shery: you are watching daybreak

asia coming live from new york. sydney in hong kong. annabelle: we're counting now to the markets in tokyo and seoul. haidi: jay powell tells bloomberg the fed may need to raise right or debt higher than previously thought, above the inflation road ahead. >> will need to do for the rate increases. we will need to hold policy at a restrictive level for a period of time. anabelle: asia set is for a cautious open after wall street swings gains as investors find encouragement in powell's remarks. plus, hedge funds and debt specialist scooping up bonds linked to is on his empire. the gas unit is -- unit tells us the spending plans remain in tact. we are getting trading numbers out of south korea. haidi: the trades deficit coming at $475 million in december.

the current accounts moving to surplus of $2.677 billion. as we continue to watch the impact of the post-covid recovery when it comes to goods demand. we know when it comes to south korea the trade numbers are something of a canary in the coal mine. an indicator in terms of the strength and dynamic when it comes to global trade demand. let's get a look at the markets, as we set up on this wednesday session. anabelle: we have the open of aussie stocks, asx 200, waiting for trading to get underway. we're waiting for the moves in the bond spaces. we're still seeing the repricing after the rba stock to markets on tuesday with a little more of a hawkish tilt. these moves could be a little overdone because traders had been underestimating the rba's resolve to stick with inflation

fighting path. the curve could flatten. in terms of stocks, this is modestly high. , futures pointing against half a percentage of the opening. the risk on tone in the markets, coming down to what we heard in our interview from jay powell. the key take away from this is he had an opportunity to turn more aggressive, more hawkish, but he did not take it. because of that we are looking more risk on in the session with kiwi stocks gaining at the start of trade. other sectors that could be a good factor for the session in asia is also what we see with the adani group, given the losses stabilizing. it had been a drag on the asian benchmark since the short seller report. also, in china, given we are watching for t strikeshe and the relation with beijing in the state of the union address. powell, front and center. shery: the markets fluctuated

according to what chair powell was saying. we managed to gain ground with the s&p 500 rising and the nasdaq 100 finishing your gold market territory. that is not extending to the future sections in the asian start of the day. downside pressure. we're watching the 10 year yield. we saw it gain ground, .2%. the deepest inversion we have seen in the cycle, easing a bit, bit of pressure for the two year yield. we saw the dollar falling for the first time in four sessions, helping push wti prices higher. we see the gains of $77 a barrel. we are seeing more optimism about china as well. we have seen the prices for asian shipments from saudi aramco, they could be rising for the month of march. bell, it is about chair powell's message and whether we could see a higher peak rate, given the strong jobs number that was seen last week. >> we are just at the beginning

of this process. the disinflationary process, the process of getting inflation down has begun. it has a long way to go. these are the early stages of disinflation. it is not going to be smooth. it is going to be bumpy. this process is likely to take a bit of time. it will take certainly into, not just this year, but next year to get down close to 2%. we think we will get -- need to do further rate increases and keep rates at a restrictive level for a period of time. the best case is it will take some time. we'll have to do more rate increases and we will have to look and see whether we have done enough. shery: let's get more analysis of chair powe rubenstein. and kathleen hays is here with the latest. markets are trying to figure out how to take his message today. kathleen: my key take away is that he had a very warm, interesting conversation with

david rubenstein the first question was if you knew what you knew about the jobs report, would you have still done 25 basis point heights instead of 50 -- hikes instead of 50? jay powell says we do not have the luxury of working that way. dave rubenstein moved on to other questions. basically, it was a conversation that i would say laid out all of the things jay powell said last week. in terms of financial conditions being easy, he did not pound on the table last week or today. he repeated that the disinflation has started, another thing people found dovish. he acknowledged the obvious reality. what he adds onto that, there is still a long ways to go. there still more work to do. that has been the message for some. it's interesting, markets had been very reluctant to price in 5% terminal rate. now it seems that they are getting to the idea that it will have to go above 5%, 5.1%, 5.2%

higher. in an interview today, they think it will go to 5.4%. mark is pricing in at another 50 basis points of hikes -- markets pricing in at another 50 basis points of hikes. rates want to go higher. they're all singing the same tune. when asked, about looking for already five basis point moves, he said it is necessary to do 50. the fed is on a path, a lot of people in the markets except that. there are other things you have to listen to and political part and read with being -- between the tea leaves. but, jay powell's message has been hawkish and it continues to be hawkish. haidi: the bank of india is expected to deliver as final rate hike cycle. is inflation doing well enough? kathleen: it looks like it is on its way. 25 basis points would take their key rate to 6.5%, a total of 225

basis points if that is what they end up doing. they have high inflation, higher than other countries. they are -- the headline number is starting to come down, food prices, the core inflation rate come above 6% is proving sticky. 6% to 2% but heading in the right direction. of course, they have a progrowth budget. they're closely watched. that could also offset the impact of any rate in -- hikes. if the federal reserve is going to hike interest rates, what will that mean for india? can can this -- can they stop your? what will it do to their currency? the fed has gotten aggressive. it may not get it again. but, keep raising rates if that causes their currencies to start weakening, that is what emerging markets are watching. shery: our global economics policy editor. haidi: let's bring in todd

jablonski, cio of asset allocation. we've seen the consolidation of this upside hawkish risk, right? not just with the fed and jay powell's committee case and but wage numbers out of japan. we had the rba bucking expectations that this was the last of the cycle and saying they would have to keep going. how does this change the approach to markets on the expectations we would see, potentially even easing this year? todd: the inconvenient truth facing investors is that the federal reserve and other global central banks are going to be making whatever actions are necessary to restore price stability to the outlook. it seems clear to me that the terminal rate may not indeed and that the 5% at the u.s. many forecasted. it's surprising to see investors take this with such good news that the fed is acknowledging it

will take time to arrest the excess demand. tightening will be required to slow the economy, therefore reduce the upward pressure on inflation. to me, it's a headwind for risk assets moving forward. haidi: it is a mixed picture. china is the main one most people are watching in asia. there is upside when it comes to earnings expectations because it has come off as low base. is there further upside when it comes to this rally? it feels like traders are waiting for the next big catalyst. todd: i think global investors could look at the depreciation pattern in the near term in the u.s. and say the market may have gotten a bit ahead of itself. the earnings delivery in the u.s. does not seem to support the short-term increase in valuations that we have seen in the big caps race. you bring up china. we are seeing that there is room left to run in the china

