♪ haidi: a very good morning. we are counting down to asia's major market opens. shery: welcome to "daybreak asia." the fed's most hawkish pivot in years. >> we are phasing out purchases more rapidly because with elevated inflation pressures and a rapidly strengthening labor

market, the economy no longer needs increasing amounts of policy support. shery: more signs of distress in china's property sector. another developer asking for an extension. and investors looking for any reaction from the fed to the spy in covid cases. haidi: we did have that record high for new south wales. let's look at how markets are pricing all these in. that ultra hawkish pivot as we could potentially look at it from the fed overnight. that staggered start to trading. and pick airbus to replace its aging fleet of boeings. that stock reported a loss for

the first half. we are watching new zealand but did get better than expected gdp numbers showing a better-than-expected impact of recent lockdowns. also watching out for labor market data. that is expected to be quite positive as well. we're protecting maybe that surge in employment after parts of the country came out of a recent round of lockdowns as well. also, of course, we continue to watch the 10-year here in australia to see if that snapback can be sustained. shery: we have the 10-year rising in the u.s. the s&p 500 and nasdaq 100 futures higher. of course, we have that rally in the new york session. it was interesting to see that we saw that big spike, perhaps the fed turning more hawkish, perhaps chair powell's endorsement of the stronger economy.

we had the nasdaq 100 gaining more than 2% as well. we continue to see wti gaining toward that $72 a barrel level, this also as it pared back losses in the new york session. we did have u.s. stock inventories all in last week, and a broader equity rally being across the oil space as well. down the asian session at this point, but this is after jumping the last two sessions. haidi: let's get more from the fed with our economics policy editor kathleen hays. kathleen: there was so much talk about jay powell's hawkish tilt. it has become the fomc's major inflation battle. paul volcker in the 1980's,

having to fight back against inflation, but the fomc like powell now agrees that inflation is no longer transitory, the economy is quickly moving towards full employment, and importantly, they did not even speed up the taper. they signaled three rate hikes in 2022. look at our classic chart. you can see out of the 16 current members of the fomc, there are now 10 favoring rate hikes next year. there are two who see 4 rate hikes, not three, and there were five that only see one, but remember in september, nine of the people on the fomc or half then did not see any rate hikes in 2022. this was a major shift. when jay powell was asked about

moving to rate hikes, listen to what he said. >> the economy is so much stronger. it is so much closer to full employment. inflation is running well above target and growth well above potential. there would not be the need for that kind of long delay. having said that, we will make this decision in coming meetings, and it is not her decision the committee has really focused on yet. >> -- kathleen: about omicron, you might say. powell said we have seen the covid virus hit the economy. we have seen what delta did more recently to jobs and the labor market and the economy, and he said with every wave, the economy, businesses, consumers, are learning better how to deal with the virus. he does not seem concerned that this is at all a major problem for the federal reserve. particularly, he is much more worried about the fed rattling

against inflation and looks ready to wage a full out battle. they will be careful and watch the data, but that is the message from jay powell today. shery: the bloomberg intelligence head of vm strategy joins us, and it was interesting to see that reaction in the broader market. i have this chart on the bloomberg showing that those u.s.-listed etf's, markets actually rallied off the fed decision. counterintuitive, right? you would that a more hawkish fed would lead to em's becoming a little bit spooked. what is going on? >> that is a great question. it is not all gloom and doom. i think the fed decision today points to the fact that they are not going to remain behind the curve, which is a positive signal. in a way, the way the market

reacted was a bit of by the news and sell the rumor. the second point is that the fed might be more sanguine in growth , and that is a very positive sign. the third most important thing is omicron has been all over the news and how it is impacting markets, especially markets where vaccination rates are low. it seems the fed believes that this may not be as big an issue, and if we really go back to 2004, 2 thousand six when there were 17 rate hikes. haidi: we recently came out and talked about 11% to 20% returns for em. does what happens now in the next few months change that? >> we feel great about our forecast. there are a few things happening

in emerging markets. let's look at a couple of little things. on the fundamental side, asean is extremely well-positioned. earnings growth has been trending really well. revenue growth is doing well. brazil and mexico could survive with upside. we feel good about that. china has really borne the brunt is the biggest driver of em growth, and it could be healing a bit, especially after the news yesterday, and india, which is otherwise not a particularly positive wildcard, but we expect em risk to come up a little bit. >> talking about the outlook when it comes to emerging markets in light of the fed to

an even more hawkish there. you can follow all the days trading action and get the asian reaction as markets wake up on the bloomberg. you can get a market rundown, guest commentary, and analysis from bloomberg's expert editors right now. let's take a look at some of the movers we are watching today. we are seeing some downside extending session lows to over 8%. we are also watching the surprising announcement when it comes to replacement of the aging fleet at qantas. qantas also's paying they see -- so saying they see -- a lot of

uncertainty what this means for holiday travel, christmas travel, and that holiday recovery of the nerve domestic tourism sector as well. -- that holiday recovery of the domestic tourism sector as well. let's get you to su keenan with the first word headlines. su: we start with the u.k., which is warning about the spread of omicron after hitting a record 78,000 cases wednesday. authorities anticipate substantial numbers of people will be hospitalized over the holiday word. meanwhile, canada is urging citizens to avoid trips to other countries this month. to the u.s. now where health officials say that existing booster shots will work well against the omicron variant of covid-19.

