>> you are watching daybreak: asia coming to you live from new york, sydney and hong kong. >> we are counting down to the market opens in tokyo and seoul. >> australia has just come online. asian stocks set to follow wall street lower with buyer fatigue setting in aztec earnings season kicks off. microsoft surging in late trade after second quarter profit beats expectations thanks to the strength of its cloud services unit. also ahead, the u.s. justice department and eight states suing for a breakup of google's ad tech business. the president of the world bank joins us. risks remain from debt burdens and inflation. >> we have the open of the asx 200. looking flat at the start of the day. futures indicate in for a sixth straight session of gains.

not a big lead in from wall street. what traders will be watching in australia today is the inflation print. the expectation is that cpi, one quarter half peaked. traders already pricing and the -- pricing in the rba nearing the end of its tightening cycle. the estimates are coming in fairly mixed. yes, the median is 7.6% on the year, but still there is quite a big range. 7.3% to 8.1%. that means any market moves off this could be fairly interesting when we see some sort of surprise. it does show moves in the aussie dollar in the first 30 minutes over the past year, 2022. it was looking fairly range bound. inflation is also in focus in new zealand. we did see it holding at 7.2%, near a three decade high.

that does put a lot of pressure on the rbnz to keep up with its tightening cycle. anz bank is already saying that the next hike will be 50 basis points. there were earlier pricing in at a 75 basis point move higher. >> let's look at what people are pricing in for stocks after that we got better than expected earnings, barely beating estimates on microsoft after the bell. that seems to be giving futures a bounce after the major market averages closed pretty flat. we had disappointing earnings from 3m among others. union pacific is the other big name. microsoft earnings beat on their adjusted earnings-per-share. cloud revenues were also better-than-expected. azure cloud computing was up 38% in revenues. now you can see we have the s&p 500. let's rounded off to -- round it

off to 0.2. the bond market had a bit of a rally. the 10 year benchmark fell in yield. you can see the price -- crude is bouncing after being down the most in three months, down nearly 2%. we are getting a bounce. people are looking at the s oftness, looking at the demand for oil. >> to lima. we have live pictures from the capital of peru. teargas clouding the streets there. protesters have returned to the streets of the capital. they are: for the return to power of -- calling for the return to power of pedro castillo. castille was impeached on

december 7 after trying to dissolve congress. congress extending its current period of sessions through february 10, giving more time to debate electoral reforms. we see unrest continuing in lima. reports are coming in of highways being blocked around the country, disruptions to copper mining in the south. major tourist sites of been closed as well. protests continuing in the capital of peru. >> let's move on to the u.s. justice department. eight states suing google over alleged illegal domination of the digital advertising market. let's bring an our bloomberg tech reporter. what is the department of justice going after? >> this lawsuit is specifically targeting google's digital advertising business. that is significant because google's advertising business is

one of the most influential globally but also within the u.s. it takes about 27% in digital advertising spent in the u.s. that is quite a bit of influence it is exerting not just over the demand side, but supply-side of how it's able to broker the digital ad spend across the internet. the justice department is saying it is engaged in illegal antitrust violations, that it is squeezing out competition that could allow for other players to provide cheaper, potentially better services. the big picture is that google wields a lot of control in this market. the justice department wants to allow some other players to come in, a move that could have widespread implications for the industry. >> how significant is this latest lawsuit? >> it is the biden

administration's first punch against google. google had its own spars with the trump administration over its search engine business. this particular case is interesting. digital advertising is a significant component of google's overall business. the fact that it is targeting that particular unit means it means business, that it is serious about breaking up parts of big tech it said it would go after. >> what could an actual win for the department of justice look like? >> one of the things the lawsuit mentions is its ad exchange, it wants to have google divest them of that, particularly unwind that investment it made in double-click in 2007 when google was a small player in the ad space.

today that looks very different. by unwinding that particular investment in other ad tech operations, it is able to allow.more competition in this space google has said in the past it is willing to carve out these operations into a separate entity. the justice department made it clear it will take more than that to satisfy this lawsuit in particular. >> bloomberg's jackie develops there. a look at how tech stocks are performing after-hours, particularly google in the wake of this potential legal action from the department of justice. alphabet shares still up 1/10 of 1%. microsoft, a mixed bag. the important thing was the cloud performing very strongly. that is propelling some positive sentiment. a rising tide that is floating

all boats. amazon rising higher despite not making any announcement today. sentiment around the future of the cloud, very positive indeed. for more on the latest market action, let's bring in bloomberg's m-live contributor garfield reynolds. microsoft, a reasonable set of numbers, especially around the cloud. i want to draw attention to remarks from jeremy grantham. he said more things can go wrong this year than go right. what is the path of least resistance? >> at the moment it seems to be bond yields. bear with me. those bond yields moving down have tended to coincide with tech shares moving up. we have one of the biggest monthly moves down in bond yields for quite some time, since last july. what happened last july?

bond yields dropped, tech shares rallied. the hope for investors is that unlike back then, the fed is just about done with rate hikes. there is a lot of attention on what the fed does in the next month meeting. is it going to hike 25 basis points? if so, is it going to signal that it is close to the end? that is what investors are looking for. we have bets that march might be their last move. that is key to the hopes from tech investors because they see an end to interest rate rises as giving tech a stronger footing. so far, microsoft earnings are the start. even if they were not great, they were not as concerning as some flanked. -- as some flagged.

