>> you are watching "bloomberg daybreak: asia" coming to you

live from new york and sydney. haidi: we are counting down to the market opens. asian stocks are set for a fourth day of declines as investors focus on the outlooks for inflation and rates. boj expect to sit tight. the january 6 house panel recommends donald trump face criminal prosecution for his role in the u.s. capitol low-salt. and sam bankman-fried sent back to jail. shery: u.s. futures muted at the open after we sow pressure in the new york session. the s&p 500 falling as much as 1.4%. consumer discretionary leading. investors are anxious about the pace of the fed rate hikes but where will that leave the economy? are we heading towards a recession? that is the big question.

we had broadside pressure was not helped by data we got in the u.s. with homebuilder sentiment sinking to the lowest level in more than a decade for the month of december. this excluding the pandemic. higher mortgage rates not helping and higher input costs not helping. despite the risk off sentiment we sought the oil price rebounding in the new york session. still fragile trading given we are seeing a second month of losses already. >> energy stocks in focus. australia -- we are watching the energy sector closely given the moves. unchanged at the start. we do have the open of the asx 3 200. investors -- we are trading down for a fourth straight day. yield curve shifting higher and the aussie strengthening based

on improvement in relations possibly between australia and china and also the weakness we saw coming back into the greenback. taking a look at what we are seeing in the rest of the region because we have kiwi stocks are ready and they are looking fairly steady. a big move is at the bank of japan and the decision do later. in terms of what we are seeing in the futures, nikkei futures looking for a weaker start as well. we have some strategist saying it is looking resilient, the japanese stock market in terms of other regions. it is down to what is happening in the yen. weaker today than it was at this time last year. shery: we already had a lot of ella to liddy with the japanese -- we already had a lot of volatility. the focus on any hints of policy

after governor kuroda's term ends in april. kathleen hays has the latest. despite the rise in inflation, no change today is the expectation. >> this was a meeting without a monetary policy report. it is the hens from the press conference after is what we are watching closely. starting with inflation. look at the charge. you can see the top line showing the headline inflation at 3.7% versus the 2% target. a key gauge, core cpi up -- but governor kuroda does not think it is sustainable driven by import prices and we may have a global recession in the background. these are raisins -- these are reasons why he thinks we should wait until --

the other big thing is the prime minister has talked to the boj about having a policy review when they would look at things like the yield curve control. flexibility around the 2% target. the 10 year government bonds -- the swap yield is shooting way above the cash bonds. this is all going to happen after the new governor is in office. all governor kuroda can do is answer the questions of reporters on how he sees things. in the past he has been resolute. these are the things that people are waiting for. any hint that something may be in the works. haidi: kathleen hays -- critical to all of this is the yen.

we still have web saw action in the monday session on the speculation of a hawkish pivot ahead of the boj decision. let's bring in ruth carson. is this a sign of further yen volatility going into next year? >> the week before christmas -- on saturday we saw a news report that the japanese government may be looking at revising -- an official denied the report but that did not stop yen traders from speculating that this is another sign that the boj -- there is a sense of anticipation building that the last central banks will surrender next year all of this means there is a flurry of trade activity in the

yen heading into a quiet period. that is not looking to stop anytime soon. shery: does this mean more fireworks next year when it comes to the yen? >> it has been an incredible roller coaster for the yen. it fell to a low and then bounced back. the we see more fireworks? absolutely -- will we see more fireworks? absolutely. put things into perspective, the -- fair value of the yen at 100. those are incredibly far levels from where we are today. if the boj -- if billions of dollars of capital comes flooding back into japan you are likely to see a rubber band spring back. the yen could strengthen by a couple of percent in minutes or

days for all we know. shery: ruth carson. let's get to vonnie quinn. vonnie: police and security guards were deployed monday outside of beijing crematorium designated to handle the bodies of covid victims. workers told for immediate that -- workers told foreign media that they were overwhelmed with bodies. that contrast with the official count of just two covid deaths reported by beijing over the weekend. chinese investors will be able to buy and sell shares of international companies. regulators agreed to expand the scope of stocks eligible for inclusion. preparations will take around three months with an official launch date to be announced later. the european commission has warned meta-of a possible breach of antitrust rules. it may be squeezing out

classified ad rivals. the move paves the way for a new business model. the eu regulator has been investigating facebook since 2019. the malaysian prime minister has won a confidence vote in parliament. the outcome was expected after party leaders signed a pact last friday to ensure his administration completes a fully five-year term. -- a full five-year term. his mandate is to fulfill a budget. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: a house committee here in the u.s. has unanimously recommended donald trump he prosecuted for his role in the january 6 us all on the u.s. capital. the first ever such referral of a former u.s. president. for more, let's bring in emily wilkins. tell us more about this

recommendation. >> as you mentioned, really unprecedented recommendation but not one that was fully a surprise given the case the committee has lined up given the footage we have seen today and given everything that former president trump did from the 2020 elections all the way through the january 6 insurrection. the question is, what does this mean? but is a huge question mark. a lot of this will wind up in the justice department's court and they will be the ones to decide whether to actually charge donald trump with any crimes and what they would be. we know they have a special counsel, jack smith currently working on that and investigating that. we don't know when to expect something from that justice department investigation. another question is donald trump has thrown his hat into the ring for 2024 for the presidency. it is a question on if these

proposed referred criminal charges are going to impact his run. we have seen candidates and brace the conspiracy theories and inaccuracies around the 2020 election lose in the 2020 two midterms which seems to be a signal that the american voters are not willing to support a lof the lies we heard around the that joe biden did not win. haidi: politically a could continue to hurt him what his legal perils, could they end up disqualifying him from running? >> absolutely. it depends on what the justice department decides and what if any charges are passed down and how things unfold from here. one interesting angle is the justice department has not wanted to appear partisan which is difficult to do when you are

investigating a former president. part of the reason -- that is why they have the special counsel doing this rather than the attorney general or any of the other folks at the justice department who were appointed. and even the recommendations being out there could impact his chances with a number of voters. the committee did decide to take this unprecedented steps is meant to send a message as to how serious lawmakers on the committee took donald trump's conduct to be. haidi: emily wilkins with the latest. still ahead, emerging a calm -- emerging economies have been hit hard with the global energy crunch. pakistan's foreign minister will join us to discuss the most pressing challenges. our next guest says chinese and em equities looking up. alliancebernstein's david wong joins us next. this is bloomberg. ♪

