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00:00Very good morning I'm Heidi Stroud what's in Sydney. We are counting down to Asia's major market opens. Shery Ahn in New York. Welcome to the BRIC Asia. Our top story this hour Asian traders weigh a tough session on Wall Street with the NASA falling into correction territory. President Biden marks one year in office with a wide ranging news conference backing the Fed's plan to scale back stimulus to curb inflation. And Chinese lenders looks set to cut borrowing costs again backing the PBS pledge of further easing to stabilize the economy. Well Sherry let's get you straight to the open here in Australia and Sydney stocks are looking to try and come off that back foot. We had so much pressure when it comes to that Asian sell off. We're seeing just staying afloat at the moment. When it comes to the first few seconds or so of trading there we do have consumer inflation expectations a gauge due out later today as well as some crucial December jobs numbers. Given the pressure on the labor market at the moment with the macro and driven supply chain and labor shortage and of course the borders having been closed for about two years just exacerbating that as well. We did see Sydney stocks really seeing that big drop yesterday. Kiwi stocks also suffering. It's worth session in August. Yea we're seeing not much positivity when it comes to trading in New Zealand. NIKKEI futures looking pretty flat at the moment. We are monitoring yet more reports about a potential increase when it comes to the Covid-19 alert level as well as watching some of these antigen testing manufacturers as well. Shery Ahn. Given that we had the government calling on foster manufacturing of these testing kits. And Heidi of course we're coming off that press conference by President Biden marking his one year in office. He talked about everything from inflation saying that the Federal Reserve's job is to reign in price pressures not to mention of course questions about Ukraine and Russia saying that he's considering a summit with President Vladimir Putin. Of course we know that Russia has an estimated 100000 Russian troops on the border. He also talked about China and U.S. relations saying that he is not yet ready to ease tariffs on the country. Let's bring in our political news director Jody Schneider for more on all of these issues. And Jody he really seemed intent to make it clear that he understands the American public's frustration when it comes to not only prices continuing to rise but also Covid-19. That's right. Is that what you call the wide ranging news conference. An hour and a half long. He hadn't given one in a while so he appeared. He kept saying drumming answer more questions. Do you want me to answer more questions. But he made clear from the very beginning that Covid remains a challenge. And that has been the challenge in his first year where he basically brought up the vaccines. But that wasn't enough. Getting people to take them became a problem. And then the economy's supply. Supply chain disruptions the inflation highest in a very long time. And he said these sort of things the government is working on. But he also interestingly said it's the Fed that needs to deal with inflation. He agrees with that path that the Fed is on and that there will be these interest rate increases soon but that it is the Fed that has to do this and that things are working. They are working on this but it will take some time. He didn't promise any quick fixes. Jody he also of course touched on geopolitics when asked about Russia and Ukraine. He believes that Putin will move in. Those were his words. That's right. That was one of what we call the red headlines that came out on the Bloomberg terminal during this news conference that he says he believes that he thinks that Putin probably will move that he is he and U.S. allies are trying to do what they can to stop that. But it will be Putin's decision. And he said he is ready for that wants perhaps a summit. But but basically gave that kind of very sober answer to that question of whether he thinks that Putin will move in the Ukraine. And of course he also talked about his legislative agenda. Right. A lot of the setbacks that he's faced perhaps a little bit of alluding that he's not really done that well perhaps on many fronts. Of course we do have the Senate votes today on voting rights as well which has been another setback for him. What was his take away with everything that's happening on the domestic front. Yeah of course as the president kind of he's the chief spokesman for the government if you will as well. And he was trying to put a good face on it saying no one had done as much as he had done in his first year particularly with regard to getting those vaccines out and getting that relief in the hands of families and businesses. But at the same time he acknowledged that it has been difficult to pass that build back better plan and said they may have to split off parts of it. That was another red headline from the terminal that we put out during this news conference on in terms of the legislative agenda. He said he's trying it's very hard with a split Congress. He did say that there's still a lot of divisions in government. But he did say that he he thought that he could get some of these things done and was confident he could though he acknowledged the voting rights is very likely and almost certainly going to going to fail in the next day. Jody he was also asked about the potential easing of tariffs on China and those commitments. What was his response there. Yeah. He was pretty straightforward there saying he doesn't see those tariffs coming off anytime soon. These are of course the tariffs that his predecessor Donald Trump had put in place. He said China has not lived up to its commitments for those tariffs to be able to come off. The Biden administration had said that it was going to have a new China policy that would be announced. He said that his trade adviser Ty is working on that. However he did not given the indication that there would be a change in policy to China regarding those tariffs anytime soon. Jihye Lee Schneider here with us with the latest on President Biden's comments with his press conference marking his one year in office. And of course we are now seeing U.S. futures muted at the open. We have seen some choppy trading in the New York session. Traders weighing in earnings and the implications of tighter monetary policy. Our next guest says the current reporting season will likely be full of upside surprises. Let's bring in Rebecca Felton senior market strategist at Riverfront Investment Group. Rebecca is good to have you with us. You are pretty positive about earnings growth. You wonder what happens to those upon the positive valuation numbers. If we do continue to see rates rising. Well we believe and thank you so much for having me. We do believe that stocks can continue to go higher even as the Fed changes policy. Historically rate hikes have not necessarily dampened over the next 12 months. What stocks do I mean in the in the period where the policies are changing. It is it's a little bit more muddled. But if you look at the earnings season that we're going through right now so far it's been a little rocky. It's not like what we've seen in the past several quarters where we've had plenty of beats and the numbers are probably still going to come in higher than what consensus is expecting. But really what's more important is the commentary which is really a barometer around price pressures wage pressures and the like and what tone that sets as we move into a year where we're going to see Q2 you want Q2 and Q3 earnings probably be in single digits. And that's where it's going to get a little tricky around selection. How are you factoring in perhaps the fiscal stimulus measures that we've seen of course we have caught President Biden and talk about his legislative agenda. We have seen the spending bill also at some point filter through the economy once those structural plans take place. But at the same time monetary tightening on the other hand. Well the if the build back better legislation does get passed it will likely be smaller. And it's really important to remember that that money would be spent over a period of years. And to your point we would be seeing the rate of inflation still moving a little higher. And of course interest rates going up. So it will be I think a little bit of a headwind. And that's why we do expect that there will be volatility this year. We've positioned to continue to take advantage of sort of growth excelling. So we still have technology specifically software but we've also added back cyclicality. We recently shored up our underweight to energy because we do expect oil prices will remain high for the foreseeable future. But we've also got exposure and conglomerate conglomerates logistics machinery and we've added back to financials. So we still are doing that barbell of growth as well as exposure to cyclicality. Rebecca when it comes to international exposure you say China is one of the biggest problems one of the biggest risks. It's also seen by a lot of analysts as being one of the biggest opportunities given the drive down that we've seen in valuation. Does that the easing by the PRC see the sort of efforts to shore up the economy alleviate that risk somewhat. Well it absolutely alleviate some of the risk in terms of allowing for more growth but we are concerned also about the the government's overreach into the various sectors. We've seen tighter regulatory environments and there doesn't seem to be a rhyme or reason as to which sectors are chosen. So we think that the risks there still outweigh the benefit. And so that is why we're staying underweight emerging markets. What opportunities do you like in fixed income at the moment. Well we're underweight fixed income because we still believe you know if you look at the AG this year it's it's down not as much as the S & P. But folks aren't happy you know that their bond portfolios are down too. And we expect that that type of activity is still going to keep pressure on bonds. And so we're underweight fixed income using it as a buffer against downside volatility in equities. But we have recently added back some high yield willing to take the credit risk. And we think the credit risk is low and that's how we're generating some income in our balanced portfolios right now. Marco Felton always great to have you with us and your market strategist at Riverfront Investment Group. Let's get you to Vonnie Quinn who's in New York with our first read headlines Money. Thanks Heidi and good morning. Chinese lenders are expected to lower borrowing costs on Thursday for a second month. Several economists tell us both the one year and five year loan prime rates are likely to be cut. These usually move in lockstep with the one year medium lending facility rate which the BBC cut on Monday by 10 basis points. The Chinese central bank has pledged to further easing to stabilize the economy. China says it has detected a cluster of Covid cases linked to a cold chain facility in Beijing. Five workers at the center have tested positive of which three have the more severe Delta variant. Authorities are still investigating the source of the infection. The cold chain facility deals with imported frozen goods which Chinese health officials claim can be a source of transmission. New research shows booster shots with messenger RNA vaccines fail to block Omicron. Scientists focused on a group of German visitors to South Africa who experienced Covid infections. All had booster doses but experienced mild or moderate symptoms. The researchers say that highlights the need to fight the pandemic with measures besides vaccination such as social distancing and mask wearing. UK Prime Minister Boris Johnson has rebuffed new calls for him to resign over alleged breaches of lockdown rules. The defection of one of his employees to the opposition Labour Party has again raised the stakes. And a former Cabinet colleague and Brexit ally David Davies told Parliament that Johnson should resign. However backers say Johnson still retains overwhelming support in the ruling Conservative Party. