The latest trend in fashion. , whichs a trend growing are u. S. Companies bringing their cash back from abroad. We know apple is the big one. They are going to be bringing billions of dollars back, which means theyre going to pay 38 billion in taxes. And that is really, for lawmakers to pass the tax reform, that is the eyes on the prize. They have built up this much money overseas, when are they going to bring it back, and how much is it going to bet go back how much of it is going to go back to the economy. In creating jobs, which is most important to the white house. Those numbers that were highlighted in the press release if you look underneath the hood, theres questions of how much is going to be repatriated back and where it is going to go . A lot of the money is in the denominated dollars. And will other Companies Follow as well . In the meantime, another note on that, apple is spreading the joy, with employees getting bonuses. We also have overall stocks up, and a wild ride that we saw in bitcoin. We have more, with a lot of optimism over the tax plan. Juicing ms to be if you go to the market snapshot. While not sitting at alltime highs, it clearly set highs for the close that we havent seen before. The dollar also rebounding a bit after being down. Bigs go to some of the movers, because as you mentioned, apple in the spotlight it over the stock not up that much, it grabbed headlines in not only announcing it is going to be giving stock grants to most employees worldwide in the coming months but it is going to repatriate enough cash to spend 30 billion in the u. S. Over the next five years. And 20,000 new hires so that is certainly a big piece of news. Ating is up because it looks a comparable combination with a Brazilian Airline company. Even though there is some obstacles. Texas instruments also up in terms of volume, and where the biggest jumps as seen in a year, and an upgrade from one of the analysts. What youof upgrades are looking at is what we call an earnings melt up. Higher estimates the highest we have seen in almost six years. The average analyst with pink growth of 11 of earnings per shareholder. We havent seen that kind of adjustment upward after the start of the year in a long time. Typically, once the year begins and reality hits, you are facing and ratcheting up their estimates lower. Note to the big selloff in bitcoin and other cryptocurrencies. 10,000bitcoin fall below and then jumping back up again. Where analyst saying about bitcoin . Longterm investors are saying that we have seen this before. Those saying from the beginning, check it out, it has been aim or reckless rise from december. It dropped below 10,000 earlier today, it set up a lot of signals to sell, which indeed happens. But lets go into the chart here. We saw a rebound by the end of the day. That is causing many who support bitcoin we have a nice chart for you what we are seeing is the slight slide. A lot of those who support bitcoin say that before we get to december, you guys were saying this was great. It is still a huge rise, and there are enthusiasts out there. It is cautioned by dramatic swings that we are seeing. Ripple cofounder is reportedly one of the biggest losers in terms of value per token. 11couldve walked away with billion on this. Twins were bitcoin holders also temporarily lost there. Lets go to some of the stocks that have pivoted to bitcoin and cryptocurrency platforms. They took big hits earlier in the session. The kodak and seagate came out strong. Still a question whether that risk was something that they were expecting. Lets talk about the selloff the company blaming its mess on supply. A look at the drop after hours that was almost at 5 . They believe china is going to continue its containment of tons of 1. 7 million are putting some of the blame there. The also take a look at the chart. They missed on the just the profits and revenue. Thestments are begging stock after hours, and it may continue on thursdays trade. How that trickles through to asia. We have seen records on wall street or than a 1 gain on these indexes is rare lately. Asia is looking at bounceback, new zealand up, the kiwi up gaining a bit more ground this morning. Take a look at the australia sessions just getting underway right now. We have seen shares of a quarter of 1 . Here. Er aussie we are off that now, and were expecting on the next hour that it could be another catalyst later on this afternoon. Not flattening like the u. S. That we have seen on the yields about five basis points right now. And japan, we are a bounceback as well. The dollaryen slightly higher weaker yen overnight. We caught up with first wrote news with Courtney Collins in new york. Chinas holdings of treasuries they may be curving its appetite for u. S. Government that. At ones of u. S. Bonds point 1 a month earlier to 1. 8 trillion. Attractingasury extra attention after Bloomberg News reported last week that beijing was considering tapering its purchases. Growth in almost all districts surveyed, but pockets of labor markets tightening. Generally supportive of the Central Banks 2018 of 20 have percent of Economic Growth and three Interest Rate increases. However, it warns that it remains constrained by tight housing inventory. Backing atrump is House Republican plan to avoid a shutdown down by temporarily funding the government, but shutting out democrats and their demands for immigration deals. Haveer ryan and his team been rallying for conservatives on stopgap spending bills to keep the government operating until february 16. The house vote is likely later on thursday. And north and south korea will march under one unified flag during opening ceremonies and next months winter olympics. A strong sign after tensions. The two koreas have not march together at the international sinceevent its 2007 2007. Global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. Bloomberg. Becky so much, courtney. Apple, as we mentioned, is going to pay hundreds of billions of dollars overseas that is going to bring back to the United States. Is going to bring expenditure over five years. Bloombergned by technologys alex webb. How big of a deal is this for the company . I think the money they talked about is not one we care about. They have a lot to play with once they pay the tax bill theres no going to have wonders they billion dollars to play with. The expectation that it will go to buy back. What is apple not talk about in these headlines that we are not seeing . Theyre not talk about what theyre going to use the rest of the money for. The 75 billion over six years it is these two elements, the drop in the ocean compared to what theyre going to have to play with given they have you 1 billion in cash flow each year. A lot of people are interested to see what they talk about when they report the earnings the start of february. Well was surprising asked was surprising as well that this was a bit earlier than expected. Is this a surprise . It made me chuckle. Its sort of make a mockery of that idea. It came out with no warning at this was going to happen. There might be political agendas behind it. We have yet to see any comments from President Trump. Agenda for is a big job creation. Well see if he has anything to say about this Going Forward