shery: i'm to daybreak asia. -- welcome to daybreak asia.

haidi: short and treasuries fall. the dollar is stronger against major peers. u.s. authorities step up pressure against sam bankman-fried's inner circle. waning chip demand macy samsung reported its first consecutive quarterly profit slide in three years. shery: take a look at u.s. futures. marginally higher after u.s. stocks fell more than 1% across the board. we have the caution and anxiety over fed policy. we did get stronger than expected u.s. jobs numbers. a stronger labor market than expected. u.s. companies also added more jobs than expected. it didn't help sentiment when we had the fed representative talking about there was much work to do in order to tame

inflation. have the treasury yield rising across the board being led higher by the short and. despite the caution and uncertainty, we did see oil prices gaining ground. this after we so the u.s. crude stockpiles rose less than expected. haidi: take a look at how we are sitting what comes to the first minute or two in cash trading here in sydney. we are seeing a flat start. one quarter of 1% higher when it comes to trading in australia. we have had quite a roller coaster when it comes to coal exporters. the big rally earlier in the week giving back most of that. we will see how the idea of the following in china is trillion ties plays out in market sentiment. -- china australia ties play out

in the market. also the bounceback in the u.s. dollar. we saw some strength this work when it came to the chinese currency but the adp numbers propelling a big jump. still on track for its biggest weekly jump in nearly three months. this has to do with outlook for the u.s. economy. one of the biggest inflation hawks for 2022 sounds like he could change into a dove. kathleen hays is here. we're talking about jim bullard. what has he been saying and why do we think this is a change of tune in the making? >> jim bullard led the way back in the second half of 2021 starting to talk about needing to hike rates, do it more aggressively through last year. when he says that there are

brighter signs of inflation and we've all been talking about goods prices falling, core services, the monthly gains not as biggest they were, he talked about inflation expectations looking more moving in the right direction, he said 2023 could be a year of disinflation. let's listen. >> the point of this is we have gone all the way back to the pre-inflation stock level of inflation expectations macro theories tell us that bodes very well for the future of actual inflation. this is a good signal for disinflation in 2023. >> let's look at the dot plots. he said the fed is getting closer to restrictive, they still have to get to 5.1%. that's the level he things will

be high enough which is the median. for this year. he still sees rates need to stay higher for longer. esther george from the st. louis fed after retiring for 11 years has boosted her forecast for this year to something over 5% on that key rate and staying over 5% going well into 2024. raphael bostic says inflation is still way too high. yes he sees good signs that prices are moderating, but there is still much work to do. that seems to be the main theme. jim says he thinks it could be going in the right direction and we are getting there. you see esther and rafael saying maybe there is progress but mostly they are looking at the fact they're going to have to keep the rates high in it that's one of the toughest thing for markets to get used to.

shery: what do they need to see to make that much expected pivot? >> the labor market is key. it is still tight. let's start with u.s. payrolls. they are expected to slow from the previous month to an increase of about 202,000. bear in mind over the last eight months, each time we have gotten this monthly nonfarm payrolls number, it is come in well above forecast. furthermore, the adp private tally of jobs came in higher than expected for the month of december. they don't go hand-in-hand, but they are usually in the same direction. maybe another sign that the market is resilient. jobless claims came in lower than expected. we have to look at wages. that's what the fed needs to see coming down. last month, they were 5.1% year-over-year. they were supposed to come down to 5% but that's where they've been stuck for the last five months and the fed needs to see

it inside the green band. that's one of the things the fed will be watching closely and the markets as well. shery: kathleen hays talking about the markets. let's delve into the market reaction today and also talk about not only with the markets are doing because of the fed but also the extended gains in u.s. listed chinese stocks. i will start you off with a reaction to all the fed speak not to mention strong labor data today. guest: we were seeing across asset classes markets beginning to price in the more aggressive fed. we saw stocks dropping after the two key economic reports that showed the labor market is still strong. stocks know this. the federal reserve wants to see the market we can and we did not get that with these data reports. stocks down, treasury yields up.

it's interesting because just a day earlier, markets learned that the fed doesn't like to see financial conditions listen. be the fed welcomed this trading day. you also think this is just one day. it is still pricing in a rate cut for the second half of 2023. one guest said today this is still delusional. even though we have this one date of trading. he still wants to see a more aggressive fed and no cut in 2023. haidi: if not delusional, maybe a little over exuberant. is that how are feeling? for so long, on investable was the word the people used. our chinese assets now investable? >> we see such a big flip.

these large rallies we saw the golden dragon index having its best start to a calendar year since its inception over 20 years ago. in turn, we are seeing the etf fund flows starting to pick up just a little bit at a slower pace than we saw for the rally in the summer. you take a look at blackrock's china etf. it saw its biggest one-day increase since november. this fund is up over 46% from its lows in october. it's hard to think one question i've been asking a lot of my sources, how much can this rally go? when is it due to putter out? we haven't seen it yet, we haven't seen any massive etf inflows this is just one day. we will see how much longer china story has to go. shery: let's get the vonnie quinn. shery: vonnie: ukraine has

dismissed as a ploy vladimir putin's call for a 36 hour cease-fire. the kremlin says he gave it for a russian orthodox christmas. the ukrainian and u.s. presidents site vladimir putin merely wants a chance to redeploy his forces. >> i found it interesting he was ready to bomb hospitals and nurseries and churches on the 25th and new year's. i think he is just trying to find some oxygen. vonnie: kevin mccarthy has failed again to get vote for house speaker despite offering them a simpler way to oust him should he get the job. there is no immediate resolution in sight. kevin mccarthy is undergoing pressure to find the votes he

needs or step aside. japan wants the group of seven to take a coordinated approach against what it calls china's economic coercion. japan is the rotating head of the g7 this year and will host the summit in may. the economy minister says china's recent growth and trade bands are clear and present danger for global economies. beijing has accused g7 members of their own moves. bloomberg has learned u.s. authorities are scrutinizing sam bankman-fried's close associate. they say he could be charged as soon as this month if he is found to have a role in the firm's alleged fraud. he has not been accused of wrongdoing and it is unclear if he is cooperating with officials. 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, samsung may report a decline in profit. plus new age wealth says and intensifying debate when it comes to risk management, their single -- portfolio strategist is with us next. this is bloomberg. ♪

