vonnie: you are watching daybreak asia. we are counting you down to asia's major market opens. haidi: a story has just come

online. mainland chinese markets are said to enter a bull market after the weeklong holiday driven by a consumption rebound. central bank investors expecting the fed to slow the pace of rate hikes as inflation shows signs of easing. asia's richest man is back -- short seller hindenburg research calling its report a calculated securities fraud. vonnie: let's -- annabelle: let's check u.s. futures -- this on the back of questionable tech earnings. down about .2%. there he early days yet. we have china markets reopen before we get to the monday session. a big week of events this week is probably going to culminate wednesday with the federal reserve fomc meeting. i whole raft of data including payrolls on friday. a week of major event risks.

the first major test -- that 10 year yield has come down 40 basis points in the last couple of months. we will see what happens after wednesday. crude seeing a little bit of upside but we are not expecting any change. haidi: i wonder how much change we expect when it comes to the reopen of china even how relentlessly good the news has been so far taking us to the precipice of the bull market for this part of the world. in the meantime, pretty flat start to the trading week when it comes to things in sydney. exactly flat at the moment -- not much of a move when it comes to the bond markets. the aussie dollar seeing quite a lot of strength. the dollar opening mixed, a tight range of trading as we get the week for the fed underway. seems to be slowing the rate of hikes and we get the ecb and poe

on thursday. a big week when it comes to fx markets. we have been watching some of these moves when it comes to stocks potentially affected by the auckland flooding and more flooding to come after we saw the country's largest city hit by that severe summer storm. watching for those tourism operators with the damage there as well. traders bracing for the first major policy decisions of the year as well as the resumption of trading in mainland china. david ingles joins us now. iran rumble will mark -- bull market watch. but levels are you watching for given the high frequency data has been so good but has the fundamental story changed over the past few weeks or months? david: when will the earnings story start to come in and support the price it has risen

to? to your question on what specific level we are watching, the csi 300 is the index to watch. 6.5 on the shanghai call. 4200 10 if you want to be exact. before that, we enter a technical bull market. but it shows the catch up we will see in this market because things were shot last week. hong kong had a great week here. some of the proxies in the u.s. up 2% or 3%. it's almost a foregone conclusion we will get there. whether we stay there into the close is another thing. the news flow suggests we will get a lot of volume coming through. i'm curious to see what the stock connects will be given how far prices have come last week. i would also be watching the 10 year yield. we are very close to eclipsing

the high we hit on december 6. a couple of areas to this market we will be tracking any onshore commodity changes up and running and we will see how they digest all the news from last week. vonnie: the csi 300 -- what areas of the chinese market should we be watching more closely? david: a couple of things reopening -- travel and some of the numbers coming up, 80% was the pop in terms of the mistake travel. we have been talking about the box office and seeing crazy numbers coming through. let's not too obvious are they pre-luminary earnings. 244% on lithium earnings -- some news on investments coming through -- just some headlines

coming through -- china giving a conditional mod to covid antivirals -- we will be tracking that very closely. and we've actually seen the yields and dollar bonds come off substantially here in hong kong. haidi: what else are you watching when it comes to the rest of the region? david: some earnings coming through today out of south korea. samsung is one of the big names to watch. japan exchange, moving into earnings season in japan. i won't get into the adani story, i know you will be talking about that later. as far as south asia is concerned, we are looking at

what's happening in pakistan. the rupee there tanking. that's one specific area of the market i will be tracking, but that is about six hours away. that's a long time away. vonnie: stay tuned. david will be taking us through the special china open in less than two hours. u.s. inflation numbers for december may pave the way for the 25 basis point rate hike from the federal reserve. kathleen hays is here with more. we've got a raft of data but what can we take away from this data in the past week? kathleen: we can take away that the federal reserve, many of the officials want to slow down and go to to pay five. some helpful numbers in the latest expenditure report, but the important part is inflation. let's look at the year-over-year rates. 5% on the headline.

it was expected to come in in at 5.5%. 4.4 lower than the 4.7 and get this -- the fed forecast 5.6% on the headline. a better number in the fed forecast. here's the bloomberg economics point, which is well taken. there is no disinflation in some key numbers and it makes inflation look stickier. core services are hovering around 5% on a more annualized basis. the pce, the main number -- that's a sticky part -- they see their 5% year-over-year not coming down but pce deflator rents up 4.1 percent. the second one is the feds super core, it is stubbornly high. it's not coming down enough.

if you look at the annualized rate, it's about 4%, far away from 2%. we saw weaker retail sales. some other numbers looking even worse. janet yellen, former fed chair, now the treasury secretary had this to say about the latest numbers she sees in the economy. janet: i don't want to minimize the risk of recession in the absence of further shocks, it comes down to the labor market. the path i see to maintaining a strong labor market or bringing inflation down, those involve a slowdown in growth. kathleen: the latest jobless claims looking at a tight labor market. maybe that is lagging. the longer it holds up, the more the fed may have to hike what it looks like may be the downshift is in the works now. haidi: is that 25 basis points

baked into the cake? kathleen: it certainly may be. very importantly, we heard from the vice chair. for the last month and a half has been talking about a possible downshift. a very hawkish member of the board of governors also talking about this. what will jay powell signal after the meeting at the press conference on wednesday? will he stress inflation has eased more than we expected? will he suggest we are downshifting but we will be watching the data closely and expect to have to keep rates high into the end of the year. that has been the previous message. that would go against what the markets are pricing in which is actual rate cuts in the second half of this year. haidi: kathleen hays. gautam adani published a lengthy rebuttal to a document from

hindenburg research. what was the rebuttal? what did we hear? annabelle: it was a follow-on rebuttal because the first response came thursday when the adani group held a meeting with bondholders. in india, we got a much longer response in this set out to reply to the 88 questions raised in the hindenburg research report that alleged accounting fraud, market manipulation. so adani said nearly three quarters of this information is in the public domain and the balance as they relate to public shareholders are baseless allegations. he's the angry overall about what happened with hindenburg research and is saying the whole thing amounts to nothing but lie and is tantamount to securities fraud. we can't get through all the details because it does come in at 413 pages but overall, he says hindenburg is making an