reopening. go back a year, you saw china sales growing at 4%. you suck chinese earnings -- esau chinese earnings shrinking. fast-forward to 2023, you're looking at 9% revenue growth, 16% bottom-line growth of those are the figures that drive fundamental increases and valuations of businesses, part of the reason, along with valuation, we think china has room to continue on the reopening story. shery: given china's weights when it comes to the broader emerging markets complex are you more optimistic about their broader space? we are getting conflicting calls when it comes to the bullishness of it. todd: investors are trying to look at the timing, look at the size, potential move. yes principal asset allocation is optimistic on the potential for china and across the e.m. complex. there is an overweight in mainland china. i would point to an area where

we can find good valuations whether it is in brazil, mexico, chile, you can find political risk, but also good valuation points, good entry opportunity. that pairs well with the fundamental story in china. shery: if you have a higher peak rate in the u.s. by the federal reserve keeping rates higher for longer, how does that play into central banks and emerging markets that have to be more aggressive, even earlier than the fed having to continue keeping rates at that level? todd: the fed, having to tighten perhaps more than investors expect presents a problem for a different -- for a couple different groups. i point to big tech in the states. it's lifted the market in the past 10 years with significance. the higher potential long-term rates means the discounting method shifts could pose a bit of a headwind against the big tech group where you see a

strong relationship with long ways in valuations. i would point to the dollar. additional fed tightening means the potential for the dollar to hold and strength, deeper through 2023. many investors have looked for a weakening u.s. dollar, against the basket of em currencies, perhaps with additional tightening you may find some of that benefit moving away. and perhaps more of a flat outlook for the dollar relative to the em basket. shery: good to have you with us. cio of asset allocation at principal asset management. let's get to su keenan the first word headlines. su: turkey has declared a three-month state of emergency in areas hit by two massive earthquakes. it gives government officials greater power and rescue efforts. emergency teams are racing to save thousands of victims, after monday's quakes, the number of people confirmed killed across turkey and neighboring syria is now more than 7000. the u.s. plans to sell poland

about $10 million in weapons. officials say that includes 18 rocket launchers and ammunition for the mobile platform. the u.s. wants to shore up a crucial nato ally as russia pressures its war in neighboring ukraine. poland has thought rocket launchers from south korea. in the u.s., president biden is preparing to deliver his second state of the union address. this amid renewed attentions with china and a battle with republicans over raising the debt ceiling. the white house says he will use the speech to call for a minimum tax on billionaires and to quadruple the levy on stock buybacks. full analysis will come up here on bloomberg television. in the u.k., the prime minister has reshuffled his cabinet, after a rocky first 100 days in office. he's creating a new department focused on energy, security and another to deal with science, innovation and technology. his conservative government trails the opposition labour

party by 20 points and opinion polls as voters grapple with services and cost-of-living crisis. 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 around the world. i'm su keenan, this is bloomberg. haidi: jeffries global tells us where they are seeing growth opportunities in robotics and ai as a china's population declines. coming up later this hour. we get an update on the donnie crisis. limited risk from banks exposure from the embattled group. this is bloomberg. ♪

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haidi: investors are buying bonds related to the indian conglomerate, adani after several fell into destroyed after a short seller report.

the groups stocks, it's also stabilizing. bell, what are we hearing in the debt side? anabelle: it seems like investors are starting to dip their toes and sing opportunities that have come out of the selloff in adani group assets. that is coming from the hedge funds distrust that specialist. that is what sources are telling us. , some names oaktree is buying, they are the world's largest opportunistic debt firm. another name is -- those are some of the names we are being told. the chart shows that some of the adani bonds issuing or yielding multiple times above that global norm of 8% for junk debt. there are opportunities if you're brave enough to take them. goldman sachs is one of those that had a call, saying the selloff is hitting for, there is opportunity when you have assets

trading at this sort of level. shery: is that the bargain-hunting we are seeing in their stocks as well? anabelle: that came through in the session on tuesday, mumbai. we saw adani enterprises gaining 25%. that is the flagship in the group. it paid the losses to 50% at the close. huge gains that helped to now those losses we have seen in the market cap. that is down to the optimism around the company prepaying some of its debt that hopes to improve its leverage metrics. on top of that he of the optimism coming through in the earnings as well because, we've had a number of companies recording -- reporting in the adani group. good numbers. they reported net income for the fourth quarter that beat analyst estimates. another company, the renewable energy arm at adani, they also

posted a profit in the fourth quarter. they said they are getting their backing from investors. these are things that are positive for the outlook for the adani group. the gains we see for the adani enterprises translating across other groups or business units. not all of them are rising in tandem. shery: annabelle joining us from hong kong with the latest on adani. let's turn to their natural gas unit. they see no change to their expansion and spending plans. adani total gas ceo, spoke to us at the india energy week about the strength of the business. >> it is very strong. so, that will ensure that we continue to expand. >> i will ask you again. how are you hoping to raise the 15,000, which is an ambitious expansion plan? how do you hope to be able to

finance that? can you give me a break down? are you looking at equity fundraising? do you have further debt conversations ongoing? do they stand as they did today? as they were a few months ago? >> i stated to you, as a company we will always have a capital management plan. we will operate that plan to achieve expansion. >> what is in the plan? >> we work as we go along. there are several dynamics which will work with us. the permission management, the national gas grid development is secret iced. we're working on the expansion. what will be our expansion plan connected with the synchronizing, it will be the way we work. we always work with and anchor -- an anchor of customers to bring in the cash flow.

w work -- we will work that is all i can share with you right now. haidi: you can also dive into any of the securities on the bloomberg functions we talk about. join in on the conversation, during our shows. this is for bloomberg subscribers only. check it out on tv go.

shery: softbank group adrs fell the most in two months after the company reported further ceo losses. th ceoe. how bad were the earnings? also the optics of not having the ceo there in the call?