companies are already raising two prepare -- pharma companies are already racing to prepare additional vaccines, but dr. anthony fauci says he sees no need. >> our booster vaccine regimen works against omicron. at this point, there is no need for a variant-specific rooster. su: retail sales missed economist estimates. this is the smallest advance in four months as consumers temper purchases as they face the fastest inflation in decades. the retail report may also reflect the pulling apart of holiday sales to counter supply disruptions. to singapore now where they have introduced a new round of property controls.

duties will be higher for second time home buyers and foreigners. loan limits for public housing are also being tightened. singapore also plans to increase the supply of public and private real estate as homes have surged in the past year. global news 24 hours a day on air and on bloomberg quicktake power by 2700 journalists and analysts in more than 120 countries. shery: still had, high-yield bonds and long-term investment strategies, but a closer look at the fed's intensified battle. this is bloomberg. ♪

>> if you look at the fed forecast, in some ways it does not really hang together. they have the nonfarm rate that is inconsistent with their estimate for three or four years, yet inflation magically melts away back to 2.4%, even though they actually have not made monetary policy tighter. in my mind, it is all about magical forecasts. shery: let's bring in more analysis, bringing in our global economics and policy editor kathleen hays, who is standing by with our next special guest, from johns hopkins university, previously served as the imf's first deputy director.

kathleen: i want to establish all your bona fides, as they say. are you surprised that three months ago, half of the members of the fomc did not even see one rate hikes in 2022, and now i believe it is about 12 who see at least three? was this a more aggressive signal than you expected? >> not at all. this is exactly what i expected. i think this is what the market expected. the fed does not look to surprise. they are not trying to be preemptive. they are trying to give the market a position that is consistent with what they have been claiming they wanted to do. the change from what it was before reflects a couple of things. first, they had promulgated a

new framework that virtually promised that they were going to be late to the party, and they kept that promise. secondly, that framework had focused a lot on explaining what they were not going to do. they were not going to lift off from zero until this happened, that happened. now we are going to move into a more interesting phase -- what are they going to do in the future, and what will guide it? the framework that they had promulgated does not offer much specific guidance. kathleen: what do you expect them to do? what do you think they should do given the level inflation has reached and given that thus far, there very little sign that it will come down much or fast? >> what has happened clearly is there was an acceleration in some key areas. food price, energy prices, auto

vehicle prices in general, where the principal source of -- were the sharp -- were dependable source of sharp acceleration and that's why they kept saying transitory, but what they have seen and recognized is that price increases are now spreading, so even though the transitory elements will be easing away, the issue is how broad and for how long, and that there is a fair amount of uncertainty, so at least they have given us a benchmark that says tapering over by march and then we start talking about this feed, pace, and duration of policy tightening. kathleen: will it be enough to address inflation expectations? jay powell did mention the concern about that. again, do they need to move faster?

is there a risk inflation becomes more entrenched? >> for the time being, they met with the market expected them to do. the underlying economic data in the situation and financial markets, which as you have seen, has not been particularly perturbed, especially by long-term rates, by the latest developments. in the longer term, there is a lot of uncertainty about how far and how fast they will go, but there is time to play catch-up if that is needed, and at the same time, there are some other factors like omicron that could produce delay, but for now, they are matching what the market is looking for. they are going to adjust for sure. >> we just had one of our

experts saying that emerging markets are actually rallying. so far, we don't really seem to be seeing that. what do you think is going on, and is there a risk the fed has to go faster on rates? >> there are emerging markets, developing economies, a lot of different circumstances. his it's too easy to say emerging markets as a whole. there are certainly some developing -- low income developing countries that are almost certain to face stress in the next couple of years, and that is going to be a problem because the international framework for debt restructuring is not at all clear or agreed at this time. for other emerging markets, for

the big emerging markets to get traded in international markets by investors, it is quite a bit different. it does change from country to country. turkey, brazil, they are very different, but think of the counterfactual if the fed had not met investors' expectations about recognizing that it was time to get moving. the implication was that they will have to do more later faster, and it will be destabilizing. to me, it is not surprising that the initial response of emerging markets has been a benign one. if they had failed to act, then it would have been more work, but there's going to be challenges down the road, as they say, where we still have a lot of uncertainty about the persistence of inflation, the degree of inflation, and therefore, the speed, scope of that action.

haidi: that is a lot of uncertainty. we heard from bill dudley saying that he thought the fed's forecast was a magical forecasts. do you think that perhaps we are not pricing in or not really considering here any elements? >> the easy answer first of all is this is caused by pandemic. the pandemic is not over. we cannot be certain we understand clearly all the implications. we will have to see. secondly, the degree of certainly the cause of the shutdown is not typical recession, as everybody knows, and the policy response has been overwhelming compared to the past. how this will work out obviously is quite uncertain, but today's

action by the fed shows that they are back on a path that seems to be consistent with the economic data. they said there framework promised they were going to be late to start. the market agreed they have been late to start, as they promised, but now they are in an action. of course, this is going to create questions about other central banks. the european central bank, the actions of the bank of japan, etc., so this opens up more uncertainty about central bank policy, but i think in the end, it is the underlying economic developments that will be most important. haidi: could there or should there be a faster response when it comes to elevation, and in other areas of the world where

we have not seen that runaway level of inflation, are there elements in place? >> if the inflation starts to accelerate, central banks can take much more strident action, and again, returning to what you just showed, bill dudley, and his claim about a magical forecasts, what he is anticipating his in the longer run, they will have to raise rates more than they have recognized, for example, in the dot plot. if that is the case, we have to ask what is the reason? is it because the economy is stronger than anticipated hour because inflation is more persistent? kathleen: china, pboc, they are ready now. they made it clear they need to stabilize the economy to grow.

what does that mean for these countries? what does it mean for the asian region? what does it mean for the world? >> simple questions, kathleen. clearly, we're in a period that is going to be choppy or -- choppier for markets because not everybody is doing the same thing at the same time. china has their own domestic issues. you have to expect that this is going to produce, for example, a tendency for further widening of trade imbalances between the u.s. and china, and let's see if that produces more policy friction, so lots of questions. >> thank you for giving us some answers there. we do have lots more to come here on "daybreak asia." this is bloomberg.

