haidi: very good morning. i'm haidi stroud-watts in sydney. yvonne: i'm shery ahn -- shery: i'm shery ahn in new york. hot u.s. inflation further bakes in market expectations for a march rate hike. china's political meetings as the virus flareup near beijing

raises concerns over the winter olympics. plus, the u.s. house nearing a deal on the china competition bill that could pump billions of dollars into the chip industry. haidi: let's take a look at how we're settling into the first few minutes of trade here in australia. we have future showing a little bit of downside as we process implications, not just for the fed, but how the tightening path is going to affect other global central banks, particularly here in asia, where they may face the choice between keeping up with the fed and maintaining support with the domestic recovery, as well. we are seeing a pretty much unchanged session, watching crown results as they get closer to that deal with blackstone. kiwi stocks are up .3%, with lots of analysts projecting further volatility in its currency given that we are seeing some of the central bank divergence coming into play

again, u.k. futures in tokyo just turning red, but what seems to be a positive start to trading when it comes to the beginning this morning here in korea. shery: and now of course, we keep watching those inflationary concerns around the world. and here in the u.s., the biggest yearly gain in nearly 40 years seems to all but guarantee a series of rate hikes by the fed. our editor kathleen hays is with us to recap. and really, the transitory cap seems to be completely gone by now. how long are we expecting these pressures to last? kathleen: that's a big question, probably not going to last too long, but the fed doesn't have to get right to that rate hiking plan it's been talking about the last couple of weeks. let's go to our chart. inflation up a 7% year-over-year in 2021. excuse me, that's the headline. the core that takes up food and energy, still up a very hefty

5.5%. it hasn't been this high since market -- ronald reagan has been in office. most people can't remember what raging inflation is like. for the longest time, local commodity prices cap to goods prices down, core goods prices. food and energy surged 7% last year, and services prices continue to put very healthy gains in, almost 4%. so now,, get back to 3% or lower this year? optimists say you know, if we see supply chains clearing up, as energy prices level off at lower levels, that could get us on those paths. but unfortunately, there are higher shelter costs, robust wage gains driven by demand in a tight labor market. omicron variants surging, all of these things expecting to keep the inflation rate from starting to get that low. neel kashkari was speaking at an

event today and he too is cautious but sees optimism in market expectations for inflation over the course of the year. let's listen to what prison kashkari said. >> as you look at financial market indicators of where the financial market is taking place over the long-term, over the long-term, they are inflation going back to historical levels. i don't overweight that. that's one data point that we pay attention to. but that gives us some confidence. kathleen: give us an illustration how things have changed so quickly. neel kashkari was pushing back on rate hikes when the omicron variant was going to surge. tw -- now he's penciled in two rate hikes. one person looking at the march lift off is now saying there could be for rate hikes this year. he said he favors the fed

getting a couple of rate hikes under our belt in the first part of the year. that will put us in a good position. the nominated vice president of the federal reserve on thursday, saying today inflation is too high. curbing it is the fed's top task now, haidi. so all across the levels, president of the fed bank, governor and leadership saying we know we have to fight inflation. the only question is how much rate hiking they have to do. haidi: kathleen hays there. let's take a look at asian central banks and the ramifications in this part of the world, how they'll address inflation risks. the be ok -- boj meets on friday. let's bring on enda curran. obviously, if you're going to talk about an outlier when it comes to policy action against inflation, that's where we would begin. enda: yeah, it is an outlier,

but there are some signs of business input prices are at their highest and 41 years. consumer inflation expectations are at their highest since 2008. the yen has been the world's worst major foreign currency over the past year. japan is importing inflation. economists think the boj next week might tweak its language on inflation rather than saying the risk to inflation continues to be to the downside. they might say that there are some price pressure starting to bubble into the economy. as you say, different story for the fed. the boj remains a long way from 2% inflation target. there's no trajectory that they are going to tweak and negative remains negative. they're going to continue asset purchases. the story of the boj and the fed remains one of divergence. shery: a different story and

south korea with what central bank's are experiencing, another month of inflation above the be ok's target. so are we now convinced that that be ok -- bok will actually act this week? enda: i'm not sure if it's a done deal, but certainly there are factors. he did say a rate hike in the first quarter is possible. we know that inflation is ticking up in south korea. the jobs market is somewhat approving -- improving there. that's a key concern for the bok. and we know the fed appears to be on the cusp of an aggressive rate hiking cycle. that might nudge the bok to stay ahead of that curve to maintain their concert -- their securities and keep global investors staying in south korea. of course, complications are, as always, the virus. that continues to weigh on consumer sentiment.

it's not yet clear how those restrictions will drive an economy during the year. two thirds of economists are expecting the bok to hike tomorrow. if they do, it will probably be more of a fed story, more price stability rather than roaring assumption story. haidi: enda curran there with the asian outlook after we had that huge inflation output out of the u.s. let's get a quick check on cron resources, one of the biggest movers to the upside in the early part of the session, extending those gains to pretty much session highs, cron resorts jumping to the highest we've seen since june last year, and really the most since november last year, as well, over 8.5%, this after blackstone seemed to move closer to what's been a year-long pursuit of the casino operator. it's weaned its operator for a third time, a .9 billion aussie dollars, 6.5 billion u.s. dollars with that price being

raised to $13 on each shares -- per-share from $12.50 back in november. kranz it engaged with blackstone and would engage with that bid if a binding offer would be made at that level. so it does look like, not towards certainty, but we are getting very close to a deal for the troubled casino operator, cron resorts. -- crown resorts. we did see regulatory -- given two years to address its lending -- litany of long -- of wrongdoing. let's get you to vonnie quinn with the first word headlines. vonnie: thank you. china postponed to headquarters, the move is raising concerns about whether the olympics an annual national legislative

meetings can go ahead smoothly. the two meetings had not yet been determined. 137 new cases wednesday. the city is located just 30 minutes from beijing via trying. u.s. house leaders are nearing a deal with china that would authorize funding for r&d and provide aid to the local semiconductor industry. sources tell us chuck schumer and white house sees the legislation as a top priority. the agreements must be reached before midterm election campaigns. the u.s. says russia must decide if it is interested in settling a standoff between russia and the ukraine. washington says they gave no commitment to de-escalate during wednesday's meeting with nato in brussels. little progress is also in -- made on monday. on thursday, discussions continue, this time with a 57 nation osce. u.k. prime boris johnson is

going on after apologizing for attending a garden party during lockdown. johnson told the house of commons he thought it had been a work event, but he still needed to take responsibility. is now in christian. -- johnson's role in the party is now in question. >> with hindsight, i should have sent everyone back inside. i should have found some other way to thank them. and i should have recognized that, even if it could be said technically could fall within the guidance, there would be millions and millions of people who simply would not see it that way. vonnie: global news, 24 hours a day on air and on bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: frontier markets in asia on the radar for investors hunting for high economic growth and strong demographics.

