♪ shery: you're watching daybreak asia coming to you live from new york and sydney. haidi: we are counting down

until doubt market opens in tokyo. we have the top stories at this hour. u.s. stocks in a four-day drop. the treasuries slumping as they digest the boj decision to widen the trading band. and sam bankman-fried agrees to be moved over to the u.s. to face the charges associated with ftx fraud. and elon musk with an investigation into the new twitter social network. annabelle: this time we are moving fractionally higher on the s&p 500. we have trading across the asian region. we are getting uncertainty around how the boj policy announcement will play out across asset classes. we will see a level of repricing going on. we are keeping an eye on what is happening in the bond space. we see a drop across the three

year and 10 year yield. the aussie dollar is fractionally stronger this morning. most of the moves are in the japanese yen and we are seeing upside pressure on the currency throughout the session. we had seen it gaining at .5% on the intraday against the greenback. it surprise markets yesterday saying the 10 year yield could reach the upper limit of .5%. shery: the doubling of the yield cap surprising the markets. we continue to see repercussions globally. u.s. futures being supportive after a volatile session in new york. there was a mixed picture with the s&p 500 having gains but the nasdaq 100 -- in the fifth

consecutive session. and the 10 year yield bond future around the 370 level. there is a concern about what happens around one of the last anchors when it comes around the bond yield if it decides to go the other direction and join other central banks in tightening. this leads to the concern of what happens if capital is repatriated to japan. especially with investors invested in global bonds and stocks. we have pressure on u.s. dollar and wti prices holding at the $76 price point right now. haidi: we have more questions and answers from -- kathleen hays is here to break it down with us and garfield reynolds as well. kathleen i will start with you. the question is, what is this?

is this a precursor to a risky exit? is it a one-off strategic tweak? kathleen: i'll answer the second question first. yes. this will be the beginning of something that will be the final getting ready. the beginning of the in of extraordinary -- of the end there will be a opening cracked and then we will step through. i spoke with the finance -- former finance minister and he says it was a good time and opportunistic because the bond market has been pushing above the 4.25% ceiling. the yen has not been weak and it is holding steady. and there is confidence that inflation will stay higher year.

if inflation stays high, why not open a door to what will be the big step? but some see politics in here with japanese people tired of a week yen and --weak yen and tired of the prime minister's estimates. limiting really so that is why we come up with a question of why now? garfield: it is a lot like what has happened with the hand over of kuroda you get a creep as you have a change in governor. that signals to me that a bull be or hawkish. -- that it will be more hawkish. kathleen: is this the governor kuroda is small step to making

your way out of stimulus. the next governor does not have to come in and take a big step and rock what governor kuroda has done so far with his policy. shery: let's talk about the potential next governor because that is key in the question of what is next. after his term expires. kathleen: while i love to talk about this because it is interesting you have curis sheena he was deputy governor in 2013 when kuroda became governor. so he is right now viewed as someone who could be a more aggressive governor and move rapidly down the road to normalization of policy. however, he is not considered the crowd favorite. that is the current deputy

governor. the deputy governor has been at the boj and he is called forever he is considered a boj lifer. he creates continuity he does not create uncertainty. he was the architect behind the yield curve control itself. and earlier you were alluding to a book that discusses what it will take and how tumultuous it will be. that will have a lot to do with who can get chosen and who can handle it the best. haidi: these are all the same questions as we go into what could be a highly volatile year. we see repricing across some aspects of asset classes. garfield: the obvious question that needs to be answered is who will be the next governor of the bank of japan. and does that mean -- i think

the markets will be very certain going forward from here that the clock is ticking for yield curve control and easing by the boj. because that is seen as being unsustainable in the long term. this is at a time where every other major central bank is raising rates. there will be those conversations and it will be about the timing. that will be the call investors are looking at when they consider the potential for the two new central bank governors that are coming -- coming. . and he said this is marking the end of the kuroda era but it is also a notice that a change is coming. the other question is to what extent can the boj maintain control?

it has been doing good so -- for now, but, if you let things move in a particular direction it can get away rapidly. one potential analog is what happened in australia, when the iba decided it could not stick with the yield curve control it got out of control fast. within a few months, you have the same governor but they moved from -- they started to get yield curve control. we are raising rates faster than we thought so central bankers can get -- once they get shifted, they can end up running fast to catch up with where they discover they need to be. shery: garfield reynolds and kathleen hays with our top story today. the implications of the boj shock. let's get to vonnie quinn with the first word headlines. vonnie: china has confirmed it

is defining covid death. it counts the victims who tested positive for the virus and died of respiratory failure. there is speculation that china's low official tally is hiding the truth it -- to curb the chaos unleashed by this pandemic pivot. they have reported less than 10 deaths this month. and taliban have barred women from attending universities. the administer of education suspended girls education until further notice. the taliban had already stopped most girls from going to school and blocked thousands of afghan women from jobs. i house committee is set to vote on releasing donald trump tax information to the public. it has the three year legal saga to obtain and release the president's financial documents. the vote comes on the house

democratic majority wait and a criminal prosecution by another house panel. elon musk is looking for a new ceo for twitter. he lost his own poll asking if he should relinquish his role as head of the company. the process could be drawn out and will not yield results quickly. 58% of those that voted were in favor of musk stepping down. and he committed to align with the results. 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'm vonnie quinn. this is bloomberg. shery: ftx co-founder sam bankman-fried agreed to be sent to the u.s. to face multiple criminal charges. he was in jail in the bahamas. we are joined by could tonga -- and there was confusion about whether there could be extradition what do we know at this point? >> we started out with much

confusion around whether ftx -- sbf if he would be extradited, we now know he prepared to leave the bahamas as soonest tomorrow. and documents regarding his timing -- time of release had been signed and he had been scheduled but not before he makes an appearance tomorrow in the bahamas before the court again to finalize paperwork issues. we understand he will depart the country as soon as the paperwork has been dealt with. haidi: what do we expect is the next steps he will go back to the u.s. where he faces a myriad of investigations and charges against him. >> it is interesting. there have been sources that have said there have been deals struck around him.