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>> we're about half an hour towards the japan open as the japanese yen is weaker against the dollar. this is bloomberg. ♪

>> we have had a lot of supply chain issues, a lot of demand, pent-up demand. but i think it depends on the product. but i think we will see some cresting and some prices will start to come down. especially in the meat industry. it is a cyclical business. commodities are cyclical. there have been some weather disruptions, but i'm optimistic that we are going to see a stabilizing and perhaps even a reduction of some prices. >> are gill ceo david mcclendon -- maclennan. new research from supply chain

information provider estimating that 65 billion dollars worth of clothing, toys, and consumer electronics will come loose from the logjam. that means the crunch is having a cooling affected -- effect on the world's economy. carmakers like volkswagen and gm should brace for the chip shortage to last beyond 2022. the redesign of car models will require fewer of the high-tech components. an embargo of more than 100 days , and industry had grown dependent on the chinese market. china accounts for half of beef exports and trade between the two nations has been halted since september. now the rebounding beef trade may help the ongoing surge in

prices. we just heard the car gill ceo saying that some relief may be coming. supply chain snags, weather issues, and demand coming to an end. the prices index hasone to 4% this year. -- wendy 4% this year. -- 24% this year. it's a new day. i knew chinese property developer showing signs of stress. this time, it is rnf properties struggling to survive a credit crunch. for more, let's bring in our chief asian correspondent in hong kong. we have been talking about the chinese authorities perhaps making it a little bit easier for these companies. what is happening with this developer? >> guangzhou r&f has been on

our radar for quite some time. like many of these developers, it is highly leveraged. in september, the cofounders announced it would provide about $1 billion in much-needed short-term financing. it has been selling assets, most recently, a product at the guang joe airport -- guangzhou airport. now this is perhaps the closest indication that they could be heading towards a default. one of the units called easy tactic is asking bondholders for the $725 million u.s. note. you are seeing the bloomberg terminal chart on that particular bond. they are asking bondholders to extend the due date by six months. it is also offering to

repurchase some of the bond at a 70% discount. if the proposals are not met, in a statement to the exchange, they say they may not be able to fully pay off the note. in other words, default. the bond has been selling off a bit. but still, it has been selling off in the shares as well. definitely another developer that we need to add to the radar going into 2022 as more liabilities and payments are going to be due. >> how do we factor this in? we have debt on the substantially rising dollar on the back of fed rate hikes in 2022. >> i was digging deep into bluebird intelligence. research coming out this morning after we heard from jay powell

and what the fed plans to do. they have a stress test for these developers based on the assumption of the increased rate hikes, raising the u.s. dollar, say, 5% versus the depreciating yuan. and b.i. has an interesting case. if the u.s. dollar appreciates by about 5%, barring the major developers in china could decrease by an average of 1.1%. r&f, among all the developers it covers, would be impacted the most among those developers. potentially seeing the debt constitute 5.7% of their total cash balance respectively. >> the largest digital currencies are increasingly showing signs of trading like stocks and bonds.

andrea, we see bitcoin and other assets trending. this is what you expect as it becomes more of an institutional mainstream asset cost. >> that's right. one of the things that need to be on the line here is that bitcoin correlation. it is still a maturing asset. however, it does become more mainstream. it is quite natural that it will trade more in tandem. that is something that we have seen in particular happened this month where bitcoin traded in tandem earlier.

in the 100 day correlation between the bitcoin and the s&p 500. it's one of the highest levels we have seen this year. >> and the inflation hedge roles are becoming a bit more serious right now. >> yeah, that's right. it has long been touted as an inflation hedge. the swings and other areas of the financial markets. bitcoin would go into that. it is furious -- spurious because we have seen this correlation with other asset classes increase. bitcoin hasn't been around for long enough. >> the latest on bitcoin.

speaking of the text of the speech, there are two options. and then review. there is a third option. that 2% to 3% inflation, and conditions for a rate rise not met in 2022. also speaking on omicron, we actually saw a record high number of cases of new covid-19 cases. this is how it will unfold.

we clearly have discussed it. to further taper from the currently weekly rates. no decision being made yet. and discussion about what happens, heating up as the fed announced further acceleration. let's get to su keenan with the first word headlines. su: intensifying the fight against inflation by tapering bond purchases. more rapidly and cricketing the pace of rate hikes. 30 billion among putting it on the track rather than mid-2022. >> we are phasing out purchases

more rapidly. the economy no longer needs increasing policy support. >> several banks in indonesia. the emergence of the omicron variant threatening the economic recovery. those authorities will be watching closely for currencies from the fed to tighten policy. to the u.s., sending the annual defense policy built to president biden with more money than expected. the defense authorization goes 25 billion dollars beyond president biden's request from the pentagon's purchase. the bill authorizes funds for major weapons purchases.