it. Emily alex, ask for joining us. Journey is here in hong kong, back so much for joining us. Journey is here in hong kong, back so much for joining us. So, you have to read between the lines for these headlines from apple. We see a line of these companies now talking about tax reform, and the banks seem in the longterm it could be good. Should the president be patting himself on the back that this 3 growth he promised . Is it coming . At 3 level quite that one would like. It is not particularly an ambitious target. Back in the 1990s, it was growing at stronger than 3 each year. And as far as the tax reform is concerned, in terms of International Times the problem the u. S. s had his European Countries have been shing tax rates Corporation Tax rates over the last 20 or 30 years as regards to Corporation Taxes. There try to make up for lost ground. It might be helpful for repatriating dollars elsewhere, but the question is will company that invest in a big way. Globally, investments are weak in a decent, strong upswing. Wasefore the tax bill approved, there wasnt a lack of it that caused them to not spend on capex. What is going to trigger them to do so now . The technology is coming in a way that is changing the bargaining position of capital versus labor in the u. S. And elsewhere. Terms of downward pressure and wages, you can hire people by the task as opposed i the annual salary for example. The bargaining position for companies has gone up. Ofsee is expansion going up hiring people run them through investments. Corporate office ability is not good news in terms of investment and productivity. It is not good news in terms of longterm growth. Of jobs, butnty there are plenty of lowpaying jobs. Growth,rms of wage there are bonuses does that add any Inflationary Pressures to the picture . Wagesis interesting that and a plummet rates in the u. S. Are very low. The wage pressure is minimal compared to what we normally expect to see at these kinds of an employment rates. The oldfashioned phillips curve of wages and inflation, is not working very well anymore. Wageschnology is driving down, and low wages create more jobs. Do you it has reawakened . This avc unappointed at 4 , inflation is going to pick up in a big way this year. It is always a moving number. At some point it is a number that will kick in. The decline in unemployment to date has not given wage increases that people expected. Speaking of wage increases speaking at this moment to reporters, she says that she season upside risk from u. S. Fiscal policy and that labor shortages are more widespread than reported. Would youagree agree with the fiscal policy in the u. S. . Other things being equal, dow would be higher demands, and higher demands means lower employment, and that could mean higher wages. But as important to put into context. It is not really exciting growth. It is passive. The chances were going to see is not much in wage increases. Risks. E worried about otherg surprise from Central Banks around the world is that even if in a plummet as low, wage increases not kicking in, and inflation is incredibly wellbehaved are yo. Americaslk about retreat from globalization. Will discuss more on that with stephen king. Also, catch our exclusive interview with vanguard chairman bill mcnabb later on in the show. This is bloomberg. This is daybreak asia. I am betty lou in new york. Protectionism. President trump is set to speak andin davos. Specifically, were talking about the leveraging. Hsbc bank to the senior economic adviser. Stephen, before we get to the issues that are going to be we had in davos, headlines two hours ago that trump may terminate nafta. That is on the back of headlines that we have seen in the last few weeks. How devastating will it be if we actually see the u. S. Go along and follow through with its exit of nafta . It is part of a broader trend that the u. S. Is losing its views of International Arrangements and international deals. There go back to 1944 was a sense that the countries were all in together and had to Work Together for the common good. Increases significant in Living Standards in a white draghi of countries that in previous eras were at war with each other. Now is theseeing growth ision wage weaker than it used to be. And President Trump, in one sense what he is saying that america had a bad deal with the rest of the world. I dont agree with that at all, but nevertheless, we have a villain narrative starting to emerge. Country day brings country before its difficulties, and wants to disengage. And then you have the rule of the game of international disengagement. Globalization goes into reverse, and you might end up with competing Regional Power locks emerging in the years ahead. That dynamic think and topic is going to be the that topic in davos . Manage it again this year, but what happens is the president is recognizing that sponsoring globalization it is something china can walk into. It is a narrative that is beginning to emerge globally at the moment. Think that trump says, and i suspect he is not going to be as positive about globalization as president xi was a year ago. Certainly theres going to be a lot of years peeled to what President Trump has to say. What do you think he is likely to use this big platform at davos, which she long criticized as well . What is he going to push . He has criticized all of these International Arrangements, and whether that it istroversial correct remarkable that he is pushing to gain of changing the rules of the game to make the rules more fair for the u. S. Compared to other countries. He will use the opportunity to say that the americans need a better deal from the better World Without recognizing that america is one of the richest countries in the world. Does the u. S. Have the leverage . Chinas treasuries fell over the last four months, is his political posturing or is china concerned that theres not enough growth in the u. S. To service its debt, therefore yields are no longer attractive . That is a nightmare scenario. But i think it is extremely unlikely and difficult. The chinese and the u. S. Will lose in that story. As the u. S. Pulls out of International Arrangements, china has to weve its holdings around the world. Bear in mind that china has is continuous large account and has to invest that money somewhere. There are real assets in certain parts. Like where . Can buy real estate around europe. One thing china is reese china is interested in is buying tech companies. It can increase the value chain. That is what we are seeing in some investments in europe over the last four or five years. Are they ready to be put in that global space . Xi has enshrined himself to be elevated to the status does that give him the leverage and firepower to go through these reforms in a meaningful way . How these countries respond to china . To not fall entirely under chinas umbrella. At the same time, china is placing its own International Institutions. Think about the partnership or the shanghai corporation, and Asian Infrastructure back china is placing International Institutions which used to be preserved for the u. S. It is changing the balance of power and influence, and also influencing the center of smonomic nine is him dynas in china. Weblog