we have not heard this from his lawyers or u.s. authorities yet. that would be interesting, but in terms of the charges he faces, it is important to know the investigation of the bahamas is ongoing. this is around his company and other companies including alameda research. they will continue to push on their investigation and recharge him as well. even if he does have an extradition. haidi: thank you for joining us. full barred management tells us how 2023 will be -- thornburg investment management will talk with us. and then we us -- will talk with stephen glass to explain these changes. this is bloomberg. ♪ we are unexpectedly closed today due to... cdw experts can keep you up and running with an

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>> there is no doubt in my mind that this is normalization step. and the good news i think it could be good news for the global markets because it does not involve selling japanese executions. but over time, this becomes unsustainable. >> do you think this is an isolated move? absolutely not. it is the beginning of mobilization. they have been struggling to hold the hard policy mix and that is changed. we are on the pathway to normalization. the market will be volatile as we progress on that path. haidi: russell matthews in there with our bloomberg opinion columnists. on the boj shift to widen its

trading band. and joining us now is stephen glass managing director we are discussing the move at the boj. there will be more volatility and risk with the policy of the boj missteps next year. >> with the japanese it is a view we have held for a long time at pella. it has other implications like bringing and manufacturing workforce. and looking broadly i do not know about policy missteps. we see the bigger risk is that the market is priced in at the u.s. at 2.4% cpi or inflation year. the fed has said it is more like 3.5%. we think the fed is more likely to be correct with interest

rates staying higher for longer than what the market has priced in. and the market is looking at that november cpi figures that were better than expected. that is not driven by goods and services remains inflated and there is little sign of it declining. services inflation is about 7%. we don't see that coming down with the strong u.s. labor force. we think the bigger risk is with market pricing. not central-bank missteps. haidi: is there a bigger concern for their broader economic recession in the u.s. and europe and u.k. but is the profit recession and impact you see across earnings experiencing more pressure from wage growth? >> we think both are extremely relevant. the fed will have to issue a downturn eventually. if inflation persists, and it

goes for three years and people have a decline in real wages in two years when actually the decline in wages again in 2021, we see the impact of that in the u.k. with strikes across many industries from nurses and security guards. we do think the fed will have to push for a slower economy but that is not baked into earnings expectations for some companies. we think it ends with the valuation spectrum. but having said that, there are opportunities out there to focus on the company visibility in the earnings market. shery: when we have the potential of japanese investors trading funds, how much our markets pricing and the possibility we could see global bonds pressured further. yields skyrocketing next year as

we do not have an anchor for yields. >> i don't think interest rates will skyrocket necessarily. having said that, the market is not pricing this in. the qt program are aware of the issues and they can easily pull back. i do not think that we will get pressure from qt. the ecb's qt program is benign. if they fill it it will be less than 5% of the balance sheet. the fan has been slow with their qt program. i do not think we will get the same pressure but i think the japanese will be a pressure because they are the biggest holder of foreign u.s. treasuries. it could have a meaningful impact on real interest rates which could be a headwind to the stock market. shery: we've seen for an out a

healthy u.s. consumer. fedex beating expectations. how long will this last when you have an environment of continued inflationary pressures? >> we've seen strong consumers and many areas but also a weak consumer and some sales. and there is some euphoria in the market. we think the consumer is at a risk and that it will be weaker and trading down. we think a way to play this is discovered retailers such as dollar general along with other plays we think he it -- they are not is strong as they say since there's been a drawdown on savings. inflation is hitting real wages. we do believe the u.s. consumer will be weaker next year than it

has been this year. shery: stephen glass investment management analyst of pella funds. in debris go to dayb and also available in the bloomberg and android app. you can customize it to hear about the assets you care about. this is bloomberg. ♪

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shery: bloomberg has learned to elon musk is seeking a new ceo of twitter. this has been quiet on the results of a poll where users told him he should step -- step down. su keenan enjoys us with the latest.

su: they say that this is underweight will likely be protracted because musk says there is nobody that wants the job or capable of doing it. and that it will involve a lot of pain. or someone who can handle a lot of pain. he says the company is on a road to bankruptcy. it is under scrutiny added has fallen into chaos. many critics over the weekend and that led to him putting out a poll stating to his users should i step down as the of twitter? more than 2 million respondents said yes, he should step down. while he said no one is interested in the job, several people on social media and otherwise did raise their hands as interested including jason calacanis, and david sachs who are on teslas so-called

wardroom. we also separately no musk has tweeted his concern about tesla stock. he is tweeting out, but not answering tweets about the poll. shery: we have also learned the ftc is stepping up its review of twitter. su: legal headaches mounting for twitter. the trade commissioner ftc is now reporting resources as taking a closer look at twitter. we know according to several sources that tumor for -- two former executives have been asked about their security and privacy practice. this is asked her musk dismissed -- this is after musk dismissed any or all of the people who were responsible for the compliance policy unit or they walked out the door. we have information about an

alleged vehicle assault that may include a member of musk's security detail. that is adding to concerns about the focus of elon musk involved in the twitter buyout. again, stay tuned the details continue to come out almost on an hourly basis. haidi: never a dull mocha meant -- moment. let's check on the business flash headlines. hyundai is trying to be flexible and protect the line as much as it can. it is the third largest car behind twitter and volkswagen. they are looking at expanding to $108 billion. they told us exclusively about the outlook. >> hopefully, the we will show progress by the same volume as

kia. we became the first ever [indiscernible] this is driven by sales and sub as well as the genesis and we will be focusing on that and ev to make a transition. i think overall the brand has gained more favor from the customers. haidi: more to come on daybreak asia. global news 24-hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in more than 120 it's official, america. xfinity mobile is the fastest mobile service. and gives you unmatched savings with the best price for two lines of unlimited. only $30 a line per month. that means you could save hundreds a year over t-mobile, at&t and verizon. the fastest mobile service and major savings? can't argue with the facts. no wonder xfinity mobile is one of the fastest growing mobile services, now with over 5 million customers and counting.