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries and Vonnie Quinn. This is Bloomberg Cherry by Bondi. Coming up next more big bank earnings. But one theme remains the same. The wage wars are heating up. We break down the results with the UN Capital Group. Plus one of Hong Kong's few. He is chief focus family offices tells us how they're building long term wealth through sustainable investments. This is Bloomberg. The situation that business leaders are facing which is a large amount of uncertainty. All our lives are centered on the fourth pandemic recovery before the end of this year. We'll get to it to a better place. The Fed is going to move in and begin to raise rates. The question this year is going to be a constant sort of tradeoff between whether the market believes that the Fed and the other central banks have really got the gumption to raise rates aggressively enough. The U.S. China situation does create challenges for any company to find a pathway through that. We may see some ups and downs because of temporary macro issues but I think long term will be fine. This year should be a better year than 2021 and 2020. Some industry leaders at the Bloomberg. The Year Ahead conference discussing their outlook for 2022. Let's turn now to U.S. bank earnings with Morgan Stanley and Bank of America rounding out what's been a mixed season for the big Wall Street names. Morgan Stanley the lender is raising its profitability targets for the longer term while stock trading revenues surprise with a 13 percent jump. And Bank of America results show long growth returning as consumers and businesses start borrowing again. Average loan balances rose 1 percent. Meanwhile sales and trading business fell short of expectations. Let's delve into the latest bank results with Richard Beauvais financial strategist and only on Capital Group. Richard it's good to have you with us. What stands out to you in this bank earnings season. Well I think you have to break the earnings into three categories. One is you know what a traditional bank does which is making loans and hoping to get higher prices to get better margins. That business looks pretty good. Basically the strength of lending in the banking industry has turned around completely from where it was a year ago. The second segment would be the capital markets area which would be investment banking trading et cetera. I don't think that looks particularly good for 2022. I think that the Fed is going to have to take some pretty dramatic steps to correct the problems in its own balance sheet. And in so doing it's going to slow down money supply growth. And therefore I don't think that the companies that are associated with those businesses are going to do well. The third segment is accounting. Basically a couple of years ago the accountants made the banks increase their reserves dramatically. When that happened bank earnings went way down last year. It was determined that those reserves are too high and therefore bank earnings went way up. So in 2022 they can't play around with bank accounting and therefore that's going to be a negative drag on earnings for companies names. Each one of the concepts if you're looking for lending banks which you should be looking for you would look at Key Corp. Comerica fifth third line agents mutual. If you're looking at the capital markets paints you stay away from Goldman Sachs Morgan Stanley J.P. Morgan. What do you make of the rising expenses especially when it comes to compensation whether it's junior bankers or the top elite of these firms. How much pressure are these wage increases going to exert on all of these banks. I don't think it'll exert any pressure whatsoever after this quarter. In other words if you take a look at Goldman Sachs they keep talking about the fact that they're going to pay higher and higher wages to get more talent whereas this talent is going to go which is going to where they can get paid more than Goldman Sachs. I think if you look at Goldman Sachs closely you recognize that this company is a partnership from their perspective. It's not a public company. They made a lot of money and they're going to put a bunch of it in their pockets. And I think that's all we're looking at. If the business is weaker in 2022 which I believe and strongly believe it will be those those bonuses will go away. Those salaries will be cut. And this whole talk about finding talent by increasing prices will evaporate. It's not just about the wage costs right. You say where can they go where they're paid as much. Maybe not many other places but they can go to places where they have a better work life balance and better culture because that's been one of the big themes for banks over the past twelve months. You know I I have tears over my shirt worrying about these guys who were making 10 12 million dollars a year because they have to work for me. You know it's it's a joke. You know this whole thing a lot of these poor guys are not getting paid enough because they're making a few million bucks because they have to work a lot of time. What if you were a fireman or a policeman. Those guys getting paid a few million bucks you know for night work you know for the work that they do. No they're not even getting paid a tenth of that. So I think that this whole thing about you know where is the money going is really an issue of hey we want the money. We want to take it for ourselves. We don't think the stockholders should get it. And therefore that a fair sense a lot of money and unify the market all these excuses as to why we should take that money for ourselves. I don't buy it is obviously. Has this when it comes to the split in performance that we might see you take a look at the banks that are more exposed to capital markets investment those that are more exposed to commercial and retail. Who is going to come up better particularly if you think that maybe that higher rate expectation is already baked into stock prices. Well I'm not sure that the ISE expectation is built into stock prices. I would actually prefer to see that fairly come out with a 50 basis point hike in March. But I don't know if they have the guts to do that. But I think that Morgan Stanley is likely to do better. And if you will Goldman Sachs or JP Morgan basically because Morgan Stanley grants money it doesn't sell money. In other words it's going to big asset management wealth management division against bank obviously makes loans and loans are renting out dollars. So it's it's not at risk of loss which I think is going to be a big factor in 2022 for these companies. But it's still it's still not going to do terribly well because remember in the last almost two years OK the Fed created six billion dollars 6 billion dollars is something like 40 percent increase in the money supply. And it took eight years before that to create six billion dollars. Well these guys are in the money business. If you create 6 billion dollars and you give it to them and you say go out make more money on it you're going to make a lot of money which is what happened in 2020 and 2021 in 2022. Who's not going to be that money. It's not going to be created. There's gonna be a fight for money which is going to drive up interest rates from a market standpoint. And it's also going to cause real problems with nonbank financial companies. And with you know getting money in high yield markets in areas like that because you know you've got to get more money in order to put more money out. And these guys didn't pay anything for that money. This money is costing what 10 12 15 basis points. It's a joke. So this this era is over. It's going to change. And it's not going to be a pleasant change. Let me throw up this chart for our viewers because the expectation was that banks and Treasury yields would move together. We actually did see a very strong correlation in the past but that suddenly turned negative. It seems that even rising rates are not good enough for bank stocks to continue to rise. Is this all about the flattening yield curve that's also hurting the group. And I know that you are continuing to buy rating for J.P. Morgan despite the warnings on that stock. Explain to us why. Well basically if you're going into a period that will be as contentious as I think the coming coming one will be this year. You want to be with the best companies. You want to be with the best managements. You want to be with companies which are overloaded literally with hundreds of billions of dollars of cash. J.P. Morgan has wonderful management team. It has a well distributed to you if you will product line. It has hundreds of billions of dollars in cash. Morgan Stanley has you know huge amounts of cash. Bank of America has hundreds of billions of dollars in cash and securities. Those are the companies you want to sit with to protect yourself. If the situation turns out to be as dire as a particularly year. Richard great to have you with us Richard Burr financial strategist at Odeon Capital Group that with us. And you can get a roundup of the stories that you need to know to get your day going in today's edition of DAYBREAK. Bloomberg subscribers got a daily go on their terminals is also available on the mobile. In the Bloomberg anywhere you can customize those settings. So you just