haidi: good morning. we are counting down to asia's major market open. shery: the nasdaq 100 fell into correction. new pressure on china tech.

investors changed the channel on netflix after its new customer forecast disappoints. shares plunging after hours. haidi: let's get straight to the start of trading in sydney. it's looking like a downcast day as sydney stocks extending the weeks that -- gain. we are seeing 3/10 of 1% lower when it comes to the staggered open. a pullback in oil weighing on energy stocks. we are trading the lowest in seven months when it comes to kiwi stocks. the aussie dollar was outperformer.

we saw dollar strength edging higher. this is the picture when it comes to chicago nikkei futures. the alert level for covid-19 for tokyo has been raised to the highest amid expectations of us like going into next week. -- a spike going into next week. shery: in china, there is a lot of debate as to whether the countries covid strategy and latest outbreak poses a risk to supply chain. the biden administration is monitoring real-time data from businesses operating in china to determine the impact the u.s.. our coanchor has the latest story. what has the u.s. found so far? >> it is still too early to tell what the impact is going to be. you have economists like hsbc flagging the mother of all

shocks to supply chains if china extends the bottlenecks further. the biden administration is taking no chances. they are mining contacts in china to get a better gauge on what is going down in the ground -- on the ground and tracking the spread on the mainland. what we are is an early detection system that was put in place at the start when the delta variant emerged last year. it helps in terms of improving the federal government's way of watching where the virus spreads. it's not just information collecting data on airfreight. also when it comes to what private enterprises are seeing on the ground as they talk to suppliers. that information is shared in the system. they get this early detection when there are any potential delays. you have this system in place. we will see what the impact is

going to be at this point. this you will contingency when it comes to china, they are continuing on this mass testing blitz as omicron continues to spread. what we are seeing in the last 24 hours is that now residents in a southern city who received overseas mail as we track the latest infection now have to be tested. they haven't gotten any omicron cases yet, but there is concern after we saw that outbreak elsewhere. you have growing speculation in china that overseas mail could be contaminated by covid. that is seeping into tightening borders and the spread in the mainland. you had cases of people who worked in cold storage that may have led to the outbreak. at this point, what w h oh officials are saying, they are

still downplaying this source of transmission. that is what we are hearing so far on the ground in china. haidi: staying with china and the communist party, it is renewing its pledge to crackdown on corruption. added emphasis that it's likely target is the big tech sector. stephen engle is joining us in hong kong. it's not just tech, is other sectors of the business. what do we know about this kind of renewed commitment? >> communication coming from a plenary session of a body in china, part of the communist party reemphasizing their anticorruption push will continue. not only against state owned enterprises and financial institutions, but perhaps with an added emphasis to zoom in on what this communique outlined as

a disorderly expansion of capital as well as monopolies. the disorderly expansion of capital is what they have used to describe the expansion of fintech into alibaba and tencent. their overreach into society at a time when xi jinping is consolidating his power ahead of what will likely be toward the end of this year his push to get an unprecedented third consecutive term as paramount leader. this is something we saw and 24 -- when xi jinping came into power, he pushed the anticorruption campaign. it seems as though there is a renewed emphasis on anticorruption at a time when xi jinping is campaigning to the

people and campaigning within the party under his common prosperity push to reduce should be the wealth. under this communique if we read it collect -- correctly, this will give up disproportionate negative impact on big tech as they renew this push in a sector that has already been beaten down. shery: also huge impact for a rally in chinese abr's. >> just when you thought tech was breaking out from its slump, chinese tech i'm talking about, alibaba is the poster child. it has weathered ok a couple of stories this week. we had the story from reuters earlier this week that the u.s. commerce department is looking into cloud and its data of u.s. customers and clients and whether the chinese communist party could access that.

there was a story yesterday highlighted by reuters which the chinese government denied that big tech would be put under scrutiny on any of its large investments would have to be approved by central authorities. now, we will have to see how the rally in the adrs overnight, the largest rally in the beginning part of the session so far your today, whether that fizzles a little bit in hong kong's session with alibaba and the like. shery: let's turn to netflix falling in extended trade after forecasting weaker growth than expected. it is expected to add just 2.5 million new customers in the quarter. let's bring in ed ludlow from san francisco. we were talking to our guest earlier today saying the market reaction was complete justified because netflix has topped out. they need a completely different strategy.

what was your biggest take away today? >> it's not just the outlook for 2.5 million subscribers. they previously forecasted more than 8 million ads. the macroenvironment, they are thinking about household incomes globally, inflationary pressures that we have seen throughout the global economy. then it comes back to covid. content is king. the existing subscribers were good. they are holding onto their subscribers, but they are not able to add more. the production pipeline has been acted -- impacted because of covid. bridget and is delayed until march. that is adding acquisition of new subscribers. [laughter] haidi: were there any bright spots out of all of that? >> i left you speechless.

they are retaining subscribers they have. they doubled down on their outlook for video gaming. they want to invest in that area of course. cash flow positive for 2022. they are dealing with debt, but they are hit by currency headwinds and dollar strength. there is a bright spot, their content has done well. despite pressure from competitors, the acknowledged the competition from disney, hbo, amazon etc. they are in route financial health and people are engaging with and watching the shows. shery: i haven't watched bridger ton, but i like cobra kai. is that netflix? >> on the big which are -- witcher guy.

haidi: i was speechless because i did -- i didn't take you for a bridgerton guy. let's look at one of the stocks we are watching keenly. bhp is in focus. shareholders backing a single -- single listing as we see them mining that m&a deals. down 2.5% when it comes to the trading session despite winning shareholder backing. we saw both london and australian investors overwhelmingly approving that proposal according to bhp on thursday.

