More hikes. A big day for stocks but not if you are a bull. The selloff started friday and im even sharper on this monday. Even as stocks suffer their biggest losses since 2008 the bond market started acting more like the usual correlation. Stock started plunging we got a nice rally in the u. S. Treasury market and we ended up benchmark 10 year. Yesterday morning we saw that 10 year testing at 2. 8 . It has been a big year in on movement. We have seen a little of that sign, butd be a good there was about 15 minutes of frantic selling on the dow, that flash crash. It is raising some eyebrows. This runup that we saw in january, this could be some type of a healthy signal. There are a lot of questions on how much pain we would have to endorse here. Guestsf questions to our this morning. Kathleen and a perfect time to be asking them. The biggestre on stock plunging in 6. 5 years. Erasing alls p 500 gains for the year. The vix volatility index wow. And i biggest spike ever spoke to an expert and said that cant be right. It is moved from the lowest volatility nearly ever. Us go right into the closing numbers. Since 2011. Y we were on pace for that. These were the worst two days since 2008 so the sentiment is how did it feel for investors were trying to get out of the gate . It felt like 2008. Treasuries were higher again. Wells fargo got a big spank from the fed, it is bigger than a spank. It is the fear of god. They are not a letter to expand until they fix a lot of what is wrong with the bank. Lets go into the bloomberg. Before you get there i will remove those boxes. Again. Ies and equities when you had today was it fell again. Running to the bonds showing that the safe haven play is still there and the equation could change again. Was concerns it could spark a downturn market, which it did and now people are running to the bonds. We cannot figure out Morgan Stanley and bitcoin, all lower for different reasons. Lets start with wells fargo and Janet Yellens parting gift. A big hit for wells fargo, get your act together is the major message but the other is that you cannot expand until you address certain measures. Almost 9. 5 . Down there are some who think they will be able to recover from this. Has had anley amazing feat. We have seen it outperform. Its a bad day to celebrate because this is very blue for investors. Lets take a look at bitcoin again. All of these big the cryptocurrencies had a major backlash. Cryptocurrency supporter said, it has been a parabolic gain. This was always in the cards and doesnt mean anything fundamental, but there are others who would disagree. Oil, energyack to stocks are one of the biggest losers. What does this mean for commodities . Gold and oil were down 2 at the close. What we see here is oil decline accelerating just when it looked like everything was clear. Wind climbing. Gold has been under pressure but not anymore. It is a big spike over this concern about what is ahead in the market. Everybody thought the market was too good to be chu true. As soon as the music changed, everybody went running for the safe haven. Thank you so very much. We are seeing stock futures rising 1 . Maybe some people do feel that it is time to jump in. Your thoughts on the kind of day we saw when this relationship seemed to get more like what we are used to. Some saying it is not that big of a deal. Maybe this is it. What is your view . Our view is that this will be a day that we want to mark on your calendar. This will be one of those interesting events where the market woke up. It is gone through a long period of time where the story and narrative have been. Something that has questioned the sharp runup in equities. It will depend of days. This is just the event. What will be most interesting is to see how this is absorbed into economy over the next number of weeks. It seems like you are seeing a healthy correction after a 24 rise. The markets dont always move like that. But to answer your question about how it affects the economy is how long it lasts and how deep it goes. Investor,mer and an doesnt last . I dont know. It sounds like a copout answer but the reality is that nobody really does know exactly what this means. And it wont have any real import until it becomes digested in the reactions to all of this. To this,sinesses react what happens to the investment plans, we have seen all the good trends and they are still with us. If that were to change we would have to adapt with that. I think that the valuations got a little bit rich. A lot of people understand that. I think that this is part of a healthy sorting out process and the fact that the market fell doesnt necessarily mean that there is anything wrong, but this is the market trying to find out where it ought to be. People are saying this is a healthy correction and when to correct more to get back to the fundamentals but others are sent the stock market is not the economy. We do see the shift when it comes to rising yields. If we see that steepening of the curve, is that a signal that we are not seeing a shift in the economy when it comes to inflation . Storymay be telling the that the economy is expected to accelerate. When you see that in the yield curve, usually that is what it is. If it for flattening, we would be crying a different story. We would say that must mean there is something wrong with the economy. If you look at Corporate Bond spreads last week, they had been tightening relative to treasury. That is telling a good story. Right now we have to be looking at that things are looking relatively good fundamentally and risk is still in the market. I cant imagine the calls tomorrow morning when you are talking to everyone at work. We areo we go from here going through our the uh in process right here. We will assess which way we think the economy is headed. That is an evolutionary process when you look at this question of the Federal Reserve we spoke to paul allen and he says the biggest risk is that the central bank will get it wrong. If they start moving toward a more aggressive approach, look out. Do you agree . Like like to see the fed raising rates. It indicates that the economy is moving in the right direction. The risks would be, they can get it wrong and one of two ways. Ironically of a melt up couple weeks ago. The fed is in a dicey position. We will have to watch carefully. Thank you for joining us to give us some perspective. Maybe stocks have had a drop. Maybe this is it. Lets look at how things are playing out right now in early asia trade. Stockst with new zealand down more than 2 . We have the new Zealand Dollar moving as well. The 10 year yield is at 2. 84 . That is something people have been walking watching very closely. Trading in japan. Nikkei futures are up. We saw that bounce in the s p futures. The nikkei is up 1. 3 . The nikkei 225 down 2. 5 . Rateve the u. S. Dollaryen at 109. 2. Other currencies are getting stronger. It could get to 105 over the next several months. Lets get to the first word news with jessica summers. This unexpected release raises questions about the korean governments ability to reform big business. He was the most high profile businessmen caught in the corruption investigation that brought down the prime minister. Are others who have been tried for corruption only to receive suspended sentences. Is calling on bhp to review its structure hoping to create a unified company. Bhp currently operates as two entities, one in melbourne and the other in london. A new study shows that Pension Funds in us trillion have grown at the fastest pace in the world over the past 20 years. That is according to research compulsory retirement saving rules and riskier assets are among the key drivers of the growth. The minneapolis fed president kashkari said that the eleration in wage growth he says it could be a blip and should not be ignored. Growth sinceastest 2009. Kashkari also says that wages must be balanced with inflation. We need to see what will happen with inflation. We have our 2 target and our maximum employment mandate. See inflation build back toward our 2 target. Powell is veryy well equipped to take this on. I am jessica summers and this is bloomberg. We have breaking news. A house panel in fact the House Intelligence Committee voted on monday to release the democrat counter memo on the fbi. We just getting that news. Republicans claimed that the fbi had abused their powers to wiretap a former Trump Campaign arecial, but democrats complaining that what the republicans release was redacted and did not give the complete view. This is a very Important Development in washington. We are watching it so very closely. There is a possible Government Shutdown