>> it does mean rates have to be higher for longer in order to maintain the downward pressure on inflation to get it to converge to 2%. shery: james bullard there. our next guest says the recent fed minutes identify a debate within the central bank. good to see you for the first time this year. happy new year. let's talk about the fed minutes because to me, it read just like a warning to the markets. you don't cooperate them we will continue to keep having to tighten. we are now seeing this rhetoric about taming inflation. what do you make of it? guest: it was an intense debate about how far they have to go with rates. this idea of over tightening was addressed to jim bullard today

also. he is in the game to be as hot as possible. there is the debate do you have to go to where jim bullard is or do you end up 5%? it's all about the economy. low income people will it be hurt by inflation or over time if we slow down the economy and low income people get hurt. this is the risk management that they have currently don't tighten too much, but enough to keep inflation down to 2% over time. for the markets it will be a higher rate. it's not fully priced yet and that's what you are seeing today, repricing. shery: how is the u.s. economy especially u.s. consumers? we see a tight job market but at the same time, excess savings falling faster than expected. does that have implications over where in the markets to invest as well? guest: yes because the job

market has been the backbone for the economy so far. the reason we are not in a recession is because the job market has been so strong with the savings a been such a supporting factor since the pandemic so the fed makes a point about it in the minutes. i think there saying the spending power is eroding not just from inflation but the savings have been spent. if you get to the point where the job market starts to materially weaken, then lower savings rate will happen for the economy. shery: is it more straightforward when you talk about fed messaging? guest: yes i think it's about the yield curve remaining inverted. we were inverted -25 basis points a couple of weeks ago now were back to you -- -75. the two year yield is following fed policy so it should move

higher. but the rest of the yield curve is about how will the economy absorb higher rates from here and it is on that view that the movement of the curve thanks the economy really does slowdown. you want to be positioned more on the short end of the yield curve that is where more of the future of return is in fixed income. >> what about the dollar because we saw the move in reaction to the adp report? a lot of money is going into adp -- shorts. the biggest jump in nearly two months after that jobs data came out. is it a little bit naive to expect that the dollar trajectory is going to be one way this year? guest: i think the dollar had weakness since october because it wasn't just that rates were peaking at that moment in time,

but the european central bank and now the bank of japan catching up to where the fed is. that has propelled the euro. the latest path is reacting to labor markets being more resilient more surprising to the currency market than what was thought. extrapolating the strong labor market to higher rates and keeping high rates high supports the dollar but i think the dollar will only strengthen if you have an economy that skirts to recession but grows faster. i think it is still a story about other central banks catching up to the fed that could put some pressure on the dollar in the first half. shery: a headline crossing right now, kevin mccarthy has lost a 10th round of voting for the role of house speaker. this is unprecedented. we're talking about the third day of the new u.s. congress and

no business being achieved right now because they can't elect house speaker. how much risk does that add to the u.s. markets? guest: if you think about 2011 we had all this discord in washington, that's where people draw parallels of this. it's not necessarily about the house speaker mccarthy himself but that it would lead to conflict within the republican party to the democratic party to completely gridlock. that gridlock at a time when the economy 80 falling into recession -- when the economy may be falling into a recession, there are parallels drawn. it's something to watch. it may be a story developing over the course of the year that becomes a narrative in the markets. at some point, this will end and he will i guess be elected or someone else but either way the gridlock is a -- idea is

something to watch. shery: the next two years with the house and the gop. you can get around up of all the stories that you need to note to get your day going in today's edition of daybreak. this is bloomberg. ♪

>> the consumer electronics show has returned to almost full capacity this week in las vegas after two years of disruption from the pandemic. ed ludlow is live at the event. what are the big themes -- is car tech still dominating?

ed: it's funny because it's called the consumer electronics show and you look at all the headlines on the bloomberg, there's very little to do with consumer electronics. lots to do with cars not so much this year about robo taxes and self driving. the key, bmw had this weird futuristic concept arnold schwarzenegger was there. the ceo did promise these vehicles will go into production by 2025. here's what he told me last night. guest: it's absolutely right to propel new technologies into an industry here in the united states. we are investing heavily in our plant in spartanburg to transform that plant into an electric. we invest $1.7 billion into that plant for this type of transformation.

ira, we would ask what kind of investment you would have to do to make that? ed: he is there with his turtleneck and his suit and his german swagger, but actually there was a really serious element which is that automakers at ces got more realistic. they started announcing things that aren't 5-10 years away but they could come in the next couple of years. shery: we have big tech players making an appearance. who have you spoken to? ed: it's interesting because apple doesn't come to ces but samsung does. they go big. it's interesting that they focused on a new $200 galaxy budget handset. right now there is pain in the consumer electronics market. the other name i spoke to his panasonic. in north america they announced a lot to do with automotive tech on the consumer entertainment side. also fancy new cameras.

their biggest business is ev battery sales and tesla their biggest customer. i ask ceo of panasonic north america are you worried about the narrative with tesla. >> we are not that concerned about that right now. we are trying to provide the quantity and quality the tesla is looking for. we have about 10 years of experience working with tesla which is been wonderful. as a 100-year-old japanese company, tesla has been a wonderful experience to work for. we are diversifying our contribution in ev battery for this market. we are not worried, we are very excited. ed: the other thing that is going on in the background is the negative headlines in the world of technology. amazon laying off 18,000 staff. it's not just techies come there

are bankers and investors here. it's an opportunity for investors to meet their peers their customers and what they're talking about is the pain in the global economy. perhaps there is some hesitance to do deals in the corridors and casinos and hotels like has been the case in years past particularly pre-pandemic. >> ed ludlow joining us from ces in las vegas, thank you. u.s. listed shares of amt deep digital soaring more than 200% on thursday. in a wave of buying activity. shares of the hong kong-based financial services form have surged early 2000% since its ipo in july. the latest covid pill could be released in china in july.

the ceo says the drugmaker is at the final stage of discussions. >> i think progress is made smoothly so we are at the final stage of the review process. i am very optimistic about the receiving approval in china first quarter of 2023. >> plenty more to come. the market opens these days, our households depend on the internet more and more. families grow, houses get smarter, and our demands on the internet increase. that's why we just boosted speeds for over 20 million xfinity customers, on us. so you get more of the speed you need for day and night streaming. more speed you need when you're work from homeing. and more speed you need as your family keeps growing.

