>> good morning and welcome to "bloomberg daybreak: australia." the top stories. china sees nearly 30,000 covid

related deaths in the new year holidays with a health official warning 18% of the population may be infected and the current outbreak. new zealand's incoming prime minister signals a policy overhaul. and bullish bets on asian stocks rise as the region's benchmark outperforms the u.s. markets are closed today, china, hong kong, singapore, south korea, indonesia and vietnam. it is the lunar new year holiday and much of asia is closed. new zealand trading as usual. expecting a modestly positive date in australia when we got going at the top of the next hour. futures pointing 0.5% higher. the aussie is pretty much flat.

and the yen continuing to lose a bit of momentum against the greenback. 129.48 at the moment. china says more than 12,600 people died of covid related causes in the week leading up to the lunar holiday -- lunar new year holidays. tell us about the latest death toll in china from covid and can we rely on these numbers? >> it is really interesting they are starting to on a weekly basis release these death numbers. they are only deaths related to deaths -- related to covid and hospitals. they were narrowing the definition of a covid death around christmas to the point they were claiming that no one was dying from covid though it was raised -- racing through

populations in beijing and shanghai. china is trying to show some transparency after pressure from the world health organization, the u.s. and others. but because of the way they have handled data up to now, there is definitely a wave of question marks particularly around the claims that 80% of the population has been infected. i am skeptical of the numbers because it is in china's interest to move beyond the covid wave. but such a claim would put the spread at faster than anywhere. paul: never mind the rise in numbers and the momentum towards reopening firmly now. and more changes to the way the borders are being managed. >> it does appear as though they are trying to dismantle a lot of the bureaucracy particularly around the border with hong

kong. hong kong still does have some restrictions and quotas and things in place when it comes to people coming to and from the mainland. but they are very much headlong focused on getting beyond this reopening wave and plowing headlong into economic growth that i do suspect that a lot of these curbs will go by the wayside and fade over the next couple of weeks. paul: managing editor for asia global business, emma o'brien. let's turn to the markets now and bring in garfield reynolds. a lot of markets around the region are closed for the lunar new year holiday but the bigger picture is very much seems to be bullish for asian equities. is this the china reopening trade or is there more to it than that? garfield: the china reopening

trade has a lot to do with it and so does the general thought that that will accompany a turnaround in china's economy though china's economy looms large for the entire region. that is a big bonus. the other thing that is really helping asia is the perception that the federal reserve will continue to slow down its interest rate hikes. that is helping to drive a weaker dollar. along with turnarounds in the chinese yuan and the japanese yen and all of that is making conditions easier in asia. asia, especially emerging asia takes it hard when the dollar -- as it did last year. and china reopening, the japanese yen coming down, and

the optimism that the fed is just about done with its rate hikes, all of that is feeding into expectations that asia is going to outperform in equities this year. paul: as you say there is a growing consensus that the fed is closer to the end than it was to the beginning of the tightening cycle but we are seeing volatility around u.s. equities at the moment. he had a rally on friday. but there seems to be a bit of a battle for the soul of u.s. markets going on at the moment. garfield: the hopes have been dashed a number of times that the fed would turn towards an actual end to rate hikes and also take some notice of the concept that if the u.s. heads

to recession it would cut rates. we still have those bets in the bond market that the fed is going to be cutting rates in the second half of the year and that is something that the fed has pushed back against. strongly. -- pushed back against very strongly. fed speakers are getting through to investors saying they raise rates and then hold them and that creates a much more contested and difficult set of calculations about whether or not equities can rally from here . we have also had a lot of concern because of all of the job cuts that have been announced by big tech recently. big tech is saying this is something you need to have gaining strongly in order to get a sustainable rebound for u.s. equities. if they are cutting jobs at this pace, what does that say about their outlook?

