shery: you are watching daybreak

asia. haidi: with counting down the market open in tokyo. the top stories this hour. media report that covid deaths may be rising despite china not reporting any covert fatalities in two weeks -- covid realities in two weeks. the u.s. ambassador to japan rahm emanuel joins us live, we get his reaction to tokyo's new security strategy. annabelle: we have the open of the asx 200, we are pointing lower, that is unsurprising given what i have indicated and the wall street session closed, two factors are driving the trading sentiment in the session today. what is coming through in china, even as we heard, we are not

seeing any more deaths being reported in beijing, we are hearing in adult reports that fatalities are rising, there is uncertainty around the opening path. we are seeing movement in the bond space, the aussie dollar moving higher. coming off of a loss of 1.6% over the past five sessions. the big moves this morning in the japanese yen, this is traders having to first challenge to react to local media reporting, what we understand from kyoto, the outlet saying that the prime minister could be considering a 10 year accord with the doj, they put out a little bit of flexibility to the two year target. it would be a change from what we heard at the midyear when they expected the boj to keep the goal.

the leader is stepping down in april. shery: if pick a conversation for policymakers to walk the fine line between rate hikes and bring inflation down. hawkish comments we saw from chair powell or other fed officials really making investors anxious. we are seeing a muted open in u.s. futures. it is early in the asian session, another early week of losses for the s&p 500 and were fears are being felt with oil prices holding at around $74 level. we have seen losses on friday but weekly gain when it came to wti prices and treasuries are mixed, 10-year yield is finishing at a350 level. we are seeing the pce deflator, the preferred inflation gage. we are getting consumer spending data and income data and more indication on the health of the american consumer with earnings

coming from the likes of fedex. haidi: the health of the chinese consumer will be key as well. where is it heading? where is the chinese economy heading? we know where they want to go. provide businesses as beijing looks to boost in growth over dropping the covid zero strategy. the economic conference did go ahead, the key takeaways, the shift to supporting the enterprise are we know has been a brutal crackdown is going to be key for investors. >> i think that was the most interesting thing that came out of the economic conference, the big change from where we were a year ago where we have the leftover meeting at the end of 2021, reining in the world growth and the internet giants in china. you have the 360 embrace right after the economic or

conference, the party secretary visiting the headquarters of alibaba, figurative and symbolic embrace of the best-known internet company in china, looking very much like beijing has growth on his mind and made it a priority. the exit from covid and i think it is looking like there will be a lot of emphasis on trying to help private business in 2023. shery: how bumpy is the exit from covid zero? we are not getting any fatality numbers from beijing authorities. what signals are we getting on the ground, though? >> beijing and the hold of china has not reported a covid death in two weeks since early december. there have been anecdotal signs and reports of more than normal activity at funeral homes, crematorium's in the capital. it suggests that fatalities

might be happening that are not being reported or are not being reported to covid. the exact nature of how many people are dying from covid is not especially killinger right now. the human tragedy of those deaths and the thing for markets is if they are is a rapid spike in the number of deaths in china, or the government reconsider putting in some of the covid zero measures that have taken away and will that upset derail upset the economic recovery that everyone has been hoping for in 2023? haidi: interesting comments from the media, they put the people and lives above all else and now that they have the exit and the virus is weaker but we will need to watch for how the data plays out. even alongside covid zero, even pre-covid zero there are structural issues with the economy and the biggest one is the property sector.

did we get any policy shift on what kind of support the magnitude of support we would see for property? >> the thing we were looking for was with the meetings repeat the line that homes are for living in, not for speculation? if they did, not a fundamental or drastic change but obviously again, speaking about support for the broader economy, for private enterprise and before the meeting we had a much clear signal from others saying that there would be more than to support the property industry. the government has done plenty or a bunch of things to make it easier for property developers to finance their operations. it would expect that to continue and it is at a big part of the economy it would be difficult to see china hitting something like a 5% growth target without the property market rebounding. shery: that is a property at a

quarter from beijing. the crypto exchange ftx is dropping the fine -- the crypto exchange ftx owner is dropping the fine. do we have any idea of what led to his change of heart? >> we heard sources share a could be a petition on the surface that may lead to him changing his mind. they try to deliver food to him unsuccessfully. more than that, sources have said that potentially what is leading to this has to do with a jurisdictional fight between the bahamas and the u.s. where the roundabout in terms of his decision which last week he was adamant in testifying during his

bail hearing that he would fight extradition hearings. we are still trying to make sense of it. his lawyers have not specified why this is. one of his lawyers did say he would not remain in present waiting until the tradition hearing -- extradition hearing. we will hear the appeal to his bail decision that came out of the court in nassau which would clarify the change of heart. haidi: there are concerned this could be dragged on if there was an attempt to block the extradition but may not lead to that. overall, the dueling investigations by the u.s. authorities and the bahama authorities and to this case, has a hindered progress -- has it hindered progress? >> authorities in the bahamas

said that he did not have full visibility on some of the cyber related documents that u.s. regulators had as related to ftx. we know that the bahama securities commission have an ongoing active investigation, the commission says it has full visibility but this bit about the cyber reports that them being a liquidator has not been able to fully have his eyes on is part of the frustration and how the bahamas is able to conclude before it breaks his own charges. sources say that while extradition in this case may not be as far away although it will take some time in the very least, several weeks or months to say, it is important to note that the bahamas investigation is ongoing and the authorities

are making it clear that they will not stop questioning and probing until they have answers. haidi: that is a reporter. >> member states are set to discuss the price cap that is lower than the original proposal. monday's meeting is an attempt to break a deadlock over a controversial plan. the check government suggested lowering the rate. the compares with the proposal by the european group last month. two ballistic missiles launched on saturday, this was the test of a rocket engine which could much shorter range missiles. this year kim jong-un has fired off more than 65 ballistic missiles, the most in his decade in power.

peru's president has ruled out resigning saying that it would not solve the country's political crisis. they are insisting on bringing fort clinical elections after the congress voted against the proposal. she says that is at 83% of the population wants. -- what 83% of the population wants. in a mood to return to power, kahn will push in the country into early elections as he is a majority in pakistan. the government called the move a gimmick. the malaysian prime minister is holding a no-confidence vote to show he commands a majority of parliament. it would give him the backing of

2/wrds majority -- 2/3rds majority. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. shery: rahm emanuel joins us live, we get his reaction to prime minister's kishida strategy. adam also discusses 2023. this is bloomberg. ♪ can help your business get a payroll tax refund, even if you got ppp and it only takes eight minutes to qualify. i went on their website, uploaded everything, and i was blown away by what they could do. getrefunds.com has helped businesses get over a billion dollars and we can help your business too.

