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asia." coming to you live from new york, sydney, and hong kong. >> we are counting down to market opens in tokyo and seoul. paul: the top stories this hour. asian markets may catch a headwind from wall street where stocks shook off losses. tesla swinging in late trading after fourth quarter profit feet estimates in promises of a rapid output boost. bonds tied to asia's richest man fall sharply after a short seller accuses him of stock manipulation and accounting fraud. kathleen: let's look at south korea's gdp number for the fourth quarter, coming in line with expectations. on a year-over-year basis, up 1.4%. there in mind, that is half of what it was a quarter before. stronger than the 1.3% forecast. roughly in line, in terms of the annualized year-over-year. 4% coming in -- we don't have

that number yet, i take that back. this is after interesting numbers. unemployment jumped from 2.9% to 3.3%. exports, the 20 day exports that -- showed that they were in decline, 8.8% the month before, was more like 2.5%. there was less weakness. the cpi being closely watched at 5% steady year-over-year, well above the bank of korea's target. that is the question, what these numbers mean for another rate hike. lot of people think the bank of korea bank will pause. that remains the question. we will be talking with a korean economist expert later in the show. and about, what do you see in asian markets? that is something we will be watching closely. annebelle: absolutely. the kospi opening in one hour. more data out. we did see that consumer

confidence ticking higher coming in at 90.7 in january. pessimists outweighing the optimists with a reading below 100. inflation expectation looking at 3.9%, from a survey of consumers. in terms of the set up for the trading session in asia, we are looking very range bound at the start. we don't have any trading for australia. the asx 200 is shut. the aussie dollar online. new zealand is flat. japan futures also flat. we did have relatively positive leading from wall street. we could see moves to the upside. kathleen will get through those details in a moment. the other factor that has been absent from asian trading over the past few days is what is happening in china, given the new year at holiday is underway. we will have hong kong coming back online. mainland china still shut. this chart takes a look at how the hang seng performs one month

after the lunar new year holiday. three consecutive years of declines. this could be the year that we do see some upside, given we did not have that positive session on friday leading into the close. and a lot of optimism around the reopening trade in china. looks like there could be more room to go, especially with revenge consumption on the rise. kathleen: revenge consumption, that sounds like fun. we will be back with an about. let me catch you up on the latest on the u.s. stock market. we will look at the futures reading. tesla helping boost -- helping to boost the nasdaq. s&p futures are slightly to the downside. they closed pretty much flat, with so much confidence -- concentration on the tesla earnings on the ibm earnings. we see pretty much flat for the nasdaq. in terms of the bond futures, a little bit of an increase in price. may be edging lower on yield.

. the 10 year benchmark was around 3.4%, still below 350 at the end of the trading day. ny crude up .31%. looks like -- here is the story, china reopening, that creates demand, but you have inventories rising in the u.s., that keeps it firmly above 80% but not moving much in either direction. dollar spot index flat. paul: wall street shaking off the tech gloom. tesla earnings are in focus. let's bring in ed ludlow and are equities reporter jess manton. ed, let's start with you. the earnings call for tesla well underway. what are we hearing? ed: the main take from the call is demand still outweighs the volume of vehicles that tesla is building. this has been the question going into earnings. the take away from the print itself is that tesla continues to demonstrate that it is

financially nimble. adjusted eps coming in at $1.19 in the fourth quarter, above expectations. they continue to reiterate that they will come in above compound annual growth rate of 50%. 1.8 million units to be produced in 2023. if you take that average over a series of years, they are running at above 50%. regulatory credits, that revenue came in, growth on a sequential year on year basis. the company's narrative is that we will see it start to decelerate. it took a while for the market to make its mind up, up 2% in after-hours. it took a while for us to get that. we were not sure if this was good earnings or bad earnings. kathleen: in terms of where tesla is heading, did you hear anything on the call about demand? u.s. potentially going into a sharp slowdown, may be a recession. you think of high income people buying tesla's, but then you wonder about china as well.

ed: yeah, elon musk's main point is that they see a contraction in the automotive industry broadly. but that tesla is well-placed to weather that storm, to whether that contraction. cost discipline was a big focus of the wording in the earnings document itself, the shareholder deck. at the same time, they seem really committed to ramping up production. they doubled capacity in 2022. china and asia angle is interesting. they basically said all of our problems were china related. production and demand wise in that shareholder deck. otherwise, march 1, annual shareholder meeting, apparently we get hints about the new generation of vehicle, which a guest told me that will be a fully autonomous car. kathleen: i don't know. we will see. i will marked on my calendar, march 1. market reaction, you were talking to us about tech gloom,

why it is there. does this lighten the tech gloom? jess: we still have a huge week next week with apple reporting, amazon, alphabet. obviously these will be key gauges that can potentially move the direction of the market, given how big these components are when you were looking at the composition of the s&p 500. i did mention earlier when we were talking as far as the relief that we did see in the reversal as far as the payment we saw when they came to chipmakers. looking ahead to tomorrow, investors are going to look at fourth-quarter gdp in the u.s. that is more backward looking. it is supposed to accelerate. looking ahead toward next week, we are going to get the employment cost index on tuesday, which i would argue that my sources are keeping a close eye on that. jay powell did flag in december 2021, after he dropped transitory as far as when he started getting concerned about the inflation equation, and what that means. the implement cost index has been hovering at a record,

supposed to come in at 1.2% for the fourth quarter. that is going to be key as far as what do these gauges look like? this comes ahead of the fed's decision next wednesday when you look at these tech growth stocks and the trajectory of the fed, that will be a key equation. when you look at on the services side, what that could mean for these companies when it comes to higher barring cost, and how long they could stay at a level when it comes to the fed. paul: and when it comes to the vet, let's talk about jobs. ibm, the latest tech firm to announce layoffs. how much is this becoming a theme for the big tech and what does it mean for the jobs environment in the u.s.? jess: it is becoming a huge theme. we heard this from microsoft last week, as well as amazon. . we have heard this from salesforce, meta, we heard this from wayfair recently. you are seeing a number of these companies that are also hearing from ibm just today. when you see that outlook, it is

a head scratcher for some people. when you see these stock prices move higher after that happens, say with meta since they announced job cuts, its stock is up more than 30%. and you are looking at that and thinking of the pain, like an individual losing that job, you are not necessarily seeing that filter in when you were looking at the broader monthly jobs report. we look at another update on the january jobs pictured next friday. you are also not looking and seeing that in the initial employment claims data, which comes out on thursday. when we have talked to mary daly of the fed at bloomberg, she said when it comes to unemployment claims, that is the last place the fed is looking to. it technically is a lagging indicator. we are beginning to see this as a theme, especially in the technology sector. this could begin to spread out and other corners of the market. kathleen: we shall see. bloomberg technology anchor ed ludlow, and equities report adjustment and. let's get to vonnie quinn with