and u.s. secretary of state antony blinken has cut short a three day trip to southeast asia after a journalist trapping with him tested positive for covid-19. blinken is returning to washington earlier than scheduled and canceling meetings in thailand and hawaii. blinken and other senior staffers have tested negative. enter the u.k. where we are warning about the spread of omicron and a record 78,000 covid cases on wednesday. substantial numbers of people will be hospitalized for the holiday period. canada is asking citizens to avoid nonessential trips to other countries over the next month. ontario announced new covid

restrictions. powered by more than 27 hundred journalists and analysts in more than 120 countries. >> coming up, we discussed rebalancing portfolios and finding long-term investment opportunities in the high-yield bond. this is bluebird. ♪ -- this is bloomberg. ♪

>> futures pointing to gains after stocks rallied, hastening the end of the asset buying program. our next guest is bullish. joining us from rbc wealth management, and it's good to have you with us. it seems a little bit counterintuitive. they are really taking the positive side of the commentary, whether it is the strengthening american economy or perhaps consumer spending still looking strong. what are your expectations for the year ahead? >> already the market discounted these rate heights -- hikes next year. the positive message.

for the last 18 months, we still have the relatively loose and with strong balance sheets. that will underpin consumption. they are being rebuilt. it will create a trend of growth. it would be difficult for equities in that environment. >> which agency do you like? >> we are underweight in the u.s. and these are two regions

which are cyclical and we expect a strong economy. >> given the young demographics of where it's spread out, you see a shift in what clients are asking for in terms of different asset classes. >> we think that diversification is very important. it is a key factor in the investment philosophy. and we do think that they look may be beyond traditional asset classes. it has a role of protecting from equity volatility, the prices have a very good run.

we think that price appreciation could continue. it is a slightly higher risk in moderation. >> if we are on the path to normalization, there are very strong returns from equity markets. what does that rebalancing of the portfolio opportunity look like going into next year? >> we balance to ensure that the declines are met by portfolios. you want to make sure that you go back to the basics.

modest overweight in global equities. the economic growth, returns will be more muted going forward. but it's for a more ambiguous sector of leadership. we won't be too hung up on value or growth over the next 12 to 18 months. >> are the evaluations compelling at this point? >> we think that there are opportunities in china. the big factor, that regulation. it has opened up some trading opportunities. there are a number of things we're looking at.

because of the different policies we have seen, we think that consumer group will become more appealing and it will have some consequences for global runs which are not established in the markets. conspicuous consumption. another investment. we think it will be less demand. and finally, another leg in the tech driven solutions. it has invested some $620 billion more than any other country in the world. we can create a competitive

impulse. it is tech driven and looking for solutions. >> the head of investment strategy at rbc wealth management. an in-depth analysis from the daybreak team here, from our studio in hong kong. >> breaking news out of japan. we see the export numbers coming in at 20.5%. this is really huge acceleration from the previous month when we have seen those single-digit gains. still in the double digits, rising 43.8% which is higher than analysts expected. it is an acceleration from the previous month. this would be the trade balance

adjustment. it is slightly higher than what analysts had expected. the headline trade deficit also much higher at ¥954 billion. this as we continue to see it is trading again against the u.s. dollar. supply chains and streams, -- strains, then we saw a double-digit gain. this is bloomberg. ♪

>> a quick check of the latest business headlines. the austrian carrier is committed to ordering airbus planes to replace aging boeing jets. it will end next year. it is also secured a commitment from singapore airlines. the securities and exchange commissions proposing new restrictions on hedge funds and targeting equity-based slumps. it is a complex derivative that

can be used to quietly build up companies. the implosion that fend off capital management. it was it was $309 that will automatically trigger new restrictions. softbank ceo executive says they are in talks to lead the company. they are working on some of the company's biggest deals. they will take an advisory role. managing partners have been in charge since march of last year. >> and we have seen this refocus from softbank when it comes to investments that the vision fund is making. they were always focused on these startups. but now we are seeing them focus their energies even in japan. a member, japan has never been that attractive when it comes to venture capital. but now there is an investment in japanese startups for the first time. we see more money flowing into the japanese venture capital space.

more than $3 billion raised in the first six months of this year alone. >> and this coming as we continue to monitor the fallout from not just the china regulatory crackdown among various sectors but an increase in the geopolitical pace, really threatening more uncertainty and downside. we have china's biggest chipmaker as well as continue downside continuing to think on the concerns that we could see u.s. investment and other types of corporate sanctions including biologics by a record 25%. we are seeing an even further downside from the recent decline. we are a few minutes away from trading in tokyo. these are some of the stocks we are watching. one of the senior executives is in talks to lead the company.

just one of several executives that have gone to softbank recently. they expect output in january and airlines could potentially move as we see covid cases continuing to surge. ♪

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>> welcome to daybreak: asia from bloomberg's world headquarters in new york. asian markets have just open for trade. the most hawkish pivoting years. >> we are phasing out purchases more rapidly. with elevated inflation pressures, the economy no longer

needs increasing amounts of policy support. >> central banks in asia and the philippines will be watching the fallout from the fed tapering. and more signs of distress in china's property sector, another developer is asking for a dead extension. >> we see gains for japanese and korean stocks, the nikkei gaining. every sector is in the green with materials and energy leading the gains. this as we have the japanese yen slightly weaker. we have november exports rising 20.5% year on year, slightly below analyst expectations. still a very strong number and a rebound from the previous month. take a look at south korean bonds right now because we are keeping a close eye on what is happening with those social distancing measures. we have seen more details with the government saying they will

limit the number of people allowed in gatherings, also saying the fomc impact on local markets will be limited. the kospi right now rebounding for two sessions, seeing the best day in about a week. >> watching when it comes to reaction out of australia. and also from the rba, they said that they are considering three options when it comes to what happens ahead of a formal review next year. it ranges from scrapping the program together, tapering, and stopping in may with that third option. we see a bit of downside when it comes to here. we saw the dollar-yen breaking a bit higher after the comment screen lighting the potential risk there. and we see a little bit of

volatility when it comes to trading that currency. new zealand announcing downside. and when it comes to trading australia and new zealand, where watching out for a sector of covid risk as well given that we had record high numbers today. let's bring in our next guest favoring equities and gold. always great to have you with us. will gold star to outperform going into next year? is that what you're going with if we follow this path of normalization? >> i think the accelerated tightening is worried about giving the inflation outlook those elements that we really think that gold may well do well.

