health crisis. but it has elements that have morphed into your classic balance sheet problems. kathleen: let's take -- let's take a look at that, because stock markets are rallying in many parts of the world. optimistic equity strategist have been speaking. what is the mechanism? numbers are picking up, jobs coming back in some countries. how do you get to this debt driven financial fragility driven crisis that you say is brewing right now? carmen: look, equity markets are being very much fueled by the expectation that rates are low for long. that central banks in the

advanced economies will continue to do whatever it takes in the famous words of mario draghi, whatever it takes to have ample liquidity to do everything in their power. also there has been enthusiasm about vaccines and enthusiasm about a fresh round of fiscal stimulus. but the reality is, you know, the job numbers in the u.s. have looked quite shaky and most of the forecasts that were also expecting more sustained momentum going into this year are being marked down because of the resurgence whether you're calling it a second or third wave depends on where you are.

that is, i think, given all the drama that we are seeing ranging from the drama in washington to the whole environment in which we are still at almost uncertainty, there is this problem that has been delayed but not avoided. in terms of households ability to repay their mortgages, their ability to repay their debts. and this is not a country specific problem. this is very generic across countries. let me just note that beside the

headlines of monetary stimulus, a big source of stimulus this past year has been that financial institutions across the globe in varying degrees have also had grace periods in which businesses and households don't repay their debts. what happens when those programs go away? haidi: just continuing on the theme of debt, as you said, this is a global problem. this is not something that only affects one emerging market or one particular central bank. take a look at china with corporate debt making up the most of that at about 200%. total debt has riven -- risen to 300%. in india, public debt to gdp is about 9%. what does productive debt look like?

this is a concern that we are continuing to add to these balance sheets, be they private or public. but were not getting the growth or productivity you would want for that amount of debt. carmen: let's start with the china case. if our frame of reference is the last price, it was cut -- last crisis, the last one really was not global. it was about a dozen advanced economies that had serious problems in their financial sectors. it was by no means global at that time. china was growing double digits and china was a major engine of growth for the emerging world, which is right now over 50% -- well over 50% of global gdp. that kind of engine of growth translated into high commodity prices. a lot of landing from china

including a lot of the poorer countries. that is not the environment we are in right now. so i ask you who will be the engine of growth? at the moment, china is certainly doing much better than most of the advanced economies, but it is a far cry from the vibrant kind of double-digit phenomenal growth it had a little over a decade ago. i think when we think about debt vulnerability, one really has to go back to the proverbial canary in the coal mine. which are the countries that already came into the covid crisis with very weak fundamentals, and some of them already in outright crisis? a lot of the very poor countries

fall into that category. they are just not the headline kind of -- we hear about the major emerging markets, china, india, brazil. but there is an increasing wave, if you will, at this stage, of debt problems of countries that are already facing debt difficulties, or very close to one. and at the corporate and household level, that is also a big issue in varying degrees. haidi: so what further institutional help can there be, or should there given -- should there be, for some of the most vulnerable economies? carmen: the cure or remedy

depends very much on the disease. for the more general issue that i've raised, the financial fragility, which cuts across income in terms of household debt, corporate debt, i think a lesson from history, if you look at how some of the banking problems were resolved, you don't want to create zombie companies. you don't want a lot of liquidity to help businesses and households through a tough. , but the quiddity does not address this. debts at the corporate level -- that's at the corporate level. debt write-offs for the lower income countries.

kathleen: so where do we see this first? they keep buying all kinds of bonds to keep their yields low. as you said, there will be a day of reckoning when things pullback. where do you expect to see the debt crisis become loud? when will it really be apparent? where do you see this happening first? carmen: you don't necessarily see a big blowout, a big lehman moment. i think europe, coming out of the 2000 8-2000 nine crisis, had an almost decade-long credit crunch that meant very sluggish recovery. that is a big source of concern. it's not the major blowout of the big headlines. it is institutions that have a