attack not just on the company, he's making an attack on india and its growth ambitions because gautam adani is seen as the indian billionaire closest to the prime minister and is seen as carrying out a lot of ambitions in areas like green energy. the other point he makes is the timing is very particular since it coincides with a huge share sale. vonnie: so what sort of impact has this thing had on the share sale -- u.s. players like jeffries involved in underwriting. annabelle: just to give the high level details -- the share sales were worth $2.5 billion. it's very rare that they are sold at a discount, so looking at the different areas we've seen from the anchor portion, the response was quite strong. companies like maybank and abu dhabi investment authority are among the investors but overall

subscriptions are at 1%. there is still time to go and investors do typically wait until the last day of the share sale to place their bids. there are concerns around this attack from hindenburg research and it could sour sentiment. there are questions coming from high-profile investors like bill ackman who has said he thinks the hindenburg report has a lot of credibility to it. he has come out with another tweet saying there are a lot of issues for banks involved in this equity sale, including jeffries and they need to do a lot more due diligence. vonnie: we will see what happens. thank you for that. let's get to su keenan with first word headlines. su: we start with the u.s. house speaker kevin mccarthy and president biden have agreed to meet on wednesday to discuss raising the u.s. debt ceiling. an agreement could produce government spending and avoid a

-- reduce government spending and avoid a sovereign default. mccarthy said while reductions in social security and medicare should be off the table, all discretionary spending including the defense budget should be reviewed for waste. israel is vowing a vigorous and targeted response to palestinian attacks. the prime minister is warning the latest sign tensions are out -- are unlikely to ease soon. on friday a palestinian man shot and killed seven civilians and that followed a deadly israeli raid in a west bank city. january has been one of the bloodiest months in years in israel and the occupied west bank. to china where they have reported a sharp drop in new covid-related deaths from the lunar new year holiday despite a spike in travel that increased the likelihood of more infections. more than 6300 related deaths, half as many as the prior week.

the true rate could be much higher as officials are not counting those who died at home more in care facilities. ftx co-founder sam bankman-fried has denied trying to influence a witness in the government's fraud case against him. his legal team has accused u.s. attorneys of portraying him in the worst possible lights. federal prosecutors have asked for additional bail conditions on bankman-fried saying he reached out to an ftx employee in an attempt to sway their testimony. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. haidi: still ahead, we will hear from japan former trade ministries as the government needs to address more in its own chip sector to compete with china. coming up next, brian frame tells us where the opportunities are as he relates value close to

growth stocks. this is bloomberg. ♪

vonnie: you are watching daybreak australia. chinese markets set to reopen after a week off for the lunar new year holiday. stocks rallied on their return last week with spending and

tourism data suggesting a recovery is gaining traction on the mainland. we will be on the lookout for manufacturing and pm data coming out from china. on wednesday, india will unveil its annual budget. experts are expecting the government to target a budget of 5.7% gdp. on friday, u.s. jobs data is expected to loosen in the u.s. but remaining far from nonaccelerating inflation. other economic data -- pmi numbers from singapore and inflation from south korea. the fed is poised to slow the pace of its interest rate hikes for a second straight meeting heartened by an inflation slowdown. policymakers set to debate how much further they need to tighten to get prices under control. we will be watching decisions from the ecb and boe on thursday. haidi: our next guest says value stocks are attractive thanks to

a reversal this month. brian vanke -- brian frank at frank funds joins us. where do you see the opportunities given that it's going to be pretty bullish. the fed already locked into expectations. big tech earnings as well. where are you looking? brian: we are looking at things that are recession-resistant. it has been a monster month and has been led by short covering and growth stocks everyone wants to return to 2021, but the economic data as a whole doesn't look like it's getting any better and could get worse. the opportunities are in noncyclical stocks and value stocks because you need to get paid to whether a recession. you can't just buy something at 20 times earnings and hope you are going to make it through. haidi: is one of the recession proof areas energy? brian: i know it's strange to say, but absolutely. it's one of the biggest

physicians in the frank value fund. they have some of the best balance sheets we've seen in the energy sector terror. for most of my career, we not invest because of the lack of capital discipline and tough balance sheets but the whole sector looks like it's going to be in a net cash position and there's not enough supply. we see china potentially reopening and potential supply shocks coming from the middle east. it might be a great time to whether the recession and energy, which is a strange thing to say but the numbers don't lie. vonnie: why the conviction we are going to have a recession? it sounds like you think it may be more than a shallow recession if we get one. brian: i don't like to be doom and gloom. i like to find opportunities that can get you through but i also follow economists you look at the macro numbers from the pmi's to leading economic indicators to the three-month to 10 year yield curve, they are all flashing recession and had a pretty good track record. i'm telling clients let's be

careful and make sure we are getting paid and make sure the margin of safety is in your equities. it is not a great time to be a broad-based investor because you are not getting the low value that could get you through with good terms. you have to be careful and pick your spots. vonnie: the fed could pause if it looks like we are going into recession. they could see that in the jobs data or consumer spending or other data and composite, no? brian: yes. i think investors have been begging for that pause for months and pricing it in at every turn and the fed disappoints them. but we will get a pause eventually. i think it is inevitable. however, if you look at history, it's not a great time to be investing when there's a pause or rate cuts at the fed. the fed has really been fighting inflation and if they pause or start cutting, you have to ask yourself what are they seeing in the economic data that they are going to completely change their

attitude? in other markets like 2001, when the fed started cutting, it was a bad time to be investing because that's when earnings were turning over. i don't think a pause is a great thing. i think you've got to be a little careful. haidi: are you looking to get different exposure to china? brian: we see our exposure to china through the energy markets because energy is a global market. there is not a whole lot of supply coming online. the supply in the u.s. looks like it is decreasing i know there's a lot of argument over when china is going to start buying oil because there's a lot of existing supply and storage but just looking at the market as a whole and they are talking about stimulus there, it's a great way to get exposure to china to be in u.s. oil companies because it's a global market and there's not much supply coming even from opec-plus. vonnie: thank you for joining us.