we'll speak with the frontier markets investor for some top picks in the region. but of next, we hear why markets are entering the late cycle and what that means for investors after the latest u.s. inflation readings. this is bloomberg. ♪

haidi: a quick check of the latest is flash headlines. the x ceo of bridgewater, david mccormick, has filed for the primary in arrest set -- republic senate seat. mccormick stepped down from the world's largest hedge earlier this month. morgan stanley is reportedly planning to raise annual bonuses for top performance on more than 20%. it's being told by sources that

bankers and equity underwriting and m&a advisory are set to get the biggest boost. trend sweeping wall street as banks try to reverse high turnover levels with large bonuses. jeffrey shares slid the most in nearly two years after the firm's trading revenue dropped to percent from a year earlier. the fixed income slump contributed to a 28% in overall trading revenue in the three months to november. the company says challenging market conditions were to blame. soon act china holdings is seeking to raise $500 million in share placement. the developer will offer shares at a 50% discount to wednesday's close and will use part of the funds to repay short-term lows. they were looking to withdraw quarterly asset prices after resolving a dispute with a business partner. shery: and of course we are very much focused on inflation numbers out of the u.s., rising at the fastest pace since 1982.

here's what some guests on bloomberg tv had to say earlier. >> there was a fear that inflation had to come in harder than -- harder than expected. >> one of the most anticipated numbers in quite some time. >> that met expectations. >> what is the potential rate of faded inflation? -- fed inflation this year? >> inflation is likely to be significantly above what is discounted the fed's target. >> it does reinforce the message we are getting from the fed. >> i don't think there was enough in today's for sport's report to stop them from pursuing this hawkish path. >> inflation is a challenge that they seem to be going to address front and center. >> i don't really think anything stops them from going in march except one of these outlier events. i think they're ready. shery: our next guest is a percent priced in by markets. let's bring in generally, founder and ceo at an investment

firm. jenna, great to have you with us . tell us, given that inflation seems to be sort of a given now and an understanding with traders at the moment, how do you hedge? jenna: you always have to talk about the risk. we knew this was coming in risk for a short-term shock, up to 10% drawdown in the market in the next six to eight months, meaning you have to have your goals and your portfolio. you still want to be long equities, but you can't go all the way long with speculative assets only. make sure you have dips bit -- built into your portfolio. shery: you serve clients, retail clients in south korea, right? and we know that korea has seen inflation is topping the central bank's target for a while. is there a similarity or a difference in how investors there are looking at the global

macro picture and how they are allocating assets? jenna: this is an interesting question. in korea, you are seeing from the media that you have cash get out of equities and you have dollar this and that. you've got local stock exposure. on the u.s., you are about to see the longest rally with an expiration date. so if you are a u.s.-based investor, you are very progressive about that, very aggressive about momentum factors. in korea, people are being conservative now, and money is moving from brokerage to savings account now. but we should say as a gold investor in asia, you focus on your dollar based testing and diversify your portfolio into developed markets, continue staying within the equity markets would prove very valuable. you can still see a percent to 12% returns for the year, lower

than last year, but you were dodging growth with inflation. the only way to do that is going to assets. haidi: on that topic of inflation, we are getting more comments when it comes to mary daly, the san francisco fed president saying she sees prices moderating as supply imbalances ease, saying that she's bullish on the strength of the u.s. economy, these comments coming in an interview with pbs at the moment, saying inflation is uncomfortably high and that we are moving fed accommodation will help ease demand pressure. this comes as we saw a slew of fed speak this week, as well, federal reserve's governor say is tackling inflation getting faster the 2% while also maintaining inclusive recovery is the most pressing task for the fed. and given that we see just such

an unusual economic picture, the assumptions that are being made as to what normalization paths look like kind of assumes a normal reception. what is the policy risk here and how do you as an investor hedge some of those uncertainties and dislocations that we are already seeing? jenna: so, we know that the medium to long-term direction. this is a very typical late cycle. what we are about to see his policies coming in to balance out growth incentives versus inflation worries. this is where the short-term shock comes in. bracing for that short-term shock, having a medium-term view , meaning you will see some still increase, inflation isn't entirely baked into the pricing. so we'll see small caps, mid-caps performing better than

big tech. diversify your u.s. equities holdings into your small caps box -- stocks. they tended to do slightly better than large-cap stocks in this market cycle. so we are not saying go all the way into safe markets. keep your risky assets in your portfolio. the make sure you are factor neutralized. don't go all the way into growth factor. make sure that you still look into momentum. when that momentum shifts, that's when you have to think seriously about risk off duty, which won't come until six months to a year is typically. so this is very normal -- yeah? [laughter] shery: how much risk do you keep in emerging markets then, given that we -- there's going to be some hard policy choices when the fed starts tightening. jenna: so, we haven't gone more

than 20% in the emerging markets in the past six months, so 10-20%, just extremely, i think given we go into 77 different countries for our typical portfolio, very small portion, and korea is in a big portion of that emerging-market either. keeping low, especially in emerging markets that returns are concentrated into one to two year segments in the cycle, we've seen that in returns in the past year and a half, not now, it's going to be moving sideways with a lot of volatility. so for asian investors, keep your local exposures to minimum. haidi: janet, really great to have you with us. coming up on daybreak asia, we continue to talk all things