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>> take a look when it comes to japan cash earnings. women talking about the impetus when it comes to getting wage

growth going again. we've heard that it's going to be a huge priority going into this year but of course it has long been a problem. we are seeing cash earnings seeing a rise of .5% missing expectations for the year in your number. the consensus was looking for a number much higher at 1.7%. november real cash earnings adjusted see a decline of 3.8%. also worse than expected. we are continuing to see cash earnings wage growth lagging even as we see inflation starting to pick up in japan. this lack in japan's job market as well is also seen as something another factor that is can went to continue to restrain wage growth. >> let's delve into what japanese business leaders are thinking. they gather to celebrate the newly year and give their outlook for the 2023 economy.

we spoke with some of those executives. what was top of mind? guest: at the beginning of each year, there is this gathering a big gathering of japan's biggest business players across industries. that includes politicians like the prime minister. what is really interesting is the timing of this gathering. we've seen many things happen in japan. central banks, unscheduled bond purchases. the boj coming up in a few weeks and the story with the yen. the bank of japan governor is set to step down in april. i asked the leader of a beverage company what he thinks the next governor should focus on. >> we can't do it now, but we

need a roadmap for us to be prepared for the exit plan. if there is a roadmap toward the exit, i think the private sector can be prepared. guest: the exit plan he is talking about is from the boj massive monetary easing policy. we also heard him talk about being prepared. the ceo we spoke to earlier in the week also mentioned something similar. he wants the next governor of the bank of japan to steadily communicate with investors. no big surprises. >> what about the currency? the yen has been on such a roller coaster when it comes to 2022. are they expecting this year? guest: roller coaster is the right word. i asked executives about their outlook for 2023 when it comes

to the yen and other sweet spot is. with i think is the ideal level. we got a variety of answers, different numbers. the ceo of a major airline in japan says the yen would hover around 130. the sweet spot for him at 125 to help support the outbound travel for japanese residents. japan airline ceo thanks the yen be going from 130 to 140 throughout the year. the president of another company says 110 is his sweet spot. many numbers are thrown out. at the end of the day, none of them want the volatility we have been seeing. >> we just broke the labor cash earnings numbers and we are talking about how wage growth has been an issue in japan. what is the sentiment among business leaders? >> absolutely wage growth has

been an issue year after year. especially this year with inflation being so high. it really -- calls from residents pressuring the premised are herded we heard from him that starting this year, he wants companies to hike wages that exceed the rate of inflation. the governor of the boj also added pressure to companies wanting to hike salaries with central banks to percent inflation goal as well. a ceo was telling me that there needs to also be a mindset shift of ceos. he wants them to focus on wage hikes first then get the reward of higher productivity from employees. one aiming 6% increase in wages starting in april. >> let's get the vonnie quinn with first word headlines. vonnie: jim says interest rates are getting closer to a high enough level to bring down inflation.

he stopped short of repeating the hawkish tone he repeated last year. the projected rate of 5.1 percent he suggested is tight enough to rein in inflation. >> the problem is we have gone all the way back to the pre-inflation stock level of inflation expectations macro theories tell us that that bodes very well for the future. this is a good signal for disinflation in 2023. vonnie: china is expanding measures that allow lower mortgage rates for first-time homebuyers in some areas. the pboc will let banks maintain lower or remove minimum interest rates. the central bank says it plans to support housing demand and a stable market. the london metal exchange chairman is stepping down as the exchange continues to grapple with the fallout from the nickel market crisis.

the announcement comes ahead of the planned publication of an independent review into the crisis. 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: vladimir putin has ordered his forces to cease fighting in ukraine for 36 hours to mark russian orthodox christmas. jodi schneider joins us with the latest. how is this received? >> we are hearing from a number of countries including president biden this is bit of a ploy. president biden says he thinks the vladimir putin wants to just get some oxygen, some headlines out of this. it is only for 36 hours so it starts tomorrow at noon. it's called cease fire, but president zelenskyy in ukraine says he thinks it's just a way for the russian troops to

redeploy. they may stop where they are for a little bit then go where they think the ukrainian troops may be less strengthened. we have heard from a number of countries that say that. we also heard from turkish president erdogan. saying he wants to see a real cease fire which would mean removal of troops from ukraine by the russians. >> what was the u.s. response? >> president biden said he doesn't believe he hears from vladimir putin. that he really thinks this is a ploy. at the same time, the u.s. announced in a joint announcement with germany that it was sending more firepower ukraine. clearly the u.s. doesn't really believe this is much more than a few days or even 36 hours of a cease fire.

at the same time, we are hearing from ukraine that to have actual talks and real negotiations with russia, that their line in the sand is that russian troops be removed from ukraine and we are not hearing anything like that from president prudent. -- president vladimir putin. >> jodi schneider with the latest on ukraine and russia. we have breaking news, we're hearing from the southwest ceo bob jordan commenting in an interview that they will be revising their earnings forecast ahead of the january 26 report that the guidance will include the impact of flight disruptions. remember we had a storm during the holidays, many flights were delayed and canceled. now we are hearing from the ceo that has declined to discuss specifics on the guidance, but

he is saying that this will be happening with a revision to the report that it is a significant event given the flight disruptions and compensation to passengers for related hotels and meals. that will certainly impact on the quarter. they will be revising their earnings forecast ahead of the january 26 report. coming up next, samsung may report its first consecutive drop in quarterly profit in 30 years due to waning demand for trips -- chips. this is bloomberg. ♪

>> breaking news out of samsung. preliminary earnings numbers for the fourth quarter. operating profit coming in at 4.3 trillion you on. -- trillion yuan. -- trillion won. as expected, samsung is saying the earnings drop in the fourth quarter is coming on the back of week memory and smartphone demand. we were expecting this given

that we have seen a u.s. rival also announcing cost-cutting measures last month given these issues. for samsung, this marks the first consecutive drop in quarterly profit in three years. the fourth quarter operating profit missing expectations by a lot. it was above 6 trillion expectations. samsung saying chip demand has significantly fallen on inventory adjustment. >> let's get some reaction to that. our guest is a global strategist . always great to have you with us. give us your thoughts given these numbers were worse than expected. guest: clearly the number came in much below expectation. if you look at the operating profit coming in at 4.3 trillion versus 6.7 trillion.