the first word headlines. vonnie: that a says it is reinstating former president donald trump's facebook and instagram accounts. trump was banned from the platforms after the company deemed some of his posts encouraged supporters to invade the u.s. capitol in january 2021. they say they don't want to get in the way of open debate, and trump will face tougher penalties for repeat offenses. the u.s. has confirmed it is joining germany in ascending tanks to help ukraine rappel russian forces in the east. president biden says the deliveries will take time, though he did not say how much. washington's decision follows a trend of allies giving ukraine powerful weapons to counter russia. >> i have been saying this for a long time. the expectation on the part of russia is we are going to break up, we are not quite to stay united. we are fully, thoroughly, totally united. vonnie: the number of covid related deaths and severe cases that hospitals stood -- hospitals has declined according

to china. official daily fatalities at hospitals slit, although it was at 896, down from a high of more than 4000. the true number may be hundreds of thousands higher than the official figure, which accounts deaths at hospitals. bloomberg sources say fed vice chair lael brainard is the top contender to become head of the national council. she is one of several candidates. president biden has yet to make a decision on replacing brian deese, who has not set a date for his departure. the next had will advise biden as the economy flirts with session. -- with recession. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. paul: thanks, vonnie. we are going to get an outlook on tesla from deepwater asset manager gene munster as profits for the ev market the estimates. we hear why state street seniors

strategists see troubles brewing in the u.s. market. this is bloomberg.

kathleen: latest five year treasury note auction extending a winning streak for u.s. treasury bonds, reflecting

investor appetite for good u.s. government debt. let's discuss this and more with marvin loh, senior macro strategist at state street global markets. auctions come and go. this one caught my eye. a lot of people are wondering about this intermediate, shorter part of the curve. in our bloomberg story, they pointed out that seven treasury auction so far this year have come in better than forecast. what is going on. ? -- what is going on? marvin: we had the two-year auction earlier this week and had similar results, where there remains strong demand for u.s. treasury security. i do think peak rates about this discussion and from a portfolio positioning perspective, owning bonds and owning treasuries as either a hedge against recession, and/or providing income if in fact we wind up

with a soft landing and rates compressed significantly, locking and these guilds. it is something that ultimately is proving attractive to investors who might have been short and a lot of these securities after the volatility in the challenging world we had last year. kathleen: you look at the yield curve which is what we are doing here. you've got the 2-year note at 4.12, you get to the tenure at 3.44, then you have it back up. the 30 year at 3.6. what is the yield curve telling us now? people have been wondering if it was signaling recession. is this a technical move, shape of the yield curve, is there a message here? marvin: i still think it is signaling a recession. interestingly, as we start thinking about when the fed is going to start cutting rates, the real discussion is when does the curve re-invert? windows 8 get back toward neutral? -- when does it get back toward neutral? that would be driven by lower

yields around the two-year part of the curve as the fed starts to cut. the fact that it is holding in there, despite these recession discussions, is interesting in that there -- while there is widespread belief that cats are coming, we can price them yet. there is uncertainty at the short end as to when those cuts might make it into the market. even though risk assets are taking this pivot, thinking about how rates look at the end of this year, how it looks in the middle of next year, as a fairly positive sign. i think the rates market is more hesitant to embrace that view. paul: i'm wondering if you can remember a time when it has been so difficult to read the data. when you look at it, you can use it to make a case for getting defensive, or for getting aggressive. which is it? marvin: you know what, we certainly are transitioning into a data by data environment. every data point counts.

for the most part, markets are grabbing the data points which support the view that they have. i don't think that it is as clear cut in terms of just saying the data is coming to a point where the fed is going to have to cut rates. some of the most important data points are unacceptable. inflation is better but it is still too high. certainly the discussion you had about the jobs market remains one of the key parts of the inflation discussion that the fed still is not comfortable with, and really has not shown the degree of improvement that may be some of the survey data, and to a lesser extent, some of the hard data as we get into this year, weakening to the degree that gets the fed in a position to want to cut aggressively. paul: i wanted to ask you about the jobs market. of course we have ibm, the latest big tech company, to

start laying off workers. do you see anything here that gives you pause for concern? marvin: it is part of the process. i think you mentioned the human turmoil that ultimately -- that it ultimately creates. the jobs market is mismatched, it is unbalanced, it is too hot, and this is part of the process. i do think for the moment, most of the layoffs that have been announced are probably companies that over hired, to a certain degree. it has been more on the public large-company side of things. whereas again, the payrolls data, some of the weaker claims data, is showing that people are finding homes. a lot of this is anecdotal. but certainly, it is part of the process, but not necessarily to the point where one could get comfortable, that in fact moving towards the fed's higher unemployment rate expectations is in place. it is one of the last blocks

that we need to see, to get comfortable with market pricing of a fairly aggressive pivot later this year. kathleen: we are going to throw up a chart, because inflation, we are waiting for the pce core, and that is supposed to come down to 4.4. if the fed gets the key rate up to 5% or 5.1%, finally got the funds rate above the inflation rate. that is finally not stimulative. that begins to get tight. core services like housing, we are showing a month by month number, the year-over-year number is up 4.7%. this is the one that jay powell is worried about. it is different by wages which continue to rise. what are you watching, and how close do you think they are too pausing at this point, let alone cutting? marvin: i certainly am watching that. i didn't realize you put a ticker together just for core services, that will make my life a lot easier. certainly, we are all watching that. we are watching that with respect to payrolls and wages

and where wages are going. again, we have got a few signs that wages are stabilizing. wages themselves overall is not consistent with the 2.5% to pce, cpi number out there. housing itself is a very large part of the discussion. while we are looking at core services, shelter itself needs to move in the right direction. it is the largest component still. when you break out shelter, kind of that oer side of it, the owner occupied part of the discussion, has been moving more sideways than does of -- than disinflation or, which ultimately we need to see to paul that entire index lower. paul: all right, marvin loh, senior global macro strategist at state street global markets, thank you for joining us. you can get a roundup of the stories you need to know to get your day going. terminal described it -- subscribers go to dayb , available on the bloomberg

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paul: we are continuing to track the market followed from u.s. short seller research, targeting ages richest man. annabelle is following the latest developments around the conglomerate. what reaction did we see overnight? annabelle: just kicking off with more context into the report because hindenburg research, they are well-known for their targeting of the ev maker in the u.s. essentially, the report put out on january 24, it alleges basically a lot of stock manipulation, and also accounting fraud. they said hindenburg research,

that the group had basically pretty complex web of offshore controlled entities from the caribbean, the uae. they claim they use these to facilitate corruption, money laundering, and taxpayer theft, and then taking money from the groups listed companies. in terms of market reaction, just saying first what adani said, that they refute these allegations. we saw it in those bond prices overnight because you can see that we saw some sharp declines on a range of notes. but basically, losing as much as $.15 on the dollar. the other way that we did see it coming through was in the share price reaction. adani himself lost $5 billion. a range of listed entities in india, around 5% to 8% lower in the trading. india shut today, so we will not see much of a follow-through reaction there. kathleen: what about the share sales in other aspects of this?