this week. Theave the longview on biggest growth in the stock market in six years. Next we are live in kuala lumpur for an exclusive conversation with this is bloomberg. Kathleen this is daybreak asia and i am Kathleen Hays in new york. Yvonne i am yvonne man in kuala lumpur. Malaysia hosting the world market symposium. They are looking at the future of financial markets. Over 600 global policymakers and Industry Experts are attending the event. We will be here for a couple of days. Kicking off the event, i am pleased to be joined in an exclusive interview by the chairman, ranjit singh. We have to talk about what has been happening overnight in the markets. It started with these rising global bond yields that we have seen. What did you make of the price action right now . We have seen a strong runup in the markets and there is always the expectation that it would be associated with some correction. Expectations are on a faster tightening of the policy. Weve seen the crystallization of that last week from yesterdays performance. Can you tell us what we are seeing . We will see some pace of correction in the markets it is a question of what degree. The key thing is that the economic fundamentals around the emerging market the secret is the recovery we are seeing around the world. Believe that fundamentals should be recognized by the markets. Yvonne is there a metric you look at four when people should start to worry. We are looking at this frenzied panic in the last couple of days. We have seen china and the National Team stepping in. Is there any indication of that you . We dont see that. We do not see any reason to react in that manner. Withsia has benefited fundamentals. The government has provided a fiscally responsible venture. Overall, the goal remains. We want to talk about the mission here over the next couple of days. In 2017,r for you guys the Security Commission winning a number of Court Rulings. The Capital Markets are very healthy. The biggest barometer we have seen is the amount of information that occurs in the Capital Market. These Court Rulings that you. Entioned are very important there is an incredible deterrence against anybody who tries to abuse the market. Yvonne that is a step in the right direction but there are some who say it is the tip of the iceberg. How far are you from where you want to be . I think this is a strong and ongoing process. Malaysia is ranked highly in terms of Corporate Governance and the actions taken are an important dimension of that. We have an ecosystem that focuses not just on regulatory discipline, but market discipline, and selfdiscipline among market payers. No different from any leading market around the world. Yvonne are to currencies and bitcoin were just sitting around the 7,000 mark. What steps is the Securities Commission taking when it comes to managing the volatility . I know that you are taking more of a cautious approach. There are two approaches we have taken. Weve been quite consistent. See, there was no discipline with regulatory bodies. Everything changed or was there a reality check . There is clearly a lot going on with that market. Stance is the appropriate one. But fundamentally were looking to allow the blockchain technology. Yvonne are you on track to be relaxing from these rules allowing Retail Investors in the market for the first time this year . A 1. 3 trillion ringgit market. It is very important. Weve done three things. Weve set up one of the regions first. What we are working on is the liberalization on the rules associated with the retail market. All of that reinforces the point that we believe retailers should have access to the bond market as well. Thank you for joining us. Singh, the Securities Commission chairman. Have a lot of big guests this morning and we will be speaking to the Vice President and chairman of asiapacific in the next hour. Lets send it back to you kathleen. What a pictureperfect day for you to be there. A quick look at the business flash headlines. This is ceo has resigned. Someone else will also resign from the board. We were not given specific details about his alleged misconduct. But in his statement he encouraged all employees to hold themselves in the highest standard of integrity and respect. Governmentbacked beijing Cultural Investment is paying for hundred 96 million for a stake of over 5 . This billionaire founder is selling off assets to pay down debt. Up next, a big story. s executive is set free after the Court Suspends his sentence. Activist investors will continue to look at the fallout and the impact of the u. S. Stock market across asia trading. This is bloomberg. 7 30 a. M. Tuesday here in kuala lumpur. Very, very balmy. Certainly keeping warm here. Certainly the chill in the markets is what weve been focusing on. 30 minutes away from asias first major market open. Kathleen . Its 6 30 p. M. Here in new york, where stocks closed anywhereoss the board, from about 3. 8 to 4. 6 . Losing 1175 points, its point drop ever, since 2008. Im Kathleen Hays in new york. And im yvonne man in kuala lumpur. Watching daybreak asia. First word news from new york now. U. S. Stocks plunged the most in more than six years. Deepened on fears that rising inflation will force Interest Rates higher. Dow sank more than 11 points. Rallied and gold rose. However, economists say the fall is unlikely to hurt an economy thats enjoying solid gains in spending and hiring. Socalled robo advisors havent this. Ch experience with when confronted with one on monday, they struggled. Biggest websites 500 index the s p sank. Wheen while, mario dragic has bank must brace for a hard brexit. He says the bank is always ofparing for a ring outcomes range of outcomes, but the possibility of the u. K. Leaving without a transition is there. He cede the e. C. B. Is said the e. C. B. Is working closely the bank of england. And Coalition Talks are expected in germanya head today, with negotiators saying they want a simple yes or no decision. Were extended as the reign conditions. More than four months after an election, she may have to offer more if shes to term. Fourth global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Ofwell, we have a second day heavy losses here in the asiapacific. The market open in tokyo and seoul. Plunged. That tumble on wall street. Havensainly see safety finding favor amidst this wreckage. Theyre finding some vindication. This morning, aussie bonds are following suit. Look at thee a currency markets, youre seeing traders flocking to the yen and can see on this hashtag. The greenback trading at the january 23 high and the yen back below that handle. And Deutsche Bank says that the volatility of equity markets, they are looking like calm. Is of while stock markets are not out of the woods yet, lets check here. Japanese futures, they are off the bottom that we saw earlier in the session. Likely to continue in seoul. But s p futures, theyre shift ing a potential sentiment. But yvonne, we are anticipating inecond day of losses here asia. If the face of more losses for the nikkei, its certainly going to be another down day. To find a japan soft there. Ut why is that . Almost everyone that bloomberg spoke to on monday, theyre optimistic on the outlook for the bull run in japan. The assurances on monday that theyre sticking to stimulus, that is reinforcing the view that the fundamentals remain intact. Look at some of the views out there, we have aexis saying that this is healthy correction. While they wont be surprised to see a pullback of about 10 from the january high that we saw, when it surpassed 24,000, it will resume following that. Type ofsee, this is the quantum move that we are looking out for, whether or not we might hit that 10 drop, to see whether or not we might see more that pullbackg right there. So we do see, of course, as the seeing indicated, we are losses at the open. Very interesting. You know, we have a guest, owen on earlier. He said japanese banks in particular are dirt cheap. At any rate, australia, setting the tone, with declines across day when theyhis are meeting. Certainly a lot on the plate aussie investors. Sales we are seeing aussie stocks headed for sinceggest twoday drop august 2015. It is not enough to lift the mood. But trebek investment seeing opportunities throughout the course of this week, even as are exacerbated. They are pointing out opportunities in metals, copper nickel, as well as cycles to ave ex closure exposure to that stronger growth story in the u. S. So keep an eye out for that. Shell be joining us throughout the program with more updates. Investors had few places to had the selloff. Gold was one of them. But bitcoin, forget about it. Worlds most popular cryptocurrency plunged below struggling to prove its credentials as a safe haven. Were at the wall with the three to know. Need even as we speak, bitcoin is mark,low that 7,000 around 6800, 6900. Earlier, yousts were talking about market capitulation. I think the same can be said to bitcoin. S youre talking about gold. Lets compare it. The hashtag, if you had gone into gold at the start of this nominally, be up 1. 