that's quite a bit of a mess. in terms the sales number, it is a slight mess coming in at 70 trillion. the expectation was 74 trillion. it is already expected given the fact that the fourth quarter numbers are quite weak on the basis of slowdown in the headset demand as well as last year overall the demand for the pc was quite week. that was a major issue. had to look into the future where the production cut is expected in the various areas. samsung is talking about 15% lower in terms of the production side. if that is the case, demand and production differences would probably level out and in the second half of this year, we will see the earnings improvement as well as the sales improvement. i guess it all depends on what

level price will be bottoming out. then it will recover for the second half of this year. >> just to point out, these are the preliminary numbers. we get the net profit and the divisional breakdown later in the month. on account of these numbers, should we expect an even more dovish shift when it comes to capex strategy? guest: yes as i said, the announcement is coming in at much less of the capex expectation about 15% lower than previously anticipated. that should allow the cycle to be bottoming out probably earlier than expected. if we look at the bottoming out of the inventory levels, we were thinking that the turnaround should be expected to be happening in the second quarter sometime. if we look into the level of production or the capex

reductions, we think that number would come a bit earlier than that if that's the case we think their stock price bottoming out might be happening sometime within this first quarter of this year. >> how is your mobile business doing? we heard them announced some upgrades when it came to their budget films at ces in las vegas. guest: if we look at the overall demand side of the picture, we have to look at what's happening in china as well as the server-side. if the china demand is expected to recover and also there is an intel amd cpu, the application improvement would be happening. therefore, there would be somewhat improvement in the growth area and also if you look into the second half of this year, we are expecting the year and to pick up. overall, i think we have been

worried about the concern about the headset as well as pc demand but going into the second half of this year, we are expecting growth in terms of the headset and server-side to be picking up around 23% year on year numbers. as you said, the improvement could be coming in quite significantly in the second half of this year. >> we are also hearing rumblings about a potential deal between western digital and another company. how fierce is the market right now for samsung? guest: if you look at the memory side, the three competitors also micron they taken 90% of market share. in terms of competition, yes it is there. with this kind of takeover happening, we expect production level to drop rather than go up because the consolidation is

expected. to improve the overall profitability's. yes, competition is there but in terms of the level of competition, we don't think it's going to accelerate but decelerate over the period. >> reacting to the samsung numbers. plenty to come here on a break asia. this is bloomberg. ♪

>> u.s. prosecutors are ratcheting up pressure on sam bankman-fried's inner circle was sources telling us they are scrutinizing a former close ftx the souci -- associate. who are we talking about? >> he was the head of engineering and bloomberg sources tell us that he has not been charged but he is under intense scrutiny. if he is found to have played a role in the criminal scheme, he could be as -- charged as soon as this month. scrutiny and his participation presents the latest difficulty to sam bankman-fried. he was extradited back to new york and played non-kelty -- not guilty earlier this month.

we know singh head recently lived with sam bankman-fried in the bahamas penthouse before the collapse of ftx. he was close to the other key players in the inner circle who have now pled guilty to fraud and are working with authorities. reute reports the top ftx attorney is also said to have met with authorities and is possibly cooperating. unclear at this point who is cooperating with officials or whether he will do so but that could complicate things for sam beckman freed. there is no, from authorities, but we know that the u.s. authority -- attorney for the southern district says he plans to dig deeper into the close associates. he said if he participated in

this conduct, get in touch with us before we come looking for you. he did not mention anyone by name, but he said there patients was not limited and this appears to be a rapidly moving investigation according to sources. >> the collapse of ftx continues to have ramifications. >> silver gate of all the banking world appears to be most at risk from what happened with ftx. it held deposits for several ftx units and alameda so it made a big bet on crypto. check out the stocks. it is down 42% in the latest session. it was holding funds and assets for many of these prepare entities. the shares plunged more than 40% after the bank said customers withdrew about $8.1 billion of these digital deposits in the

fourth quarter. that forced it to sell off assets and wire -- fire much of it staff. the bank is been scrutinized itself due to its dealings with ftx and its deposits. a crypto broker has laid off 30% of its staff and a former ceo of a network has been sued by the new york attorney general for defrauding investors. the authorities are taking a closer look and that is putting a crisis of confidence on many things crypto. >> let's get you a quick check of the headlines. abu dhabi bank says it did explore a potential bid. it said it was previously in the early stages of evaluating a deal but is no longer during so. the offer would have been complex.

a chairman will be focusing his attention on the conglomerates pivot to green energy. this follows's recent move to put his children in charge of other businesses. last year he unveiled plans to spend 75 billion dollars on clean energy projects over the next 15 years. ticket sales for avatar the way of water hit $1.5 billion making it the highest grossing film released in 2022. the result puts the film ahead of top gun maverick. >> take a look at how markets are trading ahead of the major opens in japan and south korea. we are seeing some upside for australian and kiwi stocks. kiwi stocks a little bit of upside but this after three

sessions of gains. we continue to watch japanese futures at the moment. we have seen a little bit of volatility in the japanese yen. we are seeing a little bit of downside when it comes to stock futures. u.s. futures seeing rebound after stocks fell across the board by little more than 1%. we have stronger-than-expected u.s. labor numbers. also continuing their hawkish rhetoric from the fed. the rates in the u.s. leading the charge with the 10-year above 370. it will be interesting to see what they do because for the first time in a few sessions already, we had yields coming lower.

we know that the pressure to move higher has been there especially past the .5% level for the jgb's. we had later cash earnings earlier, it was a big mess. coming up in the next hour, why they remain overweight in chinese equities explaining downside risk from the covid transition to be short-lived. plus kpmg china gives us they are view of a robust year ahead for ipo activity in china and hong kong. this is bloomberg. ♪

