>> a very good morning. i am haidi stroud-watts in sydney. >> i am shery ahn in new york. welcome to daybreak: asia. asian stocks set to slip as debt buyers help wall street to relay rebounds. jay powell vows to focus on

inflation as he faces his senate confirmation hearing. china state on property developers taking market share from distressed rivals to review contagion risk. >> breaking news out of south korea. we are getting the current account. $1.5, widening from the previous month when it narrowed to $6.9 billion. a good balance also widening to $5.9 billion. this is also narrowing -- widening after the contraction we saw in the previous month. we continue to watch those shipment numbers. export continue to grow in the double digits. demand started to stabilize around the region. supply chain disruptions are easing but the big data point will be the be ok rate decision -- bok rate decision we are looking forward to this friday. >> lots of fed speakers all

about central bank action. the implications for equity markets and sentiment as well. look how it is shaping up when it comes to the start of trading. we are seeing a downside of about a 10th of 1%. omicron cases continue to climb in major australian states. we are looking at japan playing a little catch-up work catch down over asian stocks. we could see a little less slippage. there could be an attempt at a rebound when it comes to the late u.s. session. u.s. stocks ended up closing lower. we will watch for any price action from the yen with reports that north korea may have fired another missile according to the japanese coast guard. let's get you a look at the markets.

a lot of this is really hinging on what we hear from fed speakers. we are starting to hear voices that maybe now is the time for buyers. >> that is right, we saw dubai coming last night and jp morgan coming out and saying it is a good time to come in and take out some of those stocks that sold a lot. this is a market that is readjusting to hire expectations of higher interest rates. already we are talking about possibly 4 fed rate hikes this year to counter inflation. we have heard over and over again -- this thing will probably play out for most of this year. volatility. that is what we are seeing. i don't think we can be too much into what we saw in the u.s.

last night. you will always have -- there are so many unknowns out there. there is the spread of omicron that is having some impact on economic activity. that could possibly slap supply chain's -- stack supply chains even more. the overwhelming theme continues to be inflation, interest rates. we have that u.s. cpi number out earlier this week. they expect consumer prices to continue to rise. we have a stream of fed speakers and traders in the market. i will be watching them very closely for clues on the pace of hikes and the roundup on the fed balance sheet. >> is the expectation that the fed is pressuring bitcoin and other crypto assets? we saw bitcoin follow -- fall below that $40,000 level.

>> bitcoin is part of the risk as set. it has been slammed as we enter 2022. we know that economies traditionally are very volatile assets. it has come -- bitcoin has come under a lot of pressure. it is part of that selloff we are seeing. >> that was andreea with her latest insights into the market action. global economics and policy editor, kathleen hays is here with a preview. what are we expected to hear? >> the big question as jay powell goes into his confirmation hearing before the

senate beijing committee is what are you going to do about inflation? we did get jay powell's prepared remarks later this at -- late this afternoon in the united states. he said the fed will stop higher inflation from getting entrenched. we know that ms. rate hikes. -- that means rate hikes. there could be 4 rate hikes this year. the economy is strong and expanding at a fast pace this year. he could say that is one reason why they could stand to remove some accommodation. a strong job market could take a broad and forward-looking view. let's look at the chart that shows what fed officials are expected for rate hikes in 2022 when they relisted the projections on december 15? a big shift from the december

meeting to the september meeting. at least three rate hikes in 2022. there was one voice looking for four rate hikes. the fed bank resident said that you can't make inflation disappear but this balance sheet production question is so important because a key that governor, chris wallace said -- chris waller said rate may be needed. this is a new angle from the fed. -- >> ridge is known for his research on currencies, monetary policy and more. he is finishing up his tenure. he is stepping down a little bit

early. there were questions about his trading activities during the pandemic. he seems to be stepping aside to make way for the testimony from powell. an lael brainard has worked closely with jay powell. she we would -- she will be repressing him as fed chair. they support the -- replacing him as fed chair. i think lael brainard is well prepared to do that. she will not be vice chair of supervision but another voice that is expected to call for tighter regulation of banks and saying that banks need to do more to assess climate risk when they make loans and other extended credit to investors. >> that was kathleen hays. let's get you to vonnie quinn. >> new york city's covid-19

infections may have reached a peak one month after the first case of the omicron variant was identified. the seven-day average has dipped significantly since the end of december. the cdc has raised its travel alert for canada to the highest possible, recommending against travel. the cdc urges citizens to avoid plans. novavax says it has shipped its first dose of its covid vaccine to europe. the novavax jab is already used in several countries in asia and the country expects feedback from u.s. regulators sometimes -- sometime next month. the shock can protect from covid and the flu in one shot -- vax

can protect from covid and the flu in one shot. both the u.s. and russia signal interest in further negotiations. >> on some of the issues, there might be basis for future exchanges. hopefully also some progress. >> china's governor says the country will speed up investments in key projects and boost domestic consumption. a state council meeting urged faster, limitation of more than 100 projects. it says proceeds could lower government debt sales could be used to fund them. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. >> coming up next, more on the

policy outlook as jerome powell heads to capitol hill. the u.s. 10 year yield could hit 3%. nasa looked at atrenew. how it is helping the nation's top emitter speed up sustainability. this is bloomberg. ♪

>> calls for four to five basis fed point hikes are going in -- rate hikes are being called for. why the fed needs to get more hawkish. >> you listen to chair powell and he talks about the importance of financial conditions. i think that is a key issue. the financial conditions are strongly accommodative.

