host: good morning and welcome to "bloomberg daybreak: australia." we are counting down the ages market opens. host 2: good evening. the top stories this hour. a roller coaster ride for crypto's from bitcoin to e

ther. host: the fed's tightening timeline continues to worry investors. the central bank may be more aggressive than expected. host 2: the u.s. holds off from stepping up sanctions on russia after inconclusive talks on ukraine. host: let's see how we are shaping up for the asia-pacific. new zealand currently the only market trading right now. off 1.7% following off from some of the selling weasel in u.s. equities to round out the week. futures in australia looking kinda bleak. off zero .7%. nikkei futures weakened by 1%. the pmi for the month of january, partial numbers. heading into contractionary territory.

quite a dramatic slowdown from what we saw in the past month and pmi from manufacturing still in positive territory. 55.3. australia grappling with a wave of omicron cases and on that note, we are getting numbers from new south wales. 15,091 new covid cases and 11,006 hundred 95 in the last 24 hours. a number of epidemiologists saying that australia could be passed the peak of covid curve. kospi, pointing into weakened territory. the kiwi dollar holding its own against the greenback but there are expectations that we could see the new zealand dollar further weaken as the bank of new zealand looks at hiking rates. fourth quarter inflation data is

out for new zealand expected to confirm that path as well but as we have been discussing, there is an expectation that the fed white be tightening more aggressively than was anticipated. the kiwi dollar is hovering above $.67 but the feeling is that if it breaches that level, there could be quite a bit of downside. host 2: despite those expectations, we have seen the dollar rage back. we are expecting the meeting this week to signal that we could see the hike as soon as march. historically speaking, we don't see the underperformance when the fed raises rates. equities have performed well with an annually and a lot -- tech has been badly hit. the nasdaq came off its worst week since the pandemic. we are seeing rising yields.

perhaps one reason for the downside pressure on cryptocurrencies. look at this charge. the correlation between bitcoin and tech picking up. we are seeing the global crypto market selloff and no signs of abating right now. host: let's get some more on cryptos. we are joined by bloomberg's su keenan. an kathleen hays. and stephen engle. su, let's start with you and the selloff in crypto. su: we are seeing bitcoin stabilize. even so, bitcoin still set to have what would be its worst week in perhaps the last eight months. if you look at the one way charts, you see a sea of red. and coinbase, a crypto exchange.

brutal. you're looking at just the last couple of days, the rout starting late last week and continuing through the weekend with bitcoin falling as low as 34000 and change in the last 24 hours before paring some of those losses. other digital assets also slid with bitcoin. and that is according to coinbase which recently went public. its stock took a hit of more than 13% on friday. margin positions being liquidated causing a wave of additional selling in addition to the risk averse and other concerns that hung over the cryptocurrency late last week. and with the federal reserve being hawkish, we have seen crypto move with tech stocks and

a lot of these other assets. bloomberg learned on friday there is new cause for concern. people close to the white house saying the biden administration is preparing to release a governmentwide strategy as early as next month. sources tell bloomberg that this would come in the form of executive order calling for different federal agencies to all submit reports with a focus on the issues of national security, regulation, and how this will impact the economy. again, all of this adding to concerns. to quote one crypto analyst, it could take some time for a bottom to return and confidence to return before expecting any kind of iron back in and a return bullishness. going below 30 would be the next level. shery: it does not help that we are perhaps seeing the end of easy money which is adding pressure to cryptocurrencies and

it could get worse because goldman is thinking the fed could tighten more than expected. >> what was expected before? even goldman sachs several months ago was hardly looking for any rate hikes in 2022. a lot of investment houses thought maybe in june but now it has cascaded and goldman now says they see four rate hikes this year starting in march, june, and then september and december. look at this bloomberg charge. they are saying but the market is saying. i the end of the year, four rate hikes. those months are the months where the fed updates things. goldman says this will depend on inflation. there is still supply chain issues. there is somewhat of an upside risk to their baseline forecast