annabelle: this is another way to test shareholder appetite. adani says that hindenburg report was timed to jeopardize the share. it actually was relatively strong, because the company is looking to raise $2.5 billion. they had price shares and a raise -- range of 3112 rupees up to 3276 rupees. they sold in the first trench of this so-called anchor book, sold at the top end of the range share. it does indicate that investors are putting these concerns aside for now. kathleen: and about, we will get back to you in a half-hour, as we get ready for the korean-japanese trade. let's get a check on the business flash headlines. ibm has delivered the annual sales forecast, but says it will eliminate 1.5% of its global workforce, almost 4000 jobs. ibm cfo says the cuts will focus on workers remaining after the

spinoff's of its kindle and watson health units. it still plans to hire higher growth areas the company expects revenue to increase in the mid single digits in 2023. amsterdam listed and its parent are planning to cut the e-commerce corporate workforce by 30%. the cuts will include in amsterdam and south africa. coming up, tussle reports better than expected profits, but questions grow about its demand for the electric lineup. gene munster shares his outlook next. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts.

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annabelle: you're watching daybreak: asia. where 30 minutes away from the

opens in japan and korea. we have futures for the nikkei coming online in singapore but also marking probably what is one of the more interesting moves in the session. that is coming through in natural gas. where a below the three dollar level for the first time since may 2021. a couple factors for that. good supplies and a warmer winter in the u.s. you can see we are looking very range abound ahead of the open today. not much to move the needle except for what happened in the wall street session in terms of earnings. we did see investors starting to shrug off concerns that started with microsoft's sour outlook coming through with the focus on what is happening with tesla. you can see nasdaq futures climbing higher in the session. let's change now because a lot a focus on tech and the route we are seeing at play out. one of the most read stories on the terminal. this is hedge fund results coming through.

we understand from sources light street lost 54% over the course of 2022. does arrival the losses we saw at tiger global dropping 56% and worse than some competitors. in terms of what led to that, there were souring bets on private companies. also moves we saw in the tech route. one of their biggest holdings, tesla dropping 65% over the course of last year. very much in focus today. we are seeing the stock climbing. you are going to talk more about the earnings. paul: tesla reporting better than expected the latest quarter. showing strength even as uncertainty grows for demand for the electric lineup. joining us is a partner for asset management. i know you had questions on teslas production pipeline.

tesla could do to million cars a year. when it comes to production, how do you separate what elon musk says is going to happen or might happen from what is probably going to happen? >> there are two factors to that. typically whatever he says is going to happen you discount by months or years. under normal circumstances you would take his 2 million expectation and say they're going to fall short of that. formal guidance was 1.8 million vehicles. it was a little bit of a bizarre turn on the conference call. i think it is going to be closer to two. the new guidance is to million. normally you discount what he says. in this case and putting more weight into it. he also mentioned for this reason i think these price cuts are material. they will not have a spike in demand throughout the entire

year. i think the are having an impact. it is said their orders are running two x what production rates are. that is not sustainable but they have pulled forward some demand. i suspect at the end of the day they will do around 2 million vehicles. just to finish the math on why the stock started to move higher on the comment is it changes the whole narrative around the earnings quarter. if they would do 1.8 million, that would imply 37% delivery growth. down from 40% in 2022. . if they do to million, that is 50% growth. up from 40%. you have a we acceleration. tech investors love we acceleration of growth. how much weight do you put into the 2 million number? i'm putting significant weight. i think they're going to do that number. paul: a big call.

these test learning calls are always very news richie thence. we are hearing about cyber track likely to go into production this year. mention of next-generation vehicle development. some discussion of thousand gige why batteries. the potential of the optimist robot as well. so much to look out. what is catching your eye? >> the most significant is what is the delivery number going to be this year? the second most significant is what is there profitability? how is that going to impact the model? they expect profitability to be better than 20%. it was 27% in the second quarter. those are the two most important pieces. i will put in the other departments category and there are notable is elon has talked about other products coming. an investor day on march 1. we will hear more about the products in the most significant 1 -- and the most having a one

is the lower priced model. it could be called model a, model two. some call it the robo taxi. that has -- could propel teslas growth into a new vector. optimist the robot. it catches headlines but it is not going to move the needle for a decade. kathleen: a couple numbers to cross off the list. on cnbc a couple days ago you were talking about gross margins. you thought they were going to come in weaker. the auto gross margin came in at 25.9 versus up 28.4%. that was the estimate. they missed on cash flow. 1.4 2 billion versus 3.13. to those numbers mean anything to you because the picture looks pretty rosy? >> more or less. they did mess. they missed on the gross margin. the number i am using is a

little bit lower. 24 and a half percent. the street was at 27. that was a mess. under normal circumstances the stock would be down. in this case the stock is moving up because of the commentary on the call. the 2 million number. yes it matters what they reported. as we all know, guidance is more important. the guidance is surprisingly upbeat. kathleen: autonomous vehicles. that seems like it is in the future. still problematic for anybody who tries to make them. there have been problems with vehicles that were supposed to be autonomous and that they were not exactly. what do you see there? i think a lot of people were excited about that. i think everyone is very cautious and realizes how hard it is to perfect something like that. >> i think an investor should not invest in tesla based on

autonomy but that to me is optionality value. they announced tonight they had a 400,000 fst beta users. that number a year ago was zero. that is a big number. 100 million miles off the highway. that is probably the most of any company. they are making a lot of progress. it begs the question whenever we going to get to autonomy? musk said always this year. we are probably three years away. that is a huge deal. for two reasons. humans are bad drivers. number two it is going to allow for tesla and other car companies to of charge. it is an extremely high margin business. is this autonomy thing -- metonymy thing is critical -- this autonomy thing is critical and only for humanity but investors who invest in auto companies. paul: we are seeing tesla shares rising after hours. over the past 12 months, lost a fair bit of ground.

i the broader context, keenly priced. are you willing to put a price target on tesla for 2023? >> at this point i'm not willing to put a price tag. i think the company is going to have a decent 2023. in two or three years i expect the valuation could be much bigger. i'm stepping short of giving a price target given natural uncertainty. i think they are going to crush the competition in 2023 especially in the u.s. with some of these price cuts. that is going to lead to higher sales and higher margins. kathleen: if it leads to truly autonomous vehicles, i think that is going to make a lot of people happy in the future. managing partner at deepwater asset management. at&t shares jumping more than 6% as the company beat forecast on profits.