>> we are looking for an earnings at rez session that could be as big a surprise to the market as in 2008. the are not looking for a balance sheet recession and systemic risk fall off like we saw in 2000 eight. it is very distinguished. haidi: morgan stanley's chief strategist. the outlook is strong for chinese equities and em equities. coining is now is david wong, senior investment strategist in equities at alliancebernstein. we continue to get dollar weakness or at least elder moderation into next year? -- or at least dollar moderation into next year?

david: that is right. while u.s. dollar has been strong that is because of interest rate as well as growth differentials which will ease and even reverse as we go into 2023. certainly, as we look at factors like a softening dollar, that is generally a very supportive outlook for emerging-market equities. and because when we look at 2023 we think earnings are going to be the key issue for equity market investors and the only place where we are going to find improving earnings year over year will be in china. haidi: when you take a look at the return of exuberance in the chinese market is there a risk that we bought on the rumor and then would potentially sell on

the eventual reopening? david: well, one thing that we really like about the chinese equity market set up is not only the fact that whenever we have had a covid reopening story, we tend to see not only significant equity market performance but also much stronger earnings growth really stemming from a greater consumer demand. but it is also a market that is recovering after a couple years now of very negative and weak returns. and when we look at the chinese consumer, while we did have china be the first economy to apparently come out of the pandemic in 2021, we really never saw the chinese consumer get going. and that is really why we stick to our call that 2023 will be a year of the reemergence of that

chinese consumer. shery: will that translate into market strength because we have already seen a rally. will this be another case of buy the rumor and sell the fact? david: that is a fair question especially after all of the false -- we have seen. but we do think that the earnings growth and prospects for china is real. we are expecting somewhere in the region of 10%-15% eps growth in 2023 and a reversal of the declining return on equity trend that we have seen in china for the last couple of years. i think especially when we compare that outlook to the rest of the world, it is the least

bad story, if you will, for equity markets in 2023. while we do think that earnings will be only slightly negative in the u.s. equity market in 2023 and that will be first half loaded, by comparison, having double digit earnings growth is going to be a much more attractive relative prospect. shery: let's talk about that potential profit recession we are talking about in the u.s. aside from china across asia do you see any more positivity when it comes to the earnings picture? david: well, we do think that there are reasons to like some of china's neighbors that have traditionally been beneficiaries of a stronger chinese economy. and that would naturally include southeast asia, korea, and even

japan to a certain extent. but, we would also expect there are many ways to benefit from china's reopening. and while we -- i think we look at this chinese attempt to get past covid with bated breath, we do expect, as with every other market that has really attempted to get past these covid policies, these efforts will lead to much stronger demand not only for goods but for services as well. and those services are not going to only be consumed in china but outside china as well. and so, there are ways of playing those around the world. i imagine luxury good brands,

for example, would be beneficiaries of the return of the chinese consumer to european shores. shery: david wong, good to have you with us. senior investment strategist in equities at alliancebernstein. sam bank and freed says he is ready to drop his fight against extradition to the u.s. taking his own lawyer by surprise. an update live from nassau next. this is bloomberg. ♪

haidi: ftx co-founder -- have had an abrupt and confusing snag in a bahamas courtroom. let's get the latest from our reporter who is now in the bahamas. what do we know -- this idea that sam bankman-fried and his

lawyer are not on the same page? >> the day started out seemingly with sbf and his lawyer not being on the same page. the day after a thrilling hearing this morning, we know his lawyer is now on the same page with the other -- both his bahama and u.s. lawyers are on the same page. we understand that he is ready to be extradited. it is interesting though this turn of events. last week he said he would fight extradition. what has changed has mind? some sources said it is linked to a jurisdictional fight between the u.s. and the bahamas which might also speak to the fact that his u.s. lawyers are fully informed. it leaves us wondering what will happen. he is ready to be extradited but will he leave in of the night or

without a hearing taking place? his lawyer says we can expect a hearing at a time and date have not been set. shery: is there an expectation that he might get bail if he comes to the u.s.? but in the bahamas the court decided against that. >> the court did decide against that last week but sources close to sbf have said he is of the understanding that whatever agreement has taken place between his lawyers and the lawyers representing the u.s. government that were in the court today must have in some way involved a promise of bail. but we have yet to hear that directly from sbf's lawyers to be sure. haidi: what happens from now? we are heading into the holiday period. do we expect a resolution and and extradition before that? >> formally the court said the magistrate that will hear the

proceedings around extradition does not anticipate a hearing before february 8 as was decided last week. however, sources close to the situation speak to a possible hearing this week that they say it would have to be before friday when the court is expected to be winding down its operations before the holiday. what we are hoping and our reporting is digging into whether his lawyers are ready to ask -- to discuss when the hearing will be, and could it be as soon as tomorrow or wednesday which is -- which are more likely days. shery: our reporter joining us from nassau. a quick check of the latest headlines. crypto exchange binance.us will buy voyeur jury digital's assets out of bankruptcy and a $1 billion deal. the price is a discount from a fail sale. the sale still needs bankruptcy court approval. binance.us is a separate entity

from binance.com. they hope to give voyeur jurors users access in march. the legal battle between citigroup and revlon's creditors over the banks 900 million dollar payment blunder has ended with a u.s. court dismissing the case. the dismissal came after the remaining creditors agreed to return their share of money that citibank had accidentally transferred to them. the bank made the error in transfer i trying -- when trying to forward and -- a payment. honeywell -- the sec says the aerospace menu factor admitted to offering $400 million to a brazilian government official in 2010. honeywell will pay $78 million to settle criminal charges from the justice department. coming up next we speak with

pakistan's foreign minister on how the country is navigating global challenges including an energy crunch not to mention the tragic floods the country faced earlier this year. this is bloomberg. ♪