6 . But since the start of this bitcoin in blue, youd be down by more now, more than 50 of your money. Its just crazy how this has just come off the top here. See also interesting to that this has been happening on the back of some really negative of, for example, south korea, saying they have been attacked by north korea trying to get into the cryptocurrencies there. And some of the major u. S. Banks saying, you know what . Let ourt going to consumers buy cryptocurrency. Bank of america being one of those. This is a bit of a history lesson, looking back at the crashes weve seen over bitcoin. Ever since 2010 or so, we can up toe rise in bitcoin, 19 december 18 is where we are. High, wee that record are now down 65 . But thats not the worst of it. The fourthually biggest fall in the past four falls since 2011. One was back in 2011. 92 down. But the longest one was at the of 2013, down 86 over the alone. Of 2014 the reason for this, mount gox went bankrupt and a lot of people lost their thets and their faith in crypto. For every single time that it fell, it did hit a new record. Aheadxt question moving is whether we will rise from this current fall. A very terminal chart, quick comparison with other peers. Year to date, no place to hide, just as kathleen said. Year. Bout 3 or so on the look at that, down 45 . In ripple. O down 45 the purple, down about 65 , 70 on the year. Those are your three terminal charts right now, as we continue fall. Bitcoin yvonne . You. Ank lets switch gears, talk about samsung now. Unexpected release of the companys hair, lee jaeyong, raising questions now. Korean governments ability to reform big business. His sentence for bribery, and president moons pledge to curtail this. Lets get stephen, joining us live from seoul. Ate he was he was there the time of that ruling. Jaeyong lee, again a free man. How much of a surprise was this . Have been likening it to being stunned and also not surprised, if thats even possible. Others likening it to, like, apping off the bandaid with wound that is not necessarily healed just yet. In south korea who wanted this to send a midg messe for we are on the pace reform. Thats what moon had campaigned fromwhen he took office the ousted president. But this is a stunning result. You look atif jaeyong lees father was convicted and given a suspended sentence. The, more recently, chairman was given a suspended corruption. So it shouldnt be too much of a surprise, even though as we were proceeds trickle out from the court, in some of the readings from the judge, on gettingng, we started that indication that, you know, somes going to get leniency from the high court. And that is what happened. And he is a free man this hasnt beeneit he exonerated. However, he does have that sentence, a fiveyear sentence, to two and a half years and hell be under probation for four years. But pretty much, thats a slap wrist. It certainly is. Does this mean about reform now . Weve been talking about how this was supposed to be an of, you know, were no longer going to see this cozy relationship between business and government. Going to be a blow for the activist investors in seoul, in south korea . Yes. Thats what our peers over at Bloomberg Intelligence are this could kind of silence those activists ininvestors at samsung who wanted a faster pace of reform. Well,ow, keep in mind as this company, this massive, conglomerate has about 60 billion in net cash. And the same people, Bloomberg Intelligence are saying they on a spree, much like they did in 2017 when they did buy that 8 billion purchase that many believed was partially spearheaded by lee. So we could see more of that. And then, you know, the smaller investors and also the activist investors might have to take a seat. And the judge found no evidence of power business, poor guy was just browbeat by the president. What does this mean for samsung . This basically means that they can go forward. The heir apparent. They have a number of different products coming out. Theyre going to be launching their new flagship s9 smartphone, which is going to be iphone 10, just on february 25. Perhaps go ahead with some big manda that they might on the back burner after these last couple of years, which samsung executives admitted that they went through unprecedented crisis. The note 7 fiasco and then they had the lee saga six when he was sentenced to five years in prison. A lot of that is behind them, theythe new phones and now have new leadership and lee is free. How about that . Well see where this story goes. Thank you so much, our chief asia correspondent joining us from seoul. Lets go to the reserve bank of australia now. Their first cash Rate Decision of the year. No change expected for the 18th row. In a paul, from the rbas point of like 2018 is looking a lot 2017 . Sure is, kathleen. Is groundhog day for the reserve bank of australia. Inflation, still pretty weak. Read just last week, 1. 9 for the year. Outside the band of 2 or 3 . Wage, growth, still very weak. Household debt at 188 of income, at a record high. They really couldnt fighten, even if it did want to. Beene plus side, there has very strong jobs growth. Maybe wages growth is on the way reserve has said in the past that its prepared to be patient when it comes to inflation. But, yeah, we have to were on language watch basically. Pricing inw november. As the most likely month for tightening. A little bit of data coming out ahead of this decision. Retail sales for the month of december coming out within the next hour, expecting to see that just. 2 growth. Trade, though, expected to million. Surplus, 200 and encouragely, it has at least in the past couple of weeks. Paul allen, thank you so very much for joining us. Up next, could another financial crisis be brewing . Risk assessments from the minneapolis fed president and publisher and editor. Bloomberg. This is daybreak asia. Im Kathleen Hays in new york. And im yvonne man in kuala lumpur. Fed president s says he doesnt see a financial crisis on the horizon. An exclusive interview with betty, Neel Kashkari told her while stock valuations seem on the high end, he doesnt think its a bubble. Talked about what the fed is learning from japan. America, people were very quick to criticize the bank of japan, saying they should have aggressive,re trying to deal with low inflation than they were. Littlebe in a inflationary environment for a long period of time. Weve seen the struggles of japan. Learnedhe things ive from japan is how powerful low Inflation Expectations are, when become embedded in a society. Central bank can raise inflation or 100 . We dont know how to raise aflation expectations by half percent. Thats the trick. I think japan has learned that. Theyve taken extraordinary measures to try to boost even nation in their inflation, but they want to maintain credibility. We need to continue being humble, look at the japan experience. Certainly shouldnt declare victory too early on inflation. Weve seen from japan how is if one does that. He has said very specifically, we are going to our foot to the pedal and continue that stimulus. How do you think japan gets out inflationary environment . One of the challenges and i population this, is growth. Like japans demographics challenging. Japans are much worse. Japan does not have the history the wayration United States has. A challenge for japan is, can they open themselves to immigration . Help to boost that fertility rate, by bringing in more workers from abroad . The u. S. Need to recognize that immigration has been a real source of strength for our and it needs to continue Going Forward, if we want to overcome our own domestic demographic challenges. And some of the challenges economies hasn been their own rising currencies, visavis the dollar. Such a mystery, i guess you could say, or confusing or confounding that fallen, and the rise of rising rates here in the u. S. Do you see that trend continuing . And what kind of impact do you think that is going to have in asia . Hard to know. Ts i talked to our own economist and they said we have no idea. Were allknow, terrible at predicting currencies. And the currency markets have minds. Wn i would expect to see im hoping just a strong global help all of us. Whether the dollar goes up or goes down from here, i dont know. Dollartainly a falling makes it more challenging, easier for us to hit our japan to, harder for hit their inflation target and harder for europe. Im hoping that strong productivity growth can boost a our economies. So as Minneapolis Federal president Neel Kashkari speaking earlier. Anding us now, editor publisher, dennis gartman. Hes been publishing his daily commentary on global Capital Markets since 1987. Welcome. Great to have you on the show today. And how interesting that youve since 1987. T that was another time when a much worse stocks actually crashed. Whats the difference between then and now . I think, first of all, we have to remember that in october did go down almost 24 , if i can remember correctly, between october 19 october 21. And here were down only 4. 