>> good morning and welcome to "bloomberg daybreak: australia." we are counting down to asia's major market opens. >> good evening. top stories. the top central brings diverged as inflation issue split policymakers. investors will be eyeing monetary decisions from the fed in 19 others this week. >> china is adding fiscal

stimulus in early 2022 after beijing finishes stabilizing its economy. >> boris johnson warns the u.k. is facing a title wave of infections. >> let's take a look at the markets for the first trading day of the new week. we have been trading for an hour. not a lot of action. just a few points weaker. australian futures pointing to a positive open. 0.2%. we ended up 1.5% higher last week. a similar story for the nikkei with a mostly positive story last week. futures pointing to a flat open. kospi futures looking weaker to tune of 0.75 perce >> we will be watching u.s. futures. u.s. stocks hit a record high on friday after we saw the november

cpi at its highest since june, 1982. 6.8% year-over-year. the s&p gained 1%. bonds sold off when the headline came out and people sat back and began to say, stocks are coming up and are starting to rally. it was not as strong as it could have been. we see that the stock market closed the week with an 11 point basis point gain. looking at oil, another interesting story. not that long ago oil tumbled -- a bear market on november 30. last week, the biggest move at more than a percent. there is a more bullish view on oil. and joe biden is telling the united states on friday that

this is the worst of inflation and energy is coming down and car prices are coming down. and i am sure he had a lot to say or answer to when it comes to wages. wages are not keeping up with inflation. earnings adjusted for inflation down 1.9%. people are making bigger paychecks but they are getting eaten up with inflation and it has become such a political issue that in fact, we can see that larry summers saying again he things the fed has waited too long. he things it may have cemented in 4% inflation. not just to two or three rate hikes but possibly more. >> on face the nation, a speaker did not hold back talking about inflation saying we were transitory over the worst of the

inflation call. he said it is time to let that go. the fed needs to regain the narrative when it comes to inflation this week and regain its credibility in the process. maybe it is time to ease off the accelerator so the fed does not have to hit the brake hard. he does not think the inflation story is over. >> which makes the stock market and bond market reaction all that much more interesting. the fed and other central banks meeting this week. for the federal reserve it is inflation, that is a big story. even what the question of omicron hanging over their decision. when you go to the ecb, even though inflation is pretty hot over there, christine lagarde is expected to say that she does not think these prices -- she thinks these prices will start to go down.

with some renewed restrictions in the u.k. because of virus cases rising, another reason the bank of england may hold off and the bank of japan, same old story. the bank of japan may be considering what they're going to do what their pandemic business lending program. will they start putting it back? are things going well enough or not? that is their big question. >> you mentioned omicron which is the wildcard. central banks trying to decide what to do and trying to evaluate if things will get worse or better. we got a report from the cdc saying nothing too mild has happened so far. the cdc warning let's not get ahead of ourselves. the research is preliminary though they are calling it mild -- though calling it mild might be risky at this stage. another fact that central banks

will be forced to consider this week. cross assets in asia. let's start with andrea and the diversions among central banks. 20 central banks meeting this week and you could not say any of them seem to be heading in a unified direction. >> that is right. it is going to be fascinating. what this we could mark with all of the central banks meeting is the end of two years of the largely synchronized efforts to tackle the coronavirus. also, at the same time, we could find inflation surging back stronger than many of these economies anticipated. the central banks in brazil and russia, they are expected -- as

well as mexico and hungary, you have turkey, expected to cut. and the very large central banks like the bank of japan of the bank of england and the fed, the focus is on the fed. the diversions could continue into next year. >> let's take a look at the china economic conference. three days and it is all about, we have to stabilize the economy and might i add at a time when they seem to be putting restrictions on property developers and that could have destabilized things a little bit. >> 2021 was all about risks.

evergrande defaulted last week and will go through a painful debt restructuring with government officials sitting on the risk management committee. that is a poster child for the de-risking of 2021 but there are a number of headwinds for the chinese economy. you have the property market slump. and the social stability issue as well tied to housing. there have been flareups of covid and weakening consumer demand. alterable headwinds on the chinese economy. expected now in the fourth quarter of do sell rating to about 3.1% -- decelerating to about 3.1% growth. oftentimes, policies do get front loaded in the beginning part of the year and that is