we are also watching out for these changes when it comes to the proposed expansion into metals, green energy transition, and the exit from oil and gas. we are also watching rio tinto. the pullback that we see across energy prices, we are watching the commodity price action as well. >> we start with president biden, he has again warned russia of a severe response if his forces move into ukraine. his remarks continued efforts to clarify his response to a question at a news conference today earlier. that answer suggested western allies have not agreed on how to react to a small siegel attack. -- small-scale attack. antony blinken will meet his russian counterpart in geneva on friday. >> if any russian troops move

across the border, that will be considered an invasion and it will be met with a severe and coordinated response that i have discussed in detail with our allies as well as with president putin. there will be no doubt that if president putin makes this choice, russia will pay a heavy price. >> britain's top officials will meet their australian counterparts in sydney later to disclose or discuss a security pact. the centerpiece of the partnership is a deal allowing australia to build and operate nuclear powered submarines for the first time. australian media reports its plan to deploy submarines may be announced after friday's talks. a key step toward issuing a u.s. digital coin. it could alter the u.s. financial system. economists are seeking feedback on a government-backed coin

through may 20. the government does not plan to proceed without support from the white house and congress. now to russia, russia's central bank has proposed a blanket ban on the use and creation of all cryptocurrencies. the country is one of the biggest crypto mining nations in the world. digital tokens bear the hallmark of a pyramid scheme so it says. it sees cryptocurrency as damaging the green agenda. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: still ahead, tackling what oxfam calls violence after one of the worlds -- the wealth of the world's 10 richest man has doubled. up next, hedging against

inflation. we will discuss the market outlook. this is bloomberg. ♪

>> i think there are some signs that we are close to the peak and inflation coming. shery: that was the fidelity ceo and richards. our next guest says his risk case around inflation has changed significantly. what has changed for you and what does that mean for asset allocations and recommendations? >> for the last couple of months, we have been worried that the fed was going to make a

mistake by over tightening in the face of growing inflation. we are now more concerned about persistence of inflation and the fed hikes being justified by a higher rate of inflation. what's important is not the prediction of where going to go, but what does it mean of four -- what does it mean for stocks, bonds, and your portfolio so you can be positioned? shery: we have had ominous calls coming from analysts talking about inflation concerns not giving any leeway for the fed to do anything if the economy succumbs under -- what are you seeing for prospects and what could that mean for markets? >> the economy is still in good shape. if you're looking at pent-up demand, there's $2 trillion in excess savings in the u.s. from

the pandemic. capital spending has been low. the risk is the omicron variant. it has currently -- clearly hurt activity. you earlier talked about the supply chain, but there is pent-up demand globally. we still have several years of clear growth that will -- over that time. haidi: is that why for the time being you are still underweight fixed income and are willing to take on the greater risk? >> you have to fund your overweight with something. we are not overly negative on interest rates. the risk case of higher inflation if it does come through, you will see

underperformance of the bond market. looking at the template of 2021 and what performed well during a time when inflation was well above anybody's expectation, what really worked, the equity markets in the developed world performed well. you had good performance out of real assets like natural resources and mobile real estate. those were some of your natural hedges against the risk of higher inflation. investment-grade bonds struggled somewhat. i will highlight high-yield bonds which have little exposure to interest-rate roots -- moves. those are the three primary areas that we would look at. natural resources and real estate and real assets than the high-yield over investment grade bonds.

you're not in the camp that sees the revival of -- >> we aren't there yet, but we also aren't negative on emerging markets. it's important philosophical it could -- philosophically to accept that you don't need to make a big bet against an asset class. we just don't see a clear case after the significant underperformance of em why it's going to continue in 2022. having said that, it seems like every week there is another announcement coming out of china about a new form within the common prosperity program that raises investment concerns. we aren't seeing strong bullish or bearish case for em so far in 2022. haidi: always great to have you with us. you can get that roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to your

terminal. this is bloomberg. ♪

haidi: php has one shareholder support. it would also see the u.k. lose one of its biggest companies. what are the implications of this because we saw straightforward support from internationals and australian shareholders. >> this is hope that it will ease the overhead spending for the company and consolidate it in one place to make it more nimble as it pursues the m&a agenda.

>> what is next for the company? >> in the immediate term, we are expecting more life in its buying bhp shares in sydney as it expands its presence. it will jump over commonwealth bank and should take over -- should have 10% waiting. it is linked to pretty big names in terms of m&a. we could expect some big names swirling around in terms of m&a and bhp in the coming months. haidi: what direction could we see these acquisitions ordeals taking place because there is a big focus in trying to exit traditional businesses but also getting more opportunities in these green energy and energy transition rooms.

-- realms. >> it is something they are looking at moving away from fossil fuels and moving toward anything that will be useful in the green energy transition. any of those m&a targets that were discussed before will be heading in that direction. it's a wait-and-see for bhp. i think there could be a big year ahead. shery: let's take a look at peloton numbers. they came in at around 1.14 billion dollars. the estimate was for 1.1 6 billion dollars, so that's a little bit lower than expected. shares are rising 3% post-market. peloton completely soured the mood on wall street today on reports that they were halting

production of treadmills given the slowing demand for their products. they are coming out with their projected second-quarter revenue at 1.14 billion dollars, slightly short of estimates. here's a quick check of the latest business flash headlines. the prime minister of serbia says she is a halting a planned project which has become a hot button environmental issue ahead of serbia's general election. the decision is a blow to the ceo who approved the project as one of its first big decisions. j.p. morgan has raged -- raised jamie dimon's compensation by 10% to $35 billion after the firm's most profitable year on record. -- an estimated base salary of $1.5 million and a $5 million cash bonus. jamie dimon and his top deputy

got special bonuses last year to entice them to stay.

haidi: we're getting japan's cpi numbers. national cpi coming in at 8/10 of 1% which is slightly lower than expectations. it is accelerating from this extensive a percent in november. stripping out fresh food and energy which is been volatile, we are seeing a contraction of

7/10 of a percent slightly more of a deflationary effect than expected. this comes despite the bank of japan sounding more optimistic about the prospect of returning inflation. back above zero doesn't mean we are anywhere close to normalization of policy. shery: especially given that we had broader pressures including commodities prices surging and a weaker japanese yen. the greater tokyo region has entered a state of quasi-emergency for the next three weeks. public figures from tokyo's governor to the former prime minister have signaled their support for downgrading the legal status of the virus. let's bring in our managing editor. why is there such a big debate in japan about this? >> the recent surge related to omicron has reignited this debate.