for four hikes. i guess they could see five or more. you have to put it together. they are seeing some tightening action at each meeting until the inflation picture changes. they think balance sheet runoff could start in june but there is a risk it starts in may. we spoke with chris waller two weeks ago. governor waller said his baseline is three hikes this year but there could be four or five if inflation does not come down. he said balance sheet reduction would start after lift off. and the lift off -- after it, you could see the balance sheet reduction by early summer. one of the most interesting things that has come up recently is some people are saying, why is the fed going to keep buying securities, granted they are

tapering them? ing research said this weekend there is going to be an announcement of an immediate cessation of any kind of bond purchases at the meeting this week. renaissance macro put that out in a note. it seems like a long to most people watching the fed but it adds a whole other element to the fed picture. you don't just look at rate hikes or tightening action but you start throwing in the balance sheet as well. paul: the wild card in all of this remains the omicron virus. what is the situation in hong kong and china? hong kong has 100 40 cases. it does not sound like much but it the covid zero approach working? stephen: this is the issue, right? when you have 100 40 new cases

in hong kong when you have had single digits were a zero for the previous several months before december, when you have covid zero policy, that means zero cases. 140 for a place like hong kong which has put all of its eggs in one basket, that is quite a bit. and already the quarantined facilities are hit to the max and we are having new clusters come out. 125 of the one hundred 40 cases found in hong kong in a daily tally were locally transmitted. 94 of them tied to a cluster which is the container port area. this is the biggest daily tally in the city since 140 nine cases were found in late july, 20 20. schools are closed. flights have been banned. they have ended in dining restaurants after 6:00 p.m.

and other restrictions. we could potentially see more since i read in the south china morning post at a local epidemiologist is saying that this so-called fifth wave could last three months in hong kong. and when you have a zero covid policy, that means shutting things down and tightening restrictions to try to maintain that elusive zero covid. hong kong is in for a long slog. china is 11 days out from the beginning of the winter olympics and they have a new outbreak that is spreading, a cluster in southern beijing, 20 kilometers from some of the downhill skiing parts of beijing. 54 cases does not sound like a lot. i does saturday's tally. still awaiting the official tally from sunday. the beijing authorities are scrambling to maintain and keep this under control. we are already seeing evidence from this cold storage facility, you have cargo trucks and logistics, individuals going to

different provinces, all tied back to this cluster so close to the winter olympic venue. shery: stephen engle with kathleen hays and su keenan with today's top stories. perhaps it is all of this uncertainty that we saw the down trend on wall street last week. the s&p 500 falling below the 200 day moving average capping the lowest week since the selloff in march 2020. reporting season has also not helped. we are seeing wti under pressure as well. we are seeing reports that money managers have decreased. paul: to recap the latest virus news. in new south wales, 50 -- 15,091

new covid cases. and in victoria, over 11,000. in japan, 16 more areas under covid quasi-emergency according to --. let's get over to vonnie quinn for a check of the first word headlines. >> the latest covid wave in the u.s. may soon peak with infections declining sharply in the northeast and midwest. however, president biden's chief medical officer said the turnaround will not be uniform. the south and west are still seeing rising cases. dr. anthony fauci said they should soon ease. u.s. secretary of state antony blinken has rejected pressure to immediately escalate sanctions on russia over its military buildup around ukraine. arguing that it would limit western options. he said officials tracking the

security situation in the ukrainian capital hour-by-hour. the white house is considering whether to pull diplomats out of ukraine. russia has dismissed allegations by the united kingdom that it plans to install a pro-moscow leader in ukraine. additionally leaders says moscow maintains links with many ukrainian politicians. the u.k. says a former ukrainian mp as a potential candidate. russia says that nato countries are the ones increasing tensions around ukraine. turkey's finance minister sees inflation rate peaking at about 40% in the months ahead. that is according to analysts that attended a meeting. he said inflation may not fall below 30% until year end. cpi peaking at 40% in december and some wall street banks predict the currency crisis could push it beyond 50%.

