♪ shery: welcome to daybreak:

asia. haidi: the latest fed minutes deliver a blunt warning. asia is said to extend a wall street rally. shery: with new york rebounding. we got the treasury market mixed, the 10 year yield fell. mixed economic data. u.s. manufacturing contracting for a second month. the biggest fall since the goebel financial crisis in 2008

on an annual basis. when it came to labor market data, we still saw a robust resilient condition. we are rebounding when it comes to oil markets. 70 through three dollars -- $73 u.s.. we have been liquidity which is exacerbating the price swings but the fact that we could see delays in the economic recovery in china given the surge in infections is really concerning markets. haidi: there is so much uncertainty. take a look at australian shares. this is how we are trading at the start of the session flat at the moment. we are watching as coal exporters jumping in the afternoon session yesterday on this bloomberg report that the top economic planner in -- this

is giving quite a bit of optimism when it comes to commodities currencies and stocks. take a look at kiwi stocks accelerating the gains. also positivity when it comes to nikkei futures trading in chicago as well as china futures. we have had such a monumentally positive start. where you are the u.s. listed chinese stocks are the best on record. the question is can this be sustained? shery: we have breaking news. western digital has restarted talks with a japanese company in an effort to unite these two tech storage providers. the structure of a potential

deal remains fluid, but the parties are discussing merging into one publicly traded company. this is not the first time we have heard about these talks about a potential merger between these two. the first time we reported its 2021. that failed to gain momentum. the expectation was a merger could have been a $20 billion transaction. right now, we heard the talks were revived late last year and the current talks are in the early stage and could end with out an agreement. we continue to watch them as they have now restarted talks in a deal that could unite these two tech storage providers. let's return to the minutes of the fed meeting. it has delivered a blunt warning to investors affirming policymakers decision to do what it takes to bring down inflation. kathleen hays is with us. the markets really moved on what

the fed minutes were saying. what were your key takeaways? >> think back to deceit -- december, the fed came out of the meeting hawkish. i think they went into the meeting realizing the markets are looking for them to raise rates next year but soon as they get there, soon as they see whiteness -- weakness in the economy, they are going to pull back. they put in a phrase that seems to address this concern that that would lead to financial concerns -- conditions eating -- easing. an unjustified easing of financial conditions. if it is driven by a misperception, a misunderstanding of the reaction function. in other words, what will it take for them to cut rates?

this will complicate the fed's efforts to get inflation down they are second-guessing. the minutes are carefully edited after the meeting there are pages probably of words they have to go through to distill it down. they try to be very clear about what they want the markets to see and read. also looking at the dots, they downsized a rate hike from 75 to 50. another reason the markets were thinking they are slowing down there going to the point -- they are going to get to the point where they stop. after the meeting, jay powell came out and said the fed had more work to do he is concerned about the tight labor market, imbalances between supply and demand. a lot of workers still on the sidelines. these are the kinds of things

that were concerning the fed at the end of the meeting. the minutes out today underscored the hawkish nest. shery: -- haidi: neel kashkari sent out a hawkish message today. >> he wrote an essay. when people do this, they have a message they want to make clear. also important to remember that neel kashkari president of the minneapolis fed is going to become a voting member this year. he's were to sit in one of these revolving seats. he favors boosting the rate to 5.4%. he sees hikes at the next few meetings. if he sees inflation still not coming down enough after the fed pauses, he is open to the fed raising rates even higher. the great line he has in this essay is explained to people that inflation is like surge

pricing. when it rains, everybody calls for an uber. when the price goes up, not that many people want to get in one then the drivers come out. that brings down the price. haidi: such a great analogy. let's bring in the chief rates correspondent. when you take a look at the balanced narrative of the fed meeting minutes, do you see the tug-of-war merging and how much does that complicate the way forward for investors? >> i think the way forward for investors is pretty complicated especially because the $24 trillion question is what does happen within basic -- with inflation this year?

the latest inflation reading was 7.1% for november. if inflation does come crashing down, then what are the drivers and how does the fed respond? that's what would seem to be yes you would get rate cuts because if inflation is at 1.8%, you would need a fed rate at 5% which is what the fed is projecting. the difficulty is, are those extremely striking expectations for inflation slowdown accurate? if they are not, what happens to the bond market and the stock market? you have both sides of that in the fed minutes but in particular, they are obviously willing to err on the side of

being too slow to ease off to loosen settings because they're very concerned by the precedence of the 1980's when the fed jumped back toward easing at the first sign inflation was seriously coming down only to discover it had missed -- misjudged things. then they had to hike again. they would much rather hike, hold, then cut when they are sure. they don't want to mess around the economy in that sort of fashion. shery: what's happening with chinese stocks? given how bad they fared last year not to mention overall news flow. guest: it is extraordinary to

watch the immediate bad news on the covid and economic front. yet the stock market is rallying. the expectation is that much as we saw in a range of countries once you ease social restrictions, yes you do get an increased caseload but you eventually get to cope with that and the economy recovers. unlike covid zero, or you might hold covid down but economy is doomed, this gives you the chance for the economy to recover. i think it is also going along with the idea that you have a clear pathway were bad economic news is going to mean more policy easing. from the point of view of central banks also we are seeing signs that heavy regulatory hand