what most economists are feeling that we could get a significant fiscal jolt in the first quarter , the beginning part of the gear and then maybe peter out a little bit to solidify a floor on the deceleration of growth while also giving a much-needed shot in the arm to an economy that is hurting right now. yes, ensuring stability, the top priority coming out of this three day conference in beijing which sets the economic priorities for the next year. >> the ever of altering variable quite literally is the ever evolving virus. what do we not know about the latest string? -- strain? we note -- >> we know it is incredibly infectious. moving quickly through south africa and denmark. doris johnson is moving boosters

up for all adults to the end of the gear. it is a fairly marital -- it is a fairly mild string. most of the cases have been mild. the european disease agency said there were no deaths yesterday. a lot of unknowns. a few weeks until we know more. >> thanks to our editors. and don't miss two exclusive interviews ahead. the indonesian finance minister at 930i gum sydney time and 1:00 p.m. sydney time, we are joined by thailand's central bank governor. let's go to vonnie quinn. >> south africa's president has tested positive for covid-19 and is receiving treatment for mild symptoms. he was vaccinated with the

single-dose johnson & johnson shot in february. he did not immediately respond to a request for comment about a booster shot. south africa is in the midst of a fourth wave of infections fueled by the omicron variant. prime ministers from the g7 have warned russia to de-escalate its activity in ukraine or face massive consequences. the ministers said they were united in their condemnation of russia's military buildup and aggressive rhetoric towards ukraine. the u.s. has warned for weeks that vladimir putin has drawn up plans that could take place in early 2022 though vladimir putin has denied those. president biden has issued an emergency status for kentucky and has mobilized federal assistance for 15 counties. the president said has spoken to

the governors of arkansas, illinois, missouri and tennessee and stands ready to approve more government aid. 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 vonnie quinn. this is bloomberg. >> still to come, australia's fintech sector is booming. we will have a conversation with louise daley. up next, the fed leads the flurry of central bank decisions this week. ben emons will be with us next to break down what it all means to markets. this is bloomberg. ♪

>> you are continuing to see inflation broaden out particularly among the service sectors. >> a huge problem for the most

vulnerable segment of the population. >> we are at peak inflation from supply chain issues right now. you can see signs of oil production moving up and some supply chain issues are clearing. >> some are proclaiming that those supply disruptions will be over but they will not be. >> there is pressure on the federal reserve. >> the fed acted away from the word transitory but they still believe the inflation problem we have is going to resolve itself. >> the strong inflation data is pushing the fed to accelerate taping next week. >> right now, we are pretty split between 2-3 hikes in the next year. kathleen: 20 central banks will have to face the inflation threat in the next few days. we will get the final decisions

from the fed, the ecb, the boj and the boe all responsible for monitoring policy in half of the world's economy. chair powell is expecting a quicker taper on wednesday and may be open to earlier rate hikes. ecb president christine lagarde will likely stick to an accommodative policy stance while the boj may also hold onto is very dovish positioning. paul: perhaps though the most striking area of divergence is the pboc. that has already started to ease as the property market downturns threatens to hamper growth. data from wednesday -- data on wednesday. kathleen: let's bring in ben emons, managing director of global macro strategy at medley

global advisors. inflation trend at 6.8%, the highest and fastest since june of 1982 with basically -- which has basically been shrugged off by the market. do you have any idea why? ben: it is interesting why it did shrug it off because at 6.8% , that is really high and if you believe the consumer surveys it may go even higher. consumers have been right about inflation as opposed to the economists. i think the markets took it as accelerating more than the consensus expected but at the same time, there may be a view that we will be peaking at the inflation at some point because the supply chain problems are slowly being resolved. i come from a camp that inflation looks much stickier. i think if you look at rate

developments at the moment -- there are pressures responding to the inflation. we are going to see some oppression which should lead to reassessment of where interest rates are going from here. kathleen: if you look at what the yield curve has done, the flattest yield curve, something like 84 basis points since the late 1990's -- the federal reserve is ready to start a tightening cycle. let's put up a chart. does the bond market have it wrong? are they underestimating the extent to which the fed, through its new dot plots, indicate they are ready to raise rates more and faster in 2022 than what is being priced into the market? ben: let's take a step back to what happened in march and

april. we had an inflation rate just below 2% and it stuck -- and it suddenly accelerated to almost 5% in a short period of time. the difference between the three year and the tenure errors now about 85 basis points. the dot plot could be reflecting the risks building around inflation. the market is discounting that there will be a series of hikes coming sometime starting next year, whether it is the middle going into 2023, the real question is how fast it will be. that is not known. we hope to get information on wednesday. we may get to a flat yield curve if the speed of hikes is faster.

