that's what happened yesterday, pboc tried to remove some support.l have any implications, the last time we saw the pboc sounding the alarm, we thought higher treasury yields, stronger dollar, and a triple arc cut as well. hao: yes. they always look at external factors. the most important thing for them is they have to strike a balance between growth, debt, currency, and also look at growth potential and deleveraging effort. in this case we see complicated policy in terms of managing china's yen. i do think they want to see two .ay volatility reduced we haven't talked about the data we are in flex think -- expecting later this morning. you are saying that inflation appears to be picking up. where do you see this going for 2018? will it be a concern for the pboc? largely they have been not too worried about this. the feedthrough has been pretty muted. hao: i think we have been in the cpi right now. i do see it will be picking up a little bit in the coming year living that demand has been improving from china's perspective. on the other hand the most i

don't think it means anything because this is the pboc.ast year, and, yes, the x factor, the countercyclical adjustment factor, which if you take with the jargon basically means the market says the currency should be here, but we are going to do whatever we want. does it mean the market will have a free role in the currency? i don't think so. it is the chinese exchange rate we are talking a tough. we all want a new year or christmas gift, but i don't think this was it. david: they take things slowly, right? to your point that if the market moves in line with them, that they don't have to do anything. >> exactly. david: do you think they trust markets more? in other words, if things do not go the way they want to or plan, do they have more control now to not scratch the itch? michael: they trust the market when the market is telling than the number they want to hear. the reason why they probably introduced or removed the x factor is because the market was ballistic 50, go 640, 630.50, moved to they do not want that. so they are trying to in

if the pboc follows along, what you see are debt intensive sectors, such as steel, coal, real estate, that all caps pushed one step closer to insolvency. then you have to revisit annual growth projections, which is not option.nt the pboc is somewhat in a vice. what will they do in a situation where they have little control and bad options? they revealed the strategy of december, when the fed raised 25 basis points,the pboc the next day raised 5 basis points. a small increase, but all they thought they could get the market to bear. the next day, china tried to ameliorate this pressure and remove steel export tariffs. they knew this would upset donald trump. three days later donald trump labeled china a strategic competitor. they don't have good options. they will try and thread a needle. in doing so, alll economic policy, including trade issues, becomes subservient to this meta issue. >> we talked about this report yesterday, where china ordered its state-owned enterprises to turn a profit. i don't know how you can do that in a system where you just order profits to show up. old indust

it will be where the pboc wants it.s made the speech, is making a speech that is fairly tod in asking president xi finally deliver on the globalization picture he painted in davos last year. timeds move planned or for macron's visit to say we are making a little headway on this? to make it is not going a massive difference because a lot of the stuff macron is talking about is opening up the --ustrial markets, creating for french companies, in particular and a little tweaking on the renminbi is not going to make a huge difference in how it is used internationally or to the french relationship. withey is what happens trade deals, whether there is more opening up. after the trump visit, they didn't announce this during the trump visit, but the next day, they opened up the financial markets to international companies far more. if it was something like that, consumer finance business, that would be more interesting. the europeanof financial companies into china would be more interesting than what happened. guy: how do the ch

we have seen some potential for volatility given that the head of the pboc or the next head of the pbocl be coming into desk given the current governor has indicated his intention to retire soon. that sort of development could pose volatility. other central banks are due for leadership changes as well. the fed, for instance, with powell coming into the fold. and makes for a year of uncertainty. mark: thank you for filling us in. vonnie: great stuff. the iran nuclear agreement is at the hands of donald trump. the president has until friday to decide on sanctions waiver and deal compliance. more than 1000 iranians have been arrested in the protests. almost two dozen killed. joining us now, joe lieberman. the former independent senator from connecticut and former democratic vice presidential candidate. also joining us from washington, d.c., kevin cirilli. lieberman, thank you for your time. we have this key deadline coming up on friday. what you think the administration should do? joe lieberman: i think the administration should respond to the continued bad behavior by iran by increasing s

pboc chairman has not been reselected to senior policymaking body.his comes amid signs he may step down from the head of the central bank. it is been in charge of the pboc since 2002, making him the longest-serving governor. he was reappointed in 2013. president trump says he is willing to talk under oath to special counsel robert mueller as the investigation into collusion with russia continues. house heat the white said, "i am looking forward to it." mueller is looking into whether or not the president obstructed justice by removing michael flynn and firing fbi director james comey. a panel of brazilian judges is voted to uphold a corruption conviction of former president louise messier da silva, increasing his sentenced to more than 12 years. ofall but killed his chances a presidential election where opinion polls had him leading by a wide margin. the stock exchange closed at a record high on the news, in the ryals up 3%. global news for the four hours a day powered by more than 2700 journalists and analysts in more than 120 countries, i am paul a

