host: good morning and welcome to "bloomberg daybreak: australia." we are counting down to asia's major market opens. host 2: the top stories of hour. investors brace for more hawkish fed. host: china's economic woes mount with manufacturing outputs --. host 2: in the u.s. and u.k.

close in on russia sanctions. the pentagon continues to move numbers around ukraine. host: let's see how asian markets are shaping up. it will be a weird week. the lunar new year. a number of markets will be closed including china and taiwan. new zealand trading. it is trading 1.2 percent. in australia, we are expecting a slightly weaker open. we are just getting the latest coronavirus case numbers for new south wales and victoria. victoria reporting just over 10,000 new cases and 102 people in icu. in new south wales, 182 in icu. elsewhere in the markets, nikkei futures pointing higher.

about 0.5%. the aussie dollar fairly steady. dropping below the u.s. $.70 mark as the ringback continues to strengthen. host 2: we are watching what happens to the rba rate decision this week. expectations that the fed will have to do more because of inflation. we heard from rafael bostic saying the fed could even do a half basis point rate hike, 50 basis points in order to maintain inflation though his base case is 0.75 point rise. there could potentially be five rate hikes this year alone. host: understandably, a lot of focus on the rate tightening cycle but we have to remember it will also be the end of an era with qe likely to end in march

and that will be a hot topic in australia on tuesday when the rba holds its first meeting of the year. qe expected to end in most developed banks around the world. what happens when all of this bond buying ends? we have gotten so used to it. host 2: more central banks acting in that direction. the bank of canada signaling they perhaps could tighten monetary policy in the coming weeks. the uncertainty continues. we don't know what is happening with the pandemic. we are days away from the beijing olympics and we continue to see the number of infections rising among athletes and team members. there was an additional 16 cases reported on sunday after about a week ago when we saw the first case there. more evidence that the virus has penetrated the closed loop

system that organizers wanted for the games. host: we just had a major sports event in australia. the aussie open. it all started with a lot of debate over vaccines and covid and immigration but it ended was some great tennis. rafael nadal making great history. winning his 21st ran slam title. a five-and-a-half our epic battle defeating a much younger player, the russian. a bit of history for rafael nadal. host 2: much drama with the australian open with the ongoing saga when it came to novak djokovic. we continue to watch the drama on markets as well. wall street finished on friday -- a late day surge for the s&p 500 after an intense week of gyration. the gauge wiped out its weekly

loss with a gain on friday. nasdaq 100, 3%. although we have a little bit of downside for the vix, we are talking about a fourth weekly gain, the longest march since march, 2020. markets dealing with a fed tightening, geopolitical tensions and a slow down. not surprising that emerging markets have taken a hit especially in this fourth week of january where there is usually a rebound. let's turn to china. what happens in emerging economies very much dependent on what happens to the economy and china. perhaps we are seeing a slow down with weakness in

manufacturing, services and the activity of small business is also at the lowest since the depths of the pandemic. kathleen hays is here with numbers. what do we get on those pmi numbers? >> we are seeing some signs of slow down. you remember a few weeks ago the deputy governor of the pboc pledged they would do everything they could to provide stimulus to offset the weakness. this time of the year there is the lunar new year holiday. it makes a hard to read the economy. people go on vacation. you also have the property meltdown. now, we are looking at china's main manufacturing index. in january, 50.1. the white line. fairly above the line that divides expansion from contraction. it has been hugging close to that.

not superstrong. nonmanufacturing in loop. still above 50 at 51.1 but up sharply from december. if you cannot shop because your city has been told this day and doors, that hits demand. another reason why the manufacturing index is down. look at the yellow line, and it looks more at small and medium-sized manufacturing companies. 49.1 from 50. let's look at our next bloomberg charge. we are looking out a breakdown of small, medium, and large. a small business pmi, the white line, fell the lowest since 2020. the ninth contraction in a row. look at the yellow line -- it is still doing -- it is still

higher. the turquoise line is medium businesses. they are turning lower. bottom line, a lot of people say the pboc and the government will make good on the signs they have given, almost promises that they will do more. there has been conjecture that small businesses are going to get targeted support. you look at those charts and you can see why. one more thing i have to say about the aussie open, ash barty. number one. for anyone watching, that was such a sweet victory for her. and beating the soon to be number one, danielle thompson. this last week at the aussie open was incredible. host: a very emotional finish