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haidi: we are getting some breaking news when it comes to the covid zero situation in china.

when it comes to chongqing they say mild cases can go to work which is one example of the stunning turnaround that we have seen in the covid zero policy for china in the span of a few weeks. most a complete dismantling of the restrictions including testing apparatus. even now, for this huge city and economic powerhouse to tell patients with mild symptoms that they can go to the workplace is significant. shery: it has been quite a stunning reversal in the space of a few weeks but in terms of the set up for the trading session in asia we are focused on what is happening with the fed rather than the continued dismantling of the covid policies and china. risk off. we are half an hour into the session for australia. asx 200 is down 4/10 of 1%.

as long as the overall economic outlook does not look too shaky. let's look at -- the same picture we are seeing and japan. japanese lenders outperforming the broader index of the last year to the tune of 20 percentage points or so. the bet is that the boj will be forced to change as policy settings especially when the governor steps down next year in april. the yield curve control policy settings could change. futures are pointing to a weaker star. the other sector we are watching as we head into the open first soul and tokyo in half an hour is what is happening in of energy space. we have been watching the moves in energy. wti is trading high today. it is down to what is happening

in china. the diskin -- the continual pipit away from covid zero policies is increasing optimism for the outlook of the world's biggest consumer of commodity products. shery: this year's energy crunch has hit many emerging markets hard including pakistan which has also faced catastrophic floods and is in loan discussions with the imf. joining us is a pakistan's foreign minister, the law while bhutto said ari. minister, thank you for joining us. let me start with getting some clarity from you when it comes to the energy supplies potentially from russia. when i spoke to the prime minister a few months ago he was certain you were going to get those supplies. when could we see the first deliveries that could help your economy? min. zardari: as far as our energy supplies are concerned,

as you are aware, everyone after the fallout of ukraine were, the associate is tensions have been facing tough economic times and inflation. as far as any conversations with russia are concerned vis-à-vis energy supplies, we are not at a stage where we will be getting, as far as i am aware, any supplies anytime soon. we are expected to fulfill our energy needs and are discussing with a host of countries but that -- in the immediate crisis we are in now with a catastrophic effect of the flooding that washed away 10% of my country's gdp, $30 billion, the blowback from the ukraine war but also the covid pandemic and fall from -- fall of cargo

has been incredibly difficult. we are in conversations with the imf. we agreed to terms with the imf just as the flooding started. and now i find -- we find ourselves in this incredibly difficult position where we are trying to manage our macroeconomic indicators with the imf and provide the imminent relief to the people that are still -- is still necessary and pakistan and look forward for our rehabilitation. the cameras have gone unfortunately andl the attention has disappeared but there are still floodwaters in many area -- they cannot go back home and they cannot go to school or back to farm. there is an incredible humanitarian climate catastrophe. shery: let's talk about that attention globally because when it comes to the conversations with the imf or the next loan, the tranche of next loans.com,

they have been a little bit slow. what is the delay? when could we see agreement? min. zardari: i won't be able to say whether there is a delay or not. the details of the finance minister can tell you. i do believe -- we all agree, the entire unity government agrees that it is important for us to work with international financial institutions. we want to see the fundamental reform required but our number one priority has to be helping these people who are in extreme distress in the short, medium, and long-term. that is a path forward for our country. as we rebuild and rehabilitate and create the environments so these people can get back on their feet, then they will be able to not only contribute to my economy, to our agriculture but also help meet the world's

food and securities. shery: minister, let's talk about the more specific conditions and help you could get from countries. what conversations are you having with saudi arabia? could we see a fresh loan deposit or fresh investments? min. zardari: again, there are multiple phases to our recovery. the initial and still ongoing phases because of the scale of the tragedy is relief and for the relief phase we have had incredible support from the international community, from our region, from the middle east, and of course from america. going forward we will be holding a reconstruction and rehabilitation conference cohosted by the u.n. secretary general and the prime minister of pakistan which will give the opportunity to all of our partners to join with us and our reconstruction and rehabilitation efforts. haidi: the opposition leader has

talked about dissolving two provisional assemblies. does this contribute to political instability? do you see this contributing to momentum for elections ahead of time? min. zardari: as far as elections ahead of time or any other political point is concerned, i think it is extremely unfortunate that at a time when a third of the country was underwater and given large parts of my home province and other districts, including the southern areas -- they were devastated by these floods. they were also impacted by the monsoon rains. it should not have just been my priority but everyone's priority to step up and leave partisan

politics aside and unite to meet this challenge. unfortunately, mr. khan has been holding an eight month tantrum that he has not been prime minister for these many months and distracting the relief in the domestic relief conversation but also the international relief conversation. when the covid pandemic hit, if i were thinking as he did i would've used that as an opportunity to protest and try to remove him then but at that point in time i stood up in front of my country and said i have my differences with him but we are facing a price -- a calamity and he is our prime minister. in these few months where he has been and the opposition we have faced this crisis.

haidi: india has called your remarks on moody uncivilized. do you stand by those remarks? min. zardari: the remarks were not my own. i did not invent the term of butcher. i believe i was referring to historical fact and they believe that repeating history as a personal insult. if i was incorrect then what has happened today -- a member of his party has announced 20 million ruby bounty on my head. i don't think the best way to disprove the fact that he is the butcher is to adopt such extreme steps. shery: your remarks have caused

an uproar both in india and in your country. you have a minister who was threatening nuclear war on india at this point. where do relations go from here? min. zardari: first of all, as far as my remarks are concerned resulted in protests around india and that is their right. you cross the line when you officially announce a head money for your neighboring countries foreign minister's assassination. i think that is a line that we are normalizing and the fact that we get to move on from that question is troubling for me when i am engaging bloomberg which is such an important international forum cured as far as nuclear war, no one has threatened nuclear war. a minister said pakistan is a responsible nuclear country and should be treated as such. there was not a threat for nuclear war and no one things nuclear war is an appropriate reaction. if i am quoting somebody else