they need to raise short-term rates more and faster. >> how does she production play into this -- how does balance sheet production play into this? >> in terms of the level of interest rates where the fed will start the balance sheet normalization process. i find that a little bit surprising given that the fed officials have also said that they want the federal funds rates to be the primary tool. if you want the federal funds rate to be monetary's a, you have to get the federal funds rate up so it can react to adverse shots in the economy so you can push it back down. i think the case for being a little more cautious with the balance sheet could be strong but it looks like judging from fed officials that they will go a little faster this time. not just in time but in terms of what level of interest rate we

have to get to before they normalize the balance sheets. >> what is your sense about how much they should raise the rates this year? >> at think it will depend on how the economy evolves. -- i think that it will depend on how the economy evolves. it would not strike me if we get into eight every meeting kind of cycle -- a every meeting kind of cycle. >> what went wrong? >> there were four mistakes made. the 2% average inflation target. saying they will not even begin to lift off until they satisfy the goal of inflation at 2%. it is especially to be above 2% in the future. the starting point for monetary policy lift off was the economy is already overheating. number two, i think you were wrong about the labor market. i think they were surprised by how fast the labor market tightened.

i think they were surprised to the about inflation. the transitory story has not played out very well. i think a lot of the inflation pressures we are seeing are transitory but that is lasting longer for a lot longer and a lot higher rates than anticipated. finally, i think they were too concerned about worrying about a labor tantrum. i think they were worried that will provoke a selloff in bond markets. the fact is that the markets are not taking them seriously enough. >> that was william dudley. he was speaking with us earlier. let's bring in our next guest who is recommending a selloff. joining us now is vishnu var athan, haidi -- executive director and head of economics and strategy of

mizuho bank. vishnu: there is probably going to be some adjustment along the rate hikes. if you get sufficiently strong rate hikes being built in not just for 2022 by 2023 as well, that could very easily lead to -- lead yields up 120 basis points. the more important thing when it comes to the 10 year is what we believe about the balance sheet. it would be easy to mistake that they would be a one to two year gap between the liftoff and the start of what to take of tightening. -- quantitative tightening. it could start much earlier.

even as early as later this year. that will lift the initial effect of things. let's not forget that we are at record gap levels in terms of where 10 year yields are. there is a strong upswing in 10 year yields. we are still undershooting in terms of the 10 years. we expect inflation expectations to meet some of the considerations. that could lift yields into the 2.5%-3% range. that is at the tail risk of hawkish outcomes. >> when it comes to the diversions between asian central bank and what the fed does, is there a greater risk of policy mistake if what you say -- it's kind of coercion affect plays out?

vishnu: the recovery is not lost on us. to a large extent, asia tends to elect them in terms of recovery. this is due to the vaccine lag. this has been a spontaneous hit to all economies at the same time. the longer tourism is delayed, the longer they will take much longer to pick up. that means any tightening they have to do in view of metro stability, -- here is a thought, even if the fed is raising rates insofar as the u.s. inflation remains very high, the real rate differential between the u.s. and e.m. asia does not turn very quickly. we may not see the most from

capital outflows. but if quantitative easing is tightened, that could have an effect on global liquidity. that could have an adverse effect. >> what happens in china where we are is pretty more easing? is anything going against a global tightening move? can you find any opportunity in that space? vishnu: i think in china there is enough capital account impedance such that the policy differentials and divergence does not play up. there is some degree of's -- of stability. from a price effect, it looks much more attractive to be at the short and compared to the long and of the u.s.. this makes it very difficult to

put in a hedge position which still looks attractive. that is what makes the outlook very tricky. volatility will be key. there is a lot more unknowns and knowns given that the last tightening title started in 2013. there were 46 must between the start of taper and the start of quantitative tightening. >> we do have the be ok rate decision -- bok rate decision. what are the expections there and for other asian central banks now that the fed is tightening? vishnu: we will be rearranging the chairs on the titanic. the rate hike in january, if that does not pass, there will be another very soon. there will be tightening to come. we do expect to be ok will take the formal path of getting there fast and then taking it slow.

they may be forced not to take it slow if the fed earns more hawkish at the beginning of the year. >> vishnu, thank you. you can get a roundup of all of the stories we have been talking about. today's addition -- edition of daybreak is online. you can find it on the bloomberg cap as -- app as well. this is bloomberg. ♪

>> we are counting down to the start of trading. tokyo and seoul are some of the stories that we are watching. north korea has fired a missile

into the sea. we have south korea's current account balance widening by $7 billion. we continue to see double-digit growth. there is trade data coming in january. we will see if exports did rise that much. we have a gain of more than 18% in december. japan, we are coming back online after the holiday. we are watching mizuho financial. disappointed will be decided at a board meeting. panasonic introducing an optional four-day workweek. it is one of a small number of japanese companies taking on more flexible arrangements during the covid surge. the leading index has increased to 102.9 in november, haidi?

haidi: kihara -- let's bring in our bloomberg editing manager. what are we seeing that once this extension? >> we have seen cases, virus cases in japan pick up since the new year began. the nationwide account stood at around 6500 yesterday. that was the highest level we have seen since september. cases have been steeply rising from close to zero to where it is now. experts have said that the omicron variant has been relationally delta variant. that is possibly seen as a key factor behind the accelerating pace in the number of cases

tested in japan. >> especially in cases near u.s. military bases. you look at the share of cases in okinawa bay versus the population number as opposed to tokyo. what has been done? >> there has been a lot of frustration from authorities in okinawa as well as debate within parliament about how the cases were seen to have been spread through the u.s. faces in oka now and other bases in japan. there is one in hiroshima -- in okinawa and other bases in japan. there is one in hiroshima. they have restricted the movement of u.s. servicewomen into the japanese community for the time being. that is usually -- that is pretty unusual because the u.s. has sovereign control over its people on u.s. bases in japan. >> that was the bloomberg

editing editor, kazunori. next, we will get a litter numbers on china. the government wants stay at home property

>> although these precious materials are on the lucky side that this was spot on in a way, forecasting what kind of material we would need and what quantity we would need. >> that was thurston miller speaking to us little bit earlier.