if we are just about done with rate hikes, tech shares will keep going for a while, even if you still have those concerns that the economy itself is going to do poorly. that should be reflected in poor performance for equities. >> how are investors reading this? around the world? the fed may stop hiking interest rates. they signaled that they will stop hiking interest rates. maybe they will have to get to 5.4. maybe 5% will be enough. they signaled they will hold rates there indefinitely, maybe until the end of the year. if the economy is slowing down, can that optimism maintain and create the reality that the bulls are saying we will have over the second half? >> you put your finger on the conundrum facing investors and

central bankers even. policy famously acts with a lag. just because the fed will slow the pace after the steepest rate hikes for a generation does not mean we will not get the impact of those rate hikes.for another six months even if they stop, that will also go on affecting the economy for months to come. and yet, investors are betting that because the fed is just about finished with its rate hikes, because it has tamed inflation in their minds, therefore the future is going to be brighter. that is the conundrum. do you trust that once we get through the pain in the next six to 18 months, the economy will turn around rapidly enough for equities to get back to climbing? the people who think yes are

buying it. the people who think no are sitting in cash or sending bond yields down surprise and lick low, considering we have cash rate hikes to come. >> that is bloomberg's chief rates correspondent for asia garfield reynolds. >> thank you. the new york stock exchange said some trains will be null and void after a glitch called -- caused wild price swings. exchange says a system issue affected more than 250 stocks, spirit the binary administration expected as soon as wednesday. it will offer the m1 abrams tank. they will send 14 number 10.

it overcomes a disagreement that threatened of pressure and offered key but powerful new weapons to counter pressure. pakistan's ousted prime minister says he is confident in returning to power this year. they are backing a continued role for the imf to stay about the growing risk for default. >> we have no choice. we are already defaulting on various areas. we feel that the crisis that we are now facing and probably by the time this will become much worse, who -- we will have to take radical steps. >> powered by more than 27

hundred journalists and analysts in more than one hundred 20 countries. chris joining us with the outlook for sectors. the winner from china's reopened international travel. >> next, the world bank president joins us live, reporting on the spillover effects from the u.s. debt ceiling. this is bloomberg. ♪

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>> they have made a preclear that they expect the global outlook to remain grim, cautioning here. david now persisted in inflation and a shortage of new investment, joining us now in washington. it is great to have you back on the show.

there is this concern about the global economy. not just going into a recession but i think this is being intensified by the concerns about debt which are now in the u.s.. this question about a debt limit pushing back against a deficit. look kind of reverberations does it create? -- what kind of reverberations does it create? >> it is a big not just in terms of the u.s. but also, japan and europe. as government look to continue their support programs, that is

the spillover. >> you had first-hand experience with debt, growing debt, debt limits, etc. during your years in the reagan administration. there are parallels to that time that also inform where the world situation is. >> there is uncertainty about how you get through the debt limit increase. i worked on those in 1986, 1987 and then into the future and there is political uncertainty. how do you find the political way forward? that is critical. do you get any spending restraint that is connected to it? that is critical.

the world looks at it and wonders what the u.s. is doing. i think there could be a rewrite of the debt limit so it actually had some kind of check and balance effect on spending. that seems difficult to achieve. in the 1980's, it was the lead isis. the workers that went on here. they have debt and throughout africa, there are heavy debt burdens they need to be restructured. >> let's talk a little bit more

about some of those developing countries. we heard from pakistan's prime minister. we have inflation they're running at its highest in 24 years. >> there was a process that goes on both between the world bank and the imf. they are really trying to strengthen that process to make it work. i was pleased to see secretary gale in. this is moving forward on debt restructurings.

when a country heads the wall in terms of debt sustainability. this can help them moving forward. except for in zambia where there is a lot of focus right now. it is frustrating that creditors have got together and have really made progress on a restructuring. it is important to make progress. china is asking lots of questions and the creditor's

committees. that causes delays that strings out the process. the further zambia, this is a country that has gone through a lot of its own internal improvements. it is a country that is singled out as needing to move forward with a reduced debt burden so there could be a new investment into the country. that is what is important right now. they need to take steps in the next few weeks in order to unlock the potential. >> i want to run by a couple of things that china wants out of this. they want to have the nation's local currency debt held by foreigners included in a deal.

they also want the world bank and the imf to start taking losses in restructurings. how do you respond as the president of the world bank? >> there is not a mechanism to do that. that in part is a delaying tactic or it slows down the process. that has been discussed actively at the g20 and rejected as a direction. as far as the first point, it is subject to their own laws. their own laws and possibilities as far as whether they can restructure that domestic debt. that has been taken off the table by zambia. for it to be brought in in the late innings is slowing down the process. there needs to be agreement on the perimeter and then move

forward with the debt restructuring quickly because the burden on the people of zambia is a heavy right now. we have covered a lot of ground today. so glad you could take the time. david is president of the world bank group. you can get around above the stories you need to know to get your day going in today's addition of daybreak. it is available on the mobile and were at. you can customize so you only get news on the industries and assets you really care about. this is bloomberg. ♪

>> let's take a look at how the u.s. stock futures are trading. you can see i half hour ago, we checked and saw some green on

the screen. all of that has turned into red. this is have a point. s&p futures, the data down about 2/10 now. the microsoft earnings work better than expected on the adjusted earnings-per-share. the results on the cloud revenues. maybe not good enough to really cheer up investors with so many more earnings ahead. >> on the subject of microsoft earnings, there have been expectations. we will talk about what silicon valley is doing to keep proper level study. that conversation in a moment, this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network.