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haidi: getting the latest indicators when it comes to the west bank leading index -- westpac leading index this is

the sign of a slowdown when it comes to be australian economy. and they've been able to pull back on their tightening regime. the latest index proposed -- reports month on month falling .13 percent. and the seeing a contraction in the previous reading or october as well. pointing to weakening across the components looking at health teacher confidence across sectors will play in. -- across sectors will play in. we have the big narrative trying to work out what this means from the boj. >> that's right we have that front and center. but what we see with the asx 200 we see stocks moving fractionally higher. there is one sector in particular leading the gains witches utility. drilling into that, it is origin energy and that is because the

company says its takeover by rock field asset management is still on track to be completed even though the energy price cap is worth over 12 billion dollars. you can see the big move for origin on the bottom of the screen. but the other high is what happened with the boj and the ramifications. and the announcement across asset classes. if you take a look at this chart, it shows the impacts that we see in jgb with futures trading in under 15 minutes from now. we see the curve steepening in the session. given we see big moves in the japanese bond yield. and the gap widening between rate sensitive short duration once and what is happening on the long end of the curve. this is more one to watch. and we get futures in under 15 minutes. shery: with our next guest, the

trading signals a real policy change as they prepare the ground for the next governor. joining us now is chief economist. mark. it is good to have you with us. we have two camps when it comes to understanding with the governor is trying to do right now. it is actually the start of the exit of a y cc regime. and the other one is saying perhaps it is an adjustment to make it last longer. why do you think this is a real change? >> the bank of japan will have policy regime and it has higher inflation and rates. it needs to keep its policy in line there is no question about it. the only question was when this would happen. most expectations would -- including mine would be the policy review with the next

governor. now kuroda has decided i will take part of the blame and start the process now to see what happens. shery: that's interesting that he will take the blame. and what he set out to achieve a decade ago is nowhere close to where we could be when it comes to inflationary pressures. >> that is exactly the background. in japan, the policy was extremely low rates. getting the economy going and preparing for higher productivity. and sustainable growth i government reforms has only worked in terms of financing the government plus weakening the yen. more has to happen in terms of policy changes which transforms digitalization in the economy. and what he was weighing was

criticized about the central bank policy. haidi: are you convinced that we will see the shift this type of cost with inflation driving up border inflation to demand with inflation next year? >> this is the key point. the exchange rate has been to weak. it is at a 50 year low. that's a major problem for the japanese economy being -- behaving like an emerging country even though it is not. the industry is feeling it. the japanese yen needs to be raised to an appropriate level and have appropriate monetary policy. this is where the boj is going. haidi: there's a huge amount of possibility for the risk of policy miscommunication.

do you see this as being a test of the waters, and is it a successful one? will the next government be able to incrementally do more? >> when you control the yield curve, you have a tricky policy set up when you want to change it. it is not just possible to increase the rate target at the long in. what they are trying to do -- at the long end. what they are trying to do is see how much disruption is coming in. the yen has moved and the bond markets have moved but the boj is not the bond market. everybody had specs the actual -- everybody expects the actual change will be great and this is a test for how nervous the markets are. i think this was successful we did not see a major disruption. shery: you talked about

government spending and the boj is about to 60% of gdp and now the government wants to spend more on beefing up japan's self-defense forces. talk with us about the challenges the economy faces with this governor and a new governor coming in. >> this is a terribly difficult situation. the boj is managing a huge overhang of liquidity in the market which can go in any direction. we've seen that in the u.k.. on the government side, it is really not about getting government finance on a sustainable level. households and industry request stability will need perspective as well. that requires more productivity and getting the economy moving. so far the government was happy with the supplementary budget when things were not going well.

now this is a big process. and they are getting serious policy debate. shery: what are you expecting from the negotiations? will we see upward pressure? >> yes, but companies are more happy to increase bonuses because they are not so sure how things will go next year. and productivity has not been up . at the end of the day you pay higher wages out of productivity out of your lasting profits. the situation next year is not easy, i would not expect too much. shery: it is great to talk with you. martin schulz chief economist at fujitsu. vonnie: sam bankman-fried has agreed to be in next indicted to the u.s. regarding the charges of crypto ftx. he has been held one week in the

prison in the hamas. the commissioner confirmed the 30-year-old signed extradition papers. and having a court hearing later wednesday. and unoccupied land features in the south china sea show construction activity over the last year. china has previously on reefs and islands it has not controlled. these new images depicting the first known images of construction on land that they did not know was occupied. opec-plus and its allies must say preemptive and proactive in the markets. the saudi press agency was told that they will have more chaos after the shocks this year. russia's invasion of ukraine has a plan of cutting expectations of oversupply angering the u.s..

an estimated 4 million people packed the streets celebrating the argentine in world cup winners. so many people turned out that security helicopter -- the stars had to fly in on a helicopter rather than go through an open top bus. they had an explosion of happiness. 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'm vonnie quinn. this is bloomberg. shery: plenty more to come on daybreak asia. this is bloomberg. ♪

shery: we are getting an alert on the bloomberg with comments coming from the international monetary fund on japan's price move when it comes to the adjustment of the yield curve control policy. they commented in a statement saying the boj yield curve official set -- said an adjustment is a sensible step. we have seen them raise the cap on the 10 year yield doubling it. keeping the negative rates in place and boosting jgb purchases to ¥9 trillion per month. they say around the inflation outlook the boj's adjustment of

why cc settings is a sensible step -- why cc --ycc settings is a sensible step. and they want to provide communications on adjusting the policy. they think it will help anchor the market expectations and strengthen credibility of the boj. haidi: it is that communication if this is the precursor to what at massive lending this would be after a decade-long campaign. it will not be easy to change the market expectations. let's look at the yen and other moves we see this as a result. ruth is with us. i was having a chuckle about how we deeply understand -- underestimated governor kuroda's ability to throw out a surprise. >> absolutely.