we are tracking the fallout of the global supply chain crunch. these other top stories today. hong kong's omicron outbreak is pushing it, -- cargo chain to collapse. they are respected to raise prices. this could drop below 1/5 of pre-pandemic levels. china is tightening restrictions on vehicles entering shenzhen. that is causing concern to goods and services for one of the biggest container ports in asia. one of the infections was a worker at an international logistics firm. and although airbus is struggling with the price of energy and the lack of availability, the ceo says constraints have eased through september although the latest

omicron search may impact sales in china. >> take a look at china. triple the price of the key raw materials for solar panels is about to get fixed. china spending billions on new factories to produce poly silicon. global capacity has been boosted by more than a quarter in the past two months. that should help rating prices of the material after a surge in cost slowed the pace of new renewable projects. bloomberg terminal users can read more about the stories in our newsletter. that is on and i trade -- ni t rade. evidence is growing that china is encouraging stay-at-home property owners to take shares to limit contagion from the debt stricken industry. let's get more from david engel in hong kong. this is about large private a valve is not being able to do

this? is it about consolidating toward estate health model? >> you could say a little bit of both. stabilizing growth will be a major priority of the chinese government this year. we have the other banks, the national people's congress in march. stabilizing the property market is absolutely key. it is about a quarter of gdp in china. they are facilitating meetings between many of these private distressed developers and state owned developers -- developers to facilitate asset sales. they may have a little bit that are in balance sheets it is

being downgraded again by s&p. it needs to sell some of its assets. this has been one of the more healthy private developers but it has run into liquidity problems. this stock rallied considerably. it was up about 19% monday in hong kong as we saw news that perhaps there could be some assistance from state onto developers on these particular asset sales. that being said, another distressed company, modern land, that company sank 40% on his option of trade. they are calling for early debt repayments. there is growing calls for other

early debt repayment. a mixed picture on monday for the property developers where we had state owned developers coming in saying they would cherry pick some prized assets. they do need to increase cash flow but others sinking quiet considerably. >> how many developers have you named already? it is like falling dominoes, one after another. is there a way to develop -- to see which developer might face pressure next? >> you would have to look at what their bond liabilities are but at the same time, you can go even more granular than that. bloomberg intelligence is digging deep into this and say one of the best way to pick the future is to look at land purchases versus sales. there is a ranking there.

if you look at that, if these companies are not buying land to meet projected sales, you will have problems. that is reflected in her -- in their liquidity issues. bloomberg intelligence identifies a number of companies. they posted the biggest drop or the biggest gap in the rankings for land spending through condominium sales. that could be one way to protect companies that they will face liquidity issues. keep in mind, stress builders face $1.2 million of bond payments this week. that is this week alone. january will be a tough one. we might see a reckoning. >> great information there. some signals of how to spot trouble in the property sector in china. let's get to vonnie quinn with the first word headlines.

>> drone power will tell the senate banking committee that the fed will prevent higher inflation from becoming entrenched. he prepared opening remarks that the post-pandemic u.s. economy may look different than the previous expansion. president biden picked jay powell for a second term of running the fed. >> we have inflation running away at 2.1% in 2024 even though they don't take much policy to the typesetting. this is below what they think is neutral. how does the inflation magically disappear? >> in the meantime, resigning from the board of governors on friday, which clarity will do that. -- rich clarida will do that. jay powell said in a statement that his contributions will

leave a lasting impact. vladimir putin is vowing to protect x soviet allies from what because revolutions. such movements topple autocratic leaders. novak djokovic can stay in australia and tribal a record 21st grand slam victory after his immediate release was ordered from hotel detention. there were number one did not have enough time to respond to his band from the country under current covid rules. he tweeted that he remains focused on competing in font -- in front of the amazing fans in melbourne. global news, toy for hours a day on air and on bloomberg quicktake.

-- global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. shery: pfizer will pay up to $1.5 billion to develop treatment for manipulative dna. this new partnership will allowed -- it to extent -- expand into experiments of science. we spoke with jonathan ferro about it. >> sometimes being a good partner provides more than working for a company. we have proven that this works very well with biontech. i would not say that we would not see acquisitions from our side but right now, in this specific area, all of the partners will give us exactly what we want without the amount of capital that would be needed. that is what i wanted to ask.

what kind of door doesn't open up if it opens up a series of partnerships? >> this is one of the top priorities of pfizer and myself. i would say that the number one is to stay ahead of the virus. this is what the world needs. the number two priority is to invest a lot of capital. that needs to be an investment in science. we need to make sure that all of these platforms are waiting for breakthrough science to come in and produce this for human kind.

let's talk about the platform getting the most attention right now. mrna. it has been met with hope, confusion and to some degree, skepticism. i am trying to understand from your perspective on this, when we keep getting told we need another shot, if it is so good, why do i need a second, third and fourth? >> let me say what i think about, ryan a. it is a very powerful -- about mrna. it is a fantastic technology that has produced dramatic results and we are only scratching the surface. we can harness this technology for many other areas. the lowest hanging fruit is other infectious diseases. this is something that we are doing mainly in partnership with

biontech. this is something related with the virus. as you most probably know, the natural infection of this virus -- a natural infection produces half of what you can get in terms of how long they are effective in terms of the vaccines. it is a virus that is very hard to tackle and it takes competence. >> that was him speaking with jonathan ferro. next, we will be hearing from a company that puts a circular economy at the center of its business model. the ceo of nasdaq joins us to discuss the recycling and

materials recovery business. this is bloomberg. ♪

>> looming demand for supply chain bottlenecks have pushed up this. the theme prices tripled.