inflation. we speak exquisitely with the fed governor christopher waller, getting his policy outlook after that high cpi number from the u.s. that's at 10 past 7:00 in the morning in hong kong, 10 past 10:00 if you are watching here in sydney. this is bloomberg. ♪

shery: we are tracking the fallout of the global supply chain crunch. just be see columnists are cautioning of the mother of all shocks to manufacturing in the omicron variant spreads across asia, especially china. the u.s. house of representatives is said to be nearing an agreement on a chinese competitiveness bill that would put billions of dollars into r&d. the bill would also include aid for the domestic semiconductor industry. and microsoft lured away of area -- a semiconductor from apple to

make server chips. haidi? haidi: yeah, let's take a look at industrial metals, continuing to be a big thing in the new year, matching higher again with production outages, streaking inventory -- shrinking inventory, haram material will keep up with demand. bloomberg terminal users can read more about those stories in our newsletters. that's supply lines on the bloomberg. shery? shery: and shall meet taking an interesting approach to its chip problems, limited outlook for its playstation 5 consul. the japanese conglomerate will produce its playstation 4 model to offset some pressure. let's bring in our asia tech reporter, vlad. it seems we are no closer to solving the ps5 rollout issues. vlad: yes, that appears to be

the case. sony has placed a series of headwinds with the consul in the launch of 2020, and the companies till hasn't been able to catch up with demand. there are things like logistics. shipping any electronics around the world has become much more expensive. the company has had to resort to much pricier air cargo. in the cases of ps5, you also have runaway demand, which was driven by the pandemic, which led to scalpers soaking up a lot of supply, then reselling it, etc. sony has been trying to battle that back. and as already mentioned, in terms of the supply chain, some of the simple components, you know, we've seen parts which anyone who makes electronic ski need to use in short supply, things like commodity parts. haidi: our asia tech reporter

vlad solve off their. we have more to -- vlad savov there. we have more to come on daybreak asia. this is bloomberg. ♪ 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.

vonnie: this is daybreak asia. i'm vonnie quinn with the first word headlines. president biden is making progress in battling price increases. the president says the cpi report shows a meaningful reduction in headline inflation over last month with gas and food prices falling. and a top economic advisor notes the fed's role in easing price pressures. >> i think if you look at most professional forecasters, they are to predict that we'll see an

easing in price pressures over the course of 2022. and obviously, the fed is operating independently and the president has underscored the end it -- importance of the fed operating independently to take actions consistent with making sure these price increases don't become entrenched. vonnie: switzerland joined spain and the u.k. in suggesting an endemic of the covid pandemic is insight. interior minister says the country is on the cusp of transitioning out of the pandemic. earlier this week, spain's prime minister called for coronavirus to be treated like the flu. the u.k. also says it is on a path towards transitioning from the pandemic to end, it. -- and,. -- endemic. the latest covid variant influx a softer hit than anticipated. executive director says strong demand is due to milder omicron expectations. he also says russia is to blame for europe's energy crunch by keeping gas deliveries capped. saudi arabia is sovereign wealth

fund is planning to invest $10 billion more into stocks this year. sources say the public investment fund's goal is to more than double its assets by 2025. we're told they are looking to buy global stocks based on a strategy that focuses on areas including e-commerce and renewables. global news, 24 hours a day on air and on bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: china's recent virus flareups are raising concerns about how the upcoming winter of the vix and the march annual selection of parliament can go ahead smoothly. let's bring in stephen engle in hong kong. steve, so what's the latest on the outbreak? stephen: well, there are growing concerns, of course, about whether the olympics can go on smoothly with an outbreak so close to beijing and whether the

national p chill -- people's congress, the two meetings held in early march can go ahead. but again, these are lesser concerns really. does it matter in the scheme of things? as well as the parliament session. two years ago, they delayed it until may since the -- because of the outbreak. obviously, the health of the people come over three neighborhoods have been essentially locked down. what is this going to do the chinese economy, still struggling to get its footing in the new year? and what's it going to do to global supply chains? we've seen outbreak and restrictions in testing and lockdowns in various places, it including these places, all key manufacturing centers in china and, as well, three of those cities have key ports.

now the concern of course with this new dynamic clearing strategy essentially where instead of the central government coming in and locking down an entire city of 15 million like they did, they are leaving at up to local municipalities and the local government to target specific neighborhoods that have outbreaks and then lock them down or semi-lockdowns. state media is saying they are putting out this note saying those three neighborhoods are not to the port. but again, it still raises concern. in fact, hsbc economist put out a note essentially saying there could be the mother of all, and i quote, mother of all supply chain shocks because of the outbreak in china disrupting global supply chains. and this is what the white house chief economic advisor had to say about the subject overnight. >> the lockdowns are most likely to have the effect isolated in china because the production

facilities in those geographies are printable he suppliers to the chinese market. but the situation is fluid and ongoing and something we are monitoring in real time and working across the interagency, including the state department and the cdc, to try to keep a handle on. stephen: back very quickly on the olympics, the global times put out an article saying a lockdown in beijing during the winter olympics is off the table. for now. shery: in the meantime, it looks like u.s. is upping the pressure when it comes to beijing, not just on the virus, but also on this house bill to counter competition. stephen: yep, on both those fronts. the transportation department is putting pressure on china after china canceled a number of flights, what few remaining fights the u.s. had still to china, and the transportation department put out this statement saying china's actions are inconsistent with its obligations under the u.s. china

air transport agreement. they say they could take regulatory action if appropriate. there is a statement there, completely separate from that, though, is this bill in congress, the u.s. innovation and competition act, which installed in the house. and we're hearing from sources that compromise a compromise could be reached to get this passed. perhaps before midterm election campaigns gives it the full swing and it loses a little bit of focus and attention. so this was earmarked billions, tens of billions of dollars to you research and develop meant in areas of the economy that are deemed to be under intense competition in china and state backed policies, as well as 52 billion or thereabouts to the domestic semiconductor industry in the united states. we'll have to see how this plays out. haidi: stephen engle there in