global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. paul: still to come, the u.s. secretary of state says it is too early to step up sanctions on russia over ukraine. up next, more market watches. seeing the fed tightening faster than expected. we discuss the implications with directions -- direxion's dave mazza. ♪

paul: time now for your week ahead. jampacked a few days on the economic and earnings front. in europe, italian lawmakers will start voting to elect the next president with mario draghi a top contender. regional pmi's on monday and gdp prints from germany and france. south korea also reports its latest growth figures on tuesday

ahead of the debut of its biggest ipo on record. lg energy will list. the main event, the fed's first rate decision of the year on wednesday when we will also hear from chairman jerome powell. shery: the central bank is expected to signal its first rate hike since 2018 and pave the way for a march move. oldman sees a risk of more aggressive tightening until the inflation picture changes. janet yellen things the fed will be able to bring down price pressures while one of her predecessors, larry summers, says it will be a tough task. >> it is important to note that professional forecasters think that inflation will substantially abate next year. part of this view is likely driven by the expectation that the federal reserve continue to account for these pressures as it fulfills its dual mandate. >> inflations at rates lower

than 7% do not exit the system without very substantial economic turbulence. no one is pulling harder for the fed to strike this balance and get it right and me but i think it is not going to be an easy one. shery: the earnings season is also in full swing with results from heavyweights in tech, finance, and industrials all do in the next few days. intel, samsung and sk hynix. tsmc gave a rosy outlook next week. apple and microsoft. the latter said it is buying activision blizzard in a blockbuster deal. those are the major events in your week ahead. paul: let's bring in dave mazza, managing director and head of product direction at direxion.

he said the bull market is still in tact but can it survive the fed balance sheet runoff and what many expect to be a more aggressive around of rate tightening? dave: i still believe that we are in a long-term cyclical market. however, we have been overdue for a correction for some time and we are seeing it in a material way over the last few weeks. much of this came on the back of the heels of the certainty that the federal reserve would begin to have left off in 2022. and heading into the march meeting, i think it has become a no-brainer that we will see a 25 basis point hike -- rate hike. all of this is putting substantial pressure on the market particularly small cop highly profitable tech and tech like companies. for the next few weeks,

investors and traders should buckle up and brace for uncertainty as we begin to think about what a federal reserve policy but is not just zero bound. paul: your point on corrections -- exhibit day, the nasdaq off by about 12% in the early going this year. there is a lot of quality names in there. do you advise propping things up? dave: we have been in an environment and the last three years that had -- that it has been all about dip. now we have a material 12% drawdown. in my expectation, it could get worse. what i find interesting is we had a record ever inflow into one of our i.t. apps on friday. this is a bullish semiconductors

fund. it provides amplified exposure to the semiconductor space. this is used by traders. they moved in and a material way so i do think that the bulls in the market, particularly the tech bulls, are not going to go away without a fight. shery: will we see more of a boost this week given we also have earnings from intel and other semiconductor makers? dave: what is interesting is we are probably due for a bit of a modest bounce even though futures are looking pretty negative right now. however, if we do not see the earnings firepower come out of the semi names you mentioned in particular apple as well, i think it is going to be difficult for the investment community not to feel further

capitulation. u.s. earnings have been so strong over the last few quarters and they will be significantly strong compared to its history but if you look corridor over corridor -- quarter over quarter, that has changed. earnings are going to have to do continue to move. shery: are you at all concerned about cryptocurrencies? the correlation with tech has been increasing. you are positive about profitable tech but not necessarily for the speculative ones. dave: it is easy to say tech versus financials or tech versus energy. i do think traders and investors need to break up the market more and focus on the high-quality tech companies. they are not inexpensive. and here, i would put microsoft, google, apple in that category. intentionally avoid some of the unprofitable low quality names.

