>> welcome to daybreak asia. >> the top stories, asian stocks set to start february with gains as investors cheer signs of u.s. labor and inflation cooling. economists are expecting 25 basis point hike from the fed. a flagship firm gets reprieved after allegations. vonnie: a quick look at u.s. futures. we are seeing a little bit of back, low volume today before the 2:00 p.m. news conference from jay powell. we did have a nice bounce yesterday.

bond futures showing signs of gaining. we also had gains today the 10 year was trading at 350. crude is higher once again. let's look at some individual stocks. some of these reporting after the closing bell yesterday in the u.s.. amd is up 1.5% probably the best performer among the chip stocks. amd managed to have gains in the server market so it is being rewarded by investors. not so western digital. it did not have a good quarter. electronic arts said its orders were lower and that includes star wars jedi. take-two interactive was down on that news as well.

snap after hours down 14%. it is making changes to how it sells advertising essentially and forecasts are not so great. paul: the force seems to be with risk assets in australia. the asx is modestly higher. we have a staggered open here in australia so a lot of stocks are left to come online. three year is coming back after steep decline on tuesday. retail sales were a bigamist. -- a big miss. there's a lot for the rba to consider as the mortgage cliff rolls over. the aussie dollar is hovering

around $.70. in new zealand, we see reasonable gains. nikkei futures pointing to a slightly softer open. vonnie: the federal reserve may be ready to downshift the size of its rate increases but that doesn't mean it's ready to take its foot off the gas pedal. kathleen hays is here. officials have been signaling a 25 basis point hike but we need to know what's going to happen in march and beyond. >> they signaled many of them like chris waller in washington, the vice chair and others have said we are making progress on inflation it's ok to slow down and may be look ahead to a pause. it will be jay powell's job at the press conference to fine-tune that however he asked to do it.

yes we are getting closer to the point or no we have further to go. we know that consumer prices are coming down. what feeds into the major measures? wages are a big one. the cost indicator benefits came in at 1% in the latest quarter had been as high as 1.4%. on the other hand, you have recession risks rising and that's another thing that would argue for the fed to pause at least slow down to see what happens next. if you look at something like jay powell's favorite inflation gauge, it is still high. that's the core services minus housing costs. jobless claims continue to fall, they are not rising.

that argues for a market that is still tight. it is not looking like it's broken. our team says jay powell is going to signal the fed is on track to getting to 5.25% not stopping below 5% as a lot of market participants are looking for and one thing he is definitely not going to signal is that they are ready to cut rates. he may raise the point from the december meeting that look out markets, if you keep rallying stocks and having bond yields fall and you make things easier financial conditions, we may have to do more. i'm sure he will be asked about that. it will be interesting to have -- hear what he has to say. paul: kathleen hays. asian futures are signaling

gains to kick off the new month after a positive wall street session ahead of the fed. kathleen set the scene. markets continuing to rally into the fed decision. are they getting it right? guest: jay powell will be the want to give us the not on that but they certainly do seem to be fighting the fed and that creates a lot of risks. we saw late in the day yesterday in the rates markets some traits were put on to hedge the risk of the fed going 50 basis points instead of 25 even though there's a 90% chance that they go 25. there is some concern building that markets are way too complacent. there have been a lot of investors making that call. part of the difficulty is you have a bond market that is looking at the data coming in at what the fed has done and saying

we are going to get a significantly worse economy going forward than we have now. that means that bond yields anywhere from 3.5 to four look attractive. there attractive, yields come down. if the bond market is pricing for the fed to stop then cut later, over a longer term horizon it makes sense to buy socks. in the short-term what that is doing is storing financial conditions to is loose as they were for the fed started hiking rates. that has to be something the fed is going to be concerned to push back against. vonnie: paul mentioned this the three-month tenure spread. are we going to get a significant and sudden repricing a fed tightening expectations? >> that has to be the concern

especially because there are some signs that inflation could come back. there is also concern that china's reopening you have a higher growth profile for china and higher growth profile for some people in the short-term for the u.s.. those higher growth profiles would argue against inflation continuing to slowdown. on the flipside, if you do think inflation is going to come down as fast as a lot of people are pricing for, how do you achieve that without there being a significant slowdown at least a mild recession quite possibly a hard landing? all of that argues for the potential that the fed ends up going higher on the rates side and people are expecting and keeps it up there for longer. the very least until it breaks the market complacency that the fed is essentially done with tightening policy.

vonnie: it feels like the picture is clear but people are feeling like it's muddy. it's a strange phenomenon, we will see what happens tomorrow when jay powell speaks. thank you. an indian conglomerate has managed to pull off a massive share sale. annabelle doolittle joins us now for a breakdown. i guess one concern seems to be out of the way. >> that's right because we weren't sure whether this could go ahead for much of tuesday given the subscription was so low. the group has managed to fill its books for the share sale. it's going to go to the flagship business unit. what's interesting is when you break it down and see where the demand is coming from because the subscription was very low coming in yesterday only 6% then

we had the surge in autos and that came from the institutional side so existing investors, a victory of sorts because there had been a lot of speculation as to whether we would need to see a price cut or an extension on the timeline given the report from the u.s. sale -- short sale at hindenburg. what was missing in this share sale was the involvement from the retail crowd. individual investors only bid for 10% of the shares offered to them and he is someone who is really trying to expand his investor based. paul: a qualified success for the follow on share sale. we are seeing that affects on the market turmoil on them in other ways. >> definitely when it comes down to the loans they have. what we understand in a bloomberg exclusive is that the

companies being forced to put up $300 million more in collateral to secure or cover a $1 billion loan that has come from the likes of barclays and others. that is because the top up level was triggered. it was set at 2.5 times the amount of the loan. then it was triggered that level at 2%. -- two times. that triggers the selloff that it was forced to dig into its pockets to give more cash to the loan. it's worth pointing out the personal hit that adani has taken because he has lost to the tune of $35 billion. coming into the end of last week was number four on the world's richest people, now he is slipped down to 11th place. it is one spot above his rival in india. paul: let's get over to su

