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daybreak asia. >> counting down to the market opens in tokyo and seoul. >> australia has just come online. the top stories this morning. jim bullard once rates above 5% as soon as possible. we are counting down to the bank of korea's rate decision and a possible end to its current tightening cycle. >> we have the open of the asx 200 in australia. we did have futures indicating gains as well. the focus on the u.s. inflation front. we did see signs of prices easing. possibly we could see a slower pace of rate hikes in the weeks ahead.

the aussie dollar now trading fairly flat. the focus today on equities as well. risk on treating that. -- trading. we saw big moves in the big tech session overnight. materials, you can see they are a little bit high today. 1.5% away from the all-time high for the materials index. the reason we have seen 4% of gains for the mining index is down to the optimism about reopening in china. we have some details from the imf highlighting how important it is for the global economy, need to 2023. they say it is the key factor, china's pivot away from covid zero policies. in terms of what else we are watching, we see equities mostly

pointing high today. this is down to what happened in the united states and wall street and the cpi. >> the cpi really easing as expected, but perhaps underwhelming. we are seeing a muted reaction in u.s. futures as well. it was the same case in the wall street trading session today. really struggled to find direction. treasury yields were decisively lower. we are talking about inflation numbers showing dovish sentiment in the bond space with the swap market. the 10 year yield falling toward the 350 level. the two year yield falling as well. in the crude space, we are seeing a little bit of pressure.

breaking right now, inflation a problem around peru. peru central bank raising the rate to 7.75%. this would be the 18th consecutive rate hike for peru. the central bank seeing inflation returning in the fourth quarter. we continue to see the worst inflation spikes since the 1990's. the central bank expect annual inflation to slow from march. this is coming at a time when peru has been dealing with a political crisis with the ouster of their previous president. that happened on the central bank decision day just on the last meeting. a little bit more quiet today, but an 18th consecutive increase. and antigovernment protests continue around the country. >> i want to bring in our editor kathleen hays.

also our chief asia economic correspondent. let's start off with the cpi print. on the balance of how you look at this data, does it warrant a downshift from the fed. does a downshift mean it is not the fault of the paddle let's get? >> that is a great way of putting a. they are not going to put on the brakes. still keep enough what than the paddle, absolutely. i think it is a tough call. if you look at the headline, which is down substantially from 9% just a few months ago, to 6.5%, that is a good move. and the idea here is that after doing 400 basis points last year, let's slow down a bit and see what is going on. let's do it slowly. 25 basis points at a time. let's listen to what the

president of the philadelphia fed said. this report pushed him in that camp. >> i expect we are going to raise rates a few more times this year. in my view, the days of us raising 75 basis points at a time are surely past. hikes of 25 basis points will be appropriate going forward. >> we saw a little bit of a different reaction when he came to the equities and bond space. >> i thought that was fascinating actually. bonds were pretty obviously euphoric. they'd -- they extended a sizzling rally this month. that is to be expected, inflation has come down, the fed's hikes are working. you are getting a slowing economy.

the last two quarters have seen inflation come down almost to -- two percentage points more. for bonds, that is good news. but equities, we have a couple of concerns. one is that fed officials are still saying there going to hike to about 5%. and they are going to hold it there for a long time. that is one a concern for equities. the other concern is a slowdown in inflation usually comes with a strong drop off in economic activity and therefore earnings. most of the time when we have had this deceleration of inflation it has been a difficult time at best for equities. that is why you see equities

struggling to make much of again , where is bonds soared. i was writing yesterday about the interesting pivotal poem -- point in the s&p 500 and junk bond spreads, how they have not broken the consuming trends of 2022. that is still the case for s&p futures and those junk bond spreads. they are still in the painful trend that sustained from 2022. we need to see more of a turnaround before we can think that investors are calling an all clear when it comes to equity risks. >> we are not getting any indication from fed officials that it cut may be imminent. >> no way. the jobless claims out today, the labor market still tight, the last jobs report. inflation is coming down, but a long way from target.

the other side of this is that goods prices are falling down. services are holding up pretty well. let's listen to what jim bullard , the president of the st. louis fed who has been in the hawkish camp, continuing to push for let us get it done now. >> we do not want to replay the 1970's, but we want to make sure we are moving inflation clearly back to 2%. that means that the fed will have to maintain rates at high enough levels to make sure that inflation is moving down. >> while i keep talking a little bit more about this, let's pull up the goods versus services chart. jay powell has been focused on services x housing. you see how broad services are holding up.

it rose on the month on this report. the base case is 25 come but there is still the case for 50. this may not be a done deal yet. >> the bok, what are your expectations? if we get a pause, how significant? >> majority of economists are looking for a 3.5%. the target is to percent. it could be the final hike in this heightened campaign. they started rising interest rate 18 months ago. -- eight months ago. there is tension in the credit markets. housing prices are falling. there are lots of reasons the central bank in korea might actually go on hold.

swaps traders are betting that the bank of korea will have to start cutting rates. for now, the governor made it clear his focus is on inflation. it is well outside the banks target balance. >> kathleen hays and garfield beno bear. >> the u.s. attorney general general has appointed a special counsel to oversee an investigation into the handling of documents from president biden. his suggestion on thursday that the documents found in his garage. sam bankman-fried denied

stealing from his bankrupt crypto exchange. he offered one of his most detailed descriptions of the ftx collapse, naming christian markets and an attack from rivals. he says he regrets being slow to respond to public misperceptions. china says it remains open regarding covid data which officials have not updated for three days. the foreign ministry says the government is in close contact with the world health organization with providing data. one of the world's most important short-term lending benchmarks has climbed back to a level last seen before the global financial crisis. it climbed to 4.2%. 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. >> still ahead, is award season kicks off in hollywood, we will be joined from the coalition of asia-pacific to discuss show business. up next, we will speak with brian jacobson. this is bloomberg. ♪