the feeling is that the pboc is moving.ing in asia. haslinda: when it comes to the yuan, it had the best run since 2008 last year. what are they saying about the rate this year? justina: i think there is divided opinion. maybe on average people are expecting a flat look for the yen this year. it kind of depends on the dollar. but it looks like some flows are now balanced. the pboc is becoming more comfortable. of course we have to see how things go. david: is there a sense they trust the market more? because the market is moving. haslinda: or to say it will not jump in when it needs to? [laughter] david: do they trust the market more? enda: when they see the trade data, and the chinese reports, and the u.s. continues to go gangbusters, the political trust is in the dollar yuan. it depends on what they can do their -- there. it cannot go too far. haslinda: anything that shows we are headed for a more liberalization of the yuan? justina: that is why people are -- david: unintended. [laughter] indtended.un [laughter] there is

the pboc scrapping the countercyclical factor for the yuan. after shelving his hedge fund plan bitcoin champion's mapping out a new opportunity. more on the bloomberg scoop later this hour. vonnie: breaking news on microsoft. saying that ship fix may significantly slow some servers. this is a fascinating statement. microsoft saying the greatest impact will be on corporate data servers and that windows 7 and a and earlier will be the ones that are most affected. it's interesting because it looks like the slowdowns could be more substantial than intel itself has indicated. the ceo of intel was speaking yesterday and he said the problem may be more pervasive than first thought but he didn't discuss the degree of impact. he just said some machines would be more affected than others. the stock of microsoft is not reacting hugely. it is still up about .1%. intel stock down about 1.5%. fix mayt thing the chip secretly slow down servers about 10%. abigail doolittle is with us now. abigail: we have another day of record highs. the dow and the nasdaq pu

the pboc and government, they have a doom ending anytime.al system to remove the long-term and balance, for the sake of long-term health. on the other hand, they want to ensure a smooth economic transition and economic recovery for a hardttom landing scenario. i think whenever we get, you know, if the economy doesn't have a bad reaction to the deleveraging, they will continue to tighten the grip, to squeeze the excess from the shadow banking system. so that is my take. if there is any bad reaction from the economy or stock market, that could mean good news. trap, allfor the bear of the bear traps will provide an opportunity. of globalout the risk effect from u.s. policy on china, the tax hikes or tax cuts here, and fed rate hikes? what's the impact on china? a softer yuan? does it speak to their story? >> i have been bullish on the yuan since last year, i mentioned at that time that they don't have a better alternative in their ethics policy -- in their policy. they wanted to decrease the yuan. the thing is, it is very challenging in terms o

taking a look at the outlook when it comes to the pboc.ey market tweak took a lot of us i the price. prices hovering near 30 month highs. charging into the new year with unprecedented bigger. credit goes to opec. melbourne, theor down torm spike is concerns over a run or is the bigger picture credit going to opec a sign of the success of its strategy? themes that are affecting the market like you said, opec and shale here they will be the key themes of 2018. for opec, we have 12 more months to go. their objective is to bring supplies down to the five-year average. and compliance is good. they're still about 100 million barrels above the five-year average. on the flipside, we have shale here at it has been a thorn in opec's side for the past couple of years. pro action -- production recently is down to a weekly record. it is forecasted to climb to about 10 million barrels per day. their the key themes. out of that we have got things that will affect the market as unplanned outages. the hurricane season in the u.s. , and the unrest which you

we have the pboc looking at their currency, the japanese, the ecb sending these messages.we overreached? this is the euro, these are record long positions. the heaviest long position on the euro ever. i wonder, are we setting ourselves up for a fall here? chirstophe: i wouldn't say that. we come from a situation very stressful for the eurozone because we were on the verge of a collapse of the eurozone up you years ago. now we are shifting away from this dramatic scenario. things are improving for the eurozone. don't forget that the current surplus, the current balance is in surplus for the eurozone. this is probably a situation why the euro is so strong. what kind of threat does a strong euro pose to european corporate's? chirstophe: it is a good question, but i would say the , for the time being, the dynamics come from domestic demand. the domestic demand dynamics are a negative force. drivers andtic , how do inal exports want to take exposure, how do i want to lift exposure? gambitook at that as a for the domestic play, how do you position domestically? --rstophe: i woul

where is the line in the sand for the pboc?en the fact that they are in a happy spot right now with comments from central bank reserve places that these central banks are acquiring the yuan, i don't think they are ready to step in front of the party bus right now. i think the yuan bulls will be running wild in the china shop for the rest of the week and month. yousef: we understand according to people familiar with the matter, they are restricting some cryptocurrency trading further. could we see more measures going forward? like from last week when the korea came out with barrier fore, the success of crypto has increased tenfold. the markets have not recovered. this could be a wave of regulatory oversight globally is quite strong. the people who are banking on cryptocurrencies are retail and really unsophisticated traders, so a is of regulatory oversight needed and there is a fear a lot of people could prop a lot of money on this, and this is what the regulators are trying to hammer home right now. you thisood to see morning.