yesterday was an absolute surprise. it took many people by surprise and ripped through every market. we see the yen today where at once -- this time yesterday it was at 138. now it is at 131. that changed every trading desk in the world yesterday. shery: we see global bond markets and fx tell us the implications of the boj move if this is how markets are perceiving it to be as the first step of normalization. >> some of the bearers out there are saying this is it. the boj says this is the first step to normalization. you have ubs and those that celebrate christmas early because they have a trade -- it worked this time around.

you have a cap of investors saying this is policy normalization. others are cautious particularly funds in japan saying let's listen to what they have to say. this is just a small step and negative rates are still a thing in japan. haidi: what other impact do you see across the fx landscape. we saw the move in aussie in and the dollar -- aussie yen and the dollar. what can we look at going forward? >> with the sentiment shifting on the yen, the yen is cheap, it was incredibly cheap because it was so low, it would have

implications across everything through to the chinese u.n.. and the most important one of all is the dollar. as the dollar yen continues to dominate the trading across desks and within -- putting liquidity in place watch out for big moves. shery: thank you ruth. we have jgb futures trading. they been fluctuating at the open. this is as we had toward a full opening of the jgb yields. we have seen them rally in the previous session to touch a top level of .46% given the 10 year yield cap has now been doubled to .5% we see the yen holding

steady at the 132 level keeping futures pointing higher. and we are watching the curb with the 2s/10s curve steepening and we will see that in the start of trade for now. it's been a challenging year for traders globally. the investment of green bonds coming up our assessment of 2023 investors they say investors are coming back in that year. joining us now is portfolio manager at thornburg investment management. on a day like this when we have global bond rout and yields soaring what do you watch when it comes to green bond and the appeal in the next year? >> it is great to be here. green bonds we are watching for bonds being bonds.

and kind of took my punchline that in 2023, bonds will be back. there are three reasons for that. here is one, first, we are seeing real income and rates going up and prices are going down. the portfolios are kicking off real money something we've not seen in a decade. also, supply. 2022 was very bad for supply in bonds across the sector. and immunizations was down 18% this is compared to 2021 which is a phenomenal year to begin with. 2023 we expect the trend to reverse. these are the themes that are

being played out in our space and with issuance going out. and prices going down and yields going up we see interest coming back to space. if or when we both see a recession conversation coming in play, bonds are a place to hide. muni bonds will have a lot of interest and green bond will have interest as well. shery: what will be the driver of other rates when it comes to 2023? >> when i think about green bonds in 2023, i think of rates, they are favorable, and there is regulation which is not clear. and the third part of looking at 2023 pitcher for green bonds, i

am thinking about inflation reduction act. there are a lot of provisions that may benefit the issuers especially in the tax-exempt market. muni has more emissions in the esg space. when we get more clarity about the act itself. haidi: there's been a trend of releasing twinned bonds. -- twinned bonds. is that an effective strategy? can they make that comparison for investors? >> comparison? look at material factors. with esg green labels being self affected, issuers assigned them themselves, when issuers when they talk about green they talk about the benefits.

and coming out about issuance. as investors, when talk about esg we look at the risks. for us the material factors are as we analyze any other bonds. and we think about esg as a risk and how it affects the borrower. so a different perspective. the conversations about greening something that a couple of studies are being done and talk about up to 10 basis points benefiting issuers that put the label on. i do not think that is clear yet. it is still in the process of figuring itself out. you mention it has been years and bit esg market is a tiny percentage of overall issuance. it is 1% of global fixed income. 1% is not substantial amount. and it is smaller in the u.s. about .5% and smaller in the

muni space. it has room to grow. shery: evgenia lando portfolio manager at thornburg investment management. we have breaking news at the moment we hear from peru the congress has approved a constitutional reform to hold early presidential elections. this was rejected by congress last week, the whole idea was that the government of now president and former vice president, they wanted to bring political stability by holding elections earlier. instead of seeing him hold term until 2024. now peru's congress has approved this early election. this is after the president pedro castillo was removed from office.

this is bloomberg. ♪

shery: here's a check on the latest business flash headlines. wells fargo reached a $3.7 billion settlement to cover up the harming of millions of customers for years. they say the action is causing

people to lose their cars or homes. and wells fargo says it will have to set aside millions in the fourth quarter to cover the settlement and other litigation. nike's quarterly sales have exceeded wall street's estimates. it rose 17% to $13.3 billion. nike credited expanding regional leadership for the rise in venues. shery: training begins in japan shortly. we watch the numbers for nike as well as the allete it -- athletic apparel of fila. and we watch the japanese banks in focus as well. as the yield curve continues to reverberate across the market with banks rallying from the restoration.

and financial stability in the financial system. these service sectors that will likely take a hit when it comes to the strengthening yen and higher rates. it is insurance, real estate, transport, and air transport. the tourist sectors. and we continue to watch for a broader impact of an aligning of the monetary policy that has been in place for the last decade of the bank of japan. the opening is in tokyo and seoul next. this is bloomberg. ♪

shery: this is daybreak asia we are counting down to asia's major market open.

