>> you are watching "daybreak: asia," live from new york,

sydney in hong kong. annabelle: we are counting down to the market opens in tokyo and seoul. haidi: china reports 60,000 covered related deaths since december, spurring calls for more data as it grapples with a wave of infections. the bank of japan back in the spotlight this week as markets looked to a deluge of data out of china and the global elite gather in davos. plus, president biden baxter pans and president military buildup as prime minister kishida seeks european support to deter china. annabelle: we have the opening of the asx 200 in a few moments. futures have been indicating a fourth day of gains. the big lead in coming into the session today is what came through in u.s. data, specifically the latest university of michigan survey which showed x -- showed inflation expectation moderating. some positive trading momentum

coming into a new set of the week. also, china another factor for us given we had china's top economic planner saying it will be watching the price of iron or very closely. australian minors in focus. speaking of china, the pboc is one of the central banks in asia that could make waves in markets this week because we have the one year nlf decision on monday. the expectation is no changes with one of the few exceptions from bloomberg intelligence, saying prepare for a cut to the key rate to try and spur the economy. the boj in japan on wednesday, their decision is live, it is a wildcard for us and that is down to not so much the key right, most economists saying that will be unchanged, but when it comes to its program of yield curve control. citigroup is saying it could be scrapped entirely, the policy

this week. shery: we will see where that leaves the japanese into the dollar. we've seen a little retracement of the losses the past four weeks on friday's session. u.s. equity marks away on holidays on monday, we are seeing futures trading in the asian session pretty muted after the s&p 500 surpassed its 200 day moving average. not to mention it was a point short of the 4000 level. we had earnings kicked off by banks and that led to a boost in the overall index. we are also following the nasdaq 100 which gained ground for 100 consecutive sessions, the longest winning streak since november 2021. the 10 year yield around 350. wti prices in the asian session, above $80 a barrel. this not surprising given the optimism about china annabelle just mentioned. we continue to see the covid surge in the country. haidi: particularly in the wake

of the announcement by china that they had almost 60,000 covered related deaths in a month that's per calls for data as the wave of infections continues to surge across the country. the virus continuing to linger. for more, we have emma o'brien. they've stopped reporting daily fatalities, and change the way they categorize deaths, and i guess the overall capacity of health data. how do we read this number in terms of what we had been expecting? emma: it has raised a lot of questions, 60,000 covid deaths the past, say, month, it equals out to about 1700 deaths per day. the u.s. had 1700 covid deaths last wednesday. they are much more highly vaccinated, have had many more waves of covid zan china has, particularly over 80's, much

more highly vaccinated than china. that's why they are asking questions about this figure that was pumped out over the weekend by china. they've come under considerable criticism from many fronts, particularly the world health organization, for the opacity around the data they are providing and how it leaves many in the world not able to get their heads around how this is coursing through the country. what does remain clear is it is spreading quickly and there are more deaths than being reported at least on a daily basis. shery: every time we have a huge a surge in code infections, not to mention a widespread covid infection, we worry about potential mutations and potentially stronger variants. are we seeing that in china? emma: definitely the concern is there. china has said on a couple of fronts it is sequencing covid,

that it is looking for mutations, and it is providing that information to the global database for sequencing of covid mutations. but, i mean, there are questions when you are not testing broadly, when you are not providing the data publicly. how can we trust what they are saying and that they are looking at a broad cross-section of cases in china? i think that's where the concern lies. they might be providing some data, but is it the full picture when it comes to variants? haidi: let's take a look at one of the aspects we've seen, the boost on the china reopening story, the countercyclical effect, not just the chinese economy but also the pboc continuing to ease. we are expecting them to cut the one-year lending rate by 10 basis points today. we are seeing the boost to emerging-market currencies and also getting a boost by the

weakening of the u.s. dollar as well as broader prospects for better growth compared to perhaps developed economies this year. the reopening story for china has emerged as a global investors top hedge against the u.s. recession but we are getting caution across asset classes. it's preview the trading week ahead with our correspondent, garfield reynolds. it makes me laugh a little bit, cautious optimism for china because history would tell us it is all or nothing. [laughter] garfield: that's what is a little bit different right now, the idea that we are getting some cautious optimism. this time, and it has usually been quick, buy in and it all goes wrong and everybody ducks out almost as fast as they came in. now there is a bit more caution. the optimism is still there, but there is less of a jump in with both boots and more dip a foot

in the water first and see can this be sustained? there are couple of reasons for that, one is the past history. the other is you got this conundrum where yes, reopening is what everybody wanted very much on the investment side of things because covid zero was seen as storing china's economy without necessarily achieving the health goals. now we've got reopening served on the economic front along with reforms, real estate policy and so on, and that is very encouraging, but the inevitable accompanying impact is the surgeon covid cases we were talking about just now. -- surge in covid we were talking about just now. and the lack of clarity about what is really going on with covid and therefore, can china

stick with getting rid of covid zero, and in the long term, the expectation is economically and even healthwise, this will be a better outcome for china. short to medium-term, it is less certain than it was because you don't quite know how the pandemic itself is going to play out into the impact on society will play out. shery: what about the uncertainty around tech stocks? there's been a lot of optimism that perhaps the crackdown is easing, but at the same time, how do you evaluate fair valuation in a sector that we may see more oversight from beijing? garfield: yeah, more oversight from beijing could just be a friday politburo meeting away. that is now part of the furniture. surely you cannot invest in china to these days without discounting -- chinatech these days without discounting there

will be a rule week or ongoing state interference. there was a report last week about state entities taking a so-called golden share in some chinese tech companies. that is a concern. the other concern that is another part of the furniture, we have at least two legs on the chair, is the u.s. confrontation between the u.s. and china about semiconductors, about technology transfers in general. that is something a couple of years ago when china tech was the big coming thing, was not a concern. it was not a worry. you saw u.s. and china tech as being a win-win. now it is more nuanced, there's always the concern that you might, even if china doesn't tweak its rules, even if it doesn't impose restrictions, you got the potential for disruption from the u.s. side of things. shery: garfield reynolds with

the realities of investing in china. let's get to vonnie quinn with the first word headlines. vonnie: after two years of pandemic descriptions, some of the world's richest people gather in davos, switzerland for the annual economic forum. roughly 116 billionaires register to attend this year's event none from russia or china. wall street in particular will be well rep assented with the executives of jp morgan, lack rock and blackstone on the guest list. a republican lawmaker has called on the white house to turn over zero logs to president biden's home in delaware after classified judgments were found at the residence. james comer made the request in a letter to the white house chief of staff. the white house said saturday lawyers had discovered more classified materials at biden's home than previously announced. the japanese prime minister has declined to say whether his government will join a researchers on the export of high-tech chips to china. in talks with president biden at the white house over the