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>> we got an inflation report exactly as we expected. >> very much in line with expectations. >> inflation is coming down. >> the fed is going to see we are not done. >> they are going to be fairly reluctant, let alone start to cut rates. our call is 5.5. >> i think the narrative should

turn to how far down are we going to go, not has inflation peaked. >> bloomberg tv guests reacting to the latest inflation data. our next guest expects cpi to continue easing but the challenge will be china's reopening firing up commodity prices. with us now is brian jacobson. always good to have you with us. does this mean that markets are being a little bit too optimistic about the inflation numbers today? >> thanks for having me. here at all spring, the way we are looking at this inflation data is that it is encouraging and is suggest the fed will be able to downshift to 25 basis points at the february 1 meeting. however, with china's reopening,

an increase in commodity prices, while we have experienced some goods price deflation in the united states over the last six months, that could taper off and turn to mild inflation. some of the push and pull dynamics in the inflation numbers seems like it could actually be biased toward keeping inflation a little bit higher for a little bit longer. by little bit i mean it having may be a 3% handled by the end of the year. >> in this environment, what does a balanced portfolio look like? >> a balanced portfolio still has quite a few bruises on it after the battering it took in 2022. we do believe that 2023 could be figure of the combat tour for -- come back tour for balanced

portfolios. having the 10 year treasury between 3.5% and 4.5% still looks like very decent value for a longer-term investor. if we see a panic in the market it is going to be about the growth numbers more so than the inflation numbers. in that environment, that should be fairly bullish for bonds. >> are we done with the recession? your something more optimistic than that. >> i think we have had the prophet session. -- profit recession. we had two quarters in a row. we have seen it across sectors. we have seen it across the size

dimension as well as far as large, mid and small caps. where it has not shown up is in the labor data. the market has already priced in a recession as far as the multiples. expectations for earnings are little bit too rosy for us. it is calling for about 9% if we look at the end of 2023 versus 2022. we think it will probably be closer to 4% growth instead. there are some risks to continue to navigate here because of the prophet recession going into -- the prophet recession going into an natural recession. >> argued looking for exposure to china? -- our you looking for exposure

to china? >> yes. where are the opportunities, there are a lot of crosscurrents as far as the regulatory environment, the tech crackdown, are they close to the end of that? where are the opportunities? we are allocating more towards our emerging market managers, who have the boots on the ground to do the fundamental analysis. we are still a little leery of taken a broadbrush major allocation just using indices. we would rather do it on a stock by stock basis. >> does that translate to the commodities related space given what is happening in china? >> when it comes to commodities, we do think that china's reopening has helped push up commodity prices, but it will

also likely continue to push them higher. we do not think all that move in commodities is completely done. although we do not necessarily have the most optimistic outlook for commodities, we think the gains will probably be fairly muted after we get through the next few months. our target for the bloomberg commodity index is to think about that returning may be four or 5% over the next six months, which is still a decent return, but with a lot of volatility associated with it. >> what will the dollar do? >> we have likely seen the peak of the dollar, that may be we will see some stability, but generally shifting toward a

downward trend. one of the areas we like is the japanese yen relative to the u.s. dollar. we also like the euro relative to the dollar. the headwind of a stronger dollar for emerging markets will hopefully turn more to a gentle breeze or something easier to navigate. our review to the dollar translates into a slightly more optimistic view for emerging-market equities. >> where are you seeing optimism when it comes to emerging markets? part of the argument is dollar strength and the lift they could continue to get out of china. >> when we look at emerging markets, we look at three different dimensions. you have the dollar, which is probably no longer going to be a headwind for them.

another is as far as the valuations, when we look to price to cash flows, there has been a massive resetting of the valuations in emerging markets. we like it from that valuation perspective. there is also the fundamentals themselves. china's reopening after a little bit of's -- of a slippery start, should be beneficial to the broader emerging markets. there is the risk of a global recession, but when we look at the valuations, a lot of the pessimism is priced in. >> always great to talk with you. brian jacobson. you can get a roundup of the stories you need to know to get your they going at dayb . -- get your day going at dayb

. this is bloomberg. ♪

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business headlines. apple is cutting compensation for ceo tim cook for more than 40% this year. it was a request from tim cook himself. last year, his total pay package was close to $100 million. groups have complained about his pay, but stockholders voted to approve it last year. shares in americana plunged after the firm's ceo resigned. his departure followed the disclosure of almost $4 billion of accounting inconsistencies.

morgan stanley has elevated 184 employees to managing director. it is a smaller number of promotions from last year. 38% of them are women. 5% of black, 2% are hispanic. coming up next, j.p. morgan chase's first up when it comes to u.s. bank earnings. this is bloomberg. ♪ it's official, america. xfinity mobile is the fastest mobile service. and gives you unmatched savings with the best price for two lines of unlimited. only $30 a line per month. that means you could save hundreds a year over t-mobile, at&t and verizon. the fastest mobile service and major savings? can't argue with the facts. no wonder xfinity mobile