we have a fallout from the shock change in the two-year control by the boj. we see the japanese yen strong. haidi: the impact of the yield curve how much upside pressure will we see sustained? and why does this mean for the prospect of the alleviation of inflationary pressure on households and exporters. we are piecing together what this means. is it the start of more actions from the boj or is it a strategic tweak at this point? shery: and we see pressure as well with the korean trade data for the first 20 days. we see another number that is in territory which is 8.8%. they were down almost 17% in the past. for the first 20 days in

december, they drove at 1.9% so it is slightly better. but we still see a trade deficit at this point. this is coming at a time where we see two months contraction for south korea which is a bellwether of where trade trends are going globally. falling 24% on the daily average. -- 24% overall and fee daily average is 8.8%. it is a bellwether of what is happening in japan. haidi: that is right we will have a open for you in a few moments, but his start here for the open in tokyo and seoul we are looking at the knee-jerk reaction from the boj changes. they are adjusting the 10 year yield doubling the cap. and it sends shockwaves across asset classes.

it may be some policy normalization but we see moves coming in the japanese yen this morning. it is trading like this with some out there saying you could see focus strengthening and the days ahead. and some saying the rally still has room to run. and often saying the yen is that -- socgen saying the yen is going to continue to rise. and it is slightly higher for the 10 year yield but the steepening that came through that adjusted the multiyear highs. and then we have a picture for equities stock down .5%. we did see that sentiment dented by the boj decision on tuesday. let's look at what we are seeing and specific sectors at the start of the trade. we did see japanese banks

rallying. and the beneficiaries. we see a rally being added to the start of trading. up nearly 2%. a huge outperformance for japanese lenders over the course of the year. for topics banks --topix banks. up 1.7%. and topix insurance up by .74%. and we mentioned the trade numbers coming through and it shows further weakness in the trade. we see the kospi rising fractionally. and for the cause that we see it going up as well. but we are monitoring what is going on with the korean won it is looking steady but it is that the key 1300 level.

but recapping the numbers we have seen a drop in exports of 8.8% in the first 20 days of december. and it is a bellwether of the global economy that we see a change in the economic backdrop. we see the s -- asx building higher today. and energy surging today. with origin energy. shery: our guest joins us from global investment ester to with wells fargo. . we see jgb trading back. and swaps are at higher 10 year yield. where are we going from here? do we expect more volatility in 2023 with the and certainty of

what the boj policy will be like? >> there is more uncertainty to, and you have these conflict things were -- sources of root -- a recession coming. and you have the japanese gone -- the japanese one lose investments as well. and at the same time the inflation in japan and fee shortening of the yen is a serious consideration. we have forces of latitude that push the yields higher as others push the yields lower. but in april, we would be careful about making long-term opinions of japanese policy based on what we heard today. shery: we have some opinions tightening and easing at the same time. do you have insights on what the boj could look like under a new governor? we are now talking about is it because do -- who it will be to

help us position into 2023? at this point it is difficult to forecast inflation which will be the straw that stirs the economies drink around the world in 2023. can the inflation rate come down, if not, that may tie the doj hands a little bit in terms of policy. and been there is also a recession. there is a case to be made of inflect -- if infraction is at the doorstep now. we see the u.s. in a number of places thinking recession is imminent. if you get a recession, we may have to respond to that first. we will see what happens with inflation versus the recession. we think it will be difficult to abandon the current policy. for philosophical reasons. when you have the two meeting forces at play. haidi: it is a backdrop globally

where valuations do not go up and there is further downside to come. how do you position and the new year? and find opportunities in what is the downside view of the broader asset class? >> we don't want to be too negative recession may be imminent but some factors such as liquidity in economies around the world, the bank of japan is no exception, raising rates higher, and adding qe and the bond purchases. there is some buffer of liquidity and job market strike. that will timber a recession. we want to be defensive with the u.s. over international and prefer the market in you cast -- u.s. over small caps. but as we get into the recession, with raising rates and eventually a pivot, as

markets inspect the pivot, i would say it is maybe six weeks forward sometime in the spring. that is when we start to put money back toward potentially developed markets like japan. and in u.s. small caps. the time is not here yet. that is the point. stay defensive but have a bullet in the chamber ready to fire. haidi: how are you feeling about u.s. consumer? the numbers out of fedex and others are robust does it change your outlook when it comes to the resilience of the household of the buyer? >> it does. when you enter a recession in the u.s. you never enter with the feet. right now we will eventually drag manufacturing into a recession. then we will see jobs disappear open positions will disappear. there will eventually be layoffs

and by march, you will see the consumer also go into recession. but because of liquidity and checking account balances are healthy, that will be the buffer to help dampen the impact of a recession. again, looking for the turning point in markets in 2023 thanks to the buffer, a moderate recession we are looking for an opportunity to get into cyclicals. but not quite yet. haidi: it is great to chat with you the head of global investment strategy at wells fargo investment institute. and then we have the status of the sam bankman-fried the former head of ftx is to fly to the u.s. on wednesday. fbi agent confirmed that he has

signed extradition papers in the bahamas. you will be sent back to the u.s. to face multiple criminal charges. he was going to fight the process originally, a hearing had been set on wednesday, but we have not heard a comment from representatives of sam bankman-fried. but we understand by him signing the papers he is one step closer to facing a large range of criminal charges related to the collapse of ftx. that is confirmed by the bahamas department saying he will fly to the u.s. with fbi agent's. let's get you to the first word. vonnie: elon musk is looking for a new ceo of twitter after he lost his own poll of if he should remain as the head of the company. a search for the new leader will

take time. 58% of the voters were in favor of him stepping down. he had committed to abide by the results. china has confirmed its definition of covid death. they would have to test positive of the virus and then die of respiratory failure. and their low official tally may be hiding the true numbers of the pandemic pivot. the country has reported newer than 10 deaths this month. afghanistan's taliban government is boring women from attending university. they announce the order suspending girls education until further notice. they had already stopped most girls from going to school and suspended them from many afghan jobs. 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'm vonnie quinn. this is bloomberg.