shery: what about crypto? would you buy into the dip we are seeing right now? dave: i think they have a ways to go. we are going to have an opportunity to buy into the dip in crypto but we may have further pressure before we see a sustained upturn. shery: dave, it was great to talk to you. don't miss a big guest coming up on japan ahead. one of the world's largest drink makers is dealing with a pandemic, inflation and changing consumer trends. that conversation in just over an hour's time. this is bloomberg. this is bloomberg. ♪

>> the latest business flash headlines. the key iphone assembler may have unprecedented performance in the first quarter to build up inventory to deal with pandemic

induced supply chain disruptions. they are likely to get two days off for the new year holiday. the third quarter profit, boosted by the rising interest earnings, an income around $832 million. ici has been growing rapidly, helped by mortgage and car lending. the net debt rose above zero for the first time in a year as a chose to prepay telecom dues early. paying them now will save about $161 million annually. the earnings estimates are posting 42% profit jump. coronavirus cases in australia surge past $2.1 million.

and check on the markets is coming up. 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. shery: these are the morning

calls. china may have room for weakness, that is the view of morgan stanley. it is too early to call a bottom in mainland stocks. surging omicron and interest rates pose a threat to china and threatening emerging markets is possible. paul: bowman analysts say it is

time to diversify away from the u.s. as the fed raises rates. calling for struggle growth -- stronger growth. the analysts see the growth gap between emerging economies widening first again -- once again. >> italian media mogul has abandoned voting. his decision strengthens the chance of that draghi could be elected head of state. they say that he wants to avoid his name triggering division. he is the longest-serving postwar premier. residence in beijing says that the shanghai district is to be screened for covid. early signs of spreading to neighboring provinces, adding pressures on authorities to contain the outbreak less than

two weeks before the winter olympics. hong kong has reported the highest daily number of covid cases in a year. three quarters of the infections are linked to an outbreak in a housing estate. authorities have not reported any local transmissions until late december. the city is under a limited lockdown. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. paul: western australia sees an increase in omicron cases and new zealand warning businesses to praise for the economic disruption from the -- are warning businesses to prepare for the economic disruption. >> new zealand moved to a red

light system over the weekend in the traffic light system. that means a mask wearing outdoors, capacity restrictions in places like hospitality venues. on high alert. they are encouraging everyone to get a booster shot. it is the first time that they are saying omicron is spreading outside of the people coming in across the border. shery: we also saw a jump in cases in western australia as well. what is the feeling in the country? >> and are concerned and they delayed their border reopening indefinitely. basil 24 cases in the community -- they saw it do in the community. they do not know what it means for their health system. they are encouraging everyone to get vaccinated and posted as soon as they are eligible. paul: we are starting to see a

few positive signs, cases, hospitalizations, seeming to fall. >> in the most popular state, victoria, and new south wales we may see the peak in the case numbers. hospitalizations and icu admissions, deaths do continue to climb. they do like the case numbers by a few weeks. there hopeful for those numbers speaking in the next month. we do have a return to school in the next few weeks. there'll be researches is in place. there will be a mask wearing for all students. they are anticipating cases when they return to in person of learning. shery: anti-vaccine protesters gathered on sunday, the number was smaller than expected. the bloomberg school of public health professors says the vast

mortality of the mortality in the u.s. is from the unvaccinated. one in five adults in the u.s. remain without a shot. >> we are seeing omicron being less severe, because it is so transmissible it is increasing case numbers and that lowers severity rates. it is being trumped by the fact that case numbers are expanding so high. we are seeing case numbers drop but it is responsible -- important to remember that the hospitalizations and deaths lag case numbers by anywhere up to two weeks because it takes a longer to develop the severe disease. >> this is in the post this morning, unvaccinated, 65 or older, our 49 times more likely to be hospitalized -- are 49 times more likely to be hospitalized. >> it ranges from anywhere from