keenan for the first word headlines. >> we start with the u.s. house republicans who will meet privately to discuss their strategy on the debt ceiling just hours before kevin mccarthy and president biden discuss the crisis. mccarthy has indicated the meeting will assess bidens position. republicans are still advising budget cuts and other demands they will seek. antony blinken says u.s. officials help israelis and palestinians relieve tensions. he met a palestinian president following talks in israel. the nato secretary-general says the outcome of russia's invasion of ukraine could influence

china's behavior in the asian pacific. he said a victory for the kremlin which out a third. regimes -- authoritarian regimes cannot get there with her brood first -- brute force. china's home sales continue to slump in january despite expanded stimulus and the end of covid zero. the month was a key test of buyer demand as they had the first chance in years to hunt for properties during the new year property -- holiday. data suggests that developers saw new home sales dropped 30% from a year ago. india's finance minister hands down the annual budget soon promising fiscal prudence. the annual report card sees gdp growth. the government is widely

expected to present a growth oriented budget. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. vonnie: coming up what to expect from the feds first rate decision of the year. this is bloomberg.

paul: we are counting down to the feds's first rate decision of this year. let's bring in kathleen hays who is standing by with our next guest. >> we are joined -- you have been watching central banks for so many years starting out as a currency trader and now is a macro advisor to so many around the world. the shift from 50 basis points down to 25, is it the right thing for the fed to do now? guest: yes i think it is.

it was a bit up in the air a month ago when jay powell at the last press conference indicated that he was amenable to slowing down the pace of rate hikes. we are getting close to the terminal rate we think and so it's appropriate to feel our way through the economy and the data that has come out does not justify continuing the 50 basis point rate hikes. if anything, it just makes it i would call it 100% certainty that they would do 25 and that's probably the right decision. i heard on an earlier segment one of your colleagues was talking about financial conditions which is an interesting point. how markets have rallied and

expectations of fed downshifting and perhaps not even reaching what they have indicated in their ultimate terminal rate expectations of up to 5.25%. it's going to be hard for them to fight the easing. but they don't really haven't economic justification to ratchet up hawkish rhetoric at least at this meeting. what do you think jay powell say? will he chide investors again for making it harder for the fed to get the job done? will he lean more into the soft dish more dovish position that people are getting to count on or is it going to come back tough? that it's going to stay wherever it is for a long time because

the job isn't done when it comes to fighting inflation? guest: i think he will acknowledge the improvement in numbers. the hawkish part is going to be the emphasis that there is still great deal of uncertainty and a long way to go to bring inflation back down to the 2% target. that said, the means by which they will try to engineer that is less about ratcheting rate hikes more aggressively in the near term and more an emphasis on holding rates at higher levels whether they get to what they have in their projections or if they stop one rate hike short of that which is what it sounds like right now. the real issue i think

diversions between the fed and markets, i think the fed is coming toward the markets on the very front end and the real issue is going to be the middle of the year and how long they keep rates at these elevated levels which i tend to think the fed will be right on that. vonnie: you keep an eye on the globe when it comes to central banks. the fed has to worry about the u.s. economy, but there will be a fed -- feedback loop. we have a couple of more decisions this week also. are you anticipating any surprises out of the ecb or boe? guest: let me address the ecb. there has been a lot of sympathy rally so to speak. there was a good deal of it a couple of weeks ago. people were translating what's going on with the u.s. to the european rates markets and

european expectations for ecb rate hikes. they're looking for the ecb to downshift not this meeting where they signal they are going to do 50 basis points but at the next meeting. i think that is incorrect. the ecb is in a very different position than the fed. if you look at real rates in the u.s. or check did real rates, -- projected real rates, you are talking about real rates that are positive in the u.s. will be positive but 150 basis points. the ecb is looking at core inflation somewhere around 4% for this year and they are it to percent so they are 200 basis points below. even after the next height, they will still be 50 basis points below their expectation. the core inflation prints in the

eurozone are not cooperating the way they are starting to cooperate in the u.s. and europe. i think they will end up close to 4% when all is said and done which is a good deal tighter than the market is expecting for european rates. paul: i want to step back for a moment and consider the feds dual mandate which is price stability and full employment. is it possible for the fed to achieve to get inflation under control without inflicting home -- harm on the jobs market? guest: that's the nirvana and this is where if you remember jay powell speech from the fall of last year he said to the american public this is going to hurt the fed's view and especially the leadership of the board was that in order to tackle inflation,, --

now you are getting some of the edge off inflationary pressures and unemployment if anything employment is amazingly resilient and strong. i don't think this is going to continue and this is where i buy into the fed medium-term view that will make it to the second half of the year -- when we get to the second half of the year if they can't raise rates more aggressively right now, you might get stickier inflation, they might have to take another stab at this. it's just right now they don't have justification doing that. vonnie: always wonderful to speak with you. plenty more to come, this is bloomberg. ♪

>> we want to show you some pictures of lima, peru. antigovernment protests are ripping up again. political unrest and instability has been ripping the country for the last few months. it was triggered early december by the ousting and imprisonment of the former leader. plenty more to come, this is bloomberg. ♪ hi, i'm katie, i've lost 110 pounds on golo in just over a year. i was a diet soda addict, and i needed to have a diet soda every morning as my eye-opener. with the release, the cravings are gone. golo worked for me when i thought nothing would work for me. the first few weeks were really astonishing

how quickly and how easily it came off, how much better i felt, what a change it made so fast. i feel like anything is possible after accomplishing what i've done with golo. - addressing climate change

requires effort from all of us, now and for generations to come. - join dylan and me as we get personal about the environment and how we can each do our part. - watch our conversation on peacock. >> we are beginning an exciting week. >> earnings results across the

board. >> macro data. >> payrolls number. >> the bank of england. >> a very important meeting for the fed. >> the market has got ahead of itself. >> jay powell is very likely to remind the market that the fed's plan is to stay hawkish. >> i'm of the camp that says chair powell is going to push back aggressively around this bullish narrative. >> i would expect he would push back against these financial conditions. >> we can expect with the fed that chairman powell loves to see everything flying higher. paul: breaking news on the bloomberg right now. nomura raising its outlook for

