>> we are counting down to asia's major market open. >> welcome to daybreak: asia. asian stocks set for mixed ratings following the wall street session tightening fears and tech weighing on sentiment. the u.s. and japan strike a deal to rebut relationships with allies.

hong kong races for more covert measures as cases double. let's get you straight to trading in sydney. this as we see the pullback in the energy sector. oil prices taking a halt after hitting highs in 2014. the fundamental elements for a longer-term rally, most estimates impact this. the aussie 10 year yield holding steady. we saw a big jump on it comes to new zealand this as we saw treasuries falling, adding to the overall global bond. we are expecting tightening moves not only from the fed but

other places as well. not much to write home about, about a 10th of 1%. airlines have been doing quiet while ever since we had that report that we will start to see tourists returned to australia, chicago indicates futures just to the upside. >> we are seeing nasdaq 100 futures getting a quarter of 1%. this after u.s. stocks fluctuated. we saw that dive lower with text dragging down the market. it has a lot to do with treasuries also falling. we saw the 10 year coming back. let's get more on the global markets from bloomberg. heidi also mentioned how new zealand yields have been rallying.

we saw the jgb 10 year yield at the highest in six years. what can we expect in terms of action from the boj? >> that is right. there is speculation in the market that the boj may come action and by some of its bond as it tries to defend this. this is the central bank that is trying to spare inflation. they are now looking at that. outside of japan, what you're saying in the broader bond markets, this ends the era of easy money.

you have 3 trillion back in positive territory. that is what we saw last night. this is from greece to germany. all tumbling, sending those yields higher. it is not only the federal reserve. they are expecting that to be on an aggressive rate hike. it looks like it will end negative rates. the bank of england is also looking at potentially a 50 basis point rating in march. this is all playing out in the bond markets. japan probably the outlier there. we can see if the bank of japan will step into the markets to buy the bonds and bring the yields on jgb lower.

>> stocks rolled in here. they are being sustained given the weakness we saw in tech and the weakness that plagues chinese tech giants like alibaba. >> they outperformed asia yesterday as they return from that weeklong holiday. that is the question. with the losses that we saw overnight, looking at the u.s. and chinese companies trading there as well as alibaba, that is questionable. you also have ongoing concerns about the chinese economy. you have the property sector struggling under that mountain of debt. there is still some headwind therefore chinese stocks but remember this is a market that became quaint sheep in january when the chinese stocks enter that bear market. that helped that yesterday but given the continued pressure on

technology stocks in the u.s., is also relatively seen as turnover in chinese equity. it looks like they might have a bit of a struggle to extend those gains we saw yesterday. >> hong kong is bracing for tighter social distancing restrictions. covid infections doubling every three days there. let's bring in stephen engle in hong kong. look at the numbers. in melbourne they managed to quash an outbreak of similar numbers but that was not omicron. what can hong kong potentially do to get this under control? >> if i remember correctly, in melbourne, they locked everybody up or down i should say for quiet sometime to quash that outbreak. that is very difficult to do in a city like hong kong, densely

populated, sometimes with three generations of the same family crammed into 500,000 -- 500 square feet. you cannot do a china is doing but hong kong is pursuing the same policy what they call dynamic zero covid which is zero-tolerance for covid except for insert certain apartment blocks and locking that targeted place down. it is going to be very difficult to keep going with zero covid and the only way to do it is to have further restrictions and that is what it is like if they are going to continue with that path. it is either living with the virus or further restrictions. right now, the authorities are giving new indication they are going to adapt or change to living with the virus. there will be more restrictions coming.

perhaps as early as today, perhaps tomorrow as we get the executive council meeting later today. carrie lam alluded to the fact that she will be pushing for more social distancing restrictions. we also had a former top medical advisor to the government saying if people do not heed the encouragement of the government to not congregate and to stay-at-home, we are going to be seeing the likelihood of 10,000 cases at least a day within the next couple of weeks. if that happens, he is recommending the social distancing restrictions be increased quiet considerably and basically wipe out about 70% more of what freedom we have to congregate in hong kong right now. so the numbers are not huge from the global standpoint. 607 cases reported yesterday on top of about 700 over the previous couple of days but the

trajectory looks pretty bad if you talk about the transmission change. >> stephen engle will keep us updated with any new measures in the city. less negative vonnie quinn with the first word headlines. >> the u.s. and japan have announced an agreement to and tariffs imposed on japanese fields. washington will suspend the 25% levy on incoming imports up to 1.2 5 million metric tons per year. anything beyond that will still be subject to charges. the solution mirrors the deal. the european union chips act may need to be funded by member states. 15% of money will come from here. the eu was out of the u.s. but there were increasing doubts about how the finances change

the billing of the measure. eu commissions told bloomberg there will be a significant amount for startups. >> we put on the table 10 billion euros and in addition, 30 billion just to ship out and a significant amount. i said it will probably be over $50 billion. yes, that will be the case. president biden said the nord stream 2 pipeline would be stopped if lead reported orders and invasion of ukraine. speaking at the white house, biden confirmed the project was not going to go ahead. schultz also said germany would stand by the u.s.. >> if russia invades, that means taking some troops across the border of ukraine again.

they will no longer be the nord stream 2. >> the u.s. and iran are inching toward oversight station deal. talks will resume in vienna a week later than planned. the u.s. has restored session waivers as companies cooperate with iran on nuclear project. global news, 20 were hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries, i am vonnie quinn, this is bloomberg. >> let's look at some of the stocks we are watching here. this is what is in focus. we are seeing a decline of about 7.7%. extending that the client almost 10% now. this after the company said they would be revising their current

north american sales model. that comes into effect in february until that agreement inspires -- expires in june. the capital business transaction activity in the second half is expected to be significantly up year on year. there were some concerns that there -- they would not be able to beat some of the expectations. they said this is exceptionally strong investment realizations going into the third quarter. they are really talking about the overall broader market conditions improving. we are seeing them up about 4.5% at the moment. that was a big miss on expectations. also watching them fall 3.4%. lots of speculation around this

company as they named a new ceo. we are reaction now. still had on the show, we use the winter a liv-ex to gauge china's interest in climate change policies. coming up next, why they are not buying that dip when it comes to the bond rout. we see that extension of the selloff. this is bloomberg.