you can get around up of the stories you need to know in today's it issue have daybreak. it's available on mobile and the bloomberg anywhere app. you can customize your settings so you only get news on the industries and assets you care about. this is bloomberg. ♪

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vonnie: here's a quick check of your business flash headlines. rio tinto has lost a highly radioactive capsule somewhere in the chilean desert. the mining giant and local government are attempted -- attempting to find a widget used to measure the density of iron ore. exposure to the substance could cause radiation burns or

radiation sickness. cutter energy -- qatar energy signed a deal to look for gas in and national waters in an area contested by israel. total energies and any would own 35%. the u.s. last year brokered a deal ending a dispute between lebanon and israel over the potentially gas-rich area. asml says the chip export curbs on china should not have a material effect on its earnings this year. the company is expecting earnings of 6.6 to $7 billion this quarter. sources say washington got a deal with the hague to ensure -- it seen as a victory for the by meditation. fly be has canceled all its flights -- the collapse comes

after -- less than a year after it started flying again. u.k. civil be asian authority told passengers not to go to the airport unless they had arranged flights with another airline. about 75,000 customers had to gets booked with the company. following gadget demand deals a massive blow to industry leaders. we will have a closer look at the chip tech market next. this is bloomberg. ♪

annabelle: you are watching daybreak asia. we are 30 minutes away from opens in japan and korea. the mood ahead of the open, we are looking fairly risk on. you have that u.s. session

friday, particularly the strength that came into tech stops. tesla and facebook each up more than 3%, driving the nasdaq to a gain of 1%. the other factor at play is what happens with the fed. we have expectations they could downshift to quarter basis points hikes this week. more inflation readings indicating there are pressures easing. s&p 500 futures looking a little weaker but we have australia and new zealand online. japan futures looking a little flat ahead of the open. the other factor is what happens with china. mainland markets reopening after the lunar new year break in two hours. during this time, we have seen the hang seng index rising 3% during that time, so that's another bullish indicator given we have seen tourism numbers looking strong and consumption rebounding.

we are close to the 850 week moving average. if we cross that with some investors, that's a bullish single for the hang seng index, saying it could reach 30,000 points in 12 months. that would be a 32% increase from where we are today. a lot of upside possibly. haidi: we are also watching the outlook for chip socks -- chip stocks. prices are plunging and the demand for gadgets is just not the same. it's get more from bloomberg technology editor joining us from tokyo. it's interesting to see the market reaction because you have the bloomberg asia semiconductor tour sector sitting at a five month high. what are we expecting as we get samsung numbers? >> good to be here.

the samsung numbers, what samsung says about its outlook, whether it's going to be cutting output for the first time, usually samsung typically continues to spend during downturns. they are hoping they can outrun the downturn but it been so ugly. chip prices are down by double digits. it has come to a point where they lose money for every chip that they make. the more they make, the more they lose and it has been an ugly quarter. so there's a lot of expectation samsung will finally cut output and hopefully that will trigger a bit of a recovery. but everyone is looking when customers demand a bounce back.

with that, no amount of output is going to help prices. vonnie: there's the question of companies bringing chipmaking and house. how much will that impact some of these companies in the coming quarters? mayumi: that's going to take a while. it takes a long time to get output. it's easy to say we are going to produce these chips and apple has said they will but what they are talking about is more chip design. in the end, they will have to outsource mass production and some of that is going to go back to the samsung's of the world and, in any case, that will have a huge impact on the volume of the chips that are going to rely on the regular chip giants.

vonnie: that was bloomberg's technology editor. she will be keeping an eye on those earnings this week. let's get to su keenan with the first word headlines. su: we start with the latest on gautam adani. he published a lengthy response made by hindenburg research, addressing a majority of the questions raised by hindenburg, calling the report a calc elated securities fraud as well as an attack on india. the response, which was 400 pages long was tied around the last leg of the follow-on share of sales. u.s. treasury secretary janet yellen says the u.s. economy remains at risk of recession amid high interest rates. yellen told bloomberg news she is encouraged -- is encouraged inflation is coming down and inflation remains tight. economists expect u.s. gdp to shrink, seeing a 65% chance of a recession in the coming year.

to china where they have resumed issuing visas to japanese nationals, ending some of the retaliatory measures it took against covid-related curbs on its own travelers for supper chinese embassy in japan issued a statement on its official we chat account. china's domestic plane trips almost doubled from one year ago during the week of the lunar new year. trips jumped 80% as beijing heads away from covid zero. at the pboc, they will extend three monetary policy tools for green technologies and the logistics sector. the chinese central bank says it will continue offering cheap funding for banks lending to firms that help reduce carbon in missions. it will do this until the end of 2020 -- 2003 4. they will re-extend the lending program for coal use to the end of the year and a similar program for logistics until the end of june.

auckland is bracing for more rain -- this one day after the city was hit by a severe summer storm that left at least four people dead. the city experienced its wettest 24 hours on record, resulting in widespread flooding around the city. forecasters say another system known as an miss eric river is forecast to bring more heavy rain to the upper islands. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. haidi: chile's central bank governor is pushing back against policy makers will start a series of steep interest rate cuts. speaking exclusively with bloomberg, she explains why the benchmark rate is set to stay at the highest more than two decades. >> our decision to maintain rates brings a forward bias.