we think the dollar ultimately will peak. obviously, it's a focus on the strength in the u.s. economy and we expect that to reverse at some point next year. so that is probably going to be the weaker dollar ultimately harrowing. the reason we have gold overweight is we think we will see it develop and still outperforming. so having a bit of gold generally does well and moves equities up or down. then you can get quite a benefit from the portfolio construction perspective. >> we see emerging markets rallying after the fed decisions.

do you see opportunities in that space? >> i think what happened last night is that they delivered on what they signaled previously. it was pretty much in line with expectations. so for us, that doesn't really change the outlook. if you look at the asia japan index, it is bouncing around key support levels as we speak. i think the next few days are going to be pretty important as far as asia is concerned. we currently have a bias toward your area as far as equity markets are concerned. but that dollar peaking is coming through. and we start to see earnings revisions and economic

revisions. for now, we still favor it over em. >> what are some of the other themes you are watching across asia? we continue to talk about potentially more geopolitical tensions between the u.s. and china and the tech crack down. >> the common prosperity theme in china is a key that we are focused on, saying that the rules seem to be rewritten. that policy has been mentioned for decades, and there have been headlines since 2012. we see more policies moving in that direction. in terms of china, we are not excessively bullish on the macro level, but we do expect economic growth. the areas where we will be more

supported with technology and hard manufacturing. those areas that we think the government is going to double down on, we try to make sure that it is a greener world. so from that perspective, we think it is a very interesting space. >> with the ongoing slowdown in the property sector in china, not to mention increased globalization that we see around the world, where does that put asia dollar bonds? >> within the bond space, it ranks number one. so we have high-yield being one. in asia, we believe a lot of bad news is already priced in. we had it overnight in china and the high-yield sections. it is likely to continue.

and i think we will get those negative news cycles coming through on the property sectors. we believe that is pretty much priced in now. we see the yields at that level as a whole. it is an 80% investment grade space. the yields are very attractive. i believe in the high yields and we think that is attractive as well. and it's attractive when you look at relative to history on its own basis number relative to high-yield. it's one of a few areas in the bond space that is pretty attractive. >> great to have your insight. and i we go to su keenan with the first word headlines. su: the u.k. is trying to get ahead of the spread of omicron. a surge of spending on

substantial numbers of people will be hospitalized over the holidays. canada is asking citizens to avoid nonessential trips to other countries over the next month. ontario announcing new covid protocols. to the u.s. warehouse officials say the existing booster shots -- companies are racing to prepare additional vaccines. dr. anthony says he currently sees no need for specialized doses. >> our booster vaccine regimens work against omicron. at this point, there is no need for a variance specific booster. su: u.s. secretary of state antony blinken has cut short a trip as a journalist traveling with him has tested positive for

covid-19. a state department spokesman says that the journalist tested positive upon arrival in kuala lumpur. blank and another senior staffers have tested negative so far. and to singapore which increased -- introduced a new round in the housing market. taxes imposed on buyers would be higher for a second time home buyers and private unions. singapore also plans to increase the supply of public and private real estate. prices have surged over the past year. global news 24 hours a day on air and on bloombergquint take, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan, this is bloomberg. >> still ahead, south korea making a big push into the metaverse.

we ask the company's director how he has invested in that space. central banks in indonesia and the philippines, we get more on the policy outlook ahead. this is bloomberg. ♪

>> supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to elevated levels of inflation. we are phasing out our purchases more rapidly. the economy is so much stronger. the economy is so much stronger and so much closer to full employment. there is a provision that used to be called the balanced approach provision.

>> several asian central banks won't have much time to digest the latest news from the fed. taiwan, indonesia, and the philippines. let's bring out our chief asian correspondent. it doesn't bode very well. >> the first is exchange rates. >> that will determine. and then already going the opposite direction. we will see if that divergence

does play out. the point unlike 2013, asia is in a better order. balances are stronger. and most importantly, the foreign exchange is right near that record. the central banks have been busy squirreling away dollars during the pandemic that are ready to go. they will wake up this morning and go, wow, that is quite the turnaround. this is what we see tapering without it. >> what about the central bank decisions this week? there isn't that much time. we have indonesia, the philippines coming up. yes, we have seen some inflationary pressures. they don't seem to be in that much of a hurry to move. >> it is quite interesting, the story has been emerging.

there hasn't really been much inflation, which has been nudging up. they have been focused on growth. when they wake up and see these comments this will remain growth rather on the inflation side. they might not feel under pressure to get ahead of the federal little bit, accelerating the rate hikes. that story today is going to be the focus on growth. the omicron variant and very -- they are signaling interest rates and some kind of shift in the months ahead. >> we are also looking ahead for the bank of japan decision

coming up, this on friday, of course. and we are seeing the nikkei rallying about 2%. seeing the best day in about six weeks. it weakens against the u.s. dollar and we are also expecting g pmi numbers in about 15 minutes or so. the kospi has also seen the best day in about a week, reversing two sessions of losses. a little bit of pressure at the moment. go to tliv to get commentary and analysis. this is bloomberg. ♪