our colleagues anticipating further gains before a gradual plateau. let's bring in our pack head of research. great to have you in this new year. >> so many of these cereals required to make batteries and drive the ev revolution. it has been the impact of the prices we have seen on lithium ion batteries in particular? >> the results of our annual surveys shows that the price still declined but that the decline rate was only 6% year-over-year. at the same time, we do see automakers continuing to make commitments to increase their ev lamps. for now, it will continue to grow. what does that mean for

automakers and how they are responding? >> what they have tried to do is work with their at a rate suppliers. looking at different contract structures. the commitment remains the same. they believe that technology will adjust the cost in the long run and they continue to increase their lineups, we have already seen that they will double the production capacity. we saw gm announced the electric chevy silverado. a few days ago we saw somebody announced the launch of commercial electric vehicles. >> when it comes to recycling, is there a role for that when it gets to put -- when it comes to

getting prices lower? >> when recycling to play a role, we need much higher capacity for cycling as well as much more supply. think about the average ev. it will probably stay on the road for about 10 years. we are not at that level yet. by 2030, recycling will be a key factor. particularly ensuring the sufficient supply of key minerals such as cobalt and nickel. also, ensuring the lifecycle of electric vehicles is environmentally friendly. >> our next guest runs the financial 80, renew. let's discuss that green push and how it plays into the circular economy, joining us from shanghai, they give very much for your time today.

i wonder how much demand is out there for your business and how much awareness consumers and the governor have for the need to recycle. >> thank you. >> this was the increase. one interesting thing that i can share is that the recycling rate is up about 30%. the rate is always below 3%. there are ways for us to improve in china to increase recycling

awareness around china. >> anytime i give back my old phone or my old laptop in order to be recycled and then i get a new one, i worry about what will happen to my data. i tried to clean out my information but is there a guarantee from your business that my data is going to stay protected in those devices? we used action criteria. safety, security. >> what sort of partnerships are you carrying out right now in order to grow your business?

>> in china, these are the best prices for recycling. the combination of online and off-line. this is the largest online retailer in china. we shined -- signed exclusively with them to help them do recycling. also to help them to promote these sales. the premonition of online and off-line leads to the best experiences.

>> what is the path of profitability? what does it look like to you? >> we believe that profitability is not an issue for us. we can create value for the whole industry. we are very confident about the profitability. >> what is the consideration being given to a lot of chinese companies coming home? is that a conversation they have ? >> we will be entering this for

-- encouraging this for a very long time. this is an issue for us. this is all about the accounting and etc.. we are not worried about that. be prepared for that. we are not considering that listing so far. >> great to have you with us. we appreciate your time. you can watch us live and catch up on past interviews on our interactive tv function. you can also dive into any of the securities or the bloomberg functions we talk about. you can join in on the conversation as well and send instant messages during our shows. this is bloomberg. ♪

>> a quick check of the latest business flash headlines. sources tell us that mizuho financial group will be naming their new ceo. the former one announced his

resignation after a business improvement order. the bank has been trying to reshape itself after a string of technical issues including atm and hardware malfunctions. dividends noble take over from george david next week. it is the latest shakeup of intel senior management since pat gilson took over as ceo last year. >> we are headed toward japan and south korea is open. these are the stocks we are watching, korean and japanese dispense with p stocks. this just happened with the joint chief of staff and south korea, saying the north koreans fired one? , it was at 7:20 seven local time, assumed to be a ballistic missile.

>> bank of a member -- bank of america is -- the markets opening in seoul and tokyo are next. this is bloomberg. ♪

>> welcome to "daybreak: asia." i am shery ahn. >> and i am haidi stroud-watts in sydney. asia's markets have just opened. dip buyers helping wall street to late rebound. the u.s. treasury curve.

powell vows to focus on inflation as he faces his senate confirmation hearing. plus, china's state owned property developers are taking market share from stressed rivals to reduce contagion risk. >> we are seeing the japanese equity markets returning from a three-day holiday. we are seeing consumer stocks and discretionary stocks leading the decline. real estate and financials are gaining ground, perhaps not surprising given we have seen japanese jgb yields rise to the 10 month high. we are watching pressure on yields given we saw a reversal in treasury yields in the new york session. the japanese yen holding at 100 15 after four sessions of gains against the u.s. dollar. the japanese prime minister speaking right now about the north korea missile launch. he said it appeared to be a ballistic missile, that it was

regrettable. we are watching the japanese and korean peace talks and defense talks. take a look at the kospi, gains of .4%. this as right now we are getting export numbers for the first 10 days of the month, rising 24.4% year on year. very strong numbers, double digits. we continue to see double digit export gains in the past few months, although gains have used in december. a gain of 57.1%, showing we still see strong domestic demand, chip exports rising more than 20% as well. we continue to watch the korean won, which is strengthening against the u.s. dollar. we have seen the korean won under pressure because of tensions with north korea. we will continue to watch that. haidi: certainly a mixed bag

when it comes to catalysts for asian markets, as we start to get into the session. this is what we are seeing with australian stocks, maintaining, extending some losses to trade lower by about .5% for a second session. we are seeing more recovery in trading in the aussie dollar. when it comes to kiwi stocks, we are seeing that on the back foot. we continue to see australia struggling with high numbers of covid-19 and omicron cases. we see supply chains affected, hospitality services, and consumer sentiment affected as well. shery: we continue to listen to the prime minister right now in japan because we were hearing about north korean missile moves , but right now he is talking about border ministers --

broader protections that will be in place until the end of february. we continue to see a virus cases in japan rising and the prime minister saying he will keep border restrictions until the end of february as we continue to see social distancing measures and restrictions. despite risks across the world, our next guest says asia is better positioned when it comes to fed policy tightening than previous cycles. let's bring in kerry craig. great to have you with us. there is a barrage of headlines we have to keep watching, but when it comes to the fed policy tightening, you think asia is better positioned why? kerry: as a starting position, they were in price cycles. there are some idiosyncratic factors to account for. the current account deficits,