weekend, he said he would deal with the semiconductor trade responsibly. washington began limiting chip exports to china in october and has been trying to get allies on board. police authorities say at least 68 people -- nepalese authorities say at least 60 people were killed when in airplane crashed sunday. the aviation authority says the weather was clear and there was no distress call before the crash. 15 foreigners were among the 72 people on board. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: still ahead this hour, capital economics tells us why the expect the bank of japan to abandon yield curve control by april. but next, kpmg joins us with your outlook for china and why they expect a miss on beijing's full-year growth target. this is bloomberg. ♪

haidi: you are watching "daybreak: asia." markets will be watching key central-bank policy decisions this week, saying if the -- looking at rate decisions out of malaysia and indonesia and the pboc. we have 19 central bank has meeting at davos for the world

economic forum along with thousands of policymakers, executive investors, bankers, billionaires. it is the first in person form at the swiss ski resort for three years. other eco-data to know, u.s. producer price index on wednesday. bloomberg economics expecting wholesale prices to decelerate. shery: a lot depends on china, the country's rapid reopening, december economic indicators on tuesday, along with four could gdp numbers. economist have been advising of china's growth forecast for 2023, morgan stanley upgrading that to 5.7% from 5.4%. that is your week ahead. haidi: one to bring in sarah hunter, from kpmg australia. let's continue with china, in so many respects that is the wildcard for inflation a growth this year, not to mention domestic challenges.

we have the release of 60,000 covid deaths in a month. a lot of questions about that number, as was pointed out earlier. 17,000 -- 1700 deaths per day, that is what we had in the u.s. last week. is it hard to predict the economic trajectory when you don't know the health situation? sarah: it's a challenge because it's a key uncertainty but i think what we can look at is the expense of other countries and know that on the short-term, there is a challenge to reopening, it is disruptive to the economy and it will mean many more people can't work. we need to be cautious, we know that experience. but we can also see that longer-term, it will enable the economy to get going again. when we say longer-term, we mean the middle to second half of this year. put that together with the stimulus coming through, the pboc meeting today, but also

relaxation of policies and packages put in place. it looks like this you will be a stronger year for china than last year, but also perhaps more momentum than we were expecting toward the end of 2022. haidi: we are getting economic activity and gdp. the end of last week was horrible. sarah: it will paint a bleak picture but i think we will see gdp below 3%, a big mess on target, but no surprises. it will be much more important what happens from here on and how quickly the economy can get going again, how the population respond to that reopening. it happens with vaccination rates. a lot of uncertainty but generally speaking, the risks are to the upside. it's hard to see outsized risks given what they are doing around covid. shery: what role will china play in export inflation to the rest of the world? we have this week ppi numbers out of japan and south korea.

sarah: i think the inflation picture is interesting. china's reopening is potentially boosting demand and you could argue that will be inflationary, but if it means we get further disruption, that could be helpful in bringing inflation back down. more broadly, the slowdown everywhere else, the rest of the world, is deftly going to be deflationary. we can see that in fact. that's what i'm expecting to get out of the data this week for japan and south korea. that we will see more deflationary momentum. a slowdown at the least and inflationary pressures and if not, price corrections, particularly in the producer price indices which are more volatile, and commodity prices and weakening of the ust we've had the last six weeks or so. inflation across asia think will be pretty sharp this year and likely means we won't see much more monetary tightening for many central banks.

shery: will the boj have to move sooner rather than later when it comes to adjusting their stimulus package? sarah: isn't that the question? were talking in great length about what happened in response to the wanting of the 10 year yield band, that is a topic of conversation. the key question is do they need to do more? i'm not sure i expect them to definitely go in terms of a rate hike but we could see tweaks around the edges and perhaps some forward guidance on what tweaks look like now and could look like in the future and whether they think they need to adjust the headline policy rate. it is not my baseline to expect that this week but certainly more adjustments. shery: we did see the move last week, are we expecting more moves from the be ok? -- bok? sarah: the inflation data for south korea is showing it is

peaking. year on year rates lack the momentum. year on year flatlining through the last few prints. month on month is very weak right now. if that's not the last it will be close to it, maybe one more. it could be the last and they could be on hold. their economy is slowing as well. they are absolutely impacted by global headwinds come being such a trade independent open economy. -- trade dependent open economy. we will probably be having that discussion in the second half of this year. haidi: the rba, harder than expected november cpi, and we are seeing a path through to the property sector, what does that mean on the balance of things on their boards? sarah: that's a good question because australia is behind the cycle everywhere else and we are seeing inflation prints strong

month on month as well as high you're on your rates. -- year on year rates. i think one more next week and after that some good guidance on whether they want to take a pause. it is looking like they should stop soon. the monthly data we've had for household spending and retail turnover just last week, that looked week. november last you, still coming -- last year, still coming out of lockdown. that's feeding into the financial sector and construction. i think they are pretty close. one more i think is baked in. if we get more after that, that will be a down to the wire call for me. haidi: i think we've just about covered everything. thank you, sarah hunter. you can get around above all of those stories to get you going in today's issue of daybreak. terminal subscribers can find that on their terminal. you can customize your settings.

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shery: a quick check of the latest business flash headlines. credit suisse is cutting more than 10% of its european investment bankers this year, adding to hundreds of job losses in london and zurich. according to the financial times, this was lender has been reducing headcount after announcing plans to cut 9000 roles by 2025 last year. credit suisse is expected to report a second consecutive annual loss next month. apples manufacturing partners have included southeast asia in expansion plans for 2023. companies adding more production capacity outside china after they encountered serious covid related disruptions last year. pega tron had to temporarily suspend production and foxconn's

plants all protests, halting output, forcing apple to cut forecasts. haidi: shifting geopolitical landscape, global economic headwinds, the future of crypto regulations -- these are the big themes that will be addressed at the world economic forum this week. there's a look at what to expect from davos. francine: snow-covered alps, private bets and coveted white badges. the worlds elite will dissent on davos for the first winter meeting since 2020. the themes on the official agenda are a mouthful, let's break it down. here are the top three things that will dominate this year's agenda. number one, it is all about inflation. the post-covid recovery crashed headfirst into surging cpi in 2022. supply chains stressed the breaking point and prices soared, putting pressure on consumers. the fed and central bank's around the world responded with aggressive rate hikes, taking

the possibility of a recession in their stride, but where they behind the curve? number two, a shifting geopolitical landscape. russia's invasion of ukraine forced many nations to choose sides and shore up energy supplies. russia was absent from the forums summer gathering in may and will not be there this year either. china-u.s. relations hit a new low over taiwan and human rights. china looking to come back bigger than ever at its first gathering since the pandemic, but will they receive a warm welcome? number three, crypto and regulation. a late addition to our top three things to the implosion of sam bankman-fried's ftx empire in november. his arrest and extradition to the u.s. has given regulators more ammunition in their drive to rein in the crypto industry. are we already past pico crypto? those themes aside, the big question might be more about the effect itself, with criticism in recent years about its relevance, can this year's davos produce more than talk?

haidi: keep it here on bloomberg for our weeklong coverage of the world economic forum with lots of big interviews coming up. either monday, we speak to the qatar investment authority, blackrock and sabic as well as the saudi arabian planning and economy minister. much more to come on "daybreak: asia." this is bloomberg. ♪ 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.