about the bank this week is going to be increasing their reserves france is saying there are reports of that as well. Is the vote of confidence there is a lot of Unfinished Business with the Central Banks fighting concerns in china. You sure do you share those concerns . Want to be as liquid as possible so they can move with ease. Theu. S. Dollars offers facilities where the rmb doesnt offer them currently but ertheless, china is so big it is now the second or third biggest economy in terms of gdp. You cant ignore it. Countries around the world to sing the world is shifting, it is changing, we can fight it, we have to join it whether we like it or not. Looking at your crystal ball on china, and looking towards the end of 2018, what do you think china will accomplish . What are their huge goals . What do you think they will accomplish by the end of 2018 . The environmental things are a big challenge because china is by far the biggest culprit in it is heavily dependent on fossil fuels. That is in the that has to shift over a. Of time. The china wants to move in that direction. Terms of Solar Energy Electric Cars and so on, all of those things are potentially position elsewhere around the world. The environment is going to be a slow process. Of one step forward, two steps back. I think well see more of a floating currency than we have seen in the past. We appreciate your time. Hsbc senior economic adviser. We go to japan real quick. Backe expecting a bounce on futures. It is up 30 points right now. It is a third of 1 . We got news overnight as well there iss likely that a good chance that the governor will be reappointed for a second term. The yen seeing a bit of weakness over the last 24 hours or so. Next, Goldman Sachs at its lowest since the financial crisis. More on that. This is bloomberg. It is 7 30 on thursday. We are now three minutes away from the first major market open. It is 6 30 on wednesday and markets closed considerably higher with record gains. The yen added 300 points in the s p rose. I am ready in new york. You are watching daybreak. Lets get the first alert news. Apple says they will pay back 30 billion dollars in cash. Promise 30s million in Capital Expenditure over five years. Is refocusing investment and job preparedness. They plunged below 10,000 for staging a rally to trade unchanged. This took me cryptocurrency across a trading range of 2600. Up 1000 fromll bojyear ago for the lead governor has a good chance of being reappointed for a second term. He noticed that markets have been sensitive. Has agreed to meet later this muellers month and we are told that he executiveto use privilege. He did refuse to answer some questions during a marathon hearing on tuesday. I am Courtney Collins and this is bloomberg. We are counting down to the market open. , after ayou call this day of a pause, we are back on. Appears toon markets live on and we have the chinese data that will be a highlight expect to stand pat. Taiwan a rigged one from you have the stronger yen since the start of november and a record amount of over half the holdings the last two will report earnings. Attention tor sydney, we had a number of a dates in the last hour. And the on the radar cuttingide after is recordand there annual production for a third production can see getting lifted after this comes online. Ine a look at this rise have the stock downgraded. Breaking news and this was put into bankruptcy after the crippled stagegs and a sale in the that on theax prof sale and they will be selling westinghouse claims. Yes. We will certainly be watching that. Most of this is and these losses shares have stayed there and you trade on fixed income the board with no surprises as to where they have gone. Falling andbeen tradingfixed income is a fall froms the past quarter. The last time this was around this level was in 2015 and it thisoubled and you can see anding a leg up here Corporate Tax reform was passed. There. Of a dichotomy thing where wear are down and this is the worst fall in a long time and you can since thes the First Financial and you look at that and it ise here on the pastgaining year or so. This was all negative with goldman is here in this still has not was withood as it growth not bad, but has been better. Earnings here in down, you can see it is chargere talking about a of the tax reform for the we can see the tax reform take a hit over the long the Corporate Tax rates with bank of america over 20 and citibank up after being down is herecan see jpmorgan with a little more than 30 there. Quick snapshot. Purple line is the bank of america. You can see that little dip with a little bit of a bigger dip. So, these are the bloomberg charts and a quick look at the tax rates. A lot of people will be looking to hope and positivity for earnings. Back to you. A fed official argues for more rate hikes in keeping with normalize rates. Kathleen, run us through some of this and talk about tax reform. This comes on the day as the fed releases their beige book on the economy and this is in preparation for the meeting on january 30 and january 31. The pressures are broadening. You can see the president of the cleveland fed speaking today to reporters and saying that labor shortages are more widespread raisings respond by sees the gradual rate hikes as appropriate and what they had from businesses was kind of micks and some thought it would be a boost to investment and growth. She probably thinks the tax cuts give things a boost. No expectations of a rate hike with the bank of korea. Cuts and whatrate is going on . You haveurrency and room to see what happens and you can see the inflation and the here with the official rate and there is not a reason to rush in that direction. Wrote that this could cause a breakthrough to the alarm and this is raising bells. Look at that line. You bet you wish you well and a lot of that right now. This is where the analyst teams say that the momentum will push higher and it is a concern because of the oil prices increasingd currency import prices. Saying the bank of korea is boost to the gdp am most a little bit analysts do not see a rate hike until the Second Quarter and we more of an explanation and get a sense of if they are in a cautious mode. A look ahead cap press conference. We have toshiba meeting with expect toand they with the sale this month Energy Holdings and the claims sale will contribute ¥410 million and they are selling claims. This close a dark chapter for toshiba and westinghouse. Fort has been key shareholders from both companies and it clears the path from bankruptcy and a longrunning near we have that could be the end of this. We will see how toshiba shareholders react. Coming up, where Mutual Fund Managers sees opportunities. The exclusive interview with bill is next. This is bloomberg. Is bloomberg. Ok. We are getting more headlines coming out from the leaders of hna saying that they are using this stake as collateral and income versus the shares wereer the suspended, pending an announcement on a major matter. Been underts have pressure after missing credit payments and it looks like they are using the 35 stake as collateral for some of these payments. Third wes just the have learned about and were still waiting to hear about that. They say these