of the chinese state is being pulled back. as well as an acknowledgment that they need to get their economy working, they need to turn it around and they are focusing on. that is a message that you can take from the end of covid zero. if you trust they can manage to do that and the heavy regulatory hand won't come back once the economy improves, this looks like a good time perhaps investors are deciding to get back into chinese stocks. the one question is we are getting back to the levels that -- where stocks stalled on the downside and upside earlier. a lot of the potential gains might have already come. shery: let's get to vonnie quinn with the first word headlines. vonnie: the airline industry's lobbying group has slammed the growing number of countries ordering covid test for chinese

travelers. a representative says it only delays the peak of new covid waves by a few days while hurting the economy. the u.s. is among those ordering predeparture tests. who says to -- two unknown variants. hospital cases as well as viral sequencing has been requested from china. kevin mccarthy has failed for the sixth time in his bid to be elected speaker. it deepens the chaos that has enveloped the chamber. hard-line conservatives refusing to give him any support. the house is due to convene again at 8:00 p.m. washington time. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn.

this is bloomberg. haidi: still ahead, we will be asking a global -- goldman sachs representative about their japan outlook. but first, this is bloomberg. ♪

>> a nasty earnings recession so the companies that can deliver on the cost efficiency will continue to perform until we fully price the downturn in earnings it's going to be. haidi: next guest says this is when investors should go pro risk. great to have you with us. talk us through your strategy if you are watching for what the treasury curve does. it's interesting the idea that we could potentially get more conflict within the fomc as well clouding the outlook when it comes to what the fed will do this year. guest: our forecast has not

changed in the last three months. for 2023, the expected rate cut our forecast for it has not changed. with the minutes they came out today, perhaps confidence in that rate cut is increasing but we are worried that the fed might get the economy more into recession. maybe there is a real recession that could occur because of the determination to manage the spot inflation number rather than looking that indicators are coming down, that consumer is -- very fast. they are really eating into their savings very rapidly. this shift can occur from

thinking too much about inflation where all of the supply side pressures are loosening at a fast rate to really getting back growth because the consumer is weakening, there is still strength in the labor market but increasingly we are saying companies are moving away from hoarding and the bulk of the labor market are cutting low wages. small employers less than 50 employees, that segment is where we are seeing robust demand for labor printed everywhere else we are seeing weakening occurring in that. that picture tells us the shift is going to occur where the fed is going to start focusing more on growth. the view is that the 10 year is well anchored. haidi: i hear it when you say your views haven't changed but some of the positioning around the edges have been tweaked.

one of them it's interesting to me is perhaps a little less long cash because of the changes we have seen in the u.s. dollar printed were her reallocated that? -- where have you reallocated that? guest: europe, somewhat pacific and japan. in e.m., we have also bought some in china. we are more market weight in china right now looking for reasons to be overweight but we want to get a better understanding of the situation on the ground, make sure we have a better feel for how the covid situation is playing out. i would say cautious on that before we get to q2 but opportunistically buying some areas were without there was better opportunity than sitting on cash. shery: we have ground breaking news. we are hearing from the dow jones that amazon will be laying off over 17,000 workers which was more than they had initially planned.

one that would represent the most reductions according to the dow jones revealed so far at a major tech company according to people speaking to the news outlet the company in november said it was beginning layoffs along with their corporate workforce concentrated on the devices business, recruiting and retail operations. they're now expected to lay off over 17,000 workers. this is interesting because it's not only about a company layoff. we were talking about labor market strength earlier, but it's also a company that sells to consumers and we can tell the strength of consumer spending. what is this telling you about where the u.s. economy is heading and what sectors of the market could potentially offer opportunities in this environment? guest: i think it's another statement that agrees with what i was saying earlier. the labor market is weakening. the consumer is at a faster pace

than we anticipated three or four months ago. that means it will continue putting pressure on the fed to draw the fine line between growth and inflation. the consumer one is something that we do -- we look across the board across markets what we like? companies that are much more -- much better at valuing costs. we like companies that are really good brands so they can pass on their costs to the consumer. apple being a good one. quality seems to be the place where we focused. we think rebalance that has occurred between value and

growth still has some were to run. i think we have seen too much resource allocation in tech and growth sectors for a long time that needs to reallocate as well. shery: you also mentioned the cmodities hedge. guest: in terms of adverse scenarios that occur in terms of inflation. if the inflation doesn't come down, especially in a world where stockmarket correlations of come down from very high positive levels to somewhat lower positive levels we have seen shorter bases of negative correlation but that's not out of the woods. that is a big concern to us that the stock and bonds could behave in the same direction. commodities provides a hedge as you think about those two asset classes getting more correlated as long as inflation stays a bit

high. haidi: how much are you buying into the china enthusiasm? we have seen a very strong start of the year when it comes to chinese equities albeit it's hard to go anywhere but up after twice me to bid does this -- it's hard to go anywhere but up after 2022. guest: we do like the china story, we do think the news has come out as being fast and furious. but still a bit cautious for q1. we think much like we saw the trade play out with the covid reopening that that story is going to play out in china. that should have good effect for all emerging markets. the thing that has us more

cautious on broader e.m., one of the markets that have benefited from reopening or come out at a premium indonesia and india are expensive. the second concern we have is that if indeed the slowdown is occurring in the economy u.s. europe, one of the casualties of that is going to be e.m. which does produce and sell into this markets plus the weakening we have seen in oil prices are reasons for somewhat more caution with emerging markets. more of a wait and see with regards to e.m.. also with china until q1 plays out. shery: good to have you with us. stay with us, this is bloomberg. ♪

haidi: we have heard that there will be layoffs at amazon more than 17,000 workers. a higher number than the company initially planned. that's according to people familiar with the matter speaking to the wall street journal. they said back in november they were beginning layoffs among the corporate workforce. mostly concentrated in devising -- devices, recruiting. that number is larger than expected.