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>> we will go until the job as well and truly done with just 2% on average inflation.

>> we will bring inflation down. >> we have to move the rates up, ongoing increases from the current rate to about 5% and hold there for some time in order to get inflation back to 2%. that is what we are doing right now. shery: fed officials reiterating the need for higher rates, let us take a look at the week ahead. energy ministers will discuss the gas price cap as the economy takes a heavy toll from rising gas storage and energy prices. on tuesday, bloomberg economists expect the pboc to the where the prime loan rate and release its information ahead of japan's inflation data. on wednesday, they generally six final report. lawmakers expect new evidence

from interviews that the -- the january 6 attack final report, a lot bigger than expected new evidence from interviews. haidi: ending with a whimper, is that the narrative that continues given the hawkish township and the concerns we not only see a shallow economic recession but also the earnings have yet to bottom out? >> i think that markets have been really paying all of their attention to what central banks are doing. the rest of the year will be focused on trying to figure that out and the first quarter of 2023. we are hit with this impact of slowing earnings and so i think what investors are really doing

is a lot of guesswork. that is a problem and it can lead to a lot more volatility. compound that with the fact we overall supplied traders in the market with people taking vacations. you see big moves. i would not be surprised to see big moves in either direction. if markets can bully themselves up, i would not be surprised to see some pretty big downdrafts as we head into the end of the year. haidi: what do you see as the more global impact as we see the china reopening? we know this could have potentially more inflationary pressures. also, more of a growth factor as well. >> we have been going against the grain with china reopening for some time now. it is nice to see that finally happening and a rally out of the internet stocks in china.

evaluations conversely to what we are saying in the u.s. and europe are attractive. compound that with the fact that the economy is opening and the government showing their support. we think that will obviously propel the market there but to your point, will you help the overall global economy? it will have some impact but the u.s. still is the behemoth within the global market and if the u.s. market rules over, it will be difficult for the chinese economy to completely avoid that. shery: what about the u.s. markets? do you expect the downside to continue in equities? we continue to get the hawkish rhetoric from fed officials but at the same time some are saying about this is signaling that they are willing to give it next year -- pivot next year? >> look at the bond market, the

bond market is laughing in the face of the fed right now with the 10 year falling below 3.5, we have come up off of a high. a tremendous move on interest rates despite the fact that the fed is pushing for increased interest rates. if you start there and say that does the bond market have this correct? we believe that they do. ultimately, the federal reserve will have to pivot. the question is whether they are willing to let the economy suffer for some time period before they do that. our base case is that they will. because of the aggressive tone that they have had for the past several months, we think that they will push forward and overshoot this. we think this is why we are seeing yields in the bond market come down, because you have a dynamic where inflation rolls over about the fed will continue to push and that will lead to a

declining growth in the u.s.. that will push interest rates down. we are convicted behind bonds right now because of that story. shery: i was going to ask, are you positioning as bond yields decline and where are the opportunities? >> we saw 4% on the tenure as the cycle has peaked and we overshot that a bit for a period of time. it has collapsed since then. you see yield come to 3.5%. what we have been doing is extending duration and our portfolios whether you are buying 30 year bonds or using an etf like tlt, you are finding some way to position yourself in long-duration, usually treasuries, we are focused on the treasury market and getting exposure to interest rates. we do see yield continuing to come down. we think that there is more opportunity for the tenure to trade back to 3% before it

trades at 4% -- 10 year to trade back to 3% before it trades at 4%. shery: you can get a roundup up of all of the stories in today's edition of dayb . you can customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪

shery: the world cup in qatar has ended with one of the most exciting matches in the world cup, argentina leaning, equalize in the second half, it went to extra time and finally a penalty shootout. lionel messi beating france in

the penalty shootout, the south american country taking the trophy home for the first time in 36 years. the first south american country to win the world cup in fivefold cups since brazil took it over germany back in 2002. you see the excitement, bloomberg joins us -- bloomberg's patrick joins us. what are you seeing? >> is complete chaos here and in a great way in argentina. the economy is a mess but today it is all about euphoria and people are celebrating. i even saw a married couple in their wedding outfit from yesterday still partying in the streets. it is a magical moment in windows aris -- buenos aires. haidi: skyrocketing inflation

near 100%, political polarization as well. this is a meaningful victory for argentinians. >> unlike many other countries, argentina insert a football or soccer obsessed country. this will carry for a good while, it is new year's and into the holidays. going into next year, the reality will sit back in and argentina has to face some difficult times. inflation is around 100% or higher throughout next year and a presidential election. this is a joyous moment, it will allow reality to slip back in. shery: for now, and tonight, it is a day of celebration and it was a personal victory for lionel messi. this could be his last world cup?