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and how the conversation around mental health has changed. - watch our conversation on peacock. >> our baseline scenario contemplates a mild recession. >> we continue to see the u.s. entering a mild recession in the second half of the year. >> we feel prepared for a

downside scenario if we see broader deterioration and we currently see. >> despite the macro headwinds, we are very much on track to reach the medium-term target. >> we are carefully watching the impact of higher rates on customers and expect to see balances and credit quality to return to pre-pandemic levels. >> if we have a real recession, i think it will probably equal average industrial company, which is good. haidi: ceos of some of the biggest u.s. banks on recession risks. american banks see tougher times ahead for u.s. consumers, they are piling up that on credit cards could -- cards. it might not be back for the banks. that's bring out adam. we see shifting behavior toward taking out more credit card debt. what does that say about the resilience of the consumer and doesn't mean we are seeing longer-term problems being pushed out? adam: i think in the first

instance it shows people a very keen to continue to borrow into a slowdown, they read the paper and the internet, they are aware of issues facing the economy and yet they continue to spend and also continue to require borrowing for credit cards and that kind of thing for individual consumers. it paints a picture of consumers moving their spending into other areas. there is a concern that further down the line perhaps there might be stress in debt area being built up. at the moment we are not seeing that. i think the banks are really saying that, they are saying listen, this is happening, it is a good trend for us at the moment, of course it is good for customers and good for them, but further down the line, they need to keep an eye on and he cranks starting to form. -- any cracks starting to form. if people are getting into difficulties more frequently. what we are hearing at the moment, that seems to be balanced fairly favorably.

shery: how are they preparing for potential cracks down the line? adam: banks are always preparing for this but i think particularly now, the start of 2023, what we've seen is a swath of layoffs across wall street, especially on the investment banking side, bonus pools cut or reduced relative to last year. banks are making the move to get ahead of any upcoming potential downturn. the understanding that the need to do this and be as lean as they can be into this. we haven't seen an effect on productivity of work yet. we will see how they are able to retain the best staff as the year progresses. certainly for now, the commentary we are getting is the balance is ok. they are not seeing acute levels

of stress from borrowers and if you want to go back to the words we heard from ryan moynahan on friday, plenty of cushion left, he said. that is pretty much where we are at the moment. haidi: -- shery: we are less than half an hour away from opens in japan and south korea. it's turn to annabelle. annabelle: really referencing what adam was saying about banks having a lot of cushion left, how the lenders are preparing for risks of a u.s. recession, when you look at what is happening in risk assets so far this year in 2023, we can see we have seen a lot of positive momentum coming into the sector of the markets, the likes of bitcoin for instance, just fractionally lower this morning but coming off of its longest win in nearly a decade. testing the $21,000 mark. this is being felt across asset classes, so not only in

cryptocurrencies, bitcoin and ethereum both up. then you have a pullback in the dollar, and the vix index trading at its lowest level since january 2022. how that is setting us up for the trading session into the week, still trading off inflation expectations, a pullback that came through in the ageist university of michigan survey. still seeing australian stocks in the fourth day of gains. japan pointing to a weaker start. this week, the focal point will be the bank of japan and what they do with yield curve control policy. some saying it could be entirely scrapped. u.s. futures also a little softer, we have a public holiday, martin luther king day, on monday in the u.s. haidi: let's get you to vonnie quinn with the first word headlines. vonnie: after two years of

pandemic disruptions, some of the world's richest people gather in davos, switzerland this week for the world economic forum. roughly 116 billionaires registered to attend the event but none from china and russia. wall street in particular will be well presented with executives of jp morgan, blackrock and blackstone on the guest list. china has announced almost 60,000 covid deaths since december, renewing calls for beijing to provide more data about the wave of infections a sweeping the country. the who says it is analyzing the data while urging china to share more detailed information, cleaning on subvariants and the definition of covid deaths. the number of fatalities could be much higher. authorities in china have begun rescues following an exposure a privately run chemical plant in the northeast. state media say officials are looking into the cause of the accident at the facility, run by a firm with 2500 employees.

there has not been any common on damage. the malaysian prime minister is said to keep his parties top job or another term. the junior party in the coalition says their top two posts will not be contested in leadership roles dubai may. the move is expected to strengthen the coalition government, which relies on support from zahid following the november elections that resulted in a hung parliament. united arab emirates plans to invest $30 billion in hydrogen product and south korea as the asian mission lands to boost cleaner fuels to meet climate goals. they will focus on production, transmission and storage, and the plans were announced during a state visit to the gulf. the first by a korean leader since they established diplomatic ties in 1980. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: president biden has

praised the pans unprecedented military buildup during a summit with his japanese counterpart in washington. kishida described as picks up china's worldview as unacceptable. let's bring in our east asia editor. what did the prime minister seek from president biden and that he did it during the summit? jon: kishida was looking for support for japan's military buildup. it is embarking on probably its biggest buildup since the end of world war ii. 60% increase in defense spending the next five years. it is a tough sell to the japanese public. the country is one of the most heavily indebted in the world in a has to be paid for. but by getting the u.s. on board, japan's only military ally, with this buildup, it helped kishida at home to get support for this going forward. russia's invasion of ukraine really startled japan and that's one of the reasons japan is

embarking on this road. haidi: how did security play into this visit to other g7 members? they had these meetings before washington. there is a sense of widening relationships and perhaps not solely relying on the u.s.. jon: before he went to washington, kishida made a point to visit several g7 countries, and at these places, they showed concern with what is going on in china. japan and the u.k. reached a historic agreement of reciprocal troop agreement where they can station troops in each other's countries. japan has one with australia and the u.s. has been in japan, has troops here since the end of world war ii, but we are seeing more and more outreach from japan and toward the european union, toward g7 countries. members of the g7 in the eu see

the end of pacific as part of their security as well. that was a focal point of the first part of kishida's trip and he seems to have gotten support for that in his visits. shery: what have we heard in terms of cooperation in the semiconductor space? jon: well, the u.s. has been looking for japan, looking for allies like japan and south korea to join the biden curbs on semiconductor exports to china. in his meeting with biden, there wasn't any real substance in it, showed a commitment to talks. for japan, there are key players here who have an interest in what goes on in china. it will be a difficult sell. at the same time, as part of the alliance, there have been movements in japan and south korea more toward the biden administration's plan kid it is still in the air -- plan.