the pboc could now intervene.srces escalating its clampdown on crypto currency trading, targeted online platforms and mobile apps that offer exchange like services. authorities banned cryptocurrency exchanges last year, but recently noticed an uptick in activity on alternative venues. access tos to block offshore platforms that allow centralized trading. three young hong kong democracy activists will appeal their prison terms in the city's highest court. they were sentenced last august to 6-8 months in jail for leading the occupied protest. people in hong kong suspect political interference. carillion has collapsed under $2.2 billion of debt, creating a new headache for prime minister theresa may. the company had around 450 government context, from retaining prisons to providing school lunches. in july, a series of construction contracts failed. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. haidi: thank you so much for

implications with what the pboc does.el of strength for the currency that policymakers in china are comfortable with? implications for equities, for countries, exporters as well. a look at how much this is really a dollar story given we have had reasonable stability when it comes to the basket of currencies.let us take a deeper look at the meaning of this. put us get back to dominic schnider -- let us get back to dominic schnider. there is always a big of -- a bit of tea leaf readings with where it wants the currency. there has not been much of a way of intervention when you look at daily fx volumes. does that mean there is a new sense of confidence with where the currency trade that? -- trade is at/ ? dominic: i think so. the trade ways has been pretty stable. it seems like if they really want to make sure it moves with the overall development of other currencies, the dollar has been extremely weak at the beginning of the year and the end of last year. as long as we get more dollar weakness, i would not be surprised if i

and we have to get the pboc state agencies of foreign exchange a little separate.nk one of the things that might be going on here, and hopefully we will find out more from chinese officials, they might be thinking about rebalancing their portfolio a bit to reflect a little more of what their actual trade flows are. if they do that, that means they will probably reduce u.s. debt holdings and increase holdings of other assets like european debt or japanese debt. if you do not like u.s. yields where they are, it is hard to like the yields of germany and japan given how low they are. vonnie: ira jersey, fantastic context. that is ira jersey. coming up, ford is in hot water. the motor company is being sued by truck owners claiming at least 500,000 diesel engines were rigged. we will bring you that next. this is bloomberg. ♪ shery: welcome back. ford has become the latest carmaker to be accused of diesel cheating, the stock taking a hit , following the most since december after bloomberg reported the company is being sued by truck owners, claiming at least 500,000 truck

francine: what does it mean for the pboc?is the world central banks are moving towards a tapering cycle. it seems the pboc is quite content where they are. they will be prudent and neutral in the near term. while the pboc is tweaking the money market lending rate, this is the one that has a much broader impact on the wider economy, in the second half of the year, we could see the pboc moving towards taht. the government is trying to curb credit growth. there's a view the pboc is stuck in neutral and happy to remain where they are. tom: we will speak with the ian bremmer her eie in the next hour. my take is president xi had a successful 2017. poweroes it say about his as we enter the new year? enda: domestically he has authority.d his o there's even speculation that he could be one of those leaders that stays on beyond the expected term. china's status on the world stage is growing with the u.s. pulling back from certain parts of multilateralism, giving china a place to defend the hole. they continue to play a role within the

it economists think the pboc might get on the tightening cycle toward the end of the year.he money market, but in terms of benchmark rates, they haven't touched it for several years. in 2011, haven't hiked it. morgan stanley and others have concluded a tightening in china if the global growth story holds up and china's domestic story holds up. anna: thank you very much. still described as a minority view that we get a hike in china. we will watch out for that. enda curran joining us from hong kong. global sneed, head of strategy at bmp para very good morning to you. when you look at the chinese growth story, how do you balance the positive news coming through from the global economy, what that does to chinese exports, with something more sluggish on the import side? side, a on the domestic key phrase repeated again and again this year will be quality of growth, not quantity. you are seeing china has already implemented over the winter some policies to help improve pollution in cities, which a few years ago, you probably wouldn't have considered because that would be detrime

the pboc has been doing some tightening for the labor markets.on is quite subdued and growth is taking over ok. they've taken a prudent monetary policy. no sign of a near time rate hike. -- the pbocay the could raise its benchmark lending rate. gdpy: a chart showing growth versus loan growth. the loan growth and blue is up 12%. coming down just a little bit. what do we know about the health of china's banks given that they are really state backed and state owned? >> there's always a degree of opec as an lack of transparency when it comes to china. the imf has recently published a major in-depth look at china's banks. they found that they needed to raise capital in some cases and they warned against adverse risks associated with rapid credit growth. the chinese banks are doing better than people anticipated. the biggest banks are profitable. vonnie: you are being way too rosy. surely there's less -- >> there's plenty of risk in the system. they have monetary controls and they have it under control right now. there are some fundamentals happening -

the pboc one of those in the mix. absolutely. ended the year in something of a sweet spot. ,rom the pmi indicators manufacturing is holding up quite well. sentiment is holding up well among business executives and the consumer. exports are doing well on the back of global recovery and the real estate sector, which was showing signs of frothy mess last year, has cooled without tipping into wider slowdown. the background for the chinese economy into the new year is pretty good. the big risks remain, how will the policymakers manage the position to clean up the environment and get a hold of the debt situation without hurting the wider economy. that is what the world is watching in the year ahead. guy: we are looking for any and whato the economy business is looking like. what do we get from the survey? enda: it is an interesting survey from the pboc. it looked at around 5000 businesses in the country and the message was that the v-shaped recovery in 2016 after the markets dropped in china, that recovery still continues, and it shows