>> today is really a celebration for the country and teams but also for his legacy. his faith world cup, he is 35, he said this would be his last tournament, for him to go out with a victory, in the shadow of the great argentinian legends, he was criticized for not being able to win it world cup like he had one and he shattered that today and cemented his legacy on the world stage as one of the best players. and possibly in our history. haidi: we have breaking news crossing the bloomberg, an alert from elon musk, his twitter poll asking should i step down as the head of twitter, i will abide by the results of this poll, the current findings are over 40% voting yes and 58% voting no. this comes amid turmoil for the

company, he took over twitter in november, we have had the cost cuts in terms of the layoffs of a thousand employees, a further 2000 people resigned as well, the suspensions of journalists on twitter who cover elon musk drawing some from global newsmakers and lawmakers as well as european authorities as well including a rebuke from the president biden team as well. some of those suspensions have been reversed. more to come on daybreak asia. this is bloomberg. ♪ hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician. i was 424 pounds, and my doctor was recommending weight loss surgery.

to avoid the surgery, i had to make a change. so i decided to go with golo and it's changed my life. when i first started golo and taking release, my cravings, they went away. and i was so surprised. you feel that your body is working and functioning the way it should be and you feel energized. golo has improved my life in so many ways. i'm able to stand and actually make dinner. i'm able to clean my house. i'm able to do just simple tasks that a lot of people call simple, but when you're extremely heavy they're not so simple. golo is real and when you take release >> this daybreak asia. and follow the plan, it works.

bankman-fried is dropping his

fight against extradition to the united states. the disgraced empty! founder is saying he will not buy extradition in a court appearance next week. he was denied bail. u.s. prosecutors have accused him of a range of crimes including wire fraud. the number of covid positive debt in beijing's funeral homes is surging. this is raising concerns that china is hiding data in the worst wave yet. a crematorium said they had cremated over 50 covid victims but the hospitals are overwhelmed. china has not reported covid mortalities in two weeks. china is ending at business friendly policies. you should ping other officials pledged to support the private sector. a marked shift from previous years.

global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. annabelle: adding to what you were saying about china's economic or conference, we could see big moves in the markets went mainland china and hong kong opens. one of the sectors we are watching closely is the hang seng tech cage. what we heard from officials about the outlook for internet companies and what beijing wants is to be driving economic growth into the years ahead. a big contrast to what we heard last year's conference one the focus was on raining them in. the 50 moving average -- 50 week moving average, moving above that for the first time in 18 months. we are 30 minutes out from the opens in korea and japan and look at what the outlook is facing because we do have futures opening in the singapore

session for japan and the nikkei pointing to a drop of one person at the start. we have been watching the moves in the yen quite closely and we see a strengthening a little bit after we did have local media reporting that the prime minister could be considering to add flexibility to the 2% inflation target. we are looking at lower. australia is being led low by the rate sensitive first a sectors like i.t., real estate, financials as well. an indication that there is repricing around a central banks and the action on rates and also the fed. haidi: the fed says the central bank needs to sustain tight policy to fight inflation. >> i am a little bit more higher

from the median and the sec because i see more inflation persistence than that. that is the key point. if the committee's path is very valid, we need to continue to bring it up. interest rates into a restrictive stance. we did a lot of work this year in getting expeditiously to a restrictive stance. we are starting that, bringing rates even higher. we will need to be there for a while in order to get inflation on a sustainable downward path. my path is stronger than the medium path next year. the median is between five and five and a quarter and i am above that. the message from the sep is we have to continue to raise rates because we have more work to do on inflation. we have had some news, it is still too high and that we need

to do what we can with our monetary policy to bring it down. >> that raises the question of when you raised your forecast for where the inflation rate will be, at the end of 2023? >> we put in the forecast, in last september and it accumulated evidence that shows that inflation did run a little higher than we had expected this year. we are starting at a higher level. the work we are doing with interest rates over the next year and the following year is going to get inflation down. look at this, there is a material improvement in inflation next year, not back to 2%, but coming down. we will have to adjust policy to ensure that inflation is sustainably down, back to 2% after that. that is what the job of the fed is. make sure that we get that inflation moving back down. that is what our policy path in

the sep conveys. we are committed to getting back to 2% price stability. shery: the japanese yen is opening the week higher as the prime minister is reportedly planning to revise a 10-year-old record with the boj. this could add flexibility around the 2% inflation goal and the details from our rates reporter michael wilson, what will this flexibility look like? >> the question. good morning. a could come in a couple of different ways that ship could come in a -- it could come in a couple of different ways. it was a bit of a surprise to get those comments at all. whether it is a widening of a band or widening of what the fed

has got, a trading range for the fed funds, something like that was introduced that would give the boj flexibility. what it would also do is also give strength to the japanese yen. it has been pared back a little bit and i think that speaks to the fact we are at the end of the year and we are one day out from a meeting tomorrow. the market had a go at the downside and they have had over half a percent. it did not really,, i would be much happier if i had a reference or endorsement as it were that narrative that may come in the bank of japan statement. if it were to be officiated in some sort of official context,

you may see people who typically finish for the year start to deploy capital in that direction earlier than they would plans for march. how they be brought forward a little bit. haidi: how does the direction of the dollar sway the trade as well? you have twin forces, the flexibility hope and the easing up of the dollar pressure. >> i think as long as the fed speak is coming down the pipe, it is still hawkish in nature. you have these attempts to cancel each other out which is what we found in the gains in the yen this morning. also the dollar does give it a natural bid behind the fed. equity markets are in a

crossroad and you may see a bit of haven yen buying if the unwind we have seen in the last few days and weeks and the day, if that extends, regardless of where the dollar or what the dollar might do, you may see some haven flows back into the yen which is a revisit, they have not done it for a while, the dollar has been the sole haven in the fx markets. if the move is long enough, there may be some repatriation by the japanese funds. haidi: that is our rates reporter with the move we saw in the yen this morning. the u.s. ambassador to japan rahm emanuel points us to discuss the new social security policy -- national security policy and their moves.