at the moment, i think the market is right and it sees rate hikes spread over 2023. paul: if we do have faster than expected tightening, what are the implications and for equities? do you anticipate a taper tantrum or is the growth story intact and that is the only story in town? ben: i think that is a great point. if anything, we cannot ignore that we have been used to 25 basis points of rate hikes since may of 2000 and before that, we have not seen anything like 50 basis points of rate hikes. that could be in the future if inflation persists. i do think that if you get accelerated rate hikes, zero in march and we start after with a

much faster path, that cannot be a good scenario for markets. liquidity could be withdrawn quickly. why we are not there at this moment is because i think most people in the market is comfortable they will get enough hikes that will be sufficient to keep inflation under control. at the same time, you cannot ignore that they may have to move faster. paul: something else we cannot nor, the wildcard, the coronavirus variants. we saw a sell down when the omicron variant broke but the s&p has recovered. do we now seeing new variants as

new opportunities? ben: that was a good strategy this year. every variant that showed up. that is a pattern where every variant that shows up will not lead to an immediate shutdown like we saw in march of 2020 so therefore any setback in the market is just a reflection of a temporary slowdown in the economy and the reopening is uninterrupted so you rally back. that will probably stay in place unless the variants turn out to be deadlier and we step back in our vaccination effort. so far, the market has not priced in that scenario. so i think the buying will continue.

i think the variants are a risk on scenario. kathleen: if the omicron turns out to be benign or not so serious -- it is not so much that there will be more deaths but a lot of people are pretty bearish, bond fund managers and investors who think that once we get past that part of it, next year we will see a faster rate hiking fed we will see the tenure yield get quickly above 2% and even higher. what do you see? ben: if the fed is rising, we are going back to 2.5% in the long-term which is the long-term rate, we will be pricing currently about 1.5%, i think if you do speed up with the rate hikes cycle, either with more

rate hikes where 50 basis points, that will be reflected into the yield curve. that is still a scenario and is a reflection [indiscernible] the economy also can stay on track. it will stay really robust. we could still expect that at some point in the future but at this moment, the omicron uncertainty is still out there and is part of the reason why yields are lower. paul: all right, ben emons, medley global advisors managing director of global macro strategy. thank you for joining us. you can get a roundup of the stories you need to know to get your day going on your

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paul: let's take a look at the day ahead for australia. vaccinated travelers can enter queensland for the first time since early 2021. moderna's covid-19 vaccine has added a booster shot and the south korean president has arrived in canberra for his minister with the prime minister. coming up next, an exclusive interview with indonesia's finance minister as she discusses the latest budget and tax reform as well. we are 30 minutes away from the open in sydney. futures pointing modestly higher

at about a fifth of 1%. more in a moment. this is bloomberg. ♪ hey, angie! you forgot your phone! hey lou! angie forget her phone again? yep. lou! mom said she could save up to $400 on her wireless bill by switching to xfinity internet and mobile. with nationwide 5g at no extra cost. and lou! on the most reliable network, lou! smart kid, bill. oh oh so true. and now, the moon christmas special. gotta go! take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes switching fast and easy this holiday season.

kathleen: finance chief further cut estimates is a fresh round of tax hikes since to bolster the government earnings. she spoke to bloomberg and flick -- to bloomberg exclusively on that. >> inflation is low if you compare it with the united states or europe --

[indiscernible] we also see electricity and fuel has created stability. we also do not see the same supply chain disruption as the united states and europe. there is a demand increase, but we are not in the position like in the united states as well as europe. but commodity price and editing -- [indiscernible] paul: it doesn't seem as though you are going to meet your deficit target of below 3% in

2020 three. what are you going to do to address that? >> this year, we are expecting inflation to be lower than this year. i think we are at the lower end. because of the strong revenue growth, we are showing around 16% growth for this year. next year, we will be able to reduce the deficit on the budget, but we are expecting it is going to be much lower than that. we [indiscernible]

which will reduce the need for financing. combine all of these three and i think we will have a much lower deficit. i think we are still having a good chance for that. paul: we have other perhaps headwinds as well. the constitutional court ruled that there are procedural flaws. is that likely to interrupt foreign direct investment? that could also affect your target? >> we discussed the stock creation law and we are looking

at the political process which is proper. to fulfill all the requirements. i personally feel this is a good prospect -- good process and will not affect investment. >> when are you going to liberalize energy prices? >> we definitely need to produce on this area but at the same time designing the policy and preparation in order for us to be able -- we have to be mindful