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shery: we are counting down to

asia's major market opens. we have anxiety over a stronger-than-expected labor market here in the u.s. and what that means for the fed. it really doesn't help when you have raphael bostic coming out and saying there is much work to do when it comes to taming inflation. haidi: anxiety when it comes to the china reopening as well, even though we see overtures from policymakers when it comes to throwing out more support for the policy sector and the private sector. all driving chinese equities to the best start they have had for u.s. listed chinese equities on record. but when you take a look at these samsung preliminary earnings just got through clearly there will be more downside when it comes to global tech and the chip cycle. shery: really something to watch when it comes to concerns about a potential earnings recession and we are seeing it tech sector already suffering. we are seeing downside at the open with the nikkei down .4% after gaining ground in the previous session.

we are continuing to hold any japanese yen around 133 level against the u.s. dollar. we had labor cash earnings earlier today and abet half an hour we get japan numbers. we will be watching those numbers for the strength of the factory space in japan. in the meantime we are watching jgb as well because yields fell in the previous session. the 10 year yield continues to push higher against the cap of .5% set by the boj but we have treasury yields rising overnight. we are talking about samsung, take a look at how korea is coming online. two sessions of gains for korean stocks at samsung is the biggest weighted stock in that market. we saw 69% plunge when it came to profits, and a big mess. right now samsung, we're expecting it to trade, it is holding at the 58,500 loevel,

but the broader market is seeing downside. when it comes to the korean won, also downside against the u.s. dollar. haidi: downside when you are talking about the bond rally here in australia. take a look at how we are sitting on the back of treasury futures adding to those declines. we are seeing australian bonds trading a little lower after that three-day surge, or a bit flat. equities seeing modest upside for sydney stocks. seeing some very strong gains when it comes to materials health care, real estate the biggest laggard's. tech not doing well either. we are seeing materials really leading gains despite iron ore seeing some downside on these near-term concerns. clearly the commodity bulls are still positive about the longer-term recovery of economic recovery -- activity out of china. the aussie dollar is flat at the

moment, $.67 u.s. but of course the biggest jump in two months when it comes to the u.s. dollar responding to that adp report and the jobs numbers also expected to weigh when we get those numbers, the monthly jobs report i should say, later on in the friday session in the u.s. take a look at u.s. treasuries. we are really getting the futures picture extending that slide in the early asia session. that data underscoring some of the risks being brought upon that strong labor market, dashing some hopes we could see a more dovish pivot from the fed and certainly talk about a rate cut by the end of the year. let's talk a little more about the expectations and how investors navigate this. our next guest homin lee is the asia macro strategist at lombard odier. great to have you with us. when you take a look at the big jump have seen in chinese

equities, both in the u.s. and certainly domestically in hong kong, mainland markets, has exuberance gone a little too far? do you think this is the year where we see chinese risk assets investable again? homin: thank you very much for your invitation and happy new year to both of you. now, somehow you catch us whenever we are slightly more optimistic about chinese equities, and we happen to be in that position. so, regarding the chinese equities, we think the big rally we have seen since the announcements regarding reopening late last year were really about the fact that the chinese government had an initiative against the market regarding these changes in public policy. so that is basically done here. if you think about all the announcements that have come out of beijing in the past few weeks, now there is no turning back. there is definitely a shift to

living with the virus going forward. now, the transition, it's not going to be smooth, because consumers also need to adjust to the higher infections. we're seeing higher frequency mobility indicators showing there is downside risk to growth. what is interesting for the markets going forward, this downside risk will be the primary focus of chinese policymakers. so, they have to do more to bo ost prospects going forward. and they need to relax restrictions for the industries. so that is going to come into focus. we think there is scope for this rally to be sustained until this transition is completely over. maybe by the second quarter of this year. so in the near term, we remain overweight in chinese equities for this reason. haidi: when you talk about value

and quality dominating your portfolio, what about within china? you can clearly find value within a breath of different chinese stocks. what in particular is looking more resilient to you this year? homin: well, we have to say that we're relatively balanced in terms of factor exposures in chinese allocation at the moment, which is a bit different from our global equity chinext china allocation. the reason is that this transition, basically a transition to living with the virus arrangement inm ch -- in china, will boost many sectors. the whole market has been pretty cheap. and it still has some discounts to the other markets as well. in our view, the main driver right now is the macro and public health and policy.

for that reason, we prefer to be a bit more balanced in terms of factor exposures because it is quite difficult to be very selective in this kind of environment. so that is basically where we stand regarding the factory exposures in china. shery: i find it really funny that you said we catch you these conversations every time you are more optimistic about china, which implies you have been changing your calls about china, as everyone else. what would lead you to become more negative about this market? homin: it is possible by the middle of 2023, the reopening process is quite visible and seems to be in the rearview mirror. and it would be more about the willingness of the chinese authorities to tolerate potential inflationary pressures building up in the system or other types of concerns about

extent of policy accommodations. maybe that comes into picture in the second half of the year. going forward, in the very near term we still remain quite constructive but once we get the sense that policymakers want to be a bit more neutral, then that will be the trigger for us to change our mind. shery: inflationary concerns of course could be exacerbated by seesawing commodity prices because of a shaky reopen. what are the implications of that? homin: so, in the first half of the year, we do not think it is going to be a major factor because as i said earlier, the reopening process is quite volatile in the initial phase, consumers need to be come to mow shopping out of the home in a new, higher infection environment. so we will take time for consumers to start consuming. we think second quarter is the

likely window for that and until then, the demand will be quite volatile and the industrial commodities markets will be more or less range bound. in the second half of the year we think u.s. loads up strategic petroleum reserve and china ramping up demand of industrial commodities. the picture could change a bit. in the second half of the year we think it will not be a major concern. we think disinflation will continue to be a major theme for the markets but in the second half of the year it will be a window for reassessment and review, in our view. shery: does your mower bullish call when it comes to chinese equities extend to other emerging markets outside of china? homin: so, what is very unique about 2023 is that china will be one of the few economies in the world that will see higher growth rates compared to 2022. but if you look elsewhere in emerging markets, the range will

fall. that includes latin america and eastern european countries. so we do not think it's the right time to call for a very aggressive exposure to emerging market equities outside china yet. but we think macro wise, it is beginning to look more stable. so maybe there are some selective opportunities in fixed income, for instance. growth wise, not the clear signal yet for aggressive equity exposure, but for currencies and fixed income, we do think opportunities are beginning to open up in this space. haidi: i don't know why we keep creating bearish scenarios for you, but i wonder if we get the scenario where the reversal of the dollar is temporary -- take a look at this chart for example. that was a big move in reaction to the adp port, and potentially