>> well, it was a different softbank that we saw yesterday with the loss of their -- it reported its fourth quarter of losses. the losses were smaller due to some bottoming out and some of the visions fun traded stock. the ridesharing company like gra b. the tone was different. the optics, it's not good to have the man who is makin gall the d -- making all the decisions not there. at the same time, the tone was one to reassure creditors. the cfo is a former banker. his language was very cautious. there were no geese with golden aches dancing, for instance. he talked about how softbank would stay in defensive mode. he said that there was ample

cash to turn offensive in the future. we got a taste of that yesterday. haidi: what did we hear in terms of the plans for vision fund three? >> so, we had an exclusive interview with the vision fund cfo. he said that once the vision fund's capital is deployed at there is still $6.5 billion left in the vision fund. once that is deployed, they will make a decision on what to do next. some options he mentioned was either expanding vision fund two or creating and launching a vision fund three. this is the first time they've have made a concrete comment on what might be in the works ahead when softbank goes on the offensive again.

he's suddenly the past and that he envisions a vision fund 2, 3, 4, 5, 6. this is kind of assigned that softbank is looking forward to how they can make a comeback in the future. shery: how will that involve the ipo of arm? >> oh. the arm ipo is absolutely critical. softbank, yesterday reiterated that it's still on track. it still plans to have an arm ipo this calendar year. they showed a 20% rise in revenue there on higher royalty rates and smartphones. this one event is pivotal. it can make or break softbank's bid to turbocharge its

investment machine again. if the ipo a successful, that basically raises a bunch of capital that the vision fund two a, three has planned in the future, or what it could deploy in the future and it can go back on the fences just on that one event. that is why -- that is what he has said he will focus on this year. haidi: bloomberg technology editor there. we take a look at our fx markets. the hawkish messaging that the fed will need to continue to raise rates. we will take a look at the reality check, next.

haidi: the fed chair, jay powell has stuck to the message that

interest rates need to rise to quash inflation calling the u.s. labor market strong. powell spoke with david rubenstein at the economic club of washington. he began by asking if last week's rate hike would have been bigger had policymakers known what was coming in fridays jobs report. >> we don't get to play that way. i'll take it this way. the message we were sending at the fomc meeting was that the disinflationary process, of getting inflation down, has begun in the good sector which is a quarter of our economy. it has a long way to go. these are the very early stages of disinflation. the services sector, really except for housing services, is not really showing any disinflation yet. our message was this process is likely to take quite a bit of time. it's not going to be, we don't think, smooth. it will probably be bumpy.

we're going to need to do for the rate increases. we think we will need to hold policy at a restrictive level for a period of time. then comes, the labor market report for january. it's very strong. it's stronger than anyone i know expected. i would say, we did not expected to be the strong. i would say, it kind of shows you why we think that this will be a process that takes a significant period of time. the labor market is extraordinarily strong. it's a good thing that inflation has started to come down without -- that hasn't happened at the cost of strong labor markets. of course, financial conditions have tightened significantly since then. >> let me ask it another way. [laughter] so, by the way, the numbers coming out, the jobs numbers, 519,000 jobs, does anyone call you up from the government to give you a heads up? >> on some data, sometimes we

get data the night before. it's only me. not on all pieces of data. it's a very small amount of data, we get at the night before. if we were going to get a big piece of data in the middle of an fomc meeting, as it often happens, it will help me to know with the night before. >> markets, after your speech last week, the markets assumed that there would probably be another 25 basis point increase in your next fomc meeting. was that a bad assumption by the markets? [laughter] >> again, what we said at the meeting was that we believe that we anticipate, is what we said, ongoing rate increases will be appropriate. the reason is we are trying to achieve a stance of policy that is sufficiently restrictive, to bring inflation down to 2%. we do not think we have achieved

that yet. we said that. now, you see the labor market report. again, financial conditions are more well aligned with that they were before. >> the assumption, when you made the speech, probably the fed might consider decreasing rates by the end of this year. the markets no longer assume that. do you think the markets are wrong? >> well. so, let me say, all of these numbers that we are throwing around our conditional on incoming data and what happens. we never say this is what we think will happen. we make a forecast and let the data come in. if the data were to continue to come in stronger than we expect and we were to conclude we needed to raise rates more than is priced into the markets or what we wrote down, we would certainly do that. we would raise rates more. shery: fed chair jay powell with david rubenstein.

we saw the moves in the dollar as well, falling for the first time in four sessions in new york. we're seeing it stable at the moment at the 1235 level. let's bring in senior reporter, affects and rates reporter, ruth carson joining us for a look at the fx markets. how are investors taking chair powell's comments? ruth: absolutely. yesterday's session was a good glimpse as to how people are viewing the dollar. what powell said about the interest rate outlook, we did see the dollar swing around, gaining losses we need to keep rising to ensure inflation is under control. the dollar has risen about 2% since the last week. traders have been saying it is time to take some profit, after the recent volatility. investors are turning more bearish on the dollar over the longer-term. the big peak is behind us.

at some point, the fed will have to cut rates, leaving room for currencies like the australian dollar, the euro and the yen rally further. haidi: so much uncertainty for it. what are we seeing when it comes to positioning around the dollar? are there top traits emerging? my next question would be how much longevity are there in the top trades? ruth: in is very much guerrilla warfare -- it is very much guerrilla warfare. take a profit here. on positioning, hedge funds are still bearish on the dollar, so they maintain positions. big money managers like citibank , or penciling in more dollar weakness. japan's currency is still looking cheap at around 130 per dollar level.

mng investments, reckon there is still more gains in the yen. haidi: bloomberg's with carson. let's take a look, sticking with fx. we're not done with central-bank decisions yet. what are you watching. anabelle: that's right. taking a look at the indian rupee. it's trading around a record low, ahead of the reserve bank of india decision do later wednesday. citibank is among those saying the selloff, the underperformance we have been seeing is sharper than what they expected. we could see it moving higher when we get the decision form the rbis. it's expected to hike rates by 25 basis points. economists in our survey are saying that. even though we are seeing headline inflation which is the line in white, we have the core inflation reading which is the line in orange above the 6% target set by the central bank in india. the moves in the rupiah have

been driven by this -- these outflows by adani. we're starting to see the selloff stabilizing. it could be a supporting factor for the asian benchmark. let's take a look at what we're -- where we are sitting in trading. we're looking more risk on in the session, rage brown here. traders are saying the pound was not hawkish as it could have been. that's one of the big sentiments. shery: let's turn to su keenan the first word headlines. su: we start with the adani groups natural gas business. it's expansions and spending plans are in tact despite the crisis, facing the conglomerate. adani total glass ceo told bloomberg tv that the expansion is underway and revenues are growing. the joint venture between adani and total energies is planning almost $1.8 billion in capital spending for the next seven years. >> our plans are continuing. capital management is working. the group is concerned, we've