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>> this is david and vonnie quinn with the first read

headlines. the u.s. justice department and its states are suing google to break up its ad technology business. the antitrust suit accuses the giant of italy monopolizing the digital advertising market, hurting plants and users. google says the legal action will slow innovation and raise advertising fees. mike pence is the highest level official and the latest one to be found with documents marked as classified. according to his attorney, the items were found at his aunt in indiana and turned over to the fbi after a recent search. to special counsel's are overseeing investigations and documents found in president biden's home and office and at former president donald trump's mar-a-lago estate. an advisory committee of ministers are recommended keeping oil production levels here.

the genre bending film everything everywhere all at once is leading the oscars race with 11 nominations. the movie from the independent studio a 24 is up for best directors. michelle want a golden globes earlier for her performance in the film and is -- has never received her first oscar nomination. globin's, 20 hours a day and on bloomberg quicktake. paradigm of the 2700 journalists and analysts. this is bloomberg. >> let's get to annabelle now. you can see the u.s. stock futures pointing down. we have read on the screen. what does this mean for asian trade? >> a lot of investors are saying there will be because for banks.

we have the aussie numbers due in the next hour but already, investors are saying this could be near the end of the rbn tightening cycle if we see that peak in inflation. that hid 7.2% year-over-year. some economists are starting to see meaningful signs coming through that price pressures will ease in 2023. there was already a yan zi bank among them. expect the fifth two -- expect a 50 basis point hike. that is reactionary in the bond space. you mentioned those moves in u.s. futures looking a little bit lower this morning. we are fairly range bound in the session. not a lot to move the needle here. taking a look at the outlook for tech stocks. you can see this chart looking

at the nasdaq rally. it is an 8.5% jump. we are seeing some few technical levels. that has acted as a level of resistance several times. also, rallies and the nasdaq have kind of faded once reaching above that. even if we go above that, we faced a line in blue here which is the 200 day moving average. it hasn't top that for more than a year. >> let's get back to microsoft kicking up earnings for the u.s. tied with profit beating estimates mainly on the strength of its cloud services business. an interesting set of numbers from microsoft.

what does the future look like for microsoft for investors when they consider this pivot toward a new looking business model? >> right now, the business, everybody is focused on that as your business. you might be a little better than people thought. the commentary is what has reverts to the course in the after hours. they talk about that business exiting in the mid-30's. the bigger disappointment in the quarter is the market. we knew it was declining. this was more than we expected, at least the windows business is a very high margin business. it had an impact on the margins

and the outlook, hence a little bit of the disappointment. more important, there was a good, robust discussion of the impact on microsoft's products. that is where some of the long-term positive implications should come from. >> what about sales outlook? it looks like those days of dental -- those days of double digit has might be coming to an end. the environment will probably be lower for the next couple of years. that is still the case. there will be a deceleration. it is going to impact the results. there is also a currency headwind.

the headline growth results are as slow as that. >> what does this mean if i am an investor? if i want to have a solid tech company, microsoft was almost like a blue-chip. does it still stay in my portfolio? do i rebalance? >> microsoft is all the other companies that have yet to report that they deliver bad news. if microsoft is talking about a week will backdrop in a worse than expected u.s. backdrop which is what the said, a lot of other software technology probably has to deliver some bad news over the next two or three weeks. request for a couple of years, all you have to do is close your eyes and buy a couple of big tech stocks. you felt like you are making money and you were. is this like a permanent shift

away? at least for the time being? until the stock selloff? to reflect a new environment -- >> if you think about microsoft -- apple, amazon, google and microsoft -- microsoft is in the best position. it was the other companies that have to deliver the bad news. microsoft right now, with expectations set and a good outlook based on some of their work in artificial intelligence, it was probably the best position that goes through. >> in terms of ai, we did get the news from microsoft that is investing another 10 billion and open ai. is this going to be the revenue

driver of the future? >> in the short, they are not necessarily having a check for $10 million. they are just giving credits. that means that the azure business will have a new growth driver that can start picking and as soon as this year. longer-term, inc. that kind of challenging the functionality could be a game changer. these are very impactful benefits to microsoft as it invests in open ai. it is not cash that will open ai. cracks a broad question about texas instruments in the following way, their demand was weak across the board except for autos. that was the one that was supposed to be weak. these are the big tech names

like microsoft that will be trading on the macro more so than on some of the development like ai, clout, etc.. that is going to be a big question in terms of recession, in terms of higher interest rates and central banks, etc.. >> not forever, just for the next few weeks. for the next few weeks, we want all the companies to report, give us an update about where they are at in terms of the economy, how they will be impacted. for the next 2, 3, 4 weeks, it will be all about what parts of the economy you are exposed to. >> the managing director and senior software analyst, thank you. coming up next on the show, as

the chinese travel market picks up, joan asterisk lynn how investors can play the reopening story. this is bloomberg. thanks to avalara, we can calculate sales tax automatically.

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chrysler thousand chinese consumers surveyed. the next guest expect the giving and hotel industry to cash in on china's reopening. joining is now is the managing director and ubs. as if to underscore the popularity of gambling, more than half of the thousand of the consumers you surveyed have macau at the top of the list. what is the potential upside for gaming stocks? >> sure. the two u.s. hosted names that are most exposed to macau are las vegas resorts. we prefer lbs to win resorts. we expect mass-market revenues to recover by 2024. for reasons unrelated to the pandemic but they only got about

7% of their vip business. they only have a little bit to make up for and then the mass-market comes back. it will be a little bit more work to make up for the vip business lost. we expect them both benefit clearly from the reopened. >> we have already seen some pretty decent gains for gaming stocks but still quite some way to go before recapturing previous highs. i want to talk a little bit more about some of the other things your survey said. we often talk about chinese consumer revenge spending. >> one of the things that was most interesting is the other 80% of them are planning to travel the next year. only 13% will travel medially.

only the regulations have changed for that cross-border pickup. it will be a little bit longer by the time we see the same level of cross-border travel. china had before the pandemic become the number one exporter of travelers so we think that piece of the business will take longer to recover. more domestic travel initially within china. click so far, you don't see any signs that the increase in grass is not surprising with the end of covid zero -- any sign that -- even anecdotally that maybe some of the optimistic travel numbers may not live up to what is expected. >> i do think that the survey does show that sort of hesitancy

in terms of immediate travel. i think it will be a few quarters before we start to see the impact of it. there are countries like marriott and hilton. overall, we prefer to marriott.