the direction of inflation within the economy, whether these countries will have to tighten rates in response, and rate differentials to the u.s., all those factors stack up more favorably as we enter this cycle. it suggests there will be more stability on the macro growth front from the emerging asian markets. it is a better starting position. when we look at the position of equity markets, more favorable from a valuation perspective. i think as domestic economies open up as we assess the impact of the omicron wave across asia and hopefully see it the same as developed markets, that it will allow for domestic demand to come through, adding to the growth outlook for emerging asian markets. >> what has been interesting across developing markets is we

saw the pressure and capital flow not as intense during this cycle of fed tightening positioning we sought, especially with em currencies seeing the biggest weekly gain since september of 2019. how well-positioned are central banks, given we have seen some banks starting to tighten preemptively? we do have to bok expected to move this week as well. kerry: the feeling at the end of last year was the market trying to assess how far behind the curve central banks would be in response to inflation. inflation in many parts of the world will not be transitory. supply chain issues will linger, especially if we see shortages in workers created by the omicron variant. inflation will be more insistent. that doesn't mean central banks are keen to get on the

tightening path. i think the tightening of policy in the u.s. and elsewhere will continue to be gradual, especially if you look at how high inflation rates are in many parts of the world and the growth outlook. that is something markets can digest. as we look at interest rate differentials between emerging and developed markets, it is not as wide as in the past and that is one reason we think currency fluctuations won't be as dramatic. thinking about the investment flows that will come into this world -- and do this part of the world as the u.s. looks to differentiate between developed markets. >> do you see disruptions we are already seeing as a result of omicron being transitory in terms of how long it lasts this year? we are seeing supply chain disruptions, the impact on consumer sentiment, spending

numbers certainly pretty depressing. kerry: there are a couple of factors. you are seeing an increased sustaining by businesses, if we look at numbers. you also have pent up demand for resources, whether it is because they have not been able to spend to the extent they would normally or because wage growth is moving up in some parts of the world so they have more money to spend. those are supportive from a growth outlook. the key issue is around supply. while we are seeing some metrics in terms of the supply chain improve -- for example, look at the pmi numbers, supply delivery times, things like in book and outlook prices, you are seeing an improvement to a degree and that would suggest some supply chain issues are writing themselves.

it is about workers' isolation affects when they have to keep factories closed and that may mean supply chain issues linger and inflation is stickier than had been thought. we think that will start to pass and the direction of travel is that this omicron wave will not be nearly as severe in terms of the economic drag as fast waves of the virus -- as past waves of the virus. that is important when you think about growth being softer in the first quarter and catching up in the second quarter. >> stay with us. kerry craig, global market strategist at j.p. morgan. we will talk more about china. we are getting a trading update from a company coming out to attack what it calls allegations in media reports that have

alleged the group has not fulfilled its financial obligations under the fund. they want to clarify they have no outstanding asset backed securities. they are saying they could consider disposing of certain properties and are in discussion with certain potential purchases when it comes to potential asset sales. we did see investments in chinese developers sales jumping the most on record in monday after reports -- amount -- after reports that shimao is in talks. also surged by the 10% daily limit trading in shanghai. this comes as we hear of more potential consolidation within the property sector, potentially larger state owned property developers starting to absorb what we see from these smaller,

distressed ones. >> we are hearing from the mexican president, lopez obrador, informing the public through twitter that he has covid-19. although he has mild symptoms, he will remain in isolation, only work from his office, and communicate in a virtual manner until he can move forward. lopez obrador announcing he has covid-19. he is isolated with only mild symptoms. lopez over there has been inoculated with the astrazeneca vaccine earlier this year, but we continue to see a infections among high-profile politicians as well as people around the world, and the mexican president announcing he has been infected. let's return to monetary policy because surging u.s. inflation

and how to stop it will top the list of questions for jay powell at his confirmation hearing on tuesday. kathleen hays is here with a preview. what are we expecting? kathleen: we got his prepared remarks released hours ahead of his testimony, tomorrow morning on tuesday in the u.s., so later today in asia. he said the fed is going to use its tools to support the economy, support the labor market, and stop higher inflation from getting entrenched, which is what many politicians on both sides of the aisle are pounding on the table for him to do. the fed is giving signals it is ready to do a much more aggressive rate hike this year than it thought three months ago. they say it will take a broad and forward looking view. the former president of the new york fed, bill dudley, in his latest opinion column says the

fed has to do more rate hikes than they think. they can't make inflation magically disappear. >> i think they should go faster than what's priced into the market. it is going to depend on how the economy evolves, but my best guess is they need to do 4, 5 rate hikes. . this year it would not surprise me if we get into an every meeting cycle. kathleen: the fed is already saying the consensus from december, they are looking for three rate hikes this year. the other question on the table is will they be doing balance sheet reduction to also tighten policy? this is a big question. republicans and democrats are on board. you can see this dot second in from the left, the vast majority seeing three rate hikes, a couple looking for four, which is what bill dudley is saying.

what may be contentious is asking about climate change. big banks account risk when they make loans for companies in that field or financing energy, that sort of thing, and also bank regulation, another big question. these things could be contentious, republicans on one side, democrats on the other, jay powell in the middle. everyone thinks his confirmation hearing will lead to a yes vote by the senate banking hearing -- banking committee and confirmation by president biden. >> global economics and policy editor kathleen hays. let's get you to vonnie quinn. vonnie: new york city's covid-19 infections may have reached a peak about a month after the first case of the omicron variant. data shows a seven-day average of emergency department visits has dipped since the end of december. the cdc has raised the travel

alert for canada to the highest possible. the cdc urges citizens to avoid french, -- france, spain, and sweden. u.s. and russian diplomats have agreed to continue talking. they held security discussions in geneva. the meeting did not lead to a breakthrough on key concerns, including russia's troop buildup near ukraine. however, both the u.s. and russia signaled interest in further negotiations. >> on some of the issues, there might be basis for future exchanges and hopefully also some progress. vonnie: north korea may have fired a ballistic missile tuesday that splashed down in waters off the east coast, the second discharge in a week. south korea's military says the north launched an unidentified projectile.