this ongoing anxiety we will not get a pivot from the fed, that they will have that runway to keep hiking. the biggest jump in nearly two months on that data. does that meaningfully change your view on emerging markets? homin: so, again, this is one of the reasons why we are not ready to be extremely bullish on emerging market asset class yet. because we will get that period of volatile markets for the remainder of the year, and early next year. and we do see markets maybe pricing a little too much on the rate cut prospect the end of this year. so those prices need to be adjusted. but we think in the middle of the year the u.s. economy will show clear signs of weakness and for that reason, we think the fed will eventually cause rate hikes in the middle of the year

at 5% for the higher end of the fed fund target range. and by the end of the year they will probably start thinking about maybe cutting rates once. so if that's true, then we think the scope for dollar rally against the other currencies this year, the whole year, will be quite limited compared to last year. so we are not super worried about another major rally similar to last year's for the dollar. we think the picture will be more mixed. it is really tied to the macro economic forecast, which we think will be mediocre for the u.s. economy this year. shery: homin lee, good to have you back. happy new year to you, too. take a look at what samsung is doing at the moment. we are seeing a gain of more than 1% at the moment. three sessions of gains for samsung already. we have seen reports writing out

of their latest profit numbers dropping by 69% in the worst fall in more than a decade. operating profit falling to $3.4 billion for the three months ending december, and yet the stock is up. perhaps a little bit of consolidation given the massive drop we saw last year. we are talking a plunge of a most 30%, the biggest annual plunge since 2000. a lot of it was expected when it came to market weakness. micron earlier warned about the forecast, but samsung at the moment getting more than 1%, even after that historic drop in profit of 69% for the worst fall in more than a decade. let's now get to vonnie quinn with the first word headlines. vonnie: ukraine has dismissed as a ploy russian president vladimir putin's call for a 36 hour cease-fire. it follows an appeal by the patriarch of the russian

orthodox church. the ukrainian and u.s. presidents say putin really wants a chance to redeploy his forces. >> i found it interesting. he was ready to bomb hospitals and nurseries and churches. on the 25th and new year's. i mean, i think he's trying to find some oxygen. vonnie: u.s. republican leader kevin mccarthy has failed again to get a majority vote for house speaker, despite -- the latest voting leaves the party fractured and the chamber paralyzed for a third straight day, with no immediate resolution in shgit -- in sight. he's undergoing pressure to step aside. china is extending measures introduced in september that allow lowering mortgage rates for first home buyers. in cities warehouse priors --

prices have fallen, the be voc will let banks maintain lower or remove minimum interest rates. they hope to support housing demand and a stable property market. japan wants the group of seven to take a coordinated approach against what it is calling china's economic coercion. japan is the rotating head of the g7 this year and will host their summit in may. the economy minister says china's recent trade bans are a clear and present danger for global economies. beijing previously accused g7 members of their own protectionist moves. 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. haidi: plenty more to come. this is bloomberg. ♪

haidi: after three long years, checkpoints of the border separating hong kong from mainland china are set to reopen from sunday. let's get more from shirley chow. what do we know about this reopening, what does it look

like, what do flows of traffic look like in the first instance? shirley: this is definitely a big boost for hong kong because for the first time in three years the border has finally reopened and people can finally travel from hong kong to mainland china without having to quarantine. and the demand is apparently very huge. we learned from local media that for the first five hours since the online registration system was up and running yesterday, a total of 2500 people have made registration in just the first five hours. so the demand is certainly very big and we can expect that after the border resumes from sunday, january 8, there will be a lot of people going to the border and across the border to mainland china.

shery: hong kong has been looking forward to this day for three years. how much of a boost can we expect for its economy? shirley: some industries will benefit the most. the local food and drinks industry, retail industry and finance industry will get a lot of benefits because mainland china is hong kong's largest source of tourism and hong kong's largest trade partner. so a lot of owners of food and drink installments have been expecting recovery of 20% to 30% of businesses that they have lost during the past three years. and some of the insurance industry companies have also been expecting a lot of mainland people coming to hong kong to buy insurance. also, pharmacies. we have heard some pharmacies have been setting up shops in the central districts in hong kong because they expect a lot of mainland chinese people will come to hong kong to buy drugs,

for example, fever medicines that has been in shortage in mainland china. shery: shirley zhao on the latest. despite this welcome news by the city, we know that china is racing to fight a number of severe infections and deaths across the country. now, a covid pill from a japanese drugmaker could be approved in china by march. the company ceo told bloomberg he is very optimistic about the prospects. >> we formed the joint venture, which shionogi licensed the compound, and they are developing our compound. so with this compound, they have been discussing with the china health authorities.

i think progress is being made very smoothly. so we are at the final stage of the review process. in conjunction with that, we know this compound requires huge distribution and huge promotional efforts. and we are very pleased to make an announcement last month, distribution partners with shanghai pharmaceutical, and the distribution agreement with another pharmaceutical, very strong chinese pharmaceutical companies. with that big partnership, we look forward to supplying our products to china as early as possible. in china, we, again, have the teo api facilities -- the two

api facilities, which approximately 20 -- we changed the facility already in the facility. and up to 700 million tablets, which is approximately 100 million people worth. >> how fast do you that approval will come, or how will the schedule move forward in china? >> it is a very difficult question. i mean, i'm very optimistic about receiving approval in china first quarter of 2023. again, depending on how good we are in responding to authority's questions. but we believe it will be

beneficial for china. it could be a good plus element for health authorities to review and hopefully give us approval. haidi: the shionogi ceo there. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers can find that in your terminals and on the mobile in the bloomberg anywhere app. this is bloomberg. ♪

haidi: u.s. prosecutors are ratcheting up pressure on sam bankman-fried's inner circle. sources are telling us they are scrutinizing a former close ftx associate. sue cleaning has the details. what did we learn? su: sources to us prosecutors