this is bloomberg. ♪

haidi: it is time for japan ahead on daybreak asia, this is a story we are watching closely, japan distancing itself from

its pacifist past. let us get some more from bloomberg's politics reporter. we talked about this and it seems to happen at a time where we are seeing and meeting of the original security risks. is that why that coupled with what we are seeing with the war in ukraine, is that why we have not seen a big protest that historically has accompanied any attempt to boost defense policy? >> i think that is one of the reasons, certainly. i think the war in ukraine has caused a huge ripple of consent through japan even though it is so far away. the parallel to japan's situation thing a relatively small nation next to an overwhelmingly large power, the power is obvious to everybody in japan. that is a big reason why there

has not been much pushback on this issue. there are some other issues we can look at and for example, if we compare the leaders with who we have in place, prime minister kishida who is seen as a dovish figure. look at 2015 when abe was pushing through changes he was someone who has seen as more questions and hawkish -- aggressive and hawkish. it was easy to galvanize opposition to his defense. shery: how will they pay for all of this? >> that is the big issue on the agenda at the moment. if you look at the polls on this move, generally, you see most people are in favor of a boost in military power. when you ask how, if they want to have a task raise -- tax rates, most people say they do not. the issue is something that is not early between -- only

between kishida and the public but his own democratic party, people who do not believe is a good idea to raise taxes. kishida said it would be responsible to put the burden on this future generation. for the moment, the tax issue down the road, he will discuss in the next year. that will be something that will because in conflict in his own party and will continue to weigh on his own popularity which is already falling. we saw a poll that puts his popularity and support rate at 25% which is quite a concerning rate for him. shery: joining us exclusively is rahm emanuel, u.s. ambassador to japan. thank you for your time today. what do you make of this

expected shift in japan's national security strategy? rahm: it ushers in a new era in defense of democracy. for the joint efforts of the united states and japan that have moved from alliance protection to alliance projection into the region. i do think it puts a capital d back into deterrence. both the documents that outline the policy, the different strategic document that the prime minister called for over a year ago before the earnings came on the ukrainian border and the budget that makes that strategy come to reality over five years, sustainable conversion. it is a welcomed development by america. japan is a partner with the united states and not just for our efforts in japan, but in for the region. if you call for a free and open

in the pacific, you have to have both a military, national security, clinical, diplomatic, and economic engagement and this complements all of that for japan. shery: this includes a south korea who will not be too happy about japan's moves. while that strain -- what will strained relations between japan and south korea mean for the u.s.? >> there have been clear articulation both by the prime minister and the south korean president for better relationships, both have taken courageous risks on behalf of that. there has been discussion and dialogue. 40 trilateral meetings between the united states, south korea, and japan. they faced different strategic environments and they have acknowledged that and that is why the president of south korea has been courageous in being upfront about what the future

holds and needs and japan's prime minister has been courageous and upfront and honest with the japanese public about the steps they have to take to get their own defense and the collective interests when you call for a free and open and dependent -- independent in the pacific. you have to have a comprehensive policy. look at what the united states is doing, it is not about investment in defense. diplomatic engagement, economic engagement with the region, cultural engagement, take a look at this. when there was a march 3 vote condemning russia, eight out of 10 voted to condemn russia, four cosponsored the resolution and japan and the united states were in trouble in that persuasion -- integral in that

persuasion. shery: changes in the region? >> the united state is a permanent pacific power and presence. i just militarily, but economically. japan is standing shoulder to shoulder our australia is doing that -- and australia is doing that. the one thing that china hates seeing is not just the united states but our allies standing with us in a singular effort, strategically, to basically backup the principal of a vision of the region that is one that is free from china's dominance and has countries who economically and independently develop. that is what china hates to see, they want us to be out. japan and korea and australia

and new zealand, that all speaks to a collective action. that is a power and presence that china does not want to see in the indo pacific. haidi: how much of that action unfortunately for the u.s. reflects the united states' challenges in presence in terms of military and strategic security dominance in this region in the face of death strategically confident and aggressive china -- of a more strategically confident and aggressive china? >> the way i look at this, in direct terms, we are a permanent pacific power and presence. that is what our investments across the waterfront of issues. china, they are the rising power, if you do not sign up today, we will not have a c4 you. that is the argument and everything we do with our that basic premise.is backingu

whether it is with the philippines and the security of their islands and japan is not only is self in defense but devalues in the region out the is true of how we project was australia. china cannot, china does not have allies and friends. only subjects. the united states have allies that carry their weight and pulled the weight forward with the united states. that is what china does not want to see. let alone around the world. it does not get more complicated than that. every time the united states or japan, australia, or canada act in those interests, the philippines, china cannot stand it and condemns it because it goes to the core differences. we have allies and friends, they have subjects.

the only bend to their will. the way that they do investments, develop in the belt and roads, deathtrap, extract resources, violate international maritime rules in the philippine waters, look across the board, china does not act in the interest of a shared interest, the only act for one, united states for all of our challenges, we do it in a collective way with our friends and allies. we do it with a different objective. haidi: the defense guidelines that govern the military cooperation between the u.s. and japan, do you expect these to be meaningfully revised? what changes would we see given that the conversations between the two countries could happen as early as next month? >> if i heard about the national security documents? if you look at it, these three

documents by japan were called for, updated, for the first time in a decade. the prime minister when he becomes out -- comes out and gets elected, he asked for these to be updated. we were also under president biden's prescient updating our own national security documents for the region. they are complementary and they have a shared vision of the future and a shared sense of the responsibility we all have to play. i think the two of them while they are reflective, singularly for the united states and singularly for japan, they are reflective vision of the world and the challenges and the complexities and also the opportunities to work together. >> what does the u.s. want to see in terms of negotiations over the potential changes? >> are you saying the potential changes to japan's --

shery: the cooperation alliance and the defense guidelines! >> sorry you are cutting and in out. -- and out. >> consistent with their laws and abilities to do things. when you look at each of the elements in the defense budget, whether it is counterstrike, on the coast guard, munitions, space and maritime or sub or whether it is logistics. all of it is driven by the ideas and challenges they face today and in the future. what are the things they need to do for that self-defense? shery: i hope you can hear this question clearly. we are talking about china and a reaction we may see from the

beefing up of the military spending in japan. what is the breakpoint at this point? what could be a breaker for this relationship between washington and china? >> let me step back. japan is doing this now, today. take today, china is under a decade or a two decade long major military buildup. north korea, i think after today it is close to 90 missile tests in the last year. you have seen different types of actions of russia in this region. if japan was not doing this, you would be asking me what is taking japan so long. think about what they are facing today and what the united states as the principal ally of japan is facing? a major military buildup by china.