it shows the central bank is waiting to have enough information to see there is a convergence of inflation toward the target of 3% within two years. shery: how should we interpret the fact that the language in the statement around inflation did not change at all? >> it means we maintain that bias and as long as we do not have greater clarity as long as this convergence is taking place, the monetary policy rate will be maintained. we have extra nearly high inflation and, therefore, it is important to have that prior diagnosis before changing the policy. we see this change in the evolution of china which is important for the price of copper. in the case of copper, we have had a significant increase. this change in the covid zero policy has generated a change in perspectives. what this has produced is an appreciation of our currency, a significant appreciation in recent times that we must evaluate carefully in light of

the macro economic scenario and next monetary policy report. shery: how is rising copper prices affecting the economy and inflation? >> it means more dollars in our country and therefore an appreciation. that in the short term has dour forces on inflation. it has short-term effects on the downside but long-term effects could be the opposite. we have to analyze in the context of what macro economic conditions are in each moment and therefore how much the impact is in the short-term and medium-term. there are inflation -- the inflation target is two years away. it's not the short-term. haidi: the chilean -- in an interview with shery ahn. his warning curbs on china need to be carefully calibrated. this is bloomberg. ♪

haidi: japanese markets will open at the top of the next hour. this is what we are seeing when it comes to the prelude of trading. a mixed session when it comes to the dollar. head of a fed decision this week -- not just the fed, the ecb and

boe, so a potentially big week when it comes to fx trading. dollar-yen sitting over the 19 handle. a little easing when it comes to dollar-yen. nikkei futures down by .1%. we are also watching jgb's as we continue to watch the path ahead when it comes to boj purpose -- purchases. we could see bonds zero a little lower. vonnie: japan's former trade minister saying the government needs to invest heavily in the chip sector to compete with china. he says he supports the move to join the u.s. and netherlands in curtailing beijing's semi conductor ambitions. the ruling party lawmaker also warned curbs on china need to be carefully calibrated. >> western nations should

communicate clearly on which chips could pose as a threat if exported and come to one standard on where to draw a line between cutting edge or sensitive chips. >> how should the japanese government cope with any reaction from china? >> china itself is building its own supply chains and says it's policy is not to rely on other countries. but we are doing is the flipside of that. so china is not in a position to complain. >> what kind of support for japanese ship companies. >> that is a company at the center of japan's strategy for cutting edge chips. we must ensure the success of this company as it symbolizes cooperation between japan, the u.s. and europe. it is said the chip industry needs ¥10 trillion of investment

in the public and private sector over 10 years. eight ample support to make sure it succeeds. >> how do you welcome the recent announcement considering the second factory in japan. >> tsmc is slowly discovering japan's potential. i believe they have become serious about making japan one of their production bases in the region and we welcome their move. >> what is the ideal relationship between the japanese government and bank of japan? >> the japanese government and bank of japan should share issues and cooperate well keeping a certain level of tension in their relationship. >> what do you require for the next bank of japan government? >> i expect the new governor to be strategic in a good way. you can some prize markets with

positive policy. when you have to do something that may have a negative impact on the market, you want to send a message gradually. the market should already have factored in by the time the policy is announced. i think it would be nice to have someone who can make crafty moves. >> what does japan need to do right now? >> innovations that change the world are always born in japan. the biggest challenges to create that ecosystem. haidi: japan's former trade minister speaking to bloomberg. the japanese prime minister risks reinforcing the view the country is serious about addressing gender inequality. if women are shut out of the new leadership set to take hold at the bank of japan, it kathleen hays reports. kathleen: at the u.s. federal

reserve and european central bank omma women have ascended to the top your ship ranks. at the bank of japan, in its 140 year history, a woman has never held the job of governor and not even deputy governor. jp morgan's chief japan equity strategist worked at the bank of japan for more than a decade. she says it's time for the boj to show wouldn't time -- when it comes to the promotion of women, it's on the same page as its world peers. >> to think about japanese economic growth in the future and think about their current policy formulations from many aspects, i think this is time for the bank of japan to have a senior top female leader. kathleen: this year, it looks like a woman does have a chance of taking one of the two deputy governors seat. in a survey, yuri aquino was topic. >> i think decision-making at

the bank of japan board will be more consensus between governor and japanese governor if she were deputy governor. kathleen: as the prime minister ponders his choices for these key boj seats, a liberal democratic party lawmaker who is also a former inter-equality minister says a woman could help solve some of japan's biggest problems. >> bringing a woman to the board of the bank of japan would ring extra sensitivity to such things as diminishing population here. kathleen: tokyo elected its first woman mayor ever in 2016. she said it's crucial for elected officials to make sure women could get coveted jobs where they don't have to be elected but where they can be selected. >> what we have to accelerate is

send more women in the decision-making position as soon as possible. kathleen: as his second term at that boj ends, he faces big decision on monetary similar sent policy normalization. decisions men and women will no doubt find equally hard to make. kathleen hays, bloomberg, tokyo. vonnie: bloomberg's of strivers can read more on this story on the terminal. -- bloomberg subscribers can read more of this story on the terminal. haidi: speaking of earnings -- fmo g reporting after the bell. let's bring gareth allen for a preview. these bank stocks have been strong this year. do we see the numbers bucking up to performance? gareth? -- gareth: earnings season is kicking off this week. the big banks starting the

gambit today. it has been a pretty incredible year for bank stocks. i had a quick look at the numbers and they are trending almost 50% up this fiscal year which is a pretty incredible performance given the bank of japan's rate policy. why is it happening? a big chunk happened in december when the bank of japan tweaked its policy and allowed those yields to track to a slightly higher tolerance and that's positive for banks because high interest rates means they can earn more money and investors were looking to see that happen.

in terms of fundamentals, the bank is tracking pretty well. even at last quarter, when they raised their full forecast to 770 billion yen, they were tracking at 70% of that. we are looking to see a much further along they are. they announced a buyback last quarter, so none of the buybacks this quarter but we are looking to see how they are tracking and how that opens the foresight. vonnie: plenty more to come here on daybreak asia. this is bloomberg. ♪