lot of nonperforming loans, a lot of bad debt. they are not able or willing to lend as readily, and recovery from this needs new lending. that is the credit crunch dimension of it. to some degree without a big drop. kathleen: this leads to something else you've highlighted. all the stimulus and rates and bond buying helps some bigger corporations, some of whom would probably be insolvent by now, but they've been held up. it makes it harder for the small and medium-size businesses, for households to get money. what can the world bank or anybody do about that part of it? carmen: look, intwo dimensions,

the international finance corporation works a lot on restructuring small businesses, medium businesses, all over -- not in every corner of the world, but in a lot of them. that is one dimension of the resolution. another dimension of the resolution, you can go back to the recent issues, the agreement toward a common framework for debt restructuring, for helping those countries that are having an insolvency problem, not a liquidity problem. we cannot ask central banks to take care of all of this. as i said, they can provide liquidity but that doesn't deal with the problems when there are

insolvencies at the household firm and sovereign level. haidi: we've seen in the u.s. and certainly across other economies as well, a much closer working relationship with the central banks and the fed and the treasury. do you think this should continue even in a post-covid world? carmen: i think it will for a while. look, in a world of more rapid growth and lower debt, central banks can to their hearts content and to their mandate be very focused on the inflation, the financial fragility concerns. right now the financial fragility concerns are very tied to the slow growth and to the high levels of private and public debt. so i think we are going to be in

the post pandemic -- we already started down that path after 200 8-2009 with central banks doing a lot more fiscal policy than any time since the wartime era. world war ii, i am talking about. i think that close connection between the fed and the central bank will be with us for a while. a lot of my work is focused on the term financial repression, which sounds sinister, but it's about a big presence of central banks and more regulation and also very low, and in many

instances, negative interest rates. we have been seeing that for a while. that is the environment that we will be in for a while because again, i don't think that we are in for the kind of recovery that you can say a year from now, we won't be having this conversation and it's all behind us. kathleen: you highlighted in your work, certainly it's a major issue for the world bank, income inequality. it seems to get worse in every financial crisis that you write about and analyze. what has the world bank done? in 2020, what was the biggest thing the world bank was able to do to push back against that? and what do you want to do this year? carmen: i think an important action or set of actions is in

lending, especially earlier this year when financial markets really -- even now, private capital flows are quite skittish to a lot of the middle and lower income countries. much more selective than it was. that lending is not indiscriminate. very much it has been focused. yes, there has been considerable lending to provide general budgetary support to deal with the emergency, but much of the world bank programs are geared toward social protection. i.e., building and strengthening social safety nets, cash transfers and the like. these programs target the most needy and it is an offset. but let me say that when i say

an offset, it is an imperfect offset, because this crisis has been much more aggressive than what i would call a more standard financial crisis. who can work from home? again, going back to the businesses, the small businesses often don't have access to the kinds of local government programs that can provide support. small businesses also lose access to new credit. this has been a very regressive crisis within countries and across countries. so the world bank's focus has been within countries, providing support for social programs. and across countries, like with

the debt suspension initiative, focused on the poorest countries . the 74 poorest countries that are eligible for debt suspension, which essentially allows these countries to take at least temporarily to take whatever savings temporarily they have from debt repayment and use those funds toward covid related emergency needs. haidi: carmen, we always appreciate your time. we do have plenty more to come on "daybreak: asia."

this is bloomberg. ♪

haidi: a chip shortage in the car industry has caused honda to force reduction of production and some plants. i reporter in japan is with us. what is the background as to why this is now happening? >> there's really two parts to

the story. obviously in the first months of the pandemic, automakers around the world had to close showrooms and demand decreased significantly. they ended up decreasing their orders of semiconductors for cars, assuming that the low demand level would continue for some time. in recent months, demand has recovered quite significantly and now they are in a place where demand has recovered, but now they like various parts such as semiconductors that are necessary to meet those demand levels. that is one part of the story. the second i would say is that actually semiconductor manufacturers themselves are becoming a bottleneck, because they are meeting a lot more demand for electronics companies like sony or apple. the new 5g phones require a lot more semiconductors than traditional phones. with new devices like the ps