major different type of confrontation by russia, not just in ukraine but in the region. in the morning after north korea fired 89th and 90th missile. different types of missiles. the question is this is a reaction to? it is only deterrent, it is in self-defense. it is a reaction is that a precipitating event. haidi: i hope you can hear me, i wanted to ask you about the latest when it comes to chip controls. we know that japan is looking to join the u.s. along with the netherlands on that. why is that important and how does it tie into the military cooperation? >> i think of it, if it is one thing if you have competition

and it is another if you help a competitor compete. the united state says if you have china as articulated by president xi jinping, we are not supporting and doing the hard work and research to find you to compete against us. we get that is competition, we are not in the business of helping you do it. the entire business of semiconductors is elementary to what japan just announced with ibm and logix chips. that is what the united states is trying to do. all of that is complementary in that effort. haidi: it is a pleasure having you with us. this is bloomberg. ♪

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shery: we are counting down to

asia's major market open as investors suggest more hawkish fed rhetoric. we expect a more inflation numbers out of the u.s. and japan and we have the boj decision and the cpi target leading to more strength in the yen. haidi: and chinese assets, we are watching when it comes to tech stocks. the big takeaway from the conference was returning support to the private sector, which will be huge since the virtual clampdown against tech entrepreneurs. >> we have the open of japan and korea upon us and the start of trading for cash treasuries. we saw the 10 year yield edging down a little bit. underperformance of the friday session but the focus to start this week is the fed and the

continued repricing we see and what is happening in china, with anecdotal evidence of deaths arising in beijing. the capital is not reporting new fatalities. the nikkei is edging lower at the start of trading. a lot of moods and interest in what is happening in the yen. local media reporting the prime minister added flexibility to the boj target of 2%. in korea, at the kospi and we are watching a tech heavy nasdaq. up fractionally in line with what we see in the nasdaq. future is stable but three straight days of logic -- of losses. reports that north korea has fired a suspected missile on sunday. the korean won is close to the

1300 level, a little weaker this morning, not unexpected given the china risk aversion. the best performing currency in asia this quarter and deutsche bank said it could strengthen to 1100 in the next couple months. we are one hour into the australian session of the asx 200. few sectors are in the green but energy is one. interesting moods in that -- moves in that complex. wpi and brent crude moving higher. bullishness in china. on the white house plans to begin refilling strategic reserves. haidi: covid wave in china is awaiting among concerns. george is the executive director and head of research at k2 asset management. repricing and reassessment from

a sentiment view when it comes to expectations from the fed. not the optical outcome for -- optimal outcome for markets. how worried are you? >> i'm cautiously optimistic. we are looking at predicted elements, that is what we try to do, since october peak inflation is behind us while hawkish sentiment and narrative across the fed speakers will continue. nothing has changed in the past week and the continuation of peak inflation and soft data [indiscernible] rolling over inflation and hawkish maintaining risk assets,

looking for the 24 rebound which means markets move at 23 and that is the catalyst. if you go overweight equities and if you feel comfortable doing it and once the bottom is confirmed, equities have already rallied in anticipation of it. shery: there is a huge amount of change when it comes to china, covid across the health care system and economy and takeaways from the work conference, prioritizing of support for private enterprise is a shift from the tech crackdown. what opportunities do you see that might be more market friendly from beijing? >> market friendly, a bit far to get there for next year. china has been clearly on investable for obvious reasons

-- not investable for obvious reasons since the crackdown. the market reopening of china, it is required to get to a two point six global growth for next year and you need china to be open and a five from china from the low base to get there. the world needs that. exports of commodities in general into china, the theme for the last half of 20, we like japan and thailand and korea, singapore, indonesia, australia. underweight of china so opening is a good sign but it is very messy and the pboc and beijing

will create pragmatic outcomes but it is difficult to go overweight despite the value. we would rather play european or german valuations than having china be one of the players but southeast continues to benefit the marginal investment dollar that has not gone to china over the past two years. shery: who benefits the most when it comes to china reopening? our asian equities going to outperform, especially with a very hawkish fed? >> very sympathetic to that statement. a very easy narrative but it comes to the resilient nature of the u.s. dollar.

southeast asia a broad outperformer as china reopens internally. not to oversimplify but japan, australia, but against the region once dividend, rhyolite -- reliability, liquidity, but indonesia is a very good spot for that demand cycle, korea, thailand, and singapore. so everything is lining up for a good year for southeast asia but there are many moving parts. we think next year will be volatile but not as much as this year. it comes down to yield inversion, long bond year does yields for the u.s., and sympathetic southeast asia to be a beneficiary of china reopening domestically. shery: when it comes to japan, we hear that we could see more flexibility on the 2% target coming from the boj in the future.

what would that mean for markets, if there is a tweet in the yield curve -- tweak in the yield curve set? >> it would be a surprise of markets are not priced in. adjust but target or tolerate price pressures going forward, any part of japanese exposure. so not helpful for the global economy. champagne josh japan needs to maintain target inflation and while the weakness of the yen did scare the economy, it would be a surprise not priced in and it will be looked at volatile short-term if [indiscernible] shery: george, always good to have you with us. let's get to vonnie quinn. vonnie: north korea fired at

least two suspected ballistic missiles sunday following the testing of a new rocket engine that could enhance ability to fire long-range missiles. it has been called a violation of u.n. missions. the prime minister of malaysia is holding a confidence vote later monday. party commitments so far give him the backing of nearly two thirds of the lawmakers. leaders in and wars coalition have signed a pact to ensure his administration completes a full five-year term. the president of peru has ruled out resigning, saying it would not cause the political crisis and she insists on bringing forward presidential elections a day after congress voted against

it. she asked the approval of the reform needed to hold the early vote and says it is what 83% of them want. the former prime minister of pakistan moves the to dissolve two regional legislators to return to power. he is pushing for elections. it has been called a political gimmick. 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. this is bloomberg. haidi: let's look at early movers. >> defense stocks in japan and korea are looking mixed at the start of trade. what is driving risk aversion is north korea firing more ballistic missiles with a new

engine test sunday and not batches up tensions -- that ratchets up tensions. there is a lot of concern around the new engine being fired because the path of the missile could now hit almost all of japan. shery: still ahead, the outlook of china's economy with the brookings institution as the country grapples with the latest covid outbreak. and why there is concern china might not be disclosing virus data. this is bloomberg. ♪

haidi: china has pledged to revive consumption of support private businesses after dropping covid strategies.