and very much enjoyed here in australia as well. the u.s. is close to agreeing to a sanctions bill on russia. even if troops are not sent to ukraine. let's get the details from our congressional reporter in washington. what is likely to be in the bill? >> this bill is going to look at -- look different from what senator mendez proposed a few weeks ago. it will include a lot of the same general ideas. the thing we are all looking at and waiting to get a little more information on is any preinvasion measures that may be considered. senator menendez was on cnn earlier today saying the bill he was working on with his republican colleague on the committee might contemplate some

sanctions that could happen or take place before or in advance of any sort of additional action by russian president vladimir putin. that is one of the questions we will be asking folks on the hill this week -- what are you looking at and what are the other measures you are looking at if indeed there were to be some sort of invasion? >> we are hearing from the pentagon that perhaps they are adding more troops at the border . how will that be perceived? >> in general, there is certainly heightened tensions not only on the border but in congress. you're going to see some additional information coming from the administration on the hill this week where congress members and senators will hear more. i think there is increased interest in sanctions as well and perhaps what you might call

preemptive sanctions or something that could be viewed as a cross -- as a shot across the bow. this follows what happened a few weeks ago, sanctions voted down by the senate but i think there is still an appetite to look at measures that might hit russia before anything happens. paul: congressional reporter dan in washington. let's get to vonnie click -- vonnie quinn. >> north korea is said to have fired one of its biggest ballistic missiles in five years. it launched a suspected intermediate range meso. the weapon is thought to have reached an altitude of over 2000 kilometers and have flown for over 30 minutes. it fired more ballistic missiles in january than all of last year. portugal exit polls shows the winner of the election.

it would be his third term. his party has pledged higher household incomes. india is likely to prioritize growth in its budget. economists warned the government will increase its budget to $527 billion. officials relying on income from assets and debt sale. the head of japan's encz mark says investors should not be worried about the possibility of restrictions on share buybacks. tokyo's stock exchange president brings -- says it is unlikely that the prime minister will follow through on talk of blanket regulations. [indiscernible] >> i believe he has a very

cautious stance over the uniform regulation of share buybacks and i think because he is keeping in close contact with each companies individual circumstance -- [indiscernible] >> you can get more from that exclusive interview in our japan ahead segment in the next hour. 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: an update on the case numbers for new south wales for covid-19. we are recording 30,026, a little less than what we recorded earlier.

500 lower than reported earlier. 20 more to come on daybreak: australia. this is bloomberg. ♪

paul: time now for your week ahead. another jampacked few days on the economic earnings front. a trio of major central banks starting with the reserve bank of australia. the governor may announce an end to the banks bond buying program and possibly bring forward the rate hike past. it will be the ecb's turn on friday. a stronger case for a hike in the ok and we will also have an opec meeting against the backdrop of rising oil prices. all of that before a key u.s. jobs report on friday where we will finally see the start of the beijing olympics. host 2: an entirely different world since china hosted its

first olympics years ago. simple, safe, and affective is a challenge. also interesting to note the games coincide with the lunar new year holiday this year with a number of travelers expected to be down dramatically. and of course another busy week on the earnings front. or big tech results coming up including from amazon, alphabet, and meta. the sector has been clobbered of late with investors focused on rising valuations. amazon is the only big cap tech name that is trading at a lofty 48 times estimate earnings. those are the major events in your week ahead. let's bring in our next guest who says it is important to be more dynamic in terms of asset classes. and has adopted a musical strat

-- musical chair strategy. always good to see you. this comes at a time when we have such elevated volatility. how important is it to have a proper concept of what a balanced portfolio looks like and has that trend changed with the changing environment? >> it absolutely has and i think -- first we thought of a balanced portfolio [indiscernible] where fixed income is the ballast that protects when stocks are down and provides --. additional asset classes like commodities, but this was always hinged [indiscernible] i think that is going to start changing and as it changes, it is going to be important to move

assets in and out which could include real estate or new asset classes like crypto. it will have to be much more dynamic than it has been before. i think it is a fundamentally difficult concept for a lot of and -- a lot of institutional investors to buy in to right now but the reality is that we are going into an environment with rising rates and the last time we were in this was at the turn of the 1980's. host 2: what does diversifying mean in this environment? where will you go? >> it will not be as simple as -- right now for instance, i would not use bonds as a protection against equities because they can be a hawkish environment. i would look at more defensive equities, actually to barbell my

more cyclical equities. and that is just one example. i think the point is as we keep going, you will have to make or decisions and look at additional asset classes. paul: max, is this an environment for active traders? looking to buy the dips and sell the bounces? >> i think it is an environment for a tactical strategy and i say that with a bit of bias because that is the strategy that we run here. but i do think it is finally a stock pickers market. we are seeing a lot more dispersion beneath the hood. we are not just seeing uniform data movements like we saw in 2020. we are seeing styles move in and out of favor.