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asia. we are 30 minutes into the trading session for the asx 200. we are looking at risk on in the

treating day so far. -- the trading day so far. this is a picture of risk on throughout the session. in singapore, nikkei looking a little bit weaker. we have the opening of japan in a few minutes. the latest u.s. inflation looking like price pressures are easing. that could mean they will move to a slower pace of right hikes. -- rate hikes. take a look at this terminal chart because traders are starting to reshape their expectations for what will happen in the boj space in the months ahead. we are seeing yen relatively here. -- volatility here. the boj could be forced to pivot

its policy even sooner than expected. normally -- 40% of respondents that we could see changes that soon as april. the other central bank we are focusing on is korea. the bok set to make its decisions too. as we see the growth outlook sliding, inflation is still looking elevated, more than twice the level of what the bok wants, running and more than 5% currently. the expectation today is for one more hike. >> here in the united states, we are watching the start of earnings season. j.p. morgan chase the first out of the gates for u.s. banks. one of the key points will be costs control. j.p. morgan already under fire

because of expenses. >> expenses an area of criticism during its last reporting period and now its multibillion-dollar tech buying spree has come under scrutiny because of a lawsuit that has resulted. j.p. morgan reports first out of the big banks group. investors are hoping to hear more about these tech acquisitions, particularly above 175 million dollar takeover of the college financial planning business. j.p. morgan has sued the start up claiming it was misled. the founder allegedly concocted millions of fake customers. the company is founder has

countersued, disputed the allegations. a lot of analysts are questioning what kind of due diligence did j.p. morgan do here. meanwhile, the ceo of jamie dimon has meant much of the past year trying to reassure investors that this is part of the plan that will pay up in the end. the stock has been under a lot of pressure in this current environment. a robust conversation would likely result on this topic. >> what are some of the other key areas we are watching? >> we do know that trading is a key strength for j.p. morgan and many of the other banks. the fixed income trading expected to be a strong area and continuing to show gains. the fed's rate hikes are a gift they keep on given for many of

these banks. cost controls also expected to be in focus and what progress perhaps they have made on their plan to sell off so many of the retail banking branches. meanwhile, a lot of questions about how the consumer is doing and we will see that likely in the loan strength. other issues that investors will be listening for is what the ceo will say about the environment ahead. are we going into recession? will there be a soft landing? how much pain i was seeing on the consumer? -- are we seeing on the consumer? >> a really key earnings season

that we're looking ahead to. let's get you to vonnie quinn. >> the federal reserve appears on track for smaller interest rate increases. it is likely to keep hiking until price pressures show more definitive signs of slowing. philadelphia fed president harper says he sees 25 basis point hikes. >> we need to get it above 5%. so that we are not causing undue harm to the labor market. >> brazilian president lula da silva says he will keep his defense minister. he has been under pressure from left-wing members to fire him after the security mishaps that led to riots at the capitol.

lula said investigations are being carried out to identify those responsible for the riots. hong kong has returned to the top five asia-pacific destinations for the first time since 2020. mortgage applications from the mainland jumped to a record high in the fourth quarter. interest spiked during strategic covid my thumbs. -- covid lockdowns. 36% of cfa testtakers got passing marks. they say november's batch included numerous candidates who previously deferred their exam. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. >> the u.s. and japan have

announced plans to strengthen defense cooperation. this comes as concern grows about the challenges posed by china and beijing's ties with russia. let's bring in the -- isabel reynolds. president xi has been on a whirlwind tour of the g7 countries. what is top of the agenda? >> i think for the prime minister what you have to remember is that it comes just a few weeks after japan announced the overhaul of its national security policy. while that policy has been relatively popular at home, it has been criticized by china. there are concerns about how the government will pay for it. the prime minister will be looking for a public endorsement

from joe biden. at the moment, real incomes are fallen because of the highest inflation in 40 years. the support is around its lowest level since he took office. he is also hoping for a boost for having a meeting with joe biden and representing japan on the global stage. >> what does the white house want to get out of this conversation? >> we have seen already from the two plus two that the u.s. wants to welcome what japan is doing with defense.

it came out with this plan to extend their lines into space, which is a promise to defend japan's space assets in some cases, which is quite an important thing for japan. one of the top issues is seeking support from allies around the world on a restricted exports to china of semiconductor and equipment for making semiconductors. the u.s. is restrictions will not be completely effective if it does not have the other major high-tech economies in the mix. it will be very much on the agenda at this meeting. >> bloomberg's politics reporter isabel reynolds there. still ahead, we have the coalition of asian pacifics in

entertainment president. that is in our quality segment, next. -- equality segment, next. this is bloomberg. ♪

>> hollywood's award season has kicked up with the globin lobes this week.

-- golden globes this week. this year, we saw wins for asian stars. our next guest says there is still a long way to go. michelle sugihara from coalition of asian pacifics in entertainment joins us. great to have you with us. diversity and accurate storytelling for minorities has become more of a priority. how impactful were the results of the golden globes this week? >> it was extremely significant and wonderful to see asian metros win at the golden globes last night. it was very important. both of their speeches talk to the issue of how long they had

been working in this industry and it is so wonderfully fitting and about time that both of them get the recognition. >> these are two very high-profile accomplishments of course. after what has been a lot of grassroots as well as high-profile footing to get to this point. i much progress has been made in the last few years and how much more is there to go? outside of entertainment, it has been difficult for years for asian americans and minorities. >> yes, for me, i started working in 2015 one month after fresh off the boat premiered on abc. that is a very clear line in my mind as to how far we have come. we have seen a lot of progress

since 2015. it is always two steps forward and one step back and we still have a long way to go. however, i am encouraged by the fact that we are going in the right direction, that the needle is continuing to move. >> we see these big changes and perhaps progress more with people in the public eye, famous celebrities. do you see that progress behind the cameras as well? >> that is something that is extremely important. that is something we have been working on for decades. before we even get to what we see on screen, so much has to happen before then. we started focusing with writers over a decade ago because representation starts on the page. our alumni are working on 60 shows across every broadcast,

cable and streamer. we are also seeing the dearth of female directors in the awards season. we are now focusing on bringing up that as well. we have a short film challenge that the four production grants for very talented asia-pacific islander women and non-binary filmmakers. this year we will award $25,000 grants. it is about shepherding that next generation because the talent is there. >> you mentioned a lot of different platforms, whether it is tv broadcasting, cinema, digital content. has this new media environment helped when it comes to representation given that there are more outlets are there --