>> singapore has introduced a new round for private and public

residential markets. a surge in home prices over the past year. let's get more from our international correspondent in southeast asia. was this a surprise move? >> well, it is a surprise move given that back in june we had the sun bank saying that dual risk of overheating. the government says it is needed. if they don't nip it in the bud, there is a risk that a correction will not be able to take place without destabilizing the public sector as well as the economy. a new set of measures, and it impacts everybody from citizens to permanent residents and foreigners. as of today, the beauty for second homes will raised by about 5%.

in terms of residence, it will raised by a further 10%. it is tough. it is much higher. it is speculative trading in the property sector. you can understand why given the trends in the property sector. the covid pandemic has been increasing. it is justifying the need. quick this has become a widely felt issue around the world. >> other places like south carolina -- south korea, china,

hong kong. we have seen property prices going up. the action we have seen in the first six month of the year, we are looking at $24 billion in singapore. that is double what we are seeing in manhattan. the young people will find it really difficult. and it could impact the popularity. >> our chief international correspondent for southeast asia. let's turn to chinese real estate because this company is

seeking a debt extension to avoid a default. a former credit crunch continues to reverberate through the property sector. properties are wanting more time to pay a $725 million note. let's bring in our china credit editor. we have been watching r&f for a while and things don't seem to have become better for them. >> it certainly looks like they are scrambling to make sure that they can avoid a default or a missed payment with the january 13 bond. in some ways, it is a surprise to investors. there is a risk of default. saying that the rest of it was really under pressure. it is one of china's -- one of 5

billion dollars of outstanding dollar debt. it is certainly quite a lot for global investors, of course. and the fact that it is a weaker rated firm, and some extent anticipated, i think the market, by contrast, there is very little sign that there is quite a bit of strength it is in. and there's very little indication that we would see that kind of slump in the bond prices in the share prices. >> analysts are now calling an edge to the policy tightening cycle. where does that lead the -- leave the sector as we had to the new year? >> absolutely. we have seen the easing signs, minor injections of liquidity. as well as some signs of trying to focus on stabilizing the market. on the other hand, i think when you look at bloomberg's china

credit tracker, we still see that stress is extremely elevated in the offshore market going into 2022. we will keep watch on anymore surprise default that really were anticipated by that level of stress. and finally, fundamentally, this is really the thing that is going to shore up development. and so if sales continue to be under the type of pressure that they have seen so far, it will be early difficult for firms to think about shifting and progressing. and another key factor is if developers can tap that offshore market. some analysts say it's not going to be open until the second half

of 2022. what we have seen at guangzhou rns is the -- r&f is the latest result of that. refinancing their dollar debt and an enormous number is precisely the same type of challenge that r&f is in today. >> let's get you a quick check on the latest business flash headlines. here that tie capital management is shucking the $2.8 billion hedge fund after struggling to make money from bearish bets. the firm will now shift focus to long lonely and private investment capital. it plans to return money in the timeworn equity market. -- tybourne equity market. instead, the firm is focusing on the $18 billion credit businesses and longer-term investments. the ceo is stepping down to become chairman, handing the reins to gail baron. patrick draw he -- drahey is

said to be in early discussions with potential advisors about a u.s. listing as early as next year. drahey stunned the art world when he bought the auction house for 1.7 billion dollars in 2019. and it had a three decade run as a public company. we are now seeing firms opening their policy more. have seen indications that the fed pulses giving senior associates up to $230,000 in annual bonuses. that dwarfs the 130 $8,000 combined maximum bonuses announced -- wonder $38,000 -- $138,000 combined maximum bonuses announced. a brief display of astronomical gains for many cryptocurrencies late on tuesday. crypto exchanges say bad and

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haidi: we do have breaking news when it comes to the labor market here in australia. unemployment changed for the month of november, coming up in 361,000 jobs added to the economy. the basic expectations of 200,000, a strong back -- bounce back from the previous month. unemployment falling down to four .6%, also better than expectations, and a big dip

below the 5.2% we saw in the previous month. breaking it down into terms of full-time employment, that is an addition of almost 130,000 jobs. part-time employment changed, also seeing an addition of 237,000 new jobs. we have been equipped to see a surge in employment. we are seeing the national economy rebounding from a number of lockdowns we saw put in place to contain the domestic delta outbreak. social distancing restrictions in sydney and melbourne were moved throughout october so that the november jobs readings are significant -- significantly rebounding and employers are returning to the office. looking like there's a bit of a pep up with the labor force participation cutting a rebound as we see the reopening of the economy. of course, the biggest threat is omicron. we see the covid numbers in new south wales hitting a record high. we heard from the rba earlier, they are not meeting in january, but they are 3 -- still

discussing possible scenarios of what normalization looks like. shery; perhapsshery; it is that rebound you mentioned in australia when it comes to the economy, something being felt across japan as well. we have breaking numbers with pmi figures on the services side again in expansionary territory. this is a preliminary number for december. it is a little bit of easing from the previous month, but it continues to be a third month of expansionary territories for services pmi in japan. manufacturing not surprising. in 11 months of expansion, the composite coming in at 54.8. a little easing from the previous month but still in expansionary territory. we continue to see the reopening of the economy felt across markets. and of course, the omicron variant threat still there. fed chairman jerome powell has declared inflation as the biggest threat.