get the news on the industries and the assets that you care about. This is Bloomberg. Take a look at Marcus trading across Asia. We are seeing the ASX 200 being lower by tech and communication stocks. Energy also down two tenths of 1 percent of WTI is losing ground after rallying to that seven year high in the New York session. We are also seeing Kiwi stocks down three tenths of 1 percent while NIKKEI futures are also under pressure. We do have those trade numbers. This we're in that market. We'll be watching one big company as we have this big interview coming up. Nissan CEO Michael Barr which tells us how he is dealing with the chip squeeze and supply chain issues. That exclusive conversation coming up in a few hours time. This is Bloomberg. This is DAYBREAK Asia and Vonnie Quinn for first world headlines. China's cyber watchdog has denied reports it will put restrictions on tech deals. Reuters says the government agency will require Chinese tech giants to seek approval before making investments or raising funds. The new rules would reportedly apply to companies with more than 100 million users or revenue north of one point six billion dollars. The Cyberspace Administration of China says it has never issued such documents. U.S. Secretary of State Anthony Blinken has offered a show of support for Ukraine and meetings with the country's leaders in Kiev. The Biden administration says a Russian invasion of Ukraine could happen at any moments. Blinken will meet Russia's foreign minister on Friday and says diplomacy is still the best option. But repeated that some of Moscow's demands are nonstarters. U.S. aviation regulators say 62 percent of commercial aircraft are now approved for low visibility landings at most airports without fear of interference from 5G mobile services. New frequency bands AT & T and rising use for 5G or close to those needed for aircraft radar. But the FAA says new safety buffer is the companies agreed to this week also mean more airports where flights can safely operate. Turkey has reopened a key crude pipeline running from Iraq that was knocked out on Tuesday by an explosion. Officials say flows through the conduit are back at normal levels which is four hundred fifty thousand barrels a day. National energy company Boathouse is carrying out repairs to the damaged infrastructure. The explosion is said to have happened after a power pylon fell on a pipeline during bad weather sparking a fire. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts in more than 120 countries and Vonnie Quinn. This has been raised sharing rivaling the Chinese. Banks are expected to lower borrowing costs again after the PBL C CAC policy loan rates and signalled more easing to boost the economy. Bloomberg Global Economics and policy editor Kathleen Hays is here with a preview. Kathleen so these are lower quotes for the rates. Is this a done deal now. Well it certainly looks like it is. But let's see how the how this has been set up this week started off on Monday with the People's Bank of China PBS C cutting its MLS medium term lending facility. In fact cut it by more than expected 10 basis points. Then we get the deputy governor of the PBS seat Lou watching giving an extensive briefing to reporters where he says that the central bank has to act forcefully. They have to act quickly and preemptively to avoid a credit collapse a credit credit default in the property sector. So it's a pretty much a done deal because obviously now markets are expecting more action. In fact the Chinese Securities Journal says it's highly likely they will cut the LPA the loan prime rates today. They will take the steps necessary. The banks will follow through to get those rates lower. Take a look at this chart. And what you're seeing here is the medium term lending facility which is in green and excuse me. No it hit him blue and is standing right now at three point eight. It was cut by 10 basis points. So now the blue line. So she's the one you're NPR is going to be cut and the five year both by 10 basis points or possibly 10 and 5 regardless. This has been well cued up. It's also being applauded by a former PDC official. His name is Ching Chongjin. He's the former director of statistics at the BBC. He says right now the People's Bank of China has just window a small window of three or four months to ease policy. He's looking a lot of the Fed starting to hike rates perhaps more aggressively. So he said that could weaken yuan that could lead to capital outflows. The People's Bank of China has to move rapidly. He also warns that though to avoid flood like stimulus flowing into the property market he says the people see the government as real life. They can't depend on this sector anymore to support growth. And he's warning against doing too much there. At the same time Bloomberg Economics also the China Securities Journal saying in the first quarter they also expect to see the PBS seek cut its triple R rate again as it did in December. So the stimulus is cued up. The urgency is there Heidi. I think it would the bigger shock at all or would be if they didn't move it at all today. But clearly the PR is something that the banks set among themselves. 18 banks. It's the best rate they give their customers. They give that to the PBS. But they know they have to go in lockstep with the M L F which has already been cut. That's another reason to answer Shery Ahn question. It looks like a done deal. Global economics and policy areas are Kathleen Hays there. Well a Chinese developer shares and bonds also record rallies on Wednesday amid these reports that Beijing is considering a package of easing measures including allowing property firms across access I should say to much needed cash from presales of homes. Let's get the latest now from our chief North Asia correspondent Stephen Engle who joins us out of Hong Kong. And of course part of the easing credit conditions would also be beneficial as well. Is this a significant alleviation of the pressure that's built up on these stressed developers. Oh absolutely. If this does come to fruition it would be a major removal of a stumbling block for these developers and their liquidity crunch. Keep in mind that cash hoard of pre-sales generally speaking accounts for about nearly half of these developers inflows. So when you cut that off as many municipalities and governments in China did to these developers late last year it was like taking oxygen away from a dying patient. Right. They just didn't have the means to find other areas of liquidity and for funds to to remain viable. And that's why we've had this cash crunch and you know sitting on top of a mountain of indebtedness in the sector. And that's why we're sitting here right now. Now ISE Lena Dunham she's an analyst with credit sites. She says a relaxation of pre-sales restrictions would be an I quote her could be the biggest and arguably most important easing measure towards the property sector so far. And that is why yesterday in Hong Kong those property developer shares so embattled over the last year rallied considerably. Shares and the Bonds Country Garden and Sue next saw record gains in their bonds. Just days after tumbling to record lows stocks soared as well. You had a company like Agile Group which has been a favorite of short sellers. It's soared 13 percent the most since 2015. So you know sources are telling Bloomberg that there is potentially a package of easing coming from the housing ministry and other authorities including the banking regulator on alleviating this cash crunch by allowing these companies to access those presale funds. We've been talking about a shift in tone from Beijing about a potential turning point in the government's regulatory crackdown. Could this finally be it. The turning point is this the turning point. I mean the industry has been waiting for that turning point embedded and that's why we've seen so much volatility right in the bonds have been zigzagging up and down and you get one bit of good news and they go up and then they go back down the next day. So that's why we're a little bit who is watching it at least on tender hooks as far as what the market is going to show today because yesterday you had that big rally. Now there's these huge SUVs. If there's anything that yesterday's rally tells us is that there's huge sums of money waiting international money as well waiting to come into this embattled sector. And this perhaps is one of the the more pivotal pieces of news not news yet reports. But you know it clearly shows that there is money huge vast swaths of money ready to come in if indeed this easing measures come to fruition. But we have to wait and see. Our chief North Asia correspondent Simba Angle in Hong Kong following everything that's happening in China. And of course we're counting down to the start of trading Tokyo. And so here are some of the stories that we're watching today. For example trade data due this hour. We're expected to show a wider deficit last month in the back of a weaker yen and improving imports. We'll bring you those numbers when they break on the virus front. Now Tokyo's government reportedly planning to raise its alert to the highest level. We continue to see case numbers hit a new record and across the country. Also he touchy CEO Toshi Yaki Higashi Hada has told Bloomberg that the company is ready to sell its 40 percent stake in Hitachi transport system but wants to find the right industry partner. We'll be following those stocks over in South Korea. Finance Minister Hang Seng is holding a weekly emergency economic meeting. This is a government that works to finalize his extra budget proposal before submitting it to parliament next week. We'll be watching Korean bonds because we continue to see that sell off on that space given reports of this extra budget. We're also watching North Korean state media reporting that Kim Jong un has presided over a party meeting to discuss the nation's policy towards the U.S. data out of a few hours ago. Also showing that South Korean producer prices rose nearly 10 percent on the year in November. Those inflationary pressure is really worldwide. Coming up next one of Hong Kong's few ESG focus family offices tells us how they're building long term wealth through sustainable investments. This is Bloomberg. We are looking at avenues for building and preserving long term wealth. And this week we're speaking with district capital. This is the east arm of a single family office based in Hong Kong focused on sustainable food public health and climate solutions. Let's bring in their managing director Michael. Oh he's also an advocate for Asian families to integrate impact assessment and investment into their family office practices. Michael great to have you with us. So impact