>> i think sometimes people -- they lump chinese consumers together. if i am a young and unmarried person, i may be much more willing and eager to get out and travel and go find places and meet other people my age where is -- whereas if i am older in china, i may be willing to wait to go out and have some fun. >> i do think we have seen a little bit of that with the u.s. reopening. it has been the one that has come back. there may be some hesitancy in terms of different age groups. we are seeing that in the u.s..

>> these other destinations they could had to. u.k. recession might be cut short by returning chinese tourists. look could the invocations be for markets like europe and the u.s.? >> in terms of where chinese consumers want to travel -- -- these are the biggest countries outside greater china before as well. then, a little bit less. i think there will be european travel. the u.s. is actually -- it would be a small percent returning to that.

it is 47% ready to go back to korea. chinese travelers were around six or 7% of total travelers to the u.s. before the pandemic. a bigger percent for gateway cities like new york and san francisco. they are having that piece of international travel. we don't expected in the next quarter for that cross-border travel to come back to the u.s.. we will see things more recovered.

quick thank you so very much. the managing director at ubs. be sure to tune into bloomberg radio to hear more. broadcasting line -- broadcasting live. there is plenty more ahead. stay with us. ♪ that actively cools, warms and effortlessly responds to both of you. our smart sleepers get 28 minutes more restful sleep per night. proven quality sleep. only from sleep number.

>> japanese stocks made a full recovery for the bank of japan surprise revision, putting the focus back on economic fundamentals. let's bring in our senior asian stock reported. a lot of questions here. it was the hope for the bond market traders that if something what would happen, it did not. companies are having to cope with inflation. how does this all add up for what happens next in the stock market? >> when commodity prices started to rise about two years ago, there was wide skepticism about the abilities to raise prices.

it is becoming much more common, even though two years ago, it felt almost if japanese companies have forgotten how to raise prices. it is becoming more widespread. >> how are stockmarkets reacting to these prices? >> when companies make a project announcement, share prices roll

at least for about a month. because such announcement could become so common that the shock value has dwindled quite a bit, in recent months, when companies make price announcements, they still make some positive terms in terms of share prices. the effect doesn't last long these days. >> i am wondering if these will be in terms of raising their prices, they are going to use some of that money so get -- to get their work is bigger wage increases.

what are you hearing there? >> known has a clear idea about how this will unfold. japanese companies are very cash rich. the inflation picture might change drastically. we have to see if the wage will be one of the biggest focus for markets in the coming weeks.

>> alright. that was bloomberg's senior asian stock reported. these are the stocks we are going to be watching when trade opens. oil fell the most in three weeks. as earnings from other u.s. companies begun. coming up in the next era, contiguous head of research for aipac tells us what is making investors more optimistic and later we will hear from enhanced international about the covid peak in china and what lies ahead for the country's consumers. market opens in tokyo and seoul next.

>> this is daybreak asia and we are counting down to the open spirit in u.s. trade earlier, microsoft earnings-per-share be revenues coming in on the reserve cloud business but stock futures are looking down. we have read on the screen. paul: i am watching australian cpi expected to come in pretty hot. annabelle: we have new zealand inflation holding at a near three decade high but the open of japan and korea is upon us and the start of trading for cash treasuries, where most of the action was in wall street and the yield space. we saw it retreat given the expectation the central bank hiking around the world is

nearing the end. the boj has been a -- an outlier . but we are still seeing more companies start to push production cost increases on to consumers. what that means for company profit margins, we will have more details at the bottom of the hour. the nikkei is dropping slightly at the start. a fairly muted session on wall street. earnings was the big focus today and that is what we will watch in korea at the start of trade, particularly the tech sector. microsoft and texas instruments, one of the world's largest chipmakers, had the first sales decline since 2020. in terms of action today, the

cost stack 1.2% at the start. -- the kosdaq 1.2% at the start. oil trade in prior sessions was focused on numbers coming from wall street and now the focus is shifting to demand from china and the likelihood of opec plus standing pat on outlook in the next meeting. and the eas to hunt -- asx 200 is flat. watching a retreat in bond dealers -- bond yields. paul: we will get those for you when they break. at south korea's markets are coming back online today, already in positive territory and the next guest says sentiment has been on a recovery. let's talk about where

opportunities are with olivier. the nikkei is that a good start to the week but pointing back a little now. when we see gains like this, how sustainable do they look considering the backdrop of tightening to come from the fed, recession risk and essentially a rocky earnings season? >> that is the big question. nothing seems sustainable right now. as soon as we hear this, we get an opposite view from someone else. both are full of assumptions. if this happens, if inflation peaks, if the fed has a rate hike they will pick it -- pivot. a lot of if's right now. earnings last year needed to be better than expected and this year they don't have to be as bad as expected.