tokyo for example started off the year with a handful of virus cases. yesterday, we surpassed 8000. that has been slowly putting pressure on hospital beds which now in tokyo is a little less than 30%. tokyo has about 7000 hospital beds. however, the ability to expand that further is restricted because covid-19 is classified as the second-highest in terms of the disease. which limits the number of hospitals they can take patients. if they were to downgrade the level, it would allow or hospitals to accept patients which would ease the strain on the medical system that is focusing on a handful of hospitals the moment. shery: what are the expectations right now and when could we see a decision? >> at this point, the debate is

still fairly balanced. there have been strong opposition against it. for example, if they were to downgrade it, it would impact the perception of the virus. people might be less cautious about it. or that my downgrading it, it means that the vaccination that is underway, people would have to fork out their own personal money because of the lower classification. that might reduce the number of people willing to get vaccinated. there's a lot of debate going on. the prime minister hasn't really made a stand on it. he has basically said that he is open to discussing, but at the same time he wants to be cautious about it. he certainly doesn't want to be sending the wrong message. shery: let's turn to the chinese

property sector making headlines. evergrande offshore bondholders saying that the developer is failing to make good on its restructuring plans. we are getting the latest statements from evergrande saying it is proposing to engage additional professionals, professional advisors, also a law firm and they want to engage more advisors to mitigate the debt risks. for more on this, let's bring in our guest. tell us what is happening in the property sector because we saw this huge rally. at the same time, the risks surrounding companies like evergrande continue. >> it is a highly volatile market. the offshore bonds rallied this week because berg and reuters reported that chinese regulators

are considering restrictions with regard to -- a little bit of background because the real estate developers are required to deposit into the bank accounts. the cash in the escrow accounts make up almost half of their cash flows. what happened was last year, regulators tightened the rules regarding these accounts. the concern is that the cash-strapped -- if the new rules would manage successfully, it would help them but we don't know a lot of the details of the plan.

>> is there a sense that the rally with investors getting ahead of themselves? >> there's a lot of hope that china is going to do more to stabilize the economy and the housing market. we know how it's very important with the chinese economy. we do see more urgency from the chinese people to cut interest rate and they sent a dovish signal they are trying to do more. the regulators and policymakers there is a question if they will step up the stimulus to revive the economy. >> we are tracking the fallout of the global supply chain crunch as well. these are your top stories today.

congestion in the u.s. and europe -- containers step up -- stack up. the bynum administration is monitoring data obtained from businesses operating in china to determine whether outbreaks of the omicron variant pose a risk to u.s. supply chains. it is still too early to tell if there will be any impact on the u.s. economy. rising kobe cases impact suppliers, operations in japan. combined production halts reduce the outputs in january by 47,000 vehicles. >> the port of los angeles moved record cargo volumes last year amid an import surge. supply chain snarls brought on by the pandemic. west coast port has 13% more

volume in 2021 than in 2018. the neighboring port of long beach also hit a record this year. bloomberg terminal users can read more about those stories in our newsletter. coming up next, with data showing the wealth of the world's 10th -- 10 richest men do year, we talk about taking on economic violence and redesigning the economy to a standard on equality. this is bloomberg. ♪

>> china's top anti-graft group says -- targets state owned enterprises and the sector. it we more bad news for tech giants already grappling with tighter regulations. u.s. listed chinese stocks made gains in new york. the by the administration is monitoring real-time data from businesses operating in china. this to determine whether omicron risks -- poses a risk to

supply chains. we are told information is being shared with companies in the supply chain to alert them of potential delays. the u.s. house panel investigating the january 6 incursion at the capital has asked ivanka trump to submit to an interview. the committee has requested her voluntary cooperation on what it calls a range of critical topics. she was a top white house adviser and she was in the oval office at times on january 6 and the days leading up to it. airports across the u.s. east coast including new york are under an advisory warning for possible flight delays. poor weather combined with 5g airways could lead to disruption. the faa is minimizing impacts by allowing more aircraft to fly within 5g zones and airports.

it is the first real-time test of how it will perform after 5g went live on wednesday. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. haidi: the wealth of the world 10 richest men doubled during the pandemic. during the same time, 90% of humanity is now worse off. joining us to discuss this is a director of oxfam. we know just how deep the divisions have been when it comes to the worsening of just about every type of inequality throughout the course of the pandemic. what does this report show you about the wealth gap? >> what the report is showing us is that the wealth gap is at its

largest in months. the world's 10 richest people, they are all men, it is now tripled their wealth during the pandemic. that is extreme wealth that we see. exacerbated at the top end, we have an increase of poverty around the world. here in asia, we knew that that has have a massive impact on populations across the region. in asia alone, there have been 20 additional billionaires who have become billionaires off of the business that their businesses are doing because of the pandemic. we also know that jobs are being lost. what we are seeing is widening

inequality. people are getting richer and more people are suffering feeling the impact. we know the developing gains of the last couple of decades have been wiped out because of covid. the inequality is not just -- >> it is too late to save the people that might have otherwise been saved if they had access to vaccine equality. at this point in the pandemic, what sort of structural policy changes would you be calling for that could make a meaningful difference going forward? >> there are quite a few that we at oxfam believe can be implemented. a couple of those are related directly to economic systems and structures. one of the things that we have been calling for is a wealth

tax. it already exists in a number of jurisdictions. in economies including those in asia, if you were to tax at around 2.5% of the multimillionaires and billionaires across the region, that could generate upwards of 700 million dollars additional revenue and government economies across the region. that can go into health care systems, social protection systems, ensuring that workers and their wages are protected when we do have times of pandemic. there are definitely solutions that we see. we have seen a group of millionaires across the world join us on this in terms of they are acknowledging that their wealth should be redistributed equally and more equitably. there's a group of rich people joining us that think this can be fixed and used to address the

inequality. shery: which are the countries that are doing this well? we are seeing it done in certain jurisdictions. >> globally, the wealth tax exists in some places like spain, the netherlands, the u.s. is starting to look at this issue. we also know across the region that there have been countries that have increased their social protection systems. we saw some of that in places right across asia. there are economies that are sometimes precarious. the middle income countries are in a much better position to do that. there have been examples and some of the lower income countries in some places like pakistan that have been able to put in additional social protection measures. the problem is they have not been sufficient and they have not been backed up by long-term structural reform that would