shares of jeffries jumped 19% after the announcement.

su keenan has more. he already has a 5% stake. >> according to the nikkei report, we could see the firm to smfg take as much as 20%-50% in jeffries and that was shot in the arm to jeffrey stark. it ended the day with a 13% gain. intraday, it was up as much as 19%. that is the biggest intraday increase since november 2008. a big move for jeffries. the nikkei quoting smfg ceo did not say when the firm would make an additional investment. bloomberg's most recent interview with smfg saw the cfo say this was a win-win relationship. these two can do more together. noting a strength of jeffries balance sheet or its balance

sheet is attractive to jeffries. if we look at the adrs, they didn't pop quite as much as jeffries, but got to percent gain on the day and have been on a bit of a tear in december. bloomberg reporting indicates smfg plans a second wave of banking deals across asia and expects rates to persist in japan. japan deals in asia just beginning. meanwhile in terms of expanding across europe, jeffries viewed as a particular asset in that regard. haidi: jeffries's had interest from another high-profile investor. >> the biggest value investor out there, warren buffett and berkshire hathaway. they have a sizable position in jeffries. take a look at the one your performance for jeffries.

you will see it's better than 50% for the year. that is a standout when a lot of banks and financial institutions took a beating. we know from the latest filings the picture hathaway took a position in the firm even as it trimmed its stake in other financial stocks. as of the end of september, berkshire held more than 400,000 shares of jeffries and it is one of the three new best recently unveiled investments by warren buffett that was revealed back in november. vonnie: this from the last fed meeting shows officials are committed to bringing down inflation. in a blunt warning to investors, they cautioned against underestimating their will to keep interest rates some high for quite some time.

hong kong's economy lost billions of dollars in growth due to strict covid curves during the pandemic. a bank estimates the chinese economy would have grown without covid. hong kong got more than $25 billion in bids for dollar bonds allowing it to trim pricing on the notes. the start of the new year is typically a busy time for new bond sales. analysts say new zealand's housing downturn has further to run even after the market suffered its worst decline since the financial crisis. prices fell 5% in december. the biggest drop for a calendar year in 2008.

it sees further declines this year. the u.k. prime minister is hinting the government may take a softer line against striking workers. he says he values public-sector workers and wants to see a reasonable dialogue with the unions. he is promising more detail on what that means. the u.k. has placed a winter wave of strikes. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: the world health organization says the world is facing two more omicron variant. guest: he is asking for more sharing of data, more sharing of information.

at the same time, the who is saying there has been increased engagement from beijing on data sharing. the sequencing of viruses made in china in the last 10 days. they're also saying that 97.5% of the cases in china are being caused by two known variants of omicron. there have been no signs of new variants emerging in china. at the same time the who is saying they believe the statistics being provided by beijing are undercounting when it comes to infections, serious cases, and deaths. haidi: in the meantime, we're seeing the eu trying to build consensus striking the middle ground when it comes to these travel measures. at the same time, airlines are criticizing the measures that have been taken by a lot of other nations. guest: we have had a number of eu nations italy, spain, france

already impose testing requirements for any travelers coming from china hong kong macau. other eu nations taking a different stance. trying to take a more nuanced approach. the chinese government has come out and said these measures are necessary, excessive, unacceptable and pledging to retaliate in some situations. for airlines, they have been waiting for china to reopen. the world's biggest markets for flying. arguing that travel restrictions do not stop waves, they just delay them. they don't do anything but hurt the economy. haidi: there's quite a bit of optimism on the markets. with the dropping of covid zero, we could be seeing a more

conciliatory beijing when it comes to its relationships with its trading partners. case in part, this discussion taking place of the top economic planner about whether beijing might ease the ban on imports of coal. take a look at the reactions across the board. perhaps giving back some of the exuberant rally that was seen yesterday. whitehaven off by 2%. yancoal had already been lower hundred deutsche bank also saying that this is not likely to be that impactful given that australian coal had already found new homes in asia and the european markets helped by the favorable global energy crisis backdrop. all of this is still contribute into the rally when it comes to commodity currencies in particular the aussie dollar still looking risk on given that

it might point to a broader improvement in that trading relationship. shery: coming up, goldman sachs expecting weakness to continue. bruce kirk joins us next. this is bloomberg. ♪ ersonal styling? what's that? that's stitch fix. and how can you help me? we do the shopping for you. how do you know what i like? and what fits? you tell us your size, budget and style. wait, is it a subscription? no commitment required here. and i only pay for what i keep? yup. i live in denim, can you send me jeans? we've got you. what about shoes? mhhm. styled for me? for me? always. we'll pick the clothes. you enjoy the great fit. stitch fix.