>> let's look at new zealand bonds at the moment. just the latest showcase as the global bond rout continues. we had treasuries falling overnight and joining on that global selloff. this is across the 10 year.

a pretty big move across the kiwi yield at the moment. we do see a lot saying that this is set to continue. this after expectations of more aggressive central-bank action as we get into the first quarter in the middle of the year. jp morgan saying over half of the world tightened by april. aggressive rate hikes are expected in most major economies. the next guest says she is not buying the dip just yet. this tells me you see this market is yet to find a bottom. >> if you think about the fed and the target for them in terms of inflation is about 2% and we do think that real rates have to be positive. and at this rate, with the tenure still below 2%, it is still relatively expensive. >> where do you find

opportunities then? what kind of levels would you be looking at before you would not see that risk of more outside surprises? >> at this point i think we are making sure the fed has inflation under control. what is fascinating is that tenure breakevens have tended to come down from three months ago. the market is actually giving the fed some credibility in terms of its ability to maintain inflation. they are still try to figure out if labor participation is at the level of where it needs to be from two years ago pre-covid. i think it is a moving target. this is somewhere between 2.25 and 2.5. >> we continue to see these volatile times when it comes to rate hikes from the fed. when it comes to the credit market, what should we be watching?

is there any part of that space we should be talking about more right now? >> i think we spent a lot of time talking about high-yield. especially china property. i think one of your commenters mentioned before, that upset a lot. one of the biggest risks is investment grade because investment grade has so much more duration risk. it is so much more sensitive to business rate hikes. there has been selloff from last year, we thought we might have reached bottom. we started seeing more sentiment turn. >> what are you expecting to see in china? are we going to see more consolidation given the price pressures? what should we be watching when it comes to the latest market moves? >> i think there will be market consolidation.

there have been asset sales, especially from the more stressed developers. this is the fact that they have been able to sell these. for the buyers, i think it is a great opportunity to buy land as well as projects on a relatively cheaper basis. i don't think we will see huge growth but we do think it will become more favorable this coming year. we do think that china property is going to be recovering from here. >> always good catching up with you. let's stick with monetary policy. global central bankers are turning more hawkish as price pressures continue to rise. central-bank front a risk of losing their credibility in the inflation bind.

>> it creates risks. the first part of that question, i would say the big? is the digital transformation. the digital transformation has the potential to significantly reduce the productivity burst. in the agent society, that may be pretty important. when it happens, it may mitigate that sort of demand exceeding supply side pressures i was referring to before. i want to register that. having said that, if we do get persistent inflationary pressures that go beyond the demand surge as we come out of the pandemic, hopefully and the supply chain congestion. then we are going to have significant increases in sovereign debt on a very wide front and rising interest rates because the central banks are going to have to respond or lose

their credibility through loss of control or inflation and if they do that, we will see a variety of things, a repricing of assets. we will see debt distress in economies that already had fragile fiscal conditions and have had to run up debt because there was no other alternative. >> that was the nobel laureate, michael spencer. you can get your day going in daybreak. it is also right there on the mobile, on the bloomberg anywhere app. you can always customize the settings. this is bloomberg. ♪

>> let's look at the day had for

japan. the u.s. has posted a nontribal advisory for japan. we are also expecting the current account numbers here. and this is in the earnings front. we are also watching this here. the deal will remove the 25% levy on shipments up to a certain limit. as significant is this? >> this is a big step for the relationship between the u.s. and japan. this has been an irritant since 2018, japan felt offended and they felt it was not correct that the u.s. labeled japan as a national security threat. that was the basis for the trump

administration applying the tariff and this is definitely a welcome and a useful development for the two countries, especially for the biden administration as they tried to pit it toward facing what they see as a trade threat for china and the indo pacific area. >> what is the problem with the producers in that instance? >> this will allow for these things in japan to be exported to the u.s. duty-free up to 1.25 million metric tons per year. that is higher than the amount that was imported in 2019, 1 .1 million yet below the pre-tariff level of 1.7 million. a little bit of room for growth there and it has to be melted and poured exclusively in japan to try to prevent japan from

being exported to the u.s. duty-free. but u.s. producers are also happy with this. saying the tariff that will go into effect if there is a surge in imports will help to protect from just that. it seems like a solution that both sides are able to live with. >> let's get a quick check of the latest business flash headlines. peter thiel will step down from the board of meta. it does not want it to be a distraction to the company. he has been a close advisor to mark zuckerberg for nearly two decades. and meta is going to keep transferring user data back to the u.s.. it is among the thousands of

companies that rely on a transfer deal that was struck down by the eu court of justice in 2020 on data can -- data security concerns. have been in negotiations for months to replace the agreements. lg energy solution has posted it for your profit of nearly 640 million after a loss in the previous year. the results come after the battery maker completed the largest ever last month. they have seen their shares surge nearly 80% from their debut price, making it the second largest dock on the benchmark. china is said to be exploring a combination of building materials. blackstone is discussing a possible merger of the materials in europe alongside preparations to list the company. blackstone is seeking to value the business at almost $7 million on any deal. coming up next, we will discuss

the major headwinds for japanese automakers. they were forced to readjust their productions. we will get the details ne