you have questions about the monetary policy scenario and how the pboc reacts.ase is not that we get a benchmark rate rise in 2018, that is done to be questioned. the focus seems to be on moving the rates up in the money market. anna: thank you. will be 6.9% according to the premier. thanks for giving us the latest on the chinese data. our guest is with us in the studio. start with china. it is good when we see growth coming in better than was estimated out of china. this does open up more opportunities to deliver the economy. is that the subtext on growth? right when you said about the predictability of figures. no one will be surprised by that number. and certainly i think it is becoming the consensus that growth has stabilized in china. and certainly that is the stock -- the view the stock market is taking. last year was a banner year for chinese equities. that is what concerns me. now. built into the price what concerns me is 2018 might be a more difficult year, a more volatile year. concerns have not gone away. there is a squeeze on pollution that is slowin

he was at the helm of the pboc in 2016 moment had the surprise depreciation.ing bumps along the way in china's reform and opening up. he is a proponent in that. as i said, he has been pushing onongly for a concentration this issue and risking in the shadow banking area. premier is thee cppcc.cc --cppc he has been tipped ahead of the entity. i don't think this is a huge surprise. i need to look into it in a bit more details. figure tradeknown he has played a role in the relationship between the u.s. and china. he is seen by many in the u.s. to andone they could go they have a decent relationship with. he is seen as being more and the context of chinese communist party politics. he is certainly an important person at the top of the power structure in china and important when it comes to u.s./china relations. yvonne: a lot of important parts. thank you tom mackenzie and joe to -- jodie snyder. innovation challenges. the ceo looks to expand the core pharmaceutical business. our interview from dabbles in half an hour. betty: investors weigh out president trump's ag

no, the pboc, the benchmark rate, or will they continue to actively manage but offer these lower keying the money market? said, the pboc will have the ability to have a more active monetary policy to give stability to the renminbi, so for the a-share market, it will have at least 10% gains this year because valuation is not extremely high, especially compared to when -- 10 years ago. we cannot just wait and see. aware that there is some volatility has well in the mainland market, but generally speaking, i think the bull market, especially on the growand, will continue to in the first half at least for this year. rishaad: thank you very much indeed. >> rishaad: thank you. , fear it non-plans to sell more stakes in state-owned companies. we have an interview with the deputy prime minister. this is bloomberg. ♪ this is bloomberg. ♪ haidi: the white house will decide on a day to day basis whether president trump and officials will attend the world economic forum in davos. the final decision has not been made, with the president two to fly on switzerland on january 25. deputy primenam's m

ago and will execute our plans and the way we think it, and we will do this coordinating with the pboc's talk in broader terms about central banks and the uncoordinated into two asset purchases. should the ecb in your estimation set a definite ending for bond purchases? europe is muchin stronger than it was. growth has really returned to europe. it has also now a positive impact on the labor markets you would have hoped for, and the sentiment in many countries including germany is at an all-time high. all of this means the economy is growing. next year, above trend. it also means we are closing the output gap and going in the right direction. this is the background for any monetary policy decisions. happen, wes going to have to be clear about the fact that we are still in a very expansionary monetary policy, which is justified because the inflation numbers are not there yet. they are not as negative, but inflation has had ups and downs and they are not fully at the price stability target. nevertheless, while we are talking about not breaking the car, but taking the foot off the gas ped

haidi: yes, absolutely a conundrum as to what the pboc might do next on this. course, and we will be joined by a guest from hong kong talking about the rejection of the u.s. money gram financial bid. the big question is about how the chinese payment technology goes international. she thinks that it could be a long way. this is it for daybreak australia, this is bloomberg. ♪ ♪ yvonne: 7:00 a.m., here in hong kong. live from bloomberg headquarters, i am yvonne man, welcome to daybreak asia. markets are set to take a breather after the u.s. holiday and the dollar sinks for a fourth straight session, helping the aussie and the kiwi. of onlinetarget platforms and mobile apps. i am betty liu here in hong kong in it it is just after 6 p.m. on this monday evening. the iron or shipments hit a record with automation helping boost productivity. plus the

what does this do to the pboc?ink it encourages them in their beliefs that they want their currency to trade quietly, not be a source of concern, and allow them to get their balance. china is still all about stability. they want stability. they don't want a currency that is too strong. but the moment the currency stops strengthening, reserves almost immediately stop growing. chinese are buying foreign assets, treasuries, keeping the bond market ongoing. when they back off, everything is hunky-dory. when this happened in september, as soon as the chinese signaled a change in policy, we talk 10-year -- from just over 2% all the way up to 2.4% quite quickly. we are just doing it again. anna: thank you very much. kit juckes from societe generale stays with us. manus: you can hop on to radio. you've got bloomberg radio on your digital device. is in the london area. matthew sits down with the team to talk about bonds. , whetheroin the chorus it is a bear market or not. anna: coming up, a warning to brussels. u.k. ministe