investment of course is something that a lot of funds are really prioritizing now. Is that the major driver in terms of the thematic investing that you do and how do you balance that with the need for these longer term stability and returns. Morning Heidi and thanks. Thanks for having us back. I think that this does thematics impact actually makes a lot of sense for around the offices anywhere in the world in terms of being the preserve and protect our assets over the long term is not something that has just come to our mind recently. I think ISE being more present and being more visible in the markets. It's a function of many things especially policy and the recent trend. But we were we were we've been focused on this strategy for at least a decade already. And we look forward to doing more in the field. When it comes to the demographics of the wealth in the families that you manage are you finding that there is a demographic shift in terms of a generational shift on what types of investors are more willing or interested in impact investing. I think there's definitely been an increased amount of discussion amongst the next generation. I think that the millennials and the younger the younger generation was really just coming to try and transition into wealth management at this point into the active ownership of it. They're asking last questions. They're there. They've been using their money and using their dollars to bolt for companies and they consume in the way that it's lying to their values. It's only a matter of time that they came to investment. And now that they've come to control more and more of the wealth of their families they're going to try to use their investment dollars to be aligned with what they think. What are your top investment themes for 20 20 to 1 how have they performed over the past year. So I mean it's been quite consistent I think with CAC point six. We were seeing very strong national climate commitments and green energy really needs to be front and center. Asia where we where we are as the home to the world's fastest growing economies and these rising incomes and families they say they need this right. They have a rising energy demand. There's a strong market opportunities. And we will continue be invested in that ESG data and ratings integrity. That's something that we've foreseen a few years ago. Looking at you know you tax on these two CFC SFP are all the members. Some folks say they said all these regulations coming online for fund managers and ask managers to be ESEA lines. We're heavily invested in companies which will help us service that need in terms of the carbon markets. I think that we've seen some extremely strong performance where I think there's the huge up in the room is well it will. Nations are coming come governments come into play in the markets in the Covid markets. But China coming online last year a huge boost in our investments. Tell us a little bit more about that about China's boost into your investments given the change that you've seen in the past year. I think it. We're stressed we're hesitant about where the pricing carbon will actually do environmental good. I think that we've we've looked at markets in California and Europe and North America in general and then with China coming on. I think it's very clear DAX carbon markets I here as a mainstay. I think the question is that can we ensure things. Hegarty In that the capital is generate and China into high impact and sustainable initiatives that will be essential for nations to deliver on their natural goes. Michael our district capital managing director thank you so much for your time. Do watch us live and also see our past interviews on our interactive TV function TV. Go there. You can also dive into any of the securities or Bloomberg functions that we talk about. Also become part of the conversation by sending us instant messages. TV go is your function. This is Bloomberg. A quick check of latest business flash headlines this year live as U.S. shares jumped after it ruled out raising its bid for GlaxoSmithKline. Consumer products business. The company says it's not increasing its offer of 50 billion pounds or 68 billion dollars for the unit as investors question the rationale for the deal. Glaxo had rejected that offer and two earlier bids in December. My dad's is downsizing its investment arm in anticipation that Beijing may soon tighten rules around dealmaking. Sources say Tic Talks owner is dissolving the internal B.C. and investing team and overhauling a separate team. Reuters has reported that Beijing is drafting new rules for tech firms around raising and deploying funds. The administration has denied the reports. Australia's Construction and Building Union Superannuation Fund is expected to double assets to 108 billion dollars in the three years in three years time I should say. The Melbourne based firm also known as Sleepers wants to buy rivals as regulator scrutiny forces smaller funds to exit and is talking to like minded firms to help that happen. Sherry. Heidi we do have breaking news right now out of Japan. We are getting those trade numbers with exports coming in at an increase of 17 and a half percent year on year for the month of December which is a bigger gain than was expected. It's a slight easing from the previous month but is still beating estimates. Imports numbers show an increase of forty one point one percent which is a smaller gain than expected. Also an easing from the previous month. Now we have seen the weaker yen. Also domestic consumption recovering commodities prices rising. So we were expecting an inflated import spill. So that's why you have forty one point one percent growth there. But exports have also beaten estimates which is why we're getting the trade deficit at a much smaller than expected four hundred and thirty five point three billion. Again for those adjusted numbers Heidi. Yeah. And Jerry of course we're speaking to CEOs and business leaders about the impact of inflation. A.B. InBev expecting that inflation and global supply chain disruptions will continue this year. See you. Michelle DAX discussed his market outlook with ESG strategy. I spoke with Carol Massar at the Bloomberg Climate Resilience Event. We are definitely moving into a bad year period after all these disruptions in. I think that unfortunately we are not there yet a hundred percent because you know that some countries are getting warmer chrome. And as you get the wave a form of chrome some more disruptions in supply chain will happen. I think that is will continue to be a topic of this year. Yeah. More so in the first half of the year. Why. In the second half of the year things would be better but it's not going to be fixed at all this year. Full supply chain disruptions will continue to be part of our conversations. It's going to be more in the first half than in the second. The second big issue is inflation. I think that inflation is an issue globally. It's not going to be away very quick. We are still in the middle of the wave and that has an impact in consumer purchasing power. And this is everywhere. But of course the more consumers are under pressure in developing and emerging countries the more these would be a disruption. And then they think that the third point that's going to be for second semester is one of several things settles down. We will see that these differences between people the emerging developed countries and developing emerging countries will be different. The post Covid. And we'll need to benefit from the fear of it. We need to benefit from the technology step up that we had recorded. So we can close this gap. But I see like CAC tale of two different stories in the afternoon. Covid this so-called elephant type of economy right where the developed matured countries we will celebrate further while the developing countries we need first to correct the trajectory and then later Rio celebrate. But this supply chain disruptions it's inflation. And then the two stories of the matured in developing countries that you need to have different factions after all. Yeah. Continues to make it tricky. So I'm thinking about because you guys have had such success. Success. What would you what would be your advice to some leaders out there c street leaders who are saying okay we get it. You know we're kind of at a tipping point when it comes to climate change. Here's a company ABN Barth that has set emission goals years ago and they're hitting them ahead of schedule. What's your piece of advice to them and how to do it. I don't think I have like advice to give to all just clever people that I feel that they have a little bit of our own experience. Any folks say that is what is the right side that you want to be history. We all know what the right side is. Second is the confidence that you can find to within your business to improve your own efficiency. Too bad that connects your ecosystem around targets that are shared and make everybody more efficient and that consumers are a very important part of this equation. So there is always a way to connect to our brands and products. We think that consumers want to support in their 40s close the loop you help. Sustainability becomes part of the strategy and not a distraction. So far as this part of what you do is our business. We are in the sustainability business because we are inclusive. We are a natural and we are local. And when you think this way you are CAC a reward in your fraud that they need to do what is right to do in terms of sustainability. Right. And as we head to the opens in Japan and South Korea watch Hitachi CEO says ready to sell its 40 percent stake in Hitachi Transport. Also watch restaurant stocks and other economic reopening stocks. Tokyo may be raising its Covid alert to the highest level according to local media. More DAYBREAK Asia next. This is Bloomberg. Welcome to DAYBREAK Asia from Bloomberg's world headquarters in New York. I'm Shery Ahn. And I'm Heidi Scrapbooks in Sydney. Asia's major markets have just opened for trade. Our top stories this hour. Traders weighing a negative session with Wall Street. On Wall Street I should say with corporate earnings and tighter monetary policy the shift away from techs is the NASDAQ in correction territory. Chinese property bonds soar on hopes of easier money and a lot of touch from Beijing. Plus we assess the chances of technology dropping a post pandemic. Air travel rebound with the sea to Asia Pacific presidents to mesh Patel seeing Japanese equities extending declines from the previous session with energy leading of those losses. We are seeing WTI right now reversing that gain that we saw with the crude prices at that seven year high. In the New York session financials also losing ground. The Japanese