this is what some of our guests had to say about the latest announcement. >> chair powell actually acknowledged that inflation is related to the very aggressive accommodation of monetary and digital policy that stoked aggregate demand. he acknowledged that for the first time and that is a big step forward. >> if there's panic, i can understand why they did not increase interest rates today and abruptly on purchases. >> the fed does not look to surprise. they are not trying to be preemptive. they are trying to give the market position that is consistent with what they had been claiming they wanted to do. shery; for more analysis on the fed policy decision with our global economics and policy editor kathleen hays. inflation has been surging for a while now. why pivot at this point? reporter: you asked a very good question about employment and as

we reached maximum employment. that is one of the reasons why people thought the fed would hold back. one of the important things jay powell noted today was it with both high inflation and a stronger labor market driving the fed on this path towards number one, the faster taper we expected, and the faster pace of rate hikes that was probably a little more aggressive than a lot of people thought. >> we are phasing out purchases more rapidly because with elevated inflation and a rapidly strengthening labor market, the economy no longer needs increasing amounts of policy support. reporter: i think it's interesting jay powell also said that one of the two biggest threats to reaching full employment itself -- not lower inflation, is high inflation. that is threatening the ability of the economy to grow strong enough and create more jobs. he also said he dropped the word

transitory after seeing faster than expected jobs numbers and inflation. haidi: we've done too much talking about the fed, maybe that's what is, or you are overcome by the emotion of it all. [laughter] our economics and policy editor kathleen hays with the latest on the fed pivot. let's take a look at how asian markets are pricing this in. interestingly, we have seen positive responses from emerging markets in the etf overnight. this is what we had when it comes to a positive trading day for the nikkei, up by close but to 2%. a bit of downside when it comes to australian markets. the three year yield climbing 11 basis points to just over 1% after a blowout employment day. we know it can be quite volatile, but we are seeing that significant rebound in the labor market and a plunge in the unemployment, and a huge number

of jobs added into the economy as part of australia emerges from lockdown. this, despite virus cases along with many parts of the world seeing that job again. also we heard from the rba governor earlier. in that speech, he spoke about the rba qe path, that normalization being influenced by the decisions of other central banks. quite key is what the fed is doing. we continue to see this picture of divergence and what the fed is doing to come back with consumer price inflation in the u.s., driven by supply chain disruptions. a lot of that has not percolated to other parts of the world. in australia, we saw phil lowe talking about how we are still a long way from getting to that 2% to 3% target to the rba if other central banks tighten and the rba doesn't, that will have an impact on the aussie as well. but really, taking a look again

at the employment numbers, the labor market expected to recover rapidly given that we see the lifting of lockdowns as well as that unemployment rate plunging again. very interesting as we continue to watch the canvas of the different asset classes responding to what the fed did or said overnight. shery: it was interesting to see what the crypto asset space did. we saw a rebound when it came to bitcoin and ether, the galaxy crypto index as well. right now on the asian session, there's pressure, but it moved together with a broader asset class. this of course as we continue to see volatility. we are talking about a 30% decline for bitcoin since the peak last month. 20% for ether. it is that narrative when it comes to reducing stimulus, what that means in terms of people investing in these assets. there is one company though

making big bets on crypto right now. sk square buying a 35% take -- stake in a crypto investment. this is the investment arm of one of south korea's biggest conglomerates, sk group. they are taking a leap into the unknown, the metaverse. let's bring in huh seok-joon. great to have you with us. when it comes to these conglomerates, you usually stay on the traditional asset side of things. why make this leap now? >> thank. to answer the question first, we have looked at both the metaverse and cryptocurrency industry for quite some time. as we launched a spinoff of the company from sk telecom, we thought this was the best way to announce our insurance. it coincides well with what it is trying to become.

to give you a quick overview, i'm actually sitting in a vr studio that sk telecom built a few years ago in partnership with microsoft. it responds to human motion and converts it. the company we just invested in is still human. you don't need to do it like this. it builds a digital human from scratch. go ahead. shery: please continue. >> we felt that this was the technology we would need to populate the metaverse going forward. if this goes well with our strategy of investing in a fast-growing business where we have assets that can help and attract more customers. shery: all of this technology

sounds amazing, but it also sounds like it will take a long time to come into fruition. how long are you expecting these investments to pay off? >> i think it is actually very close to where we are. in korea, we have seen digital humans now on tv advertising and it is attracting a lot of popularity. some of these digital humans are more popular than real humans when they appear in tv ads and social media ads. even for sk telecom, we will soon announce our human partnership in our promotion of our platform. haidi: for an average investor who wants to diversify and capture these opportunities in the metaverse, what kind of strategy could you recommend? >> well, i think we are looking at many platforms that are

promoting metaverse and we should look at how many customers and subscribers are using the platform and simply just ask your children or your peers. we as an investment company however, metaverse is one of the categories we are looking at and i think you had mentioned that the cryptocurrency is an area we are highly interested in and we invested 90 billion korean won, roughly $85 million u.s., into one of the cryptocurrency exchanges that have received a government license to converge the points into korean won. the company is called -- this

was the first cryptocurrency exchange built in korea. we are investing our capital into the business to become the second largest shareholder. we believe there is a big synergy because we not only provide the capital, we also happen to own many platform businesses to help bring more customers and also help the customer experience in trading cryptocurrency. haidi: this kind of radical new technology, that is quite unusual. how do you assess the risk particularly as we see south korean regulations breaking down over the sector? >> that's a very good question and that's why we spent a lot of

time reviewing the business before we decide. we believe the risk is manageable that the government had already exchanged to trade the coins into korean currency. we believe the regulators will provide more into the exchanges as well as what is being traded on these exchanges. we think that's actually good. and because of the sk square, we want to be the front tier of the investment of these new technologies and the platforms that provide new services, we want to be really different from other investment companies. shery: how much competition is there in this space right now?