it is still in the air but i think the talks may have helped biden and expressed the concern japan was feeling about these. haidi: jon there. traders are pushing yields past yield curve control in the boj. we will get more. this is bloomberg. ♪

haidi: time for japan ahead. december ppi do out in moments. an acceleration to 9% is expected. also machine-tool orders fell in december -- in november. automakers, also the u.s. and europe tumbled on monday following tesla's moves to cut prices. investors are on high alert for further policy tweaks from the bank of japan this week after a surprise decision to raise the bar on yield movement failed to significantly improve liquidity in the market. kathleen hays is in tokyo with more. governor kuroda said december's move was merely a tweak on a policy change. we were talking with garfield

that they tried to sell it as a policy tweaks to encourage market functionality. that did not really happen. how do they -- do they make more tweaks and how do they sell it if they don't make any changes? kathleen: first of all, let's were member what they did, and without any warning, there were no signals, no hints from governor kuroda that he was about to make a major move, certainly in terms of what markets were expecting. he widened the ban, the yield curve control ban, what holds the 10 year jgb in place from 0.25 up to .5. it was a very significant move. he did say it was to improve upon market functioning, a technical adjustment. the problem is, bond market functioning has an improved and on friday the 10 year jgb topped 0.5. the bank of japan had to jump in

again with more bond purchases than they did on december 20, a record amount, and it is a question now of will he be forced, will he make another tweak? someone from the bank of japan was interviewed last week by our news team here in tokyo and he said they cannot move again, kuroda cannot do this, it would be too embarrassing and fuel speculation of even more changes in yield curve control. nothing will happen, he says, in a fundamental shift that moves toward normalization and extraordinary stimulus, until the new governor is in place, whoever that turns out to be in april. other people are saying they agree, probably no change, no tweak to yc see, but in important signal can be sent in the quarterly inflation outlook, if it goes to 2% or higher for 2023 and even for 2024. almost for pristine -- 4% on a

key measure. that could be an indication that inflation is sustainable and that could send a message to the markets as well, not a yc see tweak exactly but important. shery: kathleen hays from tokyo. our next guest agrees the boj widening of the 10 year jgb yield band has done little to improve market funding. it is great to have you, marcel. we are seeing more agreement, consensus that the ill curve control policy is not sustainable, as we see investors attacking and targeting that 10 year yield cap. how soon could we see the boj moving fundamentally on this policy? marcel: basically it will happen in april when the new governor takes over. we know that governor kuroda likes to spring surprises and it is possible that if i knew governor gets nominated, that decides to ban yield curve

controls, he will want to own the debt policy change himself rather than having one of his key policies he implemented gone as soon as he walks out the door. it could happen earlier, as soon as this week. the bank of japan is under a lot of pressure to defend yield targets in recent days. it had to buy a record amount of bonds last week. the bank is under a lot of pressure and it is possible we will see a move as soon as this week. shery: and yet we've seen the sharp strengthening of the yen since october. how much do we risk actually seeing inflation cooling and the boj not being able to make that move? marcel: inflation was definitely cooling sharply this year. the price caps the government has pledged will kick in in january, knockoff about 1% from headline inflation.

the weaker yen is the biggest rubber of the recent surgeon inflation. the strength in recent weeks will result in cooling in the coming months. we are also seeing signs price pressures are broadening. we are seeing service inflation at a four-year high, and that trend will lift the banks, the banks measuring underlying inflation. if the price goes up broadly, it will make it easier for the banks to justify withdrawing stimulus even if headline inflation starts to come down. haidi: the inflation picture has long been that the boj doesn't see it as the type of inflation they want to see, i.e. wage growth. do you see more progress? there have been conversations with business leaders on how to tackle this? marcel: it will be difficult. we have seen relatively strong waves the last year, and the

main driver was simply the surge in inflation that has prompted workers to demand figure pay rises. normally in japan, the trade unions are not powerful, it's difficult for employees to push through for wage hikes. but the spring negotiations, they cover only 4% of employees and don't really serve as a benchmark for wages elsewhere. the union need to see a strong push by employees. with inflation set this often, we think it will be less demand, they will be less forced to demand wage hikes. particularly if the labor market cools this year and the economy weakens. haidi: in the last bank of japan survey, the quarterly boj survey, you had more than half of japanese households saying they felt like their livelihoods have worsened.

this is the highest percentage in about 13 years. less than 4% said they felt had improved. what does that tell you even if we are getting higher inflation, what does it tell you about the prospects of a virtuous economic cycle? marcel: i think it relates back to the point i made, that workers have relatively low bargaining power. if inflation goes up, they could change -- they don't. there has been more mobility the last year. we see it in the questions around inflation, households perceiving the heist inflation rates in decades. i think that reflect the fact that inflation is unusually broad-based, not just a few categories. it is uncomfortable for a lot of

households. that's a key reason why the government is pushing forward. shery: marcel, thank you for your time, and on those inflationary concerns, we are getting the latest ppi numbers out of japan, surprising to the upside. ppi for the month of december, year on year growth of 2.10%, much higher than economists had expected, also an acceleration from the previous month. the month-to-month numbers of surprising to the upside, half a percent growth from december when the expectation was only .2%, and deceleration from the previous month. early surprising to see the inflationary pressures continue across japan at least when it comes to the factory gauge. we have cpi numbers out of japan on friday. this is bloomberg. ♪

haidi: japan is aiming to increase why goo beef --wagyu beef exporters but farmers are struggling. they are using ai to manage businesses more efficiently. >> the system monitors cattle

sleeping, eating, 24 hours a day , using sensors attached to the neck of each cow. >> you were working upon a sonic. what made you leave and start this? >> i had opportunities to talk to farmers my previous job and i felt getting this data in a speedy manner was crucial for farmers going forward. i thought it was best if i started the business on my own. >> through u-motion, what kind of problems are you serving -- solving? >> it can monitor the condition of the cattle 24 hours a day. for example, we can tell which cattle are nearly in heat, we can monitor small changes on a daily basis so that farmers can better manage the health of their cattle. they can even prevent disease by using the system. it is impossible to improve beef quality.