shery: day two in the market reaction to the boj shock. what are you seeing? >> we are seeing momentum coming through the same sectors that slumped in the intersession. we saw the shock announcement from the boj in terms of how far they will allow the 10 year yield to rise. they are doubling on the prior 2.5 percent. yesterday the moves are in bank stocks and we see that coming through on the second day as well with topics banks --topix banks rising 4.3%. we do know lenders benefit from rising yields. it makes it more profitable for them and insurers as well. we see the gain for insurance index as well. the laggards we see here are the ones like transport and tech

stocks and real estate. we see this decision that could play out over weeks and months. another one i am watching closely is what is happening in the nike related stocks. given we got the numbers out from like he -- from nike. it surged or than 12%. this is a story of a strong consumer not just in the u.s., but around the world. because they banked on sales for all regions excluding china there are coming at $13.3 billion. shery: taking a look at the travel sector to find out why airline services providers see -- as the next big thing in aviation. the aipac president sumesh patel joins us later. and we talk about how the governor could not resist one more big surprise.

after his tenure of running the bank after his 10 years of running this and doing this as a close. this is bloomberg. ♪

>> there is no doubt in my mind that this is the step towards normalization. the good news is that we can control assets which is good news to the global market. it does not force japanese institutions. but over time, this approach is unsustainable. >> this is the beginning of normalization. they have been increasingly struggling to hold the hard policy mix and that has changed. we are on the pathway to normalization.

the market has been volatile as we progress. haidi: russell matthews and opinion columnist discusses the trading band. the decision has stunned global markets. one of the final decisions from governor harry kuroda after 10 years at the helm in april. we will get more analysis on that as we try to work out the globe -- global rent of -- ramifications. and we have sumesh patel joining our guest joining us with his impression of this. how do we interpret this decision to do business rather than deliver it to sometime next year? >> we should have expected something like this. i was getting a premonition before the decision came and it

seemed to be a little late. how to interpret it is definitely a question. we have extinguished guess that rely on this as the first step toward normalization. i am not so sure myself i do think there are bonds underlining that yesterday during his press conference. he said in those words it is not a first step towards an exit. but it is a technical tweak is how he tried to explain it. that argument does not really work well either. the boj itself said they are taking the most appropriate trading pattern for the -- keeping at where it was. for me it is hard to say it is going to be the first step toward normalization because of our deeply money in the japanese

economy. and the fact we are likely heading into a global recession next year. boj is going slowly. i think this is probably the last major move that kuroda will do it unless he surprises us again in one of the two meetings next year. that means his successor whoever that will be, will have a lot of work on their hands. will they immediately change the policy or immediately do something in particular in the fed's tightening cycle will come to an end. it seems to me in that atmosphere, it will be difficult for the boj to be normalizing. shery: i love how you talk about it was late for decision. is there a way back to the days where we are timing and seeing

when they release the statement to know if there are surprises? although you talk about the japanese economy not being ready for the first step of normalization, does this give you an indication of what happened in the markets? how tricky it will be when the time comes to reverse this unorthodox policy? >> it definitely will be tricky. in recent memory, this is going back 20 or 30 years, the boj has tried to normalize policy and increase rates beyond zero. they have had to undo that quickly afterwards because the timing was wrong in both cases. it seemed like the right thing to do at the time, but obviously the global economy conditions deteriorated rapidly after that. i think that will make whoever

is the next governor very conscious about anything that looks like normalization. japan's economy depends so much on money easing. it is hard to see the situation where interest rates look comparable to many other countries. and it will have an impact on the japanese economy something could be more dangerous than the begin we have seen. and markets blaming this policy for bringing dangers for a normal rate policy in japan. that will give them pause. i believe and think, when they do change policy, it will be a new policy that they will wrap yield curve control and police it was something else other than tweaking or changing it.

that remains to be seen with the next governor. shery: bloomberg opinion columnist joining us. check out his peace of crowed a does it one more time. -- kuroda does it one more time. it is a great read. let's get more from bloomberg asia stocks manager. give us a breakdown of the japanese stock market reaction when we got the surprise decision. >> yeah, it was a volatile session. everyone was shocked. we were at lunch break and futures were down 4%. and when the cash market opened in the afternoon, and assets stabilized around 2.5%. it still had the worst day in about -- nikkei had its worst day still.

and if you look at the options market or volatility market we see, a bit of a kick up in volatility. the most in two weeks that pales in comparison with what we saw in the fx market. investors do what they did. put option volume we saw it yesterday doubling the amount trading. haidi: we are seeing certain beneficiaries around the topics of baked -- bank index almost a size 2018. what impact do we expect from the policy change? >> i think there will be more playing out in the beneficiaries and losers. the banking sectors it was a big job yesterday continuing up 6% today and among losers we see

expert -- export reliant sectors with electronics and manufacturing losing quite a bit today. as investors try to price in the ramifications of the potential pivot of the boj and what it will bring to the market. and we have the banks, at first glance, they are beneficiaries, but if you look at their holdings, they took a big hit on the jgb holdings yesterday. and it will continue to be a big hit down the road. and corporations are recalibrating their yen forecast given the boj shift and how that would be communicated to investors in terms of their impact on earnings and how that reflects in the market price. broadly speaking, the bigger yen -- a stronger yen would mean investors internationally could

bring money back to japan stocks. when they convert that in the u.s. dollar, we could potentially get more dollars. there are a lot of forces at play. investors have to do calculations over the next few days. haidi: thank you for joining us. and we have goldman sachs saying the boj step could be removing the negative interest rate. that is after the black drop moment with governor kuroda with his big decision. two meetings left after he steps down from the helm in april. a shock saying he would allow the 10 year bond rout -- bond to rise. we are getting implications of what investors think could be to come. goldman saying getting rid of the negative interest rate could be the next step.

more to come here on daybreak asia. this is bloomberg. ♪

shery: take a look at how the japanese yen is trading against other currency players. continue to see strength against the u.s. dollar and many calls saying they would potentially see the 120 sooner than we expected according to mitsubishi you cheap. also against the british pound, we are seeing strength that we haven't seen since june 2016. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 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 internet customers.