5, 5 . Actually i think we got it down 10 from the highs. More mature market than it was back then. I think the fact that we have derivatives than we did back then. We understand a little bit thatr some of the problems can be incumbent in the derivatives markets. I think we also have better news services. Have a better dissemination of news. Probably a better understanding of it. More maturee far than we were then. Nonetheless, i think we have some difficulties ahead. The past couple days are only the beginning of what could be still a market ine bear stocks, that i think has begun. A substantive bear market in stocks. So youre looking for something much bigger than weve seen the days . Ouple remind us, how do we define a bear market . Get . Ubstantive will it well, i think, first of all, everybody wants to say that when people think you can go down 10 and thats when you start the beginnings of a bear market. To me, anytime youre down more than 5 , 7 , thats a fairly ones equity. T to i wouldnt be surprised if we take this one, after having had in,ll market that began what, 2009 . An auspicious number to say the least on the s p. Its been nine years of a bull market. 17 . E give back 12 , 15 , id be so much surprised if we didnt do that. To drive it . Ng is it just the momentum . Aspect,st the technical people wanting to get ahead of know,cline, fear, you panic . Is there something fundamentally different that would justify this . All, stock prices became egregiously overbought. The public game enamored of shares beginning in november of all times. Started to become even more enamored in december. Threw in dramatically in january. And the public is always late. Two, we have the beginnings, i think, of inflation. Think that 2. 9 wage increase that was reported last month is start of something. When you travel around the country and ask businessmen whats their biggest concern, biggest concern is they cant find labor. Commodity prices, i think, are beginning to turn higher. And i think that i put a lot in what goes on in international trade. I think we made a terrible imposing trade tariffs upon washing machines and solar panels. Now the chinese over the weekend imposed trade tariffs on grain that we export to them. A tit for tat sort of circumstance. That bothers me greatly. So i think theres a number of are worrisome at this point that people are not taking enough into consideration. Hmm. So do you agree with an earlier guest that the big risk to this year, besides all the ones you just listed and the trade aspectt cannot be overlooked, because many experts on china are saying the tradee year when war that didnt happen in 2017 is going to happen. Threat biggest possible being the fed getting it wrong. Raising rates too much. Do you agree with that . The fed will probably get it wrong. The fed historically has gotten things wrong. Have great i respect for mr. Powell. I think hell do a fine job. More moderate in his policies. But nonetheless, i think the fed raise rates four times this year, probably 25 bases points each time. I hope that we dont move the fed too much and move curve to an inversion. Certainly well take it at least bases points higher. That suddenly makes bonds at the of the curve an investment vehicle, and the competitive with equities prices. I think we have problems here. All right. Itlly quick questions, but does have too parts. How high is the 10year yield, high is it going to go . And what are you buying now, if stocks . Ld get out of first of all, i think you should be reducing your position in stocks rather dramatically. Buy,hing i would commodities. I think Commodity Prices in in balance, compared to equities prices, are ridiculously inexpensive. If i could only buy one thing, probably be a buyer of wheat. I know thats hard for most people but there are etfs that let you put that trade into effect. And how far do i think the 10year can go . You and i both, were from the old days in chicago, 25 years when we remember the long bond with the 14 coupon. With amagine the 10year 4 could you poon over the course coupon over the encounters of th course of a ye . By historical terms, that would not be unusual. Unusual but maybe i dont want to be in bonds either. Thanks so much, editor and publisher, dennis gartman. Were going to toss it over to yvonne now. Thanks, kathleen. Off later today with a surge in asian travel expected to be a boon for the makers. They say the region will have 2036,llion passengers by more than double the forecast for north america and europe combined. Chief International Correspondent for Southeast Air show is at the here this morning. What does this all mean for and boeing . Well, yvonne, asia has never a better position for manufacturers like boeing and airbus. Just to put it into perspective, about demand. Well, demand should be increasing. Only about 10 of the population here in this part of the world has actually so the upside potential is tremendous. Just to put things in perspective, were looking at 3. 5 billion passengers in 20 years, like you mentioned. Come to about 16,000 jets needed from airbus and and that also translates to 2. 5 trillion in orders. So big upside potential. Now, this comes at a time when of budget a flurry airlines. Theres a lot of competition where thet airlines, fullfledged carriers are concerned. Profitability, by the way, is an issue. Market share has come at the expense of profitability. Has to bee issue that looked at, as the region grows. Infrastructure is the other yvonne. Well, demand for air travel continues to thrive. Were looking at a lack of infrastructure. Air control towers, skilled laborers, skilled workers, all will have to be looked at in the years ahead. Kathleen . Well, thank you so much. What a beautiful morning you day to kick off your shes our chief International Correspondent. Coming up next on the next hour of daybreak asia, nissan vehicles andnected mobility. Credit swiss, thats an inclusive. Startcoming outs of the of trade in japan. This is bloomberg. We use our phones and computers the same way these days. So why do we pay to have a phone connected when were already paying for internet . Shouldnt it all just be one thing . Thats why Xfinity Mobile comes with your internet. You can get 5 lines of talk and text included at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And now, get a 200 prepaid card when you buy an iphone. Its a new kind of network designed to save you money. Call, visit, or go to xfnitymobile. Com. Yvonne in 00 a. M. In kuala lumpur 8 00 00 a. M. And kuala lumpur. Welcome to Bloomberg Markets asia. Day of heavy losses amid rising concern that inflation will force Interest Rates higher. U. S. Stocks funds the most in six years. The dow losing 1100 points. Thats more than 1 trillion wiped away. From bloombergs global headquarters, i am Kathleen Hays in new york. The route hits the robot. Digital Investment Advisors could not handle the selloff and simply crashed. Bitcoin is the loser once again, struggling to prove its credentials as a haven assets. Asset. Ven yvonne what a day. On friday after the jobs report, inflation accelerating. We saw a selloff. Wow, that was practice for the big selloff today. Court stock features have stabilized higher, and u. S. Trades are holding onto a lot of stocksns they scored as sold off. A lot of people think it is too early to say this is it. Our guest will us he thinks it is the beginning of a substantial bear market. Yeah, he mentioned how historic yesterday was. 15 minute acceleration where we lost nearly 1600 points. Has not seen and entered a move like that ever for the benchmark. As we lookution ahead to the markets in asia. The system will Capital Market symposium here in kl. What we are hearing from the ground so far is we are seeing the synchronized growth picture story happening here in emerging