five coming out amid locked down , they are meeting a lot more demand from companies like sony and apple. traditionally, automakers have fallen at a lower priority level for those semiconductor manufacturers because they haven't had the same order levels. but going forward you have cars that have autonomous driving features and new technologies that require a lot more chips. so this will continue to be a point of contention going forward. kathleen: great news for the auto industry, but where do the chips originate? river: there were too conservative orders but these companies were not able to meet demand from automakers, which is why there has been a lot of news

recently, globally actually, affecting automakers from four to volkswagen. kathleen: thank you so much, i reporter from tokyo. the market opens in seoul and tokyo are coming up next. this is bloomberg. ♪

♪ haidi: welcome to daybreak asia. ages major markets -- asia's major markets have just opened for trade. futures trending flat. kathleen: impeachment proceedings, president trump

says there is zero risk of the 20th amendment being used to remove him -- 25th amendment being used to remove him. let's get straight to the market action where it -- market action. sophie: in japan, the government will expand emergency beyond the tokyo area. the nikkei 225, little changed, but to the downside as well. the yen holding steady, after halting a four-date drop. the dollar-yen will stay cap around 1.04. u.s. yields edging lower to correct for excessive pricing. u.s. 10 year yield back below

112 this morning. we saw fluctuations as we do have consumer names under pressure. mining and oil stocks gaining ground in sydney. wti is edging higher. the dollar holding on to overnight declines. the dollar has fallen enough to make you believe that commodities have more room to run. also bullish on asian emerging stocks. highlighted the kospi as well. the index has more than doubled since his bottom. we saw volatility taking hold. now gaining some ground, up about 2/10 of 1%. we do have the kospi at 35,

looking pretty pricey. we got some jobless data. we saw the unemployment rate rise to 810-year high -- to 10-year high. haidi: the kospi index with highs, south korea -- bnp paribas head of equity research. great to have you with us. taking a look at valuations are looking at how overbought this market is, why are you bullish on south korea? we see the economic outlook looking not so great. we had those unemployment numbers coming in.

>> main drivers of the korean market are exports and particularly tech hardware and memory. the latest trends we are seeing in terms of more demand from data centers, more demand from 5g, they are likely to continue to support the demand for quite some time going forward. many of these devices, many of these new initiatives, they need a lot more memory than they have historically ever needed. we also think that in the case of korea, the kind of earnings estimate increases are quite broad-based. we are seeing that across materials, discretionary, tech, and banks and financials. the valuations may appear a bit

-- they are on the current earnings estimates. they are rising continuously. that is across the world. it means that comparing to historical valuations. haidi: so much of that rally has been driven by the frenzy in retail in korea. is that going to be a watershed moment for korean stocks in terms of a potential backlash and accelerated profit-taking? >> that is something we have to look forward to. by march 15, the shortselling is likely to come back on the table and we have to figure out how that pans out with the current

scenario. in the medium-term, the market will be driven more towards earnings estimates, that is possibly the holy grail of the equity market right now. given the combination of global demand increasing and low-cost of capital that we are seeing, if you look at some of the teams we are trying to play, reflationary trade and continued focus, korea sits nicely at the intersection of these two. kathleen: we have some stories -- run out fixed income investor -- renowned fixed income investor saying he is bullish on asian equity markets again. when it comes to asian stock

markets, to what extent do you share? are you more focused on particular ones like india and indonesia? >> we are clearly positive on asian equity markets for 2021. maybe beyond. we think there are two or three key drivers. first, a global economic recovery driven by vaccination and we believe wider availability of the vaccine will be around by the second half of this year. the depreciation of the u.s. dollar. moving forward, for much of 2021, we are likely to see -- the reflation trend, which obviously helps many of the commodity-heaven markets.