>> we are getting breaking news out of japan. we are getting the household spending numbers year on year with a contraction of 2.3%, coming in lower than analysts expected. this is a contraction from the previous month of november when we saw that surprise fall, given that we continue to see the steep increases in prices, that is really upsetting the demand recovery. labor cash earnings are also a

contraction of .2%. we had expected a gain of .9% year on year for the month after wages remain stagnant the previous month but we continue to see this drop in real wages with inflationary concerns also rising. that is weighing on spending as well with household spending contracting .2% year on year. that would be the fifth month of contractions. staying in japan. there are results here for softbank. investors are looking for direction. there has been a potential collapse of a deal and a looming tightening by the fed. it's get more from the tech executive editor. peter, the last time we spoke to investors, they called it being in a blizzard and it seems things have not gotten much better. >> yes.

three months ago they met with investors and the fund had reported a record loss at that time of about 800 billion yen. roughly $8 billion at he called it a blizzard and talked about how things would get better. as you say, they have not gotten better. you have seen tech stocks slide overall. in particular, many of the companies in softbank's portfolio have taken a hit. one of those is doordash in the u.s. and in china there was dd. in india, they had a complete go public within decline very sharply after its ipo in one of the worst debuts we have seen. probably most import for the company is that alibaba shares declined during the quarter. that is by far the most valuable holding for softbank so that has also hurt the company. that affected softbank's own share price quoted bit.

>> there is speculation that we are seeing preparations here. he talked about being in the middle of a blizzard. is the worst yet to come? what are we looking out for now? >> you are alluding to a couple of uncertainties that are on the horizon for softbank. they do have that stake in alibaba and there has been speculation that one way they would bolster their own cash is by selling off some of that stake. we have seen alibaba register with the sec for unregistered ads is they have had for a while and that has led analysts to speculate that it may be softbank planning on selling some of those shares so there can be a little bit of capital. just as important is this tale arm that softbank announced. they planned on selling to nvidia.

that deal has run into many regulatory problems. bloomberg news reported that they were preparing to walk away from that deal and then we alluded to another key thing. the coo of the company stepped aside. he had a dispute about compensation. they need to figure out how to replenish that leadership. that was peter with the latest on softbank and that preview to earnings, we are also getting more results when it comes to lg energysolutions. the biggest ipo in south korea. for the fourth quarter operating profit coming in at 75.7 and fourth quarter sales coming in at 4.41 drilling, the expectation coming from the solution is that 2022 sales will be around 16 billion u.s. dollars. capex will also come in at 6.3

trillion one. lg energy says they have failed to meet their sales target on the chip shortage. not to mention, rising costs, they are talking about that increase in raw material prices, not to mention logistics costs affecting their earnings. we are seeing their fourth quarter operating profit coming in at 75.7 billion one. another issue to contend with for the lg energy solution. also, the rising costs that all of these companies are facing. that is right. that is a key component that we continue to look at. we are tracking the fallout of the global supply chain crunch. these are some of our top stories we are watching. this chips act may need to be funded by member states. the eu wants the upcoming chips

to rival that of the u.s.. this is ahead of a trade data release. sources say the u.s. has reached out to beijing after the nation failed to meet the phase i deal commitments over the past few months. no progress has been made. as we have been reporting, the u.s. and japan have announced an agreement to end tariffs on japanese steel by the trump administration. washington will suspend this on incoming imports. that deal comes with a view toward combating chinese trade practices. beijing has already quietly scale back and cut carbon emissions from the pollution heavy steel sector. look at those metals and prices. bloomberg terminal users can get more on these stories.

>> carmakers in japan are other missing or advising their forecasts surrounding covid and supply shortages lingering. what did we learn from this yesterday? what does it tell us about toyota over the next couple of days? >> we have quiet a dim forecast from subaru yesterday. that is monday here in tokyo. the auto maker cut its profit forecast for the fiscal year through march by about a third because it is unable to produce cars. it is able to produce a lot less cars than it had. even just a quarter ago. that really does set a tone for automakers as we have announcements this week from nissan, toyota, honda.

we are likely to see pretty conservative forecasts. especially for the last couple of months this fiscal year. >> anything to help mitigate those disruptions? >> there are significant tailwinds as well that we are seeing in the out of markets right now for japanese automakers. take nissan for example. it is starting to see some benefits from its revival plan that has been tackling for about two years now. a significant chunk of that is cutting costs but on the other end it seems it is trying to increase the profitability of each car it sells. with rising car prices amid pretty strong demand and supply not being able to keep up with that, that has been bolstering the profit margins on its cars. that profitability and the cost-cutting is likely to somewhat offset significant production cuts nissan has had. and then on toyota, it is pretty

much in a different ballpark. i think you can see that from other japanese automakers. in the past year, all these supply disruptions, the company has remained strong. that was a significant factor between -- around why it ended 2021 as the top-selling automaker. in recent months, it had to pair back some production because of the chip shortage is. but with really strong sales -- shortages. there are a number of other japanese automakers this week. >> we will be watching those results. coming up next, we dive into china's renewable energy strategy for the other big games. we will hear from an analyst for renewable energy and clean air. this is bloomberg. ♪