>> japanese economic growth is expected to be around 1.6%. the fastest among g-7 nations. we expect the economy is on a gradual upward trend this year. corporate performance is looking bright as well. we see corporate profits hitting a record this fiscal year and the next. there is a strong possibility that the nikkei average will hit ¥33,000 this year. >> we expect high inflation and geopolitical risks to continue to impact our economy but the nikkei hitting ¥31,000 this year given the negative economic growth expected in the u.s. and europe, the japanese economy will stand relatively well this year and the rate will hit a peak by summer.

shery: sharing their economic and market outlooks. our next guest expects continued weakness to dampen the first half of the year. joining us is bruce kirk chief japan equity strategist at goldman sachs. what are your expectations for where the yen will be this year? guest: good morning happy new year to you guys and thank you for having me. there has been a lot of commentary since the move last month about how strong yen -- that has led to some underperformance from the blue-chip exporters going to the end of last year. the dollar yen has moved down rapidly from 150 down to 130, but it is important to note that

130 is not a strong yen historically. 75 or 80 is strong. the 20 year average dollar yen is 106. we started at 20 at 115. the consensus is that the yen strengthens from here but as long as it happens in a gradual fashion, i don't think it's going to be necessarily negative for japanese equities. if you look historically since the bubble burst, japanese market has rallied during times of both yen strengthening and weakening. i don't think 130 should be viewed as a strong yen. shery: what are your targets and what about the topics?

guest: maybe a good place to start would be our view on topics. for 2023, we are relatively constructive on japan for this year. we have an overweight rating on japan globally. our year-end target level topics is 2200 which represents 18% upside from here. we would expect a lot about upside to be back into the second half. during the first half of the year, we are expecting to see quite a volatile but largely rationalist market at the index level. one that is characterized by a certain level of sector rotation. selling out of last year's supply chain disruption winners. then buying of sectors that are

likely to benefit from potential normalization of japan 2023. by normalization, i mean across a number of dimensions including inbound tourism, domestic travel not just to the monetary policy. within that framework, we would expect to see financials remain strong given their optionality to another potential boj move. that is not something that our economics team in japan is expecting. haidi: where do you find alpha in japan this year? guest: financials is definitely a place to be at least in the first half. the risk reward on japanese banks is maybe not as attractive as it was back in october november.

in that stage, the sector pvr was about .5 times and the dividend yield was 5%. we have had a 30%-40% move in the banks since then. they're still trading at a discount to book. our financials analyst has conviction buy on mufg the banks and she has another 10% upside to target. reopening is another area the people going to look at. anybody who has been around tokyo or other cities will testify that foreign tourists are definitely coming back to japan in large numbers. around that tourism reopening theme, you're going to see a lot of interest as well. finally one more point i would make, one area that is

independent from global macro concerns or mystic macro concerns would be around corporate governance in japan. i think you are starting to see real significant changes take place in japan at the corporate governance level. we have a record year of buybacks last year from corporate. a record number of shareholder proposals coming through and both domestic and japanese investors voting for those shareholder proposals in larger numbers. there's definitely something very exciting going on in the corporate governance space at the moment in japan. haidi: great to have you with us. we are broadcasting live from our studio in hong kong. more ahead, this is bloomberg. ♪

>> recession risk remains a big question going into 2023. our next guest has the full list of projections for this year. where mark -- might we see a recession take place?

guest: to your second question, what type of recession does the u.s. need? i know you guys have going really big on the fed minutes. then talking about pushing back against the market narrative that if we do get a mild recession, is the fed going to cut? is a deep or mild recession enough to conquer this inflation bogeyman? probabilities are skewed toward europe. when you look at that number of 65%, let's change up the graphic. several banks coming out with their own respective outlooks. this to summarize everything else we have seen generally speaking is it's going to be soft landing or a mild one somewhere toward the latter part

of this year. that begs the question and to the point of jay powell and the minutes, this is an extremely tight labor market. the unemployment rate and inflation we have charted that for you. the last time we saw a drop in employment rate and inflation, the unemployed are rate had to go up to 10% in the 80's and to thousands. the projection for this year 4.5%. will that be enough to tame inflation? shery: we are following western digital shares jumping after sources said the company has restarted merger talks. this is not the first time we are hearing about this potential deal. what could be different this time around? guest: it has been quiet since 2021 will may 1 heard the companies were nearing a deal. that never happened but western

digital and the whole flash memory market has really suffered. there has been pricing issues and increased competition from samsung which is the big player in the space. western digital is a shall of itself it only 10 billion. it shares are down almost 50% from one year ago. they are under pressure to maybe do a deal with one of their competitors. 6 >> what are the benefits and challenges for it to happen? guest: together western digital and kioxia could mount bigger challenge to samsung. especially as demand for flash memory chips are what they used to be from the smart phone pc

market right now. it's a tough time bankers are saying for the space. shery: what could be the challenges for this deal and lessons they could taken from 2021? guest: there's still a lot of questions about how this deal will work. we have reported the companies will merge into one public company because kioxia right now is publicly held -- privately held. the japanese government is also shareholder. for any cross-border deal, there is to be antitrust risk globally. china might have to approve the deal, that takes a long time. you seen deals abandoned in the semiconductor space is it's hard to get the approval in china. just because they have restarted talks, zahra revived but that doesn't mean it's a done deal. -- things are revived but it doesn't mean it's a done deal. >> high-profile names are already involved.