hong kong with the latest. how markets are opening in trading in the wake of the big inflation push out of the u.s. expectations that it pauses for the tightening regime. we are seeing outside, about .3%, some outperformer's in sydney as we see the third sweetened offer from blackstone taking these talks closer to a potential deal. new zealand is coming off some of those more modest gains. lots of forecast when it comes to currency volunteer to the and the kiwi is in line the -- in the limelight when it comes to fx trading action. when it comes to nikkei futures trading in singapore, we are seeing a little bit of softness. we had heard that japan or tokyo would be raising covid-19 level to the second-highest. we'll see how some of those related stocks will be reacting in the japanese session. and the u.s. futures up about a

modest .1%. staying with japan and the country's largest drug maker says it is relying on innovation and partnership to drive growth. the president and ceo told us more about the company's plan for the pandemic and beyond. >> after years of reinventing ourselves into a top-tier global pharmaceutical company, we are now in position to grow, driven by our pipeline. we have a very diverse and richard pipeline. we have reinvented our r&d and that's what will drive our growth in the future. and the pandemic has accelerated this transformation in some ways but didn't distract our agenda to become highly innovative company in the future. >> you made the decision to not go after the covid vaccine like many of your other peers.

i'm curious as to covid becomes more endemic, what is your role in it? >> so, we are in the vaccines business, but we don't have the right technology developed our own vaccines. that's why we decided to partner with novak's the potentially a country in the -- we continue to be very active on that front in order to help with the management of the pandemic. >> how has your view of the health care sector changed? we have seen a huge acceleration, the rate of change is really picked up. we've seen what can be done in a relatively short periods of time. regulators have taken notice. investors have taken notice. in terms of fine-tuning your plan going forward, do you think you can now achieve more? do you think you can push on faster? do think you can take this

company into new areas more quickly? give us a sense of what is now possible? within the industry, partnerships have become a huge part of the landscape, the ecosystem has changed. >> innovation has accelerated. our r&d model is something we have done for many years. we have more than 200 partnerships ongoing. so everything is accelerating and the pandemic has accelerated further. the use of that technology will transform the industry in the future. this is something that i am embracing will become a company enabled by that technology. so we are looking forward to that. so in a way, the pandemic has not created a new trend but accelerated many trends, which were always there. >> what you think is going to be the trend that accelerates the fastest? and do you do that organically

or do you have to buy into it? >> so that technology will impact the entire pharmaceutical value chain with r&d manufacturing in the way we commercialize our medicine. so that will be the biggest impact. innovation is accelerating. science is progressing. so the ability to partner, to be a good partner, is very important. and that's something we do well. so i think what we will see is an ex of the ration of innovation. the science is very rich and there are many ways to innovate and to starve solve problems that were difficult to solve in the past. shery: and we are counting down to the start of trading tokyo and some of the stories we are watching today. we do have some eco-data out of japan, including money supply and machine-tool orders for december. we'll gauge the strength of the

economy there. we're also watching toshiba. it plans to split into three companies. they are signing their corporate governance director at the pension fund association. the priorities should be an overhaul of toshiba. we also have some results later today from fast retailing among the companies with results. turning to south korea, we did get some data earlier today showing that import prices rose nearly 30% in december. of course, we continue to watch price pressures globally. the finance ministry also set to release its monthly fiscal support -- fiscal report and the economic daily reporting lg energy solution is likely the fed ipo price at the top of the range around 300,001. h -- 300,000 wan. haidi? haidi: and while investors may

want to look for high-growth tear markets and long-term opportunities, age of frontier capital gives us top picks next. this is bloomberg. ♪

haidi: our next guest has more

than 20 years investing. the company now runs with its large ship asia frontier fund returning over 50% last year. let's discuss the opportunities and bring in the ceo. great to have you with us. last year was a banner year for a lot of funds, including those with higher risk premiums. do you expect that this year, given that we do expect the path of tightening to begin pretty soon, where it hasn't already begun, that for emerging and frontier markets, it's going to be a bit harder to attract that investment? thomas: yes, good evening. the risk factor this year will be, again, a good year for frontier markets because, historically, frontier markets have a low correlation to the rest -- for example, our other frien -- other fund, 0.5% to

msci index, for countries like bangladesh have a correlation of minus 0.03 times, or 0.04. so that means that the consequence of when the stock market in the growth world develops as a result as a positive performance or assuring performance, that power from p or markets are overlooked and not performing that will. but slightly down trending markets, these markets -- we have seen, for example last year, we have risen 6% despite the economic problems there, 65% for mongolia. so, we think that certain

countries may be able to repeat that again unless there's a major drawdown in developed markets. certainly, frontier markets will not be able to withstand tests. haidi: so, obviously you have higher growth prospects, more dynamic demographics for a lot of these countries and therefore the prospect of higher returns. but how do you retain those levels of returns in the longer term when you're talking about clients that are looking 10, 15, 20 years at their portfolio? thomas: yeah, i think that's the most important factor when we're talking to clients. because we are investing in undervalued companies, try to find undervalued companies. it's a long-term growth prospects. and if economies are going to --

if the commissar going faster than the rest of the world and in order to benefit mostly from this kind of investment in frontier markets, we need to have a long-term investment. so if you're looking for one or two years, you need the investment in five years. shery: you talk about finding this undervalued companies, right? how challenging has it become to do due diligence and discover those when we've had all these travel restrictions and, for example, your stock in hong kong? thomas: yes, we have stock in hong kong. it's a valuable question. so, in the past, we traveled a lot, obviously. we spent a lot of money traveling and it's something which we can now benefit from

because we are running this frontier for 10 years. but thanks to the pandemic, they have ordered -- now, a lot of companies which we were not able to meet because management did not want to meet foreign investors or local investors, for example in bangladesh or vietnam. many copies refused to do that. or maybe the company was too remote. some of the countries were huge, mongolia, pakistan. we cannot travel there. so now, we prefer emerging or commercials to meet them virtually. so we benefit. every day, he really complains, 45 meetings a day. shery: it works both ways, i

guess. there are some things that are better and easier. just quickly, tom, tell us a little bit about what are the countries that you see right now following the footsteps of china for the asian tigers like south korea and singapore. thomas: so we think companies like bangladesh and vietnam has prospects, but obviously bangladesh and vietnam, manufacturing shifts from china and the transformation of the country is opening up and transforming the economy. shery: it was great having your insight about frontiers and emerging markets. thank you. don't forget, we have a big interview coming up on daybreak asia. tomorrow, we speak exclusively