there is a lot of interest, more than usual, in what earnings will say this week and beyond for that sector and not just what they say about the current set up and what their forecasts are going forward and where they see the earnings outlook going. that will play a big role in whether or not people say, yes, it is time to buy and the bottom has been such an now is the time to get back into stocks even though we still have recession fears on the horizon and u.s. equities in all previous recessions did not bottom out until the economy was actually in a recession. paul: all right, chief rates correspondent for asia, garfield reynolds. you can follow more on the story and all of the day's trading on our markets live blog and you can find that on the bloomberg at mliv . you can find what is affecting

your investments right now. right now, let's get over to su keenan. su: incoming new zealand prime minister chris hepp gens says he will prioritize the economy as a recession looms and may drop some of the policies. he is seeking to win back the political middle ground with his labor government trailing in opinion polls. he says he has heard the message from some voters that the government is doing too much too fast. bloomberg has learned that president biden is set to name jeff zients as his next white house chief of staff. sources say he will claim ron who will stay on through bidens state of the union address on february 7. jeff was a cochair of bidens presidential transition. the leaders of france and germany are warning european businesses will need to unleash

investments on a massive scale to keep up with others. they have met to discuss how they should respond to president biden's inflation reduction act which the block argues does not abide with international rules. and influential japanese politician has thrown his weight behind washington's widening campaign to contain china's chip ambitions. he is the main architect of the rolling efforts to elevate japan's semiconductor industry and told bloomberg that beijing is part of a group of nations seeking global hedge -- global hegemony and must be stopped. >> western nations should communicate which chips will pose a threat if exported. china itself is building its own supply chains and is policy is not to rely on other countries.

what we are doing is the flipside so china is not in a position to complain. su: global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i am su keenan. this is bloomberg. paul: plenty more to come on daybreak australia. this is bloomberg. ♪

>> expect that we will raise rates a few more times this year. >> we still have more work to do. >> i currently favor a 25 point hike. >> i expect to continue tightening policy past this week --past this meeting. >> the fed will have to maintain rates at high enough levels. >> they will have to remain sufficiently restrictive for some time. >> i expect the policy rate will be restrictive enough that we will hold rates in place to let monetary policy do its work. >> we can and should adjust our overall strategy policy to keep financial conditions restrictive even as the pace slows. paul: comments from fed officials on the outlook for rate hikes.

our next guest says a cut in 2023 is unlikely. let's bring in ig market analyst, hebe chen. they were fairly unambiguous when it comes to the path of rates in 2023 but we see some interesting price action on the equities markets. we had a mini rally in all the major u.s. indexes on friday afternoon. is the market correctly pricing in this fed rhetoric? or is there more optimism than realism at the moment? hebe: my view is the market showed a strong appetite for a bull market because they are projecting a rate cut by the end of this year. downplaying the fundamental shortcomings.

shareholders are celebrating a better-than-expected subscription number while purposely downplaying that it is one of the weakest in its history. there is they strong appetite for the bull market shaping the market taking bad news as good news. coming back to the fed rate cut and i expect something to happen at the end of this year but i think it is too early to call a rate cut. the fed [indiscernible] at this time of year inflation wise there are more factors to price in. we are seeing some using signs -- easing signs.

we see japan -- and the weaker u.s. dollar. paul: i want to return to your thoughts on china in a moment but in terms of the u.s., we have seen the s&p fall below its 200 day moving average. do you feel there is a risk to the 50 days? hebe: definitely. if you are looking for the past three weeks, the s&p 500 has been up 4% and that is a level that we have seen for the bull market and does not necessarily match what we have been projecting or what is the fundamental picture that we prepared for 2023. i think the market is trying to downplay the fundamental shortcoming for the early year

-- the early days of 2023. it is over optimistic. i think it is quite possible that we will see a retest in the optimism will come to the real test when we see [indiscernible] paul: there is a lot of enthusiasm around the china reopening and the bombs in the road of getting out of covid zero policy notwithstanding but is that the opening trade starting to look a little tired to you? hebe: first of all, i agree with china's reopening being -- i am a bit cautious about what i see the markets price in right now. from my view i think it is a little too optimistic about what

the economy could do. we know china is still struggling. putting that aside, if we turn the clock back to 2019, you are probably not that positive. one other factor that i am cautious about is one of the major issues for china's economy , the credit crisis and the manufacturing crisis -- they are not issues that can easily be fixed by the reopening. i think markets are too optimistic at this stage. paul: and how about commodities that trade around the china reopening? how are they looking to you at the moment in terms of price action? hebe: we can see the global price coming to their highest in the last eight months.