out there? >> yes, that is a very astute observation. in the past few years, it really has been streaming and social media has changed the game and helped to push the needle forward and to have more diverse worries. i thought a headline this morning that in 2022, there were 599 different shows across various platforms, so the need for content is growing. >> we know that when it comes to these projects, how things perform at the box office is paramount. with the commercial success of things like everything everywhere, do you think there is more willingness to invest in

stories like this and not see it as a minority film or tv series? >> yes, and i think invest is a keyword. what study after study shows is that shows with diverse storylines make more money and really when you are not showing these different types of stories, you are leaving money on the table. it is not just a moral question, it is a business issue as well. >> i think you touched on this earlier when we talked about the importance of also having female directors and that side of representation. how important is intersectionality at a time like this when we talk about getting broader representation across

entertainment? >> that is hugely important and i believe that is where the future is going. as the world becomes even more mix generally -- mixed generally, it is encouraged by about generations coming up now and what they are seeing and pushing is important. that goes to how i see social media has changed the game as well in terms of being very immediate in the response when something goes up that is problematic or challenging, so that is something we focus on a lot in our work too, is the importance of intersectionality. we are comprised of so many different ethnicities and cultures, but also how are we looking at the next race of it

all? how do we have intersectionality with the disability community, with the veteran community, all of these different facets that make up who we are as human beings. >> michelle sugihara, really great conversation. executive director of coalition of asian pacifics in entertainment. coming up next, fast retailing may need to rely more on this growth outside of japan. this is bloomberg. ♪

>> google has concerns to the federal trade commission about microsoft's acquisition of activision blizzard. they have joined sony in raising competition issues, added fuel to the government's case. microsoft has said sony's concerns are self-serving and they overstate the importance of activision's catalog. infosys has raised its annual sales forecast. it warned there would be pockets

of uncertainty because of the downturn. india's second biggest i.t. firm posted a 13% rise in net income, beating estimates. fast retailing is keeping its retail for private -- profit and sales intact. catherine, talk to us about the headwinds affecting retail, textiles, manufacturing, as well as the uncertainty of the consumer. what are you seeing as a major player in the space? >> looking back at the results that were reported yesterday, i think the biggest disappointment was the impact of the yen on the company over the quarter. this is likely going to continue

through february. going forward, the trajectory looks better for the company outside of japan. and one think i am looking at for japan is that the bar is higher given the track of yen for the company to deliver more than 15% through february. we need to be watching the rest of the temperatures over the next seven weeks and see how it affects the companies ability to garner sales in japan. >> how much of a bounceback do we expect to see in the china market, particularly after the rapid reopening? >> definitely that is a bright spot for fast retailing. we might only get more of the impact in the physical second

half, from march onwards. the second quarter until february bull's -- will still be patchy. from march onwards, we should see sales games on a year on year basis. >> catherine lynn there with the outlook for unicorp. let's look at some of the stocks we are watching when trading opens in korea and japan. -fest we tell will be one of them. -- fast retail will be one of them. joe biden will be talking about limiting chinese exports of semiconductors. as i mentioned, fast retailing is sticking to the outlook for

profit and sales forecast for the current fiscal year and after its decision to raise employee wages in japan. american airlines says a fourth-quarter private -- profit will almost double expectations. coming up in the next hour, we are at the morgan stanley conference. why they are turning even more bullish on chinese stocks. this is bloomberg. ♪ ♪(jennifer) the reason why golo customers have such long term success

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♪ haidi: this is daybreak: asia. counting down to major market opens.

reaction to cooling u.s. cpi numbers today. perhaps that number in line with expectations underwhelming markets, given a recent rally. another place where inflation is running hot, south korea. of course, we are not expecting that just yet, but watching for unexpected results. we are watching for stickiness when it comes to u.s. inflation numbers to comes to surfaces. -- services. does that mean the fed really needs to come down harder than markets are hoping? let's look at the market open. singapore today, what are you seeing? >> we had the open of japan and korea and cash treasuries. you mentioned the move and expectations for all of that happens in the yield space. we saw a drop in the 10 year.

two you're now looking like this at the start of trade. in terms of what else, the bank of korea. the bank of japan in focus as well, given we are getting more repricing, traders starting to for whether the boj could be forced to shift policy settings when corona in april. we are seeing the nikkei come on lower. we had seen futures looking more muted in the session. look at korea. the open there. the focus in the bank of korea decision, due as soon as this hour. the expectation is perhaps one more hike ahead. korea was one of the front runners in the tightening cycle. the expectation is the key rate could top 3.5%. in terms of market reaction, the gains here, moves for the cause

that we are watching big tech. given those were higher in wall street or nasdaq futures looking flat. the korean you want seeing gains. this has been one of the best performing in asia this year. one hour in the session for asx, another day of gains. ozzie stocks being led higher by the energy. to put this in context, we have seen the longest run of gains for wti since february. haidi: more in the markets for our next guest who likes consumption plays. christina woon, director at abrdn. how long will it take for this consumption there to play out with china coming back at a time when we also have prices accelerating? >> i think when it comes to

consumption, returning is something we need to watch closely. as we have seen with three openings in other parts of the world, it is not something just snaps back immediately. there is caution as people ease back into come for levels. mobility will take time to come up as well. that is not even a comment on the stock market, it is human nature. we should expect some time for that to ramp up. perhaps the second half of the year. haidi: we continue to hear about the invest ability into china's assets, but you like chinese tech. tell us more about why. is it the regulatory aspect of things you are liking? are there concerns beijing might change course again? >> that is a good topic. the chinese internet, there are a few things there. with reopening, depending on how

that comes back. as long as it comes back, you will see advertising spend, e-commerce and travel pick up. which will be beneficial for earnings for many tech giants. secondly, there -- the regulatory picture is easing couple which could be positive for sentiment. when you look at how that sector has been something that has been battered down, valuations are stretched. that is a reasonably compelling case to keep an eye on. shery: outside china, the other big surprise out of the bank of japan at the same time we are contending with china reopened, what are you watching for the boj? how does that inform new opportunities in the japanese market? >> that is quite a holiday surprise from the boj.