to fed governor christopher waller and get his policy outlook after the high inflation number here in the u.s. now it's 7:10 in hong kong, 10:10 in sydney. and if you miss any part of whichever conversation throughout the day, go to tv . that's your function on the terminal. you can dive into any of the functions we talk about. if you want to become part of the conversation, do send is those instant messages. this is bloomberg. ♪ erg. ♪

shery: and here are some of the stocks that we're watching is markets open in korea. our markets in focus after the nuclear reactor was halted due to a cooling pump issue. we're told the reactor remains stable and there was no radiation leak. now in japan, the focus is on leisure and travel after it is set to raise its virus alert to the second highest level as infections search. and of course, we continue to watch those latest headlines about the omicron variant and other covid infections in japan. and we are seeing more moves for employees to stay-at-home, at least in japan. yahoo japan telling us -- telling its employees they can work from anywhere in the country, really bucking the trend that japan has seen during

the pandemic with some reluctance from companies to have employees working from home. but actually, now yahoo japan is proposing that they will have a $1300 commute budget for fly ends from work, haidi. haidi: yeah, it's really fascinating because we talk about the sort of traditional aspects of japan inc. and the flux ability when it comes to culprit -- corporate culture there. but they're trying to make it a little easier, and it comes at a time when omicron and this pandemic is still very much taking hold, alert levels being raised in japan, as well. when it comes to this kind of level of flexibility, we're also seeing that from twitter, as well, twitter saying they made their early shift not just to give more flexibility, but also to appeal more when it comes to hiring black and latinx recruits, right, saying that

work from anywhere model that they adopted fairly early in the pandemic was really to try and add more people of color to job candidates, helping the social media company to post significant gains when it comes to being able to add those black and let next workers to its workforce. shery: it's been an interesting labor market. we continue to see these record job openings but not enough people coming back to the workforce to fill those jobs, right? and we were talking about this earlier, that when we are seeing 5 billion north americans not working today who are employed at the start of 2020, but there are 10 million job vacancies. and one reason might be they don't want to go back into the office, especially with this very contagious variant. coming up, we'll also be talking about asia's largest company and a big bellwether for the global chip industry, cmc reporting in

just a few hours time. the market opens in tokyo our next. -- are next. this is bloomberg. ♪

>> welcome to daybreak asia. >> major markets in asia have open for trade. our top stories, asia investors way gains after hot u.s. inflation make way for a march rate hike. china, the pboc may be closing in on a great cut as price

pressures ease. plus, bitcoin climbs, as inflation hedges. >> a little divergence at the open in japan and korea. japanese equities losing ground, lower by consumer stocks and industrials. more strength in the yen, the strongest against the u.s. dollar since november. we are watching jgb's. the 10 year yield around the high. we are watching travel stocks in japan. local media reports the tokyo may be raising the coronavirus alert. take a look at the kospi gaining ground. this, as the korean currency continues to strengthen against the u.s. dollar for a fourth consecutive session. we got jobs numbers from south

korea, with the country adding the most since 2014. we are gearing up for the be ok rate decision friday. -- the be ok -- bok rate decision. >> yes. we will see what they do in the face of tightening. in sydney, a difference, some strong gains across energy and materials, as industrial metal surging, nickel, supply concerns, bolstering that boom earlier in the year. were looking at some focus -- we are looking at the focus on crown, with blackstone sweetening that deal for a third time, bringing that closer to a deal. taking a look at the aussie dollar, we are starting to see

the gains driven by the strength in iron ore in particular, but looking at that january high is the point where were starting to see that. >> with price gains in focus, we are watching what investors are saying about where this is headed. our next guest has some inflation resilience plays across asia. let's bring her in. what are you liking in this environment? >> the key risk is inflation if it over shoots, but stocks, if they can pass on the rising costs. you're looking at companies with competitive advantage and companies that have arrangements whereby they can pass along

those costs, some things like regulated utilities, wide-moat companies with strong advantages. >> valuations and focus given the macro environment. are there any attractive plays out the moment across asia? >> there are. if you look at things in total, the asian market is just under fairly valued, but there are pockets of growth. some of the beaten-down sectors, china internet, among those, we would like was because of its expansion and operating leverage. we think there are preferred stocks within that space. we have some china biotech names we like, a sector we think will probably outperform in terms of growth.

>> is there a way you can play the urgent monetary policies and fiscal policies between china and western economies? >> yes, it will be tough. china is slowing. we are still expecting u.s. growth to be above average levels based on historic levels, so were looking around three plus into 2024, then returning to 2% after that. we have china slung to real gdp growth, four to 5% over the next couple of years, but china needs to lift productivity. when sector we like is in the industrial ebonics, and -- robotics, and there is one company that has flagged --

lagged in the past six months. we think that will change as bottlenecks ease. >> what is the biggest risks in the asian end emerging markets, potentially making a policy misstep? does that create the potential for a liquidity crisis for investors? >> there is that risk. we have got a lot of countries around the world that have taken actions during the pandemic. omicron, for example, lengthens the need to have the support, so getting back that money, for the revenue to come back, that will require pulling in the r eigns.

that is one of the reasons we think it is good to look at companies and pick those up, and be a little bit more sensitive in that sense, utilities that pay an attractive dividend. those are names we would add to the portfolio but because valuations are lofty, so hiccups could send things lower. >> that is the director of asian equity research for morningstar joining us. we have a big interview on daybreak asia tomorrow, speaking to the fed governor, getting his policy outlook after the high inflation number. let's get you to vonnie quinn with the first word headlines. >> thanks. switzerland has joined spain and the u.k. suggesting an endemic

phase of covidien is in sight -- that covid is insight. early this week, spain's prime minister called from coronavirus to be treated like the flu. china has two political leanings . one move is raising concerns about whether the olympics and annual meetings can go ahead smoothly. the new dates have not been determined. they reported 137 new cases thursday, 30 minutes from beijing by train. u.s. health leaders nearing a deal on a china competition bill that would authorize funding for domestic research and development and provide aid. chuck schumer in the white house see the legislation is a top priority. the agreement must be reached