individual sectors moving in and out of favor and individual equities inside those sectors. the interest set correlation -- intra-asset correlation. paul: we were hearing from rafael bostic earlier. traders agreeing with him that we may see five fed rate increases this year. what do you expect? >> i would take it slightly under -- my projection is four rate hikes but that is something that is fluid. i do think the fed has made a decision to firmly into the hawkish camp. when we see folks that have been perma doves. and one thing [indiscernible] on the table, just as they let

inflation run hot for most of 2021, they will wait until it cools off before they start talking about ending this tightening stance. we will see inflation trend down in the back half of this year. paul: all right, max, alpha trader, cio. thank you for joining us. that's a look at the day ahead. new south wales will hand $1 million in aid to small and medium-sized firms to help the recovery amid the pandemic. the new zealand prime has ended self-isolation after being deemed in close contact with a positive covid-19 case.

she has been identified as a symptom on it and is feeling well. economically, we are watching for monthly inflation data from the melbourne institute. we have plenty more ahead. this is bloomberg. ♪

>> $100 is within the realm of what we could see in the next few months. longer-term, we think our kids rebalance and prices will moderate. shery: take a look at the commodity space. we continue to see crude at a seven-year high. we had supply concerns. six weeks of gains already for wti. a different story when it comes to metal.

copper down, gold futures also down. bold seeing its biggest weekly loss since august. stronger u.s. dollar, hawkish signs from the fed. take a look -- this was a huge week for u.s. natural gas last week with a surge in demand. february contracts expiring led to a spike. but it was also about the weather because it was so cold. even today, -10 degrees or so. yesterday, we had a blizzard. 20 inches of snow or more in the last 24 hours for parts of boston, long island and more than 1000 flights canceled. paul: finding it hard to feel those vibes as it has been hot and sticky here. look at the snow on the ground in boston. and we are seeing another huge week for the bloomberg commodities index, higher for the sixth week in a row.

natural gas higher by 8.3%. even soybeans pushing higher as part of the commodity index. not quite everything imo. gold posting its biggest weekly loss in five months as fed tightening continues. let's get a quick check of the headlines. spotify taking steps to stop the spread of covid information as controversy grows over joe rogan. some analysts -- some performers including neil young. spotify has now published internal rules stating what is and what is not allowed on the platform. the compensation jumped to $35 million for $35 million. the bank disposed -- disclosed a regulatory filing. he was asked to return a third

of his pay as a penalty. coming up, -- a plot of land in hong kong. details on that story in a moment. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable nationwide network. with no line activation fees or term contracts... saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. - [announcer] imagine having fuller, thicker,™ more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color

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paul: david graham fears creditors have moved to seize a plot of undeveloped land in hong kong, a key piece of collateral it restructuring. bloomberg's coanchor has the details. what more do we know? >> this could put evergrande in more trouble. from what we heard last week in the financial times said this plot of land was seized by oaktree capital.

this is a 2.2 one million square foot plot of land undeveloped at this point. it was seen as a palace of versailles like project. now they are saying it was used as security for a financing transaction worth $520 million, the developer over the weekend trying to assure the market this weekend and play down this issue. they say this project is not going to impact the financial position of evergrande or operations or the debt restructuring process but this move is seen as one of the most significant actions yet taken by any international player in this ongoing evergrande crisis. just last week evergrande on a call with creditors asking them

to refrain from taking hostile enforcement actions to recover their debt. potentially a new development, evergrande saying they are seeking legal advice to protect the rights of this project and they are in active talks with lenders right now. shery: what is february looking like in terms of bond payments. >> it is not as bad as january, but there are concerns that continue to swirl over the ability to raise funds. what we are hearing, stressed builders phase $467 million of bond payment due next month, far below what we saw in january, 5.6 one million needed just this month in terms of maturing bonds and coupons. it does not include product

obligations or deferred wages, so we are seeing a low in february -- lull in february. we have seen them miss some of their payments. there is a break or lull but things are likely to pick up starting in march. we have heard from analysts that the first quarter in terms of bond payments could be quite crucial, and they will look at several indicators right now, including the likes of asset sales to get clarity. shery: yvonne man there, following latest developments on the property sector let's get vonnie quinn. vonnie: u.s. editors are nearing agreement on a bill that could include entities even if moscow does not send troops into ukraine. the foreign relations committee chair it says restrictions could be applied based on what the kremlin has already done.