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vonnie: a u.s. general is reported to have told u.s. officers to prepare for war with china within two years. nbc says that general things to fight will come following the u.s. and taiwan presidential elections. the pentagon told nbc that is not its official view on china. as tensions simmer, stephen engle takes us aboard the aircraft carrier uss nimitz in the south china sea. a potential flashpoint in the pacific. >> the u.s. nimitz carrier

strike force currently deployed in the south china sea punctuates the political risk in the asia-pacific in 2023 as lingering tensions over taiwan and north korea potentially escalate, russia's were in ukraine reminds many this region is not safe from a military escalation. this, as china carries out its own exercises in the same waters as the nimitz led by its newest carrier. china and the u.s. are simultaneously flexing their muscles. the uss nimitz may be the oldest aircraft carrier in the u.s. navy but it still does its job of projecting u.s. strength here in the western pacific. zero to 120 miles an hour in 2.5 seconds. while the u.s. has 11 active aircraft carriers, no other nation has more than two, including china. both the u.s. and china have

many more on the drawing board as the u.s. upgrades to fourth class super carriers and china reportedly aims for a global blue water navy by next decade. >> what's concerning is not so much the changes in capability, it is the intent and crucially, the perceptions of intent. so both sides see themselves as responding to the others aggression. that's a classic recipe for a cycle of escalation. >> u.s. carrier strike force 11 admiral met with us on the bridge of the nimitz off camera, saying his mission is to show the flag, an assurance to allies the u.s. will be here when time is needed. >> we are set up for the vulnerability of a military mistake. when there is no trust, there's no commute occasion between nations, you have two fighter

jets flying closely in the air as we did it recently over the south china sea, that could escalate very quickly. >> yet the likely cause of any china-u.s. military conflict may be less accidental and more political or economic. >> the next decade is probably the more dangerous one in terms of big, grand geostrategic roles of the dice by china. the long term balance of power is extremely dependent on how both the u.s. and china manage their economies. >> the u.s. has assiduously denied there is any attempt to contain china, but actions speak louder than words. we have a containment policy and the bite net initiation followed up with these draconian sanctions on chips. we've certainly taken actions that have put pressure on china and it is naive of us to think

china will not respond. >> for now, the shows of force continue. but for us, it is time to leave this soon to be decommissioned nimitz on an aging c2 greyhound transport, catapulted over these disputed waters. stephen engle, bloomberg news, in the south china sea. haidi: market opens in seoul and tokyo, next. this is bloomberg. ♪

>> this is daybreak: asia. we are counting down to the major market opens. the major one is in 19 minutes.

that is china. we will have japan and korea in just a few seconds coming online to have their own idiosyncratic stories toward what is going on. >> it does look like they be supported by that optimism. and the high-frequency data does seem supportive of the reopening recovery stare. -- story. >> that is right. all of korea japan and also the sign of training for cash treasuries because this is the future between gains and losses after the first decline in a year. but in terms of the vocus, yes, central banks and the fed are the major one we are watching this week. the expectation that we could see a downshift, it signals that we have cooling price pressures

coming into the economy. we are seeing the nikkei coming on looking quiet range bound as you said. some idiosyncratic factors, earnings are the biggest ones in tokyo because we have japan's biggest banks kicking off the earnings season. they expect to not have much movement on the index. that is the second play for the nikkei 225. the yen is holding steady there. the other focus in korea this week as well is reporting. we have samsung due out tomorrow. a lot of focus on the ship sector because it is suffering from one of its biggest routes ever. a lot of inventory is piling up. samsung is expected to escape this relatively unscathed. at the open, we still have the cause deck out.

a little bit unsurprising given we have those big moves in the nasdaq on friday. still, there are geopolitics playing in this. we did have the agreement between japan, the netherlands and the u.s. to restrict exports of chipmaking equipment to china. we are still holding around a nine month high against the greenback here. that is a story more of what is happening in china and the expectations around reopening. we do have a wti that is trading again this morning, that is moving hi, being pushed by expectations of demand on the mainland there. the focus very much today is with mainland equities when they do reopen in 90 minutes from now. in australia, we have the asx looking a little bit weaker but still, you take a look at those on the screen there, that is the biggest gain, up more than 3.2%. we are all about this reopen and

china. >> chinese markets will resume trading in 90 minutes after the lunar new year holiday. let's bring in william warner. you are not all ambitious here. you're only looking at a 30% return for the year. could some of that come from china? >> of course. we have seen a lot of strength in china. we are quiet cautious with china. we have seen so much rallying in the past few months. tech stocks in china have rallied 100%. we are pretty cautious over there. we are very positive with china reopening. i think it should cost -- because more ballast to come in from the supply side. the reopening and china is definitely positive. >> are you at all concerned that

the reopening might at some point because a little extra inflation? >> yes, a lot of people have been speculating that when china reopens, we would see extra inflation coming in from the demand side. also on the energy side. we have seen slower economic growth the past few months. i think it takes time for the fed rate hike to translate. this could bring us to a softer landing. i think the past few months we have started to position ourselves that since the inflation has shown itself

slowing down, we have also seen a lot of different numbers coming in that shows inflation has actually peaked. we are slowly monitoring and making sure we are aware in real-time of what the development is but we have seen a lot of stocks, especially the stocks with the robust balance sheet. that has priced" a lot of recession earnings. we have started owning tail upside, using options to benefit for when inflation numbers starts to slow down or show some sort of tail off of coming down. we will benefit from that. we have actually seen those names performing strongly this year. >> what are the risks that you see with regard to geopolitics? we see the u.s. making more

progress. do you watch this as a potential area where there could be more downside because the risk has yet to really play out? >> yes. geopolitically it is always not good for economies like that. i think the u.s. during japan and the netherlands in order to curb exporting chips to china. i don't really see that as a positive development because china could easily retaliate in other ways. that could cause another rift. >> tech in the u.s. is having a tough time. valuations have definitely come down. what do you see for big tech? it seems like your positive on it. >> there are a few things in play.