china gdp. for a closer look let's get to annabelle and hong kong. >> a lot of traders are hoping that china's growth can offset week as we see elsewhere as we see the fed rate hikes startek affect. in asia today, japan and korea and also for the asx 200 taking cues from what happened in wall street. we saw optimism coming back in. it was the story of bed news equals good news. we saw further sense of weakness coming through in the housing sector, consumer confidence taking a hit. that tells us these interest-rate moves from the fed are starting to take effect. if you bring up this terminal

chart because we also have japan futures coming online, the joy they are watching is japan earnings. we have megabanks reporting across the week. what we are seeing for the topix is that earnings estimates are out doing other parts of the world because investors are seeing a lot more gains over the 12 months ahead. that can be partly to the expectations about the boj moves. there is an expectation that we will see a tweak and policy. sectors can help offset the impact of a stronger yen. you bring up other terminal chart, it is very different story with is happening in korea. this is reflecting the picture of what we are seeing globally falling off a cliff. there is more of that understanding that korea is a

bit of a bellwether. a lot of cyclical stocks located on this exchange like the chipmakers. vonnie: we're going to be speaking to someone about sk hynix. the chipmaker has just reported its biggest quarterly loss on record. it is in line with an industrywide decline. let's bring in our asian tech reporter. the biggest loss on record, all sorts of commentary about how this year is going to be terrible for demand and warnings out of the company and also capex slashed. is there anything good in this report? guest: they reported an operating loss of 1.7 trillion one.

-- 1.7 trillion won. they are headed to the worst downturn as prices have crashed. down 50% compared to peak prices because inventory piled up. it has doubled and tripled. there was a collective malfunction in the industry the could have nothing inventory in time because there were a lot of geopolitical risks and uncertainties over the last year . the overall industry market players and clients couldn't expect. this is going to be a tough year for every tech company including sk hynix micron and samsung.

they are hoping to see the recovery in the second half as prices are already falling excessively. paul: if we take a look at the analyst recommendations, 39 buys on sk hynix. realistically winner would likely to see a recovery? guest: definitely not in the first half since the inventory level is too high. it's a record high level. people are starting to see clients by after their inventory invest -- adjustments in the second half of this year.

they are counting on their new memory products that would fuel the demand in the second half when the industry starts to recover. the china sector is critical at this point. since they are the biggest buyer for sk hynix. that is something that we should closely watch out this year. paul: nomura has said to announce its results and analysts are expecting a modest profit fall. adam, what is the main struggle? >> in many ways, the struggle that nomura is facing is what we are seeing globally from

investment banking and that is the slowdown in dealmaking which is of course crucial to their business but also the decline in equities trading that we have seen in some of the u.s. banks that have reported. those are the two main things investors are going to be looking for. the expectation already is there will be a slowdown in both of those areas. you might see a bit of leave, but essentially net income of around 434 million they are looking for. a of around 6% on last year's number. there is one small item that might give investors cheer and that is the stake sale in the i.t. services company that we already know about. that might help at least offset some of what we will see in this quarter. vonnie: it's been trying to reduce its expense ratio as have many of the banks. is there a sense in the community that nomura can turn

around and there might be progress in cutting expenses? >> of course it is the challenge that all banks are facing and what he country across the world. to the extent that they can curb their cost space that they can either lay off staff or find other ways to bring down the cost situation going into very fragile and uncertain time for the economy with quite a lot of uncertainty not just about how the economic slowdown plays out but how the tightening by global central banks affects the investment banking side of the businesses but also people's ability to go on doing deals into next year. those of the main things investors will be looking for. can they provide enough evidence in the third quarter statement to make people feel like they are making real strides forward in this cost-cutting effort? paul: ubs group has announced

plans to repurchase more than $5 billion of shares this year after fourth-quarter profit beat expectations. the ceo told us more about the banks outlook. >> if the investor confidence is there and they're going to go risk on, are investors and our advice will always be what is leverage cost you because you should realize that be 70 the last decade very low rates, leverage was almost free. leverage going forward is not free. it will come at a cost. that will be a different perspective in terms of taking on -- we do expect that to turn and leverage to come back into the market. in asia, we have seen more toward the end of the fourth quarter we have seen some stopping of the deleveraging. it is too early to tell if that

is a trend. >> a buyback $5 billion, is that a sign of confidence? >> it's a sign of confidence and strength of our franchise. we have a capital light business. we have a mention with our clients. we are generating capital. what is important for us is that we always keep a strong balance sheet for events or risk to come through. we're conservative on risk, but you have to be aware of it. second, if we can we will grow. then it's all about attractive progressive dividends. vonnie: that was the ubs ceo. let's get over to su keenan. >> the adani enterprises

follow-on offer was fully subscribed in the final day mainly by institutional investors. adani is said to have put up $3 million of extra shares to maintain collateral cover from a long from banks that include barclays. last week's system glitch resulting in wild stock swings in the u.s. stock exchange is triggering thousands of claims for damages. the likes of charles schwab and others have submitted requests and we are told the claims are likely to exceed the $500,000 the exchange sets aside each month to cover such disruptions. officials have quietly tightened internal restrictions on employees lyrical activities at the fed. a code of conduct now explicitly prohibits activities within the domain of elected officials.

that's after the minneapolis fed president was accused of personal lobbying for a change in the minnesota state constitution. to australia where they want to boost exports of green hydrogen to the eu. the climate and energy minister told bloomberg that shipping the fields of the other side of the world can be economically viable. the eu has set ambitious goals to scale up hydrogen output using renewable technologies. it aims to produce and import 10 million tons by 2030. paul: australia can be a renewable energy export superpower. europe is energy hungry. even with europe investing in green hydrogen going forward, nobody has suggested europe will be able to meet its own energy needs. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700

journalists and analysts in over 120 countries. this is bloomberg. paul: still to come, the prediction that the market is expected to outgrow the united states. this is bloomberg.