markets, especially Southeast Asia. Seeing signs of a healthy correction could be a positive note for developing nations. Kathleen it was very interesting what your guest said. The fundamentals have not changed. Not the ones driving local markets. Buying opportunities. Absolutely. Lets get to the market open. Sophie kamaruddin has whats going on here. Sophie certainly, we are seeing red as investors wondered just where is the bottom . Losses of over 2 in seoul and sydney. The nikkei and topix losing. Several strategists have been trumpeting that the fundamentals remain intact. We are at the start of a bear market, but others say this is a healthy correction. We have the earnings story continuing, wondering whether that might help. We are seeing a big one today in japan. We have to bear in mind whether or not we might see some intervention from regulators. Monday, we had china and taiwan we sawto stem the losses in those markets. Keep an eye on whats going on in the safe havens faces. You have the japanese yen trading around that one can 110 handle,at trading near the oneweek high. 110aryen recovery to the level. Share prices are expected to retained stability. Losses over 3 into your. Lets see whats happening with the bond space. There has been a switch up of sorts when you take a look at bonds. We have on the bonds tracking the overnight rally that we saw in treasuries. Perhaps having their hopes salvaged. Bonds retain their state haven status. The tables have turned on the bearish scenario with the yields pulling back from the significantly technical levels. Tough times are continuing for oil. You have the equity selloff bleeding over into commodities. Economic prospects Going Forward. We have these worries over the robustness of global demand. Casting doubts over oils more than 50 rally since june. Kathleen thank you so much. Lets get to Bloomberg Markets mark cudmore. How does this compare with the 2010 flash crash . Can etf be blamed in any way . Saw a lotflash crash of individual stocks fall 99 in the space of a few seconds and then bounce back completely. The market is behind part of this. It plays an seen is increasingly important role, larger and larger part of the market, so etfs share part of the blame. We get a selloff. Certainly, equity markets are behind. There is most likely more to go. Yvonne treasuries, once again the safe haven. Whats the takeaway here . Mark the treasury yields have come back a lot. Basisar yields rose 80 points. Thats an incredible monetary tightening. A real restriction in liquidity in the last couple of months. We saw a record inflow into it. Nevermind the facetious point that price is the most important fundamental. The prices have changed. Restrictedy has been quite a bit in the last couple of months. 10 year yields rise a long way. Treasuries are going to get inflows at this point in time. It did seem treasury yields had momentum. They continue to rise higher even though there will they were not justified. Momentum trade cleaning out all of those who were long treasuries. It is an opportunity to get those much higher yields that seem justified by inflation. We will see how the bigger investors react to this as well. Any more fundamental reasons to be nervous . Mark i think the whole reason why i turned bearish last week was suddenly, for the first time i remember since the crisis, there were no bears. Whats worrying me is we are seeing most voices say that there is a sign of panic. Endless headlines about this just eating a healthy correction, etc. We get theirs with a small pullback. It could continue a lot further tomorrow, a lot further this week, until we start seeing the panic. The longerterm growth story can reassert itself. In the shortterm, overall we have a lot more pain to come in this correction, this pain period. There markets do have the most powerful bounces. They may have forgotten that. Because people are losing money, chasing the tail, we see powerful bounces. We may see equities fall a lot further this week, but that does not mean we cant see bounces of several percent in the interim. Stay with us. I want to bring in and occur in curran, who joins us from hong kong. But canadas economy has he inherited from janet yellen clearly, the critical question is the durability of the market selloff. To her the wider economy, thats when policy makers will get concerned. The broader economy is in good order. Mr. Powell has taken over on a day when the economy is in good health and the manufacturing is doing well. As a prices are back up to where they were precrisis levels. Sign of runaway inflation. It comes back to this question of how durable is this selloff going to be . A oneoff or something the start of or the start of something much deeper . Are the inflation concerns in the u. S. As well as elsewhere overblown . One of the Game Changers has been the big tax reform and tax cut at the end of last year. That might start feeding through to the animal spirit. We do hear a lot of anecdotes through our own reporting that reporting labor shortages because the job market is so tight and wages are going up slowly. Early indications that inflation in the u. S. Is picking up. When you factor in the impact of the economy for tax reforms, there is the reasonable case to make that inflation might accelerate faster. I dont think there is any sign of panic. Kathleen the same question for both of you, but i want to start with mark, because from friday u. S. Trade, monday u. S. Trade, the fed is going to do for hikes. Four hikes. To thats going to be better stocks. Week stocks are going to slow the weak stocks are going to slow the fed down. I think we need to see a bigger pricing in rates. A weirday, it was point. We got into this whole paradigm in the last couple of weeks that the idea of higher yields was the fact that there was this equity bull market. There was a severe monetary tightening. Was extreme monetary tightening that we have not seen in more than a decade since before the crisis. Many traders probably have not experienced a rate hike cycle. When it accelerated, i think this was a big concern for equities. What is worrying is the narrative of people stopping worrying. There might be a slight recalibration of expectations. There are signs of a pickup in the inflation. Theres very little signs of inflation around the world. The dollar weakness is helping will do down inflation elsewhere. It continues to disappoint forecasts outside of the u. S. I do think we will see a slight come down in where we are pricing fed hikes in the next two years. Inflation is no longer just a domestic phenomenon. The boj and ecb and other Central Banks are watching the fed. How are they going to take the stock market volatility temporarily when they had china with the selloff. At least turned on the message, even if we had to again in march. Just how durable and sustained will this selloff be . No reason for policymakers to panic, but we will have to watch and see how this plays out. The risk is they move too fast, too hard. This has the double impact in terms of exasperating the market and dampening consumer and Business Sentiment and hurting what we all know some much about. Central banks around the world are trying to pull back in easy money. The ecbs tap tapering. They would like to pull in more. If they do continue to end up with the path of tightening and that doubles down on the market selloff, we could be in a much different picture six months from now. Yvonne we certainly have seen this kind of trend of Central Banks on this tightening path. Kicking that off in terms of asian Central Banks, is there a risk of a policy misstep . What would that look like . Enda we only have to look at how china handles its currency markets two years ago when it tried to change the trading mechanism that triggered volatility around the world. The same thing for the bank of japan. Expectations that it was heading down a tightening path. The Central Banks in asia in this world where capital flows are very volatile. Very sensitive in moving forward. Australia, new zealand, philippines, all needing to make positive decisions. There, their commentary would be very interesting. Central banks would not want to upset the capital flows in feeling volatility in the markets. Tricky road. Welcome tosaying, the job, jay powell. It has gotten even bigger. Thanks to end a karen and enda curran and mark cudmore. Jessica summers. Jessica the unexpected release raises questions about the korean government possibility to reform big business. Lee was the most highprofile corporate figure that was caught in an investigation that brought them park geunhye. Father and other executives have been tried for corruption only to receive suspended sentences. Eliot management calling on bhp to review it will structure with a view to creating a unified company. It has seen the 22 billion rise in value for the minor. One company was headquartered in australia. It operates as two entities. New study shows Pension Funds in australia have grown at the fastest pace in the world over the past 20 years. It extended 12. 