let's get over to john nails. when it comes to key takeaways, waiting for tech stocks today to go gangbusters on the expectation the crackdown is over and beijing wants to provide more support and rejuvenate confidence in the private sector. john: really changed tone coming back into the work conference. end of 2021 there was talk about reining in the wild growth of big internet giants in china and now, lots of talk about helping the private sector boost growth, lots of focus on getting people back to work. after the conference ended on friday, the party secretary, the highest working official in a province visiting the headquarters of alibaba, the biggest internet giant in the

area. a big turnaround and markets will probably react to that. shery: how is china's exit from china -- covid zero going so far? >> early days are bumpy. there was initial enthusiasm from the population that there would be no more testing and lockdowns but that was replaced with the realization that if you remove covid, you are also unleashing the virus and we have seen businesses close because there's not enough staff, lines at hospitals, medicine hard to get, and people trying to deal with disruptions. goldman sachs, morgan staley, cutting forecast for 2020 two but raising 42023 because it -- because they think if we full -- pull forward disruptions will be more growth readily visible in 2023. haidi: have we heard much from

xi jinping himself since the dropping of covid zero and any effort to ingest -- inject confidence as china goes through this? state propaganda is doing their part. john: we have not heard from the president on the state of the covid exit. it is a gamble for beijing to exit as quickly as they have to dismantle covid zero so rapidly. most expected a gradual exit and that is not the approach they have taken. they have taken steps very quickly on the risk is theft. we have had reports locally of funeral homes being busier than normal. we have not had any official deaths reported since the start of december so that has raised suspicion about if the government is not citing covid

for deaths happening now. if there is a big spike in deaths it will put pressure on local governments to consider putting in covid zero restrictions again to try to stop infections and deaths. haidi: let's take a look at how futures in europe are opening. a downbeat ends to the week. the ecb, boe, and fed decision. an extension of losses with european stocks slumping to the lowest in over a month on hawkish messaging following the fed in terms of sticking to a hawkish tone to continue the fight against inflation. we do see msci europe is in the red. dax futures modestly high. u.k. stocks, it has been a dramatic year with the

recession, a 40 one year high for inflation and political turmoil but we are hearing from a lot of strategists that we see extraordinary value when it comes to u.k. stocks, particularly compared to what we see in the u.s. shery: same in europe. he you -- the eu states are set to discuss a price cap lower than what was originally planned. steve, what do we know about the cap? >> it is looking to be about 188 euros per megawatt hour. the european gas prices closed on friday around 115. so the cap is much lower than what was proposed before, which was nearly three times higher and required a 10 day stay above prices. it was seen as window dressing,

there is no way that cap would be implemented. but 188 euros for three days, then you will have a cap executed and you would not be able to trade contracts above that price. that has happened in the past and if there is a cold spike, if this cap is agreed to, it could be implemented. so this looks to have more teeth than the previous one. there are a lot of discussions. germany has not necessarily been a big fan of stricter caps so there will have to be discussion as the eu has to agree on the cap but it could provide relief for markets and downward pressure for prices, which are trading near the highest level for this time of year ever. haidi: if there is agreement, does it start talks on broader energy measures as well? >> absolutely. this is just one piece of a

larger puzzle the eu is putting together to try to help get over the energy crisis. they are also looking at potentially jointly procuring lng so they are not outbidding each other. there are a lot of nations with their own interests in the eu so there have been times in the past where they would pay a little more to get a contractor and get supplies over another company. going forward, maybe they will join together. they are looking potentially at other measures to help reduce demand. the gas not used is the best way to avoid future crunches so they are looking at all the ways possible to reduce consumption so that they can get through the crisis that has cost the region nearly $1 trillion. shery: you can get a roundup of

all these top stories on today's edition of daybreak. it is also available on mobile and our app and you can customize your settings so you only get the news on what you care about. this is bloomberg. ♪

shery: now to the latest on twitter. elon musk is seeking new investors for twitter. fundraising follows more turmoil, cost-cutting, blocking journalists, and now a tweet holding users if he should step down as ceo. su keenan has the latest. let's start with the financing round. >> an investor who participated

in the initial buyout round for twitter at the end of october confirmed that elon musk family office has been reaching out to potential backers the past week. they want new investors to come in at $54.20 per share. elon musk said he overpaid but he is confident going forward the longer term prospects will bear out the cost. his initial buyout loaded up twitter with costly debt and he has cut jobs since taking over. it is unsure if new investors would help pay down debt and turmoil is weighing heavily on tesla stock. last week was the worst since the early days of the pandemic. a steady slide. tesla down 57%. the slide has been accelerated

by analysts citing concern about demand for tesla vehicles and accelerated by the fact that elon musk sold 3.5 billion in shares last week and many speculate it was to help pay down debt weighing on twitter. haidi: let's get back to this poll. he says he will abide by the responses he get on whether he should step down. >> he has put this out for twitter followers. he has been under enormous criticism. he fired more than half his staff. he has tweeted out a poll on whether he should step down as the head of twitter, yes or no. it went out on sunday. typically polls are up for about 24 hours. when he asked if he should sell tesla shares for tax purposes, should there be an edit button.