are really focusing on the head of engineering at ftx, a very close friend of sam bankman-fried. not charged, but under increased scrutiny. one source tells us that if he is found to have been involved in the wrongdoing at ftx, he could be charged as soon as this month. scrutiny of him and the possibility of his cooperation with authorities presents the latest threat to sam bankman-fried, who we are looking at here. he was arrested last month in the bahamas, brought back to new york, and pled not guilty this week to charges he stole billions of dollars of the now -- he was close to two other close associates who were in the bahamas penthouse. they have also been talking to prosecutors and both have pled guilty and we are told are

cooperating in the prosecution. it is not known whether singh will be a cooperating witness, but that clearly must be a concern of sam bankman-fried. a top reuters reports as the former top ftx attorney also is said to have met with authorities and be possibly cooperating. and reuters separately reporting that the sec is now probing ftx investors due diligence. they want to know what they looked at before investing. haidi: su keenan there. more to come. this is bloomberg. ♪

shery: we have breaking news out of japan, we are getting pmi numbers for the month of december. the composite bmi falling to contraction territory to 49.7

for the month of december. already we had seen it at 48.9 in the month of november. so we do have also services pmi numbers staying in expansionary territory at 51.1, but this is the final number and it has been revised downward to. it same for the composite number revised downward. the expectation was that it would actually expand. it stayed in contraction for a second month or the composite bmi numbers, perhaps not surprising given that we have had this regional trend across asia where we are seeing weakness in factory numbers across countries area let's stay with japan, business leaders gather this week to celebrate the new year and give their 2023 outlook at a pivotal time for the country's economy. bloomberg's correspondent joins

us. what is top of mind for these business leaders? >> the new year in corporate japan means a big meeting of around 1000 ceos and politicians, that includes prime minister kishida. the timing here is key, title banks, bond buying day after day, the boj meeting up next week. what has been happening with the yen, so a lot to talk about. kuroda resigning after a decade. we spoke with the maker of japanese holdings about his thoughts on wage growth. >> we have to change our mindset. we as ceos have to change our mindset from increasing productivity, then increase wages. totally opposite. increase wages, then enjoy the

productivity. >> you heard him there really talk about the change of mindset or ceos, and that is important because prime minister kishida and the current boj governor kuroda pressuring companies to exceed wages to exceed the rate of inflation this year. japanese workers looking for that pay rise. haidi: so much uncertainty when it comes to the boj's outlook. what is the sentiment there? we get a governor there and the big kuroda surprised to end 2022? >> absolutely, the boj changes going to be quite huge coming up this year, a lot of executives i spoke to did not want to give a name for who may be succeeding

kuroda, but they are looking for one thing from the governor, and that is communication. they want clear communication so there are no big surprises they need to adjust to in a very short amount of time. haidi: let's get you to vonnie quinn who will get us caught up to date with the first word headlines. vonnie: the st. louis fed president said -- repeating the huggers tony delivered too much of last year. i suggested rate of 5.1% is tight enough to rein in inflation. >> we have gone all the way back now to the pre-inflation stock level of inflation expectations, macro theories tell us that bodes well for the future of actual inflation, so this is a good signal for disinflation in 2023. vonnie: bloomberg is learned securities are scrutinizing

sabic been freed's former associate. he will be charged later this month if he was found to have a role in the fraud. this has pressure on site bankman-fried as he fights a slew of criminal charges. a london metal exchange chair is stepping down as exchange continues to wrap up from the fallout from the nickel market rises last year. qb evans will not seek reelection and will step down once a new chair has been appointed. the announcement comes ahead of the plan publication of an independent review into the crisis. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. haidi: bank of america as just published its top stock picks for the year. our guest joins us now. one for each sector. we are wondering how the u.s.

consumer will react given the uncertainty when it comes to inflation. david: that is interesting, because walmart was opaque -- a pick. it will be a recession and recovery, that is the macro backdrop. the recent that they are picking this is it will benefit from consumers trading down. this is a consumer stable stop, it is high quality, low leverage, and it benefits the economic reality that perhaps we will be in for the most part of this year and next year as well of stagflation. that is one of their stock picks, that is the pick of bank of america. shery, why don't you pick one? shery: i am going through the names and they are pretty well

known. for me it is will tower. they focus on senior housing and the changes with the covid will have an impact. david: that is one. the other thing that they are going with, in terms of the criteria used it is also high on their esg meter, that is number two. high dividend yields. this is protection against any downturn moving forward and against the backdrop of housing supply likely remaining muted as far as demand is concerned. if you had to pick one as far as real estate is concerned it is this one. any others? haidi: the esg meter, the decarbonization. i was looking at honeywell but also looking at commodities and energies and what these picks,

potentially we can extrapolate on the broader macro outlook. david: yes, you look at things like pricing power for example. one of the key metrics they are using, i imagine across most of these picks is the ability for pricing power and consensus in terms of earnings revisions and earnings expectations relative to consensus in terms of relative to the sector, high beta stocks. i will even mention exxon is there topic in oil, relative to chevron, for example, this tends to have a higher potential for outperformance. and also in terms of a year when perhaps we are going into some sort of slow down, free cash flow is a plus for the likes of exxon mobil. shery: this reminded me with all of the picks what we used to do years ago of choosing the one

stock and we used to compete. what was that called? david: that is called libel, because you never use to win. shery: yes we did, we always kept a tally and i remember hitting tons of drinks out of that. if you missed any part of this conversation and the stock picks go to tv , watch us live and see our past interviews. dive into other securities or bloomberg functions that we talked about. become part of the conversation, send instant messages. tv . this is bloomberg. ♪

shery: we are counting down to the start of trade in mainland china and hong kong. our next guest expects ipo activity in those two markets to be robust and dynamic in 2023. with us now is a partner of new economy in hong kong kmg china. we are seeing positive news flow around china, reopen, also the reopening of borders with hong kong. what is the pipeline in the ipo looking like right now? >> the pipeline is strong with over 900 companies applying for

listing across shenzhen, shanghai, and hong kong markets. roughly 90 companies, so a pretty solid pipeline. i agree with the sentiment that we do expect a rebound in hong kong in the china market will continue to hold up quite well. shery: hong kong has had a tough time. does it look better? >> i think there are a number of factors, hong kong is influenced by international market sentiment as well as the mainland market. the fact that we are seeing inflation, inflationary pressure being under control and also the ease of interest rate hike, we hope liquidity will return to the hong kong market, so that should create a good environment for the hong kong capital markets' conditions. another factor to think about, to consider is really the easing of the covid measures in the mainland, and that should

encourage more economic and business activity a cross-border as well as foreign investment outbound and inbound. i think both of these factors should contribute to a pretty positive impact. thirdly, i would add the new listing regime in hong kong, we expect a regime will be launched in this order, and the covered range of advanced technology from a and environmental related new energy, advanced manufacturing, so industrial markets will definitely benefit from this new regime. haidi: when it comes to the sector breakdown in terms of the lessee priorities, we see perhaps an easing of the brutal regulatory crackdown on growth companies in tech in china. does that mean that is going to be one of the standout areas when it comes to companies going public?