we use our data to make the meat that are in leaner. i think the technology will help more foreigners enjoy wagyu. >> how has the demand been for farmers? >> many farmers already use the system and are happy about it. their efficiency and productivity have improved. our system has taught market share in japan at the moment and i believe we have been very well received by farmers. i expect the will increase even further. >> do you have any numbers for those sales targets and goals going forward? >> currently, 80,000 centers have been installed. we aim to cover about half the beef cattle in japan, about one million in the near future. >> what do you hope to change when it comes to japan's wagyu farming? >> i want to improve even further with ai driven sensors. our technology can help farmers who typically suffer from a lack

of labor in japan. >> do you have any plans for an ipo? >> yes, it is in our plans. we will think about going public in the near future. >> what is the one thing japan needs most right now? >> as with this new technology, i think it is important to challenge something new and boost our presence into global markets. japan has further potential to be competitive in global markets. haidi: -- shery: the market opens in tokyo and seoul are next. this is bloomberg. ♪

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>> this is "bloomberg daybreak:

asia." a lot to contend with, or data out of china, that raises more questions when it comes to the 60,000 fatalities were ported over the course of a month. pboc looking to move to cut the one euro rate later today, and also watching bank of japan. shery: china and the bank of japan all very important in this week when we have inflation expectations in the u.s. starting to drop to the lowest since 2021 when it comes to the year ahead at a time when ppi in japan just a surprise to the upside. what does this mean for central-bank policy going forward? haidi: the rba will be one of the central banks answering those questions. another gauge when it comes to our inflation numbers, the melbourne institute inflation reading month on month and year on year on your for the month of december. this is relevant given that we had a harder than expected

reading when it comes to month for november. all of this potentially giving more reason for the rba to think about when they pause. we spoke to sarah hunter earlier and she said perhaps they will go one more time, and there is good enough reason to pause. let's get you to annabelle. annabelle: positive momentum coming into the session, you had to close the wall street session friday. on top of that u.s. dollar easing, gold, oil also hi, all positive factors coming into the session today. the big focus for us as we have the opening of japan is what happens with the boj meeting this week it is a live decision specifically with what they do to their program of yield curve control, whether trading for the 10 year yield is extended higher than the current .5 1%. we had seen it being tested, that range over the past few sessions. the other thing we are watching

for is the details of the additional debt purchasing operations coming from the boj, because if they had said on friday that would give the details of that on monday. in terms of market action we are seeing the yen looking fractionally weaker, it has been stronger, and something also hitting japanese equities, down 1% at the open. continuing to watch at outperformance of the topix bank index, one of the few sectors that does gain if we see any change to boj policy settings in place. no trade forecast treasuries with martin luther king day in the u.s. we have start of trading in korea, and at the start we are continuing to watch what happens with the korean won, further strength coming back into the currency as we continue to watch or if you hit 1200 against the greenback. the korean won it has been one of the outperformers in asia today over the past few weeks. it is also an indication of the

signal of risk appetite coming into the markets, particularly with inflation expectation starting to moderate and expectations for a more dovish fed. we have the kospi coming online today and we are watching outperformance of tech shares with the cause deck -- kosdaq index, eight straight day of gains. i.t. stocks in australia are leading asx 200 higher for a fourth straight day. also watching iron ore, singapore is limping to start we. --week. we are watching what happens with material stocks, they are fractionally higher this morning. shery: our next guest has raised profit growth forecast for asia and things north asia will need to pass. good to have you with us. what does this mean for asia-pacific equity returns this

year given earnings expectations? >> we think there are two prominent themes. one is internet reopening, -- china reopening the other is the global market in 2024. we can start to pricing second half of this year as well. the view we have given these two catalysts in the region, there will be remission in the region starting off with india and china. those are that two markets work momentum will be this year. china both onshore and offshore. shery: when we talk about north asia especially with tech hardware stocks including korea and taiwan, we tend to include taiwan in that call. or this time? >> for taiwan, you're right.

both of them are tech heavy markets. the two are different. you have globally sensitive sectors like shipping and autos. it is more linked to the memory cycle ended the expectations we have for 2023 is that a memory cycle will start inflicting late quarters of this year. korean stocks typically tend to lead that by 1 to 2 quarters. you think you can take korean equity markets down on the back of that. for taiwan it tends to be [indiscernible] and risk there, which is why we are more positive on taiwan. we see a global upturn in 2024. haidi: australia is one of your

constructive geographies read what do you like about this market? >> i think if you look at the australian equity market, we know large companies of those are banks and resources, so for both sectors we think banks will be profitable given the expectation of rate hikes by the rba. also the fact that china is reopening, commodity sectors, resource companies should be doing well. when you put all of these together that is close to 60% of the australian equity market. in terms of pecking order we have china, singapore, and korea. [indiscernible] haidi: how are you looking at energy and transition trades at the moment going into this year?

>> for energy, i think we have moderated the view in general on energy. within the broader commodity space we are positive on metals and resources rather than oil stocks, and the reasons is in terms of profitability. some of it is moderating this year given the fall in oil prices. we think the risk-reward is not there. we neutralized our stance to more neutral allocation. haidi: always rate to chat with you, sunil. let's get you the australian alvord institute inflation reading, a month on month number is interesting, .2 of 1% acceleration, much weaker than expectations given that we had a 1% gain in the previous month.