[indiscernible] the pboc has been increasing their gold reserve for the fourth quarter. we are seeing other central banks coming to a level that we have not seen since the 1960's. with this happening, with the weaker u.s. dollar and central banks downplaying that will they increase the appetite for --, we expect the u.s. dollar to continue weakening. paul: we have seen an oppressive rally for gold even in the first few weeks of this year but before we let you go i want to get your thoughts on what is coming up with a earnings this week in the u.s.

we have reasonable numbers from netflix. tesla, microsoft, you have expectations there? hebe: overall what we expect for the u.s. earnings is we expect a decline. for microsoft and tesla, they have a different -- for microsoft we see some headwinds that continue to weigh on the u.s. dollar. ha it seems microsoft is trying to shift its focus on innovation. we know they are talking about chatgpt. they will put more focus on that .

tesla -- there was a strong sign in the past that there was a focus on the price cut. projecting margin wise will be as high as 50% which they have enjoyed previously but i think [indiscernible] paul: hebe chen thank you very much for joining us. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. terminal subscribers can go to dayb and you can customize your settings so you are only getting the news on the industry and asset that you care about.

this is bloomberg. ♪

paul: french -- plan more strikes. macron's finance minister told us the government will stick to the plan when he spoke to bloomberg's francine lacqua at davos. >> we can understand there are some oppositions. we are a democracy so we recognize that the rights of everybody to oppose reform but we also strongly believe that this reform is a necessity for france. we will stick to the reform even if there will be a debate in the french parliament and in the framework of the debate within the parliament there might be

some improvements of the reform. >> how much france is losing because of the strikes economically? >> i don't think strikes do have a very important economic impact on the economy, the french economy. the economy is doing well. we have a pretty strong -- we are creating jobs and we have a high level of investment and low inflation so i'm deeply convinced that france is doing well and the french economy is doing well and i think the strikes will not hurt the french economy. >> do you think the u.s. and europe are aligned on how to treat and deal with china? >> i think there is a slight gap i would say and we are all aware of that. the u.s. wants to oppose china and we want to engage china. and i strongly believe that in the world, china must be in and

cannot be out. let's have a look at the reality that everyone is speaking about, the intentions and opposition between the was and china and the determination of the u.s. to decouple from china but the reality is the level of trade between china and the u.s. has never been so high. between the statements and the reality there is a gap. and let's have a look at our own interest. if we want to be efficient and successful in the fight against climate change, it is to have china on board. if we want to have more trade, it is in the interest to have china on board. we want china to obey by the same rules. paul: the french finance minister with bloomberg's francine lacqua in davos. let's get a quick check of the headlines. asia's richest man is looking to

list at least five companies between 2026 and 2028. the cfo told bloomberg the move will help conglomerate improve and broaden its investor base. it's businesses are among those that may go public. beating estimates with net income rising 34%. the indian bank saw a surprise improvement in interest margin as indian lenders --. plenty more to come hi, i'm katie, i've lost 110 pounds on golo in just over a year. golo is different than other programs i had been on because i was specifically looking for something that helped with insulin resistance. i had had conversations with my physician indicating that that was probably an issue that i was facing and making it more difficult for me to sustain weight loss. golo has been more sustainable. i can fit it into family life, i can make meals that the whole family will enjoy.

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su: you are watching "daybreak: austrailia." china says more than 12,600 people died of covid related causes in the week leading up to

the lunar new year holiday. in a separate post, a government epidemiologist says up to 80% of china's population was infected during the outbreak. the holiday may lead to an uptick in cases but officials say there is little chance of a second outbreak in the next two to three months. south africa may face two more years of persistent blackouts, this as the country overhauls its aging coal-fired plants. an energy company says this is necessary to make space for maintenance. south africa is suffering its worst ever power cuts come up with implemented blackouts for more than 200 days last year and every day so far in 2023. in australia, economists split on the rba governor's prospects for an extension of his role. those surveyed by bloomberg says