>> in fact, it is highly competitive. before it was granted, there were exchanges that the customers could trade the coins. but there are only four exchanges that were granted with the license to trade coins and exchange into korean won, so we believe that the competition in terms of the number of exchanges have been lessened, but there will be new entrances as we move forward. the amount of bitcoin transactions in korea up to the third quarter may be surpassed the amount of stocks being traded on the kospi. it is something that cannot be avoided.

so conservative and well-known investors are entering into the market and in a way it validates the industry as well as the business as its potential moving forward. haidi: huh seok-joon, great to have you with us, sk square managing director. next, apple delaying its return to office.it . were supposed to start at the start of february, but the resurgence of covid-19 cases has halted that. this is bloomberg. ♪

su: you are watching "daybreak australia." i'm su keenan with first word headlines. the fed has intensified its fight against inflation by tapering bond purchases more rapidly and quickening the pace of rate hikes to three next year paired the central bank will limited at $30 billion a month, putting it on track to end the program in the coming months rather than mid 2022. >> we are phasing out purchases more rapidly because with elevated inflation at a rapidly strengthening labor market, the economy no longer needs increasing amounts of policy support. su: meanwhile, central banks in indonesia and the philippines are seeing holding benchmark interest rates at record lows on thursday.

they are expected to put off any rate hikes into 2022 with the emergence of the omicron variant threatening economic recovery. both monetary authorities will be watching closely for any fallout on their currencies from the fed's move to tighten policy. and a bill to punish china for alleged human rights violations against uighur muslims has been blocked in the u.s. senate. if passed, it would have banned goods from the region unless companies can prove they are not made with forced labor. senator ron wyden unexpectedly blocked the passage of the legislation after senator marco rubio who led the bill, redacted his -- rejected his request to add an unrelated extension to the child tax credit. 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 su keenan. this is bloomberg. haidi: apple is delaying its

return to offices amid the covid cases surge and has not set a new date. originally, we were expecting this to happen by the start of february, but as with so many other companies, things are changing quickly with the cases we are seeing. >> yes. we are seeing record cases in a number of places, a big surge in the u.s. where vaccination levels are not as high as they are in many places. so this is triggering a witt -- bit of a reversion. apple making a quite interesting decision of sort of extended return to work from home. it will be interesting to see if other big-name companies do follow here with an open ended return to work from home. shery: and we have even seen the

secretary of state here in the u.s., antony blinken, having to cut short his visit to southeast asia because of a covid case. that's talk about this and what we are seeing across asia right now. reporter: yes. he has apparently tested repeatedly negative, but was a close contact or excludes -- exposed to a covid case in his entourage covering his trip to southeast asia. that has meant he made the decision to cut short that trip amid meetings in thailand and other places to return home. given the very conservative approach toward covid, in most parts of asia, you can understand why he has done that. i think this talks to the distraction we are seeing again. two years into this thing, we are very much not out of the

woods. shery: emma o'brien, bloomberg managing editor for asia global business. we have more to come. this is bloomberg. ♪

haidi: we are just over 30

minutes away from the open of chinese markets. our coanchor david ingles joins us for a preview of the session. generally, reacted pretty well to the fed, but the chinese have a different issue. the diversions is getting pretty interesting. david: that's one of them and the currency implications throughout all of that. it shows, to the last point you made, what bank of america was telling us yesterday, may be the pboc is moving a little too late, which i guess underscores the underlying softness and weakness of the economy. on top of that, we have a 3% drop overnight and third day of decline. the last quote on the hang seng futures came right before the fed decision was also negative. you are getting a lot more pressure whether that's from sanctions on delisting concerns, and the latest from morgan stanley a few minutes ago, then

downgrading hong kong property. so you have big parts of this hong kong market dealing with other things at the moment, so it's getting cheap, but who knows what is cheap at this point? shery: tell us about those valuations, because every time we ask about the chinese market, people who are sanguine about china say this is the time to get in, because as you say, it is cheap. david: yes. if i had a tequila shot for every time an analyst on our show has told us that these valuations have enough buffer, my liver would be -- shery: i thought your liver was already done. [laughter] david: [laughter] well, kidneys and everything else. speaking of mount saieh, that is one stock we are tracking closely, on the back of the inflows that have gone into the

stock, pun intended. the concept of cheap in this market, and i will go back to the morgan stanley note that came out a few minutes ago, with downgrading hong kong property and looking at valuations, it is not cheap enough. we are trading at 30% to 40% of the index. we can get into the other superlatives, but the market on price itself can't seem to find the floor. we are nearing levels of december 6. it would not be surprising given the asia-pacific that this market goes the opposite way as it has for the most part of this year. shery: stay with our david ingles because he will walk you through everything you need to know today for the markets opening. of course, we have some of those names we are watching. h-share reactions for the likes of alibaba and jd.com. after those abr fell on

sanctions fear, another name, a supercomputer manufacturer, and also guangzhou are enough. the china market opens our next. this is bloomberg. ♪

>> good morning. welcome to "bloomberg markets china." we are counting down to the open of trade on the chinese mainland and in hong kong. >> the fed makes an aggressive hawkish turn doubling the pace of tapering and signaling three height -- three rate hikes next year. >> with elevated inflation