paul: we have a harbingers of doom ahead of each earnings session recently and it never turns out to be as awful as anticipated. is that your expectation this time? >> in the early parts, yes. it does not seem like the slowdown has affected earnings as much as people expected. yet. we were expecting negative overall earning growth or detraction in earnings for the fourth quarter but so far it is 5050. better than feared. we will have to see. if you ask investors today if inflation will be higher or lower than today, most will say it will be lower.

but if you ask them if it will be above or below 4%, twice the rate the central banks are looking for, then it is a 50-50 split. inflation is too hard to predict still. and monetary policy, at the heart. kathleen: it seems there are two ways to look at it. inflation will come down and u.s. economy will get weaker in recession. so the fed would cut rates. another view seems to be that even if they do not cut rates, just the fact that they pause and hold study will be enough for the stock market bulls to start buying stock again. are either argument correct? >> risk tolerance will likely

rise in the second half of the year. by then we will know what the picture looks like for inflation and when the fed has stopped region reach and what -- raising rates and what conditions for lowering it would be. it will likely rise in the first half but right now there is too much uncertainty. i both sides have valid theories if assumptions come through. but at this time, no one could tell for sure. we will likely see risk -- see risk-averse or neutral in the first half and bullish in the second. kathleen: what does that mean for the rest of the world, in terms of japan, they are divided, china, there has been

more than one person on many shows talking about emerging markets. does that appeal to you? >> emerging markets would be less risky than develop market, because the developed markets are in the u.s., which has a lot of volatility right now. so emerging markets are in a better risk-adjusted trade but that will not last. normally they are riskier. it will only be a valid option the first half of the year. paul: part of the reason people seem optimistic about emerging markets is the narrative of dollar weakness. can we be certain of that? it is showing resilience. >> it usually is the safe haven currency during uncertainty and geopolitical risk.

no one can tell how or when the war in ukraine will and for the status of the u.s.-china relationship. those things prop up the dollar but nobody needs a very strong dollars so it should not go back to the strength of last year. it should stay where it is or slightly lower in the coming year. kathleen: fixed income. how do bonds and yields play into your outlook of what to put your money and or how you assess opportunities in equities? >> both have had -- bonds have had their worst year ever last year because of interest rate. we have not yet seen a fallout in yields. there is an underpricing of

credit default risk if we get to a scenario where we have a rescission and it is longer than we think or maybe the fed does not pivot right away. the next thing that needs to be refinanced next year is a little bit of a worry for the low-grade end of the bond market but on the high-end, interest rates are peaking and it should calm down and that would be good. kathleen: thank you, olivier. let's get to vonnie quinn for the headlines. vonnie: the new york stock exchange says some trades will be declared null and void after while the price swings and trading holds on stocks. a system issue impacted hundreds as trading started on tuesday.

some firms like wells fargo and mcdonald's were impacted. u.s. and germany are going to send more tanks to ukraine. germany is going to send 14 leopard tanks. it offers keys a new powerful weapon to counter russia. -- steve -- kyiv a new powerful weapon to counter russia. and protesters are: for the interim president of peru and conservative controlled -- are calling for the interim president of peru and conservative controlled congress to be impeached.

>> in the chaos and anarchy, illegal acts such as illegal mining, smuggling, and drug cap it -- drug trafficking. vonnie: prime minister's of pakistan expects to win a majority when elections are held . he touts a plan to shore up economy and backing a continued role for the imf to stave off growing risk of default. >> we have no choice. pakistan, we are already defaulting on various areas in our country. we feel the crisis we face and by the time these will become worse, we fear the situation and

we have to take radical steps. vonnie: global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. paul: still to come, the boss of a company in beijing tells us why health care get a boost as the economy goes on the mend. that is bloomberg. ♪

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microsoft spun into losses in late trade after saying the cloud computing growth will do celebrate -- decelerate. observer has had a 38% jump in sales -- azure has had a 38% jump in sales. in texas instrument ceo says there is a weaker demand and all markets with the exception of automotive. they gave a tepid forecast for the current quarter saying it is uncertain how quickly the industry might reemerge. and 3m has tumbled after missing the estimate. they say macroeconomic challenges will persist this year. they will be cutting jobs. the ceo says the company is not

satisfied with their performance or progress. johnson & johnson has forecast stronger earnings for this year than analysts expected. they promise a momentum boost in the second half of the year with more product launches. they are pointing to new drugs and currency exchanges. paul: let's look at what is moving around the asia-pacific. annabelle, what are you walk it -- what you watching in terms of tech? annabelle: looking at stocks in japan, we have the open of tokyo and the session looks mixed so far. i.t. stocks trading fairly flat. here's the outlook for some of the biggest names after microsoft earnings. we are watching the nasdaq.

there is a 200 day moving average to watch. we are also checking reactions to chipmakers from texas instruments earnings. this was the first sales decline since 2020. they have the longest list of customers and broadest range of products in the chip industry and is one of the first to report earnings. good to watch. we still see chip stocks move mostly higher. sk hynix is another one to watch. production for mobile devices will start in the second half of this year and investors like the that just came out. kathleen: i was looking at oil prices.