enable the social protections to stay in place. the impact of covid are not just for today. we are seeing the health impact, but in so many places we see the economic impact of the pandemic. jobs are being lost, people are insecure and precarious. >> in order for these changes to stick, how important is it to empower workers? >> very important. our firm has long worked on wage issues. to protect insecure work and help small enterprises. it is those people who are feeling the brunt. we also know that across the region, it is estimated that 57 million jobs will be permanently lost because of the impact of covid. for workers to be able to get

their share of an economic system that there were can to contribute to, the need to be looked over -- after as part of the social reforms and protection mechanisms that we believe should be in place. shery: it was good to have you with us. let's turn to the markets. every sector is down at the moment in australia. materials and energy are leading the declines for the worst day in about two weeks for the asx 200. kiwi are down. we are seeing the kiwi dollar around a one-week high but under pressure. the same thing with aussie dollar. u.s. futures continue to be pressured. we had a downturn in equity markets on the u.s. indices in the last few hours of the session.

the nasdaq 100 fell into a correction. it has been a mixed picture for the earnings season right now. nikkei futures down 1.6% at the moment. we had the cpi numbers earlier percent.sing about hal more big interviews ahead. the largest conglomerate in the philippines and another company tell us how the pandemic is impacting their business is. we have 20 more ahead. this is bloomberg. -- we have plenty more ahead. this is bloomberg. ♪

>> the chip shortage situation is still uncertain, but we are on a recovery track. we are enclosed discussion with the supplier on how to make sure our plan is achievable. haidi: that was the nissan ceo and president on the chip shortage. one company is halting operations in several plants trying to meet government restrictions. our guest joins us with the details. what was the catalyst for this

cutting of production by 47,000 vehicles this month? >> this all started yesterday in tokyo when toyota discovered workers on its lines in a factory in central japan had tested positive for covid-19. that led to an initial round of cuts at that factory. then again yesterday, toyota discovered more cases in that factory. that in compilation with suppliers that are also facing their own cases at their own factories led toyota to announce it will have to pare back production by almost 50,000 vehicles this month. shery: what about the production abroad? >> i think that's what's troubling for toyota right now. it's also facing similar disruptions abroad with omicron

getting ahead here in asia which is a major production cut for toyota. one of the cases we have been following closely is a factory in china which is one of toyota's largest factories in the country. it has been halted for more than a week because the city has locked down after discovering covid cases. moving to test all of the city's residents. toyotas factory has been halted without a clear and its height. -- and insight. there have been quite a few disruptions right now and with covid spreading within asia, it's going to continue to post threats going forward. shery: these cuts at toyota, what is the broader significance in terms of toyota's long-term strategy and vision for the company? >> it has been quite a tough

week for toyota. up until the last couple of weeks, toyota has been doing well in terms of production. it is been producing record levels of cars and trying to make up for production it lost earlier last year. it is been hit by covid and shortages recently. there's the chip shortage, logistics issues, general supply chain issues that all automakers are facing right now. let earlier this week, the company announced that due to the shortages, it is likely going to be unable to meet its goal of producing around 9 million cars for the fiscal year which will end in march. it's going to continue to target high production from the next fiscal year, but for the interim, it's looking like it's going to be tough conditions for the automaker. shery: that was the latest on

toyota. we will be watching the stock at the open. we are also watching a company looking to raise 750 million dollars by selling part of its stake in a wuhan based company. it will be the second time it sold shares since september. after the transaction, it will maintain 3.3% stake in the automaker. american airlines reported a smaller loss than predicted. suggested loss was $1.42 per share while revenues doubled from a year earlier. the carrier expects week revenue at the quarter saying it would be at least 20% lower than 2019. sources say a chinese company has suggested -- selected banks for a listing next year.

morgan stanley and cmb i on the new sales. people close to the deal say it could raise more than $1 billion. we are watching the market open in japan and south korea as we are also getting doj minutes saying they won't hesitate to add easing if needed. this is bloomberg. ♪

shery: welcome to daybreak asia. i'm shery ahn. haidi: and i'm haidi stroud-watts. asia's major markets just open for trade. our top stories this hour. apac stocks are set to fall after a late day reversal on wall street. the nasdaq 100 sinking into correction. pressure on china tech.

beijing vowing to slow the curve on influence on market. evergrande offshore bondholders up in arms about what they call the developer's opaque restructuring plans. shery: breaking news out of south korea. we have the trade numbers for the first 20 days of the month, exports rising 22%. double-digit gains also for imports in the first 20 days of the year, rising 38.4% year on year. this comes after a lot of deceleration in the month of december. we have seen external demand normalizing. the base of comparison becoming less favorable for south korea. still when it comes to chip exports, they did rise by 25% they did rise by. we continue to see those double-digit gains. take a look at how markets are trading. we are seeing broad downside

pressure across markets in asia with the kospi down 8/10 of 1%, reversing that gain from the previous session which halted those five sessions of losses. we have seen the kospi become asia's worst-performing national benchmark given a lot of them and -- a lot of demand is being hoovered. the korean won unchanged at the moment, but we continue to watch those trade figures as risk off sentiment could dampen trade, given we also have north korea tensions. take a look at what japan is doing. both the nikkei and topix are losing more than 1%. communication and material stocks are leading the decline on the nikkei. we have the core cpi number for the month of december coming in below analyst expectations. that growth of 0.5% year on year. we have that boj policy minutes dropping in the last hour.

one member say in japan's inflation is largely due to oil and commodities, so they won't hesitate to add easing if needed. the continues to strengthen and is now past the 114 level. -- the japanese yen continues to strengthen and is now past the 114 level. haidi: trading in sydney down, the lowest since the start of december last year. we have seen every single segment in that market trading lower, the steepest losses seen across energy as we get a pullback across energy prices. wti crude off by just about 2%. energy and materials the biggest loser in australia. we are seeing downside when it comes to broader tech stocks, given those broader concerns. we have seen the aussie dollar outperforming in the previous session, but given back earlier strength.