but the signaling is very clear on that front. paul: that was the indonesian finance minister. let's get the first word news with vonnie quinn. vonnie: there is growing diversions among the world's top central bankers. 20 rate decisions are due this week, including from the fed, ecb, doj -- boj as well as acting other countries. some officials are aiming to tackle inflation while others want to fill demand. the omicron variant is the latest wildcard. economists predict china will start adding fiscal stimulus in 2022 after authorities laid out key goals in their annual economic policy meeting. top policies include stabilizing the economy. hawkish language on real estate

expects the curbs will remain. a target will be revealed in march. the british prime minister, boris johnson, once the u.k. -- warns the u.k. is facing a tidal wave of omicron infections. new modeling suggests the country could face almost 75,000 deaths if additional control measures are not imposed. johnson has set an end of year and line for the booster vaccination program. that means every adult should be offered an additional dose by the end of december. new data from south africa indicates two shots of the pfizer vaccine have just 22 point 5% efficacy against symptomatic omicron. scientists found the reduction in neutralizing antibodies. still, they say a booster shot -- backing up results from pfizer. 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. kathleen: let's get more now on the situation in ukraine as foreign ministers warned russia to de-escalate activities or face consequences. joining us now is bloomberg editor tony choose can. is -- did the g7 make progress? we know president biden has threatened big financial sanctions. it seemed like many members are on board with that. are they getting anywhere? >> all of this is an effort to build up a diplomatic front, if you like, against vladimir putin and what is believed to be a potential plan as we have been

told by western intelligence and western officials. that remains to be seen. the purpose of all the diplomacy and rhetoric by president biden and secretary of state blinken is to show pruden that the west, as it is called is standing up to these threats and he will pay a price, although he did not spell out what the consequences would be, which isn't surprising because you don't want to give that away ahead of time. paul: vladimir putin insist there is nothing to see in terms of what is going on this side of the ukrainian border. what is russia trying to achieve exactly? tony: there has always been a sense, well documented sense that ukraine should be part of

russia or at the very least part of the russian sphere of influence. the point of view by the g7 and others in the west is there cannot be spheres of influence, that is not how it works or how to keep peace, if you like. therefore, the entire premises rejected. russia argues nato encroachment by pumping up its eastern flank comedies countries that used to be warsaw pact. there are other russian grievances and in the middle of this is the nord stream 2 gas pipeline which will send russian gas to germany directly, which

among other things places germany in a very delegate position at this particular juncture because the pipeline is finished and now it is in a sort of diminished rate of limbo and there is talk at least from washington that the pipeline is in play as part of these efforts to rein in russia. paul: thank you so much for joining us. still to come, external funding from technology. we will hear from the vc ceo on what prompted the investment. this is bloomberg. ♪

kathleen: you are watching daybreak us truly a. time for your morning calls head of the asian trading day. focusing on china after its an economic agenda setting meeting, nec key goals to counteract growth pressures and stabilize the economy. however, the paulson institute things a stronger sponsor will -- strong response will only be in the first quarter. >> we are looking at the macro

impact of divergence policy. america predicts liquidity will peak in the first quarter of 2022 because the path of rates differs. specifically, the fed, ecb and boe are on course to shrink their balance sheets to $18 trillion by the end of next year. the digital transformation spurred by the pandemic has led to a boom for australia's fintech sector. we've seen a number of pivotal transactions, including square blocking acquisition of after pay. finder has tapped into growing demand with future capital injecting funds. the ceo joins us now. you put $30 million into finder last week, the comparison service website. what is the appeal of this

platform. it seems to have a fairly heavy crypto tilt now? louise: there were a couple of things that grew our decision to lead the investment. a lot of people know freddie sylvester as the face of the company. with his wild hair and antics. but there's a lot more to fred. it is an execution machine. they've built a premier comparison brand in australia but they are evolving into a platform for consumers and ultimately other merchants to join. they have expanded very well into the u.s. and u.k. and the technology platform has enabled

them to spin up elements very quickly and give them a lead in the market. ultimately, the consumers are using the platform. the opportunity to invest in a company that has 10 million consumers on their site every month and what can lead to new products like retail is asian of exit to crypto and defined your own product. it's an evolution and we are banking on them to do that. paul: finder has made noises about an ipo for a few years. do you anticipate this happening in 2022 or shortly beyond? louise: i would not put a time on it just yet. probably in the next couple of years and could be in the u.s. because that is where the team