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annabelle: checking firstly in

japan, this is really the day two reaction to back stock boj and as -- announcement last tuesday. they were allowing the 10 year yield to use -- a raise to 0.5%. huge benefit to lenders in japan given their interest incomes are being crushed by years of low or rock-bottom rates. we are seeing this data reaction going through. 8.8% surging after yesterday moving the most in six years. other lenders in japan following suit. corona says this should not be interpreted as a rate hike, but it could be a sign that normalization is around the corner. goldman sachs coming out with the latest thing the boj may now move negative interest rates. jeffrey is also saying traders could be positioning for such a move to happen. changes across the course of this year, we have seen in verses getting ready for the boj to have it into your curve

control policy or tweak it to a degree. we have already seen an outperformance of the top index against the benchmark over the course of 2022 to the tune of more than 20 percentage points. changing on now to see around the rest of the topics in this trading session today, we are continuing to see that outperformance for the lenders. there's continue to be under pressure, transport, real estate, i.t., sharing these, all sectors that do not stand to benefit from the boj's stock decision. shery: let's get to vonnie quinn. vonnie: u.s. house committee is set to vote donald trump's tax to the public. this initiated by democrats to obtain and release these financial documents. the vote comes in the waning days of the house democratic majority and follows trends referral for criminal

prosecution by another house panel. the saudi oil minister says opec and its allies must stay proactive and preemptive given volatility in markets. we were told the saudi press agency that this approach has prevented more world widespread chaos. opec-plus plans to cut production on expectations of oversupply, angering the u.s.. beijing is building up several unoccupied land features in the south china sea. satellite images are said to show construction activity over the past year. china has previously built on reefs and islands that it has long controlled, but officials say these new images depict the first known instances of construction it doesn't already occupy. 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. shery: we do have breaking news on that story about the relief of the former president trump's

tax information. house panel has voted to release six years of tax documents. this brings to a close a three year legal saga initiated by democrats to obtain and release the former presidents very closely held financial documents. this is coming from the ways and means can. in the waning days of the house democratic majority, and of course, as we have seen former president trump battles six weeks of political -- being blamed for the gop's disappointing midterm election results and of course this as he launches a 2020 campaign. now, we are finally going to get to see his a tax documents for the past six years. haidi: let's get the latest when it comes to the online -- covid zero in china. the country sees an increase of

covid debts that are not being reported in government data. that is according to a myriad of social media posts. officials are asking the supposed impact. we have talked about this earlier in the week in terms of some of the anecdotal evidence coming out of beijing. now we are looking at a lot more coming from lots of different places around the country saying that this isn't adding up. we also know they change the way that they define covid death. >> basically, they admitted that they are going to be counting less deaths covid. they introduced a much more narrow definition of what constitutes a covid death. you have to die from a respiratory failure to be counted as a covid death, which is very, very different to the way other countries do it. the u.s. and u.k., they do split whether you die from covid or

with covid, but the ultimate numbers are brought together. other places count your death from covid if you are positive within one month. this is a very, very narrow death definition and pretty clear what they are trying to do is to say that fewer people are dying than they really are. you can die from a heart attack with covid and it wouldn't be counted in the covid numbers in china. the research is very clear that covid can cause blood clots, it can cause things that cause other ailments and things that you die from. it is not high science. shery: what does the signal in terms of restrictions for covid-19? if they are not counting as many deaths, does not mean we are not going to see more restrictions iesco --?

>> we are very much on the. of restriction. china revise history that it really even existed, but now the rhetoric is about how mild covid is, how mild omicron is, how we can get this. at the same time, they are basically raising -- erasing for the public record any data or's statistics around it. it is hard to get a complete picture of what is actually happening in china. we are hearing about factory workers and other people being told to go back to work, even with covid. they have definitely seemed to have turned the page on covid zero and it is all about getting through this very fast no matter what the cost are and getting back to economic growth. the mac at the same time, the same impact will play out whether it is acknowledged in public or not. hearing that if you have mild symptoms you can still go into the work latest, that is not going to help with this, either. i was looking at the latest

vaccination data, it is still just about 40%. >> it is very clear, given that they haven't really done enough when it comes to early vaccination that you are going to see a lot of older people die. the estimates are around one million people dying in china, these will mostly be old and vulnerable people. the impact, as you say, one company has a smaller group of workers working double shifts because an outbreak was in the factory. we see outbreaks in bmw's factory. they have had to do similar things, to keep production going. some factories art -- are giving workers that if you don't tell us you have covid, that's fine, you can still come in. many people might get mild or

not so intense symptoms, somebody can go home, come back to an elderly parent or grandparent, and that leads to a death. we are going to see disruption whether china tries to hide that or not. shery: thank you, emma. coming up next, south korea is trying to become the third's largest carmaker. this is bloomberg. ♪

shery: south korea's motor company has become the third largest carmaker. they are just behind tesla with electric cars. we spoke with president and ceo about the company's opportunities and challenges. >> hopefully you are seeing the progress by the sales volume we have done, we became the first ever global top three. this was mainly driven by sales on the suv and also the genesis. that is what we will be focusing on it to make a transition into

carbon neutral as well. the brand has been being -- forced by the customers -- those are good numbers. we are trying to keep up the momentum. >> compared with other legacy automakers, hyundai appears to have a more modest and realistic target for eb's. there is a lot of debate in the industry around the pace of the ev transition. do you think you have a good sense of how long the transition will be and how ready you are to introduce the products and have these voting supply chain? >> 1.8 million by the year 2030. we are wanting to increase the capacity first, which is how are our ev compares to the existing on plan. also creating the new plans as