responded to concerns that have been raise. i do not see a challenge from a -- from the opportunity. su: the pentagon refuse the call from the u.s. to discuss the suspected spy balloon. a spokesperson said talks with china's defense minister were being saw. but the approach after the balloon was shot down on saturday was declined. the u.s. says the balloon was a surveillance device while china says that was a whether -- weather device that flew off course. labor unions held a third day of strikes and protests against raising the retirement age in france. protests at the paris subway with the rail operators urging people to postpone travel. parliament is debating the retirement age from 64 to 54. 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 around the world. i'm su keenan, this is bloomberg. haidi: president biden will appeal for bipartisan congressional breakthroughs in his state of the union address coming up in a couple of hours. let's bring in our bloomberg political director. we've had excerpts ahead of the speech, what you think will be different? why is it more significant? jodi: well, the president, this is his third speech since becoming president, the first one does not count as the state of the union, is just the joint address to congress. last year, sitting behind him was nancy pelosi as speaker of the house. the democrats still had the majority of the control of the house. this year it is kevin mccarthy indicating he has a very divided congress behind him. in front of him, when he is giving that speech. i think he will be making two cases.

he wants bipartisan. he wants to work across the aisle. he thinks it is important to do that. on things like the debt ceiling, that showdown that is coming up that he wants to try to work and get -- and resolve this in a bipartisan way. he will be making a tough case to the republicans that he wants to get a lot done these two years he has remaining as president. this is a bit of a test drive for a campaign. even though we have not yet heard from him that he was going to run for 2024 the announcement is asked acted to happen in the coming months, if not coming weeks -- expected to happen in the coming weeks if not the coming months. saying to the republicans, you are not doing enough to help them, i need to still do this and we need to pass legislation in congress that will help me do that. shery: let's talk about ordinary americans. how are they perceiving the job

the president is doing right now? especially as you said, this could be a test driver for his 2024 campaign. it's also platform for him to tout his accomplishments. jodi: he will be touting accomplishments to be sure. he's been doing that, as he has crisscrossed the country. he'll be doing more in days ahead, saying gluck would have done for the economy during covid -- saying look what i have done for the economy. during the -- during covid -- even though he did sign and congress passed, he signed significant legislation including that infrastructure bill. a lot of people are not feeling that. a lot in polls, he is not getting a lot of credit for that, even though he has had some of the most significant legislative accomplishments of any president in recent history. he'll be continue to make that case.

he's got to convince voters of that. this speech will be the start of trying to do that. haidi: who are the special attendees we should be keeping an eye out for the audience this year? jodi: there are several. we'll have bono, who was there for u.s. efforts to combat aids. the mother and stepfather of tyre nichols who died at the hands of police in memphis recently will be there. the president will be making a case for policing reform and passing what was called in the last congress the george floyd police reform act. so, that will be another push for things. we're expected to see paul pelosi, the husband of the former house speaker nancy pelosi. she still in congress. who was badly hurt and is now

recovering from the attack in his home in san francisco. those are some of the guests we can expect to see, courtesy, they will be guests of the first lady. shery: our political news director, jodi schneider with a preview of what to expect from the state of the union address tonight. jeffries that joins us to discuss chinese economic growth as the country's population declines for the first time in 60 years. hear why that could be a boost for robotics and ai. this is bloomberg. ♪ introducing the new sleep number climate360 smart bed. only smart bed in the world that actively cools, warms, and effortlessly responds to both of you. our smart sleepers get 28 minutes more restful sleep per night. proven quality sleep. only from sleep number.

shery: china's population, shrinking in 2022 for the first time in six decades. india has surpassed china as the world's most populous nation. our next guest says investors are underestimating how big the impact of demographics will have on the asian economies. let's get more with simon powell, global head of somatic research at jefferies. how should investors perceive this massive shift in demographics and to the dynamics of china and india when it comes to making bets on the two economies? simon: thank you for having me on. as i said, investors are underestimating how big the shrinkage is going to be in china. our numbers suggest that china's population could shrink by 48%,

between now and the end of the century. that is significant. when you dig deeper, it is missing workers, that's the big problem. so, that is going to have meaningful impact on the chinese economy. there are some positives here in terms of the need for ai and robotics and there are some negatives in terms of what is happening to household formation in china and what this means for the chinese shery: property sector. in the last few decades we saw china as this place where we could find a cheap labor, manufacturing. is that burden going to shift towards india? how big of a plague can india make of these changing demographics? simon: india's still growing, as you highlighted india has overtaken china. the big story is, when you fall below replacement? china fell below replacement in terms of its birth rate, way

back in 1994. that was two decades after japan fell. india has not started the movement. it will grow for another two decades. let put this in context. i think, nigeria's going to overtake india by the end of the century. nigeria is 200 million people today. it will double by 2050 and double again to 800 billion people by the end of the century. nigeria will be the second most populous country in the world. india will still be the most populous country in the world at the end of the century. that puts it in context. the second thing to look at is gen z. india's 370, 380 million people are in the gen z bucket. china has only 200 plus million people in the gen z bucket. gen z is the way forward for india. you can be optimistic on indian

demographics, you can be pessimistic on chinese demographics. haidi: is there a way to avoid the middle income trap? is it the destiny of china? how much does the geopolitical overlay, the tech rivalry prevent that innovation that's needed to drive future growth to happen? simon: look, you are asking the really big question. does china get old before gets rich? most demographic experts think, yes it does. median age is high. they have not hit the magic, 25,000 u.s. dollars, per capita gdp. yeah, china gets old before gets rich. what -- this is the key difference, japan was already rich before it started -- it's population shrunk. china has already made it.