the governor deserves four more years at the helm, and others say his errors mean he should be replaced, preferably by someone outside the central bank. his seven-year term expires in september. 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 su keenan. this is bloomberg. paul: the kansas city fed president is still seeing the possibility of a soft landing for the u.s. economy. bloomberg spoke exclusively with her as she winds down her term. >> this is a very tight labor market and i think unusually so in this sense. we've seen 3.5% unemployment before but when we look at the people engaging in that workforce, we are still down in terms of participation compared to 2019. we see a number of job openings for every available worker, and in that sense, all of the

indicators show how tight the labor market is. again, when i talk to people, it is their number one concern, the ability to find people to come to work. i think of the supply side of the economy we are seeing binding constraints that are making it more complicated to see inflation come down in a convincing manner. >> raise unemployment by a full percentage point and that is about a million and a half people that lose jobs. is there a path to avoid that, maybe this is a different enough dynamic at that unemployment does not have to rise significantly? >> i think when you look so far -- spending has held up. what i would be looking for is are some of those job openings going to come down? we see this imbalance begin to be addressed. i think the scenario of can there be a soft landing is one we would all want to see and there are possibilities for that. there is still a lot of money sitting in the checking accounts

of households. they may hang onto that number that will make the job easier to the extent that moves out, it may create more persistent need to tighten. but i think you have to wait and see. >> what you think wall street doesn't believe you when you say you are going to hold rates for a long period and do whatever is necessary? >> i don't know that i am the right person to speak on behalf of wall street. i will tell you, we can have different horizons and different lenses through which we look at this issue. i hear a lot about recession probabilities, a lot of focus on what will be the peak rate. i think for me and my colleagues, the focus is really on getting back to price stability. that is a singular focus right now. thinking about what it takes to have that policy be sufficiently restrictive, not overly restrictive, to get to that point of the 2% long-run inflation goal. >> let's stipulate you do that.

what do we see in the economy when this cycle is over? do we go back to the new normal of low rates and low inflation? do we go to an old normal, a new new normal? >> i think it will be different, i don't really have a crystal ball. paul: the kansas city fed president speaking exclusively with bloomberg. let's get more insight into the week ahead with economics with a moody analytics senior analyst. a lot on the docket in the asia-pacific, i want to start with australia, we are going to get cpi for the fourth quarter and we are currently running a hot 7.7% but some saying inflation has peaked. how likely is it we will see things cool down? >> our expectation is you on

your, he will see the headline is cpi peak at about 7.8% and then we will see inflation come down this year. i think it is important and what we should be focusing on is the underlying picture of inflation. stripping out the more volatile items like food and fuel and seeing what the underlying cause is of inflation in australia. what we are seeing is it is quite hot. that is helping to justify the fact why we are expecting the reserve bank of australia will continue to forge ahead with rate hikes in the first quarter. at this stage, we are looking at the 25 basis point hike in february, and the odds of the 25 basis point hike in march as well is quite high. just to make sure inflation sustainably continues to reseed over the course of the year and eventually bring it back to the rba target between 2% and 3%.

paul: we are getting some cpi numbers out of new zealand as well and there seems to be a mixed picture. i remember reading comments from the bank of new zealand head of research, he said it is starting to look like stagflation on steroids in new zealand, but westpac thinks inflation may have peaked there. what is your prognosis? katrina: for new zealand, we expect the fourth quarter was the peak for inflation and it will come down. what we are really concerned about in new zealand is the fact that because the reserve bank of new zealand has been so aggressive when it comes to monetary policy area -- monetary policy tightening, to bring down inflation, the odds of inflation in new zealand are high. we had a recession baked into the baseline for this year. as households and businesses increasingly absorb the impact of higher rates, the likelihood the economy will deteriorate

into recession is too high to ignore. at this stage, we still got strength in the labor market and consumption but it will materially come down as that elect monetary policy in new zealand does materialize. paul: sort of rounding out the cpi trifecta, we will have numbers from tokyo this week as well. we are expecting tokyo cpi at 4%. is a change of policy inevitable from the boj? katrina: i think the bank of japan really will be the central bank that continues to stand on its own and almost sing its own tune. i think at the end of the day, domestic demand in japan is still incredibly soft. they are trying to resist what we've seen from developed and developing economies. seeing that central banks,