updates could be coming in the next few weeks and there are reports that they are freezing some of these credit lines with some of these developments coming out. Attracted inflows of 370 billion last year with their fund and the chairman dismissed criticism for the rapid growth of investment and explores opportunities in china. Beit looks like there could a path to retail and mutual funds. Andre staying close to this i think that there are things going on broadly. Do you see this as a competitor on this model . I think there could be potential opportunities and we have paid a lot of attention to that phenomenon. They are out there and talking to everybody. Is this a challenge for the growth in the region or du focus on active funds . What this means to us is a lot of opportunity for lowcost investing and, whether passive or active, you could make the case for both. Fidelity is starting to push becomed lower fees to more competitive. Seeing . Nges are you a wide believe that price the blackrock been coming and that has been a driver of that cost argument and you just cannot and Money Management has lesslucrative and will get lucrative. People have to reinvent themselves and get smarter. Gracere is a huge and that poses a risk to the market. Provided is has better returns and music about this is that zerosome game, at the end of the day with the only thatrence being costs drives the growth of indexing. It was not always the case and is not always the case in every market. The Retail Investor owns a large part of the equity markets and andve managers will do well it is not a zerosome game. Say that index providers are longterm in nature and outlook and it is better for corporate governance. Was an exclusive conversation with our correspondent, Tom Mackenzie. We will tell you all about these record highs next. This is bloomberg. Erg. This is daybreak. For wool hopes to drive presses to a record. Isving us further in sydney our agricultural reporter. So, sneakers driving this price rally. When did this start . The rally started three years uses arehen new immediately driving yet. Supply andwn to demand. This is the oldest and it was half what it was 20 years ago. That is important because it is 90 of the wall use and apparel worldwide. Of these, butfan will i pay more now . Talking about this going up 20 a kilo and it may not come down much. About sneakersre as a key part of that. This. Will keep tracking china and italy are a big market. Coming up in the next hour of daybreak, we look at asia and economy. Er we are expecting a slight low for the Fourth Quarter. 6. 9 . Much willon is how room there is to curb pollution. Take a look at markets and you. Ee new zealand shares is up a fifth of 1 . The market open is coming up. The market open is coming up. From bloombergs headquarters. Welcome to daybreak asia. Hit to gain after more u. S. Records. Nickels latest white right sees a plunge below 10,000. Only to stay to recovery. Betty from bloombergs global headquarters, i am betty liu. It is 7 00 p. M. On wednesday. Fall on are expected to weaker demand for chips, but the cryptocurrency trade could be a new growth driver and running dry. Why the world most valuable Liquor Company cannot meet demands for chinas favorite, firewater. Yvonne i dont know about that firewater. Betty you also need an iron stomach for that. Chinas gdp is said to be on fire for the 27 c. We are expecting numbers later. A lot of news, which is doing with development. Apples tax reform, toshiba also closing that chapter with westinghouse. Hna trying to deal with debt issues. Betty looks like 2018 is not only a fresh start for individuals, but a fresh start for companies. As you mentioned the repatriation for apple, then we had news breaking about hna in , they will benits using part of the capital to pay down some of their creditors. Our eyes onng stocks and how the companies will react. In the meantime, lets get to the first word news. First up, chinas holdings of treasuries fell to a fourmonth low in november. Aging may be curving its appetite for u. S. Government debt. Holdings of u. S. Bonds fell 1. 1 from one month earlier to 1. 18 trillion. Chinas Treasury Holdings are attracting extra attention after Bloomberg News reported last week that beijing was considering tapering its purchases. Books have moderate growth in almost all district surveys, with pockets of surveys tightness. The report appears generally supportive of the Central Banks 2018 outlook for 2. 5 economic in interestncrease rates. The real estate activity remains constrained by inventory. Republican senator jeff flake said President Trump is emboldening authoritarian leaders around the world by dismissing Media Coverage of his administration as fake news. The senate floor urged the president to stop what he calls a tax on the truth. Of the people is how the president of the United States called the free press in 2017. Testamentent, it is a to the condition of our democracy that our own president uses words infamously spoken by Joseph Stalin to describe his enemies. Rupert murdoch suffered a painful back injury earlier this month and plans to recuperate at home for a few weeks. According to in email to colleagues seen by Bloomberg News. Chairman old executive of 21st century fox is already recovering and expects to be a communication with staff at his companies. He fox declined to comment. North and south korea will march under one unified flag during the Opening Ceremony of next once next month winter olympics. The two koreas have not marched together at an International Sporting event since 2007. A decision on who will represent north korea leader kim general oppo up Pyeongchang Games has yet to be made. Global news, 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. I am Courtney Collins, this is bloomberg. Regionalake a look at benchmarks. Gains at a 10th of 1 . For the latest with sophie kamaruddin. Seeing a bit of a backlash year. Broke 26,000 for the first time in the nasdaq had Semiconductor Stocks rose. It will be in focus given that it is due to report earnings. Apple shared plans of 30 billion in the u. S. Over five years. Cap suppliers will be on the radar. About 4 10 of a percent. Over in tokyo, the nikkei 225 are on the rise. The nikkei adding a 10th of a percent as energy and discretionary stocks lead the way. On the 111ck up handle. We are seeing weakness coming through for the korean won. That 10 68 handle headed for a second weekly loss. We wait for the bank of korea policy decision that is due this morning, expected to stand. Ditto for the bank of indonesia when it comes to its policy decision today. Lets check on toshiba as it checks on its westinghouse. The capital boost the ¥410 billion. The stock is snapping a threeday decline, rising the most since december 29. Thats get a check of notes. The dollar is rising for the first session. Weakness coming through, like the ringgit, the yuan, yesterday, the bank of thailand said signs of speculation are about. The dollar fed is below 80 as we from on job data due australia. Aussie stocks snapping a two day drop. Lets look at key movers. We have energy. The biggest drag as it cut its output target. Take a look at some of the best performers. Medical continuing to gain ground. Aussie banks also in focus. They are up 1. 