this is what is keeping the communist party awake at night. if you look back over the last three or 45 years -- 3, 4, five years, many policy decisions seemed to have been rooted in demographics. the education stocks clamped down. the video gaming clamped down. all of these things about -- are about encouraging people to have more kids. haidi: how position for that if you're a long-term investor? some things are obvious. the boom days for chinese property are over. automation and ai. beyond china, he talked about population growth happening in africa, is there ways to get exposure to that? simon: absolutely. nigeria gives you the glimpse. nigeria is going to move to be the second most populous country in the world by the end of the century. the same is true for the whole of sub-saharan africa. the challenge for investors is,

africa offers this opportunity for -- from a democratic -- from a demographic point of view but when you look at economics it is more challenging. we have written about this and previous research notes, think about the bottom of the pyramid. everybody is fixated on the top of the economic pyramid, the half percent, the 1%. . think of the bottom of the. -- permit -- think of the bottom of the pyramid, think about what they will spend their money on it. consumer staples outside of china may actually be quite a good bet over a long-term. shery: simon powell, good to have your insides, global head of thematic research at jefferies. we do have breaking out of japan at the moment. we are getting the balance of payment, current account surplus of ¥33.4 billion, which is much smaller for the month of

december than analysts had expected. it is also shrinking a bit from the previous month when it came in at ¥1.8 trillion. we're in surplus territory, but it is a much, smaller surplus than economists had expected. the current account adjusted number also coming in at ¥1.182 trillion, which is below expectations. when it comes to the trade balance, it is a deficit of ¥1.2 trillion. all of these numbers really surprising to the downside. perhaps a little to do with the japanese yen strength. that current account surplus, much smaller than expected. more ahead. this is bloomberg. ♪

haidi: a quick check of the latest business flash headlines, soft ink -- soft things aren't reported in 8% increase in revenue. the ceo's plans are well developed for the rpo with -- ipo. driven by an increase in internet of things gadget adoption in high royalty rates for smart friendships. they will give its employees

bigger pay rises citing intensifying competition for talent and foster inflation. in april, nonexecutive staff will get a larger race in the roughly 3% average of the past few years. japan's nominal wages are increasing at the sharpest basins 1990's -- since the 1990's. some of credit suisse's junior and mid-level banks will get their bonuses paid out in installments. some associates and vice president will get their installments and three trunks over three months. contending with the tumultuous overall. bloomberg sources say meta platforms are asking many of its managers and directors to transition to individual consumer jobs or leave the company. mark zuckerberg has vowed to cut middle managers and underperforming projects. his plan for a flatter organization has brought share prices up 50%. so far this year. shery: these are some of the stocks we will be watching at

the open in japan and soft -- korea. softbank for vision from three. nintendo slashed its outlook and plans to raise salaries by 10%. we're expecting bigger pay raises for numero -- nomura's japan stuff. a plan is -- a plant in north america. some korean names to keep an eye on. cookout bank soaring, 64%. these are some of the other companies we expecting financial results from. coming up in the next hour, city global wealth investment tells us why there could be even more upside to the chinese recovering. we'll be talking to -- about the rbis.

shery: this is daybreak asia, we're counting down to market opens after volatility in wall street, investigators try to gauge chair powell's comments. a big question, the rate hike as we head towards another central bank decision in india as well. haidi: as we said with the rba, the rbi, it is expected be the last of the cycle. let's take a look at how markets are contending with all of this. are we finally getting the message when it comes to what we heard from jay powell? the bond markets seem to be. anabelle: yeah, we did see yields in the bond, space with investors trying to assess the message from powell. we can take a look at the 10 year yield alongside japan and south korea at the start of trade. coming online, a reversal of the prior close. we will get to more details on jay powell's interview.

from the meantime, we are heavily focused on earnings here as well lay the region iwth japan. big numbers out of softbank. another loss in the latest numbers. the ceo, was not even on the results call. that stock not trading yet. we are seeing a pretty big spread on the bid. in terms of another company we are watching, nintendo numbers also drew out after the bell. its adrs tumbling after the company posted a week profit. neither stock trading yet, but we will get them in when they come online. the other big factor, for sentiment in the session, really comes down to the interview with jay powell we had. he says rates need to go higher. that was one big thing that came out of it. the disinflation theme, we are seeing price pressures easing. he wasn't quite as hawkish as he could have been. we are seeing stocks a little more risk on in the session.

the likes of the kospi up around .7% at the start of trade. the korean won, trading fairly steady. some traders saying it is in correction phase. the rally we have seen in the currency over the past few session has been a bit overdone. let's change. we're in the session for the expects -- asx 200, focusing on the move in bond yields. the rba surprising traders in their decision on tuesday. sounding a bit more hawkish than they could have been. also indicating they are not done yet. in terms of the rate hikes ahead. the focus in the session today for asia will remain on the fed. let's listen to some more of the highlights from the interview with the jay powell and are bloomberg tv contributor david rubenstein. >> we are at the beginning of this process, the disinflationary process, the process of getting inflation down has a long way to go. at these are the early stages of

disinflation. it is not going to be, smooth. it is going to be bumpy. this process is likely to take a bit of time. it will take, not just this year, but next year to get down close to 2%. we think we will need to do for rate increases. keep rates at of strict of level for a period of time. the best case as it will take some time. we'll have to do more rate increases and have to look around and see if we have done enough. shery:our next guest is predicting a dollar bear market, let's welcome ken peng. ken, good to have you with us. is your dollar call on the assumption that the federal reserve will have to cut rates later this year? do you still stick to that after the u.s. jobs report and the comments by the fed chair today? ken: thank you for having me. yes. in a simple answer, yes. looking at the fed comments from

chairman powell he talked about disinflation at the meeting and in the interview. it's happening. by march, the pace of cpi will be below that of the fed funds rate. by june our estimates, which show we will have -- since 2007. by that, and the fact that the u.s. economy is slowing down, the fed policy will already be restrictive without additional rate hikes. we think there is one in march. our best case is that it may be the last. shery: with a weaker u.s. dollar, are you more positive, emerging markets, especially asia, especially taking into account your expecting a slowdown in the u.s. and the growth that differentials that could benefit the asian economies? simon: absolutely. ken: the expectation for the fed and u.s. interest rates

generally is likely to continue this u.s. dollar bear market. in asia, china is recovering. the reopening that happened recently. japan, hong kong, taiwan, these markets are still recovering as well. parts of southeast asia also seeing the second half of a reopening trade. that momentum is there and it is fairly strong. it will keep some of the central banks in asia more hawkish than the fed. you talked about the rba. the bank of japan is very much in the center of attention. by the end of this year, the people's bank of china will probably turn more hawkish as well. that combination of factors is going to keep asian currencies very firm. haidi: is it a straightforward recovery when it comes to chinese assets? loosing the equity rally really stall -- we have seen the equity rally really stall.