the japanese coast guard says the object appears to be a ballistic missile. global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: we have breaking news out of hong kong. we are hearing the cruise operator has filed for insolvency. trading has been suspended on january 7 and we are now seeing they will have talks with bankers and dream cruises. they will trigger cross default events. the filing leading to the event of default. we are getting confirmation of the default for the cruise operator. still ahead, distressed mounting in china's offshore debt market as more property firms miss payments and refinancing costs

hit records. plus, more from the asian financial forum. we will speak with the ceo of hong kong's first and largest virtual bank as it looks to reshape the industry. this is bloomberg. ♪

>> evidence is growing that china is encouraging state owned properly developers to take market share from distressed rivals to limit contagion from the debt stricken injury. let's get the latest from stephen engle. what sort of indications are we getting? stephen: it was a volatile day for chinese property developers monday and hong kong as modern land resumed trading, stock down 3% after a suspension. another was up 19%. local media is reporting that

guangdong officials have been facilitating meetings between distressed developers and state owned developers to facilitate m&a and get asset sales going. a lot of developers, evergrande or others, are faced with an unprecedented liquidity crunch and need to sell off assets to those in better financial position. that's why shimao was up so much yesterday, reporting china was looking to buy select assets from shimao. we are getting headlines coming across shimao following that big surge in destocked yesterday. let me unlock my phone. essentially saying it is considering disposing of certain properties. however, it has no preliminary pack to sell the shanghai

international plaza, one of the tallest towers in that district. that tower in the middle with the two spires is the shanghai shimao international plaza. they say there is no put them in area pack to sell that skyscraper, but they are in discussion to dispose of certain properties. shimao long considered one of the more viable property and economically healthy developers but has faced significant liquidity issues and debt repayment issues of late. >> stephen engle there with the latest on the property developers saga in china, which remains one of the big risks for policymakers on the chinese economy. let's get more analysis from kerry craig. we know stability is the name of

the game when it comes to beijing, this year in particular. does this development give you more comfort there will be a soft landing for property or does that remain a major risk? kerry: there is still evidence there is a shakeout in the property sector coming through. i think you are seeing stability being the key function of how the economy plays out for china this year. 2021 was all about policy normalization as well as changes on the regulatory and industrial policy side. this year is much more around the marginal changes, more monetary policy stimulus and rate cuts to the rrr or interest rates, or around providing stability to sectors. i think that's going to add to

the sentiment towards china. after such a poor performance last year, there is a question whether china will bounceback for investors this year. certainly attractive from a valuation standpoint and attractive when we see the number of investors who have been waiting to get back into china as issues start to clear. the near term clouded by the omicron variant and the policy response to that. we are watching what happens with china over this quarter. shery: how much of all the positives will be offset by the fact beijing keeps insisting on a covid zero strategy? kerry: that is a big unknown. whether that is possible given the high transmission with this variant, whether they will be able to contain it. the extent to which that limits growth will be the focus. they have a target around 6% and

it will be difficult to achieve as they have severe restrictions in place and will lead to playing out of the surge being short-lived, as other markets have topped out quickly, or it becomes prolonged. it is a case of watching the next few months and china to see what happens. there will be an opportunity this year as fears over the omicron variant start to fade when it comes to china and asian markets more broadly. haidi: what opportunities do you see coming from chinese stimulus, which you highlighted as one of the key things you are watching? kerry: two things are taking place on the monetary policy side with interest rate and rrr cuts. if we look at the local government level and the stimulus on issuance of bonds, it did now live up to expectations. especially when you think about

the revenue generated from land sales, there are concerns about the property figure that might be offset by government spending. there is going to be a need to create new jobs or provide income for people who are unemployed to keep domestic consumption of the baited as they shift towards an economy that is more fueled on domestic consumption than external growth through trade. i think those are the measures we will see as they tried to keep their economy on track. that also plays into how we approach the markets from a more domestic angle rather than thinking about the external parts of the chinese sector. shery: always good catching up with you, global market strategist at j.p. morgan. we have more to come. this is bloomberg. ♪

haslinda: we are watching

japanese and korean stocks as the japanese prime minister now confirms that korea -- north korea could have fired a ballistic missile, the second in the last two weeks. japanese stocks and there you have it. woah. wireless on the most reliable network nationwide. wow. big deal. we get unlimited for just 30 bucks. sweet, but mine has 5g included. relax people. my wireless is crushing it. that's because you all have xfinity mobile with your internet. it's wireless so good, it keeps one-upping itself. take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes it easy to switch and save hundreds.

haidi: we have breaking news it comes to australia. trade numbers coming through. the trade balance for november at 9.42 billion australian dollars. that is slightly narrower than expectations of 10.5 billion dollars. the retail sales number also seeing a rise of 7.3% month on month when it comes to the november figure. that's much better than

expectations of 3.6%, but keeping in mind it is before the relaxation of all those covid related restrictions, and of course now what we are seeing is the demise when it comes to consumer spending and sentiment as a result of omicron cases. imports for november month on month at 6%. both imports and exports bouncing back from the contractionary numbers that we saw in the previous month as well. let's take a look if we are seeing much of a reaction. we are seeing a stronger footing for the aussie dollar but analysts say that still remains very vulnerable as to what we could potentially hear a more cautious outlook from the rba. we are also watching when it comes to the downside being extended in the equity session that a bounceback in the u.s. session is not lending much favor to what we are seeing in trading in sydney, down for a second straight day. shery: neither in the japanese

market, because the nikkei is moving -- losing ground and energy stocks are pulling at lower. we are seeing wta rebounding in the asian session but only after it fell in new york, given the broad risk-off sentiment, despite the bullish reversal. and of course we had a stronger u.s. dollar as well. not to mention asia markets right now are contending with the fact that we did have an apparent missile launch by north korea, not to mentor prime minister sheet it is saying japan will be keeping border restrictions until the end of february. that is not playing well into the market. the 10 year yield continues to be under pressure after at one point in a new york session topping the 1.8% level. let's get to vonnie quinn now with these first word headlines. vonnie: japan is extending a strict border measure until the end of february barring foreigners from entry.