when we think about how japanese banks in the context of the region, they have never actually been high. when you think about relative attractiveness. what happened at the end of last year, you've got to think about, is this a regime change? the start of say, better returns for japanese banks? at least into how capital allocates as well. you got banks that have done well in other markets. should we then be looking at reality in capital for some of these less looked at names in japanese financials? haidi: when it comes to earnings season, are you when the camp that profit recession has passed? do you think expectations are fair? underpricing? >> not exactly. there are quite a number of things that might play out.

you've got less of the reopening trade we saw last year. that change is perhaps smaller now. you've got recession risks, concerns that demand maybe slower. if got labor and high interest rates. at the same time, commodity prices have eased. that could help mitigate margin pressures. it might not be as strong a picture as we might expect, or as we would have seen this time last year when things were starting to reopen. just a bit of caution there. shery: last year's winners continue to be winners. we have seen so much optimism from those economies including southeast asia and india. >> that is an important risk to bear in mind. you look at last year, as you pointed out, india and southeast asia were top performers. this year, towards the end of

last year coming got stronger rhetoric out of china about an accelerated reopening. you've got to think about capital reallocation risks among the winners into people trying to -- there china position. haidi: if earnings, when this earnings season comes out better , does that make the view more positive? >> i think what we need to watch for is how the reopening in china translates into the spillover effects across the region. how quickly that translates into better fundamentals. that is what people are looking for. you had the first leg up from a sentiment perspective, but you've got to see fundamentals catch up as well. that is why this earnings season, as well as the next, will be crucial for people when it comes to positioning how positive they are for the

outlook on the rest of the year and across different markets. >> there has been positive sentiment around commodities. and commodity related assets. can we expect that in 2023? >> that is something i think people have been looking forward to. but again, when it comes to commodities, we've got to remember that laster was a higher base as well. whether it goes further from there, you will have to see how quickly consumption comes back. how big stimulus might be out of china. that is something we have got to perhaps be watchful of. you perhaps will not see the same big bang stimulus you have seen previously because the rhetoric is also about avoiding issues of the property meltdown we have been facing. we might see policy come in more measured than it was. that will have an effect on how

commodity prices value too. haidi: christina woon, abrdn. let's get the vonnie quinn. vonnie: u.s. attorney general appointed a special counsel to oversee an investigation into the handling of dock vents associated with president biden. the move comes after document -- documents were found in at least two locations biden use before he became president. ayden suggested tuesday that documents found in his garage were secure. sam bankman-fried used a blog post to deny stealing from his now defunct crypto exchange. offering one of his most detailed descriptions yet of the collapse as he prepares to fight fraud charges, blaming crashing markets and an attack from a rifle. the 30-year-old regrets being slow to respond to public misperception. china says it remains open and

transparent regarding covid data, which officials have not dated -- have not updated for days. the government is in close contact with the who, providing data despite concerns it is withholding information. china's last update can monday. -- k monday. vonnie: the three-month london interbank offered rate for dollars climbed 1.5 basis points to 4.82%. much of the recent surge has been driven by expectations for expected fed tightening policy. 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. haidi: let's get you back to the bell. we were talking about fast retailing. annmarie: in tokyo, we are seeing retail slumping 5%.

this is down to its latest earnings. we saw profit missing estimates, down to what happened in china because the covid pandemic keeping shoppers away from those retail stores, stopping them from taking their wallace out. we are seeing the stock look like this. the parent company saying that will start to normalize by february. that is the trading reaction. this change because there's lots going on in the session today. airlines stocks today, american airlines actually posted some of their best numbers here since the start of the pandemic. we are seeing airlines in the u.s. rising to their highest level since the start of early 2020. this is the picture for some of the airlines in asia particularly seeing gains in korea. another sector zooming ahead over the past few days is bitcoin.

bitcoin topping their $18,000 level for the first time in months. we have seen it range bound, these are the big stocks in asia. another area we are focused on today is central banks. we are seeing traders start to pivot expectations the boj will be forced to change policy settings once -- steps down nearly 40% of respondents staying at -- let us 15%. certainly what we are seeing is a lot of traders are bidding they are going to have to shift away from yield curve trading's. it -- we see that now 10 year guild rising above that ceiling the session at the start of trade. shery: still ahead, marsh asia ceo david jacob joins us for

climate-related risks to the semiconductor industry. we will be live at morgan stanley's annual investment conference. stephen engle is live. >> i will be joined by some big name guests including morgan stanley's strategist laura wong. she has her top opening picks.

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♪ >> morgan stanley's annual conference begins in hong kong today, bringing their investors and top leaders. before that, we are taking another look when it comes to the 10 year yield in japan. the bond yield rising above boj 5% ceiling. boj thursday spending a record 2.8 trillion yen, just over 21 billion dollars on its fixed rate bonds purchased to try to stop cash yields from rising above its allowed range. we have seen traders piling on more as hawkish traders come to

the boj. the central bank will be reviewing the side effects of its policy next week. as we stand, we've got jgb futures trading at an eight year low. volatility backup at the three year high. bank stocks and up at -- bank stocks are double from the covid low. the nikkei 225 trading about .5%. dollar yen holding largely unchanged. still, quite a bit of yen strength returning to that picture. let's get you back to the morgan stanley annual global investment conference in hong kong. it brings together investors and top leaders in business and finance. let's get to the event with stephen engle. stephen: you forgot to mention, bloomberg television has exclusive access here at the ritz-carlton in hong kong. the first time we have been able

to come here and hold this in person since 2020 because of the pandemic. reopening is on everybody's mind and on the mind of my first guest, laura wang's chief china equities strategist. she has a thick bullish outlook on chinese equities for this year. the title of your report is even more bullish. obviously economists are saying 5.7% gdp growth. you think global investors are under rising the expanse of the reopening. why? >> we are turning even more bullish. we turned bullish on china at the beginning of december last year. tuesday, we further -- price target and expect the hang seng index to get to 24,500. stephen: i think you prefer a bank shares over -- shares?