is heavily focus now. there's a very large market for the products and they have good acceptance in the us trillion market. they are present there today and in the u.k., and that is our focus for our team. paul: you do seem to have a heavy focus on fintech, but last week, the treasury in australia did announce some regulation coming to the fintech sector, by now, pay later, crypto -- this at have any opportunities for venture capital? louise: regulation in the sector is inevitable. there's been a lot of interaction in the industry over the last 12 months. that has been a serious play in the industry. we are communicating with government anyway. i think regulation is inevitable

in this sector. consumers will expected. companies that can accommodate it and work with government and the regulators will be the ones that thrive. the extent of the regulation and the timeframe in rollout, sometimes there can be an expectation of adherence over a short timeframe. as long as there is a recognition that regulation can take a little time, but we are all expecting it and i think that will lift the sector and make investment opportunities more available. it will be much clearer. kathleen: so much money is pouring into us trillion startups. some are saying fintech is having its moment. what's driving it? louise: there are a couple of

things. in terms of australia as a location, we have a good regulatory framework. we have consumers willing to try things and are hyper-connected. there is a proliferation of mobile handsets and the connectivity pretty much across country. i wouldn't say some of the more remote areas, but really they connectivity is pretty good. us trillion consumers are quite curious about new products, so that leads to a good adoption rate. there has always been good education opportunities in us trillion that are also driving the sector. hopefully we will be able to bring more people back into australia

human capital crises we are facing because intervention needs people and from a human capital perspective, we need something like 250,000 people in the next couple of years to drive the sector and we are only regulating in the tens of thousands. so that is critical. the final thing is we can't underestimate 15 years of economic prosperity and stability in terms of allowing people -- it's a huge undertaking. kathleen: i want to ask you about microsoft accelerated program. no other organization has been given exclusive access. in a nutshell, what is it and what does it mean for your future growth? louise: we have a close partnership with microsoft. our portfolio companies that we choose in terms of fitting into the microsoft strategy of industry cloud, in terms of

vertical is asian, and then anything that is horizontal around security infrastructure. working with microsoft, we accelerated assets to their programs which makes a difference in the partnership with microsoft. our portfolio companies get access to the go to market programs that really help accelerate their scale and adoption and that is incredibly unique about microsoft and that is where our partnership is framed come around that access. you've got a lot of technology companies that have built fantastic technology but can't commercialize it. that is really our focus. kathleen: thank you so much. coming up, commonwealth bank of australia moves closer to its sustainable lending goal with its agreement with northern trust. more details, next. this is bloomberg. ♪

paul: commonwealth bank of australia is draining the green repo markets, striking a deal with chicago-based wealth manager, norman trust to found a portfolio called green loans. let's get this on -- get more of

this from our reporter. what are the details on this? >> there's been a lot of concern about greenwashing, questions about just how green the field is. commonwealth bank has struck this dirty $6 million agreement with northern trust. they will exchange cash for collateral and agreed to reverse the flows at a later day. with these repo agreements, it's a short term. they are saying they will use the finances to help back its $6.4 billion portfolio of green loans. they are saying it's a small step, pretty small but it is a significant step. they do have that target. they hit $70 billion of sustainable lending by 2030 and this is just a small step toward

that. kathleen: explains -- explain how the repo market helps a sector of the bond market. it still very small relative to sony kinds of bonds. what gap does it fill that's filled in other markets by a repo trade? >> basically what this is about is thanks trying to green their balance sheet and trying to drive products that way. it's just the next iteration of that, trying to add a green element. not only to help customers transition, but to help green if i their own balance sheet as well. regulators still haven't decided how they want to define a green repo agreement. cba is one of the banks

consulting and the purchase agreement is different from the likes of deutsche bank and bnp paribas because they've got a certification from a not for profit group called climate bond initiative. the international capital markets body is considering the style of product it has now released. paul: our asia finance reporter there with a look at some of the companies we are watching in australia today. csl, the pharmaceutical company and its bankers are working on raising around $3 billion in equity as it tries to complete the acquisition of a swiss drugmaker. reportedly nearing a multimillion dollar deal as they plan to overhaul their domestic aircraft fleet. crown resorts holding its first

today after receiving a takeover offer. not going to be a dividend. kathleen: coming up, a look at the eco-week ahead. that's it for daybreak australia. daybreak asia is next. this is bloomberg. ♪

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paul: good morning. i'm paul allen in sydney. we are counting down to asia's major market opens. kathleen: i'm kathleen hays. welcome to daybreak asia. the world top central banks emerge as concerns flipped policymakers. they will be eyeing policy decisions from the federal reserve and 19 others this week. asian stocks up for a steady start as investors way