5 there. I am looking at headlines right now as you were talking about the markets. You have the nikkei climbing to past 24,000level, for the First Time Since 1991. Dont forget the topex rising past 1900 points for the First Time Since 1991 as well. And goodies, despite lots of concerns of are we to richer in the markets, certainly not stopping at all. Carrying over from the big games we saw here in the u. S. U. S. Lets turn to china. Chinas economy expected to show a pickup. Correspondent,na Tom Mackenzie joins us for more. What are investors likely going to be focus on focused on . Squarely in focus will be the for your number, six point 8 is the estimate for 2017. Is the estimate for 2017. The Fourth Quarter number is expected to stop from the previous number of 6. 7 . Below that number you will get the likes of retail sales that will pick up 10. 2 of the month of december in line with what you got for november. We will get Industrial Production for the number of 6. 1 , also study steady. Up 7. 1xpected to come in percent. That would be the slowest pickup in fixed Asset Investment since 1999. We have a terminal g btv 6323 that shows the monthly gdp tracker put out by bloomberg. The yellow line is the tractor. It is moderating somewhat. We did hear from him saying he expects growth and could top six point 9 . Talking about strength in corporate profits, household incomes, fiscal revenues, those the those details that could propel. They are looking for the rest forward to the rest of the year. Rose about 6. 4 percent, moderating in 20 17 as the government focuses on tackling pollution and poverty, and the debt picture as well. Another story that is worth considering for the 20 global gdp pitch for china is the s oe reform story. We have had some information out from the authorities in the last 12 hours. They are expecting esso we soe companies to take more slices ofmore companies despite the ownership plans push by the authorities. There may have been some concerned about the communist partys taking greater stakes, but equity analysts say it could be an opportunity for investors. Potentially tech firms, internet firms, those are the private companies that are likely to be in focus for the state owned enterprises here in china. What should we read into the news that we got a couple of hours ago that china has reduced its holdings of u. S. Treasury . One month is not make a trend but is beijing flexing its political muscle . Om . You are right to point out one month does not make a trend. This is the first time in four months you have seen Treasury Holdings in china drop your they fell 1. 1 . They hold 1. 18 trillion of u. S. Treasury. The number one holder of treasury. It is whether or not they can curb their holdings of u. S. Treasuries over a longer period. It follows the Bloomberg News reports that it was something being considered and they pushed back and denied that that was a plan. They said it was the Market Forces that were determining how the holdings of treasurys played out. Others pointed out that it is difficult for china to step away from u. S. Treasuries, given the debts of that market and the lack of other decent options for the chinese when it comes to this. Have potential implications, if we do see a couple of more months for their holdings of u. S. Treasuries fall, and has implications of the rate environment, just as the u. S. Is looking to go to the market to fund the tax cut plan that has been implemented over there. Significant. On is you probably need to see a few more months before we can define longerterm strategies from the chinese on this. Yvonne japan also seeing their Holdings Drop near the for your low. Tom mackenzie, china correspondent joining us from beijing. Shanghai, it kicks paris out of the top five global city economies in under two decades. We will talk to Oxford Economics. Toty we are counting down those gdp numbers out of china. We will get more analysis. This is bloomberg. Betty this is daybreak asia. I am betty liu in new york. Onnne china set to report thursday. It is the secondlargest economy extended by 6. 8 . That would be the first full year acceleration since 2010. Joining us for a preview is the chief china economist joining us in hong kong. It is always interesting when you look at chinas gdp. There is always a mix of good and bad. Growth is rising. Growth could also be weaker, but we are seeing more balance in the economy. Is the Fourth Quarter going to be a change in the trend . Raymond we are looking at 1. 7 sequential growth. For years we are looking at 6. 8 , slightly lowered them what we viewed last week. I think the government is comfortable with the growth momentum last year in 2017. The growth packet was 6. 5 last year. I think that macro involvement with the Inflationary Pressure any decently growth momentum is very favorable to push it ahead. Yvonne much of the concern last year was, we see tightening going on in china. Monetary fiscal, regulatory, as reform. Form soe could this put a drag on the economy . Dont do thisey reform, if they do not fix the problem, it is the debt growth, that will shake the government. Jinping is is xi clear about what he wants to do to push china into a modern economy. Anything, likeo the use of this 2018 outlook, it would beorable, a window to push this reform, it would be seen as a failure. I think 2018 we will see much more reform to come ahead. For example the collaboration will continue. All of the supply sites will be pushed ahead. What do you think could go wrong in all of this and maybe for china to push the brakes on this leveraging . Raymond unless we see a very , itive financial collapse theretty because of complexity between different players in the Financial Markets. At the same time, we know that they are going to push this process quite carefully. Unless we see a massive meltdown in one or two big banks running into trouble. It will not relax in terms of deleveraging. To bring in another piece of news that we learned today that had to do it china and holding the u. S. Treasuries. Articles to the news on the bloomberg, chinas holdings of treasuries fell to a fourmonth low. We have been hearing a lot about how the chinese may be slowing them down, or even halting the purchase of this. I would like to save times with those headlines from yesterday of trump been besting china again on u. S. Trade. Novemberlking about holds, but are you likely to see more of a pullback from these treasury purchases . Chinese i think the sovereign wealth funds they manage the sovereign wealth and they will do that very carefully. Is way i see this problem that they will diversify the basket. They do not want to put all assets into u. S. Dollar assets. In the past 10 years they managed this widely. You know the dollar weakness has happened in the past few weeks. The pretty much stepped China Investor and pboc managed to resurge widely. Also the way that they see this is not a difference from, are they infesting when they see the structural weakness of the u. S. Dollar with the weakness we have seen in the past three weeks. Piece of evidence that even the chinese sovereign wealth is going to follow the market. Certainly goes to that point. Do you think there is any aroundal motivations this . I think thisean, is an economic decision. Ratherctical allocation, than i do not want to trail you into any political motivation the hind this allocation decision, but as you have seen, at the start of this year, the dollar has been very weak. Now that the pboc is making the right decision in managing their portfolio. Nd joining us here in hong kong. You can get a roundup of the stories you need to know in todays 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 worlds biggest miner cuts targets atal output the broad meadow and blackwater site. International Energy Agency said it may revise u. S. Oil Production Forecast if prices remain at current level. Is forest forecast liquid output to grow 1. 