-- heavy markets. emerging markets equities are still under owned by global investors. emerging markets equities should do well this year and within them, apart from korea which we already talked about, china and india and more recently indonesia. haidi: you have a number of risks you are keeping an eye on. policy risk in china itself. when it comes to inflation spiking, when you see how -- we are going from a deep hole, small rebounds in many countries, is inflation really an issue for 2021? >> not for 2021. we talked about it as one of the

risks, it would possibly be third or fourth in the pecking order. the only risk to inflation spike would arise if we have a situation where capacity creation does not keep pace with the demand recovery we are likely to see. at the present point in time, capacity utilization across the world below -- possibly 75% depending on how you choose to look at it. i think the lack of capacity, lack of adequate capacity leading to inflation would be something to contend with only in 2022, not right now. the other risks we talked about -- kathleen: in terms of industry, sectors, plays people have in

place, whether it is covid data or the switch from tech stocks to reopening stocks, where do you see the most money being made? particularly in the asian equity markets? >> we are currently following what could be called a barbell strategy. we are over baked financials, tmt, consumer staples, and energy, even though some of the energy companies are really conglomerates, having their feet in many boats. if i were to elaborate on that, we think the reason rotation into value -- recent rotation into value has more room to go. the product prices would

possibly go up much further from here. at the same time, we are not taking our focus away from the tech megatrends like e-commerce, social media adoption, 5g expansion, and so on. tech hardware demand that arises. kathleen: make sense to me. tech on one end, energy and materials on the other. thank you so much. let's get to karina mitchell. >> we start with vaccine news. state governments are being urged to expand access to them as infection rates rise across the country. the european union -- with the program expected to start in april. germany is warning that it's locked down last through spring. -- that the lockdown could last through spring.

over to india, which has begun the biggest vaccination program on earth. hundreds of thousands of medical workers ready to start this weekend. india has 1.3 billion people. japan is set to expand its virus state of emerging -- emergency beyond the tokyo area. pleading with the government to impose new measures. several other regions are calling for help. tokyo and the other regions affected account for more than half of the japanese economy. organizers of the delayed tokyo olympics say preparations remain on course for this year. any japanese think the games should be canceled -- many japanese think the games should be canceled.

prime minister said he is confident, however, the olympics will go ahead. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am karina mitchell. this is bloomberg. haidi: sovereign debt in the asia-pacific region has a negative outlook for 2021. house debating a resolution to demand mike pence strip the president of his power. trump says the 25th amendment is no threat to him. this is bloomberg. ♪ so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet.

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kathleen: the house is debating resolution calling on mike pence to strip president trump of his power using the 25th amendment.

let's cross to our congressional reporter emily wilkins in washington. we know that pans has already said -- mike pence has said he will not do it. what does this mean in practicality? emily: what the house is doing with this boat that will start in 15 minutes -- with this vote that will start in 15 minutes to say we have exhausted all of our options. the resolution they are voting on does not say much more than calling on mike pence to do something we know he is not going to do. it sets up a key vote for impeaching trump second time. haidi: the house is planning to vote. what do we expect to happen during the vote? we have seen some interesting developments on the gop side, including senior house republicans saying they will be

voting in favor of the impeachment, there is also another group saying they want an inquiry. emily: there has been several different groups. democrats say they do have the votes to pass this impeachment resolution. there are three republicans who have come out in support. one is liz cheney, the third top republican in the house. something major that we are expecting to see play out over this next congress while republicans figure out what their path forward is. kathleen: this resolution to censure trump is interesting, being tossed about. tougher -- stronger than simple rebuke but not as strong as expulsion. we have another house of

representatives -- mr. fitzpatrick presenting this resolution. how important is that? are they starting to look for a compromise somehow? emily: it is set to go to the floor. democrats have the votes to pass it. the censure resolution might be away for lawmakers like mr. fitzpatrick, who is republican, to say i do support -- i do not support what happened with the mob, i do not support what president trump said. but they may not want to go as far as impeachment. it offers them middle ground. haidi: over the past few days, we have seen unprecedented involvement of the private sector in this political situation. more financial firms that do business with donald trump are

starting to back away from the president. emily: after hearing a number of corporations coming out against the president, we are seeing financial institutions step forward and say they will no longer conduct any business with trump and his family. that is deutsche bank. we are also looking to see if other institutions might join them. kathleen: emily wilkins with the very latest. haidi: overseeing policies on china and abroad. he is most proud of what he has achieved internally. mike pompeo reflected on his time in office. >> jim baker, somebody i've got to know over the years, he used to say the best job in the u.s. is secretary of state. but it is a difficult job.