yen holding at that hundred and fourteen level. Of course we saw that the highest in about a week against a U.S. dollar. Given that risk off sentiment that we've seen broadly we did get those trade numbers out of Japan. Export numbers beating expectations coming in the gain of seventeen point five percent year on year. Still that led to a smaller trade deficit than was expected. Imports prices are gaining about 40 percent given a weaker yen rising commodities prices a cost at the moment unchanged at the open. Remember we're seeing the longest losing streak since November. Five sessions of losses already for the Cosby. We continue to see the Korean one gaining against the U.S. dollar at the moment. This after we saw a rally in the previous session. Remember sort of a proxy with the U. 1 as while you see us a little bit of strength in the yuan than the Korean one tends to move together. But we're watching a sovereign bond yields because they fall from that highest level since 2018. But we now have this economic meeting happening in South Korea discussing the extra budget. When that happened last week we saw the sell off in the bond space Heidi. Yeah we are seeing a pretty lackluster performance here in Australia as well. The ASX just extending those losses. It closed at the lowest in about a month and is now trading at the lowest in over a month. We're seeing of about three tenths of 1 percent. Again we are seeing some gains when it comes to materials utilities healthcare. Also seeing modest gains but even energy as we continue to see oil prices press higher. And in fact crude continuing that is sent to the highest level since October 2014. That's not even helping those energy chip stocks trading in Sydney as well. New Zealand also seeing a little bit of further downside there after suffering its worst session in almost a year. In this midweek trading we are seeing the Aussie dollar a little bit stronger there just over seventy two US cents. And taking a look at New York crude just giving back some of those gains to the tune of about 1 percent. This after we did hear from the IEA saying that the market looks tighter than previously expected demand proving to be resilient in the face of overcrowding. Of course these supply disruptions in addition to OPEC plus struggling to revive output continuing to drop that outlook for crude prices higher. Sherry. Right. Heidi let's bring in our next guest who says the real excitement in 2022 could come from Chinese equities. Joining us now is Harold Bender Linda head of a pack equity strategy at HSBC. Harold always great having you with us. Do you buy into that narrative that we are going to see policy easing whether it's the monetary side of things even as early as today or the regulatory side of things of course is GTA V chart on the Bloomberg showing you how those easing speculation rumor has actually led to property stocks rallying. No we we are buying that particular marriage. Actually we bought into that narrative. I think it was October last year when sentiment on China was really bad. People were saying it's not an investable market anymore. People BOVESPA were significantly on the waves. We said we think actually got song stimulus is going to come through approval by the end of this year 2021. It was and into 2022. So we we moved overweight China at that particular point in time and we see that no one developing. See you actually get some stimulus is going to end the monetary signs and rate cut. Xi Jinping on the fiscal side taken place. Valuations are still low. And what you also see is the mutual funds were significantly overweight on Chinese equities in October November this year starting to rebuild positions down. So you see that still on the way but not as much on the way anymore. I think you can buy more that for the market to a certain extent as well. Well Chinese policymakers actions show the markets there from say the volatility that we could see given that the US is going the other direction. Well not completely. I mean the correlation to sensitivity you could say off in particular the mainland Chinese markets when the US market is not very high. So if the US market goes down. Chinese markets could go well up. But we cannot ignore of course that is the largest stock market in the world is is having a bit of a tough start of the year. Other markets will get dragged into that on a near term basis. I think that will be a bit of an overhang for emerging markets in general as well. But eventually I think we've already seen a large selloff in particular Chinese equities last year. The valuation story is much lower. The interest rate story is quite different in the US. Interest rates are going up in China going down and the rest of Asia. It's for the moment to kind of behold maybe later on in the year. These rates need to go higher. They're off as well but the dynamics are very different. So in the near-term if the US struggles overnight Asian stocks might struggle a bit as well. But I think as we go deeper into 2022 we're going to see different change in the Chinese equities could actually turn out to be the exciting stuff of these of this year of the tiger. The hear of the tiger. How what happens then to those rotation flows from Chinese equities as you pointed out last year. They're headed straight for India. You're saying that ISE was kind of largely ignored ignored. Is this another start to the year where we see more optimistic outlooks when it comes to EMS in Southeast Asia. Yeah I think you're absolutely right. So we saw last year people want to get out of China Internet. As we reported the property sector was really poor and they moved into India for good reasons. India has large liquid and has got very little to do with China and says the correlation is very low. So that's exactly where they went. And then in the beginning of the year or late last year to be honest we started to see that reverse money started flowing back to China as I mentioned as well. Some of them actually went to RTS as well. And I think they are very good reasons for it because normally in these kind of periods when the US is expected to raise interest rates the dollar is strong. Certain currencies like the rupee the Indonesian rupiah would be weak. And in the past that would mean that the central bank had to raise interest rates in order to defend its currency to make sure it wasn't too weak. And that was sometimes kind of a very unnecessary for domestic demand to meet. Domestic demand was already weak and then it had to deal with high interest rates as well. So the Indonesian economy would therefore struggle with that. Now it's always the reverse. There is money going into places like Indonesia for the very simple reason that it's the police structural of NIKKEI. We will need it. So battery makers need to be there. So they go there. So you see investments going in supports the currency. Inflation is low. They don't need to raise interest rates. The growth picture is better. Indonesia is the second or third fastest growing market this year in terms of earnings growth. So you've got a very different story unfolding in RTS and I think people need to be very cognizant of that. Yeah. I think Indonesia is one of the markets we are most excited about next. It's going to hit China this year. What about the pressure coming from a more aggressive fed the Bank of Asia Indonesia has said they don't feel like they need to move in lockstep. When you take a look at currency carry and some of the bond spread buffers it perhaps paints a pretty different picture of how much pressure there might be. You know there's a couple of risks to two Asian equities that we should not ignore. One is that we see a more aggressive fat than what currently is being priced in the market since we're going to see about a three rate hikes this year. But we mother wanted to the next year. If we see that the inflation picture remains very stubborn or it doesn't really come down. We might have to say oh they're going to do much more. That will be a negative. On the other hand you could also say what could possibly go right for emerging markets this year because it might also be that as we go into deeper into the USA by June July we find that some of the supply chains have eased a little bit. The inflationary pressure is still there but maybe not as much. And suddenly we go into the opposite side and say hey maybe we don't need three rate hikes anymore. Maybe we're happy we do. And suddenly then you have the reverse that you're emerging that that could actually be quite positive for emerging markets. So an aggressive fact is is a risk but maybe also what could possibly go right. Not aggressive. That could also turn out to be risk. And maybe these bond yields which you guys were talking about this morning I think it's probably being over one point eight percent on the 10 year in the US. What if they would start to sing a little bit lower again. We've seen this about a year ago happening as well. So that that could be an operative risk for a positive risk for emerging market or Asian equities in general. Harold always great to have you with us Harold Vandal in there. Hate SBC head of a pack equity strategist strategy. We'll get to Vonnie Quinn who's in New York with our first world headlines Bonnie. Heidi thank you. President Biden says it's the Federal Reserve's jobs rein in the fastest inflation in decades. And then he supports the decision to scale back stimulus in a wide ranging news conference marking his first year in office. Biden said his two trillion dollar economic plan will have to be broken up so a scaled version can pass Congress. The president also issued a new warning to Russian leader Vladimir Putin over Ukraine. But if they actually do what they're capable of doing exclusively March it is going to be a disaster for Russia. If they truly engage invade Ukraine and get our allies and partners ready to impose severe cost and significant harm on Russia and the Russian economy. China's cyber watchdog has denied reports it will put restrictions on tech deals. Reuters said the government agency would require Chinese tech giants to seek approval before making investments or raising funds. The new rules would reportedly apply to companies with more than 100 million users or revenue north of one point six billion dollars. The Cyberspace Administration of China says it has never issued such documents. China says it has detected a cluster of Covid cases linked to a cold chain facility in Beijing. Five workers at the center have tested positive of which three of the more severe and Delta variants. Authorities are still investigating the source of the infection. The cold chain facility deals with imported frozen goods which Chinese health officials