the prime minister confirmed or the extension after earlier saying he remains cautious on the omicron variant. japanese case numbers have climbed more than 10 fold since the start of the new year, increasing concerns a bigger wave is underway. china's cabinet says the country will speed up investment and boost consumption to stabilize economic growth. state broadcasters say the state council meeting chaired by the premier league urged faster implementation of more than 100 projects. proceeds from local government debt sales in the last quarter should be used to fund them. fed vice chair record carta lori bonn -- will resigned two weeks before his term was due to expire. it follows new revelations about stock trades he made just before a new central bank announcement.

indonesia's parliament resumes debate tuesday on a bill against sexual harassment. their president is pushing to conclude a process that has languished for six years. the bill would allow for action on reported cases of sexual harassment based on a single piece of evidence. the current requirement is for three. they are facing strong opposition from religious groups. novak djokovic can stay in australia and try for a record 21st grand slam victory after a court reinstated his visa and ordered his immediate release from hotel detention. a judge said the world number one did not have enough time to fully respond to his ban in the country under current covid rules. djokovic tweeted he remains focused on competing in front of quote, the amazing fans in melbourne. 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.

haidi: we are getting more details as to the extent of covid cases. the outbreaks we are seeing across geithner -- across china. 74 local cases on monday according to state media. this coming on the back of shinji and further tightening research and's on vehicles entering the city, raising concerns. we are also seeing china's omicron outbreak now splitting closer to -- spreading closer to beijing. what is the situation right now? >> shinji and near hong kong is also a flareup we are seeing. only a few cases what they have started testing residents and truckers.

this is home to the port which is one of the busiest ports here in the region. so there is a concern that if they are testing truckers and restricting some vehicles from entering, that could add to delays in supply chains. this is one of the ports that services the factories that manufacture everything from electronics to toys. the situation, you just reported the numbers from china. this was the city that had the first cases of omicron there. 21 cases yesterday. this is just a half hour train ride to beijing. also very close to hope a province, which is very aware that they are hosting snow sports for the winter olympics just a month away. there's mass testing. schools have been suspended. they are also halting some train

tickets to beijing at the moment. another test to the covid zero policy. shery: what is happening where you are in hong kong? haslinda: they are reaching a tipping point. we had a change in the government when it comes to people who were in close contact to people who contracted covid. covid requirements -- this is after we have seen the strain in e-government facilities. health officials saying for the available 900 rooms they are assigning it to the available people are -- people. we had a big party including many of the political elite part of this 200 person party that had to go to this facility only to find out one of the persons was a false positive so they had to leave. a pro-china lawmaker also said

this long quarantine system was quote, out of line. some of the political elite getting a taste of their own covid policies. keep in mind this only applies to close contacts of people who have contracted covid. arrivals flying in from hong kong, those still apply for a 21 day quarantine. a bit of a change today in hong kong and there is concern this mass exodus of ex-pats and locals fleeing the city which was triggered by the 2019 protests, that could be intensifying this year due to hong kong's virus strategy. shery: let's stay in the city because the aberdeen chairman now saying the territory will retain its position as a global financial hub. that is despite the challenges posed by its covid zero policy. and what some regard as beijing's increasing reach. speaking at the asian financial forums, douglas flint discussed hong kong's future with rishaad

salamat it. >> i think hong kong has so many advantages. it is there to lose. it continues to be one of the largest recipients of ipo's. it has a framework of governance and law. people can say it was not as good as it was but it is still better than most places in asia. the ease of doing business is great. and there is a tradition around economic management and fiduciary responsibilities that is incredibly strong. so, i think hong kong will continue to be successful. it is important for hong kong and for china. in this broadest sense of which hong kong is clearly a very important part. i think hong kong will retain its position as one of the

retaining financial hubs of the world. rishaad: and of course the relationship with china is vital as a gateway to china in some regards as well. written regulatory crackdowns etc. and various headwinds the chinese economy has been facing, not least the pandemic which is rearing its ugly head again. do you find parts of china now uninvestable given what i just said? and if so, there must be long-term plays elsewhere that you look at given dual circulation and common prosperity being laid out? >> there are parts of every country that are difficult to invest. i would not single out china. the holy grail in many ways for all investors is where is the technology going to come from that will enable us to transition to the kind of world that we want to live in, or more importantly that we want to leave to our grandchildren and children.

that science base is there is a huge technological science base in the u.s., the u.k., the rest of europe and in china. china comes up with the holy grail of how you de-carbonized steel or cement. the rest of the world is not going to say no, we don't want that because it was invented with you. so china probably has one of the most compelling cases in terms of how do you continue to have a manufacturing industry in a world that is increasingly demanding of lower impacts on environmental issues. we are in a technological world. where that technology is invented is irrelevant from an investment point of view. the world needs it. everyone who comments on the climate change challenge basically is clear that with the technology that exists today we will not meet the 1.5 degrees.