new zealand stocks also continue to fall, trading at the lowest e than six months. sher good thing that you mentioned tech. shares of u.s. listed chinese companies boasted their biggest games this year as u.s. tech stocks slumped. that puts the gold at china dragon index to outperform the nasdaq for the fourth straight week. we have heard from china's communist party renewing their pledge to crackdown on corruption. what that means is a big question for these tech giants. joining us is the chairman and ceo of capital link. you don't want to jump into the rally just yet. tell us what would be the right conditions for you to join into this rush into chinese equities. >> i think it's a little early. obviously the last couple days or today, in new york we had a jump in chinese tech names, but i think they are washed out right now.

i don't think that is the bottom. the bottom is when we get more regulatory understanding of what the next steps are. certainly data and big tech is under the microscope right now. i think the sentiment around these plays will lead to these large movements up, they will track back in. i think you need to see the broader market rally around the tech stocks, so it is really a market move and not just a tech move. i think the tech stocks are short-lived until we get insight from beijing about what is coming next. shery: we are getting some hints of what might be coming next for property developers. a chinese property developer is selling convertible bonds, saying the net proceeds for refinancing offshore debts. we continue to see the two underling investor confidence around the debt crisis surrounding developers across

china. how big of a risk is this sector? we continue to talk about opportunities in the property developer space. because china has signaled easing, but at the same time we get these headlines that point to more concerns. brett: i would stay away from the sector right now. this is another sector like tech, where headlines are pretty scary. right now people don't know what is the next shoe to drop, what beijing moves will be made around these, and more importantly, as we see this go from evergrande to now country garden, the question is who is next? once that starts bending -- starts happening, each domino that falls puts a further weight on the banks that hold the paper. then the trickle-down is, who has not been paid? who pre-bought? these things all have yet to be

figured out. i think there is too much noise in the space right now for that to be up late -- to be a play where you want to catch a falling knife. in both of these sectors, you need to see the market rally. i would be much happier buying the market up 10% from here than buying it down 2%. you need strength in numbers. you need sentiment change. you need to see clarity for a three-month, six-month base. you can see it right now. -- can't see it right now. haidi: that strength in numbers aspect is interesting. you mentioned you like chinese biotech specifically. if you are looking for regulatory certainty before you are comfortable moving in, does that uncertainty apply to just about every sector? we know any kind of policy crackdown is not necessarily going to affect just tech or

property or education firms. brett: right. the reason is it is a breach -- it is a pretty strategic call, and the reason why is any sort of regulatory crackdown should go across industries, however with omicron, with covid, with all the uncertainties in the medical space, i think that is the one space that sidesteps all of the regulatory noise right now because it is so important for these companies to be able to deal with what is going on in the country and increase vaccination programs and any sort of other drugs that may be in the space. while no one needs another apartment, maybe we don't need another search engine, we need and china certainly needs to continue to scale in biotech and health care. those are sectors that largely will fall out of the focus of

regulatory crackdown for a time. that is why there is not as much resistance there. haidi: let's talk about japan. we are seeing the topix falling another 1.7%. it takes that drop from the september peakt o 10%. -- peak to 10%. what is behind this long heralded rotation, including cyclicals into japan? brett: i have often said japan is in this strange spot where it does not control its narrative. the world looks at u.s. and chinese assets, then the play are into peripheral markets, certainly japan is not a secondary or tertiary market, but it ends up being that when it fits into some kind of asset allocation or any investment theory. i don't like the japanese play in the sense that no matter what they are doing right now, they really can't grab a headline

where everyone needs to flow into it. i think the covid policy has been really damaging to the way people look at the country for investment. we are seeing this huge new wave, three-months, three weeks ago everything seemed to be ok. when you are looking at cyclical rotation, i think you have to look at what markets grab headlines and control their narrative. i don't think japan is in that space right now. i also think with a new prime minister in, you will see a lot of reliance on kuroda and the bank of japan. i don't think you have enough there to get excited. shery: you don't like crypto either. ether falling below that key 3000 level. brett: yeah, look -- i've gotten in many conversations about this. i am certainly not an expert in the space, but i know there are some theories in the market that explained crypto as a hedge, as

liquid gold, as finite. i've yet to see any of these investment somatic's play -- thematics play out in a viable way. i think they are stocks right now. i think each of them should be looked at as stocks. stocks go up and come down. enron rallied for years before it fell. i think you have to be very careful. you have to know where you are looking. i would not buy the fomo or headline right now. i just don't think it has the components. shery: we had you for about five minutes and are talking about everything you don't like. we have to get you back to talk about what you do like. brett mcgonegal joining us from capital link, german and ceo. -- chairman and ceo. looking at the topix and toyota specifically, we continue to see those losses.

energy consumer discretionary leading the decline. we know the topix is now dropping. if it closes at these levels, we are talking about entering correction territory, a drop of 10% from its september peak. why are we watching toyota? the expanded their car production halts as we see covid impacting their suppliers and operations in japan, facing tough challenges of including semi conductor issues as well. really broad downside across markets in asia and it seems japan is leading the declines with the topix entering correction if we close at these levels. let's get to su keenan with first word headlines. su: we start with the latest with the biden administration. it is monitoring real-time data from businesses operating in china to determine whether omicron outbreaks pose a risk to u.s. supply chains. to determine the impact on the

american -- an official says it is to early to determine the impact on the american economy. we are told information is being shared with companies in the supply chain to alert them of delays. nancy pelosi says the u.s. house is finalizing legislation to bolster america's competition with china and aid the domestic chip sector. the bill has bipartisan support and is a major priority for the bard -- for the biden administration. two house committees approved bills with similar elements, but they were not packaged together. the fed has taken a key step toward potentially issuing a u.s. digital coin. the move could dramatically alter the american financial system. central bank officials are now seeking feedback on a government-backed coin through may 20. the fed does not intend to proceed without clear support from the white house and congress and would prefer that lawmakers passed legislation to authorize the currency.