before the midterm election campaign. force johnson is fighting on -- boris johnson is fighting on after defending a garden party. he said he needed to take responsibility. his survival is premier is non-christian. -- is now under question. >> with hindsight, i should have sent everyone back inside. i should've found some other way to thank them, and recognize that even if it could be within the guidance technically, there would be millions and means of people who simply would not seat -- millions of people who would not see it that way. >> 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 vonnie quinn. this is bloomberg. >> have an alert on the bloomberg. we are hearing that a hong kong

entity will be resuming trading in one hour at 9:00 a.m. local time. they suspended trading last week, the troubled cruise operator had warned of defaults because of the insolvency of a german shipbuilding subsidiary. on kong's think they have no guarantee that they will be able to meet financial obligations but they have not outed demanding -- noted commanding repayment in the court will rule on drawdown proceedings on january 17. in the meantime, they would resume trading at 9:00 a.m. local time. still ahead, credit suisse expects a strong outlook for taiwanese chipmakers. there are signs that the china central bank could loosen credit policies to stimulate demand. more on that ahead. this is bloomberg. ♪

>> if you look at market indicators of where inflation is going over the long term, it is going back to historical levels of around 2%. i don't overweight that. that at least gives us some confidence. >> most professional forecasters are predicting an increase in price pressures over to -- over

2022. the president has underscored the need for the fed to act independently to make surprise increases don't become entrenched. >> officials speaking after the u.s. inflation print. policy pressures are different in china. the pboc looking at stabilization in the latest credit members. is the credit environment -- what is the credit environment telling us about demand and borrowing. >> the story and china has switched to the ability of the economy. we have seen the shift began in december when the pboc started to lower its many market rates. all indications are that further support will be coming. it is not clear that demand is

strong at the moment, given the pressures on the consumers. there will be a lot on how it will hold up under the covid zero policy and how much support is needed from the government. more support is coming, more on the fiscal cited, so we will see that flowing through the economy in the coming months. >> how much of what the fed does in terms of tightening dictates what other central banks across asia do in response? >> there is a diversions now between -- divergence now between the fed and china, but it is start given the path the fed and pboc are on. what we will watch us what kind of pressure it puts on the currency, and how far the chinese authorities will allow

that to depreciate. tomorrow, we are watching the bank of korea. they seem to be staying ahead of the fed. most expect they will raise rates because of inflation in korea. they have high prices. the complication for the bank of korea and everybody else is the ongoing pandemic and how that plays out in the drag on the broader recovery. a bigger theme now is stte -- that most are containing inflation pressures. >> is are bloomberg chief asian economics correspondent -- that is our chief asian economics correspondent. we continue to see strains on china as developers pull out all the stops to get loan

extensions. let's speak with one person who says these short-term moves are backfiring. the mood is sour across the market, and these developers getting desperate does not seem to help. >> absolutely. i nice policymakers -- chinese policymakers are coming up with moves like great cuts so that others can access those easily. it has been sell, sell, sell and other parts of the market. companies say they have the money to repay dollar bonds. three days later, they say they don't or that they don't have a new wealth management business. it is really bad corporate governance, and investors lost faith in these individual companies.

>> it is difficult going by company ratings, november still investment grade at s&p global. >> yes. it is unfortunate. they have this rumor they were going to default. one reason was that in 2020 there was a developer in one province in there were rumors they took some of the debt off the balance sheet. it is a self-fulfilling prophecy. with all the bad rumors of bankers get nervous because they don't want to -- rumors, bankers get nervous because they don't want that, so they tighten the

refinancing, and a few days ago they said one of the loans its subsidiaries guaranteed defaulted, so it is self-fulfilling. >> where does this crisis e nd? the narrative is policymakers and china will support the economy because it has become bad, but can you expect them to do more when this will create hazard at a time when they have tried to deleverage? >> i feel this has not ended yet. lot of -- a lot of smaller developers need to die, then the bigger ones can offload assets. this thing is not over yet. a lot of offshore investors, it is in the future.

>> always great to have you. coming up, bitcoin gets in inflation bounce, the latest data reviving the debate crypto as a hedge against price pressures. we get the outlook. this is bloomberg. ♪

>> let's turn to commodities and crypto. bitcoin rallying after inflation data reignited debates over whether crypto is an inflation hedge. energy and metals, su keenan the

latest. let's start with oil. energy prices don't help with those inflationary concerns. >> this big run in commodities so far adding to inflation pressures. it has been a strong year for wti, already up 10% since the start of the year. we are seeing wti near $83 a barrel on top of the strong trading day in new york, where it closed at the highest level since november. a weaker dollar and a plunge in u.s. inventories and the latest data, all of it, including supplies and the u.s. are at the lowest level since 2018, adding to the rally. you are seeing it in brent crude. demand is stronger in this first quarter. combined with the latest inventory data, oil markets are

much tighter than were projected. let's go to natural gas, particularly in the u.s., increasing 14% in trading before pulling back. we are seeing in asia trading this now. veteran traders say they could be bracing for thursday inventory data for natural gas. add the cold weather in the u.s. as major population centers dig out from the last snowstorm, only to get word we are now expecting another snowstorm to slam the south up and down the east coast over the weekend. lastly, the metals. we saw nickel extend gains to the highest in a decade. it was already on the rally due to supply deficits and demand

for electric vehicles. indonesia is considering an export tax. all of this is adding to those inflationary pressures. goldman sachs sees deficits across all metals, raising its twelve-month targets for aluminum, copper, and is thank -- zinc. >> bitcoin climbing above the key support level. we are talking about it as a hedge against inflation? >> it puts the debate back on the table. there is a question, where is your inflation hedge? bitcoin has seen some severe declines. there is a lot of green on the screen. cryptocurrencies have tumbled onward the fed was more hawkish than thought. the fact you have the latest inflationary consumer price

index data showing the increase of 7% less than thought of bitcoin supporters say that is helping risk assets, stocks and crypto moving higher, and perhaps the fed does not have to accelerate tightening as aggressively as perhaps originally thought, which means the outlook for crypto may be better at the margin. as we have been saying this week, ether and bitcoin had flashed a signal for a selloff, but right now a reprieve. back to you. >> let's check the latest business flash headlines. and resorts trading higher -- crown resorts trading higher. the firm is offering a price that is up from the previous