alwed us ♪ s. len more s. at getrefunds.com. vonnie: china's home sales

continued to slump in january despite expanded stimulus. it data showed declines in australia and new zealand's property market as well. joining us now is the cio at heinz asia. we got word overnight that home sales in china dropped. also showing australia home values down more than 8% almost 9% from the peak in april. what is your think that property in asia is going to outperform property elsewhere in the world? guest: thank you. to your question on some of the negative news you reported earlier, for january it was the lunar new year month and lots of chinese people across the world

haven't seen their family in a very long time. i didn't expect home sales to be up because nobody had time. more importantly across asia, homes have become a lot more unaffordable with time that has passed in the last couple of years and the interest-rate environment is also not helping to promote home sales. here at hines our research says the property market is expected to outgrow u.s. and the eu in the next 10 years. it is secular growth we enjoy in asia. we still have a growing middle-class across this region. second of all, the concerns around the pandemic and the disruption to the supply chain have abated somewhat. we are now talking about

residency, how have our lives and business been disrupted? residency means having to provide for adjusting case situation. just in case is now very important. on the notion of sustainability, we have seen in our portfolio that tenants occupiers consumers and sometimes staff have become eco-conscious. this is an opportunity for us to stretch and our ability to deliver quality real estate. vonnie: explain to us what geographies we should be looking for? is china going to play a large part and is that going to be second homes? guest: it's probably broad-based. we see opportunities across the region. in australia, homes may have come up and prices that they still remain unaffordable.

we are in the business of building buildings that will be rented unit by unit to potential users. that's going to be a big push for hines a ship to grow into. in japan we also look for opportunities to expand our residential portfolio and to help companies sell their non-core assets and this time of contraction and liquidity so they can find the capital to support their main businesses but at the same time, selling the real estate to a professional manager with an operating platform like hines to manage their property as well. paul: away from the residential side, i want to ask about office space. work from home was meant to deliver a severe blow to office rentals. do you see that playing out around the asia pacific and what is that going to evolve into? guest: i think we are still

figuring out what it's going to look like for the most part. we have been working at home for quite some time and return to the office is just about to start. there may be conveniences if you work from home that you feel it's much better for your daily program but with think the office is here to stay. key reasons is because in our portfolio, we see high-quality offices continuing to be very well occupied and achieving rents at a historical high. it is the bifurcation of the good quality versus the less good quality that we are seeing. as office operators, we need to be very conscious on the monetization of the property as well as how we make it user friendly and for tenants to feel that and be able to bring their staff back to the office. in asia, would also add that i

think we don't have bad commutes like many parts of the world. the homes are a lot smaller as well. the opportunity for us in asia is to continue to see growth in the office sector. apparently we are out of time, thank you for joining us. tune into bloomberg radio to hear more from the big newsmakers. can also get in-depth analysis broadcasting live from our studio in hong kong. plenty more to come, stay with us. this is bloomberg. ♪ rry about things like changing tax rates or filing returns. avalarahhh ahhh

paul: a quick check of the latest headlines. the ceo of boeing says it's a matter of when not if self flying planes will debut in aviation. autonomous flight technology is being developed for the military and will eventually be used commercially. it is working on a new prototype that could improve fuel efficiency by 30%. >> we have an application on an

all electric autonomous airplane. that airplane that application is in and the faa will begin working with us today on building out a certification program for autonomy and whisk. paul: a creator open ai has helped to identify if text has been authored by artificial software or a human being. it will flag products. the company says it still has limitations and should be used along with other methods to determine the author. japan is quietly experiencing its biggest covid-19 outbreak death rates hitting a daily hot. -- a daily high. tell us more about situation. guest: good morning.

what is happening in japan is that the covid is spreading the most throughout the pandemic's history. so far the infection rate for japan has been one of the lowest in the world. right now the people who are dying the most vulnerable. the elderly with underlying conditions such as diabetes, heart disease, and all timers. because it is rising, there are delays in treatment intervention so that is causing people to die more. vonnie: give us the update on the hospital situation and the staffing, is it able to keep up? guest: no. japan is treating covid as a serious disease which means that people who tested positive are getting carried away to

designated hospitals. there only a certain number of hospitals that can deal with covid. for elderly people who are in critical condition who have to be carried over there by ambulance. the cases of ambulance emergencies have shut off quite a lot for the season. there have been many turned away from the hospitals. vonnie: thank you, we will keep an eye out for your updates and stories. the market opens in seoul and tokyo our next. this is bloomberg. ♪

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>> this is daybreak: asia. counting you down to asia's major market opens. the first session in february for asian markets. we finished january in the united states. all eyes will be on fed chair jay powell and the fomc decision. paul: we will have pmi's out of japan, taiwan, south korea and a number of southeast asian countries. gloomy news for the chip sector as well. south korean trade numbers hitting the tape as well. annabelle: we are going to be getting a good health check on what is happening in the state of the asian economy. kicking off with trade numbers coming out of korea, just dropping here with the open of the cosby bank. -- kospi. exports extended their drop in january. shipments down 16.6% on the

year. far worse than had been seen by economists for a decline of 11 .1%. korean exports are a major barometer of global commerce. this really does tell us about the weakness building into economies not just in korea, but around the world. imports meanwhile coming in line with estimates. down 2.6% on the year. that is what had been seen on the consensus. trade shortfall coming were stan expected with a drop of $12.7 billion. the estimate had been very decline of around $9.3 billion. in terms of market reactions, these numbers will be watched very closely by the be ok which had been pointing to resilience in trade is a key reason the economy could stand rate hikes. also, watching chip export numbers. sk hynix reporting earnings. we are seeing that stock rise

today but of course some of that gloom in the semiconductor sector already baked into the share price and the company sticking with plans on capital expenditure. otherwise, stocks likewise moving higher. the korean yuan trading steady. in japan, we are on earnings watch. japan megabanks reporting. third-quarter results wednesday. analysts expecting modest profit fall with headwinds we have seen globally in dealmaking and equities trading. otherwise, the big focus is the fed. of course we had seen signs of weakness come back into the u.s. economy. firstly, wage cost data undershooting expectations for signs of weakness in the housing market. consumer competence --

confidence falling as well. traders taking -- in that. seeing the nikkei come online .6% higher. in australia, those sectors that are more rate sensitive are the gains. real estate, materials, industrials, consumer discretionary. most are largely in green. oil trading .3% to the upside. the focus is not just down to the opec-plus guidance, but of course jay powell and colleagues. paul: the federal reserve they be ready to downshift further. but that does not mean it is ready to take its foot off the gas. kathleen hays joins us now. fed officials signaling a 25 basis point hike. what about the forward guidance? >> forward guidance is going to be critical.