guest: western digital has elliott management. that's why the company has said they are exploring strategic options. that has been a catalyst. then huge private equity firm is the main shareholder in kioxia so we have wall street names on both sides. western digital is working with lazard and catalyst. there's all sorts of different big wall street names around this. shery: we will continue to follow those conversations. here's a quick check of the latest business flash headlines. coinbase says it's u.s. unit reached a $100 million settlement with regulars -- regulators for letting customers

open accounts with insufficient back ground checks. it requires the firm to pay a $50 million fine and spend another $50 million to improve compliance over two years. the sec is pushing back on a plan to buy a bankrupt crypto leader. the deal valued at $1 billion. the sec says the purchase agreement underpinning the deal doesn't include sufficient detail about the ability to close the transaction. amazon is reportedly planning layoffs of more than 17,000 employees. dow jones citing unidentified sources saying the job losses will be concentrated in the corporate ranks. late last year, sources said amazon planned 10,000 job cuts mainly targeting the devices and human resources division.

haidi: japan second largest lender is hoping to extend an acquisition spree. we could be watching stocks related to moving -- retail moving. the market opens in tokyo and seoul next. this is bloomberg. ♪ at fidelity, your dedicated advisor will help you create a comprehensive wealth plan for your full financial picture. with the right balance of risk and reward.

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>> we are counting down to

asia's major market opens and we will see if asia follows wall street higher given erasing the earlier gains after the fed reported they are resolved to tame inflationary pressures. haidi: hawkish sentiment in the idea a tug-of-war might emerge when it comes -- creating uncertainty for markets. will this continue when it comes to chinese equities? chinese stocks listed the u.s. and trading in china having one of the best starts to the year in many years. shery: 13% gain in the last two days after seeing optimism in the chinese markets. the japanese market is opening now. the nikkei is higher half a percent.

we saw a fall in the previous session. the japanese yen, a little strength in the early asian session against the u.s. dollar and we are watching jgb because the selloff continued in the final session despite the boj continued debt purchases for a fourth consecutive session and the global debt rally is transferring into the japanese market. today concerned that it might draw week demand so we will watch what happens later today. south korea is opening and we saw them rise in the previous session. we are continuing to see gains for the kospi. a little weakness for the korean won in the previous session.

we are watching the property sector because most regulations are being lifted in the heated property market in south korea and concerns of a slowdown in that space given the bok rate hikes. haidi: watching property industry -- in new zealand and australia. house prices in december in australia falling by more than 1% and prices in new zealand slumping after the worst drop since 2008. a meaningful impact in trading sentiment with equities. despite the continued correction and property prices, real estate gained. a giveback of gains in coal export yesterday.

it was reported that beijing is considering easing the two-year ban on australian coal. the bond space, australian bonds are rallying. overnight speculation the fed would cut rates by year end despite the forecast from policy makers, we have seen a rally in australian bonds for the third day and resilience for the aussie dollar. so much being driven by optimism in china reopening. shery: our next guest is the head of research at cmb international investment. you are overweight on property, technology, china's tourism sector. is the narrative positive when it comes to china now and are

there risks? >> [indiscernible] covid infections are still going up but [indiscernible] in their second half. there are lots of dips in sectors on terrorism, technology, property but we have seen a rebound in the hong kong and china market so [indiscernible] we have to increase investment on sectors because [indiscernible] haidi: we have seen a rally in

chinese equities and adrs at this point. where are we in terms of valuation and the relative attractiveness around the world? >> i think for some tech stocks like before covid and the regulatory crackdown, [indiscernible] but now [indiscernible] good valuations for china. high growth potential in coming years. shery: when it comes -- haidi: when it comes to the tech sector we saw renewed optimism and policy progress, including signals we see that the end of

the regulatory crackdown. is this broadly optimistic or has the crackdown destroyed so much confidence that now that leadership has to correct course? >> i think on the regulatory side is on the table already. in the last three years china stocks have had to fit into regulations. factoring in [indiscernible] what you see in the coming years is they know what business to engage more and [indiscernible] in those sectors they invested more. tech stocks and china to pursue a high level [indiscernible]

[indiscernible] haidi: i am curious. the tech and property sector are unlikely to see the return of the level of growth and sales we saw prior to the downturn. what levels do you find them attractive and justified when it comes to valuations? >> it is the first time i like overweight china's properties because last three years underweight heavily but the second half of last year there was policy support and [indiscernible] property stocks have high growth but high valuations.

[indiscernible] they have to correct the debt problems. china vanke send regulatory commissions like to [indiscernible] on those companies. what investments are new project's and have to increase liquidity so i like positives on [indiscernible] in 2043 and 2024. haidi: great to have you with us . let's get to vonnie quinn. vonnie: airline industry has

slammed the number of industries -- countries requiring covid tests. they say the restrictions delay for a couple you days while hurting the global economy. the uk's introducing checks on touchdown. kevin mccarthy has failed for the sixth time in his bid to become speaker. chaos in the house and hard-line conservatives refusing to support mccarthy. they will reconvene tomorrow. and the schedule that saw wealthy parents get their kids into schools. he was convicted over the scandal, singer has apologized,

saying he did all of it. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: next, the ceo of chinese private hospital new frontier joins us to talk about how health care facilities are coping with a covid surge. this is bloomberg. ♪ at booking.com, finding perfect isn't rocket science. kitchen? sorted. hot tub, why not? and of course, puppy-friendly. we don't like to say perfect, but it's pretty perfect. booking.com, booking.yeah. this electric feels different... because it's powered by the most potent source

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haidi: world health organization says omicron the sub variants are driving the majority of infections in china. let's get insight in the situation and how the dismantling of covid zero is impacting the health system. carl will is here with us -- carl wu is here with us. give us insight into how the unraveling of covid zero is impacting the situation on the ground.