and speaking about a historical fact that mr. modi would forget, that it would not lead to a threat of assassination. shery: let's talk about global cooperation. give us more detail about the next conversations you are having. you have talked to us a lot about global cooperation and the need for that capital to come to pakistan and yet we do not have a clear timeline when it comes to the imf negotiations and potential more loans or investments coming from the likes of saudi arabia and others. and even the paris club, for example. min. zardari: i think the january 9 rehabilitation and reconstruction conference i referred to in my response to your other question in which the prime minister of pakistan and the u.n. secretary general will be cohosting an event for the

international community to come forward and join pakistan will be an important start but it will be just a start. for us to come up with $16 billion of financing will take time. what is important for me is to get the process started and get the work going so that people can start rebuilding their homes and go back to school and get back to work. i will make the rest of the process easier for us. obviously, the scale of the catastrophe has been such that we cannot imagine we will get through this overnight. there is a short, medium and long-term plan that pakistan is following. haidi: foreign minister, great to have you with us and we appreciate your time. the foreign minister of pakistan. breaking news. kevin rutherford the former australian prime minister has been named the new or next ambassador to the united states. he was the 26th prime minister

of australia between 2007 and 2010 and had a second stent as well as being the leader of the australian labor party and he has been named as the next australian abbasid are to the united states. coming up, european nations reach a deal to cap natural gas prices ending months of political wrangling. we got the latest on the energy markets. this is bloomberg. ♪

shery: you are watching energy transition on daybreak: asia. let's look at europe's power crisis. the eu has reached a deal to cap prices at 180 euros per megawatt power ending months of political wrangling. bloomberg's maria tadeo has the details from brussels. >> the european union has agreed to a landmark cap price that will be triggered if prices on the benchmark index go beyond 180 euros for three days which is significantly lower compared to an initial proposal of 275 euros a megawatt hour for two weeks or the spread compared to lng goes above 35 euros. european authorities say the price cap better reflects the

nature of european energy market as it moves away from russia and gas into lng while also protecting the continents economy from excess market distortions. there are a number of safeguards that will be included in this cap. the european commission makes it clear it has a right to halt the cap if the risks when it comes to supply begin to outweigh the benefits on the price point but nonetheless there are a lot of questions compared to the real-life ramifications and implode in's and even the an action of the plan and europe is gearing up for what will be a very challenging storage season for 2023. a landmark deal but nonetheless a lot of questions still to be answered. in brussels, maria tadeo, bloomberg news. haidi: bloomberg's assessment of global power prices show that despite using supply chain

snarls, inflationary pressures are catching up with renewables projects extending an increase from last year. costs from fossil fuels jumping faster allowing renewables to maintain their relative competitiveness. let's bring in our analyst. which technologies are seeing the biggest cost increases from a year ago? >> across the board we have seen prices continue to rise with the exception of the wind sector. the biggest rise as expected was gas turbines. if you compare to the cost of generation for a new plant financed in the second half of the year compared to the first half of the year the global average increase was about 23%, the highest. shery: what about the impact of rising interest rates? >> globally, as the central

banks have been increasing interest rates, the average increase is 20%. this affects renewables more than fossil fuel power projects because they have a higher share of upfront costs and the rising debt also increases the expectations. to take an example, if you look at onshore wind in india, we saw in the second half of the year the cost of electricity for new projects to be increased by about 17%. only 20% of that increase was coming from equipment price increases. 80% was coming from the cost of -- triggered by the rising level of debt. haidi: what can aipac countries do to lower the cost of electricity at this point? >> as you mentioned at the beginning renewables are still more competitive. if you look across the region,

looking at japan for example, new renewables are already at a point where they are the lowest cost of the generation which is below the current level of cost of power plants. this is due to the high fuel costs which gradually will come down. from an energy security perspective -- having said that, to do so also requires them to undertake reforms that would enable new renewables being added to their mix. shery: we do have plenty more to come. this is bloomberg. ♪

haidi: we know that australian foreign minister penny wong is headed to beijing at the invitation of her counterpart. penny wong saying dialogue is essential to stabilize the china relationship. the prime minister saying he will pay a visit to the u.s. next year at some stage. they also just announced that the former prime minister is going to be the ambassador to the u.s. this is considered an icebreaking trip visiting on

tuesday with talks set to take place on wednesday for a strategic dialogue between us joe you and china and it coincides with the 50th anniversary of the formal establishment of that diplomatic relationship. since we have seen the labour government come into the administration in australia there has been an attempt to reset what is been a frozen relationship that has deteriorated over the last few years, trade and diplomatic point of view. shery: investors will want to bet on china's economic reopening and they are still concerned about the geopolitical risks and market volatility and they are finding better alternatives elsewhere in asia. for more, let's bring in our reporter. so when we like? --so what do we like? >> when it comes to china's economic reopening, it is quite obvious that china will be the biggest beneficiary but the

problem is investors are still concerned about sudden crackdowns or the property sectors that turmoil or the possibility of the escalation in tensions with china's neighbors. when you consider all of these factors, some investors fear -- feel they would be safer investing and other asian countries considering the chinese economic reopening is the biggest stimulus you can think of at this point. the impact of that will filter through to all other economies in the region. haidi: there are obvious sectors that jump out, commodities, energy could get a boost and tourism as well. do we see a broader upside for emerging markets on the twin forces of potentially a weaker dollar as well as a reopening and stronger china? >> exactly.

it is always hard to pinpoint how much gain they could make. goldman sachs threat is making a projection that the economic reopening in china could boost msci emerging market index to 1080, almost a 30% upside from its current levels. and another thing investors should pay attention to is that actually the market -- of chinese equities is higher. if you look at the historical volatilities or their implied volatilities based on option prices, the chinese market is twice as big as many other markets in the region so you could say that if you invest in asia, you can get a decent return with --.

haidi: take a look at some of the stocks we are watching when trade opens. in korea and japan. it's a busy -- mitsubishi electric. also watching some of the gas providers as we saw european nations reaching the deal to capture the gas prices at 180 euros per megawatt hour. the market opens in seoul and tokyo next. this is bloomberg. ♪