many officials have signaled an openness to 25 versus 50. so now we have 83 of 92 economists surveyed by our eco-team saying yes, 25 basis points is going to happen. annabelle just mentioned the employment cost index. it is a measure of wages, bonuses and benefits. it is sound to 1.1% in the latest quarter. an improvement from higher levels, still higher than before the pandemic. but it does show that these pressures, which are behind inflation increases, are easing. you also see a very tight labor market. jobless claims continue to fall. that is a sign that maybe one thing the fed needs to say -- see is not happening the way you would hope if the fed is getting to slow down or pause rate hikes. jay powell has favored inflation

gauge pce core services minus rent. they have eased very little. at the same time, recession rates rising. fed officials saying it is a good time to pause and take assessment of where you are. the press conference is were jay powell will get hammered with questions. are you ready to cut rates? what you think about easier financial conditions which will give him a chance to turn around and say that is a problem. paraphrasing for him, because you ease financial conditions, then don't tighten the economy, than make it harder to get the job done. and then maybe we will have to do more rate hikes. right now, there's an expectation that 25 basis points they could pause, that should please markets. but when jay powell says rates have to say hi for lower, not shorter, that will not please him much. vonnie: talking six-month as opposed to three month timeframe.

i feel you could ask the questions and answer them at the same time. [laughter] our global economics and policy editor kathleen hays for our next guest says he expected 25 basis point rate hike tomorrow. gary schlossberg, global market strategist at wells fargo. gary, will jay powell go as far as to actually grapple the markets? they are not complying with what he had his colleagues have been telling them. does he do it tomorrow or wait? >> i think he is to hold off. the federal reserve has to walk a narrow path between staying the course, showing the market it does have discipline. also acknowledging the fact that inflation is beginning to come down and the economy is showing signs of softening. we had very aggressive tightening last year. the federal reserve wants to see how that plays out. no hints of moving to the

sidelines. but on the other hand, perhaps a little softer wrapping to stay the course. vonnie: i like that. how long will the fed have to stay at a terminal rates before the economy is in trouble. >> we think the federal reserve will be raising rates another two times. beyond that, they will get the lay of the land. we think the economy will support further quarter-point hikes. more moderate than what we saw last year. and then as they move toward the 5% mark, a little more caution there in assessing the trajectory of inflation and the extent to which the economy is responding to pass rate increases. paul: in terms of some of the market reaction and action we have seen today, we have seen markets rise but at the same time, earnings still tepid. particularly caterpillar,

showing risks still out there. with that in mind, how sustainable are the gains we are seeing? do you anticipate a correction? >> if not immediately after, certainly in response to science the economy is softening. i think the mixed earnings reports we have been getting for the fourth quarter are consistent with the kind of economic data we have been seeing. pockets of some strength, but an overall slowing of economic growth on its way toward what we think will be moderate recession sometime during the year. perhaps the middle quarters. that will be an added test for the stock market. i think there is a possibility of some sort of setback in the market in the way of powell's comments and added evidence the economy is losing momentum. paul: is this a good time to be looking to asian markets?

january was a stellar month for a number of asian markets. the asia-pacific had its best january in 13 years. across the region, markets daybreak records. is this a buy? are we seeing a peak echo how sustainable are these rallies? >> difficult call because these economies are tied, to some extent, to china, which is on the road to recovery. we can expect to see growth gather momentum and accelerate during the balance of the year. but this is all in the context of a slowing global economy, notwithstanding what is happening in china. and what we are seeing in europe and the united states. these are trade sensitive economies. southeast asia being more commodity oriented. this part of the world might be better insulated from a growth slowdown, but not totally immune. for that reason, they are still guarded toward emerging markets

in asia in particular and emerging markets sector in general. i think opportunities may arise later in the year but at this point, it might be premature. vonnie: we have to leave it there. we look forward to events later on. gary schlossberg, global market strategist. a few lines out of south korea, we have south korea's finance ministers saying trade will gradually improve on the china reopening story. the finance ministers saying trade will gradually improve on china reopening and that the trade deficit widening was mainly on chip prices and china. do not forget, we got the widening trade deficit earlier on. you can see a nice balance for korean stocks. kospi up .75%. sk hynix of 3%. you would not have necessarily thought that would have happened after reading the earnings, but

it is probably performed just as well as its peers, if not better in some areas. sk hynix out at headline prices declining at the fastest pace since the first quarter of 2008. not necessarily the most optimistic headline. su: we start with -- pulling off a equity sell for his flagship company. that is thanks to a surge in late bids. that on a enterprises follow-on offer was fully subscribed on the final day and that is mainly by institutional investors. meanwhile, adani is said to have put up $300 million of extra shares to maintain collateral from a $1 billion loan from banks including barclays. in the u.s. come a house republicans will meet privately to discuss their strategy on the debt ceiling just hours before speaker kevin mccarthy and president biden discussed the looming crisis mccarthy has

indicated the meeting will assess biden's position, rather than finalize an offer. republicans are still devising an offer, demands they will seek to avoid default. secretary blinken says the u.s. will be staying in the middle east to help israelis and palestinians reduce tensions following one of the deadliest months and years. blinken met palestinian authority president abbas in ramallah. he says restarting negotiations on a palestinian state can only come after calm is restored. nato secretary-general against oldenburg that she hence oldenburg -- says could influence china's behavior. speaking in japan can be he said a victory for the kremlin which show authoritarian regimes can get their way through brute force. he is warning of china's military buildup amid tensions with taiwan and territorial

disputes with japan and southeast asian nations. china home sales continue to slump in january despite expanded stimulus and the end of covid zero. the month was a key test of buyer demand because many had their first chance in years at properties in their hometowns. data from a private provider suggests the 100 biggest real estate developers saw new-home sales drop over 30% from a year ago. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. paul: still to come, a special focus on fuel subsidies. up next, sk hynix reported its biggest loss on record. this is bloomberg. ♪