>> this is daybreak asia. i am vonnie quinn with the first word headlines. any adjustment to monetary policy will be gradual. that is the debate over the first rate hike in over a decade heating up. the central bank would remain data-dependent well excepting

inflation and would only make gradual policy changes. price growth could turn out faster than expected in the short term. police and candidates capital are trying to cut off the fill supply to other activists that have occupied downtown ottawa for more than a week. that comes a day after the mayor declared state of emergency. lines of big rigs remain part in downtown. they are blasting their air horns. they say they want leave until all covid mandates are lifted. hong kong reported a record 607 covid infections monday with the government expected to announce further restrictions to curb cases. carrie lam was expected to announce fresh measures to contain the virus this week. experts say even with the strictest restrictions, it could

take months to get the current wave under control. data for the just ended lunar new year break should the people travel more last year but spent less. about 70% below pre-pandemic levels. they sold 44% from 2019. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. >> china is aiming to achieve big strides in it energy transition. let's look at how it is planning to achieve that goal. our head of china research joins us. what are we getting from the low carbon effort we are seeing at the game so far? >> the winter of the big --

olympics is a good snapshot of the overall strategy. the theme is 100% renewable. they are trying to transmit the power to the stadium. china is planning a lot more of these which helps china to achieve its overall goal. another thing is the reform we have taken. that allows that stadium that does not generate this power to produce somewhere else and then all of these -- after these only big games and all the other events and all the other companies will use more of these renewables. a lot of --

>> what are climate change policies to watch for this year? >> china is curbing the energy output. -- energy industry. and there are markets that will push petrochemicals into the market and send a clear signal to the manufacturing that the cost will rise in the future. that will make them transfer to low carbon solutions. >> we do have breaking news at the moment. softbank, the $66 billion sale of the chip business arm of nvidia has collapsed according to the financial times. this after regulators in the u.s., the u.k. and the european union raised serious concerns

about the effect on competition in the global semiconductor industry. the financial times reporting that this collapse will give softbank a break of up to 1.25 billion dollars and that softbank is seeking to unload arms of initial public offering before the year end 2022. the $66 billion sale of the chip arm of nvidia has collapsed according to the financial times. softbank will be receiving of fee and they will try to unload this through an initial public offering before the end of the year. it is coming just ahead of softbank reporting earnings today. they have had a tough time. whether it is the loss of its coo or the threat of the fed tightening hitting tech valuations.

we will have more on softbank shortly after we are now hearing that the sale of the arm to nvidia has collapsed. let's get back to the winter liv-ex in beijing and discuss how sustainable and green it actually is. joining us from helsinki is this lead analyst at the center for research on energy and clean air. thank you for staying up late for us. tell us what you think is happening at the beijing olympics. al green is it -- how green is it? >> china has a program of building renewable energy and new transmission lines to power the liv-ex. the city that hosts the skiing events would be the roast -- world's 12th largest country in

terms of solar. we hope that we will be a model for building large renewable energy, using similar arrangements and lines. there is a long way for the country to go but these games have been used to pilot this kind of model and highlighted to the rest of the world. >> tell us about the latest research on the electricity supplied to the olympics and how dependent china's power grid actually is on the dirtiest of fuel has opposed to cleaner energy sources like wind and solar. >> in the winter, china gets about 75% of its electricity from coal. only 60% comes from solar. one of the highest shares in any

area in china. it is backbreaking in terms of the share of wind until her that you can have. >> there is always criticism that events like the other base are fundamentally not a sustainable event. part of the criticism is the heavy alliance on -- we know beijing is able to pull out all of the stocks when it comes to putting on a bigger event. is there greenwashing going on? >> i would say for the renewable energy part, the scale of the investment goes beyond greenwashing. of course china wants to present

a green image to the world but i would say that is also a positive thing. making green energy and green technologies as part of the international image. i would not necessarily see that as a bad thing. there are issues around water being used for the event and so on but the program that has been created around energy, around this will provide a significant chunk of power to beijing in the future as well. >> how productive are energy investments in china at the moment? what are the lessons that policymakers and investors have learned? >> the overcapacity has been on

the manufacturing side and with the current increase in installations, that overcapacity does not seem like it is going to be an issue in the next years's wind and solar investments. they are expected to increase. these are already the high levels of the past two years. on the power generation side, there is overcapacity in coal but not overcapacity in clean power generation, china desperately needs a lot more of that. and a hefty amount of non-coal clean electricity. that has helped tremendously during the power crisis of last autumn and this winter. >> we really appreciate your time for us tonight.

the lead analyst at the center for research and energy and clean air. we do have some breaking news on japan's number crossing the bloomberg. we see it narrowing in the month of december. the current account deficit coming at ¥380 billion. that is what we are seeing. we have more to come on daybreak asia. this is bloomberg. ♪

>> a quick check of the latest business flash headlines. this has -- the technology could be used across a range of apple's audio offerings. this uses artificial intelligence to generate taylor he -- tailor-made music. while the deal is relatively small, it is one of apples few acquisitions in the past year. amazon is more than doubling its maximum base salary for invoice from 160,000 to $350,000. they cited the competitive labor markets and the need to attract and retain top talent. amazon is also increasing the compensation ranges and changing the timing of stock rewards to align. sources tell

management. the banking corps is said to be among the possible buyers of the joint venture. we are told there is no agreement yet and that the sellers may seek other buyers. >> in japan, we will be watching softbank. this is according to the financial times. this will receive up to $1.25 billion. all of this as we go toward the earnings result. we will continue to watch whether those chip supply issues affecting those companies. we are watching the lg energy solution because they came in with a fourth quarter operating profit of 75.7 billion won.