the u.k. is reportedly looking for ways to target the wealth of a russian oligarch in the london property markets. atlantic president said the federal bank could raise rates by half a point in march if needed. in an interview he stuck to his prediction of three quarter-point hikes starting in march is the most likely scenario. he added that all options are on the table and consumer supplies may start a more robust increase. china's property sector slowed in january. the housing market dragged down activity at small firms. the official gauge climbed to 50.1 while the known manufacturing index fell to 51.1. both readings were marginally above consensus forecast. workers had home for the lunar new year holiday.

global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. shery: scientist have their eye on a sister variant of in spreading rapidly in asia and europe. a johns hopkins public health professor has been discussing the evolution of the variant. >> the virus doing its own thing out there and evolving as we expected, so omicron has a sister virus technically called ba.2 where the omicron we are struggling with is called ba.1. we are worried about how well immunity cross reacts to that virus and it is starting to spread in the wake of the first omicron going to the population. all signs point that all vaccines should work well against it but it is increasing in numbers so we are trying to

monitor other factors to get a sense of how much of an impact it might have. >> where are the variants coming from? what areas have a lack of immunity and also the level of transmission that would possibly lead to some of these variants? >> there are three that we call omicron right now, all of them seem to have evolved around the same time in some part of southern africa and emerged around the same time. we are seeing one sweep to the world, we are seeing a second come through right now. these came up at the same time. what we are seeing, as this virus moves to the population, if it picks up a mutation that makes it better to infect or easier to infect vaccinated people that virus will become the dominant virus eventually. we are seeing some of that right now.

there have been an amazingly large number of cases in more cases equals more mutations equals more variants. we are seeing some of the fallout. >> we have controversy as people figure out when they could start easing back on masked requirements, the southwest ceo shifted his stance and says it is still appropriate to be wearing masks on planes. given the fact that they're all of these mutations, will there be a time when we do not have to wear masks? >> absolutely, and the silver lining is that vaccination, boosting is protecting against severe disease. even though omicron is a different variant from the vaccine the vaccines are working against severe disease, and combined vaccination with a large number of infections we

have, immunity and the population will be extensive and that should make a big impact in terms of severe disease. once severe disease is under control that is when we can think about releasing public health interventions and moving back to some level of normalcy. paul: johns hopkins public health professor speaking with us. the school is supported by michael r. bloomberg, founder of bloomberg lp and bloomberg philanthropies. we hear from a jp morgan strategist daniel hui. this is bloomberg. ♪

>> i believe mr. kishida has a cautious stance over regulation of share buybacks, and because he is giving consideration to each company's visual circumstance, so i do not think it will impact capital markets. shery: the stock exchange

present speaking exclusively to bloomberg, you can get more on that segment in japan ahead. it is time now for morning calls ahead of asian trading day, chinese internet stocks may be set for a rebound, that is the view of a citigroup analyst who sees sediment turning more positive in the back half of cyclical recovery. a recent meeting between regulators and chinese internet companies, citigroup says the government is still supportive of the industry and the worst of the crackdowns may be behind us. paul: goldman sachs has raised its latest forecast for rate hikes, global economist expect five 25 point basic -- basis hikes, 1.5% by the end of the year. jerome powell's latest comments make it clear the fed is open to

a more aggressive rate of tightening. turning now to fx markets, major currencies are nearing strongest levels in 17 months. a global fx strategist at jp morgan, daniel hui, it is predicated very strongly on what the fed is intending to do in 2022. how much dollars frank -- dollar strength do you think has yet to be priced in? >> our view is is not here yet. we have gotten pushback recently just on the idea of the fed is overpriced now, clearly the fed did not overpriced. powell last week made that clear. the market has been trying to chase the fed. this is an unusual cycle. recently we changed our forecast. the market is going to be in some sort of crisis mode.

how fast the fed can go, obviously last week powell undermined that idea. you have to remember before the last cycle a normal fed hike with eight times a year. we do not think the peak is here yet. typically the peak of the dollar comes one thank two months -- one to two months after that. paul: ok, so while the consensus seems to be more dollar strength in the pipeline, which currencies are going to suffer the most against the surging greenback? >> we would like to position long versus low yielding reserve currencies, particularly those were central banks aren't lagging. we have been strategically short

euro dollar for some time. we think 110 level is a minimum for that trade. we put on long dollar yen subject to fed repricing. we have a barbell strategy on the dollar. we think the right hand side as well as the left-hand side is in effect. we are short kiwi dollar. shery: let's talk about the left-hand side because a chart on the terminal says crude prices are near that seven year high. if you have these currencies gaining ground, where could that leave the dollar? >> right now commodity prices are quite strong. we do not want to be short high did a currencies that have commodity exposure.