those gains coming despite a cost-of-living crisis weighing on consumers. the ceo told us more about the latest numbers and the outlook for 2023. >> we have been focusing the business to be much more adept in the communications space. we started that work in earnest about two and a half years ago, two years ago. completed the warner media transaction early part of last year. i think investors were stepping back and asking is this the right place to go and are they going to execute around it? i think what you have seen in the last couple of quarters where we continue to grow the business, we continue to pick up the customer base and now we are seeing profitability and cash secretion back into the business as we have made the investments and moves to run the business better they are starting to gain confidence and rightly so. we intend to stay focused on that and keep forward with that strategy. >> investors confident. what about consumers? you have a great bird's eye

perspective on how much consumers want to be spending. what does the macro look like? >> we have a broad scale of consumers at every end of the socioeconomic stream. i think there are probably a couple different stories in this. clearly the low end is stressed a bit more. we tend to see that exhibited. taking a little more time to pay their bill or call in and ask for arrangements to pay their bill or possibly recharge a little less frequently if they are prepaid subscriber. it is not they are not buying the service. they are trying to manage it within an overall stressed environment where they are making other choices on more discretionary items they are moving out and trying to balance their overall obligations. the top end of the market is still really strong. we are coming off a good volume year. i think it will temper as we move into this year.

it is still going to be pretty healthy. it is indicative of how ingrained in life the products and services we sell are. >> i want to jump on that. the sales side reaction or their conclusion seems to be you are prioritizing financial growth over subscriber growth. in the fourth quarter you added 600 56,000 new phone subscribers. strong growth in the fiber-optic business. is it a case of financial growth over subscriber growth or can you achieve both? >> it is both. i probably would not agree with that conclusion. we -- both wireless and in our fixed broadband business. we are growing not only share but we are growing profitability. it is coming from getting the right customers the right way and we think we have done a good job of tuning our offers into the right segments where we have been underpenetrated to gain the share and we have been working hard on restructuring our

business. our cost structure and w growthe time we are able to grow the business to the top line. paul: at&t ceo john stinky speaking to caroline hyde and ed ludlow. let's get to vonnie quinn. vonnie: a range of bonds and shares tied to indian billionaire fell sharply. and to improve it is shorting links through derivatives and u.s. traded bonds. companies have lost $12 billion in market value. the u.s. market regulator is proposing a ban on wall street friends who issue asset securities. the sec's five commissioners voted unanimously to impose new conflicts of interest regulations for investment banks and others involved in securitizations.

the new restrictions would not cover hedges against risk. europe's largest tech company expects u.s. export control measures against china to push beijing to develop its own advanced chipmaking machines. the ceo says export controls will create levels of disruption that will affect efficiency and innovation. the forecast that are then expected despite possible new curbs on exports to china. the bank of thailand is signaling more rate hike saying the economy is strong enough to absorb the low after policymakers unanimously delivered their fourth consecutive increase in borrowing costs. the bot is already a back to pre-pandemic levels. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. kathleen: hong kong's market set

to reopen after the lunar new year holiday. we will get a preview coming up next. this is bloomberg. ♪ the first time you made a sale online was also the first time you heard of a town named... dinosaur? we just got an order from a dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. godaddy. tools and support for every small business first.

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stock trading on thursday after a three-day lunar new year holiday. let's get a preview. power hong kong shares set to trade? hong kong shares are poised to extend their rally. cheney shares rose 1.4 percent during the break. traders are likely to take their cue from that. the news over the holiday seems to be largely positive. there was a report the people spent a record amount on or's racing bedding in hong kong. anecdotal evidence chinese tourist places are packed with tourists.

unesco world heritage site and famous for the sculptures of the chinese first emperor's army. sculptures were easily outnumbered by the taurus. there are good signs the economy is coming back to life. paul: have there been any changes in market perception? >> yes, one of the biggest concerns investors have before the winter new year holiday -- the lunar new year holiday was there could be a new variant of the coronavirus. so far we have not seen any signs of any nasty variant. even though it is probably a little too early to come to the final conclusion of the variant

because mainland china is still in holiday until the end of this week, the health authority in china is estimating about 80% of its population has been already infected. so far there is no sign of any troublesome variance. so far that is good news for investors. they are growing more positive. there list worried about these risk scenarios. paul: bloomberg senior asia stock reporter. you sure to tune in to bloomberg radio to hear more from the newsmakers print broadcasting live from our studio in hong kong. you can listen via radio plus or bloombergradio.com. stay with us. ♪

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that's stitch fix. ...and how can you help me? we do the shopping for you. you tell us your size, budget and style. wait, is it a subscription? no. style for me? for me? for me? always. we'll pick the clothes. you enjoy the great fit. stitch fix. paul: getting a bit of data out of japan at the moment. breaking news you on the bloomberg terminal. ppi for the month of december coming in just a little weaker. producer prices in japan one and a half percent for the month of december. expectation was for 1.6%.

continuing the slowing of 1.7%. ppi services producer prices rising 1.5% in the month of december. we are also getting news from the bank of japan. kathleen: i would say it is in keeping with the message we got from kuroda. his last meeting coming up in march. when he was talking and answering questions about not doing another two week in the yield curve control band, the top around .5. it says we need to continue with monetary easing. we cannot begin to reduce the stimulus in the least bit. we cannot change that band. one og member. a more time to assess the impact of the december move. that is another statement the governor made at the meeting because he thought it might take longer for the december 2 week

to have an effect. this is what is in mind now. want to talk about south korea's economy striking for the first time since the beginning of the pandemic in the last quarter. the number for the fourth quarter down .4. the company -- the economy expanded by 1.4% when you look year-over-year. the fact it is down .4. exports and the first 20 days were weak in australia. the fact there is uncertainty about the reopening of china. i would not say the messages to mixed. i think the message is the economy is finally weakening enough for the bank of korea to say no more rate hikes this year. paul: south koreans rise to become the biggest luxury spenders. let's get more from bloomberg's global business reporter.

tell us more about what is going on with south korea and luxury brands and why. >> south korea spent $60 billion last year on luxury goods. that is the world's highest in terms of per capita spending. the total amount they are shopping was even close to those of the japanese people. when we look at the sales data of product or other luxury brands, south koreans counted more than 10% of their total revenue. one of the reasons behind that situation is because of the bubble in the country. the benchmark kospi was up more than 30% in 2020. housing choices doubled or tripled or higher. that made people think i became rich so maybe i need to buy a

bag or a tesla car. kathleen: at the same time we do see some headwinds coming for shoppers. interest rates have been rising. what do you expect there? >> sure. as you mentioned the bank of korea raised interest rates to 3.5%. south korea is -- the household debt is already higher than the gdp in the country. the housing prices in seoul and other areas are full in. housing prices fell most inward in november. that means these kind of strong optimism in the consumer spending in the country is pretty uncertain. kathleen: thank you so much. we want to share some breaking news with you from the nyse.

you may remember in the last couple days there was an incident. something happened that caused the opening trade not to show an auction tray that needs to take place for trading to take place as regulated. we are finding out the nyse was traced to a staffer who left a backup system running. one of my colleagues asked -- surely a former staffer by now. we'll find out about that. interesting how the tiniest mistake can affect a big system. not expecting an thing like that in seoul and tokyo. those markets open next. this is bloomberg. ♪