these people are looking to develop and the fed policies. if the inflation shocks positively and comes down a lot quicker than expected, i think the forward guidance will improve itself. naturally people are pricing in higher rate hikes, slower economy growth. even recession for a lot of these names. there pricing and a much lower value. this is a robust balance sheet again. we have seen names like tesla and microsoft actually reporting these earnings. it is lacking. debt servicing takes time to translate into the numbers.

a positive outcome would be if inflation comes quicker than expected. >> he published a lengthy rebuttal. donnie addressed to the majority of questions raised by hindenburg. it is calling for a calculated securities fraud. the response which was around 400 pages long was tied around the last leg. kevin mccarthy and president biden have agreed to discuss raising the u.s. debt ceiling. mccarthy told cbs that social

security and medicare should be off the table. all discretionary spending should be reviewed. israel is going a vigorous and targeted response to attacks. benjamin netanyahu is the -- says tensions are unlikely to ease soon. a palestinian man shot several civilians. january has been one of the bloodiest months in years. to china now which has resumed visas to japanese nationals and knew some of the retaliatory measures on its own travelers. the chinese embassy in japan -- china's domestic plans almost doubled during the week of the lunar new year.

his legal team has accused u.s. attorneys of portraying them in the worst possible light. all of this in attempt to sway their testimony. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan, this is bloomberg. >> let's go back to look at some of the movers. >> that is right. we are looking at how they are faring in tokyo. we are trading at 10 minutes now. we saw the nasdaq in the u.s. reporting its best week since

november. really down to those moves they came in the likes of tesla, meda has well. they are very much focused on earnings. we are on earnings watching korea. we have samsung do to report earnings tuesday for the fourth quarter here. that should give us an indication about how this company which they do better than others -- have it is fair with this native to we have been tracking. looking a little bit mixed around geopolitics. on friday, we got that confirmation of the netherlands and japan joining on certain advanced chipmaking technology exports to china.

that does and some of the retaliatory measures. we are seeing japanese tourism stocks. quick still had, why credit suisse over many cautious on the magnitude and speed of china's economic recovery. first, we look at what chinese officials are saying about cases after the first lunar new year holiday. is bloomberg. ♪

quick the rapid dismantle of john allowed people to travel freely for lunar new year for the first time since 2019. good news for the chinese economy. let's bring in michelle cortez.

there is this risk of the virus being carried out. what have we actually seen? >> it was very difficult to understand what was happening in china because we don't really know what is happening on the ground. the information from the government is cases and deaths are falling precipitously. they have fewer than a 1000 deaths a day. that is great news. those are only deaths happening in hospitals so we don't know what is happening in those rural areas you are talking about but it is something we are watching very closely. the concern is the travel that has happened in the past we will ignite this other wave that has happened in the days to come. we are hoping that things will

stay calm and china. >> exactly, what do we know about these covid antivirals that china is embracing? could they potentially help? thanks china has just cleared a couple new vaccinations for the virus and they are also working on antivirals as well. it has been a huge issue over the past 1.5 months because of this huge wave. china had the biggest outbreak in the three years to the pandemic. they were bringing them in -- people were bringing them from singapore and hong kong, anywhere they could get them. the more they could produce on the mainland and increase the number and china, that will be great news for them. at this point, the good news is the case counts are coming down. people will need fewer of these. more is definitely better. >> is it possible to predict the path of the virus used? and the fact that we are starting to see the dropping of

these restrictions for japan? you're going to see a lot more cross the border international travel between china as you well know. >> it is great to let these people, let all the china population get back out there but there is the risk they could be bringing the virus with them. at this point, again, the number of infections in china is coming down. the thing we have all been watching for and worrying about is variants. that is the big situation. to this point, the virus that has been circulating in china has been the variant that we have seen elsewhere in the world. it would be more deadly than they are saying in japan and hong kong. it is something we are watching very closely and are concerned about, that something could come

-- pop up. china is letting people in and there are variants circulating elsewhere in the world so china is now also going to be vulnerable to what is happening in other places. >> let's hope for a best case scenario. thank you michelle. one of the metrics we are watching is oil prices, up about .9%. we will get the actual china market reopening in just a little more than an hour. it is something the fed is going to be watching. that may pave the way for a 25 basis point rate hike this week. kathleen hays is here with more. we had a lot of economic data here in the u.s.. what can the fed take from that? >> one they report that capital -- encapsulates so much about inflation and the economy, personal consumption expenditures, it also has

inflation, it is a pce deflator and it involves the fed's number one gauge. here's what we got on the headline. 5% year-over-year on december. certainly moving the right direction. the core, four point 4% year-over-year last month versus 4.7 the month before. in fact, when you look at how this stacks up against the forecast for the end of the year , that is what the december year-over-year is looking at. they were looking at 5.6 on the headline. good news. disinflation is not exactly in all parts of the report as ap points out. let's look at what they are pointing out from this report and why inflation still looks sticky. core services. that was at .4 for the second month. that is still pretty high.