that was korea's largest ipo ever last month. we will also get results later on tuesday. the markets open -- market opens in seoul and tokyo are next. this is bloomberg. ♪

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>> welcome to daybreak asia. i am shery ahn. >> i am haidi stroud-watts. asia's major markets have just opened. sovereign debt worldwide to slumping the most in five years. the u.s. and japan struck a deal to roll back steel tariffs. the white house says it is

rebuilding relationships. hong kong braces for more covid measures as cases double every three days. shery: japanese stocks seeing some upside. the topics is higher by 3/10 of 1%. we continue to see range bound trading when it comes to the japanese yen, but what we are watching in the japanese markets, softbank. we have reports their sale to nvidia has collapsed. so far, stock is down about 8/10 of 1%. we are watching jgb's as well as the 10 year yield rising to the highest level in six years. we are waiting to see any action from the boj. yields continue to rally. take a look at the kospi. it is gaining more than 1% and

rebounding from those losses we saw in the previous session. we are also seeing the biggest ipo in south korea. the korean won is gaining against the u.s. dollar and trading at the 1197 level. we are getting more hints from the prime minister we could see an increase in the extra budget. we know that could have an impact. haidi: that is where so much of the pricing action has been, as we have seen treasuries capitulating, analysts saying when it comes to global bond yields, we saw new zealand bonds, the 10 year yield rising. the highest since 2017. we continue to watch for that

yields biking across various jurisdictions. we are seeing a real turnaround, energy, a little bit more muted in terms of the games, but oil taking a pause, energy as one of the big gainers, as well as materials seeing the most gains, up by 2.5 percent. new zealand equities just hanging on when it comes to that territory. taking a look at new york crude, resuming some of those gains as we continue to see how long it could take until we see $100 per barrel. the demand-side and under supply will continue to weigh on the dynamic. shery: let's stay on the markets because we are looking ahead to the open of mainland shares,

this coming on the back of their best day in about two months post-lunar new year holidays, but in new york, we saw the chinese abi. what are the biggest drivers for chinese stocks right now? >> i think the biggest drivers we are seeing are asset growth, the slowdown we saw over the last couple of quarters is more obvious, and much smaller growth than what we saw in the regional consumption. this is something we are quite worried about, but china, like most of its peers, has to stimulate. we've seen some fiscal measures being put through an monetary easing coming through, as well,

they are doing the reversed of most central banks in the world, and we will probably see more cuts and the potentially an interest rate cut coming. investors are concerned about it right now. haidi: are we seeing the upside leading into those measures we are expecting? when could we expect this trade to play out, whether it is on alibaba or tech regulation? >> to your point, for international investors, the biggest question will be regulatory clarity after the spate of tightening we saw in the e-commerce sector. this is a little bit of news, the filing for shares of alibaba

, that waited on the chinese equity shares. the key question for investors is where the regulatory uncertainty on some of this internet and e-commerce space, because the valuation has corrected quite a bit at this point in time. haidi: going into the end of last year, property stole the thunder of tech in terms of the most worried about sector. are we concerned reinventing can be done? are there outside risks from that sector? >> in terms of a systemic fallout, policy have a lot to choose. the change in terms of capital

structure is a shock, and i think that will prevent it from happening anytime soon. in terms of, will we see a banking crisis? i do not think there is a high likelihood of that given the levels that the government at the central level and at the local level can do to prevent that. you will probably see anemic risk until sentiments turn in this particular sector. haidi: does that mean we should be cautious on consumer names? given how beholden wealth is to the boom we are seeing in property? >> indeed. if you look at most of it, it is

tied up in real estate investments. the appetite to spend is a little bit weak. you can see that in the retail sales numbers we've seen the last few quarters. there are still certain sectors that are doing quite well it is not a broad stroke, but you need to pick where you want to be. haidi: one of so many interconnected areas. in your fund, i noticed that

alibaba is one of your top five holdings. are we close to a bottom? do you see the regulatory pressure? also, the ongoing consumption weakness story, right? >> alibaba is one of the top 10 holdings. for something that is topline growth, we expect to see from e-commerce right now. we are still particularly comfortable with this stock. the size of the position has been moved down reflecting the concern we have on the regulatory side.

haidi: great to have you with us, as always, the head of asia's softbank. this is what we see when it comes to the planned sale of the armed chip group to nvidia has collapsed. this is what we are hearing, all coming ahead of softbank's results, which has been a rocky quarter, lots of concerns over how the tech crackdown -- we were just talking about some of the remaining risks. they are in the middle of this blizzard. this is a significant downside development for them. peter, i just want to check that we still have you?

>> i am here. haidi: we are hearing reporting that nvidia is abandoning the purchase of our group from softbank. the collapse of this transaction coming after what has been a difficult period for softbank. what are the implications if this proves to be something that is confirmed? >> i just saw a headline that nvidia is walking away from this plan to purchase. this was something we reported, saying nvidia was planning to abandon this deal. the u.s. regulators said they would oppose the deal, and many

voiced opposition to the deal. with nvidia's purchase, that neutrality would've been compromised, and that is where people were voicing their opposition to. they are bowing to that reality and saying they will go a different route. shery: an hour or so ago, we were talking about earnings and how they are facing a lot of difficulty. >> they are going to report earnings later on today in tokyo . this is a bit of a setback. they were plan numbly cash and stock they were going to get from the nvidia deal to fund the