what are the next drivers you're looking for? ken: since the end of october we had a 60% rally. china added speak -- at its peak. the actual economic recovery in the earnings recovery is beginning. we talk about this a lot. 15 trillion of new deposits accumulated last year. a lot of that money was meant for property. people did not dare buy because of the worry about incomplete projects. some of that money came out of stocks and bond markets, right? some of the money was meant to be spent, but could not. now we're seeing the spending begin to happen. the flow into equity markets is quite slow. there is a lot more to come in that respect. the property side, we're likely to see sales recovery, not back to the boom days, but compared to last year, certainly better.

these conditions will continue to give us more upward earnings revisions. it will give us -- there will be more comfort to get into the high-yield credit market. this recovery has more legs to go. haidi: i find it interesting that you look at u.s./china geopolitics, this is theater. we are getting over the balloon episode. the union address from president biden later on. do you not think that there are meaningful implications for growth, for trade, for inflation, depending on what happens to this relationship? ken: i think there absolutely will be. this strategic competition between the u.s. and china will be something that we'll be watching for decades. but, i think this year, the dominant factor in china and in

asia in general is the recovery in consumption. yes, we will get these overtures in geopolitics. that could be more meaningful when the market is -- i guess -- is richer. it's not going to stop this recovery from happening. i also think both sides probably have enough reasons to try to set up the guardrails that antony blinken was supposed to do this trip. this -- i would like to call it an accident, because it seems unintended to me that it veered off course. but, in any case, these geopolitical overtures at the moment, i don't think it is strong enough to change the direction of recovery. haidi: ken, always great to chat with you. ken peng.

let's get to belle, for some of the movers. dyer numbers out of softbank. anabelle: that's right. we are seeing softbank declining as much as 5% at the start of trade, the biggest drop we have seen since the middle of november last year. yes, as you say, down to those dying numbers. vision fund. valuations down as well. issues going across the start of, in the tech sector as well. a loss of $5 billion in the three months ending in december. the group as a whole, logging and net loss of ¥783.4 billion. this is the state of play. we will track the stock. it's extending the declines as we get into the trading session. another company we are watching is nintendo. that one, still not online just yet. a bit on spread. let's change it on and look at another sector in focus. energy stocks.

which are climbing in the session. we've seen oil gaining. saudi arabia is increasing crude prices on the hopes of recovery in the region. also have -- he also have optimism coming from powell's interview, given he was not as hawkish as he could have been. shery: you mentioned nintendo. it's starting to trade. it's dropping as much as 6.5% after cutting their full-year profit outlook. let's get to su keenan the first word headlines. su: we start with turkey which has declared a three-month state of emergency in areas hit by two massive earthquakes. it gives government officials greater power and rescue and reconstruction efforts. emergency teams are racing to save thousands of victims still trapped after monday's quakes. the number of people confirmed killed across turkey and neighboring syria is now more than 7000. president biden is now set to appeal for bipartisan

congressional breakthroughs in his state of the union address. his speech comes among gridlock among lawmakers, showdown over the debt ceiling and renewed tensions with china. excerpts of the address show biden will bolster the middle class and -- middle class and urge congress to put aside their differences. full coverage is coming up on bloomberg television. the u.s. pentagon says china refused the call from the u.s. to discuss the suspected spy balloon. a defense department spokesperson says talks with china's defense minister will are -- were being stopped, -- sought, but it was declined. the balloon was a surveillance device while china says it was a weather monitoring device that blew off course. and the adani groups natural gas business says its expansion and spending plans are in tact despite the crisis faced in the conglomerate. adani total gas ceo told

bloomberg tv that the expansion is underway. revenues are growing. the joint venture between adani and total energies is planning almost $1.8 billion in capital spending for the next seven years. >> our plans are continuing. capital managing is working. we group and respond to the concerns. currently, i don't see any challenge on the plan. su: 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 around the world. i'm su keenan. this is bloomberg. haidi: let's get back to belle. one winter, one decliner. anabelle: that's right. we'll kick off with the session today. that's nintendo at the start of trade, losses at levels we have not seen since november of last

year. tracking the similar moves. this is another company that put out a pretty weak outlook. we thought missing its quarterly profit estimates and it also trip the for your outlook. this is down to concerns over the switch console, whether it is aging. the health of the gaming industry. it expects to end the fiscal year with 18 million console sold. it was for 19 million consuls the cell. the other big story we are watching is nintendo raising its wages for staff in japan by 10%. interesting when you put it in the context of the nominal wage growth yesterday and the highest level we have seen since 1997. the other big company we are watching his toshiba, it is gaining. we're singh trading volume around four times higher -- seeing trading volume around four times higher. 13 minutes underway for tokyo trading. the big headline from this is that the top japanese lenders or banks will be issuing commitment letters for more than $10

billion loan. that will back the j ip led takeover of toshiba. that's according to sources that are familiar with the matter. shery: india central bank is set to deliver its rate decision later wednesday. why they expect this to be the last hike but do not see any cuts, coming this year. first, moody sees a limited risks in bank exposure to the adani group as hedge funds scoop up its bonds. the latest for the conglomerate, next. this is bloomberg. ♪

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latest. what was your take away. markets seem confused about his message. kathleen: is getting convoluted. the market thinks he is more hawkish or dovish and then he says something and i think, yeah they are stumbling over their own analyses. to meet is clear that the federal reserve led by jay powell realizes that inflation is high. disinflation has started but that is what he has kept saying. we have to do more. when he spoke, at an economic club of washington event today, moderated, speaking with david rubenstein, he basically said the same thing. what's interesting is the markets seem to be accepting that this is not hawkish. more rate hikes needed message from powell and they are finally pricing in something closer to what the fed seems to be saying. another 50 basis point rate hikes. how is a lot -- it has a lot to do with data.