price. it said it is a binding offer of at least that amount. the board recommends accepting the proposal. they already own 10% of the troubled operator. morgan stanley is planning to raise annual bonuses by more than 20% for top performers. reuters has been told that bankers in underwriting and advisory for mergers and acquisitions are set to get the biggest boost, following a trend of banks trying to reverse high turnover with bonuses. the investor group buying 51job is cutting its takeover offer by 20%, restructuring the bid. it is now offering a price in

cash. it closed 9% higher new york. coming up, moving forward with a china competition bill, tensions are flaring. we have the latest just ahead. this is bloomberg. ♪ ♪ every day in business brings something new. so get the flexibility of the new mobile service designed for your small business. introducing comcast business mobile. you get the most reliable network with nationwide 5g included. and you can get unlimited data for just $30 per line per month when you get four lines or mix and match data options. available now for comcast business internet customers with no line-activation fees or term contract required. see if you can save by switching today. comcast business. powering possibilities.

>> with hindsight, i should have sent everyone back inside. i should have found some other way to thank them. i should have recognized that even if it could be said technically twofold within the guidance -- to fall within the guidance, there would be millions and millions of people who would not see it that way. >> the lockdowns and china -- in china, they are principally

suppliers to the chinese market, but the situation is fluid and ongoing and something we are monitoring in real time and working across the interagency, including state department cdc emmett to keep a handle on it. -- cdc, to keep a handle on it. >> china flareups are raising concerns about how the winter liv-ex, the march session of parliament can go ahead smoothly. let's bring in our correspondent in hong kong. the sessions can be virtual, postpone. it has happened before. they can't do that with the olympics. how much is it endangering the outlook now? >> of course. a couple of years ago, the national people's congress and the advisory body suspended by a couple of months because of the pandemic, so that is not a big concern. the olympics will go ahead

regardless. it is a matter of whether there will be a lockdown in beijing. there will not be any foreign precipitation -- participation. it is a nonfactor, aside from prestige for china and ambience in beijing. even the global times is saying a lockdown in beijing during the of the picks -- olympics is off the table. the concern is what is happening in one region 70 miles to the southeast of beijing, the main port for the capital. there are lockdowns and restrictions in three districts of the city of more than 15 million people. state media is saying those three neighborhoods are not near a port, but there is concern about logistics, the supply chain, and manufacturing. we got a headline saying toyota

motor is closing its plants in the region. it is a key manufacturing spot for automobiles like toyota, which has a jv partnership and is a key shipping port for automobiles in and out of china. they are watching that. this comes with another headline , another positive case in a northeast city, a positive omicron case. we have a couple of omicron cases in the region. now when reported in another keyport in northeast china. it is an oil importing center for china. we have to watch what is happening closely. ayanna -- china is having its outbreaks in multiple regions. it is tough to contain omicron. >> in order to contain it, those

restrictions causing tension between beijing and washington. >> that's right. on the fire is front, the u.s. transportation department is upset with china for canceling and barring flights from the u.s. to china you shanghai and beijing. now the transportation department has put out a statement saying china's actions are inconsistent with its obligations under the agreement and they could take regulatory measures as appropriate. this comes against the backdrop of potentially more trade ties between the u.s. and china unrelated to the covid outbreak, this bill that has installed in the u.s. house of representatives, the u.s. innovation and competition a ct, which earmarks tens of

billion dollars to key areas of the u.s. economy where they would put in more research and development, as well as send money -- spend money towards u.s. production of semiconductors. that we are hearing according to supporters that compromises are being reached to get this bill through ahead of what will likely transpire oprah 2022, intense midterm election campaigning. i don't want this was to be lost in the shuffle. >> the latest on the virus cases across china. in hong kong, carrie lam has laid out a long-term vision to answer beijing's call to fix the pricey housing market. she outlined the plans for the so-called effort. what are the details? >> that's right.

every lawmaker is now pro-government, so she has a runway to pass the policy, just at the moment she's preparing to finish her five-year term. yesterday, she laid out a plan around housing, a key priority for beijing. it was an appealing agenda for those in mainland china. the candidate for the chief executive race this summer is shoring up support in the pro-beijing cam, so it raised speculationsp about her future plans -- camp, so it raised speculation about her future plans. carrie lam admits the omicron outbreak has derailed plans to open quarantine-free travel with mainland china, of a priority for the past six months.

-- a big priority for the past six months. i'm staff brought in the omicron variant -- some staff brought in the omicron variant. carrie lam said they will have to have 14 days of note infections, but -- no infections , but with outbreaks around the country, it remains to be seen was will be a good time to open the border again. >> at is our greater china editor. let's get the vonnie quinn. >> thank you. president biden says the administration is making progress in battling cost-of-living increases, even as inflation hit the highest in four decades. the president says the cpi report shows a reduction in headline inflation over last month, with gas and food prices falling. a top advisor notes the federal

and easing price pressures. >> if you look at professional forecasters, they are predicting and easing in price pressures over 2022. the fed is operating independently. the president has underscored that to take actions consistent with making sure price increases don't become entrenched. >> the international energy agency says oil demand is resilient, as the latest covid variant inflicts a softer hit than anticipated. one person says concrete demand is due to milder omicron expectations and says russia is to blame for the energy crunch by keeping deliveries capped. russia says it must decide if it's interesting resolving issues over ukraine, as a second round of talks concluded without a path forward. the u.s. is moscone gave no commitment -- the u.s. said

moscow may go commitment. on thursday, discussions continue, this time with the osce. saudi arabia's sovereign wealth fund is investing $10 billion more this year. sources say the goal is to double its assets by 2025. the fund is looking to buy stocks based on a thematic strategy, including e-commerce and renewables. 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 bloomberg. >> coming up, the largest company in asia, a bellwether for the global chip industry, tsmc, reports earnings. credit suisse tells us what to expect. this is bloomberg. ♪ s is bloomberg. ♪