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shery: this is daybreak: asia

and we are counting down to the major market opens. a to watch including the bank of japan, rba minutes not to mention china's bumpy exit from covid zero. mild cases of covid can now go to work. haidi: this turnaround has been extraordinary in its pace and the extent of the dismantlement of restrictions in china and we continue to watch investors already contending with the fed and other central banks going into the new year. >> we have the start of trading in japan and treasuries coming online. investors are starting to reprice their expectations for the fed and central banks into the new year ahead. coming to an understanding that they will continue to even into recession. this is the outlook for japan. we are coming online fairly flat. the other big thing watching in

japan is the boj decision do. no changes expected but we are seeing investors starting to position for a pivot as governor kuroda plans to step down in april. watching the bank stocks closely given we have seen them outperforming to the tune of 20 percentage points. let's change and look at what is happening in korea. we are focused on the economy given we have the be ok putting out its biannual inflation report in the next hour and we are also watching for what is happening in tech stocks given that they are trading lower and in line with the kospi and the nasdaq declining 1.5% and the session. and we are still keeping an eye on the korean wan. in australia, we are one hour into the day for the asx 200. stocks declining for a fourth

straight session. one key sector is moving better and that is the financials. it can benefit in a rising rate environment. we are keeping an eye on what is happening in that the kiwi dollar. more weakness coming back. some lines coming out in terms of business confidence. the index declining to minus 17 point two. a deteriorating outlook for the new zealand economy. the rbnz a frontrunner in the tightening cycle. keeping an eye on wti trading high today. down to what we are seeing in china and the optimism around reopening and a fast pivot with covid infected cases mild being allowed back into the workplace. a sharp change from a few weeks ago. shery: perhaps one reason why our next guest season headwinds easing. joining us is lorraine tan from

morningstar. how much have you priced in this chinese reopening? and how much is it to do with the aggressive tightening cycle peaking for major central banks? lorraine: i think we are in a better position this time this year. last year we had evaluations that were pretty high. right now we are sitting at evaluations that are still relatively attractive. we are nearing the end of the feds rate hike cycle. we are also finally getting more transparency in terms of china policies in terms of regulations as well as covid. regarding covid, a lot of it -- many have factored in a gradual reopening from 2023. it will be a bumpy ride until then because cases are still rising and there will be disruptions. where we have not seen upside or

what we have not factored in is additional government support measures to the private sector that would boost consumption. shery: how cheap are chinese stocks right now when we already saw a massive rally? lorraine: we are still seeing opportunities particularly in the technology and consumer cyclical space. these are the sectors that fell the most and this is where we still see the most opportunities. we are talking things like quality names like tencent for example that are still trading around 40%-50% discount when we look through the cycle of their activities. the other thing to note is we are advocating a mixture between value and growth. we feel we are not out of the

woods in terms of the volatility . it is important to position for both value and growth. haidi: how do you feel about china in particular? we had the turnaround when it comes to policy support for private enterprise after what has been such a value destroying crackdown. lorraine: a lot of the regulatory discounts have been factored into the share price. some of that is beginning to diminish. that is where we are seeing the first run-up in the share prices. there is still some ways to go. most of the big measures are out. there is still a fair amount of tweaking that will continue. we know -- for some of them like alibaba, tencent, they are

dominant in their space so they will not be able to benefit as much as they may have in the past from being able to use the data and cross-selling and the dominance it they have in their platforms. that will eat into some of their market share. what that means is we do have less risk in terms of the uncertainty but it also means although there is slightly slower growth we are still looking at high-quality earnings and strong cash flows. haidi: what are your assumptions when it comes to the direction of the u.s. dollar for the next year? lorraine: we don't have a view on the u.s. dollar but we do feel the rates -- the interest rate cycle would peak between the first and second quarters and we could see a u-turn in the second half of next year. that mean some pressure for the u.s. dollar to come down.

generally speaking that is one of the key positives that we anticipate for the equity markets in the next year. definitely the u.s. growth is going to be so much slower in 2023 but we do think it is not going to be a deep recession. we are hoping for a shallow recession. that should allow the next leg of better tailwinds for the equity space. shery: which is why we continue to talk about potential earnings weakness and profit recession when it comes to the companies reporting in the u.s. but i do wonder what that means for asian companies as well that really export a lot to this economy. lorraine: there is some cyclical weakness says but having said that we are seeing those as opportunities. some names that are global exporters like tsmc which will get a little bit of headwind, the industrial robotic names in

japan for example that are global players. there has been a little headwind but with china coming back up we hope that will provide some support to the demand cycle. we also think, if you are looking down the road, we are still seeing strong overall structure demand that will drive the purchases as well as semiconductor chips down the road. haidi: lorraine tan from morningstar. let's get you to vonnie quinn. vonnie: i house committee has recommended donald trump be prosecuted for his role in the january 6 a salt on the u.s. capital. the committee voted unanimously to rev her donald trump for prosecution. it is of her such referral of a former u.s. president adding to the legal and clinical troubles plaguing donald trump's reelection bid. sam bankman-fried has caught his

lawyer off guard and his plan to waive extradition -- and his plan to fight his extradition. the judge adjourned proceedings until february. european nations have reached a deal the cap natural gas prices at 180 euros per megawatt hour. it ends months of political wrangling over whether to intervene in the energy crisis that is risk putting the region into a recession. the cap is significantly lower than an earlier proposal. police and security guards were deployed monday outside of a beijing crematorium designated to handle the bodies of covid victims. a worker told foreign media they were overwhelmed with bodies. that contrasts with the official count of just two deaths for beijing over the weekend.

malaysian prime minister has won a confidence vote in parliament. the outcome was anticipated. a pact was signed last friday. the vote strengthens his mandate to form a budget for next year. and those are your headlines. haidi: let's get you a look at some of the movers. a big focus on energy. >> it has been some big moves in oil. given what we are getting out of china. including one city saying that patients with mild symptoms of covid can still go to work. it is been driving the bullish story around oil with traders whip sawing between what is happening in china and its demand outlook and recessionary concerns. and a mixed outlook in japan. oil linked companies are moving

higher. another sector we are focused on . bitcoin. -- bitcoin exchanges. these are trading mostly lower. the story is what has been happening in terms of bitcoin pricing. it has been declining in four of the last five sessions. it is still below the key $17,000 level. a lot of risk aversion we are seeing across the market. another story is what is happening in terms of the market cap of some of these biggest exchanges and coinbase is one that has fallen below that of dogecoin. an interesting story given that dogecoin is a cryptocurrency invented as a joke. shery: still ahead, former boj board member joining us to discuss depends consideration of adding flexibility to the 2% inflation goal. european nations reach a deal to cap natural gas prices and in

months of political wrangling. the latest from the energy markets next. this is bloomberg. ♪

shery: the boj is expected to keep policy unchanged. it is hinting for moves in 2023 after governor kuroda does term measures -- governor kuroda 's term ends in april.