the pce deflator minus housing related costs of 4.1% on a six-month annualized year-over-year basis. still too high if you're trying to get a -- tried to get to 15%. the super court number minus housing costs stays really high. so what is another element we should look at to look at what the fed is looking at? chris retail sales, consumer spending in this report, it was down year-over-year. janet yellen, the former fed chair, also our current treasury secretary in south africa on friday had this to say about her worries about the economy and the recession. >> i don't want to minimize the risk of recession in the absence of further shocks, it really comes down to the labor market. i guess the path that i see to maintaining a strong labor market and getting inflation

down does involve a slowdown in growth. >> 25 basis points, it looks like it is a lot closer to being baked in the cake. the question will be after the fed policy decision, after the tightly worded policy statement, what does jay powell say about what happens next? will you continue to 25 basis point hikes? are you going to pause? are you less worried about inflation? whatever he signals there, it will be very important to the market. they are pricing in cuts in the second half of the year. jay powell says they will keep the key rate at a high level. that will be a big issue on wednesday as well. >> as japan prepares to announce the replacement for the government, we look at why the

country risks lagging behind on gender equality if women are shut out of the race. >> at the u.s. federal reserve and the european central bank, women have ascended to the top leadership ranks and the bank of japan is -- and it's 140 year history, the woman has never held the job of governor or deputy governor. the chief japan equity strategist worked at the bank of japan for more than a decade. she says it is time for the boj to change its attitude toward women. and also, think about their current policy, for many aspects, i think this is no time for the bank of japan to have seen your female readers. >> it looks like a woman does have a chance at taking one of the two deputy governor seats.

this former boj official was the topic. >> i think that decision-making at the bank of japan will be more of a kansas between governor and deputy governor if she were a deputy governor. >> as prime minister -- the prime minister thinks about his choices, a liberal democratic lawmaker here. >> she says it is crucial for elected officials to make sure

women can get coveted jobs where they don't have to be elected. >> as the second term of the boj ends, he made some big decisions on and a monetary stimulus. decisions that men and women will no doubt find equally hard to make. kathleen hays, bloomberg, tokyo. >> bloomberg subscribers can read more on this story on the terminal. it is also available on bloomberg.com. when you are ahead. -- plenty more ahead. stay with us. ♪

>> let's look at markets that are trading into the soul and soak sessions. we are seeing a lifting when it comes to chinese stocks. we are seeing a little bit of downside. these days, our households depend on the internet more and more. families grow, houses get smarter, and our demands on the internet increase. that's why we just boosted speeds for over 20 million xfinity customers, on us. so you get more of the speed you need for day and night streaming. more speed you need when you're work from homeing. and more speed you need as your family keeps growing. check in on your current speed through the xfinity app or upgrade to the speed that's right for you today.

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>> this is daybreak: asia. we are 30 minutes into the session.

you can see them a little bit weaker. a lot of expectation building for central bank including if this will move to a 25 basis point hike. these may and then markets have been shut since january for the lunar new. taiwan at the latest will have futures reopening.

a lot of optimism that has come into chinese equities over the past few days. the consumption has had a lot of travel, tourism, retail sales. we do have the ah shares premium. we see the move lower their when hong kong was trading, the mainland markets were shot. we see them play a little bit of catch up at the open. >> exactly. that is less than one hour away. >> a lengthy rebuttal published to flawed allegations by short seller hindenburg research. they have opened a pandora's box on india and emerging markets. she joins us now.

hindenburg shortselling is an attack on india. it is true. does this immunize donnie from anything that might be scandalous? >> i think the rebuttal report is very dramatic. it took a very nationalistic tone. what happened last year was they got freaked out by china. the problem with india is the market is very expensive. they traded over 20 times earnings.

that is one problem the hindenburg is raising. are stocks deserving this type of valuation premium? what are the other possible scenarios? >> we have seen this before, read across asia, big debt burdens, questions over government. hna was just one of them. what are we seeing from the past experience? does hindenburg have the ability to tumble with that? >> it is a really good question. the short-sellers have been targeting evergrande for as long as a decade. the hindenburg can learn from china.

basically hna blew up because the government started to target privately held companies. they all blew up. 2021 was china doing the real estate crackdown. the question is whether the indian government will come out or if they are equivalent will say nothing happened. >> another thoughtful take on that story. let's get you to su keenan in new york. >> we start in china which was

reported a short -- sharp drop in covid related deaths despite a spike in travel that increased the likelihood of more infections. more than 6000 300 related deaths in hospitals. that is not half as many as the previous weekend. the true rate could be much higher. the pboc will extend three monetary policy tools and support of green technologies and logistics sector. the chinese central bank says it will continue to offer cheap funding that will help reduce carbon emissions until 2034. it will also extend its relenting program until the end of the year. to the u.s. now, janet yellen says the u.s. remains at risk for the session. yellen told bloomberg news she

is encouraged that inflation is coming down and that the bloomberg market remains quiet type. they say they have seen a 65% chance of recession in the coming year. finally, in tennis. novak djokovic has one his tent australia title. they one in straight sets. after receiving his trophy, joke of edge described the wind has the biggest victory of his life. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan, this is bloomberg. >> thank you so much. japan's former trade minister says the government needs to invest heavily in the chip sector to compete with china.

he says he supports the move by japan, joining the u.s. and the netherlands with semiconductor ambitions. the winemaker also one of the curbs on china need to be carefully look after. >> western nations should communicate clearly on which chips pose threats. a cut on where to draw a line. >> how should the japanese government cope with any reaction from china? >> china itself is building its own supply chains and it says it's policy is not to rely on other countries. what we are doing is the flipside of that so china is not in a position to complain. >> what kind of support does the government need to do for japanese chip companies? >> this is a company at the

center of japan strategy. we must ensure the success of this company as it symbolizes cooperation between japan, the u.s. and europe. it is said the chip industry needs 10 million in both the private and public sectors over the next 10 years. they need ample support to make sure it succeeds. quick they are now slowly discovering japan's potential. i believe they have become serious about making japan one of their production bases in the region. we welcome that move. >> what is the ideal relationship between the japanese government and the bank of japan question mark >> the japanese government and the bank of japan should share issues and

cooperate while keeping a certain level of tension in their relationship. >> expect the new governor to be strategic in a good way. you could surprise market with positive policy. when you have to do something that may have a negative impact on the markets, you want to send a message gradually. the markets should have already factored in by the time the policy is announced. i think it would be nice to have someone that could make crafty moves. >> what the bank of japan needs to do right now -- innovations that change the world are always born in japan. the biggest challenge for japan right now is to create that ecosystem. >> that was the trade minister. coming up next, the mainland

chinese markets have entered above market. this is bloomberg. ♪

>> mainland markets are set to reopen over the next hour after the weeklong spring festival.