claim can be a source of transmission. UK Prime Minister Boris Johnson has rebuffed new calls for him to resign over alleged breaches of lockdown rules. The defection of one of his employees to the opposition Labour Party has again raised the stakes. And a former cabinet colleague and Brexit ally David Davies told Parliament Johnson should resign. However backers say Johnson still retains overwhelming support in the ruling Conservative Party. Global news 24 hours a day on air and al Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm Vonnie Quinn. This is Bloomberg Cherry right. Finally we have an alert on the Bloomberg Chinese developer usual now saying that they have an overwhelming majority of holders supporting their exchange offer and that would be four hundred and seventy seven point two million dollars in exchange notes valiantly tendered for exchange. They plan to relaunch the exchange offer on January 26. This coming at a time of course as we have seen Chinese developers under pressure and usual had proposed to swap millions of dollars of bonds maturing later this month for new debt seeking to repay holders but anticipating that they will have they will not have sufficient funds or seeking to amend something. Ventura's governing some dollar bonds maturing later as well. Take a look at Sony as well. Over in Japan because we are seeing a little bit of a rebound up more than 3 percent. This of course after plunging about 13 percent on Wednesday. They lost about 20 billion dollars in market value after that Microsoft deal was announced to buy Activision for 69 billion dollars and of course rivals in the gaming industry. We are now seeing Sony seeing a little bit of upside in today's session Heidi. Yeah sure you were watching Quantas. They're saying that they've applied to terminate the long haul cabin crew agreement seeking to terminate that amid a roster challenge saying at this point there's no job losses associated with the proposed termination. We're seeing Qantas trading a little bit softer at the moment but they're seeking to axe pay and conditions with long haul cabin crew members choosing what's really being seen as a nuclear option to shatter that deadlock with the union to try and aid the recovery from Covid-19. So the airline has gone back to the Fair Work Commission to terminate that current enterprise deal with the cohort and to essentially push them onto the modern award until a new deal is expected to be reached. We would need 97 per cent of cabin crew of course after they voted against that new deal just before Christmas. So Qantas wanting to push through that new do to try and simplify some of those settings and cut down on those costs as well. Also watching BHP at the moment trading pretty healthy gains of about two and a half percent saying that it's planning to unify its dual listing structure and would then have its primary listing based in Sydney. So the world's biggest miner saying that is part of their annual earnings kind of overhaul. Just confirming a report that we had earlier that dual listing began back in 2001. But the single listing change is set to occur in the first half of this year. Well still ahead how block chain can bring about new efficiencies to air travel. We're discussing that the tech transformation of the industry the impact of 5G technology on flying with theaters. Sumit Patel. Coming up next it's lone prime rate today in China. All signs are pointing to more support for the economy. We'll get more on that decision next. This is Bloomberg. My trade is working on that. Yeah. Sure. I'd like to BBB the position to see meeting the committee which would be useful if you're not President Biden speaking earlier on the trade situation with China. Well Chinese banks are expected to lower borrowing costs again after the People's Bank of China cut policy loan rates and signalled more easing to boost the economy. A Bloomberg Global Economics and Policy is a Kathleen Hays is here with a preview. So Jim will keep lending rates are expected to be lower. Just over an hour from now. How aggressive is this move. Well this move is going to be aggressive enough to follow. And all the things that have already been put on the table by the People's Bank of China to make sure they they put a floor under the deterioration in credit in the property market that they avoid financial contagion. The cut in the M L F the medium learn will facility on Monday send a signal. And then when the deputy governor of the PBS spoke and said that they have to avoid credit collapse they have to act forcefully and preemptively. It really cements that the next thing in line is the loan prime rate. As you said Haidi Lun prime rate day like Fed Day Sunday were to watch more and more and more. I think in fact that this is so much expected. The China Securities Journal saying it's highly likely the banks will cut the loan prime rate today. So when you're looking at this chart what you're seeing is the medium term lending facility rate to 8 5. Now that's the blue line. It was cut on Monday. We're looking at the green line the one year loan prime rate at three point eight. The red is the five year pro loan prime rate at four point six five. The one you're expecting to be cut by 10 basis points lowered. I should say. And the red by five or 10. Here's how it works. Let's look let's remind everybody that the PR is a de facto benchmark lending rate. Banks get together. There's 18 that submit the the rate to the PBS C which is the rate the best rethinking of their customers. And that's it from that emerges the loan prime rate. But remember it follows is lockstep with the MLS. If that gets lower you know the LP helpers coming down too. So again the it's something that they have put in chain and they are acting quickly. They're acting definitely. And they've already had an impact on the credit market to a certain extent. That's what they want to see. They want to see people having confidence that they're going to do what it takes to make sure the funding is there. They stabilize the economy and they don't let this turn into something worse. And we heard from an ex PBL C official talking about the pace of easing. What exactly did he say. Well I thought this is a very interesting observation in the way you think. Well what's he talking about. This little window for easing. But he's right. The Fed can start raising rates and then they're going to start balance sheet runoff and bond yields might raise more. And he said so base basically. And of course this was Shane John Chang who is the ex director of statistics at the PBS Sea telling Bloomberg that it means they have about three or four months to ease their policy. Now he doesn't think they should do too much. He warns against flood like stimulus flowing into the property market. He doesn't want to see over stimulus and speculation again but he does things they have to move. Each talks a lot about higher inflation in the US in the second half could mean more rate hikes weaken the yuan. Maybe there's capital outflow. So he's giving that warning. For now though everybody expects China Securities Journal Bloomberg Economics saying the triple R which was cut though they are reserve requirement ratio for banks is after being cut twice at 100 basis points last year. Look for another cut in the first quarter share. We don't know how much the deal how far they'll go. They are still being a bit prudent I suppose. But I think that the message is so clear we don't want to get let this get any worse and we're letting the world know and we're taking steps by making sure these lending rates come down. Yeah they're really using all of those tools available to them. Right. Kathleen Hays our global economics and policy editor there. And given those easing hopes Chinese developer shares and bonds sold record rallies on Wednesday. For the latest let's bring in our chief North Asia correspondent Stephen Engle in Hong Kong Steve. So how significant would this be for those stress builders. Yeah. There's just a shift in sentiment a little bit. If this goes day to day by the way as I've been reporting on this almost every day and the latest news is that sources are telling Bloomberg News that there's going to be the potential of a raft or a package of different easing measures in the property sector of course which has been absolutely hammered by regulation over the past year or so combined with weak consumer confidence as far as buying flats and cash flow is been a big problem. And of course we've had at least seven developers default since October. And this latest surge in bonds as well as shares yesterday came on reports that perhaps you know as part of that easing measures would be allowing developers access to their presale funds. And this is important. If it does come to fruition because generally speaking developers about half of their inflows come from these pre-sales and many municipalities and the government's restricted these indebted developers from tapping into that late last year because they didn't know where they were going to use those funds. Obviously the central government wants them to pay their wages deferred wages. They want them to pay their contractors. They want to get them to complete their buildings and their units and deliver them to those who paid down payments instead. Perhaps lower down in the priority is paying off some of their their bond liabilities and short term liabilities. So if this comes to fruition this is what a couple of people who talked to Bloomberg about it had to say about it. They said a relaxation of presale restrictions. This is Lena tongue of credit sites. An analyst could be the biggest and arguably the most important easing measures towards the property sector so far. And we're getting another comment from Lombard ODA Age Pacific's CIO John Louis Nakamura saying this is exactly what we were hoping for. Can we say that this is a potential turning point in the regulatory crackdown. Well it's a point where some money managers are saying OK this is a big enough move that we might want to get in and that's why you saw these record inflows on a number of different bonds. I mean look Country Garden the biggest developer it has been absolutely under its bonds have been under siege of the last few weeks. This is their bonds. I wanted one example to 2020 for a dollar bond. In the weeks prior we'd maybe move one cent on the dollar. In recent days it's been eight to 13 cents. It's been seeing a lots of volatility. And so neck and country gardens saw record gains just yesterday. But you know this could have a reversal as well. And what we're seeing is you know there is money international money and local money waiting to come in to flood into the sectors distressed securities. Should