the earnings slow down hitting a lot of markets. annabelle: that was the sentiment for the wall street session on tuesday. the biggest driver for oil prices because it dropped more than 2% in the session. you can see at the bottom of the screen it is trading flat. big energy companies in asia are looking mixed. a little higher in korea. that could be a catch up because they were shut for a public holiday but the focus for oil seems to be pivoting back toward demand from china and the outlook for the next opec-plus meeting. kathleen: general election -- general electrics is continuing to grapple with lingering issues in their energy business. we were told the aerospace business is taking off. >> we exited last year with

tremendous momentum. the end of the year had us at a strong revenue level, up 11%, led by our aerospace business. catch up 60%. earnings up 50%. we are bringing that momentum in the -- into this year. we are down 100 billion dollars in debt since 2018. we come into the year feeling very good where we are coming from and aerospace perspectives. services and new units are continuing to improve given recovery. we anticipate better performance. we have challenges in renewables but we think this year will be better and it sets us up overall not only for good results this year but in turn, the second

step of transformation whereby we take over and over the public. -- we take vernova public. >> what is the timetable on that? >> it will include our powerful and renewables business. we will bring them forward in a second staff and we -- step and we are on the path. there was a lot of internal work to rewire the business like we did for health care. the underlying operative performance has to be better but what we have seen in the last year in the last year and pricing and cost improvements has set us up to do that. one thing we did not expect, two things, last november -- november 2021 when we announced it, we were not expecting the inflation reduction act and were

not anticipating what happened in ukraine. it changed the market outlook. >> looking at renewables, as i look at the documents released, that jumped out that it was not doing as well. if anything, they are going in the wrong direction. what is the cause and what do you need to do to make sure this spinoff works the way you wanted to? >> when we look at results today, aerospace led the way. powers showed instability. renewables has a way to go. what we need first is the inflation reduction act to kick in and give us more volume in the u.s. market. we are in the middle of a low. -- lull. when we get the volume coupled with underlying productivity and cost improvements we made, we think renewables will be on their way.

paul: that was ge ceo. you can get a roundup of the stories in daybreak. go to dayb on terminals and you can use our mobile app. customize your settings so you only get news on the stories you care about. this is bloomberg. ♪

kathleen: let's check at how futures in europe are opening because you can see declines across the board. let's round it off to about 2/10 of 1%. this comes after a similar decline and after stoxx 600 has rallied a little under six

percent in january. you can see this rally has lost steam. one reason is another ecb governing council member is turning into the hawkish camp. he is that lithuanian central bank chief and he thinks they should not slow down and keep doing the 50 basis point rate hikes. the president of the ecb monday pointed to more cuts needed so even with concerns about global recession, maybe the warm european winter has helped keep the hawks more bold. let's move on to the world bank. they have a green -- grim outlook for global economy and they are cautious slowdowns could linger into next year. the bank's president is prep --

is particularly frustrated and says the country needs help with debt burden for new investments. >> many of them are facing high risk of debt distress and there is a process that goes on between the world bank and imf, also through the g20. we are trying to strengthen the process to make it work. i was pleased to see secretary yellen in africa this week focusing on the urgency of moving forward on debt restructuring. i was in china in december with the imf managing director. we had important meetings with two of the world's biggest creditors, chinese banks, on how to push forward with the process. one of country hits the wall of debt sustainability, there has

to be a way to work through it and get them moving forward. for example, in zambia, where there is a lot of focus right now. paul: do you think china is being as constructive as it could be when it comes to restructuring debt, and is it a source of frustration for you? >> it is frustrating that creditors have not gotten together and really made progress on the restructuring. zambia has been at it for two years and it is important to make progress. they might be able to do that over the next couple of months. china is asking lots of questions in the creditors committees. that causes delays. it strings out the process. so i think it is important for them to be focused on getting to an actual debt restructuring where the burden can be latent. for zambia, this country has

gone through a lot of their own internal improvements. and it is a country that had -- that is singled out as needing to move forward with a reduced debt burden so there can be new investment into the country. i think that is what is important right now and they need to take steps in the next few weeks in order to unlock that potential. paul: world bank president speaking to us earlier. we have plenty more to come on daybreak asia. let's take a look at how markets are tracking. kospi higher returning to trade after a couple of days off in india. more in a moment.

>> getting some breaking news

across the terminal at the moment -- it is consumer prices for the fourth quarter. cpi, coming in a little bit hotter than expected. 7.8% for the fourth quarter. the median estimate, 7.5%. we are seeing the dollar gaining right now. little changed on the asx. this is the measure the reserve bank of australia likes to watch. 6.9% on the year. also a little bit hotter than expected. plenty here for the reserve bank of australia to ponder ahead of its next meeting, as inflation is proving to be just as sticky as the weather outside in sydney. let's get more from our chief rates correspondent for asia, garfield reynolds. what does this mean for the reserve bank ahead of its first meeting in 13 days time? >> the initial market reaction is telling you this takes off

the table any potential the rba would pause or pull a rabbit out of its hotter and go 15 basis points at the february meeting -- hat and go 15 basis points at the february meeting. this was a strong expectation even going into this inflation data. it does not probably have a huge impact on whether terminal rate is seen going. the expectation is they would do two 25 basis points from here and pause -- hikes from here and pause. this lines up with that. the figure did come in underneath the rba's forecast for year-end inflation for 2022, which was 8%. that lines up with the idea that the rba is soon going to be in a position where like other central banks, it can hold interest rates in restrictive territory and keep an eye on what that is doing to the economy over the longer term. >> it is during difficult now

for the rba. we had this morning from deloitte over the week that more rises beyond 3% could push australia into recession, as household spending starts to contract. what is the dilemma here? is there a chance we could see a pause? >> there is a chance. i'm sure at the last meeting the rba said it has 0.25 or .5 on the table and it went with .25. i would expect to have the same range there, 0.25. they will look at the data coming in, with monthly cpi readings. that will help them to get a handle on whether this .25 is enough. it's been interesting the way that the maximum rate, price 10 by markets, was seen at being 4.75% just back in november. that is now back at 3.6%. two 25 basis points hikes