what specific level are we watching for in china? >> i cannot get a minute of sleep on the weekend knowing we will be there, knowing we will get there. and then we will ask what is next. how far can multiples expand? 4210, spot five to be exact right there. this market has really lagged. where we are up 50 or 60%. this is one to watch. i am curious to see what flows will be like. take your pick. i would be watching lithium producers a lot more closely than usual. a lot of pacific items coming out of this at 233%.

also, i am looking at some of the antiviral stocks. >> it is all good vibes. or are there some caution warnings as well? >> it is the exuberance, really good look at the other side. the global had a research drop this in our inboxes on sunday. this is really more of a global story. this also goes into what the fed and the market sees the fed as pivoting or maybe just ending after maybe two. they are saying maybe they moved on a little too quickly. right now, their advice to clients, they are a bit more cautious right now. i will leave it there.

>> china spring festival travel showed signs of recovery. this is the head of greater china equity research. i don't know if you are as excited as david ingles just told us he was. but we are building up to the potential reopen into this bull market. my question is about how we have had a lot of support in the past coming days. as any of the change to the broader outlook for the economy? >> actually, we are looking through the situation right now. it is what a handsome recovery after things settle down. in terms of consumption and these purchases. those of you the two big items we would watch out for.

kueng's other risks to the downside? what are you avoiding in terms of those risks? close and -- >> in terms of risk, we will be watching out for the situation in the united states. if the states come through with better rate hikes, the liquidity would be negatively affected. in terms of earnings outlook, coming up to the season march, that is another thing to watch out for potentially. while we are quit optimistic over the next three months -- >> what will we see this year? >> if consumption comes back

when handsomely and if the home purchase comes back, i don't think the fiscal situation is much of a concern. >> right but if it doesn't, will china have the bandwidth to stimulate if necessary? >> i believe so. i think there are quit a few boats the government can use. i think the government's quick determent to support the economy at this point. >> how resilient are earnings expected to be? both on the macro and earnings side? do you expect significant further re-rating? >> i believe so far. even throughout the pandemic, the earnings companies were quit recently in china surprisingly. when the reopening is coming through, i believe there should be plenty of upside in price

when it comes to earnings guidance. >> do you like chinese big tech now that it seems like the regulatory direction has changed? quick since they account for quit a big portion of the index, if there is any momentum on the upside, this is most for the tech to move up. if the rally were to continue, it is almost unavoidable for the share prices to move up further. >> if the fed finishes with its tightening cycle fairly soon, even if it is for the second half, is there a risk for economies like china's emerging markets that capital starts to flow out again? >> i believe there should be room for further inflating and china.

in a way that liquidity is likely going to support over here. >> thank you so much for joining us. the head of greater china equity research. some stocks we are head of the market opening ahead of hong kong and mainland china. china has given conditional approval for two locally made covid-19 antivirals. this is all following the end of virus restrictions. china related travel stocks moved. we are also watching air china and china eastern. we are continuing to look at jim stocks after the u.s. secured an agreement with the netherlands and japan. we are keeping an eye on the likes of ac technologies.

still ahead, we go on board the aircraft carrier as washington and beijing flex their military might in the south china sea. our special report coming right up. this is bloomberg. ♪

>> a u.s. general has reported that he is told his officers to prepare for war with china within two years. they think the fight will come following the u.s. and taiwan presidential elections. the pentagon told nbc that is not the official view on china. as tensions simmered, our chief north asian convert -- correspondent stephen engle takes us on behalf of the south china sea. quick the carrier strike force currently deployed in the south china sea punctuates the political risk in the asia-pacific and 2023 as lingering tensions over taiwan and north korea potentially escalate russians were in ukraine reminds many that this region is not safe from a military escalation. this as china carries out its own exercises in the same waters led by its news carrier.

china and the u.s. are simultaneously flexing their muscles. quick this may be the oldest aircraft carrier in the u.s. navy but it still does his job of protect -- rejecting u.s. strength here in the western pacific. 0-1 hundred 20 miles per hour in 2.5 seconds. >> the u.s. has 11 active aircraft carriers but no one in asia has more than two including china. both the u.s. and china have many more on the drawing board as the u.s. upgrades to for class super carriers and china, for a blue water navy by next decade. >> it is not just the changes in capability, it is the intent and crucially, the perceptions of the intent. both sides see themselves as responding to others aggression.

that is a classic recipe for a cycle of escalation. >> the strikeforce 11 commander met with us on the bridge off, saying his mission is to show the flag, and assurance that the u.s. will be here when the time is needed. >> we will set up for the vulnerability of a military mistake, when there is no trust, you have two fighter jets flying closely in the air very recently over the south china sea, that could escalate very quickly. >> the likely cause of any u.s. china military conflict might be less accidental and more political or economic. >> the next decade will probably be the more dangerous one in terms of big geostrategic roles of the dice like china.

the long-term balance of power is extremely dependent on how both the u.s. and china manage their economies. >> the u.s. has denied there is any intent to continue on china. we have a containment policy. the biden administration followed up on these draconian export sanctions. we have certainly taken actions that put enormous pressure on china. it is not evil to think that china would respond. >> the shows of force continue but for us, it is time to leave this soon to be decommissioned transport catapulted off over these disputed waters. stephen engle, bloomberg news in the south china sea.

>> taiwan is markets come back online for trading after the lunar new year holidays. this is what we are seeing when it comes to the futures session, we are expecting the mainland chinese market to come back on shore and to open to that market territory. a lot of these indicators suggest that we will continue to see chinese consumption of tourism. this is fragile -- travel and education going back. that is inferred daybreak asia. market coverage continues ahead at of the china open. this is bloomberg. ♪

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>> good monday morning from hong kong. it is not :00 a.m.. i am david ingles. let's get toh