suggesting perhaps we had the price increase in november, that is showing signs of reversing by the time we get to december. the year on year number is 5.9% in line with expectations, but it does feed into an interesting picture when it comes to the rba given to we had the november monthly inflation reading for a national institute coming in harder than expectations. many economists expecting the rba will deliver a final rate hike in february and then pause potentially going into the fourth quarter depending on economic conditions where we could actually see according to bloomberg economics the start of a rate cut cycle. let's get you over to vonnie quinn. vonnie: after two years of pandemic disruption some of the world's richest people gever -- gather in davos, switzerland. billionaires are intending to attend the event, none from

russia and china. executives from jp morgan, blackrock and blackstone are among those on the guest list. a republican lawmaker is called on the white house to turn over visitor's logs to president biden's home in delaware after it wants my documents were part of the residence. the oversight committee chair james comer made a request in a letter to white house chief of staff. the white house said saturday lawyers had discovered more classified material at biden's home been previously announced. authorities internet have begun rescue work following an explosion at a privately run chemical plant in a northeastern province. officials are looking into the cause of the accident at the facility. a firm with 2.5 thousand employees. authorities say 68 people were killed when a yeti airlines flight crashed on sunday. the turboprop took off from

kathmandu and came down close to mr.'s of the airport. the aviation authority says the weather was clear and there was no distress call before the crash. 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: let's get you back to hong kong, take a look at some of the movers including minors living today -- miners moving today. annabelle: china intends to italian supervision of iron ore after we saw a huge run-up in that ingredient, a key ingredient for steel. this is the state of play for some of the biggest steelmakers in japan and korea, so far it mix, 10 minutes into the session for seoul and tokyo. let's look at another sector, supplies of is love broadly

weaker today. this is the did a reaction to tesla, not only did it cut prices were china for the second time in a matter of months but also that was expended to other markets including europe and the usa. the model y has been drop by 20% and as much as $21,000 of its most expensive vehicles in the u.s.. certainly an indication that there are question marks over its ability to meet consumer demand and whether the demand is as strong as it was previously. let's watch what is happening in the bitcoin space as bitcoin gets very close to the $21,000 level. we saw it coming off its lug a stretch of gains in nearly a decade. these are some of the biggest crypto players in japan and korea, and they are more risk on in the session so far. shery: our guest to joins us for their outlook on china and explains their pessimistic view of the property sector. up next we look closer at signs

that china las vegas reopening is said to offer a boost to the world economy. this is bloomberg. ♪

haidi: china's announcement of over 60,000 covid dez and a month as bird new goals for data

as a wave of infections continues to sweep the country. let's bring in uber's managing editor for asia global business -- bloomberg's managing editor for asia global business. we know how they manage these deaths. what does it tell us? >> most people are saying this is an undercount and is a reaction to the criticism they have been getting for the very significant lack of data they have put out about this covid reopening wave. for comparison this comes out at 1700 deaths a day, which is what the u.s. reported last wednesday, and they have had much higher immunity and vaccination particularly among the elderly population. they did say it was just an estimate, because they do not have a good sense yet of how deaths are playing out, but i think it is fair to say from the reaction that we have seen that

it is an undercount. shery: could we see more mutation zeta variants? >> that is the biggest concern given that you have a vast outbreak underway, 30 million cases a day according to internal chinese government counting we saw last month. that just raises at the risk of the virus trying to evolve and twist and turn, and that is what is behind a lot of travel restrictions, testing, curbs being put in place by other countries that are concerned about the risk of a new variant. china is providing data and sequencing and providing backdated to the international sequencing effort, but when you are not testing as regularly as you used to, you are not releasing any data really publicly that brings into question on whether you are getting the full picture of what

is going on in the ground. haidi: there are signs we could be getting close to a peak in major cities. as we get toward chinese new year, does that shift? >> i think you are probably moving into one of the scariest stages of this outbreak, because you are going to see it move into rural areas, which are much less resourced than china' as biggest cities. you are talking about people who do not have access to hospitals, just the way china emphasizes its cap system -- it's health care system in the city. you could see some of the biggest death rates at of these rural areas. some of the scenes we saw in india a couple of years ago with a lack of resources. given the fact that china is not reporting any data it is difficult to report on the ground there.

we might not have that full picture. shery: emma o'brien with a very worrying potential picture when it comes to china's reopening and covid infections. the sudden reopening is said to offer a boost to a flagging world economy. let's get more from our chief asian economics correspondent enda curran. where will we see the biggest impact? >> it will be services sectors, tourism, education. there will be an increase for commodities demand as china's reopening boost activity in the property sector. you were seeing the reaction in the chilean peso. you are seeing that in the australian gauge as well, so across the board, across aviation, classic tourism metrics, they are all expecting

to see an uptick in visitors, and uptick in spending. the imf described china's reopening is probably the most important event for the world economy this year. wall street analyst upgraded forecasts, and there is expected to be spillover. it is not expected to have the kind of jump start a effect that china did for the rest of the world after the financial crisis because china is not rolling out as much and because of the nature of what is happening in china, this ongoing public health crisis. recovery will not be linear and we have got a long way to go before we get the full picture in terms of the health crisis in china. nonetheless, at the bottom line is people are saying china's reopening will support world growth this year. haidi: we did hear from the pboc deputy governor on friday saying they want to avoid flooding the economy with excessive stimulus,

but we are seeing a cyclical role being played by the pboc. what are we expecting for make decisions this week? >> they are expected to bring down -- if they brought it down twice last year, the lending facility. this tries to get money to the property sector in particular, which will help property developers get on their feet and after -- offer a boost to the broader economy as well. china's economy is especially short of credit at the moment. there is not a feeling massive monetary stimulus will turn things around. there is so much more coming on on the confidence side of things linked to the public health story we just spoke about. government spending will be a big part of it as well. if they do bring down the cost of this medium-term lending

facility, it will help companies suffering in terms of profit growth last year, the property sector and at the margins it will show china is supporting its economy. it will be seen as another positive for china's growth story. shery: enda curran with the latest, you can get a roundup of the stories you need to know to get your day's -- to get your day going in today's edition of daybreak. dayb on the terminal and the rubric anywhere. customize settings so you get news on the assets and industries that you care about. this is bloomberg. ♪

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these are some of the themes addressed at the world economic forum this week. he was a look at what to expect. >> snow-covered alps, private jets, the world's elite will descend on davos for the world economic forum's first winter meeting. the themes on the official agenda are a mouthful. here are the top three things. it is all about inflation, the post-covid recovery crest headfirst into surging cpi in 20. supply chain's stress to breaking points and prices surge putting pressure on consumers. the fed and central banks responded with aggressive rate hikes. where they behind the curve? number two, a shifting geopolitical landscape. russia's invasion of ukraine forced many nations to choose sides and short energy supplies. russia's absence from the summer

gathering and will not be there either. china is looking to come back bigger than ever at its first gathering since the pandemic, but will they receive a warm welcome? number three, crypto and regulation. a great addition to our top three things to the implosion of sabic been freed's ftx empire. it is given regulators more emanation to reign in the crypto industry. those things aside, the big question may be about the effect itself with criticism, can this year's davos produce anything more than talk? haidi: business jeeves gathered in davos are weighing new risk and economy where power politics loomed large in government. these are new challenges, but a lot of them are being carried over from 2022.