tight, the pboc moved in decisively, trying to inject liquidity into the system. you look at how the stock market has done, june 2013 is actually the lowest point for the chinese stock market in recent years. ever since then, the chinese market has been moving up. yearld say yes, this because of the leverage in the system across the many years, the leverage is very high and risk is also rising. at the same time, the government can be very resourceful. yvonne: only time for one more question. what is the cautionary tale here? this is a time when china is looking to the market for financing when it comes to projects like one belt, one road. i'm guessing for an projects will be called upon for that. what should they be cognizant of? >> that's a good question. stephen: i was thinking the same thing, that's a good question. >> very good question. within rating agencies, there seems to be concerned about china's leverage level. at the same time, just keep in mind that much of the financing is domestically -- is done domestically. china does not have so much foreign debt

he is also a former pboc economist. thank you for joining us, happy new year.er numbers. they were quite striking. at least in the picture of global growth. it looks like we are ending 2017 on a strong note, 29%. how long can china keep trading these double-digit numbers when it comes to exports? ding shuang: it supports the view that the external environment is still high quality. andntly including the pmi, also the new export order from china, suggested solid growth of china's foreign trade has been maintained. in december we forecasted export growth of 9% and import growth of 14%. that puts annual export growth to 8% and import growth to about 17%. that is a major improvement, comparatively to 2016. the foreign trade surplus could narrow. it dropped by about 20%. in 2018 we expect not only solid growth from europe and u.s., but africa, middle east and latin america. generally favorable environment would encourage the chinese government to purchase deleveraging. are still expecting 6.5 percent growth in 2018 for china. we see a lot of economist in the last co

it is clear that the pboc did not like the volatility and the side effects. to be in control of the domestic monetary situation. yvonne: they got rid of the cyclical factor that was supposed to reduce volatility. kit: that has helped. but they don't want to go back to a weak currency that results in large capital outflows, losing control of the situation. they had an experiment and really, really want control. it is the price of control, a slightly stronger currency. strong on as not weighted basis, it is fine. but it is strong against everything. stronger a weaker move against the basket or the euro and dollar, i think they would start to get concerned. my sense is, when push comes to stroke -- when push comes to shove, the pboc wants control over domestic money, more than a wants the weaker currency that would be helpful. the: i want to go back to bloomberg terminal with that seasonality function for the dollar, the dixie currency. this is seasonality, 2013, 2 .33% down. last time we saw that was more than 30 years ago for january. looking ahead to what the

the pboc might intervene. the euros gains against a weakening u.s.lar, might continue if gains continue to be seen and inflation. ecb's representative said that this is something to be seen. investigators are trying to work thewhy a floor at indonesian stock exchange collapsed. police say that they found no trace of explosives. turmoil has not been affected despite the turmoil, and the indonesian market we started after its usual lunch break, with the benchmark edging higher. have a feudb states brewing again, after a emirates flight to dubai the was stopped by qatar. an xl qatari royal said he was being held against his -- an exiled qatari royal said he was being held against his will in the uae, something which is also been denied. this is bloomberg. rows, thank you very much. even though u.s. markets were closed, the decline of the u.s. dollar dominated, falling for a fourth day, the longest losing streak since january last year. it is putting pressure on cryptocurrencies. let us talk about the major dollar.es and the sue: yes, even though markets

the pboc pump in a net $42 more than agreements offset maturities, around $93 billion is set to leavehe financial system. of the irisher rock band "the cranberries" has died at 46. she was pronounced dead in london at a hotel where she traveled for a recording session. police are treating the death as unexplained. she sold more than $40 million worldwide and was best known for singles linger and zombie. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. matt: thanks very much. the dollar halted its decline this morning, but bloomberg's index has made the greenback the worst performing currency in the last year. is this dollar weakness distorting our view of the markets? cudmore, bloomberg mliv strategist joining us from singapore. -- the reason you say the dollar weakness is distorting our view of the market is mainly because commodities are all priced in dollars, so the gains we think we see in oil and -- the reason you sayothers r'g as you are holding them in other currencies. mark: absolutely, that is the la

in terms of what happens next from the pboc, will they go in syncopation with the fed?ecause they don't want that differential to widen. anna: and what does the global growth from the chinese mean for the reserves as well? and the trade tensions? we will talk about that for the program. a host of great guests to discuss that with. wewill also be hearing more, have an exclusive conversation with sergio ermotti. our colleagues in china are catching up with him, and we will bring you more from that conversation, what he had to say about china, and his thoughts on european politics and economics. let's get the first word news with juliette saly. u.s.,te: anna, in the steve bannon has issued a lengthy apology to donald trump and his family over comments in the book "fire in theory." the former white house chief strategist said he is "a patriot and a good man" after michael wolff's book attributed comments to been in over his meeting with russian nationals to get damaging information on hill dickinson -- on hillary clinton, saying it was treasonous and unpatriotic. in the u.k