so, important today is on wednesday, they shift down to 25 basis points and powell signaled more rate hikes have to be done. friday, the jobs reports everyone wanted to see what he would say about that. david rubenstein's question about -- question of, if you knew what you knew on friday, powell moved to that went to the side and kept going. in terms of remarks, he said clearly that there's hot labor market now. that's one of the things he is looking at. how that link between final demand and inflation. to me, it's an equally hawkish message. i think the markets are struggling every day to get into the nuances of everything he said. maybe we all need to focus more on what he said and what he means. haidi: our previous guest called at the inconvenient truth area [laughter] we're also getting a decision

from the are b.i.. expected to deliver its final rate cycle. i'm having deja vu about having said this about the rba. for india, is inflation well enough behaved, truly? kathleen: deja vu or groundhogs day. we don't know. it's interesting because, that is in the eye of the beholder, isn't it? it's clear that they are expected to do another 25 basis rate hike. that will to a 6.50. they have been on a rate hiking path. there getting closer to the end. it is still very high. they have a very wide range, about 2% to 6%. there around 6%, dipping lower. the big thing is lower food and energy prices. it's good but not that good for the core. that is where you see the concern. that is why they are still doing

a 25 basis point hike. we will be waiting to hear signaling. how sure they are to finish rate hiking. and the budget is a backstop. that is what their policy makers may say. if they can hike rates and not worry about slowing down the economy too much, the most interesting question, if there's any mention of fed rate hikes and what it may mean for the currency, the rupee. a year or so ago when the fed was starting to write -- hike aggressively, currencies like the rupee were getting hit pretty hard. that is always the concern if you are an emerging-market central banker. haidi: our global politics and economic -- economic editor, kathleen hays. investors are buying bonds related to adani, after several notes fell into distress territory following the u.s. short seller report read we are seeing signs that the route in the groups stocks may be stabilizing. rachel chang has been watching the development. what? is the strategy?

there have been lots of measures to restore some semblance of market confidence and investor relief. has it worked? rachel: that is what the company is trying to do now. a couple of days ago, adani and the family agreed to prepay over one billion worth of shares and loans to several banks. that was meant to show that they have liquidity, don't worry about anything. yesterday what we saw was that one of the companies that adani bought, the guest private generator, they also decided to prepay a bond. the message the company is trying to send is there is no actual issue in running operations. liquidity is there. that is how they are trying to -- [indiscernible]

we saw shares coming up a little bit. that could be the start of a turnaround for them. shery: we saw not only their stocks rising but some of the hedge scooping up some of their debt. there are further headwinds for this group, right? what are they? rachel: what their problem is this issue has become so huge. it's become a political issue. adani is close to the prime minister. his business is aligned with the domestic growth. the opposition parties are seizing on the situation. calling out capitalism. tying the political. adani could continue to become -- [indiscernible]

shery: bloomberg's rachel chang with the latest on adani. plenty more to come. this is bloomberg. ♪ the first time your sales reached 100k was also the first time you hit this note... ( screams in joy) save 20% with the lowest transaction fees and keep more of what you make. with a partner that always puts you first. godaddy. tools and support for every small business first.

shery: big declines for nintendo dropping by the most since october of 2021, down more than 8% after cutting their full-year profit outlook. we're seeing toshiba on the other side of the trade. green. we heard the top japanese banks are going to issue a commitment letter for a $10.6 billion loan tha backs -- that backs contortions takeover of toshiba. also in the red for softbank. they had their third quarter net loss, $5.9 billion. vision fund took a big hit

again. this get more on the earnings for softbank with bloomberg's -- it didn't help that he was nowhere to be found for the first time on the earnings call. >> right. especially because the earnings were actually a lot worse than what was expected. people were largely expecting more moderate loss, even a potential profit. it looks like softbank applied strict standards and did big markdowns, then expected to his private portfolios. that is why the number is much worse than expected. he was missing from the call. it was the cfo doing all the explaining. it does not look like it was enough, looking at the share price reaction today. haidi: do we have an idea of what is being planned for vision fund three? >> we did an interview with the

vision fund executive. he clarified that after, once they have more firepower to spend on the current vision fund, two, once that is all sent, which is about a 6.5 billion u.s. dollar after they spend that money, he said they could consider either expanding the rise of the vision fund two or consider a potential third fund. we'll have to see when the pace of the investments actually pick up. for vision fund and softbank in general to see further development. shery: how important is a successful ipo of arm be? >> it would be very, very important. everyone is focusing a lot on how arm does. it looks like they are sticking

to the plan to have it publicly listed in this calendar year. they did not specify any timing. people are very curious to know what will happen to the ipo. it means a lot to the company. and the cash flow. and future potential for any other type of ipo's they have planned in the pipeline. haidi: our bloomberg technology reporter there. coming up, junior and mid-level bankers at credit suisse are getting there much anticipated bonuses in chunks. this is bloomberg. ♪ so... i know you and george were struggling with the possibility of having to move. how's that going? we found a way to make bathing safer with a kohler walk-in bath. a kohler walk-in bath provides a secure, spa-like bathing experience in the comfort of your own home. a kohler walk-in bath has one of the lowest step-ins of any walk-in bath for easy entry and exit.

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his message that interest right need to keep rising,: we began by asking if last week's rate hike been bigger. >> i will take it this way. last week, the process of getting nation down has begun. has been a long number to go. the services sector is not showing any disinflation.

we don't think it will be smooth, bumpy. we don't think we will need -- we think we will need to do further rate increases. the labor market in january was stronger-than-expected. i would say it shows you why we think this will be a process that takes a significant period of time. the labor market is strong. it's a good thing. of course since then, financial conditions have tightened significantly. >> let me ask another way. when the number --

>> sometimes we get data the night before, but it's not on all pieces of data. it's a small amount of data. we get it just the night before. we were going to get a big piece of data as often happens, it would help me to know it the night before. >> they will probably be another -- was that a bad assumption by the markets? >> what we said at the meeting was we believe and we are trying to achieve it will be

sufficiently restrictive. we do not think we have achieved that yet. now, you see the labor market report. >> there was an assumption that the fed might consider decreasing rates by the end of this year. do you think the markets are wrong? >> all of these numbers we're throwing around are conditional on incoming data and what happens. we never say this is what we think will happen. we make the forecast and that we let the data come in. for example, if the data comes in stronger than we expect and we need to raise rates more, we would do that. we would raise rates more.

haidi: that was jay powell. annabelle: tracking investor reaction to the interview. you can see the move stabilizing , investors with a hawkish tilt. but there they are saying it's overdone as well. in terms of the currency space, we are seeing the dollar drifting fractionally lower with marginal gains coming through. the offshore yuan as well. in the equity space, we looking more risk on.