over the past couple of years energy for one, we know that as the economy and trade become used more as weapons of statecraft, the war over energy has been one of the dominant teams over the past year, and that looks to create further conflict and challenges going into this year. the u.s. and its allies versus russia over the war in ukraine, and all sides have sought to weaponize and use sanctions and purchasing curves to try and advance their side of the fight. we are also seeing this development when it comes to high-tech global chips. shery: you have to think about this change in tied around the world -- tide around the world. i remember in university my first class was globalization. we are talking about more fragmentation around the world whether it is supply chains or

this rivalry, there is a new frontier of the cold war. taiwan, another key topic being discussed among leaders. haidi: friend shoring, i love that term, incentives and urban concerns over a conflict over taiwan as well. keep it here on bloomberg tv. we have weeklong coverage of the global economic forum. later on monday we will be speaking to a qatar investment authority ceo and blackrock by as well. shery: apple's manufacturing partners foxconn and pegatron have included southeast asia in expansion plans for 2023. both companies are adding more production capacity outside china after they encountered serious covid related disruptions last year. pegatron had to suspend production and foxconn's plants

are violent protests halting output, forcing both to cut forecast. credit suisse is cutting 10% of its european investment anchors adding to hundreds of job losses in london and zurich. the swiss lender has been reducing headcount after announcing plans to cut 9000 roles by next year. it is expected to report its second annual loss next month. we hear from csla about the reopening of china's border as well as its vast and struggling poverty sector when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets. before golo, i was barely eating

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haidi: this annabelle: this is "bloomberg daybreak: asia." 30 minutes into the session for japan and korea and the nikkei

is standing out this morning down 1% in the early part of trading. that is perhaps unsurprising, not only have we seen a stronger yen as of late but also you had to moves in the bond space as well. japanese five-year in focus today, but also that 10 year yield most interesting over the past few sessions given we had seen traders testing the limits of 5.1%, and boj one of the key focal points for traders this week. expectations or assumptions they could be forced to pivot policymakers on their yield curve control. we have a bond yields moving higher across the board, it is capping some gains we are seeing in the equities picture today. australia into a fourth straight day of gains. what we have leading into that is what we had in the wall street session on friday, s&p 500 one point away from the key for thousand level. we had the survey on friday that

showed expectations for inflation moderating. in the commodities space key areas to watch today, aluminum high today. goldman sachs as raised its price forecast. iron ore is slumping to start the week, unsurprising given that china has pledged to assess the price action on that key commodity for steel. in the currency space in what is happening with the korean won, very close to the 1200 level. that is an indication of the risk appetite we are seeing in the first few weeks of the year. the outperformance of global stocks on the recovery path over the past few weeks leading the s&p 500, which is the line in a white. that is down to what is leading the global index, and that is the moves we are seeing in china. shery: it remain cautious on

china despite the world leading rally in tech shares. let's get more from our senior asian stocks reported. how much does it have to do with getting fair valuation out of software you are still uncertain where beijing can go in terms of scrutiny in the sector. >> good morning, shery. that is the $1 million question, is it not? in some ways we can say chinese tech shares are inexpensive at the moment. we had the story over the weekend that shows tech shares are like -- shares. alibaba shares are trading 15 times it's projected earnings, and hang seng tech index is trading about 23 times the

earnings i believe, i am sorry, 21 times the earnings. in last year it was on average about 30 times. clearly they are much less expensive than they used to be. haidi: so with the moderate expectations, what is the upside investors are seeing? >> yeah, i mean, even though they have become less expensive, they are now trading above the nasdaq index in the u.s. that suggests their valuation might already be stretched a little bit. also there is a question about chinese policy. even though chinese policymakers

have changed all over the last few months, there is a certain degree of uncertainty about what they're going to do, especially given that people think the chinese policy decision is being made by a single man. and that is a good reason to be a bit cautious. one hedge fund manager recently told me if you have spent a few years destroying market confidence, you need the same length or period to recover confidence. it seems a little difficult for markets to go back to the previous high valuations of a couple years ago. haidi: i reporter in tokyo. our next guest expects a soft landing when it comes to the property sector despite a multiyear downturn. with us is the head of china

financial research at csla. let's start off with the topic we were talking about, the wrapping up of regulatory crackdown on fintech. is it just a matter of time for it to return to the levels of profitability, or has this sector been structurally changed by the regulatory oversight? >> our base case is that for the fintech space the regulation is already pivoting. you can see over the past few months softer tones from regulators have already been seen, and there are many actions taken by regulators, such as the approval for a plan and shuffling of ant group. those suggestions say that tightening has already been done. the focus on fintech is people should also look at dental

milestones to come, such as the approval of licensing of a credit scoring company and a financial license as well and the fundamental recovery of the sector. the fintech space is a proxy of reopening in china. payments will pick up given recovery of consumption, so in general we are constructive on the fintech space this year, and the message is get back to the fundamentals and look at the potential upside. haidi: we have seen a slew of policy adjustments when it comes to the property sector and supporting the property market, but we were just saying earlier a lot of investors have learned their lesson that in china you may see these huge profits, you are just one policy change potentially overnight from losing all of that. is there a sense that investors have become more cautious about

that or that the leadership is more aware and potentially trying to orchestrate more market friendly reliable policies going forward? >> i think part of the regulation here is to make sure there is no risk happening and also ensure that the property markets still grow healthily. in our view the property market will be seeing a soft landing, i.e. limited financial risk, but the downturn is still likely to come in the coming years. over the past six months the regulator has been putting out a sweeping package to bailout the property market. at the central government level we have already seen 600 billion rnb pay out money. commercial banks that are providing rnb as liquidity to

the whole. having said that, the property sector as a whole are still seeing potential downturn over the supply situation. that is why we have a soft landing scenario to come. shery: we are expecting the one year medium-term lending facility to be announced today. what will these monetary policies due to some of those financial stocks in china? >> monetary policy in our view will be more precise and be stronger. being precise is putting in the front space, meaning this year at the monetary policy will focus on targeted measures such as psl and the relending facilities provided to commercial banks to support these specific areas of the economy. and for the overall interest

rate cuts, we are actually looking at a smaller scale of cuts compared to last year, because this year inherently the economy is back to the normal track starting from q2, so there is no strong need to cut interest rates. to put it in one sentence to be more precise and stronger. shery: so you have those measures coming from beijing and you have a the reopening of china and exit from covid zero. how much support does that lend to households trying to allocate funds into capital markets? >> indeed. we have noticed a very strong change last year. chinese households halfed their borrowing last year but they doubled their savings. you can say they are sitting on a lot of dry power they can allocate into the potential capital market.