you do like some big tech, big cap tech stocks like alibaba, but prefer hong kong shares? >> we prefer the offshore space, which is the combination of the hong kong market less the agr space. for now. the biggest reason is we do recommend investors get into the large cap chinese internet names. the reason for us recommend this trade is we realize global investors, particularly large-cap funds are significantly under weighted. for them to get back into china market, was china recovery. this is the most straightforward way to regain that exposure. these companies will enjoy the upside from the post-covid reopening momentum. stephen: doesn't alibaba outperform that target? it is up 20% already this year but it is just one third its value at its peak on october 20

8, 2020, just before the collapse. doesn't alibaba have more legs than the hang seng? >> the broad large cap names, with a preference for alibaba. of course at the broad index level, we expect another 15% upside. global investors should definitely reengage. stephen: should investors have some caution? we have had policy u-turns before. there is always that possibility, and we have covid outbreak's across china. maybe some institutional investors are gun shy because they do not want to get earned. many have been burned by china. >> we understand. as long as 23 months between generate, 2020 one to december, 2022, we have been cautious. some of these risk factors we think are behind us. particularly concerns about covid policy. we think the post-covid return

is on track. there is no going back. stephen: you get an extra tailwind as inflation comes down in the u.s., the fed might be a little more accommodative, less tightening down the pike? >> absolutely. another reason why we favor offshore markets. they actually are very sensitive to the global central bank policy, particularly fed policy. 20 23, the liquidity environment is becoming less tight. this is why we prefer that space. stephen: what would you stay away from? property? i noticed you think there are opportunities in property. >> we believe the market is going up in general. in such environment, we would recommend more progrowth stocks and stay relatively away from low stocks. you think about low beta sector tours -- low beta sectors, we

now recommend to own overweight. stephen: how do we keep this momentum going into the second half? there is going to be pent up demand from the consumer through the lunar new year and lots of stimulus. but then, old issues come up. debt loads, sustainability. if they are just pumping fiscal stimulus into more roads and bridges. >> we would like to see further delivery on the earnings side. sentiment has been coming back and we have seen a lot on the evaluations side but we need earnings. the fundamentals. we are getting more bullish on earnings because a lot of the macro shock has been frontloaded into november and december last year. now we have a lower base and an even bigger earnings recovery prospect. we are's -- we are expecting 16% growth and we need that to be delivered across each quarter for investors status --

investors to stay engaged. stephen: how do you play the inflation story? we are seeing signals of inflation in china with metals going up. oil prices could go up. how do you play that on equities? >> we are not that concerned. in general across asia, we do not see inflation pressure. in china, there is still a lot of recovery to be done. the overall demand level, we don't think there will be a lot of pressure on pricing. stephen: you have predicted 6.65% by the end of the year. that could help with the import bill? >> correct. that is also helping offshore markets. if you think about these chinese companies generating revenue and earnings, you see why. earnings are being calculated in dollar terms. we are also increasing attractiveness of chinese equities. stephen: a lot of people on the

east coast of the united states, many have been burned in adrs. what is your outlook? do they match what is happening here? >> this is the number one trade we are recommending right now. large cap, mostly liquid internet names, which have huge overlap with adr. what we see is going to be of elevating is further relaxation on the regulatory front. we have seen signs of that. renews of gaming licenses, top leaders re-emphasizing the importance of private sector and platform economies for china. we think the regulatory environment is encouraging. stephen: that's the whole thing. investors are thinking for the first time in years we have regulatory, economic and covid policy in lockstep. you can imagine people are like, is this too good to be true? >> not necessarily. but of course, we can understand

the caution from an esters. -- from the investors. we can understand continuity. stephen: implementation. >> and geopolitical tension. de-escalation. and the near term chinese new year fx when investors may think about the extended holiday period and stay on the sidelines. we can monitor that closely. stephen: thank you for helping us kickoff coverage of your conference here. ok, many more guests. of course, the morgan stanley conference. >> stephen engle. this is bloomberg. ♪

>> 10 year jgb yields passing

through the .5% ceiling set by boj. the central bank has been ramping up as bond purchases to fight back increasing rising yields. investors betting we could continue to see a more hawkish shift. we have two shares doing very differently with retailing. really plunging the most since may on their first quarter operating miss. -- holdings rallying after boosting full-year operating outlook. more to come on daybreak asia. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to 60% a year. and it's only available to comcast business

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♪ go a big week for markets data. david is in hong kong. this friday. we are almost done.

there is market price and where you see it when it comes to the fed's path? david: it has been a busy week. busier than usual. certainly you guys have been talking about inflation numbers coming through. recently, it is this move we are seeing in japan. all of this is really indicative up this turn in the macro narrative. the fed is closer to 25, effectively 25 basis points. on both fed fun features, less so when you look at swaps. throw forward to fed and march, combine those two meetings, and when you look at the pricing here, up slightly below 50 basis points. we will still have a lot of data points between now and then. two more cpi reports. a central bank meeting. gdp numbers. who knows?

current market pricing suggests that for now, the fed hikes by two and maybe stays there for now. >> such different positioning for the markets when it comes to boj expecting get to be more hawkish. david: to what extent is that hawkish and us? in what form is that going to be? is that going to be a further widening of the ceiling we just breached on the 10 year jgb yields? will that eventually made an interest-rate hike? something we have not seen a japan for 15 years. a lot of the things we are tracking in the market. jgb futures we have taken out the 50 basis point. the market is certainly position for something to happen. this one just happened a few hours back.