>> of course. thanks for having me. we have been very busy the last few weeks as china prepared to open up. the hospital has focused most of our resources into [indiscernible] most of december we had an influx of patients going to facilities. fever patients have increased 15 times over and telemedicine services have increased 500% since the opening started. on the other hand, our facilities have been well-stocked. we have ample supplies of relevant medications. end of december and beginning of

january, we have ramped down in the facilities. we are still very busy with inpatient services for elderly patients but the emergency room services and fever clinic visits have gone down since then. haidi: i understand your hospitals and facilities are on the high. private hospitals cater to those with good health insurance and the wealthy. would you say this is a different experience to what the majority of chinese civilians are experiencing now? >> new frontier runs a variety of different formats. in addition to united family we also operate 20 rehabilitation hospitals across the country.

they are commercial insurance. we operate a home health network that covers 40 cities and we offer health insurance services to individual clients. i will say that in december across the country, our facilities were busy. also included and -- ourselves included and public services. the government has done many things to manage the situation, including ensuring manpower stays at work early on during the opening process. the government determines health care workers do not require covid testing in order to report to work.

that substantially alleviated pressure on health care organizations. a lot of our workers with mild symptoms were able to receive and treat covid patients and we understand that has been the case for many public facilities. everyone was busy but manpower was perhaps tight in the second and third week of december but pressure has a used. we moved early to make sure supply of antivirals in our facilities so in december and january we are open 20 47 and are able to supply -- 24/7 and are able to supply treatment. we were the first to bring in

convalescent plasma treatments which has been recognized as the best treatment for patients. shery: regarding conversation with the government have you been asked to pitch in more on the public effort? what priorities have you been given? >> we are asked to take covid patients and we decided to do that even before the formal open up policies were announced. initially we were able to separate the positive and negative patients but in december there was a shortage in manpower. in order to service all the covid patients we had to ramp down some of our less urgent services, including elective surgery to make sure we had enough people to service covid patients. shery: what do you see now in

terms of death in your facility and how are you preparing for the chinese new year? >> more than 90% of our staff has tested positive for covid and recovered. we are 14 days over the peak so those services have ramped down. we are still at an elevated level compared to pre-covid in terms of volume but now we have enough people to help. in december there was a significant waitlist but now we

have been able to ramp up a new number of facilities so there is more slack now in the system and the public system has recovered in terms of capacity and i think we will be over the worst of the surge by chinese you -- chinese new year. haidi: what are you seeing when it comes to vaccine level and interest? >> i think the government is doing everything they can. all of our health care workers have had three shots and most have had four shots of the chinese vaccine. it is difficult to get to the 60 plus. the government is doing everything they can to mobilize

vaccines for the elderly. we have a lot of geriatric patients and the government is diverting a lot of resources in the last several months to get people vaccinated. shery: karl, thank you for joining us in this hectic time. ceo of united frontier. get a run above all the stories you need to know, including china's covid outbreak and the surge of infections. this is available in the bloomberg app. you can customize your settings so you only get the news you care about. this is bloomberg. ♪

shery: amazon is reportedly planning to lay off more than 17,000 employees, higher than planned. spencer joins us with more. >> the number floating around before the new year was 10000 and now it is up to as many as 17,000 per the wall street journal. a deeper cut than expected. this is fairly small for a company the size of amazon. 1% of the global workforce. but the cuts will be predominantly in the corporate division. most of their workforce is those moving inventory in the warehouses. haidi: do we know if some teams will be more protected than others? >> they have been nibbling at experimental programs, things

like amazon scout was a report who was going to -- a robot that was going to make delivery. they have closed some stores. a lot of cuts because they have gone from rapid hiring to not needing people, it is hitting human resources and recruiting. we have not seen much about the cloud computing division and on the retail side they seem to still be committed to opening grocery stores. the video division on advertising division appear to be ok. so it looks like if you are with an experimental program and something that was not turning profit, it means you are vulnerable. shery: are the cuts reflecting how their business is doing and will they do moe to cutosts? >> it's a great question, where

this evens out. they were going through rapid expansion and we reported last year how they curtailed some warehouse capacity expansion. they have always said they would rather have more people than what they need than not enough and not be able to deliver for customers. they overshot in terms of physical space and in terms of employment and now they are correcting. they are looking at leasing warehouse space out and looking at selling excess capacity on airplanes. they have a fleet of cargo jets. so there are other ways they can maybe get revenue. we will have to see what consumer spending is like in this new year to see if they will have to keep cutting more people. haidi: spencer with the latest. we are watching western digital shares jump after sources tell

us they restarted talks with kulaks yeah. companies have been circling each other for years and could combine. this is in an early stage. [indiscernible] is considering raising stake in the u.s. investment bank. he hopes to make jeffries and equity method affiliate that would involve an interest of 20% to 50%. his company will hold discussions with management and u.s. regulators. and general motors has been held to its steady demand and a rebound in fourth-quarter production. sales rose 3%. 20 and fell close to 10% --

toyota sales fell close to 10%. more to come. this is bloomberg. ♪ as a business owner, your bottom line is always topf 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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haidi: let's take a look at externally vulnerable economies in asia.