♪ paul: you're watching daybreak: asia. let's check on what is happening. annabelle: 58 minutes into the session for japan and korea. modest gains for the index. checking in on specific sectors, social media in focus.

we had earnings for snap after the bell. you can see that sharp drop in the company. essentially the headline is that snap forecasted its first quarterly revenue decline ever. now dropping to between 10% and 2%. versus the average analysts estimate for growth of 1.48%. in terms of market reaction, we have holdings in tokyo dropping. sox moving modestly high, but that is also a reflection of the more miss -- more risk on tone ahead of the fed decision later wednesday. the other big focus is the chip space. sk hynix earnings just out shortly. in terms of market reaction, we are seeing the stock climb 2.6%. other chip stocks moving higher. we had that selloff in the price session. vonnie: we want to continue speaking about sk hynix because we are getting more from calls.

peter elstrom, asia tech executive editor in tokyo for thanks for joining. i want to point to one line, which is a glimmer of hope and one of the reasons perhaps the stock is climbing. sk hynix talked inventory peeking in the first quarter. that is a positive step? >> the chip companies, the investors in chip companies, are looking for signs of hope for the industry. it has been rocky. the memory chipmakers in particular have seen a big buildup of inventory and decline in demand, which led to losses. sk hynix reporting a loss equivalent to $1.4 billion. the biggest it has ever had. a sign of troubles in the market. samsung reported earnings yesterday, also week profits. what these committees are looking for some sign that

supply and demand are going to come in to balance in the memory chip market after a big buildup. the inventories are at such a high level for many of their customers and distributors that they need those to come down before they can begin to restore -- rebuild sales back to near what they had been in the past. what you are seeing with hynix are indications that may come sooner than had been anticipated. paul: we've got the stock there tracking next to you as you speak. sk hynix up 2.25%, despite this rather gloomy fourth-quarter state of results. analysts still like the state of the sock as well. is there longer-term story to be told? >> shares are up today after a few sessions of down trading too. it is coming back a little bit. yesterday, when samsung reported

and said it was going to continue to invest in capital spending, that was probably a negative sign overall for the memory chip market. samsung wields a lot of power. there investments in capacity will weigh on the pricing for the rest of the injury -- rest of the industry. analysts are looking at what will happen to demand. we have seen a steep pull off in demand from the pc segment. they need that to come back to stabilize inventory. paul: bloomberg's peter elstrom joining us from tokyo on sk hynix's fourth quarter. you can get a roundabout the stories you need to know to get your day going in today's edition of daybreak bloomberg subscribers can go on your terminal. also available on mobile. customize your settings so you only get news on the industries and assets you care about. this is bloomberg. ♪

paul: ubs group announced plans to repurchase more than $5 billion of shares after fourth or profits beat expectations. the ceo told us more. >> if investor confidence is there and they are going to go risk on, our investors will always be, ok, what does leverage cost? you should realize that vis-a-vis the last decade that a very low rate are live -- leverage was almost free. leverage going forward is not free. it will come at a cost. that will be a different perspective in terms of leverage. we do expect debt to turn and

leverage to come back to the market. in asia, we have seen more towards the end of the fourth quarter. we have seen some stopping of deleveraging there. but it is too early to tell whether that is the trend. >> big buyback. a sign of confidence? >> it is a sign of the strength of our franchise. we have a capital business. we have momentum with our clients. we are generating capital. what is important for us is that we always keep a strong balance sheet for events or risks to come through. conservative risks, but you have to be aware of that. if we can grow, we will grow. but then it is all about attractive progressive dividends and share buyback. we have confidence we can buyback over $5 billion this year. vonnie: ralph hamer their.

here's a check at the latest business flash headlines. gains in the lucrative server market makeup for a -- chips. sales of $5.6 billion narrowly tops predictions of $5.6 billion. that would still be there first year-over-year quarterly sales decline since 2019. snap tumbled after hours, forecasting its first ever quarterly revenue decline. income predicted to drop between 2% and 10% in the first quarter from a year earlier. snap citing changes to snapchat advertising products, saying they be been disruptive to the app's business. caterpillar filler most after warning of weaker demand for china. following its first quarterly profit ms. since the start of the pandemic thanks in part to higher raw materials costs.

caterpillar benchmark for china demand is the excavator market, which its ceo said will be weaker this year than last. boeing ceo says it is a matter of when, not if self flying planes will debut. date count food -- dave calhoun tortoise exclusively autonomous flight technology being developed for the military will eventually be used commercially. as well as delivering its final jumbo jet, it is working on a new prototype that could improve fuel efficiency by 30%. >> as you may know, we have an application on an all electric autonomous airplane. referred to as risk, that application is in and the faa will begin working with us today on building out a certification program for autonomy. vonnie: paul: let's check on how futures in europe are opening at the moment. european stocks easing a little tuesday ahead of the ecb meeting.

stoxx 50 futures currently in positive territory. dax futures also in positive territory as we await the meeting from the ecb. a packed agenda for central banks. also we will be hearing from the bank of england and the fed. vonnie: one after another. speaking of central banks, i want to point out the fact the jgb 10 year yield right now is at 0.488. it got highest point 493. there is a 10 year sale later on that could be why the debt yields are rising. probably making central bankers in japan hot under the collar seeing that yield rise toward the debt ceiling of 50 basis points. next, as the adani group pledges more shares of its ports armed to lenders, we assess the rakes of test risks of hindenburg allegations to any upon largest private operator.