would you say it is the best job in washington? >> the privilege of a lifetime. it is a challenging job. you can do wonderful things to protect america, keep our nation safe. david: you have served 2.5 years as secretary of state. what would you say you are most proud of having achieved? >> internally, we have made some real progress at the state department. we make sure we had the right people in the right places, a planning system that will have real value as the years go on. the leadership challenge of being secretary of state building out a large organization and handing it off to the next secretary of state is an important one. it is based on restraint and realism and respect for other

nations and their sovereignty. it is a central understanding of america capacity to do good in the world and do it without putting lots of people in harm's way, to deliver on the things that matter. david: as you look back on your tenure, what would you say is the most frustrating thing for you? is there something you wish you would have achieved? >> certainly lots of unfinished business. the work we have done to change how america thinks about the chinese communist party and how we respond to it is incredibly important work, but it is a long-term project. we turned the page. we put american foreign policy in a new direction but there is still a lot of work to be done. kathleen: that was mike pompeo

speaking to david rubenstein. more key takeaways from the annual just markets. we dive into his calls across treasuries and bitcoin. that is just ahead. this is bloomberg. ♪ so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet. powered by the largest gig speed network in america. but is it secure? sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business.

>> for a quick check of the latest business headlines. cementing its role as the world's chipmaker of choice. 2020 net income rising by more than 48%. the performance has sent the stock soaring more than 70% since the start of last year. on bets that apple will continue to be a major customer. toyota and honda are reducing car output because of a shortage

of memory chips. honda has scaled back in the u.k. and reducing output. automakers are facing a critical chip shortage as producers try to satisfy demand from electronic customers. french supermarket chain has received a friendly approach from the canadian convenience store chain. it is valued at almost $37 billion in toronto. haidi: jeffrey gundlach has just finished his latest just market cast. what stands out to you? su: let's talk about the dollar, treasuries, commodities,

bitcoin. he hit on all of them. he says he is short-term bearish on the dollar. he said the dollar should be weak given the federal reserve pledge. don't count on foreigners to buy treasuries. it has been going down for years and china, by the way, is the largest treasury holder after japan. one of the biggest concerns in the treasury community, the impact of the u.s.-china trade war. that was an important point. he said the dollar has fallen off to make him believe commodities have some room to run. investors should have 25% of their portfolios in some sort of real asset, such as real estate or industrial commodities. as for gold, he is neutral on gold.

the 200 day moving average, levels of support for gold back to 2010 and it is not making any progress now. therefore, neutral not. -- neutral on that. kathleen: he had to make comments on bitcoin as well. su: neutral on bitcoin and neutral on gold. he remains there. he believes bitcoin is in bubble territory. on the webcast, he gave a specific reason he is neutral on bitcoin. i don't like having to worry about losing 20% in an hour. he also said something interesting. he believes another widely

followed hedge fund actually was a catalyst for getting into bitcoin. back to you. kathleen: su keenan, thank you so much. plenty more to come on "daybreak asia." this is bloomberg. ♪

karina: president trump says he is under a zero risk of being removed under the 25th amendment, which suggests -- but suggests joe biden could be. democrats are calling for the president to be removed from office after last week's riots that left five people dead. his comments have led to a ban on many social media platforms, some banks pulling away from him, and the launch of an impeachment proceeding against him in the house. the pentagon says the fighter used by the u.s. and eight allies remains marred by software issues which could hurt

performance and readiness. a new report finds the most costly weapons system ever has 871 deficiencies, many of which were identified before the develop phase. that compares to only two on a similar report last year. navy diver is in indonesia have recovered one of the flight recorders from the air jet that crashed over the weekend, killing 62. the recorders may reveal what caused the plan to dive into the sea shortly after takeoff. it was a nearly 27-year-old boeing, much older than the 737 max that's gradually returning to service after a global grounding caused in part by another crash in indonesia. the men who built las vegas sands into the biggest casino company in the world has died at 87. sheldon adelson had been suffering from non-hodgkin's lymphoma. he founded the company's