things they wanted to do. they said if the deal doesn't go through, their backup plan would be to take on ipo's. you'd expected they would turn around quickly to be able to raise capital that way. it is not as good as selling it to nvidia, but it allows them to cash in some of that stake. haidi: what are some of the other options for fundraising? there was heightened speculation they might do something about that starbucks stake. >> the most valuable stock that softbank has is alibaba, the chinese e-commerce company, which has come under tremendous pressure because of beijing's crackdown on tech companies. over the weekend, alibaba registered some shares in the u.s. they had not registered

before. we've seen softbank cash in on some of the shares it holds and alibaba in the past. they will get questions about that during the earnings report. they may talk about it a bit. haidi: we will be looking out for details on that. we are hearing some reports from local media. they are reporting in hong kong that hong kong is set to tighten their public gathering limit to two. we are bracing for more curbs in hong kong. we are seeing cases of the omicron variant doubling every three days there. looking at over 600 locally

transmitted cases reported monday, not terribly high compared to other cities and countries, but under covid zero, the stringent policy measures hong kong has undertaken, that is seen as unacceptable. we are hearing reporting that the public gathering limit to two per person, including at restaurants, is among some of the strictest measures. let's get to vonnie quinn who has your first word headlines. vonnie: president biden says russia's pipeline would be halted if president putin orders an invasion of the ukraine. speaking at the white house after meeting german chancellor olaf scholz, biden confirmed the gas product -- project would not go ahead in the event of an attack. moscow has denied plans to invade ukraine. >> if russia invades, that means

tanks and troops crossing the border of ukraine, then there will no longer be a nord stream 2. we will bring an end to it. >> we are absolutely united, and we will not take different steps. we will take the same steps. it will be hard for russia. vonnie: the u.s. and iran are inching towards the revival of their nuclear deal. that could enable iran to return to world energy markets. since diplomats last met, the u.s. has restored sanctions waivers, allowing countries to cooperate with orion on civilian nuclear projects. meanwhile, tehran has shut a controversial facility. china's zero covid policy has put a damper on consumption.

eta shows people traveled more than last year but spent less. around 130 million trips were taken during the seven-day national lunar new year holiday. about 70% below pre-pandemic levels. tourism revenue fell 4% last year and 44% from 2019. global news 24 hours a day on air and on bloombergquint take. i am vonnie quinn. this is bloomberg. shery: we continue to see downside pressure, as bloomberg has learned that nvidia is set to withdraw from the acquisition of softbank's arm. that would be the $66 billion sale of the chip group to nvidia, softbank planning to proceed with the arm ipo in the financial year of 2022. we are also learning that the arm ceo is stepping down and will be replaced by rene haas,

head of the company's intellectual property unit. softbank's ceo has faced some challenges the last few months. we are hearing softbank plans to proceed with the ipo, while nvidia is said to withdraw from the acquisition of arm. take a look at lg energysolutions. its largest ipo ever. their operating profit for the fourth quarter came in at 75.7 one. we see some upside for the stock. we are watching that stock in the korean market. still ahead, we speak to the executive chairman of a canadian

tourism corporation. up next, the u.s. and japan announced an agreement to end steel tariffs imposed by president donald trump. details just ahead. this is bloomberg. ♪

>> i've been doing this 30 years, and i've never seen markets like this. we are out of everything. i don't care if it is oil, copper, kale. it we are out of it. shery: shortages getting priced in across the commodities space. it is not surprising we saw that aluminum price reaching a three month high, not to mention iron ore continuing to gain ground,

that in the chinese session. natural gas in the u.s. rebounding after some pressure. the storm had shuttered some production in the u.s.. wti under a little bit of pressure, but this as we head towards that iran nuclear negotiation being restarted. let's get more on steel because we are seeing the u.s. and japan achieving that deal on removing trump era tariffs. of course, big implications for the economy, the markets, but also the relationships of these countries. >> that is right. that is the more significant aspect, the fact that the u.s. is trying to reestablish ties with its allies in europe and

japan, i think this is a clear signal that their stance towards their allies have changed under biden. this comes as there are heightened tensions in asia with china, repeated missile tests from north korea, so it is important for both countries to reestablish the strong relationships they've had. haidi: of course, there have been concerns from domestic u.s. steelmakers that it is a slippery slope in terms of access, but you talk about this as an important step. what other aspects of the relationship could soon change as a result? >> the steel tariffs have not completely gone. there will still be tariffs on japanese steel imports into the u.s. under a certain limit, so

that still remains in place. japan had hoped to get rid of that, but the u.s., the fact they would not agree, that probably speaks to that. it accounts of 4% overall steel imports to the u.s., but the bigger issue is that any loosening or easing of stance would cause uneasiness among u.s. steelmakers who are concerned that by easing measures in countries like japan, it might open way for imports to flow in from countries like china. haidi: bloomberg news managing editor joining us. lots more to come on daybreak asia. this is bloomberg. ♪

shery: japanese stocks gaining ground after we've already seen the half on those of the nikkei 225 reporting earnings. nissan reporting today, toyota reporting tomorrow. materials have posted the biggest surprise. we continue to watch what has happened with softbank. bloomberg learning that nvidia is set to be withdrawing from the acquisition of arm. softbank plans to proceed with an ipo of that chip group. haidi: a big development ahead of their earnings today. take a look at what we are seeing across asia, as we had

u.s. tech dropping, as well as this speculation over what is going on, but we are seeing a bit of a turnaround. we are seeing pretty strong yep, it's go time with wireless on the most reliable network. ok, that jump was crazy! but what's crazier? you get unlimited for just 30 bucks. nice! but mine has 5g included. wait! 5g included? yup, even these guys get it. nice ride, by the way. and the icing on the cake? saving up to 400 bucks? exactly. wait, shouldn't you be navigating? xfinity mobile. it's wireless that does it all and saves a lot. like a lot, a lot.