and could we see ant and the next couple of quarters? >> yeah, i think the regulatory environment for tech companies has stabilized. a lot of the current update on regulation is trying to enhance the capital market infrastructure, the oversight and also enhancing the quality of the companies going public in mainland china, so they are also encouraging domestic companies to go to overseas markets for listing. so all of these are ready positive signals from the central government that they want the market to be active again and also encouraging investments. haidi: what are the key areas of focus other than the revival of tech that we have talked about? is the energy transition going to be one that we should be watching? >> yes, pmt industrial markets

that i talked about would be a key area where we see pretty good interest, and a lot of the narrow focus is about the net zero, the energy transition, and at the same time semi conductors is also a key sector, a very strategic sector for china that we believe there is good activity in private equity and venture capital market, so that should lead to increased activity and interest in the market. shery: most market analysts we speak to have the consensus view that no matter what happens this year, whether returns will be good or bad, volatility will be key. in such an environment when you have central banks around the world tightening and market sentiment hit by the potential talk of a recession to come, what are the headwinds of for

these potential ipos? what are the biggest risks? >> before i comment on that, i think taking a step back is the fact that china listing performed quite well last year despite the challenges in the global market. i think somewhat do do with domestic policy that actually supported the development of the market. in the coming year, we believe that the risk will be how much of that international economic conditions good impact the china market in terms of export, manufacturing activities, and commodity recovery. the central government is doing a lot to revive the economic activities. so the effectiveness of those measures does it depend upon the global demand, and i think that

is the first one. end the second one is -- and the second one is due to sentiment, if activity recovers and there will be argument in the consumer market, that will translate into improved sentiment in terms of economic and investment activity . so it does it depend upon the economic recovery itself. the third point would be about the geopolitical environment. we have been seeing the development over the last couple of years. we do hope that it will stabilize this coming quarters, and a lot of these factors have been factored into the market, and hopefully the geopolitical situation does not become more constrained, and therefore i

think it will improve the investment outlook for both markets. haidi: it is really that last point, not just the broader geopolitical tensions with its trading partners by beijing's handling of domestic policy, not least of which was covid zero. what would you need to see in terms of policy measures from the leadership that would give you the conviction that beijing can attract cheap capital more easily for investments but also give investors the assuredness of stability, transparency, and some level of guaranteed returns? >> i think there has been a pretty consistent effort from regulators in china to create a market where the infrastructure will be more market oriented and having a registration system that has been in place for 2, 3

years whereby a steady stream of high quality listed companies can actually seek public capital. they also introduced a more streamlined policy around domestic companies going overseas for listing, as i mentioned earlier. a lot of these policies that have been introduced gives pretty positive signals to companies and also investors that the government direction is to encourage local, domestic, and also foreign investment. so i believe those are good signs that the market should be -- policy direction should be quite stable in the coming 12 months. haidi: great to have you with us, irene chu. tune into bloomberg radio, hear more from the day's big newsmakers and get in-depth analysis from the daybreak team.

they are broadcasting live from our studio in hong kong. listen on the app. lots more ahead. this is bloomberg. ♪

haidi: after a chaotic reopening foreigners have taken to looking

at china with deep skepticism. our bloomberg: this joins us now -- columnist joins us now. 20 has been no especially -- 20 has been a bang especially compared to u.s. commodities. are we seeing these assets being more investable? have things really change? >> i think overall market sentiments have gone a lot better. covid zero it was putting the economy back to a standstill. once china is going back to 2019, and other brent observations back in shanghai, china's big cities, economically prosperous regions have already hit herd immunity. perhaps we can come back to an economic rebound or china can go into an early stage of a business cycle whereas most of the rest of the world is toiling

with a potential recession. in terms of potential growth differential china could turn out to be the biggest rate of the year. shery: talking about the event stability -- investability of china, big investors do not want to miss out on the opportunities there. what will it take to continue the rally this year? >> investors need to can consider -- to consider two things. the covid reopening was great, but a bear in mind it was going from covid 02 covid 100%. the chinese government cannot just change his mind all of a sudden. for long-term investors, equity in china for five to seven years, they will think about what that means for their investments, which are very illiquid. the second thing is that it can

be reopened but without being opened. the government is not been forthcoming on a lot of data points, including this covid outbreak. what are we going to see with the economy? we have very little sense and global investors will have to do due diligence themselves. do they want to do that is the question? haidi: china is far from being a global safe haven. what would you like to see from the government in terms of policy to get events investors that their money is safe, policy can be predictable, and returns at least to some level can be guaranteed? >> i think at this point the chinese government's policymaking has been very chaotic. they need to show some stability. recently we have seen a lot of property easing measures. they look pretty crazy, to be honest, and i think the

government needs to step back and be a little more steady. shery: we both want to thank you. great column again. samsung's quarterly profit plunging almost 70%, hurt by sliding memory chip prices as of global slowdown cuts demand for i.t. gadgets and servers. operating profit fell to $3.4 billion within three months end of december short of analysts' estimates. samsung will not break up divisional performance until later this month. tesla's board of directors is facing mounting professor to prepared just how -- spacing mounting pressure to show just up a bit for the loss of ceo. shares have plunged more than

70% since musk's disclosure in april of his initial stake in twitter. markets coverage continues as we look ahead to the start of trade in hong kong, shanghai, and shenzhen. standby for bloomberg markets: china open. this is bloomberg. ♪

david: hello, good friday morning, it is 9:00 a.m. into beijing