particularly in the asia-pacific , are almost passed the peak in the rate hiking cycle, the bank of japan is continuing to lag that and will take a more measured approach than what we are seeing elsewhere. paul: yeah, were going to be getting some minutes from the bank of japan from the december meeting later on. is april the month we really need to look at in terms of japan, when we get a replacement for kuroda? are you expanding -- expecting change of direction? katrina: i think even with the change of government, you're looking at economic fundamentals and japan and it doesn't make sense for a material policy shift on the monetary policy side of things, to make an impact. it doesn't make sense if you've got domestic demand still recovering. they were relatively late to dial back covid restrictions,

and we really need to see the recovery take hold before we start to consider material monetary tightening in japan and we don't think that will happen this year at all. paul: we've got multiple central-bank decisions around the world this week and the bank of canada might be interesting to watch. will we see the end of the tightening cycle they and what else are you keeping an eye on in terms of central-bank action this week? katrina: what we are expecting is, as i touched on briefly, we have seen that last year was the year of central banks coming aggressively off the sidelines and moving to tighten rates, basically as quickly as they could, and in unprecedented terms. this year, we are expecting in most cases, q1, we will see central banks take those last rate hikes, if they continue to move, and q2 onward, the pace

will persist or slow considerably. that gives these economies time to have the monetary policy filter through the economies and hopefully we will see inflation sustainably comes down. while we are seeing headline inflation come down, the pace of how quickly core inflation is going to call is unknown and what central bank's will be focusing on, and we will also be looking closely at labor market figures. if we can see labor markets easing, core inflation coming back, they will not need to move more aggressively. if core inflation stays stubbornly high, we will likely see more aggressive, ongoing tightening cycles this year, which does really increase the odds that a global recession will materialize. paul: in terms of recession risk, you mentioned new zealand

is on your radar. which other economies in the asia-pacific look most at risk of a hard landing to you? katrina: that's a really good question and if you had asked me in december i would've undoubtedly said china was the recession -- sorry, the economy, rather, we were closely looking at in terms of being at risk. now they have changed their zero covid stance, things are looking up for china. in the near term, we still have concerns about how they will muddle through this high infection period, but we think that by midyear we will start to see domestic demand conditions stabilize, we will see material improvement in household consumption as well. hopefully this investment will follow. that will improve china's outlook. that is great news for the rest of the region, but also globally, just given that china is such an important stimulus for growth.

if we are looking back home at australia and other tourist flows into asia-pacific, it is fantastic news, because pre-pandemic arrivals from the mainland such an important stimulus, or service exports, which are still struggling to get back on their feet post-covid. paul: all right, katrina, thank you for joining us. plenty more to come on "daybreak: austrailia." this is bloomberg. ♪

paul: let's take a look at how markets are trading in new zealand, one of the few markets in the asia-pacific open today. a little bit of weakness creeping in at the moment, off by 2/10 of 1%. some of the better performers, we have energy stocks, genesis performing reasonably well, a telecommunications company doing all right. the overall sentiment in new zealand today, modestly risk off, and we do have a new prime minister in new zealand, his name is chris higgins and he has signaled a policy overhaul and he is bowing to prioritize the economy, as he seeks to win back the political middle ground ahead of elections. ben wescott coins us now.

chris higgins doesn't have -- hipkins doesn't have the international renown that jacinda are dern had. ben: he has pitched himself as a down to earth guy. he likes sausage rolls, he understands kitchen table issues -- this is the narrative he's trying to push. he is a former police and education minister and fortunately for new zealand, the face of their covid-19 response. regularly appearing alongside the prime minister at press conferences. he is recognizable for that. given the covid-19 response was one of the more controversial aspects of jacinda ardern's time as prime minister, it may help or hinder his time.