>> that is why the governor is going to be hammered with questions. that is one of the main reasons that people are saying, isn't it time for them to move towards removing stimulus. look at epi. the headline cpi is up 3.7%. core inflation is still up to 3.6%. take out energy and it is still at 2.5%. the governor says and i think the boj members agree, it is being driven by export prices because of the week yen and commodity prices like energy. and the governor wants to see sustainable inflation. what you have to do to get sustainable inflation is that you have to see the wages start

to rise. there will be a lot of focus on the wage negotiations this spring. they won't have the results until he is ready to step down march 8. there is a possibility that the u.s. hiking rates and pressures on the european economy, what if we get a global recession? for these reasons no change in stimulus today. but the governor will be asked a lot of questions -- what kind of inflation do you see? the more long-term questions are in focus as well. haidi: the yield curve control -- a lot of speculation as to what the policy review could hold.

did we get any details? >> we will not even get an admission that it will happen although the governor may say, someday we will have one. the prime minister and to his team talked about it and there have been reports recently in kyoto about this. it started with a boj board member earlier this month when he said policy review what probably happened. you have to remove stimulus sometime and you have inflation staying high. it is on the table. that cannot happen until the governor steps down and the next governor is in place. yield curve control -- the chart is showing the markets are already betting on the target widening or some kind of move. flexibility on the 2% inflation target. what if they make a ban from 2% to 4%.

these are the kinds of things that people are asking. it will be a very interesting press conference. we will see if we get any hints in the policy statement but there is no monetary policy report this time so we don't think we will see anything on policy changes. about four and a half years ago when the governor went through his reappointment for a second term, mr. yen who was known for his currency market intervention guided jay's during the financial crisis in the late 1980's said he thought this would be the time for the boj to make that big pivot. when governor kuroda steps down and the new governor takes his place. no big statements. just hence if we are lucky. haidi: you can turn to your bloomberg for more on this. our function is where it is at for function and analysis.

let's take a look at the start of trading when it comes to european stock tutors. we have had -- european stoxx 50 futures. can the gains it be sustained across energy in particular? futures down to 10 so 1%. the msci europe a little more positive. dax futures down about a quarter of a percent. and a bit more broader optimism. still volatility when it comes to how much the chinese opening will benefit our kids. shery: it has done a lot. we continue to see the extension of the gains in the asian session. this after we have seen the

reopening of china from covid zero bumpy as it is, we are seeing the signals coming from the government that they will continue on that path. even a large city saying that people with mild cases can go to work. i don't even remember that in the u.s. we are watching the energy space. that is how a natural gas futures were trading in the u.s. session. up 4/10 of 1%. we will also be talking about twitter. users of voted for elon musk to step down as ceo. we had a rally in the new york session that faded. we will discuss. this is bloomberg. ♪

haidi: twitter users have voted for elon musk to step down as ceo.

58% of almost 18 million responded saying they favored the exit for the entrepreneur. will he follow through? su keenan joins us with the latest. he said he will abide by the results but it is elon musk. >> he has reversed himself before but we know he never intended to stay on as ceo indefinitely. he jumped in temporarily. he may well be looking for a way to step down particularly with the criticism that reached a fever pitch over the weekend causing him to tweet out a pole -- should i stay or should i go as ceo? the results were fairly overwhelming. 58 milk -- 50% of the 17.5 million votes favored elon musk stepping back. there is no clear replacement right now. almost all of the top rank had been fired or resigned. he added that the question is

not finding a ceo but finding a ceo that can keep twitter alive. he has said it is on the road to bankruptcy. it loses about $4 million a day. he has fired half of the staff and spooked advertisers. it is been a rough road. meanwhile all he says no one is interested in the job, several people did raise their hands. in fact, a tech entrepreneur, an angel investor and a podcaster put out his own pole asking his twitter followers if he should take on the role. elon musk not saying anything about people volunteering other than there is no successor. and he has said he would abide by the pole. it is clear though that this has taken buy-in twitter for they 40 plus billion dollars and putting enormous debt on the company

has taken a toll on his personal wealth. he is no longer the richest man and the world, he is the second and he continues to see declines in his baby, the tesla stock. haidi: elizabeth warren weighing in with a letter to the tesla board. >> this is another big pressure being placed on elon musk and his other main company, tesla. elizabeth warren sending a letter to the board of tesla asking them whether they are doing everything they can to rein in elon musk. she wrote "his action as the new ceo of twitter has raised questions about possible violations of securities and other laws." despite widespread concerns about elon musk buying out twitter while ceo of tesla, it is unclear if the board is

adequately covering the company and there are clear policies to address the risk to tesla posed by elon musk's dual roles. it is a warning to tesla investors. meanwhile, tesla's stock continues to move lower. it had a brief rally earlier in the day but it has missed out on the rally in tech that happened the last few weeks. down some 57% year to date. there are many concerns from investors that elon musk's continued focus on twitter even if he steps down as ceo is continuing to interfere with the focus he puts on tesla and some of his other companies. haidi: su keenan with the latest. a quick check of the headlines. binance.us will buy voyager digital's assets out of bankruptcy at a $1 billion deal.