. -- haidi: what does that mean for the pboc?pect more of a convergence when it comes to policy? we had that surprise to the money market rate in the end of last year. >> the bbo see policy language has been unchanged. the monetary policy has been on that site since 2017. one example is that the extra credit conditioning has been decelerating. it is related to the financial deleveraging which will continue in 2018. the policy rate following the path of the hike in 2018. we don't expect any change, but i will say that probability of the interest rate is increasing at this moment. rates, wend repo think it will be three moves to the upside. it is there to keep an eye on what the fed is doing. >> there are now three sets of interest rates in china. the benchmark policy rate has not changed. if you look at mark interests, it is much faster. the consistency between the three sets of interest rates. it truly is what it is. rishaad: since may have 2016, what was the signal of the dollar weakness story? >> the currency is at a less monet

francine: what can you tell us about deleveraging and how soon can we have a new pboc chairman?e consensus of analysts that this number for 2017 does give them room to sort of push a little bit harder on the deleveraging front. their aim has been for the past year to cleanse risk from the financial markets that has taken many forms. most of it targeted at trying to slow this really rampant credit growth that has taken hold in china since the global financial crisis as they basically leveraged or spent their way to that really strong growth rate or stable growth rate at any rate. in terms of where we are at with the pboc governor, there hasn't been any word on that we have the national people's congress coming up at the beginning of march and there are some expectations that the new governor will be replaced. -- announced. tom: on a relative basis, that seems outstanding. do they treat sub7% g.d.p. given the global economy with the same enthusiasm they treated 8% g.d.p.? >> yeah. there has definitely been a managing of expectations over the past couple of years by the state media

setting -- pboc setting the yuan at a strong level. ground withing other currencies.are up. the shanghai composite drag lower by telcos and i.t. stocks. over in hong kong, the exuberance is real. the hang seng gunning for its highs close since the inception and is set to clock a 15th day of gains. this is before the earnings onslaught, the bulk of which will come in february. leading the pack is sands china, rising 5.5%, the most since july 2016. it was upgraded on expectations the mass segment will sustain the sectors of trend this year, so helping to boost the gaming sector in hong kong. ping an leading insurers. country garden retreating from its record high last week. that. thank you for let's get first word news with paul allen. has been told that xiaomi has selected morgan stanley and goldman sachs for its planned ipo, which could target a valuation of as much as 100 are you and dollars. at a $45ised money billion by the way in 2014. it has yet to decide on the timing and location of the share sale. earnednian tanker that after a collision off shanghai has explo

now that the pboc is making the right decision in managing their portfolio.us here in hong kong. you can get a roundup of the stories you need to know in today's edition of "daybreak." go on your terminals. also available on your mobile in your bloomberg anywhere app. you can customize your settings so you get news on industry and assets that you care about. this is bloomberg. ♪ >> checking shares in petroleum falling to 9/10 of percent in sydney. they reported total for your production fell 11% to 84 point 4 million barrels of oil equivalent in time with the october revised guidance. between 85 and 90 million barrels of oil equivalent for the whole of 2018. they expect a significant increase in annual lng production at its facility coming online. shares doing this. ore output rising 3% on improved rail and plant performance. shares of 1%. a performance putting it on target for record annual production. output was 61.6 million metric ins when the month ended december. 60 million tons a year earlier. the world's biggest miner cuts targets atal output the broad

they are also meant to announce a new pboc governor any minute. are now starting to get a shift in the japanese economy. inflation numbers started to show a little bit of a pickup. you've got some inflation finally coming through in japan. you've got nominal growth in japan starting to pick up. that is a big success. year, awhat we saw last linkage between dollar-yen and profit growth. if you look globally, japan is the best area. you are a lot of upward momentum. francine: if you look at the biggest risks in the asia region, is china not something we should worry about? james: completely. we talk about a lot of risks. inflation as a risk, geopolitics as a risk. the other risk is china. they are tightening financial conditions. we know they want to deleverage the economy. in the past, when they tried to do that, they didn't get it right. economists isr they are doing it at a much better time. you get the poll from the global economy. francine: thank you so much for joining us. james barty from bank of america merrill lynch. "bloomberg surveillance

pboc official has said there is room for an increase in interest rates in the short-term because prices profitability have improved. says the central bank thanks higher interest rates would help squeeze asset bubbles and restraint expansion. expects a 25 basis point hike this year. saysellor angela merkel germany needs stable government as she begins make or break with to renew her alliance social democrats and open the door to a fourth term. the coalition began exploratory talks on sunday. europe's biggest economy has faced three months of postelection stalemate after angela merkel failed to win an outright majority. theresa may has told the bbc a cabinet shuffle -- reshuffle is coming soon. the telegraph says a minister will be appointed for leaving the eu without a trade deal. the times is reporting that senior ministers are all likely to remain in their posts. saysstray his government iron ore is in for a bumpy ride. it says prices will average just over $52 a ton for the full year , although they may be higher in the first half as china relaxes curbs on steel output. the industry a

francine: we have not even talked about the pboc governor.pecting an announcement within the next couple of weeks or months. how much do we care about the pboc? the former one repeatedly argued about deleveraging. policycentral bank dictated by the authorities? they: of coursed, in bigger picture sense, it is a political decision made at the highest level. but we definitely need a very, very capable set of individuals at the central bank. if nothing else, just to alert, worn and forewarn on potential issues. in thegest imbalances world are in china and they are both in the purview of the central bank. creditst is excessive growth. the second is the imbalance in the capital account. there is still strong demand for overseas assets. while it is not apparent today, it will resurface in how the central bank manages. francine: it will resurface in 2018? larry: no, i think if we think of the term of somebody who runs the central bank, we think of the term of that individual. francine: we were talking about donald trump and president xi speaking on