industry then-largest event before selling it for $800 million in 1995. he plowed the profits into casinos, first in las vegas and then in asia. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. kathleen: thank you so much. now, taking a look at the markets and how they are shaping up, we go back to sophie kamaruddin in hong kong. sophie: midweek, asian stocks are modestly higher. we're seeing fluctuations for sydney shares. check out valley -- value equities in asia. after that rally that began in october. no consensus yet as to where the best value play is our acosta region. socgen saying sentiment is mixed, but key investors include south korea, malaysia, singapore

and taiwan. let's check on some stock movers of note in seoul and tokyo. lg chem gaining ground on the news around its battery unit. local news reporting lg nrc -- energy solution has -- industrial robot supplier jumping on the back of its profit outlook upgrade. surge in chinese demand. slipping after a reported 22% drop in net profit and it missed forecasts. but oil stocks are gaining ground. rising nearly 4%. -- nearly 4.5%. wti extending gains for a seventh straight session. gold testing the $18.60 level. 2000 could be the mark to top in

2021. in the bonds corner, aussie 10 year yield just below the year's high. u.s. 10 year yield edging back below 112, after tuesday's solid option which showed the limits of their sentiments when it comes to treasury. haidi: markets are hoping for an improvement, but the chief economist of the world bank is warning another global financial crisis is brewing. he told us earlier it could take years for the world to recover. >> a rebound this year still needs income per person below where it was below -- before the covid crisis. so, calling it a recovery is misleading. now, i am glad you brought up the issue that here we are a year later and we are still right now facing record

infection rates. the longer this goes on, the more disruption in terms of jobs, in terms of closures of businesses that can't really get back to anything resembling normality. and so, you know, when people hear the term financial crisis, the first thing they think of is a lot of drama. i'm not talking about that. i'm very concerned that the longer this goes on, the more strain on balance sheets, of individuals, of households, of firms, of countries. and its accumulative roll -- toll. and that, i think has, at least

historically, this did not start as a financial problem. this started, and continues to be first and foremost, a health crisis. but it has elements that have morphed into your classic balance sheet problems. >> let's take a look at that. because stock markets are rallying in many parts of the world. we have had optimistic equity strategist after optimistic equity strategist speaking. so how do you get to where the economy is picking up, jobs are coming back in some countries, to this debt-driven, financial agility driven crisis that you say is brewing right now? carmen: look, equity markets are being very much fueled by the expectation that rates are low for long.

that central banks in the advanced economies will continue to do whatever it takes, in the famous words of mario draghi, whatever it takes to have ample liquidity to do everything in their power. it has also been enthusiasm about vaccines, enthusiasm about a fresh round of fiscal stimulus. but the reality is, you know, the job numbers in the u.s., you know, look quite shaky. that most of the forecasts that were also expecting more sustained momentum going into this year are being marked down because of the resurgence. whether you're calling it a

second or third wave depends on where you are. that is, i think, you know, given all the drama that we are seeing, ranging from the drama in washington, to, you know, the whole, you know, environment in which we are still -- almost unprecedented in this past year levels of uncertainty. there is this problem that had been delayed, but not avoided. in terms of households' ability to retain their mortgages, their ability to repay their debt. this is not a country-specific problem. this is very generic across countries. kathleen: that was world bank chief economist carmen reinhart,

and her concerns are shared to a certain extent by our next guest, who says the follow-up to the pandemic and measures created by government have created an economic, fiscal, and social shock that will last into 2021. so, let's bring in moody's investor services and a new outlook for asian severance for the year ahead, senior vice president christian de guzman. christian, i am sure you heard what carmen reinhart was saying. you are here to talk to us about all the downgrades, and your concern about what is going to happen, particularly in asia over the course of the year. what is your main focus, your theme for what is driving this? christian: well, as you had mentioned, we do have a negative outlook for 2021 for asia-pacific sovereign. there is nothing new here. it does reflect the continuation of the stresses that we started