Beijing in fact make significant moves on the regulatory front. But it's a guessing game but the bets at least on Wednesday were that there could be some easing significant easing Stephen Engle lower achieved North Asia correspondent there. You can actually get more on that story and other stories and you need to know to get your day going in today's edition of DAYBREAK. Bloomberg subscribers go to maybe go on your terminals. This this Bloomberg. We do have the Australia December jobs numbers coming through. Employment change for the month of December coming in at a slight beat of sixty four thousand eight thousand jobs. There we are seeing expectations there for sixty thousand. That is after the huge number of three hundred and sixty six thousand being added in the previous month of November. The unemployment change we're still just waiting on that expecting that unemployment rate just to tick a little bit lower there. The jobless rate coming in at four point two percent. And that is actually really close to the low that we last saw back in 2008. That was up four point one percent. So a huge move down when it comes to the unemployment rate from four and a half four point six percent I should say to four point two per cent less than expectations of 4.5 per cent. Full time jobs added just 41000 there part time about 23000 jobs being added to the economy of course. There are really huge dislocations when it comes to the labor market in Australia due to two years of the border being closed and no foreign talent being allowed to be brought here. But also Omicron having these huge impact on the supply chain and taking large parts of the workforce out as a result of CAC Covid quarantine or isolation. We're seeing that move when it comes to strengthening in the Aussie dollar. Now this after we had that jobless rate falling much more than estimated to close to a 2008 low four point two per cent there. Let's get you to Vonnie Quinn with the first world headlines now. Funny. Heidi thank you. Chinese lenders are expected to lower borrowing costs on Thursday for a second month. Several economists tell us both the one year and five year alone crime rates are likely because these usually move in lockstep with a one year medium term lending facility rate which the BBC cut Monday by 10 basis points. The Chinese central bank has pledged further easing to stabilize the economy. New research shows booster shots with messenger RNA vaccines fail to block Omicron. Scientists focused on a group of German visitors to South Africa who experienced Covid infections. All had booster doses but experienced mild or moderate symptoms. The researchers say that highlights the need to fight the pandemic with measures besides vaccinations such as social distancing and mask wearing. Turkey has reopened to key crude oil pipeline running from Iraq that was knocked out on Tuesday by an explosion. Officials say flows through the conduit are back at normal levels which is 450000 barrels a day. National energy company US is carrying out repairs to the damaged infrastructure. The explosion is said to have happened after a power pylon fell on a pipeline during bad weather sparking a fire. Qatar is open to ticket sales for the FIFA World Cup in November. Seats for a group stage match start at sixty seven dollars for international visitors with special discounts for locals. Prime seats for the final will set you back. Right now at least sixteen hundred dollars. This year's World Cup may prove the first major sporting event to open to global funds since the start of the pandemic or not. Qatar hopes to attract more than one million visitors to the tournament. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries and Vonnie Quinn. This is Bloomberg Heidi. Bokova cluster has been found among coal chain workers in Beijing. The latest case is adding to concerns about contaminated goods spreading the virus. Bloomberg managing editor Emma O'BRIEN has the details. Emma what do we know about this cluster and some of the theories that have been discussed. Yeah I mean five people working in a cold chain storage facility in the district of Beijing have tested positive for Covid. This is part of a relatively small by global standards flare up in the capital but nonetheless causing a lot of consternation given where just weeks away from the start of the Winter Olympics the officials are saying that the facility they people work in deals with imports as well as other sort of cold train products sent around China and that these workers who tested positive hadn't left Beijing in the past two weeks. So the implication being potentially they might have contracted the virus from products which is a very faded theory of Beijing's. So what is next for China and trying to contain the virus. Yeah I mean. They haven't been able to get back to this much vaunted zero cases for many months now basically since that delta much more transmissible got into the country again. Now we do have that on a con in in China as well with a couple of it. That is the main one thing is CAC. So at this stage they are still prosecuting the virus that very stringently they are trying to blend in and find you know every case to snuff them out through mass testing that sort of thing. And it is causing a fair bit of disruption persisting with this strategy. And then the outlook for that is that it will continue for some time to come. At least DAX through the Winter Olympics and probably through the Communist Party Congress this year which we don't have an exact date for. Managing editor for Asia Global Business M O'BRIEN with the latest on all of those virus headlines. And take a look at the commodity space given then of course we are headed towards that loan prime rate decision by banks across China. We have seen base metals really piece gains with copper and nickel leading China vowing to use more monetary policy tools of course to support the economy. And this country is the world's biggest buyer of metal. So not surprising that we've seen such big gains. Brent crude finished a session above eighty eight dollars a barrel. WTI also rose to that seven year high here in New York. But we're seeing a little bit of downside pressure in the Asian session which is why we're seeing those energy stocks losing ground in trading today. Take a look at crypto assets. Bitcoin rebounding slightly. We saw Bitcoin fall below that forty two thousand dollar level in the New York session. Really tightening monetary policy has been seen as a catalyst behind this continued slump that we're seeing in crypto assets ether. We saw losses in the previous session but we're still above that thirty one hundred dollar level of caution. We have seen a massive rally for ether as well what's 400 percent last year or so. But given the big losses that we've seen in 2022. Interesting that one of the biggest casualties of this selloff has been grayscale bitcoin trust which is the biggest bitcoin fund. Coming up next a U.S. aviation officials and wireless companies have agreed to a last minute on the core to avoid major flight disruptions. We'll have the details on that next. This is Bloomberg. Monetary policy is not at all the only game in town here. No longer. And I think that's very important. You couldn't you couldn't raise rates more aggressively. But that's not going to ease the supply constraints that are the under lying cause of this higher inflation. I think that inflation is an issue globally. It's not going to be away very quick. We are feeling the need to offer the wage and that has an impact. The consumer purchasing power in the US is everywhere. But of course the more customers that end of freshly develope in the emerging countries the more this would be a disruption. Executives weighing in on the supply chain issues. We're tracking the fallout of the global supply chain crunch of course. These are the top stories today. The poor the Long Beach moved. Record cargo volumes last year amid on the import storage and supply chain snarls brought on by the pandemic. The West Coast ports saw an almost 16 percent jump in container units compared to the previous year. Logistics giants in the U.S. are turning to remote operated forklifts amid a shortage of workers. Two of the biggest logistics companies in the US are deploying thousands of software run equipment. They've also led a 42 million dollar investment in the startup that designed the software. Cathay Pacific is offering bonuses of up to thirty seven hundred dollars to pilots willing to endure Hong Kong's strict quarantine regime in a bid to get more planes in the air. This coming as virus restrictions suppressed the city's inbound air cargo shipments. Heidi Shery Ahn to stay with aviation for the third time in less than two months. The U.S. aviation system on Tuesday face a threat of widespread flight disruptions over potential 5G interference only to get a temporary reprieve. A last minute accord between wireless telephone companies and the FAA averted disruptions. A long term solution though is still to be worked out. Bloomberg terminal users can read more about those stories in our newsletter Supply Lines. That's at any trade. NL airlines around the world are adjusting their schedules and aircraft deployments for flights to the US over fears that a 5G rollout could interfere with key safety systems. Let's discuss more on the technologies around the sector and brains. Mitch Patel who is the Asia-Pacific president at SETA which provides I.T. and communication services to the air transport industry. Really great to have you with us. We appreciate your time. Has the issues surrounding 5G in the US surprised you. Could there have been a better kind of semblance of planning or communication. And could we face those similar issues when it comes to Asian carriers as well. Well Heidi thanks for having me. The operations of secret services I would say is not impacted by the current debate around the sea band frequency. Is the mid ban being deployed by the US mobile providers. Basically for this ISE. And then you know they're close to the aircraft and the airports at sea. We aware of the potential issue of 5G bans being close to the radio ultimate frequencies of certain airplane models. And of course we advocate for an agreement to be found to assign the specific bands around the airports to remove the risk of interference. Clearly you on the arrival of 5G presents the huge benefit to the air to ground aircraft. Communication including the ability to support safer in-flight decision making is helping to optimize operation. And of course it has the passenger experience. So clearly we are hopeful that an agreement is found on the specific bands around the airports to remove the risk. In what ways more broadly has the