ubs says the pboc will stay the course on interest rates in the next two years.alk to their to china economist. that is next. this is bloomberg. ♪ yvonne: this is "daybreak asia," and i'm yvonne may in hong kong. betty: i am betty liu. a rebound to 1.9%. that is well below the government prosecutors and target. little pressure for the federal bank to tighten monetary policy. expectt guests does not any rate change the 2019. let's cross over have to ubs greater china conference in shanghai where tom mackenzie is standing by with the bank's chief china economist. tom. you.betty, thank joined by the chief china economist at ubs. time thisfor your morning. as but he was saying, we got the inflation data out tomorrow for china. what are you forecasting for cpi and ppi? >> our forecast is cpi will have a bit of a rebound to 1.8%. to decelerate. tom: is that posing a risk for profits? the corporate did pretty well as producer prices picked up last year. is that a risk for corporate china? >> ppi rising was driven by upstream prices. all materials and commodities. while

we did have the pboc weakening the most since september. it has been upgraded from goldman.have seen a lot of movement in korean ship makers as well. a bit of a flat session coming through on the regional index. ♪ emily: this is "bloomberg technology." i am emily chang. microsoft says fixes for security flaws in chips could slow down some servers and pcs. the statement suggests the slowdown could be more substantial than previously indicated. intel confirmed its chips were vulnerable to hacking. intel chips are used in more than 90% of laptops. technologies is exploring strategic alternatives. according to people familiar with the matter, the company is under pressure from elliott management. the activist investor has said it would seek talks with the company. is working with morgan stanley as an advisor. one of bitcoins most outspoken champions plans to build the goldman sachs of crypto. michael november says he will start a bank dedicated to cryptocurrencies. our editor at large, cory johnson, is in new york. two editor at large is. cory's shoes are too large for me to fil

>> he has been such a popular so successful pboc governor i don't expect much change once that does occur. piece these items together and say we are seeing them removing this even if it is convenient at this moment also in line with the discussion we aboutaving yesterday opening up the financial sector. can we tie these pieces together to any extent? >> governor had some essays recently discussing where china needs to go, where it's been. tie it intond of that. in this particular instance its convenience. if the currency wasn't at a level where they thought they could do this they wouldn't have done it. julia: that was nice. the minsky moment. scarlet: when he brought up the risk of things going pear-shaped with the lack of volatility. in mirrored in chinese financial markets to the same extent? you look at correlations and whatever should happen doesn't necessarily always happen in china. i haven't been looking at the sector specific stuff within china but it's a completely different animal i would say. up the gap between bitcoin crisis and the united dates continues to grow. why is it s

the -- becauses the pboc changed the range for fixing its exchange rate and the currency is back up to these are little signals as to how central banks are going to work in the next several quarters. also higherndex is for a second day thanks to the rising yield. it's also a testament to how important the asian central banks are going to be in the coming years. that may be want to point out bitcoin. it's down for another day. 14,850. trimming some of those losses now. let's stay on markets. equity euphoria grips the world. withburger is here sentiment stands and what may come next. this wordwing a lot euphoria. over a year ago everyone was calling it the bull market. do you want this chart first? >> i really like that chart because i think it just shows the breadth of this rally. i like this one because it is not just u.s. stocks. this is emerging markets. this is asia, japan, world indexes. the only one if you are looking at developed nations that isn't at overbought territories -- this is relative strength index. this measures the momentum and speed that the equity indexes are rising

boost them getting a after the pboc script the countercyclical factor for the yuan.-market currencies as well. the japanese yen gaining half a theirt after the boj cut bond purchases. sign up for the balance of power newsletter at the politics.com -- bloomberg politics.com. david: coming up, michael neidorff will be on to discuss how the new tax care is changing the health-care landscape. you can catch all of our interviews on the bloomberg with our function tv . live from new york, this is bloomberg. ♪ scarlet: i'm scarlet fu. julia: and i'm julia chatterley. welcome to bloomberg markets. ♪ at bloomberge live world headquarters in new york. here are the top stories we are covering on the bloomberg and from around the world. daca debate. president trump singh moments ago that his meeting with members of congress was "very good." china's fx whirlwind. a long-held policy that is seen as support for the currency is scrapped. plus we will be speaking with the ceo of centene about how the new tax law is changing the obamacare landscape. plus will he be making any deal

zhou has been interest of the pboc since 2002, making the longest serving governor.el of reasons markets are t now. you have markets at record highs. you - -of brazilian judges increased prison sentence to more than 12 years. it all but kills chances in his october presidential election. the sao paulo stock exchange closed at a record high. up 3%.l was >> checking markets midsession abouthursday, it is all the davos dollar dilemma, the weakness in the u.s. currency pushing up currencies. 1%.an yuan up as high as a south korean government official saying they are monitoring the move. the japanese yen in focus. all of that pushing. mixed movement in these equity asian markets. tech players sold off yesterday coming back after the selloff. you have the halt in the raleigh we have seen in the h share index. eherally we have seen in in th h share index. it has been driven by the financials. we have seen a halt in that market after 19 sessions of gains. a quick check of em currencies. checking this chart. south korea says they are monitoring these extensive movements in th