is seen as the maximum the rba does. that is an acknowledgment of the risks of recession and in particular a lot of people have been pointing to that so-called mortgage cliff. with people who took out fixed rates when the rba rate was at 0.1%. now they are facing those rates coming off and being based on an rba variable-rate. 3.35 probably or even 3.6, if they go again. that's going to be a big shock and the housing sector has already seen some pretty steep declines. that's having an effect on consumers and starting to have an effect on businesses. the other thing going on is the fed is getting close to the end of its moves. if it goes 25 basis points, as expected, in february, that's really going to give the rba a lot of capacity to sing, ok, if even the fed is slowing down, we can slow down and maybe stop. >> it seems to be more and more

of the same story. if the fed slows down, what does that mean for me? we look at the inflation number, unchanged, 7.2% on the latest rate. -- the latest read. it is not as much as the rba thought it would be so maybe they will downshift, i just wonder, do we need to hear more from central banks, how much are you moved by inflation not being quite as strong as you thought it would be? how much of a difference should that make -- does that make? should investors be ready for you to downshift and pullback when inflation levels are still pretty high? >> well, there is some of that, it is a necessary though not sufficient condition, if the inflation numbers come in above the central bank estimates, then that would be a signal that the job is not done yet. the fed is important especially

because the fed is seen as being close to be great. it's led to a decline in the u.s. dollar. a stronger strain in new zealand, that helps to retire inflation in those countries because of -- there's less of an impact on prices. import prices come down, that sort of thing. the other point that's going on in both countries, especially in australia, is some signs the labor market is cooling a bit. we had the and employment rate a little bit more elevated than had been expected the last couple of recent releases, once revisions were taken into account. we had job losses, admittedly part-time jobs, but job losses and set of strong jobs growth -- instead of strong jobs growth. you get the mix of the housing sector and what that is doing to the overall economic mood, that mix of factors sort of tick, tick, tick, tick toward when we

can stop. we are not considering cuts anytime soon. the market is not pricing that in for the rba, but there's a stronger chance that they are going to pause and wait to see. that's been something that for the rba, they've said time and time again that they need to be more data-dependent if the data allows for it, they can't stop and see how things are going. they have been more aggressive in their rhetoric saying they need --. -- to get on top of inflation -- saying they need to get on top of inflation. is leading the more aggressive charge. that's partly because of its stands. -- its stance. the different nuances of the two economies. >> on a positive note, this is a

backward looking data, fourth quarter, ahead of this release from the treasurer and australia. he says inflation has p eaked, is he right? >> there are some signs -- i have not had a chance to review the data that just came out, but the year on year moves in petrol prices in particular is a very strong driver for prices in the economy and consumers' expectations for prices in the economy. there is also pressure coming off of power prices. in particular some signs that wage pressures are not as strong as they had been. all of that points to the potential that inflation has peaked. most economists expected it will soon peak event has not. >> garfield reynolds, thank you so much for joining us and taking an in-depth look at a

report that scott heightened importance right now -- that has got heightened importance right now. let's take a deeper look at other aspects of the inflation report. any reaction from markets on this? >> the moves in the aussie dollar are pretty interesting. we had seen it up as much as half a percent against the greenback. now just moderating those gains slightly. you can see around .3% to the upside against the greenback. it is a more significant move when you look back over the course of the past year of inflation prints. these are moves we have seen in the first 30 minutes after the release in 2022. it is not something -- if you change on now, more interesting moves happening in the bond space as well. we have seen those yields really retreating in new zealand and australia after those inflation

prints in anticipation as well. the general feeling amongst investors, central banks, nearing the end of the tightening cycle. this could be a reason the rba may be forced to sustain its tightening, if we don't see more signals coming through that the peak of inflation has passed. you are seeing yields a little bit lower here. not as much as they were at the start of the session when we saw the moves around 10 basis points. the same thing we are seeing for new zealand, the five year yield. currencies and markets wise, in terms of what we are seeing further gains today, that is certainly south korea playing a little bit of catch-up and you can see the australian stocks trimming that advance. we had been higher for a sixth straight session. at the top of the hour i mentioned in japan, we are seeing a lot more companies starting to pass on these production costs, increases to

consumers. if you bring up a terminal chart, it doesn't show how japanese food companies are performing here. it is interesting, you do question whether consumers will accept them and japan. yet to be seen. this stock, showing ajinomoto is the only company to outpace a topix. -- outpace the topix. >> thanks, annabelle. let's get to vonnie quinn, with the first word headlines. >> [inaudible] >> we are having a few audio difficulties with vonnie quinn. we will return to first word news any moment. pakistan's prime minister says he is confident he could return to power this year. he was removed from office in a confidence vote last year.

he told us the popularity of his party has rattled every other fraction in pakistani politics. >> the entire status quo is against me right now. the parties are all on one side and my party is up against them. can they are petrified, because -- and they are petrified, because the reason for this assassination attempt is they got scared of the popularity of a party. since we were removed for conspiracy on the ninth of april, on the 10th of april, hundreds and thousands of people coming out protesting around pakistan has never happened in pakistan. then followed a series of public rallies which were unprecedented. but what really scared them were the 36 elections that took

place since and 29 out of 36 were won by us, despite the establishment on their side -- the administration was on their side. that's what's really rattled them. if you look at any survey in pakistan right now, all the parties put together cannot compete with us. and the by elections, 13 parties stood on one ticket against us. 75% of the election won by us. >> that is pakistan's former prime minister speaking to bloomberg. now, let's get to vonnie quinn with the first word headlines. >> the u.s. justice department and eight states, so when google to break up its ad technology business. the suit accuses the search giant of illegally monopolizing the digital advertising market. google says a legal action will