pandemic changed the use of technology around passenger travel. So it's based on our thinking to anyone and transport ideas insight which was just released this month which represents the view of more than a hundred and eighty ISE airport and airline decision makers across 45 countries. Basically what it says and it's very clear that the pandemic has escalated the digital transformation to tackle the immediate challenges. And I would say there are three main challenges which our industry faces today. One is around health the second and automated passenger journey. And to sustainably fly. If I blow it a little bit more. So if you look at most of the airlines and airports are expected to spend the same or more in 2022 compared to 2021 to address three key challenges one. The first one is I said you know the dutiful way to help really remains a top priority. Just that security was after 9/11. And while most of the airlines and airports are struggling to work with paper documents at the same time the industry is embracing the new change. And the fraud is an issue with manual process and a paper documentation that you have. One of the recent articles said then defeat the word vaccine in the death certificate market is really growing with more than about twelve hundred vendors worldwide helping to do you not have the big documentation. So many governments and the commercial health schemes are currently being deployed to tackle this fraud and also deal with the paper documentation and at CWA working on building a health hub which allows the interoperability of various health schemes to working together and suddenly united as industry owned organizations working in the crossroad of airline airports and the government. We are able to connect these dots and streamline the process around the health document. How much does block chain plane into a plane to the digital transformation drive that you have ongoing in the industry. So Blodgett said he believes the key role and there are certain areas where still be you know sharing the information is certainly key now would be help. And you know the passenger processing requirement. So clearly the block chain is one area where it is a single source truth where you know the multiple stakeholders and share these important information freely and securely among themselves. So certainly this link area and I would say two key areas. One is on health. And secondly in the passenger process ie using biometrics and and mobile. So just quickly we of course have variant after variant is spreading around the world. What do you expect to be the key challenge in 2022. So now you know one good thing is that you know our industry has to really learn how to live with the virus. So what the way we were impacted I would say a year back or 18 man bankers. It's not not the same so. Well you know our feeling is that with the new technologies in place and build additional does mention the recovery will be much faster. And you know the area of focus as I said would be mobile and biometrics to transform. So a lot of what you can do at the airport. Now we're using your own mobile device mobile using mobile as your remote control. Passengers will be able to do a lot before even they arrive at the airport. So much power tell there was good having you with us. Seater Air Park president there. And of course it's not just the airline industry that suffered during the pandemic. We have seen of course semiconductors. Are shortages in that industry become a key issue. Intel CEO Patrick Gale Singer is optimistic that the US will pass the CHIPS Act to support domestic semiconductor manufacturing. He also says Intel remains very committed to China. Gail Singer spoke to Bloomberg John Micklethwait at Bloomberg the Year Ahead Summit. We think this is a great start. You know maybe the second half of the decade there'll be a chip's act too. But this is creating a lot of energy. And we believe that we U.S. companies but also Asian companies should be participants in building out and accelerating this capacity on American soil. We've. Personally I've been very involved in lobbying for getting the bill done. We are hopeful that before the continuing resolution ends in February that that timing is one that I think every all the legislators are lining up to get across the line. And there's a similar timeline in Europe as well. So we're optimistic. We think it's a great start. And if we can go from 37 to 12 and I've set a moonshot objective where us gets back to 30 percent over the next decade and Europe gets back to 20 percent. So we're looking at 30 2050. I think that's a incredibly positive way to leave this decade and one that we're optimistic that we'll be able to achieve. Push you a bit on that from you. It's interesting you've made a noise about this. Most of the other people who make a noise in terms of standing up to China tend to be people like Facebook and Google who don't have the same amount of sales. Right. China is still the biggest. It's your biggest customer. It's bigger at the United States. Do you worry that they might take retribution on you. Do they have no real choice in terms of chips. Well you know we believe that every country would want local suppliers wherever possible going forward. Our objective is build the best chips and deliver them into our customers on a global basis. And about 25 percent of my revenue is in China. We have deep customer relationships. They're ones where you know there of course we want more of their own supply chains there. We fully respect that. But our customers there want to build the best cloud platforms. You know the best commerce platforms. And if our products enable them to be markedly ahead of what they would do with alternatives. We'll be able to continue to satisfy that business. And we have seen continued growth in China and we're very committed to that market for the long term. But the U.S. China situation does create challenges for any company to find a pathway through that tenuous. Do you think we're on the same footing. Do you think we're heading towards a world where there is effectively two Internets. There is a Western one and then there is one gathered around China but of Asia as well. Is that the reality of technology going forward. That's something that people should ask. Know we believe that you know and if you think about Chinese policies like dual circulation you know the Great Firewall. You know there's a level of disengagement of that market from the rest of the world. At the same time we think of technology as neutral. It's neither good nor bad. It's neither U.S. or Asian. You know in which Chinese governments like well for that matter the American government thinks passage is neutral. They make so much fuss about it. Isn't that the kind of political reality of the world you're in. Certainly there are aspects to that and part of the chip's act as we've clearly said hey it's good economics but it's also national security as well. And for that when we have you know 80 plus percent of the world's supply in Asia. Boy that's not very comfortable for national security as well. And that's why I've said a geographically balanced resilient supply chain for the most important resource of the future and one that hey we're committed to that market. But we're very much a U.S. company. We're proud of that. We have a substantial presence of manufacturing in U.S. European markets. We hope to announce major expansions in both U.S. and Europe and help to rebuild the supply chains on U.S. and European soils as well. Entails the patent guessing of they're speaking at the Bloomberg gearhead conference and this on here McCarter. That tells us how he's dealing with the chip squeeze and supply chain issues. We have that exclusive interview coming up in a few hours time Gerri. And Heidi we're also watching some of those Korean defense stocks. This as we heard from North Korean leader Kim Jong un now signaling that he may lift a self-imposed moratorium on major nuclear weapons and intercontinental ballistic missile tests. We are seeing gains of more than 7 percent and 5 percent for a couple of those stocks. DAYBREAK Asia. We do have more coming on. This is Bloomberg. More investor pressure for China's tech giants after Chinese regulators have denied that Reuters report on new curbs tied to tech deal making and China Allianz says it won't be making payments on several bonds therefore signaling a default is imminent. Let's bring in Bloomberg Markets anchor David Ingles. So Dave this is even without the sort of credit easing measures that we're expecting lots to keep an eye on. Absolutely and I think when you let me start things off here but just with a look at the property market because it's a little bit more nuanced. Given the extreme moves up there we've actually seen across a lot of these dollar bonds and also some of the listings on the Chinese mainland. A very good example of that would be the Shanghai Property Index which if I'm not mistaken I just had a quick glance should be up more than 20 percent from that low it had. In fact we are flirting right now with that high. We hit a couple of weeks back if not days back. So a couple of levels to watch there. Obviously I alluded to the fact that we are looking at some of these high yield dollar bonds which really have been on a bit of a rally on the back of some of these easing and support our policy. You turn to some analysts call it. I'm also watching obviously what's happening with government bond yields in China. And certainly let me phrase it this way. The emergence of the convergence because of the divergence in policy. And when you look at say the Chinese three year bond yield for example that's back to the lowest level here since about the middle of 2020. And Treasuries as we all know of course they're back to the highest levels since even the start of 2020. So I think that's key theme to watch obviously as we make our way into the open of your markets here in Hong Kong and up on the Chinese mainland. Back to you guys with a very eloquent David Ingles as always. Thanks for that. But take a look at how property developers finished this session with those big gains in the last day. And also take a look at those tech stocks that we're watching because of potential tech Tom Keene we had being added to the Senate antitrust bill here in the U.S. China markets open next because this boom Barak.

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'Bloomberg Daybreak: Asia' Full Show (01/20/2022)

Haidi Stroud-Watts in Sydney and Shery Ahn in New York drive to the Asia, Australia and New Zealand market opens while wrapping the biggest stories of the previous day on Wall Street. (Source: Bloomberg)

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