it will be interesting to see the results that he says he will follow. he also said that going forward, he will hold votes on major policy changes. he caused a whole new level of controversy over the weekend and late last week by blocking a number of journalist accounts, mainly journalists who allegedly had revealed the location of his private jet. >> you are not special because you are a journalist. you are just a citizen. no special treatment. if you doxx, you get suspended. end of story. >> but the fact that he blocked a number of journalist accounts, some of which he has reversed, was criticized over the weekend by the eu and u.n. and he announced he will remove accounts created solely to

promote other social media platforms like facebook, instagram, will be taken down. a lot going on and it will be interesting to see how it plays out on monday. haidi: let's get a quick check of the headlines. a subsidiary will dispose of a minor oratory -- selling shares for $772 million. the latest sign that beijing's chip industry is becoming isolated from the world. intel will reportedly delay construction of their chairmanship. intel is seeking more government subsidies. the chipmaker says a lot has

changed since their first announcements. hyundai is investigating child labor allegations in alabama after a reuters report. they employed minors at the plant, it has been reported. child labor violations were found at two other suppliers. plenty to come. this is bloomberg. ♪ hi, i'm lauren, i lost 67 pounds in 12 months on golo. golo and the release has been phenomenal in my life. it's all natural. it's not something that gives you the jitters. it makes you go through your days with energy, and you're not tired anymore,

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>> he is a check on markets 30 minutes into the session for

korea and japan. looking risk off to start the week, not surprising because u.s. stocks had their longest weekly losing streak since september. we see sectors more rate sensitive leading losses, industrials, material stocks. those that benefit come up are looking more steady in the session today. what is interesting is while hong kong is positioning for a slightly lower start in futures, given we had the work conference wrap up after a on friday and the pledge from the president and other officials in beijing is to revive consumption so we could see that look more positive, particularly for tech stocks as we enter the trading session. another move in the japanese yen, holding onto earlier gains against the greenback.

local media reports the prime minister may add flexibility to the long-standing agreement with the blg -- boj around the inflation target. one stop of note in the japanese session, toshiba is slumping. we heard from the nikkei the consortium trying to buyout toshiba, japan industrial partners, could lower the valuation down to ¥2 trillion, just over $16 billion. haidi: sps -- sbf details. what is the latest when it comes to change of plans? we reported the conditions he is

being held in the bahamas. >> this might have played into it. initially his lawyers said he would likely contest the extradition and now we are told he is likely not to do so. he apparently had his own jail cell in the maximum-security wing of the prison but the prison is notorious for overcrowding, that sort of thing so it would not necessarily have been a pleasant place and who knows what actual factors were that changed his mind but apparently he has changed it and will now not contest the extradition. shery: what would he face when he arrives in the u.s.? >> it could speed things up. the extradition fight can take months or years before you can get things done so this would allow the case to proceed more quickly. and it likely would.

that is the main thing, it will let things go a little faster. you would not have one aspect of the case contested and it could mean prosecutors can get going faster. shery: let's get to vonnie quinn for the headlines. vonnie: sbf said to drop his fight against extradition to the u.s. and will not -- and has been locked up in a facility in the bahamas after being denied bail. u.s. prosecutors have accused him of a wide range of crimes, including wire fraud. the number of covid deaths in china's future i will -- funeral homes is rising. they have admitted at least 30

covid victims and funeral homes in the capital are overwhelmed but china has not reported a single covid related fatality in two weeks. their top leaders plan on boosting the economy next year. at the work conference, the president and officials pledged to revise consumption and support the private sector, a shift from recent years. priority is on boosting gdp and policymakers likely to target growth at 5% or higher. eu member states are set to discuss a gas cap one third lower than the original proposal. the government that holds the eu rotator and -- rotating presidency will lower the cap. 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. this is bloomberg.

haidi: plenty more to come on daybreak asia. this is bloomberg. ♪

haidi: rates path globally is

still in focus, pulling down sentiment as we get into the last two days before christmas. the fed resolves to keep raising rates. covid hitting beijing and dampening sentiment. kospi down by 4/10 of 1%. australia, pretty flat start to trading. kiwi stocks down half a percent. an initial jump in the japanese yen on the report of potential flexibility on monetary policy. a potential test when it comes to the kiwi rally. aussie yen and aussie dollar continue to outperform. shery: china's top leaders

finished an economic conference but i made it rising covid infections and deaths, the transition to living with covid will be bumpy, according to our guest. david from the brookings institution, how difficult is it to gauge the state of the chinese economy for next year when the exit from covid zero seems so uncertain? >> there is a tremendous amount of uncertainty. the economic situation this year was terrible. november data was very negative in retail sales and exports and i think it is because the economy has been terrible that they finally changed the zero covid policy. while that is probably necessary, the transition will likely be bumpy. it has happened very rapidly and now we see a surge in covid in beijing and other cities in china. there is not as much testing as

before so it is hard to actually know the extent but probably china will have a difficult few months as there is a surge in cases. optimistically, the virus situation settles down by late spring, and then china can bounce back to some extent. still faces some other headwinds but if it can get the covid situation under control, that would be a nice boost for consumption. shery: and policymakers will try to boost the economy through stimulatory measures. what have you gauged from the conference? >> i was encouraged by the report from the conference because they are going to pull back on fiscal stimulus in 2023. they are not going with their traditional tools and they have

language about essentially paying more attention to the private sector, domestic private firms and also looking at concerns of foreign investors. we have to wait and see what measures they have but it is a nice change in tone coming from the xi jinping administration. haidi: is it an issue of necessity? outlook is an looking great. so do we see this return to supporting private entrepreneurship because they need to rely on it as an engine for growth? >> i think you are right. we are seeing pragmatism, which is a good thing. so i think the change in covid policy is one surprising example. and the overall government indebtedness is becoming quite serious. they have gone to the same playbook many times, building

local infrastructure to stimulate growth. they have overbuilt infrastructure so that playbook will not work as well. so it is encouraging that leadership is responding chromatically -- responding pragmatically. shery: with your experience, how do you view the relationship between washington and beijing, particularly with the headwinds facing china when it comes to tech ambitions and access to chipmaking equipment and flogging global demand? >> the relationship between the u.s. and china has deteriorated sharply. the measures the u.s. is putting in place for national security reasons are having a significant effect on the chinese economy. that is an additional headwinds.