there are some specific earnings . softbank posted a profit loss. nintendo lower on earnings and toshiba is buying it out. haidi: we have another scoop when it comes to its lease. it's been a busy news flow. asia risk control ms. contending with outflows in a steady stream of staff departures. they are dialing back some stringent anti-money laundering controls in the asian market, including the bank required

sources of wealth. third-party transactions are no longer subject. the difficult situation is highlighted as it tries to overcome the tumultuous overhaul. particularly when it comes to the fast-growing asian business. the measures are more stringent but they did threaten to restore efforts. this comes on the back of a bloomberg scoop with mid-level bankers that the bonuses would be paid in installments, and we heard that some negotiations have been put on hold. >> quite a list. what this latest risk assessment

and private banking side is it shows you how deep this goes. it shows you how far stems across the whole company. there are two things changing. they're quite significant. has he said, some changes have been more stringent. this is where fixation on wealth. disrupted last year. that has eased significantly. the fact that third-party transactions no longer need sign-ups from executives is quite telling. but this does is it shows you the fine balance to do things that make them more competitive or back into the frontline that

they had in the years before scandals are erected and they are making little changes to be able to make them competitive on the street. >> tell us about that. how much will be changes keep new customers when the reputation of the bank has been hit? reputation is key. >> is in it? as people decide to retain credit suisse as a customer, this is about trying to improve that. what we saw with the scoop earlier this morning about the bank retention bonuses and how they will be paid out for junior and mid-level 40 days after.

it shows you they are trying to do things slightly unorthodox like bringing in new ways to try and retain the talent they have and finding ways to pay those people properly and make sure a lot of those people that those outflows of talent are coming to some kind of an end. people are finding other places to do banking. a lot of the stories are showing a few pieces coming together to show how tricky the transition period is for disrespect. shery: the latest on credit suisse.

i bipartisan breakthrough. let's bring in a white house reporter. reporter: the president will focus on the economy and china. the nec director said it's at the forefront. we have not had an unemployment rate in the united states at this level since 1969. the president is 80. the issue he has is this economy is not resonating with the public. the polls are faltering. there was a recent poll that said more than six and 10 americans in needs to address.

when it comes to how they are commenting china, the change of economics has not changed. but you can look out for the president talking about export controls. the chip stack. the fact that there are chinese companies with ministers linked to the chinese chemists party. haidi: there is a gap in data.

>> the issue is he is facing a divided government. is going to call on excise tax. democrats do not think it's a deterrent. the issue he has is the president was unable to get provisions through a house and senate and the president being a democrat himself, there is no way that this kind of legislation actions he is calling for will get through a divided congress. haidi: stay with us. bloomberg has special coverage

of the state of the union address from 9:30 a.m.. coming up next, our next guest thinks it is not clear that india is out of the woods when it comes to nation. we are previewing the decision and will this be the last hike of the cycle? this is bloomberg. ♪ ualiis vital to your mental, emotional, and physical health. and we know 80% of couples sleep too hot or too cold. introducing the new sleep number climate360 smart bed. the only smart bed in the world that actively cools, warms, and effortlessly responds to both of you. our smart sleepers get 28 minutes more restful sleep per night. proven quality sleep. only from sleep number. three nights. esg... -diversification, futures, options... leverage. -excess cash flow. gold. the world is full of financial noise.

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poised -- let's bring in the asia economist. it feels like the mood is hawkish, seeing from japan's wage numbers. when it comes to india, is inflation under control? >> we have headline inflation coming down but courtney sticky. 25 basis point hike is a done deal. the question is what will happen after this. the central bank will keep a neutral tone to keep it open. headline inflation is expected to continue to fall because food harvests were good, food prices will fall. there is a lot of uncertainty over this. probably because the china

opening is not sure if that will push up oil. there is uncertainty over the oil outlook. for the central bank, keep it open for what to do next and watch out for inflation. growth will decelerate. there is evenness. external demand is weak. moreover, fiscal policy is into help. like is not going to be big. look at the transmissions through several channels.

in terms of equity holdings, look at prices themselves. institutions, mutual funds and retells do not know out of them. the fallout was coming from the bond side where investors were a bit more cautious and discriminatory when they look at indian assets. overall if you brought in and out overall, all of the data has been the same besides high leverage companies, low margins, return on capital. indian corporate debt is among the lowest in asia. if you this with china, and the

is is only about 50 something. shery: even before the crisis, the market itself was seen as being more expensive compared to china. how constructive are you? >> absolutely. indian equities markets have always been the most extensive and asia. the market has not declined at all. in 2022 declined. in 2021, it also performed. equities are still elevated.

as seen that it is creating india but in reality and has not had a sizable impact. they have outperform for the past two years already. shery: finalizing a $25 million order for chemicals in nigeria. >> you see less financier, the

doubling means it will have a significant guy. i see huge opportunity not only in india but specifics. >> we are targeting companies, some good position. see the value on the table. the cycle of investment, we're

looking into africa, particular nigeria and a concerted manner. we have hopefully a sizable order that we might share in times to come on that region. we have a prestigious order from vienna. this is a huge opportunity. 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. >> can i proceed to put some numbers to the opportunity? >> we're looking at something close to $50 million on the books from international markets. specifically from those regions. >> you have outlined intentions to move from petro chemicals and

renewables. >> absolutely delighted to answer that. growth, calibration and transition. the business strategy, the outlook of business. we have refineries. we are pushing forward. we have this transition.

it's multidimensional. we have the funds who shift from sector to sector. we are well poised to putting green hydrogen on the map. >> how much of that -- haidi: quick check of the latest business flash headlines. softbank group shares are doing this in the tokyo session. steve losses in the ceo, just

below 7%. the net loss was $5.9 billion. the vision fund was hit by declining tech valuations. a source says they are considering launching a third division fund. until has raised $11 million in the blue-chip bond market. our source says the richardson arts. this is a 40 year treasury. shery: some of the stocks we are watching at the opening hong kong and china. energy stocks could move. saudi arabia hiked its oil price . the heat is on when it comes to

baidu when it comes to its czechia bt service. we are keeping an eye on the stocks related to tech in china. stay tuned for special coverage of the state of the address. this would be his second time since taking office. that address is coming at the times on your screen. this is bloomberg. ♪

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