that is not where we would want to express the left-hand side of the dollar view. em currencies, we are underweight in fx, and there is the situation going on with russia-ukraine and the u.s. if you get a geopolitical shock driving oil prices higher, you have to be careful. typically oil prices go up, petrol currencies go up, but if it is because every supply shock, that undermines the risk environment, and historically these currencies do not benefit from higher oil prices. that is a warning we put out. shery: is that also a reason why within emerging markets you do not like lata?

doesn't it give you pause that they have also been fast tightening preemptively even before the fed's latest move? >> em at significant way less in developed markets in tightening. that has been going on for a whole year. em is not able to benefit from that. high inflation is a problem, you have a lot of idiosyncratic geopolitical issues holding them back. higher carry in em so far it does not look likely to shield em currencies of a pricing from the fed. if you have em long that you like the recommendation is to express it in our be -- rb

terms. shery: always great catching up with you. you can get a roundup of stories to get your day going. bloomberg subscribers go on your terminal. customize settings so you only get the news and assets that you care about. this is bloomberg. ♪

shery: a check of the headlines, china's immigrant says certain creditors have seized a plot of land in hong kong that was used as security for a financing transaction. every rental the hong kong exchange it once of debt restructuring. the developers as it is seeking legal advice -- advice. management and equity partners are said to be nearing a deal for a software maker. the parent will pay $104 per share in a takeover that could be announced as soon as monday. the maker of work from home software would be valued at $13 billion. walgreens is set to have begun a sales process for its unit.

fresh buyout firms are considering bids. it could be worth as much as $9.6 billion in the sale. two companies have teamed up on a bed and are considered early favorites. blackstone is putting together $11 billion for its second private equity fund for asia. the biggest asset manager said it raised $6.4 million from investors and will need an extra 6.4 million from its global fund . paul: australian dealmakers have shrugged off and are signing deals. let's bring you know reporter. with last year's rally

continuing is still likely to top even last year? >> it would be difficult given that lester was the biggest year of all time for m and a targeting. we may seek a close if this month is any indication, and it does have some weight given that usually this is a slow patch. we are just far enough into the year that we can take a step back and have a look at how it is kicking on so far. small numbers given the scale of things and everything we saw last year, but it shows the record will probably not be contained to last year's calendar. shery: what are you watching out for? what are the deals left to do now? >> there are a few public live deals that are sizable that

carried over from last year. the main one is blackstone private equities, the gaming company, that would be a multibillion-dollar deal, one of the largest deals for the year. it could come forward. it seems like there is a lot of state privatization in the works , not public companies, they add a few billion there and those are sizable tickets in themselves. paul: tell us why january numbers are so important in this case. >> it is an interesting point. conventionally in the calendar for this time of year the cadence is that in australia it is the kind of period you would see in august, the summer slow down. people taking a break, and that

runs conventionally or traditionally all the way through. it is rare that bankers and lawyers are talking about printing their first tickets this early in the year. paul: bloomberg's australia reporter there. talking about the month of january, january is traditionally the final week when there is betting on the first few days of the year typically get punished. 2022 was no exception, developing asian equities just had their worst week since august after a strong start. shery: it is not surprising given that we have seen a huge surge it comes to developing nation equities, so many people turning up bullish on emerging markets. more than $80 billion of inflows

into emerging market equities just last week. we have already seen for the first three weeks of the year inflows especially versus the s&p 500, gains we have not seen since 1990 or so. we are talking about a huge upside in emerging markets, perhaps consolidation after that rally. people are turning more positive on emerging markets, and we could continue to see those gains especially given valuation discounts to u.s. stocks, a 39% level or so. there is a lot that could still be had for emerging markets, especially given the expectation that china may ease further and we are seeing signs monetary policy, fiscal policy may be easing in china, and the mainland in hong kong take about

two/three of emerging-market fear, so expectations are high that we may see this rally continue into year end. paul: let's look at markets, a number of markets around asia pacific, we will not have any trading in china, south korea, taiwan, and as the week goes on a few more markets will close, but things are reasonably normal today. the index has been trading for a couple of hours, up 1.2% after we saw a positive finish for u.s. stocks on friday. in australia, it looks like we are heading for a sloping week, off two/three of 1%. look at the yields on the aussie 10 year, back below that level we saw it week, and tomorrow a big day, the reserve bank of

australia holding its first policy meeting of 2022. we will learn about rate increases, but that for now is it for "bloomberg daybreak: australia." this is bloomberg. ♪

paul: good morning, i am paul allen and sydney. shery: i am shery ahn. welcome to "bloomberg daybreak: asia." a 50 basis point hike in march possible. china's manufacturing sector loses steam, and a housing market