the confidence of households may increase and they may come back to the market to buy more financial assets and potentially will also consume more. so this type of dry powder is very strong. we expect there will be 10 trillion rmb deposits this year. shery: we will be watching out for that. let's get to vonnie quinn with first word headlines. vonnie: china has it almost 60,000 a covid that since december renewing calls for beijing to provide more information about the wave of infection sweeping the country. who says it is analyzing the data while urging china to share more detailed information including on subvariants and the definition of covid denso. several studies suggest that the number of fatalities could be much higher.

japanese per minister kishida as declined to say whether he will join sweeping restrictions on the export of high-tech chips to china. in conversations with president biden he said he would deal with the semi conductor trade responsibly. washington began limiting chip exports to china in october and is trying to get allies on board. malaysia's deputy prime minister is said to be keeping his party's top job for another turn. the junior party of the coalition says their top two posts will not be contested. at the move is expected to strengthen anwar's coalition government, which relies on support following elections that resulted in a hung parliament. the united arab emirates plans to invest 30 begin dollars in hydrogen projects and south korea as the asian nation seeks to boost cleaner fuels. it will focus on production, transmission, and storage.

it came during the president's four day visit, the first from a middle eastern leader since the two established ties in 1980. 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: apple's top supplier look beyond china as they expand production capacity for some of the world's most popular gadgets. the details are next. this is bloomberg. ♪

shery: key apple partners foxconn and pegatron have included southeast asia in their expansion plans were 2023 as they look to expand production capacity outside of china. let's bring in our guest, i think trying to diversify away from trend that makes sense given the challenges they have faced their. --there. how important is it? >> from our perspective there is a valuable opportunity right now. as you mentioned the trend of diversification has been persistent for a number of years. i think covid and geopolitical tensions crystallized the

diversification. i think governments from vietnam to india are realizing this is a pivotal moment, and they are putting in place not just incentives but also importantly policy support to encourage valuable supplies to move some of their assets. haidi: on the back of this expansion, what is the outlook when it comes to growth and demand for this area? >> i think right now the entire world is going through uncertainty for lack of a better phrase. electronics demand is across the board, you see it in chips, you see it all over the place. i think, however, governments are focused on the long-term.

if they have enough production to make the region's a viable place for production of future valuable electronics, that will stimulate economies and also establish foundations for future technology, more advanced technologies down the road. shery: edwin, what are we seeing terms of semi conductor demand? >> i think that is the $1 million question. these projections seem to show demand will remain weak for months or so and will pickup toward the end of this year. expectations have been dashed. we have a good overall view of the industry, but they are also in a very good position as the

most advanced semi conductor manufacturer. i think we will have to see. haidi: that is edwin chan. be sure to tune into bloomberg radio and get in-depth analysis from the daybreak team broadcasting live from our studio in hong kong. listen in the app or bloomberg radio.com. more ahead. this is bloomberg. ♪

shery: a mixed picture across asia right now with japan under pressure ahead of the boj decision by the kospi is winning .551%. energy is one of the big gainers today, we are seeing paring back of the bti prices. this is after oil posted the biggest weekly gain since october. haidi: let's take a quit quit look at the latest business flash headlines. bloomberg has learnedrenault is offering concessions as automakers work on a deal to reboot their two decade alliance. nissan will meet with the board to consider proposals over easing concerns of shared intellectual property. nissan will invest less in its

ev business. jp morgan says interest income will be lower than expected as the economy shows signs of slippage. america's biggest bank seesnii below the $74 billion estimate. the ceo says it remains uncertain what the ultimate effect what coming headwinds might be. hdfc bank of positivist quarterly profit exceeded estimates. net income surged 19%. it is the first major lender and ending at the report earnings, and these positive results signal other major banks may also perform well in their upcoming results. shery: wells fargo as posted higher than expected fourth-quarter expenses and at revenue. the bank spent $16.2 billion in the last ones of the year including $3.3 billion in

operating losses. the cfo told us it is seeing strong performance on the credit side of the business. >> when you first look at the quarter and the performance, and i will come back to mortgages, you are seeing some good, solid performance, and it is execution on the plan that we have laid out over the last couple of years, and that includes making sure we simplify businesses and refocus our efforts on what is most important to our core customers. the mortgage piece is part of that. we are refocusing that business onto our consumer and wealth management customers primarily, and we think that will help integrated and provided much better service to those customers over a long time. it will be a very important business for us long-term. when you broaden out and look at what is happening in the mortgage business, you are seeing a continuation over what we have seen the last quarters.

volumes wealthy and in the purchase market and refinance market, and that is coming through the results, and industry is continuing to right size capacity we have two what we expect new lower volumes to be. >> how long do you think this will take with regard to the mortgage business and taking -- making this transition? >> part of it will happen fast. as we look across the servicing business it will take a while. it will take a long time to get to where we want to be there. we want to do it in a thoughtful way that makes sense for our clients. >> when it comes to potential charges related to that, have you guys mapped anything out or anything you can share with us? >> as part of the results this quarter we did take a severance accrual related to changes we are going to make their, so that is the initial piece of it that

we should look at. that was embedded in the operating results that we saw that were pretty strong. you continue to see us benefiting from rates in this environment, you can see really strong performance on the credit side including the mortgage business. you continue to see a strong capital position, which allows us to start buying back shares again, and we are managing expenses well despite the fact that we continue to invest in businesses and launch new capabilities, right next, services -- products, services. >> there are a lot of areas to cover, let's talk about loan loss reserves. you build these in the quarter past. this is due in part to the less favorable economic environment. what is your current base case for the economy and what are you seeing in your consumer and commercial folios? >> we built our allowance by

about $4 billion. the biggest part of that was growing our card balances. that is a good thing as we see some of the benefits of investments we made paying off, the smaller part was related to the economic environment. we like everybody else are expecting the economy to slow and we will have quarters of negative growth at some point. what is clear over the last quarter or two, the timing of that is uncertain and it keeps getting pushed back a little bit. we would expect to start seeing more weakness into the latter part of the year for sure. haidi: the wells fargo cfo there , take a look at iron ore seeing impact given potential curbs we are seeing out of china. a little bit of downside close to the tune of 5%. one of the biggest beneficiaries so far from the tenant reopening story, but china has been

targeting false information, flagging tighter supervision of the key steelmaking ingredient. shery: not surprising, we will be watching iron ore and steel stocks when the markets open in china. eastern end china southern on plans to delist from the new york stock exchange. eb makers could be moving following u.s. and european peers after tesla's decision. the market opens in china our next. -- are next. this is bloomberg. ♪

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david: good monday morning, it is