seeing from last year. so indeed, the pandemic continues to drive our credit use for the region at large. currently we do have six negative outlooks, and they are more concentrated in emerging-market spaces. we also see a divergence in terms of how sustainably governments can continue to provide stimulus, so advanced economies are in much better shape. but frontier emerging markets are going to have a little bit more of a tougher time should certain risks shape up. now, we're still focused on the downside risk presented by the virus itself. indeed, as ms. reinhart mentioned, one year later on, we're still looking at record high rates of infection in certain countries. in asia, we see a diversions in

which the way pub health issues have been managed. on the one hand you have places like new zealand and taiwan, which have done relatively well. on the other hand, a lot of the emerging frontier market, india, indonesia, we saw malaysia announce another state of emergency. so here we do see an emergence in the growth outlook also dependent on public health outcome. kathleen: what about the ability to the countries that are poorer countries? it will be harder for them to perhaps sell bonds at affordable yields. maybe they are the ones who did not deal with the pandemic as well as others. do you see any point where some of these governments are going to have trouble getting financing from the public markets, or at the very least, being able to sell and service debt that they may have to sell at a much higher yield? christian: indeed. as i mentioned, we do see that

divergence between events -- advanced economies and developing economies. most of our downgrades in 2021, and -- in 2020, and we expect the same in 2021, were more assets in financing. for more developed countries, they will rely on donors, on the international community. we have the debt services mission in the g20. we had extraordinary lines of financing from the world bank and other multilaterals. as long as these lifelines continue, there's a backup -- backdrop. the overall balance sheets continue to deteriorate. given the uncertainties with regards to the growth outlook, and given the uncertainties with regards to how much their

balance sheets can recover. haidi: do you see a financial crisis building in the way that carmen reinhart from the world bank spoke to us about earlier? christian: well, i think we would echo some of the same concerns. we're not looking for a big bang, but certainly the pressures are continuing to build up. once again, our negative outlook for the region is basically a continuation of what we saw in 2020. constrained growth outlook, continued deterioration in fiscals across the board. and at some point, perhaps, there -- some of these pressures could break. but we are not looking at the moment for asia-pacific at large. we are talking about the health of the financial systems.

many of the countries we are looking at entered into the crisis with very stable financial systems. of course there have been exceptions to that rule. for example, we downgraded india last year. so the financial fragility is in the banking system were exacerbated by the pandemic. so certainly, for many of the countries, apart from india, we're seeing that they entered into the crisis with some buffers against the possibility of a financial crisis. haidi: you talk about an asymmetric recovery. yes, countries like new zealand and australia to a certain extent have come out pretty well, well buffered in terms of recovery, but they are no china. in the absence of another china with a strong recovery to stoke the demand side recovery for other countries, is it really going to be difficult for a lot of these other economies that are reliant on that demand story

to be able to get back on their feet? christian: indeed. we don't assume that the things will be back to normal. indeed, the past few weeks, they had been some enthusiasm brewing because of the introduction of vaccines in the region. some of that has already started. but the fact of the matter is we are not in a situation where we can see output levels, gdp levels, coming back to 2019, pre-pandemic levels, for most countries in the region. so, in the absence of borders opening up, and tourism is a very important part of many of the economies in asia, for example. investment relies a lot on the ability to travel. so, investment and tourism are going to be handicapped. so i think countries are going to have to think of ways to

increase domestic manned -- demand. that will involve a lot more stimulus, but domestic demand will be much more important in terms of thinking of how to recover amid the pandemic. haidi: christian de guzman there. next, indonesia is kicking off a mass vaccination program. we assess the uncertainty over the chinese jab. this is bloomberg. ♪

haidi: the president of indonesia will be the first in indonesia to get the vaccine shot. uncertainty still hangs over it, which has reported four different efficacy rates. what are the efficacy rates when it comes to this vaccine that we have, according to the data? guest: over the past few weeks we have seen four wildly different efficacy rates released in indonesia, turkey and brazil. goes as high as over 90% and as low as 50%. a wide difference. it is very confusing for those reporting on it. but it is fueling skepticism over the china vaccine.