counterbalancing it, china is participating in new trade agreements, partnerships with southeast asia, japan, south korea. a smart move for china is to respond to the u.s. action by opening up the economy more rather than closing it off and we will have to see if they follow through on that in the next year or two. haidi: does a more difficult domestic growth situation and the political challenges with covid zero change china's ambitions to be a friend to the developing world, given the criticism that perhaps they created a trap for themselves in the huge amount of lending they made to africa? >> the difficult situation in china has to have some effect. there building road initiative has slowed down to some extent.

they will not give up on it because it is she xi jinping's flagship initiative and it is the natural tendency to invest more with other countries but i think it is pulling back to some extent for pragmatic reasons. it has financial difficulties. many countries it lends to our in difficult financial situations. so pragmatic adjustment resulting in the whole program becoming somewhat smaller, so in that sense, yes, china responding to the external and internal situation by cutting back what it has been doing in the developing world. haidi: david, always great to chat with you. changes in japan.

they are embracing a new national security strategy. we asked the u.s. ambassador to japan about implications he sees for the move. >> i think it ushers in a new era in defense to democracy and the joint efforts of the u.s. and japan that have moved from protection to projection into the region. i think it puts a cap on deterrence and the strategy, the confidence that outlines the policy, the documents the prime minister called for over a year ago before any missiles were fired over ukraine, and the budget that makes the strategy come to reality over five years. it is a welcome addition by america and japan is being a full partner with the united

states, not just for our efforts here in japan, but into the region. if you call for a free and open indo pacific, you have to have a military national security, political diplomatic engagement with the region, and this compliments that for japan. shery: we are talking about china and the reaction we might see from the beefing up of military spending in japan. what is the breakpoint and what could be a circuit breaker for this relationship between washington and china? >> japan is doing this now, take today. china is under a major military buildup. north korea i think after today

is close to 90 protests in the last year. you see different actions of russia in this region. if japan was not doing this, you would be asking what is taking japan so long. think about what they are facing today on what the u.s. as an ally of japan is facing. a major military buildup by china, major type of confrontation by russia, not just ukraine but the region. north korea just fired the 90th missile. at what point does this trigger something? it is a reaction. that is number one. number two, it is a deterrent. in self-defense. so you are asking the breakpoint but this is more of a reaction than a precipitating event. haidi: we know that japan is

looking to join the u.s. and netherlands on chip control. how does that tie into the military corporation and why is it important? >> it is one thing if you are going to have competition. the other thing is if you help the competitor compete. the u.s. says if you are going to have china 2025, we are not in the business of doing the hard work and research to find you to compete against us. we get it is competition but we are not in the business of helping you do it. so the effort on the semi conductors is complementary to what japan just announced on logics chips so what the u.s. is trying to do, so it is all complementary to that effort. shery: brian emanuel's begin with us earlier in our japan

ahead segment -- speaking with us earlier in our japan ahead segment. this is bloomberg. ♪

haidi: scenes of celebration in one sros. argentina claims -- in one is iras -- in argentina as they

claim the world cup. they are gathering downtown on sunday evening to celebrate the victory that at times did not seem certain. shery: it was such an exciting match. tide and then penalty shootouts. knowing argentina and south america, that party will continue into next year. [laughter] i mean we are celebrating with them. it is amazing. haidi: to get so excited about the world cup, we know it comes at a time of enormous difficulty for argentina. shery: and you know that i don't follow any sports. this might convert me into soccer.

this was really exciting. here's a quick check of the headlines. plans to build an electric vehicle assembly plant in new mexico could be announced this week for tesla. details are being worked out and talks involve state government and mexico's foreign ministry. this is part of a push to expand global manufacturing. the avatar sequel has generated lower revenue than expected. a raked in 130 $4 million in north america. -- $134 million in north america. it debuted in over 12,000 screens in the u.s. and canada and 40,000 internationally. haidi: the tide is expected to

turn when it comes to asian equities after two dismal years. it is about china potentially reopening and a weaker dollar. let's bring in our guest. doom and gloom when it comes to recession across major economies but what are we hearing about prospects for returns in these parts of the world? >> the party could continue here in asia but for different reasons. asian equities could finally outperform after two years of underperformance. strategists see a 9% return from now through the end of next year according to a survey we did. the reasons are china's reopening and potentially a weaker dollar and the end of the chip down cycle.

these factors have weighed on asian this year and we could see they all -- we could see them all debate next year. forward earnings estimates for asia pacific up 3% but downgrades continuing for the s&p 500. shery: changes in recommendations heading into 2023? >> the biggest is china, the idea that it is investable again is a major change we see two allocations on recommendations. the second is south korea and taiwan to a lesser extent. both markets have chipmakers as heavyweights in stock indexes and with the market seeing and ends to the down sale -- down cycle, the bets are on these markets could outperform. haidi: what are the key risks

for this part of the world? >> there is a global recession that will hurt exposures and cyclical sectors in early part of the year. the sense we get from strategists is the first half of the year could be tough for asian equities in the second half would be much better as the risks are priced in by the market. the other problem is if the fed does not act on inflation enough , the risk of policy error is there and china's reopening, depending on how bumpy it is, we could see profit taking in the market as well. shery: the outlook on what to expect in the markets next year. and look at how we are trading in the asian session at the moment. pressure on the nikkei down 1%.

when it comes to asia-pacific stocks, health care consumer discretionary leads the way down. the japanese yen is holding steady. a little strength against the u.s. dollar. the kospi is down 6/10 of 1%. this week we will watch key data out of japan. we have trade numbers out of self korea in the first 20 days of the month. australian stock market is down 3/10 of 1%. our markets coverage will continue with the start of trade in hong kong, shanghai, and shenzhen is next. this is bloomberg. sleep per night. proven quality sleep. only from sleep number.

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david: good monday morning from hong kong, it is 9:00 and