haidi: we do have australia's business confidence numbers for the february period -- january period, i should say -- just crossing the bloomberg, the number coming in at three, dropping from 8 that we saw in december. worsening when it comes to business conditions, and improvement when it comes to

business. businesses of all sizes in australia had that opening up between state borders, and we are looking ahead to the return of international tourists from february 21. we are seeing that resumption of normal, but all of this is coming at a time and we see very high omicron cases. retail, hospitality sectors, all of these cases, as well as requirements for isolation. shery: we are seeing hong kong falling into contractionary territory, coming in at 48.9 for the month of december instead of 50.8 in the previous month. talking about the number for january, 48.9 instead of 50.8. the pmi numbers have stayed in

expansionary territory since february of last year. it is surprising they are in contractionary territory below that threshold. we are seeing new orders falling versus the previous month, the lowest readings since january of 2021, perhaps unsurprising given those omicron concerns. hong kong, bracing for tighter social distancing with infections doubling every three days. let's bring in stephen engle in hong kong. what are we seeing in hong kong in terms of the virus? >> hong kong is in a pickle because they do not have the vaccination rate that would protect them from omicron. we are seeing numbers soaring to come a 600 70 cases yesterday, on top of 700 over the weekend, so that is 1300 plus another six or so that are preliminary

positive, and about 80% of these cases are omicron a. a number of them, including 150 yesterday, they were not able to trace the source. there are a lot of hidden transmission chains, so they are concerned. that is why we are hearing from the newspaper and other media reports that the government is likely to announce very soon, today if not tomorrow, after they complete their executive council meeting, we could get more social distancing, some of the strictest that the city has seen. the city has been relatively unscathed as opposed to other areas, but that would create a bit of a false sense of security. a lot of people did not get there vaccination, but with the

omicron variant spreading quite rapidly, it puts people who are unvaccinated or without final vaccination, that puts hong kong in jeopardy. there is reporting that hong kong will soon announce stricter restrictions, including limiting in dining patronage to just to customers, also, public gatherings cannot be more than two people, tough in a city with some of the most densely populated neighborhoods. it is going to be a tough one. if this city will go with its dynamic zero covid strategy, which targets eliminating the virus, have to clamp down and do more restrictions. otherwise, you start to live with the virus, but the city is sticking with zero covid. they are not ready for living

with the virus. haidi: stephen engle with the latest in hong kong. let's get you to vonnie quinn in new york. vonnie: the european union's proposed chip needs to be funded by member states. a 15% will come from the bloc's own budget. the eu says it wants its chip act to rival that of the u.s. still, the eu commission told bloomberg there will be a significant amount for the startup. >> we put on the table 12 billion euros just for r&d, and in addition, 30 billion just to support mega farms and startups. i've said it will be probably well over $50 billion. vonnie: christine lagarde says any adjustment in monetary policy will be gradual as the

debate over the euro regions first rate hike in over a decade heats up. lagarde said the central bank will remain data-dependent while addressing the medium-term outlook for inflation. she warned that price flows could turn out faster than expected in the short-term. police in canada are trying to cut off the fuel supply for a convoy of truckers and other activists in downtown ottawa. big rigs remain parked on major thoroughfares, bombarding residents with nearly constant blasts. organizers say they will not leave until mandates are lifted. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. shery: coming up next, negative or percent the captive ex-pat community in cambodia helped to

drive its gaming business. we will get more from the executive chairman of the company just ahead. this is bloomberg. ♪

shery: it has been a tough few years for the casino industry in asia.

the sector underperforming, although data showing the lunar new year traffic picked up 29% year-over-year, bloomberg intelligence saying that gaming revenue, macau may not reach 30% of pre-pandemic levels this quarter, but the outlook over the coming years is looking a little bit brighter, the team saying the casino sector could be rounding the most in the leisure space through 2024 on the back of low valuations, pent-up demand, and duty-free changes that could quadruple earnings as early as next year. haidi: let's stay with gaming and the outlook. we will be talking about this with negative. they reported revenue, two hundred 24 million dollars. joining us for an exclusive interview is the executive deputy chairman a. great to have you with us. i have to ask about the missing chinese consumer given the lack

of visitors we have from outside of china. how has that impacted your business and traffic? >> we are not that reliant on china. our market comprises of a strong domestic market. residents are primarily from china, given china's border with cambodia, as well as residents from the rest of asia. really, the transportation is not that critical to us in terms of our business. haidi: are the recent regulatory changes and restrictions we are seeing in macau something that is of concern for your business in terms of overall gaming interest and flow?