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kathleen: this is daybreak: asia.

we are coming down to asia's major market opens with important news. south korea's economy contracting in the fourth quarter for the first time since the pandemic. the bank of japan's minutes underscore they are not ready to change why cc yet. paul: bank of japan owning a huge amount of bonds. we saw producer prices a little weaker than expected and consumer spending in korea a little weaker. plenty for markets to digest. what are we watching? annabelle: the hang seng in hong kong in the next hour. we do have the open of japan and korea. the start of trading for cash treasuries. watching the five year yield. we have the strong auction on wednesday. had seen january a strong month for auctions with the latest drawing lower yields.

a sign investors are pivoting or positioning for the peak in fed policy rate and for liquidity issues. that is the state of the five year yield. we had the boj meeting minutes out for when they met in january. the focus is this need to continue with easing. that was one of the key headlines. we do get more signs of inflationary pressures coming into the economy. producer prices also dropping. up 1.5% on the year. a little lower than the estimate of 1.6%. inflationary pressures remain in the economy. something the boj is watching closely even if they stick with the policy. we see japan downgrading its monthly economic assessment in january. that follows what we have in korea given we saw gdp contracting .4% from the prior

three months. it was a story of weaker consumer spending. also declining exports. what lead that was the chip stocks. keeping an eye on how the because daca's trading. out pacing broader trading of the kospi. chip stocks, we had asml reporting better-than-expected first-quarter sales. lam research also out. they dropped after the bell in u.s. market trading after earnings and revenue forecasts missed estimates. that is the state of play for korea. we do have australia off-line today for a public holiday. one market with can still track is what is happening with new zealand. the aussie dollar holding steady after the big game yesterday following the inflation data. bitcoin can be a barometer these days. risk appetite in the market dropping. keeping an eye on what is happening with the offshore yuan

given as i said the hang seng returning to trading in the next hour. paul: the holiday has seen a revival in spending in hong kong. it comes after covid travel restrictions were eased between the city and mainland china. let's discuss what to expect when venture markets reopen. if we look at hong kong in the first few days of the year it has been a pretty bright start up 11%. a little better since the start of january. when we get going again today after a break what are you anticipating? >> from our perspective we are tactically bullish on china. my sense is i think stocks in hong kong will remain on the stronger side. what we might see in the months ahead is improvement in many of the activity indicators. as that happens we can also expect some sort of earnings

update which will give another kind of wished to stock prices. positive from our perspective. paul: how much longer do you think the china reopening trade has got to go? >> this is a very topical question from our investors. what we did was we looked at previous instances of trends in pmi's from asian countries. what we tried to gauge was how long does it take for pmi's to go from a tough point during the pandemic to the peak point? what we observed was usually the recovery from the trough takes around nine to 10 months. it is possible in the months ahead this may take seven to eight months in the case of china. as far as the stock market is concerned at least for the next three to four months the recovery in the opening trade will sustain.

that calendar view will change if we see a 20% surge in china stocks. people will start questioning valuations. valuations are decent. there is still room for valuations to increase. kathleen: the tech cycle downturn, we talk about tech gloom in the u.s. we have tesla, microsoft yesterday. we have ibm. enough to put this question to you when we look at the outlook for the u.s.. when we look at what is happening in asia, what you look at in terms of a positive factor for your argument on china being a goodbye -- a good buy? >> for china, the big coal is what happens with the economic recovery. i think the global tech part has larger implications for some other markets in asia.

for china it is the opening recovery. if we see stronger signs of economic growth in the months ahead, i think stock prices will get a boost. the tech cycle downturn -- some parts of china might have some implications. for me, china for the next three to six months is going to be about reopening and recovery. kathleen: it is interesting when you look at china, asia, everything you see is positive including if there are recessions in the u.s. and europe. that makes asia the outperformer. what is the risk to your outlook particularly if the fed does not cut rates particularly if these recessions occur and they may be deeper and longer than people are expecting? >> let me clear that view.

the recession in the u.s. and europe is still a risk. if that view is correct we are likely to see weaker economic data in the u.s. specifically the payrolls market. that would be what we are focusing on. let's say under the months ahead we see weaker payroll data. it is possible u.s. stocks might be softer, global stocks might be softer. that will have some impact on asia. in that scenario asia would also be down. we expect some sort of outperformance. for overall 2023 the view is quite constructive because eventually asia will see gdp growth rates recover and the outlook both from a valuation standpoint and fundamental outlook perspective is positive for asian stocks. paul: how is your position on korea? we just set a quarter of negative growth consumer spending not looking to flash either. how are you positioned in korea?

>> our difference is we like two markets. one is china and when is korea. in china the market will be softer in the months ahead but we need to focus on stocks. many stocks have significantly declined over the course of the last few months. if you look at eps, expected earnings growth rate for the market it is around -15% for 2023. many of these things are factored in stock prices. our review looking forward is in the months ahead in the next two orders the memory cycle which is important for these large-cap stocks will possibly bottom. as that happens the stocks may start anticipating the bottoming out of the cycle. that may happen first quarter or second quarter. we would look to use that volatility in the first quarter and raise exposure on income.

kathleen: it cannot hurt and that the slowdown and the economy means the bank of korea is done hiking rates. we shall see. asia pacific equity strategy at nomura. let's get to vonnie quinn with first word headlines. vonnie: as we have been saying south korea's economy shrank for the first time since the pandemic began. exports declined. consumption slowed in response to rising interest rates. across the year the economy expanded to .6%. the u.s. has confirmed it is running germany in sending tanks to help ukraine repel russian forces in the east. president biden says the deliveries will take time though he did not say how much. washington's decision follows a broader trend of allies giving

ukraine increasingly powerful weapons to counter russia. >> i've been saying this a long time pdx pay take on the part of russia is we are going to break up. you're not going to stay united but we are thoroughly fully totally united. vonnie: bloomberg sources say fed vice chair lael brainard is a top contender to become head of the white house national council. resident biden has yet to make a final decision on replacing brian deese. the next head will advise biden as the economy flights with recession and a battle bruise over raising the federal debt limit. the bank of canada has raised interest rates for the eighth consecutive time to the highest rate in eight years. policymakers say they intend to hold the rate at its current level. governor to have mike lind told the news conference it is too early to talk about rate cuts. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries.

i'm vonnie. this is bloomberg. -- i'm vonnie quinn. this is bloomberg. paul: let's take a look at how the markets are moving at the moment. how are we doing with tesla suppliers? annabelle: mostly moving higher but in line with the after-hours move we have for tesla up as much as 6%. in terms of the reaction it comes down to results that came through better than expected. a lot of strength showing for the company because there had been concerns building about demand from consumers for its ev lineup. we saw earnings coming in at one dollar 19 a share. better than forecast by analysts from bloomberg. the ev market saying it wants to increase output as soon as possible. forecasting to deliver 1.8 million vehicles this year. that it's good -- that is good for bigger suppliers. one set their moving to the

downside are the chip names. that is the state of play with the ones in japan. they are leading the losses so far for the topics. that is down to the earnings that came through. asml forecast better than sales. profitability, that target missed estimates. lam research coming through peer that fell in the u.s. earnings revenue, both worse than what had been seen on wall street. kathleen: still ahead, we bring -- we break down south korea's gdp outlook and how it may affect decision-making at the central bank. up next, a closer look at china's chip sector and how u.s. led restrictions could end up being a good thing for beijing. this is bloomberg. ♪