slow innovation and raise advertising fees. the former vice president, mike pence, the latest level official with documents found marked as classified. two special counsel's are overseeing. opec-plus to expect an advisory committee of ministers to recommend keeping oil production levels unchanged when they meet next week. international oil prices climbed in the past two weeks with china reopening and the eu sanctioning member country russian. analysts predict opec-plus will only start to reverse its supply curbs in the second half of this year. elon musk has told a jury he was confident he could have pulled off his 2018 proposal to take tesla private. and the third day on the witness stand in a securities fraud

trial, he continued defending his tweet, saying he had funding secured. under questioning from his own lawyer, he set aside a problem for him to raise money and every financing round he's ever had was oversubscribed. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ >> plenty more to come on "daybreak: asia." this is bloomberg. ♪ thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh

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>> with the end of covid zero and pandemic controls and china, many are traveling back to their home towns for the lunar new year festival. our next guest says consumption driven by mental and physical health needs. let's bring in the president and ceo at and hence international -- at enhance international. an interesting way of looking at how covid zero ending, how china reopening is going to affect the economy. we think, are people going to go on trips and buy more stuff? you are looking at medical expenditures. what do you see there? >> ok, so does one measure i

would like to point out, which is basically medical literacy. simply put, this is a term that looks at how aware you are as an individual about your health exposure, opportunities for preventative care, etc. and so forth. this is a measure that's been tracked by the health ministry in china for over a decade. what we found is that there is a very strong correlation between the medical literacy in china and health expenditure. and the correlation is strong enough that it is around 1.9%, which is a very strong correlation. what that tells you is, there's less of an influence on what the market conditions are on health care spending than it is on the increase in medical literacy. on average, it's been growing slightly under 2% over the past 15 years.

but then what happened interestingly enough in the year 2020 is it spiked to a 6% increase, and that is because of the onset of covid. from what i've seen firsthand in beijing in december, our estimate is that you may see an even newer record in 2023, in terms of that area. as you may be aware, medical expenditure is roughly just slightly under 9% of the total wallets of the chinese household, and that doesn't even take into consideration what we call medical tourism. >> let's talk about medical tourism. how that enters into the picture and how it's growing. >> well, our view is, based on the research we have done, that there is pent-up demand for medical tourism. to the point where we don't necessarily see the spending

coming and more gradually. we may actually see it peak around the summer time frame. you may even see a slowdown sometime in the fourth quarter of this year. because so many of those individuals are looking to get newer vaccines, etc., we are very concerned about lung coping and reinfection, that it may come in sooner than you think. -- long covid and reinfection, that it may come in sooner than you think. it all depends on the countries they are keen on going to. >> and the experience of other countries as a guide, there had been a wave of covid outbreaks one after another. how do you see china and chinese consumers responding to this when it almost certainly happens -- when it almost certainly

happens? >> i was in beijing and we were tracking the symptoms in wenzhou. it was very clear that for the different variants, there were different symptoms. what you saw the most was a debilitating fever that took you away from work for at least a week. in some cases, longer. so the question is now that all bets are off, will the south and the western part of china get reinfected? and will this prior immunization that they got, will that help address the fact that bf7 has different characteristics and different impacts on productivity? that is something that will definitely -- that we are definitely keeping a close eye on after people return back to work.

>> sam radwan, unfortunately we are out of time, president and ceo at and hands international -- enhance international. we have plenty more to come on "daybreak: asia." stay with us. this is bloomberg. ♪ introducing the new sleep number climate360 smart bed.

the only smart bed in the world that actively cools, warms and effortlessly responds to both of you. our smart sleepers get 28 minutes more restful sleep per night. proven quality sleep. only from sleep number. >> shares fell in tokyo after the automaker slashed its profit

outlook. hurting demand for both electronics and automotive parts. let's bring in our senior editor, reed stevenson. is this a reflection of the business environment or succession issues at nidec? >> well, it probably is a bit of both. in a briefing after the warning yesterday on the profit outlook, the nidec ceo and the chairman said that a lot of muska medication with customers had occurred under previous -- miscommunication with customers had occurred under previous management. there was a lot of turmoil at this kyoto-based company last year because mr. nagamori was not able to let go of the reins. they hired a successor and soured him very quickly and he was out after about a year. so that turmoil has contributed to some of the issues according

to him. but in a statement, the electric motor maker also cited a worsening business environment. demand for appliances down, now that we are coming out of this global pandemic. the global auto industry is not recovering as fast as nidec had anticipated. all these factors lead to what amounts to a roughly halving of the profit outlook. >> how are investors looking at the company now and what's been the impact on the share price? >> so last year, because of this turmoil, we saw the shares of nidec drop by about 49%. this morning's decline as he raced -- -- -- has erased some of the modest gains we have seen this year. investors were worried about the succession issue. now they have something more to be worried about which is the actual underlying business performance here.

>> bloomberg's senior editor, reed stevenson, there. let's take a look at how we are treating in australia. the asx, quite a reversal, after stronger-than-expected cpi numbers for the fourth quarter. coming in pretty hot, 7.8%, at the upper end of the range of estimates. we were expecting around 7.5%. the aussie dollar, appreciating . clouding the picture for the reserve bank of australia ahead of its first meeting of 2023 and just 13 days -- in just 13 days. the aussie dollar, trading at 70.74. that is it for "daybreak: asia." coverage continues in a moment. this is bloomberg. ♪

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