35% to 90% based on the numbers that i am seeing. unvaccinated people are driving that severe disease. >> do we need to do what austria does? >> well, this is the ongoing issue in the u.s.. it is going to play when we start to see these case numbers continue to drop and where we are going to plateau. are we going to porto at a level that is low? -- plateau at a level that is low? or are we going to have a large number of people who are unvaccinated? the posters are helping prevent infection as well -- who stirs are helping prevent infection as well. boosters are helping prevent infection as well. >> organizations are saying it is time to get back into the

office. nhs, do you think this is an appropriate policy? do you think able to go back to the office and start operating as it is is the norm? >> we are about being close to the bottom of the peak. historically, in other pandemics, there is a lot of information showing that if you bring people back too early, you suffer the risk of having a second surge of cases or plateauing at a higher level than you what if you would have dissuaded a little bit longer. -- waited a little bit longer. we still need to hold on and monitor and minimize that for police and number -- that for at least another few weeks. >> when do we get back to normalcy? >> it is the slope of the line

of is showing us the case number and when that turns into a plateau. if it turns to our plateau at a high level, we will continue to see absences from work and impacts on the economy that the illness is causing. it is about where this bottoms out. in terms of measuring the effects on the economy and normal work and school life. paul: discussing the latest coronavirus surge. still to come, washington says it is too early to step up russian sanctions over your brain as eu ministers gather in brussels to discuss their response. this is bloomberg. ♪

paul: there has been no breakthrough in the standoff over ukraine with talks between geneva and antony blinken and his counterpart ending 90 minutes.

russia has dismissed western hysteria over ukraine. >> ukraine, the idea that we attend -- intend to attack ukraine despite saying that this is not happening. >> this is a candid exchange of concerns, in what we will be having over the coming days. we agree to further discussions after that. shery: the u.s. enough faces -- now faces a difficult situation on this issue. so terribly can is readjusting escalating sanctions against russia at this point. it would limit options in the future. what do you make of that? >> a pleasure to be here.

the u.s. has a rule out the act of military aggression. they are considering different financial and economic and personal sanctions to the russian flight amir -- russian government. it is a bit concerning that ukraine was not part of the meeting in geneva. it is a sovereign state and the incursion is not something new. it is an ongoing conflict that has been happening since 2014, since russia annexed crimea and occupied the territories in the east of ukraine. the significant military buildup is actually quite concerning. that is a pretty much what the situation is. shery: concerning, but is there a real possibility for russia to

take aggressive actions against ukraine? given though has seen significant changes in the civil society in the country as well -- we have seen a significant changes in the civil society in the country as well? >> that is why it is dangerous for vladimir putin and for his readings, for his public perception to be seen. it raises questions of what can and cannot be done in russia. in that sense, ukraine, putin is not interested in the continuation of these democratic developments and he blames the west for sponsoring democracy in ukraine. that is why this conversation would not have been trying to prevent further u.s. aid to ukraine. military and developmental.

paul: president biden was speaking last week about harsh measures to be taken if russia did intervene. those measures are likely to be economic. considering the other incursions to the east, is an economic measure enough of a deterrent here? >> actually, there is research that sanctions are effective in the short term. in the long term, they lead to different states taking strategies to de-dollarize their economy. for more that states are learning to sacrament -- more states are learning to circumvent these. it is also a matter of doing business in russia, in the

future, and the prognosis of what is going to happen to all of the foreign capital that is being invested in those enterprises. paul: we have been seeing pictures of equipment arriving in ukraine. or russia to invade, how well-equipped is ukraine to repel that or extract the heavy price militarily? >> looking at the response of the united states and of the eu allies, we see that the incursion is plausible. however, it is also important, the ukraine army is much better prepared to handle this then it was back in 2014. ukraine does not have any military institution -- the threat was supposed to have always come from the west and ukraine be on the border of the soviet union it always had open

military structures ready to prevent an attack from the west but never from the east. that is why when russia attacked, ukraine was unprepared because he did not have the existing structures in place to prevent that occupation. ukraine is much better developed. there are also ukraine's allies who are providing it with military defensive aid. that is actually, i saw commentary that putin really has a unique opportunity here which you may not have in the following years -- which he may not have in the following years. you ukraine -- ukraine's allies are going to help and that runs against his interests. shery: he was soft when talking about russia during president biden's press conference and when it talks about nato being