pmi singapore falling to the lowest since november 2020. hong kong just coming through. singapore we are dealing with externally open economy and we have seen volatility when it comes to export numbers, particularly electronics and pharmaceuticals. gdp numbers came through higher-than-expected but forward-looking indications of global singapore pmi falling to the lowest since november 2020. hong kong with the dismantling of covid zero and reopening of borders we expect economic revival. the risk is another wave of covid infections.

hong kong pmi coming in coming in at 49.6. that number staying below the level suggesting we are still in contractionary territory. vonnie: the fed meeting shows officials are committed to bringing down inflation. they cautioned against underestimating the will to keep interest rates high. fed officials intent on lowering back to the 2% target even at the risk of slower growth and rising unemployment. on the concept cap -- omicron subvariant's are driving the majority of covid infections in china and are asking for more transparency on the number of hospital cases. hong kong's economy lost

billions in potential growth because of covid curbs. hong kong's economy would have grown 2.8% over the last three years about covid. they have list -- they have lifted almost all restrictions on will soon reopen their borders. and corelogic says average prices fell the biggest drop since 2008 mac further drops this year. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: morgan stanley's strategist says he expects a nasty earnings recession ahead. mike wilson says only the most

cost-efficient companies will continue performing well this year. >> what happens is the big leaders will eventually fall and that is what we see this year and last year. >> where is the greatest variability? is revenue the greater mystery or net income? >> all about profitability. we've talked about this factor since january or february, operational efficiency. that is what the market is paying for. they pay for companies who can deliver to the bottom line. growth will be softer than last year but we do not know if it will be negative. it ties into recession. being a bond investor is harder than being a stock investor right now. in the equity market, if you do

not get a labor sector the margin will be worse. either way, a nasty earnings recession and the companies that can deliver on cost efficiency will continue to perform until we fully price whatever the downturn in earnings will be. >> if we start seeing cuts emerge in big tech does it make you more constructive in the sector in 2023? >> yes. we are starting to see it. consumer goods and tech had the most agree jake over earning margins on top line and has to get wrung out. what concerns me about tech is they are not good cost cutters. they are growth companies. they want to invest in downturns and aggressively all the time and they are not good at cost-cutting so they will be late and not do enough probably. it will take longer than you

think in the market degradation could be worse in those areas. some parts of tech have already gone through that. be careful how you define tech. looking at the top seven stocks in the s&p, only two of them are real tech companies. the others are communication services and consumer retail. haidi: that was mike wilson speaking with bloomberg. after the worst stretch in the modern history of the treasury market, many investors expect a bounceback this year. we have mark cranfield with more. what is your best modeling about the trajectory for yields this year? >> i cannot take credit for the modeling this year. macro man in new york has done the treasury outlook with his famous model and he sees the 10-year yield higher than where it is now.

he sees it coming up slightly above 4% this year based on inputs in his model. various factors including unemployment and the likely path of said rates. what complicates this outlook is the fact that we start the year with a heavily inverted yield curve. there have not been many times where investors have to face that right at the beginning of the year. the two year yield at the moment is somewhere around 67 basis points higher than the 10 year and that is linked to the path of the fed rates. at the moment people guess the fed will peak out around 5.25% and the funds rate in the first quarter but one thing that makes it -- there are new faces in the fed this year in terms of voting at the regular meetings and a few of them are unknown. we do not know if they are

dovish or hawkish and we are waiting to see. it could imply there are changes to the outlook. the voting process might not be as smooth as it was last year. there might be splits between members. more for bond traders to digest and there could be more volatility. so what the new fed speakers have to say will be important and we will be watching jobs data closely. whether you say treasury yields will rise or fall might you have to have a strong view on when you think the curve inversion will change back to a normal shape or steepen. that will be input into how people gauge the treasury market this year. shery: what are the implications for asian assets? >> when the fed is tight and keeping rates high for a long time, it's a headwind for asia. it makes it hard for everybody because as we have seen in the

past year, asian central banks respond to what the fed does. there might be tightening and they might not be as aggressive as the fed but most asian central banks do some form of tightening. if the fed keeps rates high for a long time, asian central banks will have to follow. mike wilson from morgan stanley just spoke about how that is a drag for tech companies in the u.s. and you could say similar for those in asia. in the past few days we have had some positive things come out of china. alibaba got approval to raise money. so there is more optimism related to china. we could go back to a situation where overall it is a tough year for equities but we could have pockets of outperformance in asia, china particularly might be a place where we start seeing a rebound, even if the u.s. is finding it tough to get going. shery: mark cranfield with a

preview of what to expect in asia. get more on the trading on our blog on the bloomberg. get a run down one click. expert commentary and analysis from our editors. find out what is impacting your investments now. coming up, chinese markets are off to a strong start this year. that is the company -- country moves away from covid zero. a preview of the open is next. this is bloomberg. ♪ . is the planning effect. this is how it feels to know you have a wealth plan that covers everything that's important to you. this is what it's like to have a dedicated fidelity advisor looking at your full financial picture. making sure you have the right balance of risk and reward. and helping you plan for future generations.