>> breaking news, affinity is considering the sale of a hong kong-based garment label maker. they have received interest from

potential buyers. the sale could value it at $1 billion and would likely attract other private equity firms. it makes garment labels and radio tags. it is considering the sale. let's turn to tsmc. they are reporting today. it is the biggest foundry in the world. it just announced a sixth quarter of record sales. investors are waiting on details. at their are earmarking billions to ramp up production capability and aiming to close the gap with tsmc's technological advantage. tsmc is ramping up its capacity around the world. >> yes. let's get more when it comes to

the strong outlook with our next guest. he is the head of taiwan equities research at credit suisse. great to have you with us. let me look at this chart, showing the business empire is growing, prophets met with slowing growth. are you still constructive about future growth? >> we are. we do expect 16% growth for the chip industry. most of the market is 12%. some are a bit higher, close to 25% growth. the key factor is they were successful raising prices. they have been trying to meet

the challenges of chip shortages and meet demand, which there singh from 5g, high-performance computing -- they are seeing from 5g, high-performance computing. our view is we could see higher capex as we go into results today. >> what do we see from the demand side? even as we see it being restored after a fraught year, our customers traumatized by that? will they be trying to build out inventory just in case? >> they will see demand and inventory buildup. when we look at automotive, they need to restore production. before the pandemic, the global industry was running 90 million

to 95 million. on top of that inventory, whether it is u.s.-china, that is the potential we need to see from automotive, but it is also the content from electric vehicle, gradually bringing an autonomous driving. so tsmc grew quite a bit this last year from automotive, but we still see that continuing next year. they still need to build up more stock across the supply chain. that is happening across into markets -- end markets. >> are the drivers going to be for the automobile sector or other electronics and 5g? what are the main drivers of demand in 2022? >> tsmc, it is a good question.

only 5% of revenue is from automotive. that will grow. the biggest growth, there is a bucket of high-performance computing, where that was 25% of revenue five years ago now 40%. that is graphics, aware there gaining market share, ai accelerators for companies like nvidia, and cpu, apple moved their chips to tsmc for the macs, also amazon and amd. add to that, intel will be used for a couple of years. >> more investors are becoming nervous about a coming correction, given the hype during the peak of the chip

shortages. where do you stand? >> there is a big difference in spirit most met -- divergence. most management teams when they look at their books, whether it be shortage comes from demand the next couple of years, investors have been fearing next quarter imminent correction. where we stand, it would take some time to catch up to demand. we still the high-performance computer as a driver, 4g, ig, not a lot of growth, but each device carries it, so it will take a few more quarters. also, we keep getting these issues coming up. now with omicron, companies will want to carry more inventory to manage it. so demand for inventory, and all this capex does not instantly

converted. it does set up a bit risky next year. the key is does supply chain normalize and endemic the man finally comes -- pandemic demand finally comes off. >> who is most well-positioned to overcome this among chipmakers? >> the biggest potential, you go from inventory buildup to adjusting inventory, with supply chain demand. that could come as long as we finally get through covid later this year. it points to tsmc, but they are gaining share. that is a plus. once you get past those cyclical prices, they still have capacity

to price it at a higher price, so they will still see an upward lift and pricing the next couple of years. i do feel they have the ability to ride through it better as we go to that inventory correction. >> it was great having you on. the head of taiwan equity research for credit suisse. you can turn to bloomberg to follow tsmc earnings in real time. you can get commentary and analysis from bloomberg. in the meantime, an alert, we are getting the u.s. faa coming out with a statement when it comes to 5g flight restrictions. the faa has been concerned about the 5g rollout in the u.s.

they are concerned it could interfere. now they are saying that airplane makers can petition the faa for exemptions that the devices are safe in the 5g towers will not be near those airports, and some approaches will be possible with 5g. the semiconductor plunged impacting ev makers. lucid is among those. the tesla rifle is opening a factory in saudi arabia by 2026. the chairman of his outlook to bloomberg in an exclusive conversation. >> are working closely with the ministry of an -- we are working closely with the ministry of investment. it has been negotiating with us. we have announced our intent. we are working hard on what

percentage will be owned directly by us, but look, 2025, 20 36. -- 2026. >> is part of the reason you are here is because the momentum? >> i am here for a lot of reasons, but lucid has ambitions here. it is three years in the making. now that we are successfully producing and selling cars in the u.s., our attention is turning to the factory here. >> lucid has ambitions for deliveries. what are you seeing in terms of supply chain that might hold back those goals? >> as i mentioned, i can't talk about numbers, but i will say if you think about when we first said would be in this moment, we started production successfully

in october. we have our prototypes. our cars are being delivered. i have one. it is a phenomenal car. i'm not saying that because i am chairman. we will have more to say to the market about what we will see on the supply chain, but we are experiencing supply chain issues. >> where does the european market fit into the global pie? >> retail in europe, right hand drive, and eventually we get to the u.k., but certainly continental europe is one of our key markets. our first car is a luxury car at the high-end. it is a beautiful car, but it is up against mercedes, audi, bmw, and porsche. have a range that beats -- we

have a range that beats everyone. europe is strong as well. we said nothing about factories yet. >> is the chairman of lucid. -- that is the chairman of lucid. more to come on daybreak asia. this is bloomberg. ♪

>> let's look at what we are

watching as the market opens in hong kong and china. we are watching shares of one company set to resume training -- trading. also, one company slumping despite a dispute over asset freezes. crypto-linked stocks could move after bitcoin went above $44,000 for the first time since the latest slump. that revived debate on crypto as an inflation hedge. we are watching mining stocks. nickel pushing a decade hi. we continue to see the industrial metals pushing higher. >> that does not help the inflationary picture. we will be discussing this in an interview on daybreak asia tomorrow when we speak to christopher waller and get his policy outlook after that high u.s. inflation number.

that's it from "daybreak: asia." more market coverage continues. bloomberg markets china open is next. this is bloomberg. ♪

♪ >> it is 9:00 a.m. here in hong kong and shanghai. welcome to "bloomberg markets: china open." we are counting down to the open of trade here in hong kong. >> our top stories this morning, u.s. consumer prices jump at their fastest pace in nearly 40 years. china's