-- putting together a strong response against russia. how are the allied forces repelling such an aggressive move? >> it depends. we are about to see. they met in geneva on friday and it is interesting to see what is going to come out of these meetings. some of the requests that russia has made to the united states are unreasonable. it is unlikely that the written document that has been requested as an outcome of the conversation will concede to these demands. experts are talking about how it will try to bring russia back into the existing treaties and agreement that russia has stepped away from. that is starting from the military transparency. let us go back to the years of

2019, ukraine gave up its arsenal in exchange for security assurances that russia has a not laterally violated -- has violated. this allows russia to walk away from the existing agreements in that way. shery: what are the implications for europe? also depending very much on russia. >> this current military buildup does undermine energy security in the region. i think we can go back to the cold winter of 2009 when russia had cut off its gas europe because of a discrepancy in communication. i think back in 2012, we had a case where it was a particularly cold winter and russia's gas supply had dwindled. were red flags that have encouraged the european states to diversify their energy

sources and make them more sustainable. to big question is nord stream 2 which runs from russia to germany, the construction has been completed but it is not operational. this ukrainian incursion is putin's leverage to get it operational. it will then be harder to prevent the attack on ukraine. paul: thank you. thank you for joining us. we have a guest coming up on japan, how one of the world's largest a makers is done with the pandemic, and changing consumer trends. this is bloomberg. ♪

shery: a quick look at as is in the asian session -- a quick look at the asian session, this is after plunging 50% since the november high. it will be really hard for cryptocurrency to pull out when you have the stock selloff ongoing. ether gaining ground, we saw a downturn of about 30% in the past seven days.

they have issues with conductivity and stability and network congestion according to . paul: let us get a quick check of the latest business flash headlines. sycamore partners has reached out to kohls about a potential takeover. it is not known how much they're willing to pay. kohl's is already building an offer. kohl's is under fire from an activist investor to make more changes or consider a sale. voter fraud -- [indiscernible] late last year but no agreement was reached and talks are not ongoing. there has been speculation of a vodafone merger for years, but regulations has blocked

it. trion has got a stock in unilever and has put pressure to buy the glaxosmithkline consumer health unit. is usually unpopular with investors, -- it is usually unpopular with investors. spider-man is back on the top, it is showing the film's popularity, it is the highest grossing movie of the pandemic despite not being screened in china. entertainment directors are sent to reject amazon's request to scrutinize the indian retailer's finances. they're willing to buy all of future group's assets.

one of the three independent directors prescribed -- describe the amazon offer as a smokescreen. let us look at the stocks to watch at the top of the hour. the world's's biggest miner, and flows on a sheer unification according to an analyst, we are watching one of the big iron or re miners, moving to acquire advanced engineering for approximately $223 million to help develop battery technology to make a zero emissions mine truck. they are cutting capacity by 10% and may be considering a legal challenge against the western australian government operate decided not to open its borders as planned due to an outbreak of the omicron variant. they had to sell off are not

securities. shery: we are seeing stocks at the lowest level since march 2021, moving around for the fourth consecutive session. not looking very positive at the moment with sydney futures also under pressure. we have seen the weekly loss versus the u.s. dollar with the risk off sentiment intruding across markets. we continue to see the selloff in the aussie and qe dollar as well. -- kiwi dollar as well. territories, we have japan pmi's coming out today. they have fell in the last session to the lowest level since 2020. coming up, we discussed the economic week ahead with fred newman. takeshi niinami joins us to

discuss the impact of covid and how new capitalism might affect his business. that is it for daybreak australia, daybreak asia is next. this is bloomberg. ♪

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paula: good morning, i am paul allen in sydney and we are counting down to asia's market open. shery: i am shery ahn in new york. welcome to "daybreak: asia." worries about fed tightening cause stock concerns. the rate hike may be more aggressive than expected. cryptos stabilize after a weekend rout t