to russia, its central bank has proposed a blanket ban on the use and creation of all cryptocurrencies. the country is one of the biggest crypto mining nations in the world. officials say digital tokens bear the hallmarks of a pyramid scheme and undermine the sovereignty of monetary policy. they see crypto mining as damaging the nation's green agenda. russia already bans the use of crypto to make payments. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. haidi: still ahead, we look at the catalyst for the recovery in the gaming sector and invest dresser -- and address investor concerns about policy risks. new year, new crackdown. beijing underlines its vow to crackdown on tech companies with

renewed commitments. this is bloomberg. ♪

haidi: china's communist party renewed its pledge to crackdown on corruption within added emphasis that likely targets it's already embattled big tech sector. let's bring in our chief north asia correspondent stephen engle in hong kong. new year, same crackdown, but it seems some renewed fervor here. stephen: it is a new year and a politically charged new year as well. later in the autumn we get the party gathering where xi jinping will likely solidify his third term in a row as the paramount leader. we saw this back in 2012 when xi jinping needed to consolidate his power base. he launched an anticorruption

campaign. this is a reaffirmation that this anticorruption campaign is ongoing and consistent. it is not being phased out on state owned enterprises, on the financial sector. on this communique thing from the anticorruption watchdog of the chinese communist party, it essentially also targets big tech and how big tech evolved from being just social media platforms and e-commerce to fintech players with outsized influence on society and perhaps outsized influence that overshadows the communist party with its collection of data. the grip that the tencents and alibabas had on society. when you straddle financial and technology sectors, you will com e under scrutiny, as we have

seen with alibaba. this communique says in addition to reasserting the anticorruption pledge on other parts of the economy, we are then going to zoom in on corruption underpinning the "disorderly expansion of capital as well as monopolies." the bottom line says breaking the ties between money and power. that has been the basis of this anticorruption crackdown on alibaba since october of 2020. the wealth destruction, if you will, of the big tech companies on the stock market. this is potentially very bad news in what has been a year and a half of bad news for alibaba. shery: i can't wait for chinese adr's to start trading in the u.s. again tomorrow. stephen: they had a great day up until this news came out. we can bring up the shares. you can see everyone from tencent and alibaba and the ev

makers, they were all rallying the biggest gains this year. this year is not very long so far, but it was a big rally despite some negative news on alibaba and the regulatory front in the u.s. and a report yesterday by reuters that the central government will have to approve all investments by big tech like alibaba. whether they will be able to weather this big communique news, we will see one the stock opens up. shery: stephen engle in hong kong. he will keep us updated on how those shares do. the volatility is not only restricted to chinese tech shares, we are seeing it in chinese property. country garden sold nearly 4 billion hong kong dollars in convertible bonds as evergrande says it will engage in advisors.

this comes as offshore bondholders say the distrust developer is failing to engage on its opaque restructuring plans. let's bring in our bloomberg china credit editor. should we start with evergrande? what is going on there now? >> we have seen these offshore creditors, an ad hoc committee of bondholders criticizing evergrande, saying the process of restructuring has been opaque and now threatening these enforcement actions. typically we know that creditors and a borrower have quite an acrimonious relationship potentially, but this is important because it is the first real sign of these rising tensions between the two stakeholders. restructuring evergrande will be one of the most riskiest and

complex china has ever seen. investors know they are at a disadvantage where the state is playing such an important role in the restructure. we are seeing that reflected in some of the price. we previously had u.s. hedge funds looking at attractive buy opportunities. the notes are in the $.40 on the dollar range. now they are around $.10 on the dollar. we are seeing that pessimism reflected in the prices there. haidi: we saw such optimism from investors, both bond and stock investors. did they get ahead of themselves here? why are we seeing that optimism fading? rebecca: absolutely. this has been one of the most volatile weeks in credit markets i have seen so far. incredible swings and declines across property bonds, particularly in country garden. we are i think seeing that optimism fade. i think investors are sobering

up. two main factors, the first is this presale escrow report. although it is a positive sign, some strong developers will be able to reach tribute that cash, actually the implementation of that policy is unclear. there is implementation of presale funds. it is overly quite patchy in china. there is this persistent fear over hidden debt. that really does continue to dominate the narrative when it comes to investors trying to pick where they see opportunities. haidi: our bloomberg china credit editor with the details. we have lots more to come on " daybreak asia." this is bloomberg. ♪

shery: netflix is plunging and

extended trade after forecasting weaker subscriber growth than expected. the streaming giant expects to add 2.5 million customers in the current quarter, blaming lingering fallout from the pandemic. let's bring in ed ludlow from san francisco. we know asia was a big market for netflix last year. how did they do on subscriber growth in the region? ed: broadly asia-pacific was good for netflix. they did strongly in the fourth quarter. you guys got any guesses why? no, i will jump in. everyone has been watching "squid game." it has gone bigger than that. this content originating from the region teams to be doing well for them. they are focused on india. india was exempt from frustrations about growth. it is such an addressable market. they do talk about potentially cutting prices. we know they have fierce

competition from disney, disney operating products like live sport with cricket. they see this as potential growth going forward. haidi: why is there so much focus on india and why are they willing to cut prices to get that market up? ed: it's interesting, because they were saying the growth numbers they posted in the outlook was not good, but it was still growth, and if they are going to get more widespread growth, it is in markets like india where they can do it. they just have not quite got the formula right. they talk about how the average household spending in india is three u.s. dollars a day on cable. it just raised prices in the u.s. near $20 for the products. they need to rethink about pricing in that market. if they do get it right, they

see a big opportunity. they know the original content out of bali would has done really well -- of bollywood has done really well. haidi: ed ludlow in san francisco. ciccone and covid rules -- 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.