dollar-yen formed a death cross. 50 day moving average falling below the 200 a moving average. following what we have in the u.s. dollar gauge. to the point you are making earlier, this turn in the macro narrative is hitting milestones. shery: such interesting moves. >> one of the standouts today when you look at the dead space, it is that shorter duration that is standing out as one of the few gaining. in the session today, we are down to that positioning we are seeing around central bank loose. but is also playing out inequities. tokyo bank index is one of the few sectors gaining today. thanks, one of the big beneficiaries. when we do see movement from the boj. otherwise, the picture today is also down to what happened in the u.s.. specifically signs that came through the u.s. inflation data. the fed could move to a smaller

pace of rate hikes in months ahead. that is why we are also seeing guilds mover -- and then in terms of equities, we are looking fairly risk on in other markets. including australia, into its third day of gains. in terms of what is lacking, we need to talk about fast retail. the company saw profits missing estimates and is now down to its lowest since the second quarter of last year. as i said, the bank of korea is due as soon as this hour. if you pull up the currency ranking system, we can look at the moves. in currencies, we are seeing the korean yuan leading. that is really down to inflation numbers. certainly, the korean yuan has been one to watch. we saw the rate differential between be ok and the fed. shery: these companies are dependent on what happens in

china. china's december trade data out in the coming hours. early indicators pointing to a deeper drop in exports. let's bring in our expert. how bad could it? >> things are not looking great for the data today. we are expecting a steeper drop than in november. probably because of the global demand drop off continuing to be a major drag on exports for china. also, this is the month that covid zero ended. early indicators show factory disruptions steepened. people called in sick. there was a lot of snarling of a supply chain that is going to continue to the drop off. imports are likely going to be lower as well because of that drop off in domestic demand. haidi: what does it mean when it comes to the shape of recovery

this year? once we get through the first quarter. our things to that are things starting to look up? >> the issue with trade is because of these fears of global recession. the foreign drop-off -- the foreign drop-off in demand, it is not going to be as big a contributor to china posco growth. i stay chart their path out of covid zero and figure out ways to boost the economy elsewhere. whether that is short optimistic demand. ultimately, it is going to be tricky for china. haidi: while the global semiconductor supply crisis has eased come our next guest says climate catastrophe could be the next big risk for chip makers. joining us is david jacobs. tell us about your research. this forms part of the broader report from the world economic forum about a range of global

risks going into this new year. when it comes to supply chain disruption, what do you see as the biggest risks not being priced in or accounted for by manufacturers? >> thank you for having me. marsh mclennan, in partnership with the world economic from in zurich, just released a global report. once again, we are analyzing the top 10 risks both from a short-term and long-term perspective. it is no surprise climate and severe weather events dominate not only the short-term, but long-term, as well as geopolitical risks. we think about the semiconductor industry, the two main components we are seeing as part of the global risk reports points to disruption in business interruption as well as supply chain disruption that will

affect the semiconductor industry. as a whole, we look at the industry and we focus on three core risks we help our clients analyze, prepare and ensure at the end of the day. that is extreme weather events, natural catastrophe, supply chain disruption and geopolitical spirit very much aligned to the global risk report. you mentioned the supply chain, that is key. you think about what has happened and you rain and russia -- in ukraine and russia, the semiconductor industry, a huge component of gas is basically controlled by ukraine and russia. ukraine controls 70% of a very important gas in the semiconductor industry. russia controls 45% of palladium. this disruptions have caused effects in the global supply

chain. what we are helping clients understand better is from what was once a traditional, look at minimal number of suppliers, form a relationship and hopefully we get better price points 10 know say, we need to diversify the supply chain to help ease shocks. >> it is interesting when you look at the big come around risks. thinks like climate, war, geopolitics. for a lot of those things, there's some not -- there is not a lot an individual company can do to attic the risk proof -- adequately risk proof against war, or tension. what can they do? you have talked about diversification and near shoring is something we are seeing. >> it really points to that. it is basically helping clients prepare for, hopefully, not a

situation that will arise, but we help them prepare. are there continuity plans in place? crisis management? how are we looking at safety and lives of our colleagues or employees? we did the same during the russia-ukraine war, situating what we do with our businesses there. the main thing we are seeing is really looking at a more geographic, diverse business model. rather than single sourcing at a particular plant or country, we are seeing diversification into asia for semiconductors and diversification into the u.s. and europe. you can see from recent u.s. chip act that was passed, $53 billion in investment. semiconductors to come to the u.s. same with europe and japan. there's lots of incentive to help his this is shockproof supply chain.

>> tell us about those incentives. at a time when cost-cutting is paramount, won't this just be expensive? >> i think it is thinking about long-term. obviously, thinking about capital expenditure at a time like this is huge. but i were semiconductor clients are thinking long term. may entering into markets that they haven't been present in the past. they need to do this because a lot of tech companies like apple and google are thinking about manufacturing chips on their own. the obviously think about controlling supply chain having better understanding of the chips themselves. this is a must for lots of our semiconductor clients to diversify and be in these markets commit to really be present and able to ease supply

chain to some of their big suppliers. haidi: when you say long-term, what does the timeline look like? >> we think about the length of time it takes to build one of these big semicon sabbath plants. three to five years. your thinking years in terms of establishment to this diverse model to sustained rose. >> david jacob, ceo of marsh asia. there with some mitigation plans for his businesses in the semiconductor space. see our past interviews and in -- interactive tv functions and dive into securities or bloomberg functions we talk about and become part of the conversation. this is bloomberg. ♪ announcer: markets, headlines and breaking news 24 hours a day at bloomberg.com, the bloomberg business app and at bloomberg quicktake. this is a bloomberg business flash.