1 Million Barrels a day in 2018, up from 540,000 barrels last year. Agency will publish its Monthly Update on friday. Executive director told us that india is taking the lead from china and driving global demands. There is a huge demand for energy. India is moving to the center stage of level energy affairs. With china slowing down, india is coming forward. Bank of korea issued the policy decision and less than an hour time. Thisange in rates expected time. Economists are waiting to see if officials to make their inflation and growth forecast. Lets go to bloomberg policy editor, kathleen is here with a preview before they decide. What other drivers here for the central bank . Being driveny are to keep their policy on hold after a long series of rate cuts. They raised rates in november. Having done that, they are expected to waive back into a happens. The next part is focused on their inflation growth forecast. Maybe we will get forecast. But sticking look at g btv 2520. You can see is there there is a rate hike at one. 5 . South korean inflation is also running at one point 5 . The target is up to her at 2 . Bond yields have been on a bit of a rise recently. One of the things they are thinking about is inflation. Where is it going . Expert move higher any your oil and korea, that could boost the inflation rate. Hashe same time the yuan gotten stronger. After the rate hike in november, there was in poor price. There is push and pull there. Some are saying that with the is up. Maybe it could push it up more. That could jeopardize their experts. Very important part of economy. Next one. 8 is the look at this yellow line. Has a rocket ship the won been since september. Picking up steam in november, coming back again. Rter sees as a potentially is potentially a problem. It might just not up there gdp forecast from three. 0 to 2. 9 percent. Another interesting thing from it iso team eco team, out 1. 8 . Variable underscore the idea. They will take their time moving to rate hike. Most analysts see the next rate hike, when it comes not until the Second Quarter of this year or later. Indonesia and centralbank meeting today. What is in focus their . Kathleen on the bloomberg story, it is a runaway crisis. They are expecting to keep their rates steady. They have had eight rate cuts in about two years. It has not done that much to fire of the economy. Lets take a look at g btv 8531. You could see by a lot of other country standards, 5 gdp would look pretty good. Not good enough, not yet. Consumers are not spending that much. Consumer confidence is higher. This is a concern for Bank Indonesia. Experts have fired up. If this continues that should give the gdp number a bit of a boost. The other thing about these runaway rice prices is interesting. This is directly to food inflation. If you are Bank Indonesia you think about raising rates. If i have to pay more for my rice in indonesia, how much money do i have left to spend . The indonesia government is getting ready to import 500 tons of rice. They will overcome the supply shortage. One more reason why they will sit back and keep the key rate at four and a quarter percent, it will be interesting to see what kind of we get from them and what their biggest concerns are. Yvonne rice is certainly the concern. Global economics and policy editor joining us there. Up next, will chinas semiconductor cash in . This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Look out oflive sydney. Beautiful day outside the sydney opera house. We are seeing the asx 200 up 1 10 of 1 . Coming through from australia, the employment numbers, we have seen how volatile they can be. This is sizable when it comes to the month of december. 34. 7 thousand. That is 34,000 jobs that were added. This is more than twice the estimates of what they were expecting. They were expecting 15,000 jobs to be added. Are edging down, close to half of what we saw for the month of november. The Unemployment Rate picking up a bit to 5. 5 from the 5. 4 that we saw in the previous month. It seems like this month it was more about parttime workers and fulltime workers. Parttime employment up 19. 5, down 15,100. Lets get to the Market Reaction with sophie and how it is reacting with the dollar. Attempt tosaw an make a rise towards handles hitting the 39. 96 mark. Now around 7983 here. We do have investors digesting this latest bout of numbers. Bear in mind that as the aussie has added five cents, it has it long again. We do have relative strength index for the aussie dollar in about 10 years. You could see this on g btv 8002. With the potential domestic headwinds stacking up, that could bode ill for the aussie dollar. We have some strategists wondering if this might be the outlook for the aussie, which would push back below the hundred day average, the line in green. We are seeing momentum follow that beat and the aussie jobs number. Lets check out what is happening with aussie stocks. They have not been getting rid of the program when it comes to the stock rally in asia. After hitting the years peak on generate ninth, index is down for the year. To date the benchmarks is to hit a twoyear decline. It is providing the biggest boost. They are kicking off 2018 within overweight recommendation. Shareholder value on dividends and buybacks after underperforming in 2017. Energy stocks are under pressure today. Petroleum is sliding after dropping in the Fourth Quarter output. Well Whitehaven Coal fell over 7 after cutting its coal output forecast. Lets look at treating in japan. This as the nikkei breaks 20 4000 and the topix. Ritas 1900 for the First Time Since 1991. At thisis trading flat moment. Lets look at equity movers. For the nikkei two 25 your chipmakers and machinery stocks leading the way for the benchmarks. Tdk rising 4 . Has not upgraded. A july 27 a july 2007 hi. High. Lets get to the first word news now with Courtney Collins. Courtney first up, toshibas its Westinghouse Nuclear unit to bolster its capital by 3. 7 billion. That should help its it resolve negative shareholder equity. Toshiba expects aftertax profits of 1. 