the price as a discount from a failed sale to ftx. it still needs bankruptcy court approval. the ceo says they hope to give voyager users access to their assets in march. the legal battle between revlon's creditors and citigroup over the payment blunder has ended with a u.s. court dismissing the case. the dismissal comes as a remaining creditors agreed to return their share of the money that citi had in error sent to them. honeywell has a great to pay more than $160 million to settle u.s. claims. the sec says the aerospace manufacturer admitted to offering at least $4 million to a brazilian government official in 2010. it will also pay $78 million to

settle criminal charges from the justice department. philippine regulators are investigating the budget overrun in the country's largest phone operator. the securities and exchange commission said the overrun is an area of concern as it launches the inquiry. the issue has sparked questions over the corporate governance and fiscal control. coming up, our next guest things the upcoming change in the governor will be a turning point for japan's central bank. takahide kiuchi as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to 60% a year. and it's only available to comcast business

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>> we have the minutes of the rba meeting just crossing the bloomberg. they considered a 50 basis point

hike and 25 basis points, as well as no change. they pointed to rapid rate rises and policy lags within the more conservative 25 basis point decision. they wanted to be consistent and there was no clear impetus for moving to 50 basis points or implementing a pause. the rba expects to raise rates further but not on a preset path. concern over the outlook when it comes to the vulnerability of household spending. within the meeting minutes they are not ruling out a return to bigger hikes or a pause to assess data. they are resolute on returning cpi to target. not a great deal in terms of what we didn't already know for the rba but we have in particular when it comes to the labor market that strength supporting there is room for further hikes if they need to. >> and a lot of anticipation around the february meeting. could this be the last hike for the current tightening cycle?

that probably is the expectation or hope among some companies because we are seeing the business impact of the tightening cycle today. you can see the stock on your screen, the online property company domain, the biggest laggard on the asx 200 today. an online property company down as much as 14% at one stage. it is flagging the impact of a challenging market environment. new listings are falling as well. an indication of the impact tightening is having. that is showing up in new zealand because we got business confidence numbers coming through. we saw that dropping to a record low of more than -70. in terms of the broader market outlook, we are risk off. still focused on central bank news and that is the interest in japan. the nikkei is the sole market trading higher, perhaps helped by the japanese yen. more weakness coming back into that currency.

quite a lot of volatility ahead of the boj decision. no policy pivots expected yet but traders are starting to make bets ahead of governor kuroda stepping down in april next year. let's look at volatility today because that is looking quite subdued. we are coming into one of the final weeks, or the final week of the trading year. traders are starting to take a little money off the table on the sidelines, also with the general tone of risk aversion coming through. shery: let's get to vonnie quinn with the first word headlines. bonnie: chinese investors will soon be able to self shares of international companies with a primary listing and hong kong. hk says they agreed to expand the scope of stocks eligible for x -- for inclusion. preparation will take around three months with an official launch date announced later. a majority of respondents voted for elon musk to step down as head of twitter.

in a poll, the billionaire entrepreneur said he would respect. about 15 percent was in favor of musk stepping down. there is no clear replacement for musk with almost all top executives having been fired or resigning since he took over. the european commission has warned meta-of a possible breach of antitrust rules over its marketplace service. the commission says the company may be squeezing out classified ad rivals. the move paves the way for potential fines or changes to the firm's business model. the eu regulator has been investigating facebook since 2019. global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: japan's government may seek to revise a decades-old accord with the boj and consider adding flexibility to the 2% inflation goal.

all of this is while we saw big moves with the yen monday. let's talk this through with the former boj board member takahide kiuchi who is now executive economist at nomura research institute. i am curious to get your views on this. there is so much world market speculation that could see the review of the 2% inflation target. what does that mean when it comes to rejuvenating the bond market as well as the currency aspect? do you think they will do this? is this the time to do this, given by most gauges we have seen inflation pressures pushing higher? >> the boj has the instrumentation to change the 2% inflation goal. it is achievable. the boj may change the status of the goal to the short-term or long-term target and disconnect the linkage between the third inflation target. i think the boj doesn't want to

accept a government offer to change that because it could lead to a bad precedent. i think the boj has the intention to change the 2% goal someday by its own decision. it's not necessary that a change will be implemented next year after the change of governors. next year the economic situation could be worse. the changeup agreement may increase the separation of the market.

next year is not necessarily a good time. it is going to be postponed to 2024. shery: do you think next year is too early for a monetary policy review? do you think that should be pushed out further if you put aside the political pressure to do that? >> if the government wants to change monetary policy drastically. i think the boj may eventually change the status of the 2% inflation goal and the boj may release the view. i think the boj will increase interest rates after the

economic financial market situation and restore stability. the economic situation could be deteriorating in japan and the yen could appreciate rather sharply, reflecting not only the interest rate differential between the u.s. and japan. i think the change of governors could be a big turning point of monetary policy and after the changeup of governors, monetary policy could move to the normalization phase. the next day is not good timing. timing should be postponed to 2024 or 2025.

shery: you mentioned the market impact. how painful will it be for the boj to remove itself from bond and equity markets when the balance sheet has sort to 120% of japan's gdp? >> i think the actual impact is not so serious. the boj -- i think the change of monetary policy could cause appreciation. normalization of the bank of japan is completely different from the u.s. in the u.s. normalization of monetary policy means the increase of interest rates to 4% or 5%. in japan, the interest rate before the boj introduced the change in monetary policy was only 0.1%. now it is -0.1%. the boj could reduce the short-term interest rate.