>> there are views that it may be positive for the gaming industry because it effectively takes away the middleman, encouraging customers to engage with properties. we have to be careful as to what the implications of the credit in terms of direct players. once the travel restrictions are lifted, we will see how that segment of business recovers. shery: the fact you do not have much interest in china, does that mean you're not that interested in bidding for the new gaming licenses in macau that will be open? >> i think that might be too big for us to bite. we've looked very carefully at

what we can spend, looking at columbia. having looked far and wide, we are very happy to be there, very happy that the way the -- very happy with the way they handled the covid situation. we expect tourism to cambodia will pick up and recover to pre-covid-19 levels pretty soon. shery: what about the crackdown on junket operators? we know there have been crackdowns in some cities. is that a concern for your business, or what is the impact? >> definitely, i have seen a drop off in the ip segment.

as i said earlier, this may not be such a negative thing because it will encourage direct players to the property. we have to be careful about credit. we have to be careful at how we extend credit. it should be on a cash basis. we'll see how that turns out the next few months. haidi: we saw some workers of nagacorp striking last year, and authorities tried to stop that because of what was going on with the pandemic. are there measures in place to

try to prevent this type of strike or discontent from happening? >> we put out a few announcements on the strike. it's why we initiated the mutual separation, targeting 100,000 shares. they launched a strike. it was deemed as legal by the cambodian courts.

it is very much out of our hands. throughout the process, the separation plan as well as layoff, we consulted with the ministry of labor. we paid more than what is required under the law. having said all of that, i think despite that, naga in 2021 -- [indiscernible] that is really the second highest among all peers in asia.

if you look at the recovery time post-covid, you would think we'd get to pre-covid levels. shery: philip lee. good having you on, thank you. we will be watching for casino stocks as soon as they start trading in china. this is the set up with the nikkei gaining ground, being led by utilities and industrials, energy under pressure as we are seeing wti losing ground ahead of the iran nuclear deal negotiation restart in vienna. softbank is paring some of those losses and gaining ground after news of nvidia said to be withdrawing from the acquisition of arm chip group. we are watching the kospi, which is gaining 9/10 of one person and rebounding from losses we saw in the previous session. take a look at the bond space.

the two-year in the kiwi sovereign yield training at the highest -- trading at the highest since 2017. when it comes to the sovereign bond space, it is about the global bond rout as we see these hawkish signs from global central banks, and this as price pressures continue to rise. i spoke with nobel laureate michael spence who warns central banks run the risk of losing their credibility in the inflation fight. take a listen. >> it creates risk. on the first part of that question, i would say the big question mark is the digital transformation. the digital transformation we are in the middle of now has the potential to significantly produce a productivity burst,

and in aging societies, that's pretty important. if it happens fast enough, it will mitigate the demand exceeding supply side pressures i was referring to. i want to register that. having said that, if we get persistent inflationary pressures that go beyond the well-known ones, the demand surge as we come out of the pandemic, hopefully, and the supply chain congestion, then we are going to have significant increases in sovereign debt on a very wide front and rising interest rates. central banks are going to have to respond or lose their credibility through loss of control or inflation, and if they do that, we are going to see a variety of things. a repricing of assets, debt distress in economies that had a fragile fiscal conditions and have had to run up debt because

there was no alternative. it is going to be turbulent. haidi: coming up next on daybreak, we preview the market opens in hong kong and mainland china following shanghai's postholiday rally. can it be sustained? this is bloomberg. ♪ omberg. ♪

haidi: a quick check on the latest business flash headlines. softbank's deal to purchase nvidia's chip arm has collapsed. the eu and u.s. raised concerns about its effect on competition in the semiconductor industry. it would have been the largest deal ever in the chip sector. we are hearing softbank plans to go ahead with the arm ipo this year. lg energysolutions missed its full-year target after the ev battery maker completed the largest ipo ever last month. chip shortages in raw material costs weighed on results. it has seen its shares surge, making at the second largest stock on the kospi. mitsubishi is considering the

sale of their jointly owned real estate company for about $1.7 billion. it is said to be among the possible buyers of the joint venture. we are told there is not any agreement, and the sellers may seek out the buyers. shery: we are just over a half an hour away from the market opens in hong kong and the mainland. investors will be watching for what comes next. let's bring in with chief markets correspondent sophia. this follows the chinese apr. what will guide markets today? >> exactly. it was not a bullish reopen, as it were. stocks did rise the most on mainland exchanges, but that trails the strong open we had already in hong kong friday. this rally does not look like it

has staying power. we have not really had much of a policy update from beijing since. it is not like we are seeing a huge coordinated response in terms of monetary easing, in terms of supporting the property market. there are still a lot of risks to contend with. the tech sector is another one. haidi: particularly in light with what we saw with alibaba. what are the catalysts we are looking for for the next price action drivers? >> alibaba has been a difficult stock to trade for most of the past year. we just wrote a story that every time the stock rallies above its 50-day moving average, that tends to be a sell the rally signal, and the same thing happened right now. that is not just beijing's

crackdown on the tech sector. we do not have visibility whether that is ending. there is more commentary about the expansion of capital, but also concerns about delisting in the u.s., and now we have potential pressure from a large shareholder in softbank. there is some speculation that it may sell some additional registrations next week. if you want to time the rebound. you seem to get burnt every time. haidi: this is something we are watching ahead of the open in the hong kong and china we are

watching these movers that could potentially see some reaction to hong kong looking for more curbs , cases doubling every three days. we are hearing reports that some of those curbs may involve personal gathering limits of two. we are seeing local hotel operators, some of those other reopening plays, all could see a reaction. shery: take a look at the futures action, u.s. futures gaining ground after we saw stocks falling, tech dragging down the market. we are watching for the chinese open, because we had them surge, the best lunar new year holiday since 2019, but at the same time, we had chinese adrs under pressure.

that is it from daybreak asia. our markets coverage continues. standby for bloomberg markets: china open. this is bloomberg. ♪

right here on bloomberg. it is 9:00 am here in hong kong, beijing and shanghai, welcome to the china open, i am dividend less with yvonne man. >> the top story this morning, the global bond selloff extends as markets weigh the impact of tighter monetary policy on growth. the arm sale with nvidia set to be pulling out.