>> my guess is he will. he has to do something. >> under these circumstances, we have to be ready for anything. >> if moscow chooses further aggression, we will impose swift and massive costs. >> the russian side is aware of our determination. i hope they also realize that the gains of cooperation outweigh the price of further confrontation. >> any use of force against ukraine will be a severe and serious strategic mistake by russia and will have severe

consequences and russia will have to pay a high price. >> it is going to be a disaster for russia if they further invade ukraine. >> we don't threaten anybody with anything, but we do here the threats addressed to us. -- hear the threats addressed to us. shery: you are listening to the diplomatic efforts to avert a military effort in ukraine. we start with the latest in ukraine. president biden has again warned russia of a severe response if it's forces move into ukraine. the president's remarks clarify his response to a question at a news conference earlier. that answers adjusted western allies had not agreed on how to react to a small-scale attack. the u.s. secretary of state will meet the russian foreign minister in geneva later friday. the u.s. house panel investigating last year's january 6 riot at the capitol has asked if ivanka trump to

submit to an interview. the question -- the committee requested her voluntary cooperation. ivanka trump was a white house advisor and the committee says she was in the oval office at times on january 6 and the days leading up to it. britain's top foreign and defense officials meet their trillion counterparts in sydney -- their australian counterparts in sydney later. the august partnership is a deal allowing australia to build and operate nuclear powered submarines for the first time. australian media reports say a plan to delivered british nuclear submarines to australia may be announced after friday's talks. airports across the u.s.'s east coast are under an advisory warning from possible flight delays, poor weather combined with new 5g airwaves could lead to disruptions. the faa is allowing more aircraft to fly within 5g zones

near oak port. the weather systems are the first major test of how the air traffic system will perform after 5g went live on wednesday. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. shery: as we continue to watch the latest virus headlines, there is a lot of debate as to whether china's covid zero strategy and latest omicron outbreak poses a risk to global supply chains. sources say the is monitoring real-time data from businesses operating in china to determine the impact to the u.s.. yvonne man has more on this story. what has the u.s. found out so far? yvonne: they are on high alert at this point. the biden administration has been trying to gauge how things

are going in the field on the ground in china and to track the virus' spread. they have put in place an early detection system just last year when the delta variant first started spreading. it gave the federal government a better chance of monitoring the situation. the data captured everything from what is been going on at ports, freight, airplanes, and enterprises can share about what they are hearing from suppliers as well. that has what has been going on. we are seeing the ports, especially in shenzhen, where ship arrivals have been facing further delays. it is too early to tell what impact these supply chain disruptions will have to the u.s. economy. you have the likes of hsbc warning of the mother of all shocks to supply chains as china does shut down entire cities just to clampdown on covid.

you do hear what was going on in terms of yantian, factories are pushing ahead of the lunar new year holiday to push out goods. you see shipyards there that are basically packed. the congestion you are seeing in the u.s. and europe is rippling back to asia. this as we see china continuing to do this mass testing blitz. we are hearing of growing speculation that these latest omicron cases have been tied to international mail, frozen food. you are seeing cities like cointreau are not taking any chances. they are telling anyone that received mail internationally last week to get tested. they have not had any cases so far, but shenzhen found cases that were tied to food international mail. the w.h.o. officials at this

point downplaying this route of transmission, saying it is unlikely. haidi: hong kong has been adhering to its own zero covid strategy. we heard in terms of the exodus of talent over this pandemic. are they having issues bringing in talent as well? yvonne: yeah, it seems like that what we -- that is what we are hearing from firms. the ease of travel, that seems to be cratering now as hong kong continues on the zero covid strategy. you talk about a 21 day quarantine if you are flying from somewhere, or even close contacts being sent to core indeed camps. -- to quarantine camps. it is steering people away from the city. one recruiting firm says no money right now can convince someone to come to hong kong. they are choosing places like

singapore instead based on lifestyle choices. some recruiting firms say they are hiring locally now. yesterday you talked to a guest saying 44% of the people they surveyed are contemplating leaving hong kong due to these strict travel curbs. on the other hand you your headhunters say hong kong remains an attractive destination for some expats giv en its proximity to china. the stakes are high as we deal with this brain drain and watch this exodus of ex-pats in the city. haidi: bloomberg markets anchor yvonne man from hong kong. staying on the banking talent wars, thanks america trimmed staff in the fourth quarter -- bank of america trimmed staff in the fourth quarter. brian moynihan said he would rather pay people more and grow business. he spoke with bloomberg's david

westin. brian: it's a tale of many cities in the sense that there are some businesses that have not as much leverage, so therefore their compensation structure maintains constantly. overall we have about $33 billion in compensation and related expenses of our 59 billion expenses. it is the biggest expense by a lot. the biggest way to manage that is you have to be competitive, you have to pay people. if the equity markets drop, that changes the way the grid works and the revenue comes down and payment goes down. that is something we hope never happens. we would rather pay people more and grow the business. the reality is it's a

multifaceted complex discussion. our job is to be a fair, great place to work for all of our teammates. david: in 2022 we are looking at something we have not seen in a long time, the tightening of monetary policy. give us a sense of what you are looking at. as you make projections at bank of america, how many rate hikes do you expect out of the fed in 2022? brian: two parts. one, our research team is terrific. they have four rate hikes in next year. internally we model our future income off the curve. inflation is here. the economy is going to grow at 6-4-2. a 2% growth rate in 2023. think of it this year is making that adjustment. that is basing it on the

stimulus stopped last year and the monetary stimulus pulled out because the economy, as big as it was, unemployment below 4%, the conditions are right to reduce the accommodation with one big caveat. does this virus caused some damage that people don't understand? -- cause some damage that people don't understand? the good news is we are winning the war with vaccines. the economy is slowing down. part of that is the engineering to bring it into more of a sustainable growth rate. it was growing faster than it usually grows. will rates go up? four times this year is the prediction. does that help our earnings? yes . because the economy is growing very fast and inflation is growing very fast, as that slows down we should get back to a normal economy.