we need new technology. haidi: douglas flint there at the asian financial forum. we will have more from there shortly. the ceo of hong kong's first and largest virtual back will be joining us to tell us how he plans to reshape the industry. and of course course as we continue to monitor the fallout from omicron and how companies and wall street is really adjusting to this new reality of vaccine policies in particular, jp morgan adjusting its vaccine policy, locally based on the varying circumstances across geographies where the biggest u.s. bank operates. the ceo saying they are not trying to be consistent, is what he said. he also said consumers are actually spending 25% more than pre-covid. a lot of interesting takeaways from that conversation. shery: quite a difference from what other companies are doing.

citigroup is now mandating shots and threatening unvaccinated employees with termination. and we have just heard earlier today as well from meta platforms that they will be requiring booster shots, and they have delayed the return to office. we will leave you with some of our conversations with big pharma executives on all of these challenges posed by omicron. >> omicron has presented an unprecedented challenge. >> this virus is not leaving the planet. >> the peak with omicron is probably happening. >> the protection they are getting does not last as much as with the vaccines. >> there is a lot of pent-up demand for our vaccine. >> it is mostly unvaccinated people being hospitalized and dying of omicron. >> this is a drug that should and has shown it works against the variants. we are going to have 3 million courses to the u.s. by the end of january. >> we have a really good vaccine, coupled with the fact that it is very tolerable. >> the world should be in a

better position with tests. >> we might end up in a world where people might have to have an annual booster. an annual booster.

haidi: it is the second day of the asian financial form in hong kong. participants are gathering to discuss the outlook. rockson hsu joining us from the

sidelines of the forum for an exclusive interview. great to have you as always on bloomberg tv. you have hit some pretty great milestones recently going into the end of the year. talk to us about the pathway for future growth. rockson: thank you for having me on bloomberg. we're very positive on citibank's future. it's great to share the development of the past 22 months. we launched in march 2020. the virtual back committee has reached a customer base of one million. [indiscernible] just crossed half a million. we grew from 220,000 in 2020 to

500,000. we're still very positive on the development. we remain the number one social bank in hong kong with a number of customers. out of this positive -- [indiscernible] we launched public banking just a year ago. then now we have also launched -- we are the first central bank to accomplish this. we're in the process to launch more. haidi: when do you expect to turn profitable then? rockson: profitability, as we launched two months ago, we had

2024, five years. we're at the turning point coming this year. the breakeven point, 2024. shery: will wealth management player role in that calculation? what are your plans on that sector? rockson: actually both. we're a bank, so it's one of the lkey revenue drivers. wealth management which hopefully be launching shortly will be one of our two kets. t -- two keys. the first is insurance which we launched last may. we're bringing new experiences for the hong kong users. shery: what is your assessment of what traditional lenders are doing? because we continue to see more of these big banks like hsbc trying to step up their digital

presence as well. rockson: yes. i think all of us in the hong kong banking industry has the same goal, to bring the best experience to our users. [indiscernible] the first of five focus areas for all banks. both striving to offer a better digital experience. we are all doing a very aggressive job. shery: given the pandemic situation also increases demand for your products. and you are launching your wealth management and insurance part of the business as well. what is the status on the hiring spree we have seen with your bank lately? rockson: we are getting to a point where the hiring spree is

more to accommodate -- [indiscernible] at this stage we have around 500 colleagues. we don't have branch networks. so mainly in i.t. i.t. is one of the key drivers. [indiscernible] haidi: something your competitors have strong relationships with visitors where big data has played a big part in terms of leveraging the opportunities. do you see potential partnerships in the future? rockson: yes. partnership has been one of our initiatives from day one. the latest situation in hong kong with covid, last wednesday when they announced a new policies, we immediately powered up --

[indiscernible] partnership all along has been very strong. shery: it was good seeing you. thank you. za bank ceo with his insights on his business. we have plenty more to come from the asian financial forum. our exclusive interviews with brett king and more. if you miss any of those conversations you can use our interactive tv function tv . you can dive into any of the securities or bloomberg functions. go watch our past interviews, watch us live, and become part of the conversation by sending us instant messages. this is bloomberg. ♪

shery: take a look at commodities trading. we are seeing bitcoin a little supported. $41,000 after dipping below $40,000 in the new york session at one point for the first time since september. brent crude also under pressure but above $80 a barrel. we had a stronger dollar in the u.s. session. pressure in that market. we are seeing aluminum encores

reach $3000 a ton for the first time since october. that's forcing producers to cut out port. iron ore remains supported despite the fact we continue to see concerns over china as we are seeing the omicron variant spreading across the country. haidi: let's get you a quick check of the business flash headlines. we are hearing -- they tumbled 7% in their first annual loss since 2016. they struggled in the last two months of the year, dropping as much as 10.7% in december. one stock that may have hurt results was jd.com. that was the second-biggest u.s. equity position as of september. airbus has raised a warning about its outlook, citing the spread of omicron in china. the ceo says so far, production

of their planes has not been affected but it is too soon to assess the impact of the lockdown. they receive about 25% of total jet deliveries last year. they are said to have reached to saudi arabia as a sovereign wealth fund as they seek investors to join. kkr approached the public investment fund to gauge interest in providing capital for a passive role in the bid. they made a $12.2 billion proposal in november. shery: take a look at some stocks we are watching ahead of the opens across the mainland markets in hong kong. we will see another rally with a chinese tech shares. we saw those gain for a third consecutive session given the valuation appeal. we are also watching property stocks as we continue to see the stress in the bond markets. she mongrel saying he has no

outstanding asset securities due in payable and is not entered into a preliminary agreement to sell some assets. coming up, we speak exclusively to the head of ubs's apac investment bank. this is bloomberg. ♪ loomberg. ♪

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♪ >> welcome to "bloomberg markets: china open." our top story this morning, fed chair powell will prevent flushed invasion. they are betting on rate hikes by early 2024. rising covid cases