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shery: chinese stocks off to a strong start so far this year. perhaps a return to economic pragmatism. but covid still clouds the situation. this has been a sharp shift in sentiment, jeannie. >> a sharp turnaround in sentiment. we talked with investors and that the key reasons they cite is regulatory overhead for chinese stocks are removed, especially after yesterday on the property side. we see exciting news that asia supports the too big to fail

property developers and approving private equity funds to continue investing in china's home housing market. so that is the property crisis in china. on the technology front, the sector has been cracked on by the government for almost two years but yesterday they got some green lights in the government to do capital raising so some people are saying this is wrapping up the technology crackdown in china. it's to the removal of overhead has excited sentiment and held stacks -- stocks rally. a good start to the new year. haidi: will this continue? what are the expectations? >> on the data side we have

articles saying if we are having a strong start of the year, usually for that year we are likely to see a good return but on the other hand we are hearing investors say they need to see how china's covid situation unfolds. so right now we see signs some covid cases are peaking in major cities in china but we still have the lunar new year ahead and as more data comes in will help investors gauge the impact of covid cases spreading situation in china. haidi: one topic providing impetus for the upside is the approval of a fundraising plan that is boosting optimism that

that regulatory crackdown is easing. and next guest sees this as a key signal of progress. leon, how significant is this development and does it indicate a seeing more support for broader entrepreneurialism or that the leadership recognizes the crackdown went too far and now they need to restore investor confidence? >> good morning. we see ant raising capital as a signal of making progress of the overhaul. the overall started 2.5 years ago and aunt has been -- ant has

been the most significant company targeted during it. [indiscernible] if we look at specifics of what is going on with them and similar companies, they have all made significant progress toward what the pboc has been asking them. for example, pboc not happy with leverage, they raise more capital. pboc is concerned about personal data of those with credit and the companies are making progress. so they have made significant progress. if we look at the progress of the overall, pboc has laid out some important targets of the

rectification, and most targets, they have come out with concrete rules and ant is close to satisfying most of the rules. there are still some things to do regarding licenses but the primary target the regulator was worried about [indiscernible] that plan had a pickup this time around everyone is happy and the

regulator is happy and it is approved so we see it as significant progress towards the completion of the overhaul. haidi: the fhc license has been an issue for years. how do we expect -- how quickly do we expect that to be done? >> there have been three major hurdles between ant and the ipo. the issue with consumer finance and this time around it is almost done. raising capital should not take long. then financial holding license on the credit bureau license. the most difficult one is almost done. we are waiting for the other two

, which they are also making progress. for the financial holding company license it was mainly a governors issue and that was the concern and in the last two years we have seen restructures. now independent from the board of alibaba and partners and the boards have become independent and share agreements between alibaba and ant has been reorganized so that alibaba is not specifically favored by ant in terms of sharing customer data. shery: how is ant's business doing now? >> business is secondary to the overhaul issues. the key focus at the moment is

the overhaul rectification. businesswise, payment, financial services, tech. payment obviously has been affected by week consumer sentiment. looking at pboc payment data across china [indiscernible] a significant deceleration and as the biggest player in payment cannot be immune to financial services have been affected by the downturn and week insurance market. hardtack has made significant progress in revenue, especially understanding that some investors look at the earnings.

the u.s. capitol factors in the valuation gains. 2021 was a good year in terms of ipos of subsidiaries that we invest in so the earnings have not been as attractive. shery: if this is a wrap-up of regulations, which of companies could benefit the most? >> this is an important signal in wrapping up the regulatory overhaul. this is a key step towards wrapping up the rectification. ant was the first one pboc officially accused of regulatory issues and we believe the first in, first out situation as possible and if you're asking

about other companies that might see similar progress, pboc has an official list. they include fintech subsidiaries and tencent find us -- tencent finance business. shery: good to have you with us. tune into bloomberg radio for more on the big newsmakers. our team broadcasts live from hong kong. you can listen through google radio.com -- global -- bloombergradio.com. stay with us. ♪

shery: here's a quick check of headlines. amazon is reportedly planning layoffs of more than 17,000 employees, higher than they initially planned. dow jones identified sources, saying losses will be concentrated in the corporate brands. last year they planted 10,000 job cuts targeting retail and

human resources. we learned that china holdings received bondholder approval on an extension of $2.3 billion of domestic debt, giving them time to deal with liquidity crunch. sunak offered property assets including a tourism project to make the deal more attractive. and a u.s. unit reached a settlement with new york regulators for letting customers open accounts without sufficient background checks. the settlement requires the firm to pay a $50 million fine and spend another $50 million to improve compliance over the next two years. haidi: tech stocks are in focus. alibaba led the rally on capital. signs that regulatory crackdown

might be concluding. tencent could have shares traded. looking at the exuberance care today's -- characterizing the start of assets. coming up, we ask a professor about china's economic challenges as it moves away or dumps covid zero. and mib securities hong kong will share bets and as central banks keep up the fight against inflation.

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david: good morning, it's not :00 a.m. in hong