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>> it was a smooth year without big supply chain interruption or massive problem. have a potential to do to million cars this year. we are not committed to that but i'm sitting that is the potential kathleen: tesla ceo 11 musk on the company production outlook. speaking after better-than-expected profits in the latest quarter but questions are still growing about demand for its all electric vehicle

lineup. we are bringing in our bloomberg technology anchor ed ludlow. it is not exactly technology but it is in a way because so many tech people say if the fed is raising rates that is going to be tough for us. the fed might pause come etc. but they might not. elon musk went on about this. >> we can tie it all together because you heard him saying we could do to million units if there are no headwinds. one of the potential headwinds is the consumer impacted way higher rates. he said two things. one will make you will your eyes and laugh a little bit like i did which is that higher rates are bad for equities. when it comes to the technology sector we know that is the case. you get a discount on the present value of future profits. what must went on to say is actually he looks to the fed and says if the fed goes beyond a 6% rate that is when we could start to see some problems. he weighs in all the time on twitter about the fed come about

the impact of higher rates on tesla stock in particular. what he went on to say broadly is he sees a pretty significant recession this year coming. that link with the fed, the question around consumer demand. it all ties together. paul: just getting back to tesla's knitting, what stood out from the call to you? there were a lot of headlines particularly on future products, reduction pipeline. what were some of the takeaways? >> tesla and that shareholder deck teased on march the first they will have more details on their next generation of vehicle which is currently in development. most in the market think that is a mass volume self-driving fully autonomous vehicle of some description. it was interesting to see them commit to and reiterate this 50% compound annual growth rate. they said they will do 1.8 million units in 2023.

actually that is not 50% growth from 22. if you stretch it over a number of years they are saying going forward they will grow at about 50%. there is the demand picture. asia is an interesting one because shanghai is so important from a production and demand standpoint. in the deck they had said a lot of problems in 2022 largely centered around china. so far in 2023 elon musk talked about year-to-date demand for vehicles. they cut prices in china and the united states. year-to-date demand is the greatest they have had on record. it was fighting talk while acknowledging a softening macro picture globally. paul: bloomberg news reporter ed ludlow following tesla. asml says u.s. led export control measures against china could push beijing to successfully develop its own advanced chipmaking machines. let's bring in our asia tech

editor. what is the significance of these comments? >> this is an unusual comment by the ceo of asml. it is one of the most important makers of chipmaking equipment. they sell to chip companies that have to produce. saying the biden administration's efforts to stop china from developing its own domestic chip industry could end up backfiring. that they are going to work even harder to develop the kind of equipment they need to make chips over the long-term and that is going to be a negative for the companies like asml and the others that make chipmaking equipment but also the western chip industry more broadly. kathleen: in terms of u.s. efforts to block china from getting advanced semi conductors, there is also a question about how china might react. as an aside i was speaking to a japan chairman emmert is of the

tech company that thanks could push them. . to be more aggressive >> i think there looming over these discussions is the future of taiwan. where we are now is the unveiled its chip restrictions on china in october. they are in negotiations with japan and the netherlands over weather those countries will join the effort to block equipment from moving into china. bloomberg news has reported they are close to an alliance. that is important because those three countries are home to the five most important companies that make chipmaking equipment. to your point about taiwan it is a longer-term question about what is going to happen to taiwan and tsmc which is the most important chip company on the planet at the moment.

paul: is the warning likely to change the minds of politicians involved? >> that is a good question. . it does not seem like it is going to have any effect on the politics of the situation. it does look like the u.s. has been successful in lining up support from its allies. particularly japan and the netherlands. the other important regions as you mentioned are taiwan and south korea. it looks like they are moving ahead with an agreement of some sort. the key thing is going to be keeping an eye on the details of the agreements. what will the netherlands or japan agree to as they agree to some sort of restrictions on sending chipmaking equipment and other key technologies to china? the devil is going to be in the detail. kathleen: bloomberg's asia check executive editor. you can get a roundup of the stories like this to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb on their terminals.

it is available on mobile in the bloomberg anywhere app. you can customize your settings so you only get news on the industries and assets you are most focused on. this is bloomberg. ♪

paul: workers at one of amazon's warehouses in the u.k. have going on strike to demand bigger paychecks. it is the first such industrial action by the company's employees. lizzy burden reports. >> we are in coventry in the english midlands where amazon workers are striking for the first time in the u.k. you can see the gmb union behind me has set up camp at the entrance to the warehouse. it is stopping workers on their way in asking if they want to join the strike, join the union.

so far about 300 workers are expected to have joined at least and it is all about pay. they are asking for a 50% raise to 15 pounds an hour. the union says the workers need it to deal with the cost-of-living crisis. double-digit inflation in the u.k. they say workers deserve it. they have grafted through the pandemic and the union says amazon can afford it because it only paid about 10 million pounds in tax on pretax profits of 200 million pounds in 2021. for amazon's part it says it is proud of the wages it pays. they are competitive. they are above the national living wage but the union says that is nothing to brag about. kathleen: bloomberg's lizzy burden at amazon's warehouse in coventry. it's take a look at european futures agreeing on the screen. a gain of about two thirds of the percent.

overall we see the msci europe index down. dax futures up. european stocks if you look at the stoxx 600 post the first of the year. they are tracking what happened under the u.s. same for the dax despite having a higher futures print by a good margin. the dax had been lower at the close. .08%. tracking wall street again, interesting the people institute shows growing optimism in germany with january business expectations and business climate indices climbing on a monthly basis even though a lot of people are still worried about recession. kind of a mixed day but definitely futures showing optimism as they get ready for the next trading day. paul: let's get a quick check of the latest business flash headlines. ibm has delivered an upbeat annual sales forecast but says it will aluminate 1.5% of its global workforce. that is almost 4000 jobs.

ibm's cfo says the cuts will focus on workers remaining after the spinoffs of its healthy units. it does still plan to hire in growth areas. it expects revenue to increase in the mid single digits in 23. shares in at&t jumped more than 6% after it reported better than projected earnings. the biggest one-day move of the year followed forth what a profit of $.61 a share. it's outlook for 2023 came up short of wall street targets on earnings and free cash flow. elon musk has denied a wall street journal report he has been in talks with potential investors for a possible capital rates of up to $3 billion to pay off the twitter debt. the report cited unidentified sources saying he had discussed selling up to $3 billion in new twitter shares in response to tweets asking him if the report was accurate. he sent he replied no.