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we start with india's finance minister who hands-down the annual budget later wednesday, promising to focus on fiscal prudence. the finance ministry's annual report currencies gdp growth of 6.5% the financial your starting april. the modi government expected to resistant him tatian to turn populist. bloom are has learned last week's systems glitch resulting in wild swings is triggering thousands of claims for damages. sources say charles schwab, robinhood and citadel securities have submitted requests and were told the claims are likely to exceed the $500,000 mark the exchange set society it's -- each month for. dowsing market decline further in january. logics index dropped 1% with every major city falling as the

rba's progressive tightening cycle ways on home prices. new zealand house prices also extended their decline on expectations the country's central bank will keep raising interest rates. australia wants to boost exports of green hydrogen to the european union. climate and energy minister chris boeing told bloomberg they are shipping fuel to the other side of the world, it can be economically viable. the eu has set ambitious goals to increase hydrogen output using renewable technologies such as wind and solar. it aims to produce and import 10 million tons by 2030. >> australia can be a renewable energy exports super power. europe is energy hungry. even with europe investing heavily in green hydrogen develop going forward, nobody has suggested europe will be able to meet its own needs. global news powered by more than 2700 journalists and analysts in more than 120 countries.

this is bloomberg. paul: we got a very large number of pmi's up across the asia-pacific at the moment. we had a narrow beat out of japan. beats also from thailand, vietnam, the philippines and south korea. south korea of course reporting rather grim export numbers for the month of january. off 60.6%. nevertheless, pmi's for the month of january coming in at 48.5. a couple of misses on the list. taiwan, 44.3. export orders fell for the first time in taiwan last year the first time since 2019. malaysia missed as whelp it 46.5 january pmi. there will be no trades in malaysia today markets closed for holiday.

mostly a series of beats across the region, either narrow, or in south korea a narrow beat in thailand, vietnam and the philippines. all pretty handy improvements on january pmi. annabelle, what are you watching echo annabelle: -- watching? annabelle: interesting when you put those numbers in the context of the data we have had over the course of january. at least those numbers are forward-looking. it for have cells is better days are ahead. you see that reflected in the stock market because we saw these huge run ups over the course of january. australia climbing to gain the most on record. multiyear highs for others on the region. compare that to further signs of economic contraction that came into these local economies. korean exports stayed at the top of the hour showing a lot of weakness. a slump of 16.6%. the unemployment rate ticking higher. another rate hike from the be ok. in japan as well, spending

slipping. australia, weakness in the housing market. retail sales yesterday not doing too well either. cpi hotter than expected. sending signals of weakness over the course of the last few weeks. but as i said, good numbers coming through in the stock market. that is coming down to expectations that the fed and other central banks are nearing the end of their rate hiking cycles. just a quick look at seasonality playing in. if you bring up the specific index and take a look at it using the function, you can see the gain of 7.84% over the course of january, 2023 for this index was something we have seen on a five-year average. february and march, we have weakness ahead be the question is whether we will see markets start to slip. perhaps a little repricing going on with expectation the fed may -- may need to stay higher for longer.

vonnie: indian billionaire adani keeping quiet in public on fraud allegations that cost them tens of billion dollars. fresh off a successful -- that gave his flagship $2.5 billion in new capital. in his first public appearance since the hindenburg report, asia's richest man focused on his empire's newest investments. speaking in israel, adani says a cargo port being developed by one of his companies would help the local economy. >> our intention is to make the -- investment that will not just make -- partnership proud but will make the whole office very proud. paul: bloomberg intelligence says adani's port sees less susceptible to stock manipulation. government risk could remain a focus as global trade downturn pages growth appeal. let's begin asia infrastructure

analysts denise wong. how far it -- how vulnerable is adani to the hindenburg research allegations? >> the allegations of financial risk is probably less relevant for the company, given his strong balance sheet. it relatively michael -- minor premium -- i am sorry. strong fundamentals. it also seems less prone to stock manipulation given -- hi investor ownerships and minor -- premium over india's stock indices. vonnie: what should investors be worried about then? >> the company is vulnerable to controversies. such as adani's family -- financial damages. there's also talk of the me and marla military. [indiscernible]

the loans to adani group companies warrants attention because it is significant even after they tighten approvals. paul: we have seen adani share prices suffering. his personal wealth taking a hit. what are the financial implications from these controversies? >> the financial implications should be limited in the near term because of the strong balance sheets and healthy leverage. but then because of the stock and bond selloff, the capital, cost of capital, will stay elevated near term and that could affect growth ambitions. if it has been seeking very ambitious acquisition growth and a lot of activity relying on debt and potentially also equity financing. especially some of the strategic and does not pay back in a few years. vonnie: investment sentiment seems says that seems to have

improved. how sustainable is it? >> the stock and bonds have come a long way off. the fact that adani enterprise shares were assessed will definitely help. but these fraud controversies do not go overnight. especially with a -- against suspicious offshore transactions. paul: so. what might change your views? >> the company will have to tighten their business ethics protocols and -- disclosures significantly to ease some of these controversies. of course if the regulator comes up with a conclusion from its investigation, that will also ease concerns. vonnie: thank you p we will be watching for more of your pieces are bloomberg intelligence analyst denise wong.

next, -- as expectations for today's india budget with the modi government facing a test of its fiscal resolve in its last spending plan before elections. this is bloomberg. ♪

>> there could be a lot more

persistence and inflation. we have had a few good prints. but let's not think that somehow the job is done. far from it. >> i believe that inflation is going to come down. but the degree of certainty we are seeing in the market, the degree of certainty i am seeing in financial newsletters that inflation is behind us makes me nervous. >> the job is definitely not finished. i expect they come forcefully on this message during the press conference. they really should address this disconnect between the financial markets and themselves head-on. vonnie: that is all ahead of us in the next few hours. it should tell us a lot. maybe give us answers. as for now, we are seeing give back in the futures market. s&p futures trade down .3%. nasdaq 100 down .5%. dow jones futures, .25%.

very early in the session. we had an update yesterday on light volumes. paul: that's take a look at how we are doing around the asia-pacific. the kospi doing pretty well. up .8%. sk hynix performing strongly after fourth-quarter numbers that left much to be desired. yes, positive territory across all markets. in australia, we are better by about .6%. keeping a close eye on india, said to unveil a budget in a few hours that could chart a path to sustained robust growth while maintaining fiscal prudence. let's bring in our economist for institutional equities at the lower capital. we got a situation in india that is familiar to many countries at the moment.