so far it has released less information than western front runners. it is speculative unless more data has been peer reviewed. we are waiting to see how much of the total people tested in the vaccinated group that will help us to understand why the numbers are very different. kathleen: so much uncertainty and so much need for this. what is the impact of these different results so far? jinshan: the federal government committed to inoculate the cities with stenovec shots. indonesia is going to start. but some places like hong kong, the data issue has already appear to impact regulatory approval. yesterday when i talk to a government advisor in hong kong he sits in a back was going to ship supplies to hong kong in

january, but then they delayed it three times. so that will delay the assessment of the application and the arrival of their shipments. kathleen: thank you so much to bloomberg reporter jinshan hong joining us from hong kong. next, hsbc putting its future on well-connected bankers to help steer through crossfire and closer to china. this is bloomberg. ♪ . this is bloomberg. ♪

haidi: we have breaking news when it comes to the exercise of the 25th ammendment to remove president trump. we have a letter from the vice president mike pence, telling nancy pelosi via this letter that the 25th amendment is not in the united states. pence sending this letter to house speaker nancy pelosi on the 25th a moment resolution, urging nancy pelosi to avoid actions to further divide and inflame. of course we had much expected this. we knew the vice president would not exercise the 25th, and president trump saying earlier at a rally in texas he was at zero risk of removal with the 25th a moment. however, we do know the house is preparing to vote on the article of impeachment. we're getting various factions and various counterproposals being drafted within the gop

factions as well. kathleen: hsbc is increasingly grooming a set of well-connected bankers tonala kate -- navigate its delicate relationship with beijing. they are searching to find a successor. for more we are joined by senior advisor. they are said to be looking at two candidates more closely. what can you tell us about them? guest: good morning. the two candidates that we have heard are being considered at least internally among a bunch of others are two bankers. one is mark wang, the current ceo of china, and we have david leau, the head of asia-pacific global banking. with mark wang, he's been china's ceo since about march.

he is supposed to have a personable style and has been a public face for the bank in recent months. however even he has only taken is no -- new rules since about march, he needs more experience before taking on more responsibility. he joined hsbc in 2005, previously worked at deutsche bank and bank of china as well. then with david, basically he has tended to be liked by investors. knowledge of chinese markets. he is close to the ceo and board member, two very good candidates there. liao helps everything from debt capital raising to share sales. generally the asian units accounted for more than 80% of the total adjusted profit of hsbc banking and markets

business in the first nine months of the year. haidi: mark tucker's contract is coming up for renewal put -- renewal. is that why there is more pressing need? ambereen: he's an old hand when it comes to dealing with beijing. previously he was at prudential, which we all know. with mark tucker, he is one of the key figures when it comes to hsbc's dealings with china. so, given his contract is up for renewal sometime later this year , peter wong is also nearing retirement age. these are the two key hands along with the younger guys who do the daily dealings with the chinese relations. so they really need to kickstart

a succession plan going now while the two are still around. peter wong, he has renewed his contract in the past and is extending it. the other reason i guess is because there's an increasing political tension as we have all seen between china and the rest of the world. so, you need someone who is able to have specific diplomatic skills and deal with all these competing states, and in particular, they would need to protect hsbc's interests as well. haidi: great to have you with us. let's take a look at what stocks we are washing. -- watching. sophie: these three chinese consumer companies. fundamentals for china's consumer staples center. layer cautious, given they have

nearly -- they are looking to names with cost control to boost margins. switching out the board, keeping an eye on more share buybacks in the mitch. three chinese companies in particular after they announced by bank ♪

tom: it is 9:00 a.m. in beijing and shanghai. welcome to "bloomberg markets: china open." david: we are counting down to the open of trade in the chinese mainland and here in hong kong. let's get to your top stories. impeachment proceedings may move forward against president trump, as he says there is zero risk of the 25th amended being used to --