1 percent on average, outpacing the u. S. , the u. K. , and japan, according to research. Savingory retirement rolls and a preference for riskier assets are among the key drivers of the growth. , the fedpolis president says acceleration in u. S. Wage growth is not support faster rate hikes. He reckons fridays job report indicated they might be rising but says it could be a blip and should not be ignored. Average Hourly Earnings rose 2. 9 in january from a year earlier. That is the fastest growth since the middle of 2009. Kashkari says wages must be balanced with inflation. We can see whats on to happen with inflation. We have our 2 inflation target and maximum employment mandate. Some of those trade off each other. We want to see inflation build back to the 2 target. Is veryjay wellequipped to take this on. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 100 countries. I am jessica summers. This is bloomberg. Yvonne plenty of bank interviews ahead on Bloomberg Television. We will head back to the singapore airshow, where we will be joined by Honeywell Aerospace president stephen yang to discuss the asian strategy. Kathleen we are back to the world Capital Market symposium in kuala lumpur, where yvonne will be joined by Credit Suisses representative. This is bloomberg. Kathleen this is daybreak asia. Im Kathleen Hays in new york. Man in kualayvonne lumpur. Investors will be watching toyota today as it did that to release results. Our reporter, joining us live from tokyo this morning. Kevin, what are you expecting . Well, i am expecting them to still be predicting that they will be able to turn and increased profit this year. They recently i think it was they went from predicting a second Consecutive Year of profit declined to profit growth. That is something that is really toyota. When he said they would suffer if profit decline this year, he said he would do everything he could to over that. You likened it to two consecutive defeats in sports. Since then, they have been very aggressively cutting costs, and that seems to be working. The r d spending is not a record. They are pouring a lot of money into things like electrified powertrains, autonomous vehicles, as well as their own global architecture. Eventually, by sharing more parts across the models and streamlining their production process, so that they can create more vehicles on the same line. Eventually, netflix ability will really pay off of them. The initial investment is going to be huge. What would you say is the biggest part of the challenge . There was a reputation challenge at one time. This is a very competitive space. It always has been. When you look at the targets they want to meet, what is the most important . I think, really, what is this for toyota, he really has the trends are towards sharing, it is a occasion, autonomous driving. Risk of commoditization of vehicles, where people dont look as cars as something they want, but as a means to move from a to b. He is trying to create cars that people want to drive, they want to buy, they want to own for themselves. In order to do that, he is trying to make cars even better in terms of drivability, in terms of design, and so, really, it comes down to the models. The new models include the new camry, new avalon, some sedans, which are struggling in a very truckcentric u. S. Market. Still the bestselling car in america. Initially, it looks like it is being a success. That is the bestselling vehicle in the u. S. Bar the big trucks. So thats been the same basic model for quite a long time. That should get a complete refresh. That will hopefully boost their earnings in the future. All right. Kevin buckland in tokyo with toyota. Joining us, rival, nissan, says it plans to invest 9 million in china in the race for ev dominance. Joining us now from singapore is connectingvp for vehicles and Mobility Services at nissan alliance. Welcome to the show. Good morning, kathleen. Good to be here. Kathleen we just heard kevin talking about how toyota is looking at this space so closely. What would you say what kind of progress have you made so far . What is your most important focus here . When you look at what we fewmplished over the last years, we are clearly the leader in electric vehicles. A lot of companies are moving. When you look at this on the ground, it shifted electric cars. Therefore, it clearly are in the world when it comes to mobility with electric vehicles. New electricunch models by 2022. In the long run, clearly connected, autonomous, and electric vehicles are core pillars of the future strategy. Karl announced recently a 1 billion fund. Have you zoomed in on Many Companies in the field of connectivity to invest in . Have you invested in some of them . Made a small investments in battery technology. We will see more investments coming in the area. Areasare very important that we will be focused on in the near future. We announced a big fund and there is plenty of interest in the industry about engaging with us. Kathleen a lot of people say gm is ahead of the pack when it comes to providing connected service with its onstar system. You have a plan to introduce a similar kind of system . If we do, it will be much better . Ogi of course, so we are working very hard and building the connective cloud. They are going to be connected into it. We made big plans. We believe conductivity is the main pillar of technology and development. That means every car will be connected to a single cloud. We are working closely with microsoft to build the cloud, and the cloud will be a place where the services will be materializing and where people will be storing Important Information about these services they subscribed to and partners they want to engage in. For us, it is the core pillar of conductivity that i bring to all of the vehicles. Yvonne do you think nissan and mitsubishi are connected . They want to make all of the cards connected by 2020. What do you plan for mitsubishi and renault . Ogi no, we are not behind. When you go back to my nissan was one of the First Companies to launch. Many years ago. Behind, you like we are but we have aggressive plans to accelerate and jump, leap ahead, if you will. That means working with partners. Historically, we have been known to work well with partners. We announced key partnerships. Very advanced technology with partners in japan. A Company Called dna. We are testing some very advanced Mobility Services as early as the end of this month. Stay tuned. Kathleen we will definitely stay connected. Thank you so much. Redric. Ogi thes take a quick check of latest business flash headlines. The ceo of lululemon has resigned after they said his behavior did not live up to its standards. He will resign from the board. Lululemon didd not give details about his alleged misconduct but says in a statement it expects all employees to simplify the highest levels of integrity and respect for one another. Alibaba filing the secondbiggest shareholder. The beijing Cultural Investment is paying 496 billion, just over 5 . Wandaone the films films first major one. Weaker jaguar sales have pulled down profit at the parent company. Was 187 million dollars, about half the average estimate. Profit at jail are sell at jlr fell. They are inspecting a milestone year as they prepare to launch their First Electric car. Live at the singapore airshow. We will speak with Honeywell Aerospaces representative. The big demand is growing. Keep it right here. This is bloomberg. Sydney harbour bridge on a war morning. 24 celsius. 76 fahrenheit. Wish i were there. Quite a lovely, lovely day. Now, we are going to go right to our own paul allen. We have got breaking news out of australia. The latest trade and retail data. Paul, what are you seeing . Paul moore read for you, kathleen. A big miss on both reads. Retail sales for the month of december contracting. 5 . A have been expecting contraction of. 2 , so much bigger than expected, following a surprise expansion in november, so a big miss for retail and for december trade balance. A deficit of 1. 3 8 billion. 1. 38 billion. A big miss for the trade balance, largely driven by imports rising by 6 . Exports rose 2 in the same period as well. We have a look at the aussie dollar and its falling, although not precipitously. It was 78. 