-- he simply replied no. boeing reported a surprise loss. higher costs slowed the recovery even though a late flurry of jet deliveries drove a surge in cash. revenue was about $20 billion. the ceo told staff more workers needed to stabilize operations and supply chains. plenty more to come on daybreak: asia. this is bloomberg. ♪ i screwed up. mhm. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! woo!

i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck.

>> this is "daybreak asia". tim annabelle droulers. 30 minutes into the session for

japan and korea. the outlook was looking subdued. we have trading volumes in, as well as austria is off-line. when you look at how we are trading using the imap function, most sectors are trading higher with a few exceptions. energy. i.t. is lagging on the nikkei at the start of trade. it was really down to the earnings that came out from the research company. tesla is climbing in after hours, adding a little optimism in this session with data than expected numbers. were also watching something that will move the needle, the reopen of the hong kong session. this backdrop here does set us up for more positive momentum coming into the session. we do have that revival of consumption we have seen in hong kong, macau.

also the prospect that hong kong could be about to further relax travel restrictions for travel between hong kong and mainland china. let's see how the proxies have performed since friday. . the gains are looking broad-based. it comes down to the continued optimism that we see with revenge consumption and the reopening theme still being treated on. kathleen: great themes. got to love them. [laughter] bond shares tied to the fell sharply after he was accused of stock depletion and accounting fraud. hindenburg research is shorting adani securities through derivatives and u.s. traded bonds. our reporter joins us now. what is the latest? what can you tell us on where this case stands and how it is not only affecting the company, but where it is going next? abhishek: in one session, all

10 identive group stoxx lost about $12 billion in market cap. it has dented sentiment. whether it is the uterine on adani stocks, the jury is still out. hindenburg alleges that identive group-controlled companies -- it was doing corruption, siphoning out money from the companies. but they have a skin in the game, they have a short position. it has been taken with a pinch of salt. hindenburg also says that even if you take their allegations and research out, purely on fundamentals and valuations, there is 85% downside in identive group stoxx. the company said -- in adani group stocks. it is pretty much the same line of things that we are hearing from india. analysts on the ground in india.

the next step in this regard would be to see where the stocks move from here. it is a test of optimism in india, which has not had a very good track record talk about activist investors getting their way. it also tests the huge rally that pushed gautam adani into the ranks of jeff bezos. the flagship company of the group, adani enterprises, went up more than 2500% over five years. the decline in that has just started. it will be testing the group that has added significant wealth into india's market cap. two of the adani group stocks there in india's nifty energy index. in the same context, if you look at the allegations, they are concentrated on the high level

of debt. they are very well-known known in the street. . they are facts, not allegations. therefore, the street is not too excited about these allegations making a big dent. but people are looking for vulnerable adani group stocks. like we reported yesterday, there are two companies adani group had recently acquired. one of them a cement maker. they are widely held by finance. so these -- by funds. these flagship stocks would serve as key indicators of how much impact this report is holding because these stocks are held by investors who they represent. paul: alright thank you in the hindenburg report. let's get to vonnie quinn for the first word headlines.

vonnie: meta's as it is reinstating former president trump's facebook and instagram accounts following a two year suspension. trump was banned after the company deemed his posts had encouraged supporters to invade the u.s. capitol. now meta's says it doesn't want to get in the way of open debate, and that trump will face tougher penalties for any repeat offenses. the u.s. market regular is proposing a ban on wall street firms who help issue asset-backed securities from betting ago to those same products. the sec commissioners voted on that. the new restrictions will not cover market-making, more trades to hedge against risk. the bank of thailand is signaling more rate hikes, saying the economy is strong enough to absorb the blow. this after policymakers delivered their fourth consecutive increase in borrowing costs. that bot says output is already back to pre-pandemic levels, in

the tourism recovery could fuel additional consumer spending, leading to higher prices. china's lunar new year travel and box office are showing signs of recovery as people travel freely, after beijing ended its covid zero policy. during the first four days of the public holiday, roughly 24 million trips were made daily, compared to 18.6 million last year. box office totals were $533 million, up from the $516 million reported during the same period last year. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. kathleen kathleen: thank you. the new york stock exchange says a manual error caused wild price swings and trading halts for hundreds of stocks when the market opened on tuesday. for more we bring in catherine doherty. we are lucky we are still here at bloomberg headquarters today. [laughter] you were just talking to us about this yesterday, you are the right person to be talking about it again. not a disaster, but isn't it

amazing how a human error can cause so much trouble? catherine: yes, i am coming back to you with some answers which i didn't have 24 hours ago. essentially this problem, even though you think of the new york stock exchange, it goes back to chicago and that is where there disaster recovery program, it is in backup facility, is located. essentially if by human error, it was left on overnight. it is meant to be almost wound down and up and it is just a procedural thing, but it was not properly shut off in the way it should have, so it impacted the opening on tuesday. and essentially the auction process in which the prices for the shares that we saw that were disrupted, those prices were all over the place. normally the auction takes care of keeping the prices within certain parameters.

well, those parameters were not set. the computer messing itself up because this overnight protection, the backup system was left on. paul: catherine, those people who might have lost money because all of this happened, are they going to be made whole? katherine: that is the next question we will try to answer. the firms responsible for the investors that could have potentially lost money in this tobacco have until friday, three days after, to submit their claims. then the exchange will have to go through those claims and evaluate how much and what they have set aside to recover or make whole the claims. at the end of the day, it's going to be a lot of weight and see. when we have some of those answers, we will try to bring them to you. it really comes down to both the systemic impact of this, cost,

and also reputation. there has been a lot of outcry in terms of the disruption that this caused, not even dollar figures i talked to, many triggers lost money but it caused disruption to their day and they look to the new york stock exchange and other exchange values as a system that is put in place, has protections, and that they contrast it. this was a blip, it was a human error that really only happens handful of times if ever. now we have some answers of why it happened. the next step will be how is it going to be resolved. paul: alright, bloomberg's katherine doherty there with some answers, and a few more questions about that average on the new york stock exchange. united says getting the faa more resources is a top priority, after a recent system shutdown and industry issues. the ceo also told us hiring top talent is getting more

expensive. >> a lot of dollars have been going up in the going to go up. united, we're at the top of the pyramid for pilots, for all employee groups. will always pay well. we have great growth opportunities. because of that, we are able to hire. the stress happening on the lower levels of the pyramid, for the low-cost carriers and regional airlines, they are having much bigger challenges. so if you are a pilot for a regional airline, actually in the last 12 months, you are getting paid double. talk about inflation. it is going up across the board. really the supply challenges exist and are more acute further down the government. >> -- further down that pyramid. >> in terms of getting the right people in the right jobs, if you look at the entire ecosystem, where is the biggest problem? you mentioned the faa outage that impacted airlines in the united states recently. as you look now at the entire