rising energy costs, along with other costs for not just industry but small-scale farmers. household as well. to what degree is the modi government a little bit boxed in with this budget? the need for fiscal prudence on one hand, but the need to offer relief and election sweeteners on the other? >> good morning. my answer is a very interesting fiscal prudence measure. [indiscernible] they wind it up saving a large chunk of subsidy. along with that, -- globally is giving confidence they could see reasonable amount of money. these two heads together could

save them about -- gdp. [indiscernible] consolidate the fact that it -- during covid and basically expand the -- especially today -- [indiscernible] vonnie: but modi will be wanting to boost consumption and increase private jobs at the same time. how does he manage both? >> i think the -- creation of jobs has been twofold. they have been consistent in their -- and -- [indiscernible] the other thing is in terms of -- creation, they are focusing heavily on the production

schemes which is tying in well with -- [indiscernible] which will allow them to expand the -- [indiscernible] most of the gains will be evident in two to three years. i think at least e- [indiscernible] especially for the low income tax bracket consumers that will enable them to -- because -- times where the balance sheets have been badly disrupted because of covid. [indiscernible] vonnie: if the budget shortfall comes in around 6.2% of gdp, i think that targeted 6.4%, where do we get gdp full of full -- for the full year? >> [indiscernible] vonnie: gdp growth?

>> my attention is not you will -- and about 6.9. next year, a think real gdp growth of not more than 5.5% with a nominal of not more than 10.5%. last evening -- indicated 11% with relatively higher gdp growth. but i think 10.5% gdp would be a fair assumption in the macroeconomic environment. paul: you mentioned a minute ago come a potential spending on roads, railways and defense. what are your expectations more broadly? >> [indiscernible]

-- should constitute nearly -- global allocation. a large chunk should basically be going into programs that have been chalked out for rolling stock agreements, the building of national highways and defense . especially the air force. paul: india's credit rating is hovering around the lowest investment grade. do you see this changing over the coming year? >> i do not see that changing. [indiscernible] the government has indicated 4.5%. [indiscernible] -- significant part of the tax gains will be behind us. i don't see significant gains

coming in terms of the -- considered to be a reasonable level. by fiscal agencies or credit agencies. debt levels have mounted during the covid pandemic. i do not see -- change. growth prospects remain quite dry. [indiscernible] vonnie: thank you. we will have more details and a little bit. we appreciate you joining us. garima kapoor at the lara capital. chinese market napping up more shares in january than in the whole of 2022. a preview of the open is next. this is bloomberg. ♪

paul: let's get a quick check of business headlines. exxon has reaped a record $59 billion of profit, but disappointed some investors by holding the line on share buybacks. full-year profit excluding one-time items jumped 157

percent from 2021, far exceeding its 2008 record. c.o.o. told -- it is pursuing a balanced approach to dividends well reducing debt and investing in new projects. paypal says it will cut 2000 jobs or 7% of its staff. the macro economic slowdown has weighed on the businesses in recent quarters. a memo to employees, the ceo says the cuts will happen in the coming weeks. paypal last year embarked on a cost-cutting initiative that it said would result in $1.3 billion in savings. pfizer's 2023 forecast fell short of market expectations on shrinking demand for its covid drugs. adjusted earnings of up to $3.45 a share. analysts had expected $4.31. full-year revenue of up to 71 billion dollars was also short of forecasts. the stock had already erased $40 billion in market value in january open ai has unveiled a

tool to help identify whether text has been authored by artificial intelligence or an old-fashioned human being. the tool will flag content written by its own products as well as other ai authoring programs. however, the company says it still has limitations and should be used along with other methods to determine authorship. vonnie: foreigners are returning to china with a vengeance, snapping up more shares in january alone than for the whole of 2022. asia stocks managing editor joins us for more. talk to us about where these foreign investors are. they're certainly not sending the major indices that much right now. >> yeah. we saw investors based in hong kong and some overseas markets like europe and the u.s. we are seeing people be quite bullish because -- stocks have underperformed chinese stocks listed overseas.

we are seeing a 19% jump in the last 60 days versus a more than 50% jump in the ms ci china index. it is a bit of a rotation, or convergence play that has been going on. as you mentioned, funds have $21 million worth of chinese shares in january, more than 50% above the previous record. paul: so, is this a trend? >> according to goldman sachs, there is still room for purchases. hedge fund investors have been buying chinese stocks for months, but the positioning has not yet caught up with improving sentiment. morgan stanley also said u.s. funds remain underweight chinese stocks. people are also looking at earnings, with economic recovery continuing. earnings growth, according to jeffries, is going to be reflected on the earnings up revisions by analysts.

that could be a further catalyst for foreigners to pile money back into china. paul: some of the stocks we are watching ahead of the markets opening in hong kong and china. shares of asia's big tech firms and social media companies and focus after snap forecast its first-ever quarterly revenue decline. giving an eye on alibaba, tencent and jd.com. caterpillar is warning investors that chinese demand won't be bouncing back this year. we are watching zoomlion. sino truck and longing holdings. vonnie: just want to point out something to do with adani. apparently, most of the group's dollar bonds have gained after the share sale. we saw in the chart there that the bonds were absolutely tanking after the hindenburg research report. but since the share sale was

successful, most of the group's bonds have gained. adani green energy 2024 bond rose 1.5 cents on the dollar. continue to follow that story on the bloomberg for more. still to come, the vice chairman of hung limp properties tells us about which parts of the real estate sector are due for recovery. and, investment manager for hong kong and china equities gives us her market outlook as trading begins. that is it from daybreak asia. our markets coverage continues as we look ahead to the start of the trading day in hong kong, shanghai and shenzhen. standby for bloomberg markets: china open. this is bloomberg. ♪ every day, millions of things need to get to where they're going. and at chevron, we're working to help reduce the carbon intensity of the fuels that keep things moving. today, we're producing renewable diesel that can be used in existing diesel tanks.

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