87 just before the release of this data. Now, it is 78 point 72. A couple 78. 72. We have that happening in three hours time. The rpx expected to hold the cash rate. Retail sales, particularly turning out the way that they did. She can strengthen the argument for the reserve bank of australia to stay put. Retail sales contracting. 5 in december and trade balance coming in at 1. 36 billion deficit where we have been expecting a return to surplus, kathleen. Kathleen even though the rba was not inspected to move, im sure they are not happy to see retail sales contracting like that. Sophie kamaruddin. Sophie . Sophie as paul pointed out, we have the aussie dollar. The risk aversion was already in place. All the dollar down. 2 . Check out the glaring red. Twoday drop twoday drop since august 2015. Over 10 basis points this morning. We are seeing treasuries pullback after rallying overnight. A bit of a mixed picture in the bond space. I want to highlight what is happening in seoul as well. The kospi set for the worst three date drop come out led lower by samsung. We have the korean won losing ground as well, the lowest level since november. Korean investors are going to have other news tonight with the finance ministry this morning, saying the Capital Gains tax is being delayed. Kathleen an ugly wanting for japanese stocks. We have heard from some japanese bulls so far in the last couple of hours. It would turn out to be a buy. There could be further to go before the bears by some buy some . Even though they are optimistic, they do admit there is likely to be a pullback in the near term, and that is the btv 376. Inling 10 , the peak we saw january. Have the declines resembling the slide. As nikkei futures are pointing more ahead, we have volatility soaring. A gauge of price swings for the nikkei jumping over 98 in three days. You can see this on g btv 3841. That is this chart right here. Just throw in another comment saying the market is pricing in concerns over inflation and a possible worsening of the u. S. Economy. Very negative for japanese stocks. Inhleen dramatic moves markets makes for some striking charts. Sophie kamaruddin, thank you so much. Lets get the first word news with jessica summers. Jessica thanks, kathleen. U. S. Stocks plunged the most in more than six years. The selloff deepened on fears that a rising inflation will force Interest Rate higher. The dow thinks more than 1100 points. Economists say the fall is unlikely to her an economy enjoying solid gains and spending. Muchadvisors have not had experience in market routes. When confronted with one on monday, they struggled. Sank. Shed as the s p 500 the glitches are set back for the industry which has boomed. Tumbles for a fifth day, dropping below 7,000 for the First Time Since november and leading other cryptocurrencies lower. Digital tokens are filling the backlash for banks and regulators against the speculative frenzy that saw dizzying highs at the end of last year. Bitcoin has now erased much of its value from what it reached in december. Ecb president mario draghi told the European Parliament the bank brace for a hard brexit. He said the bank is preparing for a range of outcomes and the possibility of the u. K. Leaving without transition is there. Draghi said the ecb is working closely with the bank of england to help smooth the impact of brexit on the financial industry. As Coalition Talks are checked to do come to a head in germany with negotiations saying they want a simple yes or no decision. The talks were extended. Than four months after an inconclusive election, she may have to offer more if she is to win if worth term. A fourth is to win term. I am jessica summers. This is bloomberg. Kathleen jessica, thanks so much. The growth of air transport in the asiapacific and china outpaces the rest of the world, Honeywell Aerospace it developing ways to make lying the crowded skies safer and more efficient. It cost back to the singapore airshow where Haslinda Amin is standing by with the chief. Better opportunities from Honeywell Aerospace . Haslinda there is so much optimism at honeywell. Earnings fortheir 2018 and said there have been a lot of confidence shown among its customers. Lets get perspective. Stephen, good to have you with us. What justifies this earnings revision . Whats different . Is it because growth is sustainable Going Forward in the region . Ande have growth in 2017 the numbers as we exited the year. , especially in aerospace, we continue to see strong momentum. Not only market momentum, more Airline Passengers and travelers , but honeywells ability to capitalize on that by having the right people with the right tools and selling that in the right way. Haslinda there are particular Growth Markets you look at . Southeast asia, for instance, what kind of growth specifically are you looking at . High singledigit growth. We look to follow that in china and across Southeast Asia. We capitalize on that through supporting airlines that are seeing that growth which puts them through different types of maintenance opportunities. A full maintenance solution or a carrier that has more of the maintenance. We have conductivity solutions. Satellite communications with what we do on the aircraft in our knowledge about Information Technology to provide more efficient maintenance to provide different types of solutions for the passenger for the cabin. More reliable and safe flight. Haslinda can markets be a game changer for you . Absolutely. We have seen a tremendous amount of growth in asia, not only an era space, but across honeywell. We made huge commitments in china. We recently bolstered of what we do in kuala lumpur, opening up new headquarters. Haslinda commitment in terms of investment . In terms of dollars. In terms of hedge, thousands of people across the region. Honeywell has over 10,000 people in the asiapacific alone, well over 10,000 people who continue to grow the presence and support ventures andnt recent acquisitions for other businesses. Haslinda talk about china and russia working together on a project. His honeywell interested in being part of this . Over the past year, they signed a joint venture agreement between china and russia. Honeywell on the legacy program, the predecessor program, says it has quite a bit of content. Working well on both of those programs moving forward. Side, chinese and russian looking to work on this. Haslinda what exactly are you hoping to do . Are you hoping to contribute . Much as we have done on the current platforms in development , it is really a partner. We provide both the mechanical and of the literary. Avionics content as well in the cockpit as well as satellite medications for passengers. In talks with them, both types of content on this. Haslinda the issue with the c 919 currently, they had the first light of the c 919 last may. We are proud to be a big part of they are now in a full Flight Test Program and this will develop over the next two years. They are looking to do a certification of the airplane. Working very closely. A number of partners in china. Haslinda are we looking at the first full certification . When will that be . The end of 2020. Haslinda when it comes to the aviation sector, supply chain is very important, and there have been a lot of challenges. With company, manufacturers manufacturing bases all over the world, is that contributed to the supply chain problem . I dont think so. Honeywell has had a Global Supply chain for many years. In china alone, we have three. Oint ventures great local partners. We continue to be very smart, cautious, and realistic about how fast we move things. Make sure you have the right supply chain to support the industry. Whether it be each for each or across the world. Haslinda how can bottlenecks be addressed . A lot of things we look to do is making sure we have the right source, should that be required, making sure we have the right planning, the right intention. We have an underlying structure, so hopefully, Going Forward, bottlenecks dont exist anymore. Is drivingechnology the industry. Changed this technology the face of airlines and planes . We have one real example for honeywell, the connected aircraft. It is a simple concept. There is a lot of things we can do with communications, especially Satellite Communications, to communicate that to the ground. It provides very real benefits. Productivityght for passengers, so if you are on a flight, we released some technology rolling out gear lines like singapore currently. That allows passengers to receive in flight conductivity on the computer just as they would at home. It allows them to do that worldwide