well. we also need the battery sourcing. we are thinking how we may come to adventure with the battery makers. arc and see of the customers to have? >> one is, how reliable? in terms of the safety or the battery durability and those soy -- those sort of things. for us, it is also key, how much longer can it drive? also, how fast? how quickly it accelerates its speed. his ability is -- the usability, how the inside of the car is good for your comfort and driving condition. >> how impressive, is this going to continue? how much more work are you going to put in and making sure you

have the chip supply and the raw materials and everything for every category going forward? >> yes. for the next two years, we believe the demand for automotive will be between three to 5%. -- inflationary pressure, some policy issues and with the chips . how we manage our supply chain is the key concern. as far as those chip supplies are concerned, we are working very hard with suppliers and chipmakers by having -- contracts. we are working very hard to integrate the chips and developing -- autonomous chips as well. >> when you look at overseas markets, where do you see the

biggest challenges, but also the biggest opportunities? >> course, auto markets are continuing the growth rate that they are showing. those are high-growth, the ep, you start with the key concerns. what we are seeing in the u.s. is pretty important to us. i say, how we can open the trade to the ev market in the u.s. and do the same thing in the european market by having ourselves be more competitive. shery: -- haidi: we would also like to mention the interview was before hyundai said earlier this week that it is investigating allegations that two of its suppliers in the u.s. and void minors the alabama lance -- plants. the company says they do not

condone or tolerate violations of labor laws. shery: we continue to see the markets moving in japan. the two year yield at jgb, now rising above zero for the first time since 2015. we have seen it not only the jgb route continue into today's session, but really translate into a global bond rout as we saw the boj now raise the 10 year yield cap and double it to zero point 5%. they also boosted bond purposes to ¥9 trillion per month. we are also seeing the repercussions continue in the jgb space. coming up, how hong kong airport has got the jump on tesla and other carmakers in its development of driverless technology. more on that with asia-pacific, next. this is bloomberg. ♪

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shery: the airport authority hong kong says it is ready to use driverless buses on its action national airport -- international airport after reaching a stage that no company has reached in real-world conditions. >> this is hong kong airport's new electric bus. what makes this bus so special is, this doesn't even need a driver. it has so much technology on

board it can run autonomous and driverless. >> we are quite confident in the technology. we have been using it for a long time. and have zero accident so far. you have passengers on board. >> autonomous driving isn't as all-encompassing as it sounds. being driverless means no human intervention when the vehicle is driving and something is wrong. in theory, the driver can be the passenger. a stage but no company has reached in real-world conditions. >> this is the heart of the at hummus vehicle. -- autonomous vehicle. for here, a lot of the signs are related to safety. and passengers not set properly on the seed, the sensor will send an alarm since.

>> airports hope this bus will be one of many driving around the airport without the need for a driver in the future. haidi: thank you, denny. we are joined by himesh patel. great to have you. as we look to 2023, the further and broader recovery of global travel and aviation, trends are you noticing in particular? how does technology fit into that? sumesh: having me and good morning. from our perspective, we clearly see 12 megatrends basically helping and driving the way the future of the airport is going to be, and basically the rules are based on the technology --

traveler and economic -- if you look at the report about which is meeting the megatrends, it basically was spearheaded by our innovation team and draws upon the insight from across the transport industry. see does global research -- proof of concept. one key trend in the report was the gen z and millennial travelers who are driving the demand and demanding a more independent physical journey and a more digital way of life. haidi: when you look at automation as being the next transformative thing, how quickly do we see that happening? what problems will it have well

still dealing with a lot of the labor shortages and disruptions at the moment? sumesh: i would say the automation was already -- when the pandemic has done was help to accelerate the adoption of these technologies. if you look at this technology, it is not just helping the passenger, which is, when you go to the airport and you use your face as your boarding pass for your passport, but it is also going beyond. for example, we just saw in the autonomous and electric -- this will be supported by the artificial intelligence and -- and the airport, the arrival of -- and maturation of solutions, it will see connective autonomous robots and mobility

support. clearly, the results will be more autonomous tracking and controlling of the activities, and that will help the passenger journey out the major international airport. what we are seeing is the move away from out with the shortage of manpower, how can the technology help to address that? and of course, have a better passenger variance. with the staff doing more work or focused on providing a better customer service rather than doing -- which was supposed to be done by human, can be done by technology. haidi: how affordable are these changes for more budget challenged and smaller airports? sumesh: i would say the efficiency it brings into the

technology, we are basically helping the airport. it clearly justifies the investment. firstly, you have a better customer experience, and second, it also is the other challenge which is sustainability and reducing the carbon foot. this new technology coming in, basically you can track that. our recent partnerships, we have partnered with hong kong airport recently where we are helping hong kong airport to basically track and manage the carbon footprint. it provides the visibility of the entire carbon footprint for the airport and basically suggests the approaches and also, the proposed metrics. hong kong airport has got a very aggressive plan and basically, this solution causes them to track and provide suggestions.

shery: do you see any divergence in demand for these technologies for regions or countries? sumesh: it does, certain technologies are adopted by people who want a deal much faster, while other airports are a little slower in terms of -- that is tied with a few things. one is the profile of the passengers in that country or region. two, the technology availability as terms and how fast he needs to be deployed. third, it is also looking at the congestion. how much of the airport will continue to expand their footprint in the terminal? moving forward, they are deploying these targets. haidi: thank you so much for being with us today. here with the latest when it comes to technologies at

airports. we continue to watch the market fallout from the boj's stock decision when it comes to raising the 10 year yield cap and doubling it to 0.5%. the market opens in hong kong shanghai and shenzhen are next. this is bloomberg. this is bloomberg. ♪

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>> good morning, it is 9:00 a.m.. welcome to "bloomberg markets: china open"