vonnie: the federal reserve appears on track for a smaller interest rate increases looking further cooling. it is likely to keep hiking until price pressures show signs of slowing. cpi climbed 5.7% in december, the smallest in a year. patrick harker told us he now

sees 25 basis points as appropriate. >> we need to get rates above 5%. how far above? i will let the data determine. i do not think we have much further than 5% at this point. and that is it for a while. so that we are not causing funding harm for the labor market. vonnie: lula da silva says he will his defense minister. he has been under pressure to sack him after the security mishaps that led to riots in the capitol the protection of federal buildings fell under the local administration. lula says investigations are being carried out to identify those responsible. hong kong has returned to the top five asia-pacific investment destinations by cbre for the first time since 2020. mortgage applications from the mainland jumped to a record high in the fourth quarter. underscoring their growing influence of the property

sector. interest spiked during stringent covid lockdowns. the pass rate for the first level of the analyst exam has fallen. 36% got passing marks in november. that a sound from 37% in august. the cfa institute says november included candidates who had previously deferred their exams because of covid. 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. haidi: let's take a look at the state of regional markets on this final friday. lots to contend with, including bracing for the boj. the kind of reaction come the yield cap being breached. the nikkei to the downside. both the nikkei and broader japanese markets are releasing leadership when it comes to financials as well is the big internet and tech names. we saw lower short did a yield

affect boosting growth stocks. we are seeing that playoff in tech stocks. the beneficiaries, the big energy players as well. a week again of 6%. demand outlook and cooling u.s. inflation helping. a dominant theme when it comes to the asx. china opening story sending mining stocks soaring to record highs. about .8%. hong kong mortgage applications for mainland chinese buyers rose to a record high in the fourth quarter. let's get to our correspondent for details. take us through this data. what is it really telling us? >> we know the property markets on the mainland have suffered

its longest downturn in history since the property market was privatized in the 1990's. that is not surprising. mortgage rates in hong kong, despite rising are still low. the data showing increased interest in hong kong. that is an important demand for the market. prices have been falling and it is a core part of the economy. it is showing that interest from us the border is picking up, could really put a floor on the market when needed. obviously, the defective central bank has to follow the fed when it comes to rising interest rates. there was concern this could destabilize the property industry. if we do get that pickup from across the border, that is a good offset. >> what does that trading day look across chinese assets given

u.s. inflation numbers? not to mention, we are headed towards big economic numbers out of china next week? >> busy. i am looking at the yuan fixing the yuan strengthened overnight because of the fed. ubs calling for 86.5 on the yuan before the end of the year. that is stronger than previous estimates. -- saying last night according to cctv, the state broadcaster that officials have to do more to support the economy. and make sure that consumer prices to not pick in this reopening story. also, the chinese giant battery maker. there reported much stronger net income than analysts expected. we do get -- next weekend we get pboc decision on the editing, which before the lunar new year, there is quite a lot of demand for cash. that could be interesting.

shery: we are watching now for the bank of korea rate decision, expected any moment. bloomberg subscribers can get commentary and analysis from our expert editors. this is bloomberg. ♪

>> thank of korea raising rates

by 25 basis points to 3.5%. this could bp last rate hike of its 18 month tightening cycle. this was expected by 11 of 16 economists surveyed by bloomberg. let's get more from kathleen hays. of course, we have a big inflation problem, but they'll economy is still under pressure. >> absolutely. a lot of people think this will be the last rate hike of the cycle. we shall see. inflation is still running about double the target. something that is obviously the reason why the governor and his team have decided it is worth moving again. at the same time, we just saw the latest on claimant figures jumped to 3.3 percent from 2.5 -- 2.9%. you can see forces pushing against the korean economy hitting the labor market. it is true that the bank of korea was ahead of its time.

they started raising rates, doing 50 basis point hikes long before the fed. even so, inflation has continued to climb. another recent report showing their year-over-year 20 -- first 20 days of the month, exports were down 8.8%. you contribute that to the slowdown in china. but, that has been something weighing on their economy. house prices are falling. another market where prices were going up. another reason why bank of korea felted should move to cool off. it has cooled off a lot now and the question is, is this the last one? will they move again? one more thing for them to consider is the federal reserve still on a rate hiking path. although, the other big story today is the consumer price index continuing to cool off. maybe not enough for the fed to

stop hiking, but there is discussion now with, has inflation cooled off enough? is the fed close to terminal rate it can slow to 25 basis point hikes? it will be interesting to see what the governor says that the press conference. he will presumably get asked about that too. the link between pressures on korea's economy come upon deals and other things that was another factor to consider when thinking about this rate hike. in november, the credit meltdown that occurred, kind of around this financing that went to build legoland korea in the area just east of seoul. many on the table. statements answers from the governor to all of these questions. >> it is interesting looking at the bond futures. just a small step lower. it shows perhaps there were at least part of the market

expecting apostate i. -- expecting a pause today. if we hear language that leaves the door ajar? >> absolutely. given the cooling off of the economy we have seen, it is easy for me to say it is easy to say yes. to get the signal that this could be the last one. with inflation still high, and since there is uncertainty around the federal reserve, do you want to get definitive statement? he had already signaled when they didn't do 50, they backed down to 50 -- and now many people assume this is the last one and that is probably the main question. i am also interested to hear how much the fed may be shifting. how much china's rebound, which may come from this reopening. these are timely questions that everybody will be waiting to

hear the answers. haidi: kathleen hays. this as we continue to watch for more out of the bank of korea's policy direction as we had key interest rate raised to 3.5%. we will get you the details more. there is our team of expert commentary being updated at the moment. that is it for daybreak: asia. we are taking a look at trading in hong kong. bloomberg markets, china open is next. this is bloomberg. ♪

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>> good friday morning. it is 9:00 a.m. in hong