so there are no dead spot to the ocean. The second key thing this conductivity allows is maintenance. We can predict when the problems are going to happen and communicate about that in a very simple way to the technician on the ground and take proactive maintenance steps so we have greater availability. It enables sharing things such as weather. So we can have better knowledge of the weather earlier and plan more efficient and reliable flight paths. A very real thing. Haslinda having said that, we have issues like the inmates mh 373. Is there anything we can do . There is a number of things that the industry is looking at, inther it be current changes Current Technology or using things like Satellite Communications or better realtime Ongoing Communications to address issues like this one. I think there are a number of things the industry is working on for the next few years. Haslinda there has been so much optimism within the airline space. What would you say is the biggest challenge . Continued investment in infrastructure. When you think about rapid growth in Southeast Asia, it india, or maybe 10 years ago in china, two things are important. One is the ability to handle airplanes in the sky, allow that investment. It is the number of airports. It is secondtier and third tier cities. You see it in china. You see it in a number of plans and Southeast Asia. That commitment to both types of infrastructure, whether it be better air Traffic Management and modernization or just infrastructure needed on the ground to effectively handle those airports, the airplanes taking off and landing. Haslinda we thank you so much for your insights today. There coming to you from singapore airshow, the largest in this part of the world. The issue really is infrastructure as much as more and more people in this part of the world want to fly. The of the structure cannot support that kind of demand. Big visions. We will be jetting all over very quickly and easily. Aerospaceoneywell speaking with Haslinda Amin. To the world Capital Market symposium in kuala lumpur. Dont miss yvonnes exclusive chat with the Credit Suisse representative. Thats next. This is bloomberg. Does seem on the highend in terms of the stock market. Maybe this tax cut will lead to stronger earnings growth. This volatility we have seen in the marketplace is not unprecedented on a historical basis, but it is new for investors to deal with. It has been basically a rising tide. The trigger, at least in my mind is what is the fed going to do with rates in 2018 . Are they going to make a mistake . This year is the central bank year. This is momentum investors jumping off the train. They were riding it up, and they throughsoon as it goes from a 2 , 3 , they have stop orders in. Exactly what you got. It went up too far from a too fast. Plenty of analysis on Bloomberg Television on the u. S. Market selloff, which handed the dow the biggest loss in 6. 5 years. Asiapacific investors bracing for a second day of heavy losses after the frantic selloff in u. S. Treasuries rallied with gold for some of these haven assets. I am pleased to be joined by Credit Suisse vice chairman, joining us on the world Capital Market symposium. We have been talking about what has been going on in the markets here. Shrugged and lost all its games for 20. Does this market selloff have legs do you think . What is the durability of it . I think the markets, for some time, have been quite disconnected with the Political Risk involved. The concern about the rise in Interest Rates has been around for a long time, but it has never happened. It has been happening at a very gradual level. The recent surge in the 10 year u. S. Treasury rates was the big catalyst that indeed we should be expecting Interest Rates, and that should have a course correction in the markets, as we are seeing. Having said that, the economic environment shows very constructive. If you look around the world, in the u. S. And europe, right here in asia, you see very robust economies that are expected to continue to grow, so it has been this of legs to keep attached to markets. You are seeing the pause to digest the rising Interest Rates. Yvonne are you seeing a fundamental shift when it comes to inflation . We have seen real yields picking up and oil prices as well as Inflation Expectations. Is this concern overblown . Lito inflation concern is a real thing. That is going to put money into the system. The Central Banks around the world are beginning to unwind. I think it is a healthy development. The markets get back to the level that will be stable. It is being upset by the possibility of an economic environment. You have a good balance of very positive catalysts to keep the market going, but also make sure the valuations are in direct places. Yvonne we see this rise in global yields. Could be taking a breather. Exports facing some headwinds here in emerging markets given the trade tensions we have seen between the us and china. The Trump Administration talking down the dollar at the moment, malaysia,able is Southeast Asia, to some of these external challenges we are seeing . Lito the biggest challenge is in the u. S. And china. In any case, it could lead to instability. Taking out the steam out of the Economic Growth in china. It has cascading effects for the rest of asia. Asia has grown over the decades, so its very important that china continues to experience growth. Expecting 6 . China, 6. 5 . I think there are good reasons to continue to expect that. When you look at china, for example, the Consumer Confidence is growing. It is shifting from being an export. That looks good not only for the region, but for the world. Yvonne given the export linkages that Southeast Asia does have, how the human negate how the you mitigate the titfortat . These as well. How does e. M. Deal with all of this . Lito first of all, you would hope that more sober thinking amongst the political leaders would recognize that it is not really help anyone. I believe that that will be the case. I dont get it is going to materialize. You are seeing export growth. Semiconductors in singapore. You are seeing a lot of the growth. From growthming coming from different sectors, particularly technology. Yvonne they have largely overlooked the risk we have seen, whether in the u. S. Or europe as well. Southeast asia in particular, 2018, is like to be a big one cambodia,ions in malaysia. Can we ignore what is going to be happening here politically . There is uncertainty because of the elections. Although there are strong beliefs that there will not be team be too many surprises. It is a strong economy. You see that even in the philippines. Just been enjoying very strong growth, and now, they are talking about changing government and so on, but it is not affecting the market. Be theuld very well other Southeast Asian economies. Yvonne which election in particular are you most concerned about . Is there a particular one where you just think people investors should be focused on . We can see the must change and the must reform . One thatuppose the might be concerning is the elections next year in indonesia. The largest economy in Southeast Asia. Results of the elections i hope there are future events at the national level. Camacho ofo asiapacific and the former philippines finance minister, joining us here at the world Capital Market symposium in kl. Plenty more to come here. We will have another interview with the chairman of cmi be, kathleen. Kathleen great stuff. Now for a quick check of the latest business flash headlines, Mitsubishi Motors raising its earnings outlook after profit more than doubled in the third quarter. Higher sales in asia and the weaker yen helped the company recovered from last years feel if insurance the scandal years fuel efficiency scandal. Archer daniels midland is in acquire talks to bungee, a deal that could spell the end for a twocenturyold company which has a market value of 11. 5 billion. Potential merger is likely to attract close attention from the regulators. We will continue our coverage of the u. S. Selloff and asias reaction with david ingles and haidi lun. David, big day. You have a big show coming up. David its very busy. We will be live. Citigroup coming with a show to talk about the selloff. 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. There. Japan basing a correction at this point in time. The other big loser, have a look at the climb. Falling below 7,000. Struggling to improve its credentials as a potential haven asset. This is digital Investment Advisors. They cannot actually handle the frenzy of these websites. I am david ingles. I am haidi lun and said day. Well be hearing from