5 billion from the deal. In september toshiba agreed to sell its memory chip unit to raise funds. The deal may not close by march. Pay 38ays it will billion dollars in taxes on hundreds of billions of overseas dollars. Is also promising 30 billion in Capital Expenditure over five years. Atating 20,000 new jobs existing sites, and a new campus in in 10 star open. Ceo tim cook says apples focusing investments on job creation and job preparedness. A senior official in japans party says boj governor has a good chance of being reappointed for a second term. The official who is close to Prime Minister shinzo abe says there should be no big changes in monetary policy. He noted that Financial Markets have been sensitive about any hint of an exit strategy from the Central Banks extreme stimulus. President trump is backing a House Republican plan to avoid a shut down by temporarily funding the government, but shutting out democrats and their demands for an immigration deal. Speaker paul ryan and his team have been lining up to support among conservatives for a spending bill to keep the government operating through february 16. A vote is likely later on thursday. Day,l news, 20 for hours a powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. A g a were once chinas most acquisitive companies, but now they are under pressure for a government crackdown on big conglomerates. Joining us now is Bloomberg News editor. Lets start with this news from h in a just in the last hour making the announcements regarding ball high capital. This is the third unit that we know of, right, that is now being used for collateral of ojai capital to pay down some of these debts . That is correct. This company is already pledged a vast majority of its stake in. He capital they are in a furious rush to raise as much money as they can, and to try to pay down the debt. That is what this transaction shows. If you break down the number of shares is relatively small to what they have already pledged. It is important because it shows you how this is really scraping the barrel. Now accounts for virtually their entire stake in one of their pretty significant sized units that they have pledged to raise capital to pay down debt. Betty what is their Capital Position right now . It is hard to say. Of the things that investors are looking at. There is not a lot of transparency in the company. The companys capital structure has come under question. That is one thing that is making it harder to raise money. Come under fire and a lot of jurisdictions for acquisitions that they have made where the Ownership Structure is not clear in the company. Some of the assets that they have acquired, some of the deals that have gone forward have not been concluded. It is very hard to say what the companys net Capital Position is at this point. It is not something that they an ounce on a daily basis. Haiever, for example, bot capital had been suspended. This announcement came out today. We are not sure if that is considered the major announcement that trading shares were held on. It is the same for a couple of other units. Their shared trading has been suspended as investors try to figure out what this company is going to announce next in terms of capital raising, and in terms of its Capital Position. Yvonne a similar story with them. They have been shedding some of their assets, hotels in london, sydney, australia as well. Repayment toit of do in march, but also in may and november as well. Is this a Significant Development in terms of relieving some of the pressures and concerns from investors at this point . The transactions that we are seeing coming are a bit more direct. These are sales of major real estate projects that they had purchased not that long ago. These were luxury hotel and Residential Projects in london and in australia. We are told they are selling the one off in australia. In some of these cases, for example, with the transaction in london, they claim to be able to , even thoughn that they only recently purchased it and the new towers and Residential Properties have yet to come to fruition. This part of a sweeping of more than 9 billion total sales as they come under government screw for the scrutiny government shopping spree and how they financed it. The government rating has been cut and now they are to jump levels. They have been raising as much capital as they can to try to pay that down. All at the same time, focusing on growing their business within china. Yvonne thank you. Bloomberg news asian conglomerate joining us from tokyo. Chipmaker Taiwan Semiconductor is set to release earnings and forecast on thursday. While a new iphone rollout is what gives its earnings a boost, analysts are betting it may have a new cash cow. Bloomberg cindy joining us from taipei. But start with what investors will be watching for during the press conference earnings conference today. As the chipmaker for iphone has considered a barometer for iphone, 20 of its revenue comes all. Apple over shipman forecast for iphone x weak demand. Fourthquarter earnings are expected to drop 3 year on year. It is First Quarter sales made for about 8 sequentially. It is usually low season for iphone and china smartphone. Fordemand used cryptocurrency is becoming an. Mportant driver for tsmc some Analysts Expect tsmc to grow 10 this year in terms of revenue on the back of ai and cryptocurrency like bitcoin. Cindy, the crackdown we have seen on china, will that affect this boom, the cash cow for tsmc . We all know, Chinese Government is never a big fan of cryptocurrency. In initial Coin Offering the digital to hold currency trading. From this year they will ship operations overseas. Some people still believe that meant toas government do was to regulate the market and keep everything under control. But some people question whether the demands for mining will be sustainable if the price of that coin continues to fall. For the moment, we have seen the price of bitcoin done more than 30 from its record high. Before that really happens, the investors of tsmc are still treating this as a potential bonus to the company. Isone analyst put it, this like an option for tsmc. It is a good company, a good investment target. The demand is gone by tomorrow, it should not upset its investment outlook. But if the demand turns out to be strong, it will make the company better. Be a new frontier of competition between tsmc and other chipmakers . , that is the case. That is what most people believe. In fact, the company ceo told investors in last quarter that 350 million about to 400 million of revenue. That is about 45 of that periods revenue. Whether he would disclose more details on this revenue contribution from cryptocurrency remains to be seen. Any comments from the company on the outlook for cryptocurrency and all that is definitely one of the key things to watch at the Investor Conference this afternoon in taipei. Yvonne cindy laying there in taipei cindy there in taipei. Oxford economic wreck in shanghai will become one of the worlds top five city economies within 20 years. What is driving the growth in just a few moments. This is bloomberg. Yvonne this is daybreak asia. Liu and newbetty york. The latest report from Oxford Economics says shanghai will replace paris in the top five of global city economies by 2035. Asian cities will account from us half of global city activity, overtaking european and north American Cities in just over a decade. It is not just shanghai, but other economies will be rising as well. Joining us from hong kong is the oxford economic head of asia economics. Exactly what is driving this growth in shanghai. Anybody who has been following asia pretty closely could probably see