think of our economy being bigger than it was in 2019 already and growing at twice the rate. we have to worry about inflation. that is why they have to raise rates. shery: bank of america ceo brian moynihan. let's look at the markets. we are seeing u.s. futures accelerating losses. the 10 year yield following below the 180 level. we had disappointing data in the u.s. with jobless claims climbing to a three-month high. this as we see the topix in correction territory. it would fall more than 1.7% in this session. the kospi also resuming losses. this is bloomberg. ♪

haidi: the outlook is cloudy with omicron region in asia ahead of the key lunar new year holiday. travel restrictions keep the pressure on gaining revenues. visitor arrivals rising for a second straight month in december. investors are weighing the impact of macau's new casinos. unexpected details like the

national security clause are raising concerns that the law imposes more control on the gaming hub. let's get to analysis with the global gaming senior research analyst at bernstein. let's start off with the new proposed gaming law. the details seem to alarm some investors. we saw that clawback of the gains we saw earlier. >> yes, the gaming law has now been published, or the traffic amendment -- draft amendment has been published. it clarifies the uncertainty through the consultation process we saw in macau last year. that is why we had a rebound. right now we are in a pause mode because investors are digesting what these terms actually mean. the reality is while the law will get fixed, i think we will get more clarity around the

future. the travel barriers need to come down and visitation needs to increase to macau in a much greater way. haidi: tell me about the seniority in which of the names you like and which you think are more resilient to the risks we are talking about. vitaly: in hong kong we prefer mgm -- we prefer mgm china. we think the risk-reward for most macau stocks today is very attractive if investors are able to hold for an extended time beyond six and 12 months because of the uncertainty of when recovery will begin. this needs to be a long-term investment rather than something short-term focused. shery: especially given we don't know how the omicron variant

will play out, out? -- out, right? when are you expecting travel to resume with the mainland and how is that factored into your base case assumption for these stocks? vitaly: last year, visitation into macau from china was at 20% of what it was pre-pandemic. we are significantly behind on the travel resumption, mostly because the travel restrictions are still in place. we would expect hong kong to reopen for macau. it has been closed for almost two years now. perhaps sometime in the spring in april. that would be the impetus to see more visitation to macau. the next key will be the return of group travel into mainland china. we don't expect that to happen until the summer or the fall. the current omicron breakouts we are seeing in con and china -- in hong kong and china, while

fairly low compared to the rest of the world, have caused travel disruptions and travel barriers to come up. for the short-term that will be a big issue. we expect by summer or fall we will get significant visitation coming back into macau. shery: you prefer sans china over other casino stocks in the region. why? vitaly: we believe with its buildout program, it has repositioned itself with its new product offering. it has always been the leader in the mask market in macau. the the retrenchment of the junket industry we have seen in macau, we believe operators that are more exposed to face masks stand to outperform. from that regard we think sand is well-positioned and -- is

well-positioned as the recovery resumes. shery: thank you very much for joining us. he was talking to us about casino stocks in macau. next, chinese stocks have been rallying as investor sentiment shifts. we get a preview of what to expect at the open. let's look at futures trading at the moment. we are seeing accelerated losses on u.s. futures, this as we have seen the s&p 500 fall for a third consecutive session in the u.s. the nasdaq 100 falling to a correction following the nasdaq composite. a mixed picture when it comes to the earnings season. we are seeing futures trading to the downside as well. take a look at those after our movers. we are getting the latest from the palatine ceo, talking about -- peloton ceo, talking about rumors of layoffs. also saying rumors about

treadmill production halts is false. that soured the mood in new york trading today as we heard they were halting some production because of slowing demand, but the ceo is right now rejecting those claims. we are watching netflix because it was plunging on softer subscriber growth. we saw the after hours trade being down 20% after their outlook missed estimates. they are expecting to add 2.5 million subscribers this quarter. we are seeing broad downside pressure across markets in asia, with the topix headed for a correction. this is bloomberg. ♪

shery: american airlines reporting a smaller loss than forecast in the fourth quarter. ticket sales starting to recover from the pandemic. its adjusted loss was $1.42 per share while revenue doubled from a year earlier. the carrier expects weak revenue in the current quarter, saying it will be at least 20% lower than in 2019. toyota shares fell as it expands

automobile production halts and operations in japan. a key factory in china has been shut for more than a week to comply with mass testing efforts. combined production halts will reduce the automaker's output for january by around 47,000 vehicles. sources say china's company has selected banks for a hong kong listing that could happen this year. it already trades shares in shenzhen, but is said to be working with morgan stanley and others on the new sale. people close to the deal said it could raise more than $1 billion. haidi: we are just over 30 minutes away from the open in hong kong and mainland china. a broad rally in chinese equities that extended to adr's in the u.s. let's cross to our chief china markets correspondent. do we see this as being

sustainable? essentially we are seeing sentiment shrugging off the latest anticorruption pledge from the government. >> yes, that is a really good question. one company's team had a note out yesterday that said there is an increasing need to diversify as the fed titans policy. a lot of that flow is going into china because the valuation is different. we saw the nasdaq 100 of u.s. tech shares enter correction yesterday, down more than 10% since its november record. the golden dragon index of chinese adr's rose 2.2%, a clear diversions that money is flowing into china. if you look at the hang seng index, yesterday it had its best day since july. we are on track for a fifth week of gains. there is clearly a shift as the

nasdaq falls, extremely overvalued u.s. tech taking a hit, that panic is translating into diversification. chinese equities set to benefit. shery: what are the top things you are hearing from china investors? we have talked about the tech regulatory crackdown, but at the same time monetary and fiscal support helping out the markets. there seems to be very diverging views on where to go in china right now. sofia: yes, i do think the case for china is it is the world's only value play. you have a lot of headwinds still. the tech crackdown is by no means over, but an increasing number of people on wall street are saying if you are looking for value and diversification, china is the place to be. that discourse started already in september and october, but

now we are seeing the flow follow the discourse. a lot of people lost a lot of money in china last year and are looking for that rebound to take hold. as long as we get that flow, there is a lot of money riding on a rebound in china. when the regulatory risks -- and china is slowing down -- but you have beijing puts at the same time you're losing the fed put in the u.s. haidi: our chief china markets correspondent with a look ahead. these are some of the stocks we are watching as we inch closer to the open in hong kong and mainland china. base metals rallying on dwindling supplies led by nickel. also watching semiconductor stocks. possible weakness with u.s. jet markers -- with u.s. chip markers falling.

that supply story keeps giving as well. we have more interviews coming up ahead as well, some pretty big ones. the largest conglomerate in the philippines and indian automaker mahindra will tell us how the pandemic is continuing to impact their business. that is coming up on bloomberg. ♪

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>> it is 9:00 a.m. in beijing, shanghai and hong kong. welcome to the china open. i'm david ingles with yvonne man. yvonne: asian equities and u.s. futures decline after the tech heavy nasdaq 100 fell into a correction. chinese tech adr's bucking that trend. china bows to curb the influence of tech companies on -- vows to cu