ecosystem, where are the bottlenecks? >> there are bottlenecks everywhere. it's not going to be quick. pilots is one of the big ones for airlines that can't be fixed quickly. the one i am most focused on, united, at least we know what we're doing for pilots. the faa needs more resources. the faa, their budget is lower in real times than what it was 20 years ago. they are hugely responsible. they work with airbus and others on aircraft certification. they had to rob peter to pay paul. the money and people have come out of the frontline operating budget. because of that, we have fewer air-traffic controllers than we had 30 years ago. it's a really fragile system. you can't fix it unless you give them the right amount of resources. they work really hard. they do everything they can, but their system is 30 years old. when you have 30-year-old systems, those things are going to happen. all you can do is build the

infrastructure, which includes people, to invest in the future to fix it. that is what i am most focused on because they can fix it on their own. they need congress to offer the money. it's more complicated than fixing our own issues. we have to wait for congress. kathleen: that was united airlines ceo scott kirby, speaking to bloomberg's guy johnson. next on the show, south korea's gross domestic product outlook, and how it may affect decision-making at the central bank. this is bloomberg. ♪ lara, you don't have to worry about things like changing tax rates, exemption certificates or filing returns. avalarahhh ahhh ahhh ahhh

paul: south korea's economy shrank for the first time last quarter since the beginning of the pandemic. kathleen: gdp contracted 0.4% in the previous three months as exports declined, consumption slowed in response to rising interest rates, among other things. joining us now is an economist at anz. she followed this closely. crystal, so glad we could have you here today. this was pretty much in line with expectations. in terms of how severe the slowdown looks to you, is it going to continue? what do you see in this report today? crystal: the weakness was quite broad-based. the decline was led by exports,

but private consumption fell as well, investment was smoke the only thing that tiktok was government spending but it was not enough to offset the weaknesses elsewhere. growth remains quite a challenging, especially when you consider exports. we had trade data for the first 20 days of january already. exports contracted. without this --, it would be difficult for a recovery. kathleen: korea, number one of the most biggest, heaviest-concentrated exports relative to their economic size, et cetera, in the world. china, a major trading partner. how much does a turnaround or avoiding recession, which would be two quarters of negative growth, how much does that depend on china reopening? crystal: china is korea's biggest trading partner. there are some growth headwinds, with china reopening.

normalizing following covid-related disruptions. at the same time south korea does not stand out as a major beneficiary for china's reopening, because chinese tourists are important for south korea's tourism sector, they account for one-third of tourist arrivals pre-pandemic. but south korea has quite stringent entry restrictions. arrivals from china are going to be subjected to testing requirements, and if you test positive, they will be subjected to mandatory card to. that will -- mandatory quarantine. that will hamper the recovery of chinese tourists going back to south korea, so it is going to take time. paul: what is your outlook for the korean won, which we have seen strengthening somewhat against the greenback? crystal: the korean won has had a really strong run. it is up something like 16% against the u.s. dollar since last year.

but given the extent of the move, i think we are turning a bit more cautious now. markets are prone to overshoot. so we think we're in a period of consolidation now. but over the longer time horizon , we hope for more appreciation. potentially inclusion into the index. for the chip cycle, this would be quite positive for the currency. paul: so in terms of where we are heading next in the tightening cycle, we have now had a quarter of negative growth, a strengthening won, consumer spending is weak. we had members at the back of korea meeting arguing for a hold. where do you think we are in the tightening cycle now? >> i think the tightening cycle --[indiscernible]

we have a pretty weak growth backdrop. the government is starting to ease regulations. planning to raise tax incentives in order to bolster strategic sectors. to support activity, that supports the case for an extended --. kathleen: i was in seoul in november and had an interview with the governor of the bank of korea. at the time, he indicated that the bok would not be inclined to start cutting rates right away. like the fed saying, they will hold rates high and keep the tightening level there. if korea is going into recession, though,, do you think that will change the governor's stance? crystal: a lot would depend on how long this slowdown lasts.

the expectation is that it will start at the second half of next year. if that does not happen, i would say that the odds of an earlier than expected rate hike by the back of korea would be increased. paul: crystal tan, economist at anz, thanks so much for joining us. still to come, hong kong markets are set to open after the lunar new year as the cdc's a pickup in mainland visitors and holiday -- as the city sees a pickup in mainland visitors and holiday spending. 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.

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paul: let's get a quick check of the latest business flash headlines. elon musk has told tesla earnings call that he sees is a difficult recession likely this year. fourth quarter profits and sales beat estimates by a record delivery of cards. tesla did not issue new guidance, but reiterated it once to increase output. it also says production and delivery challenges last year were mainly concentrated in china. jaguar land rover has returned to profit after the chip supply boosted output for its higher and new vehicles. sales of its range rover and what models almost doubled in the three months ending in december. tata-owned jlr says it will

start making fully electric models in 2025. kathleen: hong kong markets are set to reopen after the lunar new year, which saw a bumper in visitors and holiday spending in the city. of our china markets reporter joined us for a preview. so, the backdrop on that end looks good. the global backdrop, a little bit mixed right now although there have been some good market moves lately. what do you expect to see? jeanny: still from our conversation with investors and analysts, people are still very upbeat, especially this morning, we have seen very good travel data in the first four days of the chinese lunar new year holiday. for example we are seeing that average domestic trips made in china, almost 30% up from last year. we have seen very good travel data to hong kong, to

macau. so, so far, i think people are still expecting that the index can go up further even though the it has rallied for five consecutive weeks before the lunar new year holiday. it is already at the highest since june of last year. paul: are there any particular stocks are sectors that will be keeping an eye on when the market reopens in about 30 minutes? jeanny: i think this morning we are in particularly watching tourism stocks, and also stocks related to china's film industry. we have some really robust box office during the holiday. we are also watching the macau casino operators, such as wynn macau, since we have seen really good visitation data to macau. kathleen: step back and look at this from the big, broad,

longer-term question. financial hub. hong kong was the hub. it has lost that position. singapore seems to be the rising star. what do you see, looking down the road? jeanny: right. this traffic never ends. the comparison between hong kong and singapore. recently, there has been some expectation that hong kong would play catch-up because china is reopening the border finally after three years of almost shutting down the border between hong kong and china. there has also been some saying about people returning to hong kong after the border reopens. i guess in the longer term, that is still yet to be seen which one will take the lead in this competition between the two cities. paul: alright, china markets reporter, jeanny yu.

here are some of the stocks we will be watching ahead of the markets open in hong kong. tesla reported better than expected profits in the latest quarter. we will be watching lithium, byd, and others. kathleen: coming up in our next hour, ebs global management gives us their outlook shares. an analysis from yale university as china lifts its pandemic-era restrictions. as you have heard into so many interviews today, this will make a big difference in many economies, including china's. the start of trade in hong kong, shanghai and shenzhen. bloomberg markets: the open. this is bloomberg. ♪ to keep in the family or passing down the family business or giving back to the places that inspire you. no matter your purpose, at pnc private bank,

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david: welcome to the show.