>> the pboc is on a tightening trajectory we think rates will creep higher, maybe from 2.5%, 2.75% later this year. so the direction of travel is for tighter monetary policy. having said that, we don't think there's going to be material spillover. if anything, a couple days ago we witnessed a change in the yuan and renminbi, which suggests the chinese authorities are more comfortable removing the counter cyclical factor, which suggests the chinese authorities are more comfortable having seen more volatility in the renminbi so we don't think there's going to be major spillover in terms of broader markets on the chinese front, we're watching closely the threat of ramp up of protectionism from the trump administration i think that's relevant for china, for nafta, we could see trade actions on aluminum, steel, intellectual property, we will see whether that leads to a tit-for-tat for a u.s./china trade policy >> broadening out the discussion it's remarkable how well em as an asset class has performed in the last year. going into 2018, given that we know the fed may hike four times this year,

is suggested, it doesn't have an immediate impact on growth >> i want to ask about the currency the pboc removed the counter cyclical buffer. some people interpret that as first steps towards liberalizing the dollar/yuan what is your view on the trajectory >> i think it's the pobc were concerned that the country was too strong measures were brought in to protect the market from getting built up they're probably seeing dollar is weakening t they don't want it to get too strong they can pretend its liberalization, it makes them look good, but it's basically the dollar is weak, let's step back our call for this year is largely predicated on the dollar view we expect a weaker dollar over the next couple of years, but i think they will deliver on strength >> perhaps keeping interest rate policy as it is? >> i think we'll see a shift in the way they do their interest rate policy. the benchmark lending and deposit rates don't really matter anymore, it's more about open market operations they have to choose a new instrument >> craig, thank you very much for that and for bringing us the latest on

at the end of last year, the last one in december, was to minimize risks this year you will get the pbocthe central bank, controlling liquidity, trying to tighten but basically not trying to cut off the flow of funds into the market and to companies where earnings have been quite good and companies are able to pay back a certain amount of debt. so you will get this keeping up on liquidity but making money more expensive >> looking back on 2017 and the chinese stock market, it was a great year on the surface. if you drill down deeper, some of the strength was boosted by tech stocks according to what we saw in the u.s and also by the large caps do you think 2018 will be a year where smaller caps and mid caps tend to benefit from de-leveraging? >> they should do. but you have this big runaway with the tech stocks, as you say. and some of the bigger state companies, they're listed and doing better which is all part of the story of china inc doing well and finding a more stable growth path in that process you will get the smaller and mid cap companies probably fighting for position here this

when do we get a new pboc governor? neil: we should this year.ake several months. what is his or her number one priority? neil: of course, all the words and communication out of beijing will be about financial stability. they've got this run-up in private sector debt, particularly state owned companies and try to manage that and the fallout. some of that is going to go bad. they've got to manage that alongside -- the economy is slowing, so the consensus view is what that means is actually they focus on the financial stability risk and key policy relatively tight and rein in credit. lose -- loosen policy and cushion the slowdown, that has been the experience over the past couple years. tom: steps right in. 4%, 5% would be loosening. neil shearing with us and we will continue. enda you and occur in -- curran as well. this is proving successful for a lot of people. the bonus round of should come over here and click on any given segment and here is that chart, better bonus, the log bloomberg dollar index. you can steal that and dazzle neil shearing.

haidi: what is the threshold for the pboc when it comes to the yuan? see pushback. everyone keeps saying to look at the basket but the dollar versus the yuan is still pretty key. mark: the optics for dollar versus the yuan do still dominate the market, i think irrationally so. if you look at the history, it was lowered a few years ago. yes it has kind of outperformed the bloomberg dollar index. but overall yuan strength seems justified. chinese growth has stayed remarkably strong around 6.5% again this year. last year it beat expectations. the yuan offers a high real yield and low volatility. overall you have a growth and yield story and not much of a risk story because it is controlled. it seems like the argument for yuan strength is still there and it seems unreasonable for the pboc to push back too soon on this move. mark, thank you. let's get more on what we're watching out for this week when it relates to markets. viktor, always good to see you. this rally keeps going on and on and on. remember when chuck prince said when the music is on you have

in china there has been a strong signal that the pboc's long-standing governor may be read -- maybe readyo tire. he is not being reselected as a member of the countries 13th national committee. his absence signals he is likely to retire from the central bank before march when the conference usually holds its annual meeting. bazillion appeals court has unanimously upheld a sentence against former president -- against the former president. they voted to increase his prison sentence to over 12 years. it overkill since chances -- it overkill's his chances of winning the election. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . checking in on the markets here in asia. a little bit of a mixed picture. closing out the session down by 1.1%. you have seen hong kong's hang seng snap that record winning streak. chinese chairs listed in hong kong, they've been up for 90 sessions -- chinese shares listed in hong kong, they have been up for 90 sessions. hyundai of stocks, coming under a little bit