in 10 years it is only 0.5%. in the case of japan, normalization of monetary policy doesn't necessarily mean increase of the interest rate. the monetary policy may not have an on the economy. i think the yen could appreciate to maybe 100 something. haidi: we have not seen that level since i lived in japan about a decade ago. what will be the legacy of governor kuroda? >> i think initially monetary policy -- that's one possibility from

using monetary policy. it has also enhanced accumulation of government debt and has postponed -- high-growth strategies. this side effect could outweigh the effect of the monetary policy. that's my assessment of monetary policy in the last 10 years. shery: what will be the biggest impact from what we are seeing in central banking around the world? whether it is the federal reserve slowing the pace of rate

hikes but still maintaining the hawkish stance for japan in 2023? >> i think the boj -- the reserve board is reducing the size. 25 basis points could be kind of a magic number. i expect the next move at 25 basis points, that separation may lead to the decline and the cause of dollar depreciation pressures. the yen could appreciate. i expect unwinding against the yen next year. the yen code appreciate to 120

at the end of the next year and approach around 110 in year 2024. >> good to have you with us, thank you. executive economist at the number a research institute with his views on japan's monetary path. the pakistan foreign minister says the country's energy needs are not yet at a level that requires oil from russia. he said the country is targeting $16 billion in funding to fill the more urgent need of reconstruction and relief after this year's devastating floods. >> as far as our energy supplies are concerned, everybody after the fallout of the ukraine war, the associated sanctions have been facing tough economic times , high inflation, high gas at the pump. that's the same for pakistan. as far as conversations with

russia are concerned vis-à-vis energy supplies, we are not at a stage where we would be getting, as far as i am aware, any of those supplies anytime soon. we are not as rich to fulfill our energy needs and are discussing with a whole host of countries, but that's not the immediate crisis right now. the catastrophic effect of the flooding washed away 10% of my country's gdp, $30 billion. the blowback from the ukraine war but also from the covid pandemic has been incredibly difficult. we are in conversations with the imf. we agreed to terms with the im f just as the flooding started. now we find ourselves in this

incredibly difficult position where we try to manage our macroeconomic indicators with the imf and provide the imminent relief that is still necessary in pakistan, and plan forward for reconstruction and rehabilitation. unfortunately the cameras have gone, the attention has disappeared, but there are still floodwaters in many areas of my country. many people still can't go back home or can't go back to farm. there is an incredible humanitarian climate catastrophe. shery: what conversations are you having with saudi arabia? could we see a fresh loan deposit and perhaps investments as well? >> there are multiple phases to our recovery. the initial and still ongoing phase, because of the scale of the tragedy, is relief. we have had incredible support from the international community, from our region, from the middle east, and of course

from america. going forward we will be holding a reconstruction and rehabilitation conference cohosted by the u.n. secretary general and the prime minister of pakistan, which will give the opportunity for all our partners to join with us in our reconstruction and rehabilitation efforts. haidi: the foreign minister of pakistan speaking with us a little earlier. coming up, as china continues to pivot away from covid zero, life insurers are on track for a solid recovery. the industry outlook next. this is bloomberg. ♪

haidi: china is poised to take a more market friendly approach to economic policymaking as it pivots from covid zero. bloomberg intelligence sees a solid recovery when it comes to chinese life insurers in 2023. how much do we see the economic reopening, potentially the return of economic growth, to add to the outlook for insurers? >> good morning. the most important thing about life insurers in china is we need to remember for the past three years the main metric of

new business actually have. -- halved. we expect the market is pricing in a rebound in 2023. the consensus shows that chinese insurers will have a mid to high single digits increase in terms of new business value. based on our scenarios analysis, we are seeing it is quite easy for the peer group to be to that by about 10% to 15%, if the full reopening comes in around second quarter of next year. shery: what about the insurers agency salesforce? what could we see in terms of expansion on that side? steven: great question. what happened is that on top of the covid situation, the industry is also coming through

structural reforms. the problem for the life insurers before is there is a lot of agents going in, going out, and they are not selling a lot of high-margin products. what we are going to see for the next couple of years is that phase is passed. insurance companies trying to retain their agents and retain those who are high quality, higher educated, to sell those higher-margin policies. we are going to see that the new business margin is going to go up. we may not have an influx of agents, like before. right now china had about 3 million to 4 million agents. we don't expect a huge increase in number of agents, but we expect the productivity of them to go up. on top of that, in a pandemic when people are infected with a disease, the concept of getting protection will increase as

well. shery: steven lam with the latest on insurers across china. we have plenty more to come. this is bloomberg. ♪

shery: china set to lower a key interest rate tuesday as the government tries to stabilize the property market. let's get a preview from sophia.

will they move? >> the consensus is no move, but bloomberg economics is forecasting a 10 basis point in the five-year. there are two rates, the one year and five year. we are looking at the five-year because it is underpinning mortgage rates. thanks 10 to follow the central bank. the central bank did not cut rates this month but it did add more liquidity by cutting back rrr and freeing up more cash. it gives banks room to cut it. if they cut the one year, that would be expected -- would be unexpected. that underpins corporate loans. corporations are not borrowing so there is not much demand for credit. haidi: this is unlikely to fix the fundamental structural problems with the property sector. even covid zero reopening.

what are we expecting when it comes to the outlook for next year? sofia: you put it extremely well. the fundamental problem is on the demand side. this would help because it makes mortgage cheaper. last week they said the property sector remains an important pillar of the economy. we are seeing a shift in narrative from china's top leadership. data for november showed the fundamental weakness is still there. we are in the 15th month of sales and price declines. it is all about sentiment, something difficult to measure and forecast. even the communist party can't control that. the outlook for next year is the really important thing top leadership wants to put a floor on the market. whether or not it will be successful is another question, because it's about demand and not supply. the liquidity problems for developers are still there.

we saw two developers today cap the equity market for more funds but the offshore debt market remains short still. shery: what are we seeing in terms of market sentiment at a time we are expecting a bumpy exit from covid zero, but authorities' determination to exit? sofia: bumpy, everyone's favorite word right now. it's a difficult one to track because we don't know what the impact will be on the economy from this reopening. is it good for the economy or will it be a difficult exit because of the new cases and because people are staying home? there are still a lot of unknowns. we had that initial rally when people were factoring in pricing in the reopening. now it is about getting the evidence that this is good for the economy because that's still an overhang. the market sentiment is very

year end volatility. volume is quite low. going into the end of the year, it's clear the covid zero reopening story will be the biggest story next year. shery: can't believe it is less than two weeks until the new year. we are not there yet. for today's session, keep an eye on these stocks. after china allows investors to trade through hong kong stock links. also the pboc set to announce as we expect those interest rate decisions. bloomberg markets: china open is next. this is bloomberg. ♪

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