this happening, right . So because shanghai is already a big city in terms of economic output. The government does not want the number of people to rise much more, but productivity in china and shanghai is still rising. Further increasing productivity will lead shanghai higher in the rankings. Betty is this the case of a rising tide . Other cities in china, perhaps around asia, they following in the footsteps . Louis for sure. If you are a city in a rapidly growing country, then you are likely to also do well. That is why we see many chinese cities, and other asian cities rising in those rankings, pushing down some of the incumbents from europe and the u. S. Betty i also thought it was interesting that this is not really an emerging markets story, it is more of an asia story. There are several cities in latin america that are dropping out of the ranking. Louis yes, that is something that we also noticed what we look at countries instead of cities. Asia is doing well and is moving up the rankings, but not all emergingmarket countries and cities are doing that well, in terms of raising productivity. I would say this is really about, can you razor productivity . Marketsemerging economies and cities, it is not happening at the pace that it is happening in asia. Yvonne you mentioned big cities like shanghai and beijing trying to cap the explosion that we have seen in firsttier cities. They have forced margaret workers out, how did Migrant Workers out, how did that influence this for you . These are people who are doing jobs that permanent residents are not willing to do. Complicated a issue. Urban policies in china is complicated. A sickly, the government does not really want those huge cities to grow further. Even if you ask people to where they want to move to, a will be big cities. There is a huge challenge for governments to manage what they have furtherve and growth of mediumsize cities. And balance that with where people want to move to. Yvonne president is using ping has been xi jinping has been talking about some of those battles. I guess it is a bit ironic that socialism with chinese characteristics should create some of the biggest billionaires in the world. Do think the president can deliver on this . That is a good question. Inequality and china has been on the rise from their early 90s until about 2005. At the moment it depends on what you look at. You look at a between urban and rural, within the different strata or the income, there has been some improvement because of Government Spending and good wage growth of low income earners. And other dimensions it is still rising. This is a big challenge for the government. I would say it will not be possible to completely eradicate poverty and china in the coming five years, what they are making headwinds with reducing it. Betty before we go, there is isn curious how big that gap between shanghai rising at number five, the new york city, which is at the top, how big is that gap . Could we see shanghai or any other asia city rise to the top . Are going to push this out further in time, it may well happen. If we look at the areas like shanghai and beijing, they are already at rates of economic of somend wellbeing European Countries. Especially those larger, richer cities in china are definitely on the rise and starting to compete in terms of wellbeing and will doing cities than the rest of the world. , look forward to reading more. Head of asia economics. The worlds most viable distiller is running out of liquor, driving prices up. This is bloomberg. Yvonne this is daybreak asia. Of thequick check business headlines. The Financial Group is the latest japanese lender to end the security business as the nations regional banks diversify away from traditional lending. Banks located in southwestern japan will open on monday with 60 employees. That includes 10 people on loan from major firms. Holdings jumped, hip by following demand from the offshore oil company. It will evaluate Strategic Options from the division. They have cut 4200 jobs. Be slim from five operating units to three. A rebound in holiday sales by new accessories, such as 90 pencil holders and 450 rulers. They rose 3 in the final two months of 2017. The pencil holder and ruler sold out online from higher end products. There are Still Available in 9,000 sterling silver ball of yarn. A little too fancy for my taste. The alcohol flavor, potential to appreciate and price has made hot property. Also the most valuable distillery in the road. It is now running out of liquor. Bloombergs consumer reporter joins us from beijing. Rachel, i dont know if i will ever get caught in this inch, but tell us binge but tell us more about the shortage,. This is a 150 dollars 150 Product Company that faces limitations on its production. Grainss to be made from that are grown specifically in this town. The only liquid that is added to that liquor is from the river of the towns. That place is significantly natural limitations on its production. Betty what is it going to do about this . Chel the Company Knows that there is an endpoint to how much liquor they can produce. A part of that has driven up prices. The company is really focused on trying to build other businesses beyond this liquor. They are planning to launch three other Public Offerings three other public businesses. The ecommerce business and one is of the agricultural business. That main alcohol that is so in demand, what they are trying to do is create premium versions. Customize bottles for clients and casino operators, pushing up procedure products to maintain revenue growth. They have got to keep that purity in their manufacturing. Rachel in shanghai. That is it on daybreak asia. A look at what is coming up in the next few hours here on Bloomberg Markets. You are watching many things coming up on your program. Many things. We will be talking about china gdp. Coming up later this afternoon, we have to tweak the schedule. Does that mean we will get a disappointing rate, perhaps they will release it later in the day. Equities. Global also watching what the hang seng does today. Pushing through to reach another record high. Lots to talk about in terms of the values to be found when it comes to ashares where she sees the rotation going, as well as Global Outlook of cause. Talking china property causes. We will try to get some answers as to why we are seeing this divergence with between property stocks and the direction of property prices and where she sees the best positioning for developers going into this year. Whether prices will make a comeback. Chinal talk again about in a broader outlook when it comes to this Global Growth story. Strategistomist and will be joining us out of hong kong. I want to talk to him about the situation when it comes to chinese appetite for u. S. Treasuries and whether there is something into that refuted report we put out last week. Certainly a jampacked few hours for you. That is it from daybreak asia. Markets covers coverage continues. This is bloomberg. It is 9 00 a. M. In hong kong. I am haidi and this is Bloomberg Markets asia. Haidi asian stocks extending their stellar start. Theirthey gives clues on reestablishment plan. Goldman sachs finishing out a tough year. Running dry, why the worlds most