paul: he's got nine, maybe 10 months, depending on how you want to count it, in the run-up to the election. how is he likely to fair? ben: he will really be focusing on kitchen table issues. on the economy, on rising inflation, on new zealand. he will remove some of the more controversial policies that were dragging down ardern's approval rating, which is the labour party's approval rating. they trail by not an insignificant margin a few months out from the election. hipkins trying to present a different picture. ardern was popular on the world stage and that encountered some criticism back home. chris hipkins doesn't have that

star power. while that might hurt him in some extent, like charisma some experts are talking about, it might mean come the election, he can present a more everyday man who understands the average voter. paul: in terms of that, ardern's departure may come as a surprise internationally, but her approval have been slipping in new zealand, she had negative net favorability for the first time just before she stepped down. a lot of commentary has been around focus on issues such as code governance, particularly around new zealand's water supply, and a move away from bread-and-butter issues. there is a cost-of-living crisis in new zealand at the moment. how that might impact other countries, particularly australia? ben: absolutely, it will be an

interesting message. there is a body of indigenous others that would advise the australian government on policy matters affecting indigenous australians. this is a big platform, his policy for this term, he's putting a lot of capital on it. if new zealand backtracks and moves away on that, it's bad timing for the australian leader, even though australia new zealand are often not in sync with each other in terms of political leaning. the past few years, a straley has had a center-right government, and obviously prime minister ardern has been in power. the country next you, famous for handling indigenous issues, moves away to the right wing.

paul: all right, new zealand's new prime minister. tune into bloomberg radio to hear more from the days newsmakers. you can get in-depth analysis from the daybreak team as well. now broadcasting live from our studio in hong kong. you can listen via the app, radio plus or bloomberg.com. plenty more to come. this is bloomberg. ♪

paul: as japan's inflation hits a four decade hi, a ceo says his company will raise wages. speaking to us in davos, he also said the boj and government should not keep everyone guessing on what they will do next. >> i think six is a good level. how we can continue this trend to increase wages is questionable, because how to increase productivity? that is another issue we have to be worried about. but this is a great trend and a tipping point for the japanese economy. people are expected to see rate hikes, but except --accept that. >> a small to medium-size

opening, this is what we've been adding four, higher inflation and japan for a long time. how do you change the composition of the economy? >> first of all, there are two aspects for inflation. one side means a rate hike, the other side is people suffering. i guess the norm is i think even -- will increase eventually. big, nice have to give a dutch big companies have to give a fair increase in price. -- big companies have to give a fair increase in christ. i'm sure that will happen even among smes. francine: we talk about the bank of japan a lot. is it confusing what they are trying to do? >> completely, we look at the market and really confused.

down the road, we need to exit and we need a roadmap to avoid a surprise to people and corporates. but i think it is not the right timing because the landscape of our economy has changed. we've got to change the entire policy taken by boj and the government. but we are not ready, we need a roadmap. francine: do you think it will be under governor kuroda or up to the new governor? >> new governor. francine: and you are confident it will be a framework that markets will understand and you think will make more sense for your country? >> because people got to know already down the road the interest rates going up your for example, the mortgage rate is going up so the general public

feel something will happen like an increase of interest rates. francine: does the new policy help you? francine: i think so -- >> i think so. definitely a rate hike. francine: what is your biggest challenge in the next few months? we talk about supply chain shocks, demand being volatile -- what are you worried about? >> gas price. the energy crisis is still going on. china is participating in buying commodities again. we don't know about that. that might upset the chinese economic growth. that is helpful to the world. we don't know how they will take action to buy more commodities, by more oil or gas. francine: how can you protect yourself? do you buy energy or options in advance? >> we are moving to higher

growth margins. resilience for business is so important. we are putting more money to r&d. paul: a ceo speaking to bloomberg in davos. a reminder, markets are closed today -- china, hong kong, singapore, south korea, indonesia, malaysia, taiwan and vietnam. no trade for the lunar new year holiday. markets in sydney are opening at the top of the hour. this is bloomberg. ♪

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paul: i am paul allen, the top stories this hour. china says more than 12,006 hundred people died of covid related causes in the week leading up to the lunar new year holiday. a government epidemiologist says about 80% of